Published by Global Banking and Finance Review
Posted on April 25, 2025
By Greta Rosen Fondahn
(Reuters) -Swedish industrial bearings maker SKF has passed on the cost of tariffs to customers, it said on Friday, but forecast like-for-like sales to weaken in the second quarter as global trade uncertainties threaten already muted demand.
SKF, which makes bearings for products ranging from machine tools to wind turbines, said continued weak demand in the first quarter had been partially offset by cost cuts and price setting among other measures as its earnings beat market expectations.
Prevailing market uncertainty could however influence demand ahead, the company said in a statement.
SKF, which has experienced a long slump in demand amid a manufacturing slowdown, had seen some signs of the market beginning to bottom out in the first quarter, but customers had then taken on a "sit-and-wait approach" after U.S. President Donald Trump's tariff announcements, CEO Rickard Gustafson told analysts in a call.
The group, which competes with the likes of Germany's Schaeffler, said it had largely compensated for increased tariff costs through price adjustments and that it expected to continue to do so in the second quarter at current tariff levels.
"It's not an easy discussion... but everyone understands why. I am convinced our customers do exactly the same to their customers," Gustafson told Reuters on how price adjustments had been received.
As global companies grapple with the potential impact of tariffs, an escalating trade war has fuelled expectations of a global economic downturn.
SKF said the indirect impact of tariffs on the economy was the main risk ahead.
Adjusted operating profit fell to 3.23 billion Swedish crowns ($335.54 million) from 3.30 billion crowns a year earlier but beat a mean forecast of 2.94 billion crowns from analysts polled by LSEG.
Its operating margin, however, rose to 13.5% from 13.4% last year.
"The outlook for Q2 is a touch below consensus, but given existing level of margins in a soft market, there is probably not much downside on the underlying margins from here," RBC analysts said in a note.
Shares in the company were broadly flat at 0900 GMT.
($1 = 9.6264 Swedish crowns)
(Reporting by Greta Rosen FondahnEditing by Kim Coghill, Muralikumar Anantharaman, David Goodman, William Maclean)
