SKF earnings rise to 2.845 billion kronor as industrial margins improve
Key Facts
Sweden's SKF reported adjusted operating profit from continuing operations of 2.845 billion Swedish kronor in the third quarter of 2026, according to Investing's coverage of the company's results. The comparable profit was 2.553 billion kronor in the same period of 2025. The earnings increase was accompanied by an improvement in the adjusted operating margin for these operations to 16.3%. The margin was 15.4% in the third quarter of the previous year, according to the same coverage. The margin improvement was supported by strong performance in specialized industrial solutions, with the automotive business presented as discontinued operations ahead of its separation from the group.
Sales from continuing operations increased 5.5% year on year in the third quarter, according to SKF's results presentation cited by Investing. Sales reached 17,467 million Swedish kronor, compared with 16,562 million kronor in the corresponding period of the previous year. These results cover the industrial businesses the group is retaining as arrangements for the automotive separation progress. The company said on its investor relations page that the automotive division would be presented as discontinued operations in the third-quarter report. The classification precedes the distribution of shares in SKF Vertevo to the group's shareholders and its separate listing on the Stockholm stock exchange.
The specialized industrial solutions division posted organic sales growth of 8.3% in the third quarter of 2026, according to the results presentation. Performance was particularly strong in magnetic solutions and aerospace, which were cited among the division's performance drivers. SKF is expanding production capacity for magnetic solutions to capitalize on demand from data centers, semiconductors and energy. Against the backdrop of its industrial expansion, EL7 previously covered a joint venture between the company and China's Leaderdrive in humanoid robotics. That cooperation extended to robotics, while the production expansion cited in the third-quarter results focuses on magnetic solutions and demand from the sectors mentioned.
On costs, SKF management said during the earnings call that price adjustments had largely offset tariff costs, according to the transcript published by Investing. Management described its achievement as "largely offsetting tariff costs through price adjustments." The company expects to continue using price adjustments to offset those costs. Meanwhile, management is monitoring cost pressures from materials, energy, logistics and wages across its operations. The company's efficiency measures are continuing as it addresses these pressures, management said in its discussion of the results and operating conditions.
SKF's profit margins had previously improved in the second quarter despite a slowdown in the automotive sector, according to earlier coverage published by EL7. In the reaction to that period's results, the company's shares fell 5.1% on 17 July 2026, according to Investing. The share price reached 249.5 Swedish kronor in the trading covered by that report. Cautious demand expectations and geopolitical uncertainty overshadowed the improvement in profitability at the time. That move followed the second-quarter results, ahead of the current third-quarter results showing higher industrial earnings and an improved adjusted operating margin for continuing operations.
For the fourth quarter of 2026, management expects a modest year-on-year improvement in sales in a market environment similar to the previous quarter. It said during the earnings call: "We expect sales to improve somewhat in the fourth quarter year on year." It said volatility persisted and some European distributors remained reluctant to increase inventories. Management also estimates that currencies will have a positive impact of about 150 million Swedish kronor on operating profit from continuing operations in the next quarter, compared with the same period of the previous year. The estimated currency impact is based on exchange rates prevailing at the end of September, according to the call transcript.
In the next steps of the group's reorganization, SKF expects to list Vertevo on Nasdaq Stockholm on 1 December 2026, according to the company's page on the automotive separation. It plans to carry out the listing through a distribution of shares to SKF shareholders under the Lex Asea mechanism. On operating efficiency, the group is targeting an annual savings run rate of 2,000 million Swedish kronor by mid-2027. The company brought forward the date for achieving this target by 6 months from the original schedule, according to the results presentation cited by Investing. The expected listing date for the automotive business therefore precedes the target date for reaching the annual savings run rate in mid-2027.