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SKF Capital Markets Day: A New Strategic Vision

On November 11, 2025, SKF successfully hosted its Capital Markets Day at At Six Hotel in Stockholm, providing key insights into its future direction as it prepares to separate its Automotive division from the Industrial segment. This strategic move aims to unlock significant value by allowing each business to focus distinctly on its market demands and growth opportunities.

A Clearer Focus for Two Divisions

The President and CEO of SKF, Rickard Gustafson, emphasized the importance of this separation during the presentation to investors and analysts. By creating two standalone entities—one focusing on Industrial solutions and the other on Automotive innovations—SKF intends to sharpen its strategic focus and enhance customer value.

This phase of SKF’s journey is particularly crucial as it adapts to the different dynamics, manufacturing processes, and customer needs of the two sectors. With the intention to generate heightened competitive advantages, both divisions will work on tailored strategies aimed at specific market demands.

Financial Highlights Post-Separation

The separation is projected to result in impressive financial performance benchmarks. The outlined long-term financial targets for the Industrial business post-separation include:

• - Organic growth of 4% over the business cycle.
• - Adjusted operating margin exceeding 17% mid-term and 19% long-term.
• - Cash conversion rate of 60%.
• - Adjusted return on capital employed (ROCE) set at 20%.
• - Net leverage to remain below 2.0x.
• - Dividend target of 50% of average net profit.

In conjunction with these goals, SKF reaffirmed its commitment to sustainability, aiming for net-zero emissions in its supply chain by 2050 and decarbonizing its operations by 2030. This aligns with their ambitions to lead in environmentally friendly practices within the manufacturing landscape.

The Automotive Business Strategy

Meanwhile, the Automotive wing at SKF is positioned to exploit key growth segments and geographical markets post-separation. The strategic vision for this division includes:

• - Targeting organic growth that surpasses market averages during the business cycle.
• - Maintaining an adjusted operating margin in the high single digits.
• - Keeping net leverage below 1.0x.

These measures are structured to support the Automotive sector’s investments in areas that enhance growth and profitability, with a streamlined corporate setup fostering improved agility and efficiency. A concerted focus on innovation and capturing more market share will be pivotal as they capitalize on emerging technologies and market trends in the automotive space.

Enhancing Capital Efficiency

During Capital Markets Day, SKF also discussed its transformative measures aimed at optimizing its industrial footprint and value chain. This transformation seeks a rightsized production approach that enhances automation while minimizing costs through regionalization. The target is to increase capital expenditures to about 5% of net sales in the mid-term, gradually stabilizing to around 3.5% in the long run.

Gustafson highlighted the importance of an efficient supply chain and working capital management, reiterating the ambition to reduce it to 29% in the mid-term, with aspirations to drop below 27% long-term. By focusing on these optimizations, SKF aims to bolster its profitability while generating consistent cash flows across both business units.

Roadmap for the Future

The timeline for separating the Automotive division continues to unfold as planned, with considerable progress already made—over 70% of roles for the new Automotive team filled, alongside a successful transition of manufacturing channels. SKF anticipates successfully listing the Automotive division by mid-2026, subject to board approval and the backing of shareholders.

Conclusion

As SKF embarks on this ambitious path, it stands determined to unlock the full potential of its unique automotive and industrial capabilities. Through the ongoing optimization of both businesses, SKF aims to emerge as a more agile, growth-oriented enterprise catering effectively to its customers’ needs across diverse markets.

The Capital Markets Day served as a pivotal platform to discuss these strategies and reaffirm commitment to stakeholders, underpinning SKF’s enduring vision for a sustainable and successful future.