By Christina Zander
STOCKHOLM--Shares in Swedish ball bearing maker SKF plunged
Friday as the company reported lower than expected demand for its
products in North America during the first quarter.
SKF, which had previously guided for slightly higher demand
sequentially in the region during the first quarter, said lower
activity in the mining, agriculture and oil sectors had a more
negative impact on sales than expected, resulting in an organic
sales growth of 1.4%.
"We underestimated the exposure that some of our customers have
to these segments," Chief Executive Officer Alrik Danielson
said.
Ball bearings are used to reduce friction in rotating parts in
cars, industrial machinery, and turbines. SKF, a global supplier to
almost all industries, including the automotive and energy sectors,
is an important barometer of how the industrial cycle will affect
the Nordic engineering sector.
The company said that demand for its products and services in
the second quarter is seen relatively unchanged for the group in
Europe and North America, while for Asia it is expected to be
higher and for Latin America slightly lower, compared to the first
quarter.
SKF Friday reported a net profit for the three months ended
March 31 of 1.17 billion Swedish kronor ($136 million), compared
with SEK1.28 billion in the same period a year earlier, as currency
tailwinds of SEK450 million only partly offset restructuring
charges.
Sales in the first quarter totalled SEK19.45 billion, up from
SEK16.73 billion a year earlier. Operating profit was SEK1.72
billion down from SEK2.02 billion. Analysts polled by Factset
expected sales of SEK19.73 billion
"SKF's first quarter figures showed a lower than expected
demand, but a bigger than expected boost from currency tailwinds,"
said Peder Frolen, an analyst at Handelsbanken.
Currency tailwinds, mainly due to the depreciation of the
Swedish krona against the dollar, is expected to add SEK800 million
to its operating profit in the second quarter, the company
said.
At 0837 GMT shares traded down 6.1% at SEK212.00.
Write to Christina Zander at christina.zander@wsj.com