Rickard Gustafson, SKF chief executive officer, is pictured.

SKF is divesting part of its Aerospace division – but that divestment does not impact the company’s Falconer plant.

The divestment was discussed during a recent conference call between SKF officials and investor analysts. SKF sold its ring and seal operation in Hanover, Pa., to Carco PRP Group, through its US aerospace subsidiary, PCTI, for $220 million. But, aerospace remains a key part of the company’s future.

“But as you also can see on this chart, aerospace remains a key industry,” said Rickard Gustafson, SKF CEO. “And after distribution or industrial distribution, this is probably one of the largest industrial verticals that we have in our portfolio at the moment, representing some 9% of our business. And this is a strong and growing business that has a strong tailwind and pickup still after the COVID closedown a few years ago. So, clearly, a strong growth and exciting business that we now can use these proceeds to further invest into our strategic part of this business. So, we feel good about this thing. And, again, this is in line with what we said that we’re going to do.”

Niclas Rosenslew, outgoing SKF CFO and senior vice president, said the company had sales of SEK 23.7 billion in the third quarter, down from SEK 25.8 billion in the third quarter of 2023. Profits decreased slightly from SEK 3 billion in the third quarter of 2023 to SEK 2.8 billion in the third quarter of 2024. Cash flow in the quarter was strong, SEK 3.6 billion, a slight increase from last year’s SEK 3.4 billion. Operating

profit at similar levels compared to last year.

“If we then turn to outlook and guidance, what comes to our expectations on (the fourth quarter)?” Rosenslew asked. “We expect a mid-single-digit organic sales decline, very much as Rickard commented on here, relatively soft demand, which we see continuing also going into (the fourth quarter). And as a consequence, for the full year, we also expect then a mid-single-digit organic sales decline. Currency is expected to be negative also in (the fourth quarter).”

Restructuring has been a constant topic for SKF officials in recent years. The company has restructured its manufacturing footprint, sold part of its aerospace division and is working to separate its automotive and industrial divisions. The announced separation of the automotive segment follows SKF’s strategy to create a separate Automotive business. Gustafson said SKF’s automotive and industrial divisions are different enough that it makes sense to separate them and allow each to focus on its own growth.

Everything is being done with an eye toward SKF being a stronger company once the global economy begins to pick up steam. That isn’t expected to happen in the fourth quarter. Rosenslew and Gustafson said the company expects sales to decline in the fourth quarter and for 2024 as a whole.

“All of these things that we have talked about in the last couple of quarters, and they continue at high pace in the

organization, and that has enabled us to, once again, mitigate a rather soft demand environment and hold our

operating margin at a fairly stable level,” Gustafson said. “And we believe that as another proof point that we are transforming our company into a more competitive and profitable company long term that is really well positioned to benefit from when the demand turns back up again.”