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Markets News

UPDATE 2-Bearings maker SKF beats forecasts again as demand recovers

* Q3 operating profit 1.92 bln SEK vs mean forecast 1.52 bln

* Organic sales -5.1% yr/yr

* Shares rise 4% (Adds background, detail)

STOCKHOLM, Oct 27 (Reuters) - Sweden’s SKF, the world’s biggest maker of industrial bearings, beat quarterly earnings forecasts on Tuesday, helped by an efficiency drive and a pick up in some markets, but said the outlook remained uncertain.

The company, whose bearings are used in sectors ranging from construction and transport to mining and wind power, said demand had rebounded from the pandemic-ravaged second quarter, with the automotive sector among the markets seeing an improvement.

Third-quarter operating earnings at the company, which competes with Germany’s Schaeffler, fell to 1.92 billion Swedish crowns ($220 million) from 2.29 billion a year earlier, well ahead of analysts’ mean forecast of 1.52 billion, according to Refinitiv data.

Adjusted for non-recurring items, the operating profit was 2.48 billion, up versus the previous year, despite a like-for-like sales decline of 5.1% year-on-year in the quarter.

“Our strong results in the third quarter illustrate that we are delivering on the implementation of our strategy,” Chief Executive Alrik Danielson said in a statement.

“Uncertainty surrounding the near-term economic climate makes it difficult to provide a reliable demand outlook for the fourth quarter.”

Danielson has spent recent years aiming to make SKF leaner, faster and less cyclical by investing in manufacturing automation, pushing performance-based revenue models and cutting costs.

SKF shares turned positive following the results and were up 3.7% at 1250 GMT.

“Although a certain beat should have been expected following reports from peers we believe this is exceptionally strong numbers that should trigger high single digit EPS upgrades,” analysts at Carnegie said in a note.

SKF, which derives 70% of sales from its more profitable industrial business and 30% from its automotive business, has beaten earnings forecasts in every quarter this year.

Still, the company said had decided not to call an extraordinary shareholders’ meeting to propose an additional dividend for 2019.

Schaeffler on Monday flagged better than expected quarterly earnings driven by its automotive business.

$1 = 8.7369 Swedish crowns Reporting by Johannes Hellstrom, editing by Niklas Pollard and Mark Potter

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