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STOCKHOLM, July 21 (Reuters) - Sweden’s SKF, the world’s largest maker of industrial bearings, reported quarterly earnings above market expectations on Friday, boosted by strong growth in Asia and North America, and said it expected firmer demand in the third quarter.
The company has been hit by weak global industrial demand, heavy price pressure and intense competition in recent years, but growth returned at the end of 2016, and has since accelerated.
“As we move into the second half of the year, we expect to see continued broad-based industrial activity and growth,” SKF Chief Executive Alrik Danielson said in a statement.
Gothenburg-based SKF’s second-quarter operating profit, adjusted for one-time items, rose to 2.44 billion Swedish crowns ($297 million) from 2.02 billion in the same period last year, beating a mean forecast for 2.36 billion crowns in a Reuters poll of analysts.
SKF, which counts Germany’s Schaeffler AG and Timken of the United States among its rivals , said it expected higher demand, by which it typically means sales volume growth of 4-8 percent, in the current quarter compared with the same quarter in 2016.
It forecast higher demand in Europe, North America and Asia, and significantly higher in Latin America. Like-for-like sales grew 7.5 in the quarter, ahead of a 7.1 percent mean forecast.
A profit warning from Schaeffler in late June citing rising pricing pressure in the automotive business as well as a temporary supply chain shortage in the automotive aftermarket business, has weighed on SKF shares.
SKF shares are down 4 percent in the past month, compared with a 17 percent drop for Schaeffler and a 2 percent decline in the STOXX Europe 600 Industrial Goods & Services Index.
But while Schaeffler generates the vast majority of its sales in its automotive business, SKF’s automotive division accounts for only around 30 percent of its group sales.
1 = 8.2198 Swedish crowns) (Reporting by Johannes Hellstrom; editing by Niklas Pollard)