--- title: "SKF AB Class B Earnings Call Highlights Margin Gains" type: "News" locale: "en" url: "https://longbridge.com/en/news/293086006.md" description: "SKF AB reported Q2 2026 earnings with a cautiously upbeat tone. Group organic growth reached 1.4%, driven by Asia and Specialized Industrial Solutions (SIS), which grew over 8%. Adjusted operating margin improved to 13.9% due to pricing and cost actions. Automotive sales declined 1.4% but margins rose to 5.7%. The company completed its automotive separation, strengthened liquidity to SEK 12.5 billion, and announced a new venture in industrial humanoids." datetime: "2026-07-18T00:09:42.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/293086006.md) - [en](https://longbridge.com/en/news/293086006.md) - [zh-HK](https://longbridge.com/zh-HK/news/293086006.md) generator: "portal-rs" --- # SKF AB Class B Earnings Call Highlights Margin Gains SKF AB Class B ((SKFRY)) has held its Q2 earnings call. Read on for the main highlights of the call. ### TipRanks Welcomes a New ETF – NYSE:RANK - TipRanks has entered a new arena in the investing world, powering the index of an ETF based on its unique data now trading under the ticker RANK on the NYSE. - RANK tracks the performance of the TipRanks US Momentum Analysts Index, a rules-based index of 50 large U.S. companies. SKF AB Class B’s latest earnings call struck a cautiously upbeat tone, with management emphasizing margin gains, strong execution in Specialized Industrial Solutions and solid liquidity despite muted group growth and automotive softness. One‑offs tied to the automotive separation and U.S. footprint restructuring clouded headline results, but underlying operations and strategic progress appeared firmly on track. ## Steady Organic Growth Led by Asia and SIS Group organic growth reached 1.4% in Q2 2026, driven mainly by strong demand in Asia and the Specialized Industrial Solutions segment. While overall expansion was modest, management highlighted that mix improvements and SIS outperformance helped offset weaker volumes in other regions and businesses. ## Margins and Profitability Move Higher Adjusted operating margin improved to 13.9%, up from 13.3% a year earlier, as pricing, mix and cost actions filtered through. Adjusted gross margin climbed 1.1 percentage points to 32.7%, underscoring better underlying profitability even as the company digested inflation and transformation costs. ## Specialized Industrial Solutions Delivers Standout Performance Specialized Industrial Solutions grew more than 8% year on year, far outpacing the group and underscoring SKF’s pivot toward higher‑value applications. The segment’s adjusted operating margin jumped from just above 10% to over 15%, powered by aftermarket strength, aerospace and magnetics growth and robust demand for automated lubrication systems. ## Bearing Solutions Remains the Profit Engine Bearing Solutions continued to anchor earnings, representing 55% of group sales but roughly 76% of adjusted operating profit. Organic growth was broadly flat at 0.2%, yet the segment still delivered an operating margin above 19%, highlighting its resilience and pricing power in core bearing applications. ## Automotive Margins Improve Despite Revenue Decline Automotive organic sales slipped 1.4% in Q2, reflecting weak demand in EMEA for both light and commercial vehicles. Even so, adjusted operating margin in Automotive rose to 5.7%, supported by manufacturing efficiencies, disciplined procurement and early benefits from the structural separation of the business. ## Rightsizing Program Outpaces Separation Headwinds The rightsizing program generated about SEK 350 million of realized savings in the quarter, surpassing the negative synergies linked to the automotive separation. Together with SEK 300 million of savings in Q1, these actions are tracking well toward the SEK 2 billion target and underpin the group’s improving margin profile. ## Liquidity Strengthens and Leverage Remains Low SKF reported liquidity of SEK 12.5 billion, up sharply from SEK 8.4 billion in the prior quarter, giving ample financial flexibility. Net debt excluding pensions stood at SEK 7.3 billion and net debt to adjusted EBITDA at 0.5 times, while adjusted return on capital employed improved to 14.5%. ## Solid EBITDA and Cash Generation Before Working Capital EBITDA came in at SEK 3.5 billion for the quarter, supporting robust operating performance. Cash flow before changes in working capital reached SEK 3.2 billion, ahead of last year’s SEK 2.9 billion, although subsequent working capital build muted reported free cash flow. ## Strategic Moves: Automotive Spin-Off and Humanoids Push Management reported that the structural separation of Automotive is complete and remains on schedule for a stock market listing by Q4 2026. SKF also unveiled a new majority‑owned venture with Leaderdrive targeting industrial humanoid applications, aiming for around 80% bearing coverage and first operations by year‑end. ## CapEx Discipline and Long-Term Optimization Planned full‑year additions to property, plant and equipment were cut from SEK 5 billion to SEK 4 billion, signaling tighter capital discipline. Over the medium term, SKF still targets CapEx at roughly 5% of industrial sales, easing gradually toward around 3.5% of sales as optimization efforts mature. ## EPS Benefits from Fewer One-Offs and Better Operations Reported earnings per share reached SEK 2.8, while adjusted EPS rose to SEK 5.0, both higher than a year earlier. The improvement stemmed from stronger underlying operations and fewer non‑recurring items, even though restructuring and separation charges remained sizable in the quarter. ## Automotive Weakness and Regional Soft Spots Beyond the headline decline in Automotive sales, management pointed to particularly weak EMEA demand in both light and commercial vehicles. This softness means Automotive continues to drag on overall group growth, partially offsetting healthier trends in Asia and selected industrial niches. ## Support Production Inefficiencies Lift Costs and Working Capital Support production tied to the separation and channel transfers lifted production volumes but hurt productivity and increased unit costs. Working capital rose by about SEK 1.1 billion, mainly from safety stocks and higher receivables related to the automotive carve‑out, weighing on short‑term cash conversion. ## Heavy One-Off Charges and Restructuring Costs One‑off items totaled SEK 1.0 billion in the quarter, split roughly between automotive separation expenses and consolidation of the Americas footprint. This figure included SEK 345 million of impairments, and management reiterated full‑year restructuring and separation charges are still projected at SEK 2.5–3.0 billion. ## Tariff Refunds Add Noise and Short-Term Cash Drag Most of the U.S. tariff refunds were booked in Q2, resulting in revenue and pricing adjustments plus a slight positive impact on profit. However, cash payments back to customers have yet to be made and are expected to generate a temporary cash outflow into Q3, creating a near‑term drag on liquidity. ## Currency Headwinds Trim Sales and Profit Foreign exchange movements shaved about 0.8 percentage points off reported sales and cut profit by roughly 0.3 percentage points versus last year. The impact was driven mainly by a weaker U.S. dollar against the Swedish krona, partially offsetting the operational margin gains. ## EMEA Weakness Highlights Geographic Divergence EMEA delivered flat to slightly negative organic growth, reflecting cautious distributor behavior and geopolitical uncertainty around the Middle East. Management did note some early signs of recovery among OEM customers, but these green shoots were not yet strong enough to offset broader regional softness. ## Inflation and Transformation Weigh on Cost Base Costs remained pressured by weaker productivity in support production, wage inflation, tariffs and investments in industrial transformation initiatives. Material cost savings, particularly in the Automotive business, helped cushion these headwinds but did not fully neutralize them in the quarter. ## Net Debt and Leverage Ratios Edge Higher Net debt excluding pensions increased by SEK 1.0 billion from the prior quarter to SEK 7.3 billion, partly reflecting the working capital build. Net debt to equity, also excluding pensions, rose to 12.3% from 10.2% at year‑end, though overall leverage still sits at conservative levels. ## Higher Expected Tax Rate Weighs on Bottom Line Management raised the full‑year tax rate guidance to around 29%, up from 28%, citing a revised assessment of evaluation reserves linked to the Americas footprint consolidation. The change implies a higher tax expense going forward, modestly tempering the net earnings uplift from operational improvements. ## Forward Guidance Points to Slightly Stronger H2 Looking ahead, management expects organic sales to “strengthen somewhat” in Q3, while acknowledging lingering geopolitical risks to demand. They foresee a currency tailwind of about SEK 100 million to operating profit in Q3, confirm lower CapEx of SEK 4 billion for the year, reaffirm projected one‑off charges of SEK 2.5–3.0 billion and maintain confidence that rightsizing savings will more than offset separation headwinds as the automotive listing approaches. SKF’s earnings call portrayed a business navigating transition with improving profitability and a solid balance sheet, even as cyclical and self‑inflicted headwinds weigh on growth and cash flow. For investors, the key messages were continued margin traction, standout performance in Specialized Industrial Solutions and clear progress on the automotive spin‑off, setting the stage for a potentially cleaner and more focused SKF from 2026 onwards. ### Related Stocks - [SKFRY.US](https://longbridge.com/en/quote/SKFRY.US.md) - [RANK.US](https://longbridge.com/en/quote/RANK.US.md) ## Related News & Research - [SKF's Board takes next step in the listing of SKF Vertevo and convenes Extraordinary General Meeting](https://longbridge.com/en/news/298221268.md) - [SKF partners with fiber-optic sensing specialist Sentea to develop SKF Core platform for Insight bearings](https://longbridge.com/en/news/298275528.md) - [SKF shareholders vote on spin-off of Automotive unit SKF Vertevo via Lex Asea distribution](https://longbridge.com/en/news/298215859.md) - [SKF Vertevo appoints Håkan Buskhe as chair, names eight-member board](https://longbridge.com/en/news/298215802.md) - [Notice Convening an Extraordinary General Meeting of AB SKF](https://longbridge.com/en/news/298219251.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**