MRO Magazine

N.A. market a challenge for SKF in several sectors

Gteborg, Sweden -- Aug. 27, 2001 -- The SKF Group has reported that profit before taxes is up 14.3 per cent for th...


August 27, 2001
By MRO Magazine

Gteborg, Sweden — Aug. 27, 2001 — The SKF Group has reported that profit before taxes is up 14.3 per cent for the first half of 2001. Market demand in Europe peaked in the second quarter, the company said, while the North American market declined further and total demand in the Asian region improved slightly.

Over the next quarters, the overall market demand is expected to decrease further in terms of volume for the SKF Group. As a result, the company reports that considerably lower production (compared with the third quarter of 2000) is planned for the third quarter this year.

The number of employees was reduced during the first six months by 1,154 and will continue to be reduced.

SKF and EDS signed a contract during the quarter regarding the transfer of SKF’s internal IT Services with some 700 employees to EDS. The agreement was a major step taken in line with the strategy to outsource activities that SKF does not have to handle itself. This strategy aims to reduce the group’s costs, increase flexibility and reduce capital employed.


SKF has signed an agreement with a syndicate of nine banks to obtain a five-year and US$300 million revolving credit facility. The purpose is to replace existing credit facilities in order to get longer maturity.

A summary of the activities in some SKF divisions follows:

The Industrial Division’s external sales for the first half-year rose 17.0 per cent. The volume of sales in Europe was the same in the second quarter this year as in the corresponding period last year, but was substantially lower in North America.

SKF’s sales volume to the windmill industry continues to grow strongly. SKF is today the leading supplier in Europe for spherical roller bearings and housings for the main shaft of the mills as well as for bearings for the gearboxes. There is also a very clear trend towards using spherical roller bearings of the unique Explorer design, launched by SKF two years ago.

SKF acquired the Italian company Gamfior S.p.A during the quarter. Gamfior, which has 180 employees, is a leading European supplier of spindles and ball screws for the machine tool industry. With this acquisition SKF became one of the world’s leading suppliers of machine tool spindles.

In the Automotive Division, the volume of sales to the car and light truck segment in the second quarter, both in Europe and North America, was slightly higher than in the same period a year ago. SKF’s volume of sales in Europe is better than those of the overall market thanks to new businesses and the customer mix. The volume of sales to the truck segment in Europe was lower in the second quarter and was substantially lower in North America.

SKF continues to strengthen its position as a supplier of bearings and seals to the automotive industry. The new Jaguar X-type is equipped with custom-engineered bearings and seals from the SKF Group.

In the Electrical Division, new businesses are helping to counteract a downturn.

SKF signed a joint venture contract with Shanghai Bearing (Group) Co. Ltd, (SBC), part of the Shanghai Electrical Group Corporation, to establish a company to manufacture and sell high-performance deep groove ball bearings. SKF has 60 per cent in the new joint venture and SBC 40 per cent. The market segment to be served is mainly household appliances, electric motors, automotive electrical components, power tools and two-wheelers. This is a fast-growing market in China and production is planned to start in 12 months’ time.

SKF received two customer awards during the quarter; the “Bearings Supplier of the Year Award” from Siemens Automotive AG and the “The Supplier Award” from the Bosch Group.

During the quarter, SKF acquired Niden Teknik AB (NTAB), a leading mechanical condition-monitoring company in Sweden. Niden develops and markets condition-monitoring hardware and software for customer-specific applications in hydropower, steam and gas turbines, and for marine and train applications.

The Seals Division, which is highly dependent on the North American automotive business, saw its volume of sales in North America to be considerably lower in the second quarter compared with the same period last year. The number of employees was reduced by 378 over the first six first months of 2001.

The growing use of high-pressure diesel pumps has increased the demand for the Steel Division’s specially developed steel bars.