SKF Says More Cost Cuts Needed As Q3 Profit Slumps

The company said while it has reached agreements with the 1,500 "white-collar staff" being cut, further cost reductions will continue across the group.

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Gothenburg, Sweden-based bearings manufacturer SKF recently reported its 2015 third quarter financial earnings, giving a gloomy outlook despite a sales increase.

The company had sales of $2.2 billion in the period, a 3.3 percent increase over Q3 2014. Profit, meanwhile, decreased 12 percent to $218.8 million.

"The expected weakening of market demand that we flagged for in July materialized and gathered pace during the quarter, especially in Asia and North America," said Alrik Danielson, SKF's president and CEO. "As a result, sales in local currency declined by 5 percent. Production rates were reduced during the quarter and inventories were kept under control. Our financial performance was impacted by the lower sales volumes."

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Danielson said SKF has reached agreements with almost all of the 1,500 white-collar staff that is being cut as part of the company's cost-reduction program. Those cuts, however, aren't enough.

"Given current market conditions, these actions alone are, however, not sufficient and we will continue our cost reduction activities across the Group," Danielson said.

"Entering the fourth quarter, we expect the macro-economic uncertainty to continue and as a consequence we expect demand in the fourth quarter to be slightly lower sequentially and lower year-over-year," he continued. "We are adjusting our production levels accordingly."

For the first nine months of 2015, sales of $7 billion were up 10.1 percent over 2014, while profit decreased 4.3 percent to $729.4 million.

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