GOTEBORG, Sweden, July 15, 2002 (PRIMEZONE) -- The SKF Group reports a profit before taxes for the second quarter 2002 of MSEK 925 (820). The profit for the first half of 2002 was MSEK 1,686 (1 611).
Earnings per share for the second quarter were SEK 5.58 (4.56), and for the first half year, SEK 10.22 (9.50).
Sales in Europe remained weak in the second quarter. In North America, sales to the automotive sector showed good growth and sales to the industrial sector started to recover. Sales growth in the Asian region accelerated.
Outlook
The predicted recovery in market demand this year for the Group is progressing step by step in a number of segments and regions. Production will be increased to meet the expected higher market demand.
Summary: * The operating profit for the first half of 2002 was MSEK 1,951 (1887). The figure for the second quarter was MSEK 1,048 (979). * The operating margin for the SKF Group for the first half-year of 2002 amounted to 9.0% (8.6), and for the second quarter to 9.5% (8.8). * Cash flow after investments before financing was MSEK 717 (1,746). Cash flow for the second quarter was MSEK 829 (1,249). * Net sales amounted to MSEK 21 718 (22 054). Net sales for the second quarter amounted to MSEK 11 053 (11 148). * The decrease of 1.5% in net sales was attributable to: structure 1.6%, volume -3.7%, price/mix 1.4% and currency effect -0.8%. For the second quarter a decrease of 0.9% was attributable to: structure 1.9%, volume -0.5%, price/mix 1.4% and currency effect -3.7%. * Net profit amounted to MSEK 1 165 (1 082). Net profit for the second quarter was MSEK 636 (520).
The Group's financial net for the first half of 2002 was MSEK -265 (-276). Additions to tangible assets totalled MSEK 611 (676). At the end of June, the Group's inventories amounted to 20.5% (23.7) of annual sales. The equity/assets ratio was 40.0% (37.6). Return on capital employed for the 12-months period ended June 30 was 15.3% (15.8). Return on equity was 14.3% (15.4). The registered number of employees was 39 926 (39 247). Acquisitions of the bearing factories of VMZ (Bulgaria), Aeroengine Bearings UK, and Delta Consult B.V. (NL) added close to 2000 employees to the number of registered employees.
Exchange rates for the second quarter of 2002, compared to the corresponding quarter of 2001, had a small positive effect on SKF's profit before taxes.
Divisions
The result by Division is based on SKF management reporting.
The Industrial Division's external sales for the first half of 2002 amounted to MSEK 5,006 (5,156), a decrease of 2.9%. Total sales (sales and deliveries to external and internal customers) were MSEK 7,990 (8,095). The operating result for the first half of 2002 amounted to MSEK 806 (842), resulting in an operating margin of 10.1% (10.4) on total sales including internal deliveries.
Sales in Europe were slightly lower in the second quarter compared to the same period last year. Sales in North America were somewhat higher than last year. Sales in Asia were at approximately the same level as last year.
SKF has launched a new all-electrical steering system for industrial vehicles that improves comfort and safety for the operator, simplifies design and assembly for the manufacturer and benefits the environment through the elimination of the hydraulic system. The system was demonstrated in a forklift at the Hanover Fair.
During the second quarter, SKF added angular contact ball bearings to the Explorer family of products. This is one more step in a series of continuous improvements to keep products in the forefront of technology and to provide new design possibilities for customers.
SKF also launched an online monitoring system, called the SKF WindCon System, for the wind energy market. With this system, wind park operators have a complete and continuous overview of the mechanical conditions of their wind turbines. SKF WindCon will enable operators to improve overall uptime of the wind turbine and enhance maintenance timing and efficiency.
The Automotive Division's external sales for the first half of 2002 amounted to MSEK 7,061 (6,950), an increase of 1.6%. Total sales were MSEK 7,810 (7,784). The operating result for the first half of 2002 amounted to MSEK 320 (259), resulting in an operating margin of 4.1% (3.3) on total sales including internal deliveries.
Sales of bearing and seal products to the car and the light truck industry in Europe were slightly lower compared to the second quarter last year. In North America, sales were higher than in the same period a year ago due both to a higher production of vehicles and a positive mix of SKF sales.
Sales to the heavy truck industry in Europe were somewhat lower than for the same period last year while sales to the heavy trucks industry in North America were higher than for the same period last year.
SKF's vehicle service business reported considerably higher sales figures for the second quarter this year compared to the same period last year.
Chrysler's all-new Pacifica 2004, positioned as a sports tourer, will be fitted with SKF hub bearing units on both axles. The hub units carry integrated ABS sensors and feature the latest self-retaining orbital- formed closure technique.
The Electrical Division's external sales for the first half of 2002 amounted to MSEK 995 (1,032), a decrease of 3.6%. Total sales were MSEK 3 444 (3,623). The operating result for the first half of 2002 amounted to MSEK 187 (195), resulting in an operating margin of 5.4% (5.4) on total sales including internal deliveries.
Sales were higher in the second quarter compared to the same period a year ago, mainly as a result of new customers and strong sales to the two-wheeler market in the Asian Pacific region.
Capacity in the factory in Jakarta, Indonesia, is being increased to meet the fast increasing demand for SKF products for two-wheelers.
The Service Division's external sales for the first half of 2002 amounted to MSEK 6,638 (6,788), a decrease of 2.2%. Total sales were MSEK 7,397 (7 592). The operating result for the first half of 2002 amounted to MSEK 637 (570), resulting in an operating margin of 8.6% (7.5) on total sales including internal deliveries.
Sales in Europe were considerably lower during the quarter compared to the corresponding period a year ago. In North America, sales were somewhat better than for the second quarter 2001. In Asia, sales increased considerably compared to the figures for the same period last year.
During the quarter, SKF launched an industrial decision support system. The system, branded @ptitude(TM), provides technologies and services that automate the decision support process for optimized asset efficiency.
During the quarter, SKF acquired 100% of the shares of the Dutch company Delta Consult B.V. The company provides high-level, life-cycle asset management, maintenance engineering and operational services, as well as maintenance-related business process and information technology support.
The Aero and Steel Division's external sales for the first half of 2002 amounted to MSEK 2,006 (2,094), a decrease of 4.2%. Total sales were MSEK 3,362 (3,553). The operating result for the first half of 2002 amounted to MSEK 119 (127), resulting in an operating margin of 3.5% (3.6) on total sales including internal deliveries.
Sales to the aerospace industry were clearly weaker during the second quarter compared to the same period a year ago, especially in the aeroengine business.
The acquisition of 75 percent of the shares in NSK Aerospace Europe Ltd at Stonehouse in the UK was finalized during the quarter.
Ovako Steel, previously the Steel Division and today part of the Aero and Steel Division, reported for the first half of 2002 external sales of MSEK 869 (968). Total sales were MSEK 1,611 (1,682). The operating result for the first half amounted to MSEK 3 (-3). The operating result for the second quarter amounted to MSEK 12 (6).
During the quarter, Ovako reported higher demand from both SKF and external customers.
Parent Company
Profit before taxes for the first half of 2002 amounted to MSEK 614 (547). Previously published profit before taxes for 2001 has been restated to include Group contribution directly in shareholders equity. The Company had no net sales. Investments amounted to MSEK 0 (1). As of June 30, short-term financial assets amounted to MSEK 1 (1). The average number of employees was 121 (109).
Previous outlook statement
First quarter 2002: "The overall market demand for the Group is expected to be weak also in the second quarter this year. However, in Asia the growth is expected to continue and in North America more signs of a recovery are seen."
Overhead presentation from SKF
An overhead presentation will be published on SKF's website at the following address: http://investors.skf.com (choose presentations).
Goteborg, July 15, 2002 Aktiebolaget SKF (publ.)
Sune Carlsson President and CEO
Enclosures: Consolidated financial information Consolidated balance sheets Consolidated statements of cash flow Consolidated financial information -- yearly and quarterly comparisons (Group and Divisions)
The accounting principles and methods of calculation are those described in Note 1 in the Annual Report 2001. The report has not been audited by the Company's auditors.
The SKF Nine-months report 2002 will be published on Tuesday, October 15, 2002.
Further information can be obtained from: Lars G Malmer, Group Communication, tel +46-705-371541 e-mail: lars.g.malmer@skf.com Marita Bjork, Investor Relations, tel +46-705-181994 e-mail: marita.bjork@skf.com Aktiebolaget SKF, SE-415 50 Goteborg, Sweden tel +46-31-3371000, fax +46-31-3372832 www.skf.com
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