(July 16, 2011)
STOCKHOLM: Leading bearings maker SKF posted slightly lower-than-expected quarterly earnings yesterday, weighed down by currency headwinds and casting a shadow over the rest of the industrial sector.
SKF, seen as a bellwether for the manufacturing sector with its bearings used in items ranging from jets to dishwashers, has seen a boost to profit margins from rising demand and costs cuts made during the global financial crisis.
But it is facing more difficult comparisons in future earnings and chief executive Tom Johnstone said business was getting back to more normal seasonal patterns after the global crisis and recovery.
Danske analyst Carl Holmquist said some investors might have been worried about a buildup of inventory at SKF and the negative currency impact.
"The stock has not performed badly ... in the run-up to the results, " he said.
"To really propel stocks higher you would need to see a firm outlook from any company," he added, noting this had not been forthcoming from SKF.
Pretax earnings rose to 2.45 billion crowns ($379 million) from 2.05bn a year ago, a notch below the average forecast of 2.46bn.
Sales at 16.71bn crowns were below the forecast 17.1bn, while inventories as a per cent of sales rose to 21.7pc by the end of the quarter from 20.1pc at the end of the first quarter.
The Swedish crown has been strong this year, hitting domestic companies, and SKF said the negative impact of currency transactions, at 500m crowns in the quarter, was higher than the 400m the company had forecast.
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