By Marie Mannes and Anna Ringstrom
STOCKHOLM -SKF, the world's biggest maker of industrial bearings, posted on Tuesday a bigger drop than expected in third-quarter core earnings despite strong sales growth, as soaring cost inflation in Europe squeezed margins.
SKF has, like other global manufacturers, suffered from cost inflation, the energy crisis as well as supply chain issues in the past few quarters. It has been cutting spending and raising prices to ease the hit.
Operating profit adjusted for items affecting comparability at the Swedish group fell to 2.13 billion crowns ($191.1 million) from a year-earlier 2.67 billion. The adjusted profit margin narrowed to 8.5% from 13.3%.
The company, whose rivals include Germany's Schaeffler, said costs were up 2.9 billion crowns from a year earlier.
"Our performance in EMEA was hampered by unprecedented cost inflation," Chief Executive Rickard Gustafson said in a statement.
"We expect to see continued volatility and geopolitical uncertainty in the markets and as a result, we expect continued high levels of cost inflation, supply chain bottlenecks and volatile demand."
Handelsbanken Capital Markets analyst Hampus Engellau said adjusted operating profit was 15% lower than expected due to the higher energy and other costs.
The Gothenburg-based company forecast around 10% organic sales growth in the fourth quarter, after 11% growth in the third, and predicted full-year growth in the upper part of its previously guided range of about 4% to 8%.
Shares in the company were down 5% in early trade, taking a year-to-date fall to 25%.
($1=11.1467 Swedish crowns)
