SKF Q4 2025: Laying the foundation for long-term value creation

"In Q4 as well as for the full year 2025, I'm pleased to conclude a solid performance with an improved adjusted operating margin year-over-year, despite challenging markets. By executing on our strategy, we're laying the foundation for long-term value creation."

Continued resilient and improved margin

Throughout 2025, we navigated persistently soft market conditions and geopolitical uncertainty, including tariff-related impacts. At the same time, we remained on track with our Automotive separation process. For the full year, we delivered a resilient adjusted operating margin of 12.7%. Industrial business' margin improved, while Automotive's margin was relatively flat, year over-year, despite a weak market and adverse currency effects. Cash flow from operating activities was BSEK 8.4.

Looking at Q4, the soft market conditions remained with flat organic sales, year-over-year (y-o-y). The weaker growth compared to what we reported in Q3 y-o-y is mainly due to favorable timing of deliveries before year-end 2024 in our Industrial business in Americas and India. In addition, price/mix was solid. Organic sales in our Industrial business increased, where Aerospace and Magnetic bearings in Europe and tariff-related price increases in Americas contributed. In Asia, a solid organic growth in China was partly driven by a strong finish in Industrial distribution towards year-end, while the volume driven growth in India continued. 

Organic sales in our Automotive business continued to decrease with sequentially even more challenging market conditions, particularly in Europe and Americas. Negative growth in China was due to a strong Q4 last year, while electric vehicles continued to perform well. In a tough market environment, it's encouraging that we continue to win several strategically important margin accretive contracts across our targeted segments which bode well for the future.

The improved Group margin y-o-y was mainly driven by a strong positive cost development where solid execution of our rightsizing activities contributed with approximately MSEK 190. The negative synergies related to the Automotive separation are expected to kick in from the beginning of 2026. In Q1, these negative synergies are assessed to be somewhat larger than the savings from the rightsizing activities, compared to a positive net contribution in Q4. In addition, the now finalized World Class manufacturing program impacted earnings positively. Lower material costs continued to contribute, partly from a different product mix within Automotive compared to last year. Tariff costs were once again largely compensated for. At current levels, our ambition is to do so also in Q1 although the geopolitical turmoil inevitably amplifies overall uncertainty. The margin was furthermore significantly affected by currency headwinds.

Items affecting comparability (IAC) were, as previously communicated, sequentially higher and amounted to BSEK 1 with roughly half related to the Automotive separation and the other half to our footprint optimization activities with the closure of Argentina manufacturing operations as the main one.

Cash flow from operations at BSEK 2.7 was solid, considering higher IAC, driven by a positive Net working capital development.

Creating two fit for purpose businesses

At our Capital Markets Day in November, we presented the strategic direction and new Industrial financial targets following the planned Automotive separation. As a focused, pure-play industrial company, we are well positioned to unlock additional long-term value through a more competitive offering and an enhanced ability to outgrow the market. The continued transformation of our manufacturing and supply chain footprint, resulting in increased investments as well as charges (IAC), are necessary for delivering on our long-term adjusted operating margin target of above 19% over a business cycle.

The strategy for the Automotive business focuses on accelerating growth in high-potential markets, supported by a lean, automotive-adapted value chain. Its long-term objective is to grow ahead of the automotive market while improving operating margin, where the business wins mentioned before build a solid platform for our future Automotive business.

The Automotive separation continues at high pace according to plan. We have identified an opportunity to faster reduce the contract manufacturing to Automotive, although from the same level at point of separation as previously communicated. This will strengthen the competitiveness of both businesses and decrease future investment needs for Automotive. As this will require an additional transfer of production lines to Automotive, we therefore plan to list the Automotive business at NASDAQ Stockholm during Q4 2026. This additional transfer will be managed within the already announced cost and capital expenditure for the Automotive separation. Listing is subject to the Board of Directors proposing a listing and shareholders' approval.

Outlook

We expect market demand in Q1 to remain at similar levels as in Q4. Consequently, we expect organic sales to strengthen somewhat in Q1, year-over-year supported by more favourable comparables.

In recognition of the Group's solid financial position, the Board has decided to propose to the Annual General Meeting a dividend of SEK 7.75 per share to be paid in two instalments."

Outlook and guidance

Outlook

• Q1 2026: We expect market demand to remain at similar levels as in Q4. Consequently, we expect organic sales to strengthen somewhat year-over-year, supported by more favourable comparables.

Guidance Q1 2026

• Currency impact on the operating profit: around MSEK –800, year-over-year, based on exchange rates as per 31 December 2025.

Guidance FY 2026

• Tax level excluding effects related to divested businesses and separation of the Automotive business: around 28%.
• Additions to property, plant and equipment: around BSEK 5.
• Items affecting comparability related to the Automotive separation and footprint optimization: BSEK –2.5 to –3. This is within the frame comunicated at CMD 2025.

A webcast will be held on 30 January 2026 at 09:00 (CET):
Sweden: +46 (0)8 5051 0031
UK/International: +44 (0)207 107 0613
https://www.skf.com/group/investors

Aktiebolaget SKF
(publ)

The financial information in this press release contains inside information that AB SKF is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out below on 30 January 2026 at 07.30 CET.

For further information, please contact:
Press Relations: Carl Bjernstam, +46 31-337 2517; +46 722 201 893; carl.bjernstam@skf.com 
Investor Relations: Sophie Arnius, +46 31-337 8072; +46 705 908072; sophie.arnius@skf.com 

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