STOCKHOLM (Reuters) - Sweden’s SKF (SKFb.ST), the world’s biggest maker of ball bearings, reported a smaller than expected fall in quarterly core earnings on Tuesday as cost cuts helped it weather a steep decline in demand due to the pandemic.
The rival of Germany’s Schaeffler (SHA_p.DE) said sales fell 25% on a like-for-like basis in the quarter, with its automotive business hit particularly hard due to plant closures at customers related to lockdowns in many major markets.
“We have delivered another very strong operating result, despite sales falling by 25% during the second quarter,” CEO Alrik Danielson said in a statement. Demand had also begun to recover toward the end of the quarter with sales improving in June, he added.
Analysts said SKF’s profit, adjusted for non-recurring items, was better than expected, with Credit Suisse estimating the outcome beat consensus forecasts by as much as 33.5%.
Quarterly reported operating earnings were 669 million Swedish crowns (58.91 million pounds), still down from 2.5 billion crowns in the year-earlier period, and below the 960 million crowns mean analyst forecast according to Refinitiv data.
However, adjusted for large non-recurring items such as restructuring costs, only partly factored into analysts’ estimates, the operating profit was 1.57 billion crowns.
SKF normally derives 70% of sales from its more profitable industrial business and 30% from its automotive business.
The company said it expected “a continued elevated level of restructuring costs during the second half of 2020” and refrained from giving a demand forecast due to continued market uncertainty.
Reporting by Johannes Hellstrom; editing by Niklas Pollard