SKF close to expectations

SKF aka. Svenska Kullagerfabriken AB(Swedish ball bearing factory OMX: SKF B)first quarter 2012 revenues approached 17 billion SEK, which was a little higher than last year. Operating profit of 2.14 billion weakened almost 15% as margins came down from 15% to 12.6%. The company was nonetheless satisfied with the quarter which was in line with their expectations. Net profit of 1.34 billion meant an EPS of 2.84 SEK.

The performance in different geographies was uneven. While North America and Latin America showed double digit sales growth, sales in Europe were down a notch and in slowed down over 8% in Asia. The company says that situation started to mend somewhat towards the end of the period. The firm that supplies products such as bearings and seals has been working to reduce inventories across the board.

During the quarter an agreement to acquire West Nyack, NY, USA headquartered General Bearings Corporation for 125 million U.S. Dollars ( price per sales ratio of about 1,25). The company markets brands called The General and Hyatt. It has about employees 1750, almost all of whom work on its four factories (1 ball bearing, two taper roller bearing and 1 precision roller factory) in China. This transaction is expected to be finalized on Q2.

SKF expects slightly higher demand in all business areas on Q2 2012 vs. Q2 2011 or vs. Q1 2012. Annual General Meeting will be held on Wednesday so the share will be trading ex-dividend on Thursday 26.4.2012. The dividend proposal is 5.50 SEK per share (about 3.2% yield on Friday close). The share ended the week almost 5% higher.