SKF Q1 2021 Strong organic growth and operating profit, while managing cost and currency headwinds
GOTHENBURG, Sweden, April 22, 2021 /PRNewswire/ -- As the Board announced in January, Rickard Gustafson will be joining as President and CEO at the latest by 1 July. Alrik Danielson's last working day with SKF will be 30 April. The Board has appointed Niclas Rosenlew as Interim CEO in addition to his current role as CFO.
Alrik Danielson, President and CEO:
"During the first quarter we saw strong sales and demand growth. We also experienced significant headwinds in terms of cost inflation and currency impact, affecting our operating result by SEK 1.3 billion. Despite this, we delivered a very solid adjusted operating result of SEK 2,789 million (SEK 2,572 million), representing an adjusted operating margin of 14% (12.8%).
Organic sales development in the quarter was 8.6%, with net sales of SEK 19,865 million (SEK 20,085 million). Sales were significantly higher in Latin America and Asia and relatively unchanged in Europe and North America.
We are already implementing measures across both Industrial and Automotive to compensate for rising input costs.
The Industrial business delivered strong results, with an adjusted operating margin of 16.3% (15.5%).
The Automotive business continues to perform well, with an adjusted operating margin of 8.9% (6.0%).
The first quarter is historically lower in terms of cash flow generation. The sharp increase in demand in the quarter also contributed to increased working capital. As a result, cash flow was SEK -702 million (SEK 1,930 million).
From this quarter, we will be reporting on our sustainability-related targets as an integrated part of our quarterly report. One of SKF's strengths is our ability to support the development of industries that enable a shift towards a low-carbon world. Our investments in industries such as renewable energy, electric vehicles and railway is paying off, with sales to these industries growing from SEK 4 billion to 7 billion in the last two years.
We are also making progress on our ambitions to reduce CO2 emissions from our own operations.
We continue to capitalize on new ways of working and digitalizing throughout the organization. The sharp increase in demand in the quarter has necessitated an increase of around 200 temporary workers, predominantly in our factories. Permanent staff numbers were unchanged.