Gothenburg, 31 January 2025

Q4 2024

Net sales: SEK 24,725 million (24,438)
Organic growth: −3.1% (−1.9%), driven by lower market demand mainly in Europe and China, while Americas and India & Southeast Asia are showing positive sales development.
Adjusted operating profit: SEK 2,735 million (2,929). Continued strong price/mix contribution was offset by negative currency effects as well as lower volumes, which also resulted in decreased cost efficiency.
Adjusted operating margin: 11.1% (12.0%)
Net cash flow from operating activities: SEK 3,283 million (3,937)

Rickard Gustafson, President and CEO:

"In 2024, we showed resilience in challenging market conditions thanks to diligent strategic execution. In the fourth quarter, we maintained solid margins given low demand and currency headwind.

Solid margin in week markets 

I'm pleased that we successfully navigated the challenging market conditions that prevailed throughout 2024, initiated a separation process for our Automotive business and continued to strengthen our operational and innovation capabilities. This positions us well to capture profitable growth opportunities as demand recovers. For the full year 2024, we upheld a resilient adjusted operating margin of 12.3% in a market that shifted from organic growth in 2023 to organic decline of −5.4%. Cash flow from operations was solid at approximately SEK 11 billion.

The weak demand environment remained also in the fourth quarter, partly offset by a solid price/mix through effective pricing activities, diligent portfolio management, and strong aftermarket focus. The organic sales decline in the quarter was −3.1% with large variations between regions. Our Industrial business in Americas and India & Southeast Asia showed positive organic growth, partly due to favorable timing of deliveries before year-end. Demand in Europe and China remained weak, which also was the case for Automotive in general, except for our EV business in China that performed well.

Our adjusted operating margin in Q4 of 11.1% represents another proof point of our improved resilience given the negative volume development and a negative margin impact from currency of −0.9 percentage points.

We have continued to work hard on cost reduction activities and fully offset high wage inflation. The fourth quarter, however, was the first since the low demand environment started in mid-2023 where these activities were not able to fully offset the negative impact from low volumes. Due to the product mix, we also saw an increase in material cost. Our diligent cost reduction activities will continue, including looking at the set up for our Industrial and Automotive businesses to create a strong foundation for the future.

Our Automotive business had a challenging quarter with volatile demand, impacted by customers' reduced factory output. It is therefore encouraging that its underlying business performance is on a positive trajectory entering new margin accretive businesses. Our new Hub Bearing Unit for EVs, for example, provides significant customer value through increased mileage per battery charge by being 10% lighter than conventional wheel bearings and reducing friction by 30%.

Cash flow from operations was robust in the quarter at SEK 3.3 billion, supported by margin resilience and working capital reduction.

Investing in creating a stronger SKF

Regionalization is a key element of our strategy. In 2024, we continued to invest in further optimizing our footprint and in creating competitive and resilient regional value chains. These efforts improved our regionalization rates during the year from 63% to 68% in Asia and from 66% to 69% in Americas. Increased regionalization brings several market- and operational benefits. In China for example, it has shortened lead times from order to delivery with 25% since 2019. 

To position us to benefit from the electrification megatrend and the increasing demand for high-speed rotation, we are investing in our ceramic bearing capacity and capabilities. To strengthen our competitiveness and secure the full value chain, we are investing in increased access to raw material as well as in accelerating our manufacturing and R&D processes.

Separation update-Capital Markets Day on 11 November

Our work to create two fit for purpose businesses, Industrial and Automotive, is in an intensive phase. More information about the progress will be shared on our Capital Markets Day which will be held on 11 November 2025 in Stockholm.

Outlook

The world is rapidly changing, with markets affected by geopolitical uncertainty, and we expect continued volatility. For the first quarter of 2025, we expect organic sales to weaken somewhat, year-over-year.

In recognition of the Group's solid financial position, the Board has decided to propose to the Annual General Meeting a dividend of SEK 7.75 per share."

¹⁾ Price, mix and volume

¹⁾ Price, mix and volume

Outlook and Guidance

Outlook

• Q1 2025: We expect organic sales to weaken somewhat, year-over-year.
• SKF has decided to discontinue issuing full-year organic sales outlook.

Guidance Q1 2025

• Currency impact on the operating profit is expected to be around SEK 200 million positive compared with the first quarter 2024, based on exchange rates per 31 December 2024.

Guidance FY 2025

• Tax level excluding effects related to divested businesses: around 26%.
• Additions to property, plant and equipment: around SEK 4.5 billion excluding separation of the Automotive business.

A webcast will be held on 31 January 2025 at 08:00 (CET):
Sweden +46 (0)8 5051 0031
UK/International +44 (0)207 107 0613
https://investors.skf.com

Aktiebolaget SKF
      (publ)

The financial information in this press release contains inside information that AB SKF is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out below on 31 January 2025 at 07.00 CET.