#SKF #Sweden #Gothenburg #Automotive separation #Industrial business

Introduction

SKF has recently released its Q4 2025 financial results, showcasing a commitment to long-term value creation. The company reported net sales of MSEK 21,969, down from MSEK 24,725 in the previous year. Despite ongoing challenges in the market, particularly within the automotive sector, SKF's performance reflects a strategic effort to fortify its industrial business and optimize operations.

Financial Overview

For Q4 2025, SKF recorded:

• - Net Sales: MSEK 21,969, translating to flat organic growth compared to a decline of 3.1% in the previous year.
• - Adjusted Operating Profit: MSEK 2,588, showing a slight decrease from MSEK 2,735 due to lower volumes and currency challenges.
• - Operating Margin: An increase to 11.8% from 11.1%, demonstrating better cost management and price adjustments.

These results indicate that while the automotive side of the business faces difficulties, the industrial sector is witnessing resilient growth, especially in areas like aerospace and magnetic bearings.

Strategic Insights and Market Outlook

Rickard Gustafson, President and CEO, expressed satisfaction with the company’s resilience amidst soft market conditions. He pointed to improved margins and emphasized the company's strategy in navigating geopolitical uncertainties and tariff-related impacts. This strategic approach is laying the groundwork for creating two distinct, well-focused businesses: one for industrial solutions and the other for automotive.

In Q4, SKF reported that organic sales in the industrial business saw growth, especially driven by favorable pricing and robust market demand in regions such as Europe and China. Conversely, the automotive sector continued to experience pressures leading to declining sales. However, despite these challenges, SKF is actively pursuing contracts that enhance margins, helping to secure its future due to their focus on strategic growth areas.

Long-term Vision and Challenges Ahead

The outlook for 2026 remains cautiously optimistic, with expectations for organic sales to show slight improvement. SKF anticipates a steady market demand similar to levels experienced in Q4 2025. However, guidance suggests potential currency impacts could adversely affect profitability.

The transition towards separating the automotive business is set to continue, with SKF planning a public listing in late 2026. This separation aims to strengthen the competitive edge of both organizations involved—allowing SKF to extend its market reach while focusing on high-growth areas within the automotive sector.

Conclusion

The results from Q4 2025 reflect SKF's strategic initiatives to adapt and grow in challenging conditions. By focusing on long-term value creation through operational excellence and strategic partnerships, SKF is laying the foundation for sustained profitability. Moving forward, grasping opportunities in resilient market segments, alongside a strategic reorganization, will be critical in navigating the upcoming financial landscape. Investors and stakeholders are encouraged to stay tuned for more insights as the company progresses into 2026 and beyond.