Swedish bearings maker SKF (SKFb.ST) forecast stable demand for its main industrial business in the third quarter and cited unexpected signs of improvement in the battered Chinese car market, spurring a 4% rise in shares.
The world¡¯s biggest maker of industrial bearings reported second quarter profit fell 13% due to restructuring and impairment costs, though excluding them earnings beat forecasts, aided by cost cuts.
SKF - which derives around 70% of sales from its industrial business and the rest from autos - has felt the impact of a slump in car markets globally, especially in China, and signs of slowing demand for industrial goods.
The Gothenburg-based company, which rivals Germany¡¯s Schaeffler (SHA_p.DE), said overall organic sales dipped 2% in the second quarter, its first quarterly decline in almost three years, hit by a 7% fall in its automotive business alone.
Still, the company surprised investors by pointing to signs of improvement in the Chinese car market, noting the company¡¯s auto business in China had been flat in June.
¡°Some might be surprised that we see some flattening out in the China automotive market, and actually may be seeing some light in the tunnel,¡± SKF CEO Alrik Danielson told a conference call. ¡°But if you look at China, and understand that the downturn there has been going on for quite a while longer than in other markets, then maybe it is not that strange actually.¡±
Chinese car sales dropped 12% in the first six months on 2019 according to industry organization CAAM.
