Germany's Schaeffler has released its financial performance report for the first nine months of 2023.
During this reporting period, the Schaeffler Group's operating income reached 12,270 million euros (11,790 million euros in the same period last year).
Compared with the same period last year, operating income increased at a constant currency rate of 6.6%, mainly due to increased production in various business units.
The revenue trend was further supported by the favorable impact on sales prices across the three divisions. Revenue in the third quarter of 2023 increased by 0.5% at constant currencies to 4,062 million euros.
|| Automotive Technology Division:
- Constant currency revenue growth for the nine months was 5.4%, primarily due to market-driven growth in production in the Engine & Driveline, Bearings and Chassis Systems business units.
- The Europe region reported the highest revenue growth at constant currency growth of 11.3%. Asia Pacific revenue grew 8.7% in constant currency, while Americas and Greater China grew 3.7% and 0.2% in constant currency, respectively.
- The operating profit of the Automotive Technology Division in the first nine months was 349 million euros, an increase from 214 million euros in the same period last year. The operating profit margin was 4.8%, higher than 3.0% in the same period last year.
|| Industrial Division:
- The Industrial Division achieved total revenue of 3,274 million euros during the reporting period, an increase of 5.7% in constant currency terms.
- The Americas region led with constant currency growth of 11.5%, while Greater China revenue declined 1.9% year over year in constant currency.
- EBIT in the first nine months was 326 million euros, with an EBIT margin of 9.9%, down from 12.4% in the same period last year.
SKF releases financial results for the first three quarters
The report shows that in the third quarter of 2023, SKF's net sales increased to 25.8 billion Swedish kronor, and organic growth was relatively stable.
While volume growth was negative across all regions, the company managed to offset this negative impact by maintaining strong pricing and portfolio management.
Despite negative organic growth, SKF's Industrial business remained resilient, achieving an adjusted operating margin of 14% (11%).
At the same time, ongoing portfolio repositioning within the automotive business is underway, with adjusted operating margin improving to 6% compared with 3% in the same period last year.
Although global geopolitical tensions had an impact on the company's Ukrainian factory, SKF acted quickly to mitigate any negative impact on customers.
Following the suspension of production, the company quickly initiated alternative supply chain options to move production from Lutsk to other plants. This action demonstrates SKF's commitment to customer service and its ability to respond to global challenges.
The company's investments in technology and innovation will contribute to overall profitability and support the development of several high-growth sectors such as railways, agriculture and machine tools.
In addition, the company will further invest in sustainability and regionalize its manufacturing footprint. For example, the company's new factory investment in Monterrey, Mexico, has been completed, which will provide the company with an even stronger position for its customers in North America.
In the aerospace business, SKF has decided to conduct a strategic review of its business. The review revealed that the aerospace industry is a high-growth, high-tech industry in which SKF has a strong and unique position. To realize its full potential, the company plans to place greater emphasis on its core business areas - aerospace engine bearings and aerospace structures.
Looking ahead, SKF expects organic sales to decline in the low single digits through the fourth quarter of 2023. For the full year, organic sales growth is expected to be mid- to low-single digits.
Commenting on the company's results, Rickard Gustafson, SKF President and CEO, said: "During the quarter, we continued to see slower demand as economic confidence weakened and customers reduced inventories. However, our profitability demonstrated strong resilience , cash flow remains strong as we remain focused on controlling costs, optimizing our portfolio, and reducing working capital while continuing to invest in innovation and further improve our manufacturing footprint."
Timken releases financial results for the first three quarters
Timken Company recently announced sales of US$1.14 billion in the third quarter of 2023, an increase of 0.6% from the same period a year ago. Growth was driven by acquisitions (net of divestitures), higher prices and favorable foreign currency translation, partially offset by lower sales volumes.
Timken's net income in the third quarter was $87.9 million, or $1.23 per diluted share. This compares to net income of $87 million and earnings per diluted share of $1.18 in the same period a year ago. Net income represented 8.0% of sales in both periods.
Operating cash flow for the quarter was $194.3 million and free cash flow was $150.7 million. During the quarter, Timken repurchased 775,000 shares of the company, accounting for approximately 1% of outstanding shares. Overall, the company returned $87.3 million in cash to shareholders through dividends and stock repurchases in the third quarter.
The company completed the acquisitions of Des-Case and Rosa Sistemi during the quarter, both of which expanded the company's industrial motion product portfolio. Additionally, Timken announced agreements to acquire iMECH and TWB. Overall, the net impact of these four transactions will add nearly $50 million to the company's gross profit and will improve the company's profit margins.
"While the business environment remains challenging across several industries and geographies, Timken delivered solid results during the quarter," said Timken President and Chief Executive Officer Richard G. Kyle. "We executed well across the enterprise, and we expanded adjusted EBITDA margin and generated strong free cash flow across both business segments. We also continue to invest to strengthen our business and create sustained shareholder value," while maintaining a strong balance sheet."
Timken updated its outlook for 2023, expecting full-year diluted earnings per share to be in the range of $5.60 to $5.70, and adjusted diluted earnings per share to be in the range of $6.85 to $6.95. The company now projects 2023 revenue overall to be 5 to 5.5% higher than 2022.
"We have updated our outlook to reflect softer end-market demand conditions and our expectations for continued channel inventory reductions in the fourth quarter," Kyle said.
"We are taking steps to align costs with expected sales volume levels and finish the year strong. We remain on track to record all-time high sales and profits in 2023, which will be several consecutive years of margin improvement. We remain We are committed to advancing our long-term strategy to build Timken into a diversified industrial leader and continue to grow the company's revenue and profits."
