Industrial bellwether SKF sees stuttering world economic recovery
Reuters in Stockholm
Industrial bellwether SKF, the world's biggest bearings maker, painted a picture of a stuttering economic recovery in the coming months after cost cuts helped it to a smaller-than-expected fall in second-quarter earnings.
Manufacturers have faced headwinds over the past year from a lacklustre global economy stunted by a lingering recession in large swathes of Europe, a tepid US recovery and slower growth in China.
Against that backdrop, companies have pinned their hopes on an upturn taking hold during the second half of the year.
SKF, whose bearings make their way into products ranging from dishwashers to wind turbines and give it a broad industrial footprint, said that it expected demand to be unchanged in the third quarter from the second.
"We do not see any major improvement in demand in our industrial markets around the world," long-time SKF chief executive Tom Johnstone said.
SKF, a rival of America's Timken and Germany's Schaeffler, said second-quarter operating profit fell to 1.84 billion Swedish kronas (HK$2.1 billion) from 2.05 billion a year ago, beating analysts' forecasts.
The Gothenburg-based group suffered its sixth consecutive quarter of falling sales volumes and forecast flat demand for the vast majority of its customer base, including carmakers and general industry. However, it saw an upturn for the truck industry and a continued improvement in the aerospace and energy sectors.
The easing of growth in China and more uncertain prospects in other emerging markets have taken centre stage in recent months and only last week led the International Monetary Fund to once again cut its global growth outlook.
SKF, which early this year unveiled plans to cut 2,500 jobs because of weak demand, said that among major regions only Latin America was expected to show firmer demand, while Europe, Asia and North America were all seen as flat.
Johnstone said he expected efficiency improvements would result in savings of about 150 million kronas in the second half of the year.
Production would stay at similar levels to the second quarter, the company said, after it slashed inventories late last year.
Johnstone said inventories could fall slightly in the third quarter.