Rickard Gustafson, SKF president and CEO, is pictured.

SKF is reporting a sixth consecutive quarter of negative organic growth as the company continues to manage what Rickard Gustafson, SKF president and CEO, says is a volatile environment.

SKF operates the SKF Aeroengine North America plant in Falconer after acquiring MRC Bearings in 1986.

The company reported organic sales growth of −3.1% (compared with −1.9% in 2023) driven by lower market demand mainly in Europe and China, while the Americas, India and Southeast Asia are showing positive sales development. SKF is reporting adjusted operating profit of SEK 2,735 million, down from SEK 2,929 million in 2023. Adjusted operating margins decreased from 12% in 2023 to 11.1% in 2024 while net cash flow from operating activities decreased from SEK 3,937,000 in 2023 to SEK 3,283 million in 2024.

“On a rolling 12-month basis, the margin is holding up pretty well also compared to 2023, as you can see on this chart,” Gustafson said in a recent conference call with investor analysts. “And the drivers behind this are the same that we had talked about throughout the year. We are executing on the strategic intent that we have laid out. We are driving a lot of price/mix. We are driving our portfolio management activities. And we are continuing our regionalization efforts to ensure that we establish strong and robust value chains in those regions where we operate.”

Operating profit for the fourth quarter was SEK 2,331 million, up from fourth quarter operating profits in 2023 of SEK 1,925 million. The adjusted operating profit for the fourth quarter was SEK 2,735 million, down from SEK 2,929 million in the fourth quarter of 2023. The adjusted operating profit was positively impacted by price and mix while drags on adjusted operating profits include currency effects, lower sales and manufacturing volumes which also resulted in higher costs. In addition, product mix resulted in higher material costs, logistics increased and energy costs were flat. Significant salary inflation was offset by reduced headcount.

SKF’s fourth quarter sales were significantly higher in the Americas than elsewhere in the world. By industry, sales to industrial distribution, heavy industries, aerospace, an area that would include the Falconer plant; railway, off-highway and marine were significantly higher. Decreases were seen in high-speed machinery and electrical drives, renewable energy, agriculture, food and beverage, material handling, automation and traditional energy sales.

Full year results showed SKF’s Industrial division with an adjusted operating profit of SEK $10,821 million, a decrease from SEK 11,280 million in 2023. The adjusted operating profit was positively impacted by price and mix as well as lower costs for material, energy, salaries and wages and logistics. The adjusted operating profit was negatively impacted by lower sales and manufacturing volumes and currency effects.

“Looking into different industrial segments, we see strong growth in aerospace in this segment, while we see very low activity levels in automotive in primarily EMEA,” Gustafson said. “So this gives you a little bit of a flavor of how the growth have developed and activity levels in the different regions where we operate.”

SKF officials expect the first quarter to continue a decline in overall organic sales while the company is not offering a full year organic sales outlook.

“I think the story continues,” Gustafson said. “We are still navigating in a volatile world with negative organic growth rates, but our activities to offset that and maintain our margin resilience continues.”