#SKF #Sweden #Gothenburg #Automotive #Industrial

SKF Q3 2025 Financial Insights

On October 29, 2025, SKF released its financial results for the third quarter of 2025, revealing significant insights into its operations amid ongoing market challenges. The company reported net sales of SEK 22,482 million, slightly down from SEK 23,692 million the previous year. Notably, organic growth stood at 2.0%, a welcome improvement from a decline of 4.4% observed in the same quarter a year ago. This growth was primarily fueled by the Industrial business, although it was partially mitigated by unfavorable market conditions affecting the Automotive sector.

The adjusted operating profit for Q3 was SEK 2,762 million, down from SEK 2,821 million last year. The adjusted operating margin rose to 12.3% from 11.9% year-on-year, highlighting SKF’s ability to implement effective pricing strategies and cost control measures that more than compensated for lower production volumes and ongoing currency challenges.

Key Financial Metrics

The financial overview indicates that while net cash flow from operating activities fell to SEK 1,840 million compared to SEK 3,576 million last year, the adjusted earnings per share slightly decreased to SEK 3.96 from SEK 4.05. The decline in net profit was also notable, reporting at SEK 1,127 million compared to SEK 1,631 million the previous year. This performance reflects significant challenges, particularly within the Automotive segment, where market demand has softened, especially in North America.

Rickard Gustafson, SKF’s President and CEO, commented, “Despite the challenging economic landscape and significant currency headwinds, we have managed to enhance our margins through strong operational execution. Our focus on transforming SKF into a more streamlined organization continues, offering us opportunities for profitable growth as market conditions improve.”

Sector Performance

The performance across different sectors was telling. The Industrial division exhibited robust growth, increasing by 4%, driven predominantly by improved organic sales in all regions, particularly Asia and the Americas. Notably, in China, effective policy-driven pre-buy strategies within the Wind segment supported this growth. Conversely, the Automotive division saw a decline in organic sales by 2%, underscoring the challenges of weak market demand and intensifying competition.

The report also outlined ongoing initiatives, such as rightsizing efforts that aim to optimize organizational efficiency. Although some savings were realized this quarter, full benefits are expected to materialize over the coming years, leading up to 2026-2027.

Automotive Separation and Future Plans

A significant development within the company is the accelerated separation of its Automotive business. Over 50% of the Automotive business volumes have been successfully transitioned into new legal entities. Furthermore, SKF India Ltd. has progressed with its demerger into a focused industrial entity, aiming for a stock exchange listing before year-end. This strategic move reflects SKF's commitment to clear operational segments, setting the stage for heightened investor interest when it lists its Automotive business on Nasdaq Stockholm by mid-2026, pending board approval.

New Investments and Strategic Directions

SKF also introduced its ambitious plans for a globally automated Super-precision bearing center in Italy, a project aimed at tapping into high-growth sectors driven by the megatrends of electrification and automation. This center is expected to enhance SKF's competitive edge in the industry, yielding high customer value through advanced product offerings.

Outlook and Guidance

Looking ahead to Q4 2025, SKF anticipates market demand to remain stable, projecting organic sales to be relatively unchanged year-over-year. However, currency impacts on operating profit may pose challenges, with an estimated negative impact of SEK 650 million compared to Q4 2024. The company remains cautious yet optimistic, focusing on operational adjustments and strategic investments to navigate the uncertain economic climate.

In summary, SKF's Q3 2025 results reflect a company capable of adapting to challenging market conditions, showcasing resilience in its margins while navigating the complexities inherent in both the Industrial and Automotive sectors. Investors and stakeholders await further developments, particularly regarding the upcoming separation and the expected listing of the Automotive business.