* Sees slightly higher overall demand in Q2 vs Q1
* Expects stable demand in Europe, higher in US, Asia
* Q1 operating profit in line with forecast
* SKF shares up 5.2 pct, lifts Swedish engineering stocks
(Adds CEO, analyst comment, share price)
By Niklas Pollard and Johannes Hellstrom
STOCKHOLM, April 19 SKF, the world's
biggest bearings maker, struck an upbeat note for the industrial
sector on Thursday, forecasting rising demand from the United
States and Asia and a more stable Europe after in-line quarterly
The Swedish group, whose products are used in everything
from jets to dishwashers and which is one of the first major
manufacturers to open books on the first quarter, forecast
overall market demand would be slightly higher in the second
quarter versus the first.
"Again the main growth will be in the Americas, but we also
expect a continued improvement in Asia and a stable development
in Europe," Chief Executive Tom Johnstone said. "All three
business areas are expected to show sequential growth."
SKF said it expected demand to be relatively unchanged in
Europe, slightly higher in North America and higher in Asia and
Latin America in the second quarter compared to the first.
The upbeat view sent SKF shares up 5.2 percent by 0853 GMT
to lead a 0.9 percent gain in the Stoxx Europe 600 industrials
index and lifted Swedish peers such as Atlas Copco
and Sandvik about 4 percent.
Operating earnings at Gothenburg-based SKF fell to 2.14
billion crowns ($317 million) in the first quarter from a
year-ago 2.50 billion, roughly in line with a mean forecast of
2.17 billion seen in a Reuters poll of analysts.
The operating margin in the quarter fell to 12.6 percent
versus an expected 13.1 percent as the company scaled back
production to bring down inventories.
"The market should look past that in light of the fact that
volumes are as strong as they are in the first quarter while the
outlook is so positive sequentially from a stronger base in the
first quarter," Handelsbanken analyst Peder Frolen said.
EUROPE BOTTOMS OUT
SKF, traditionally a highly cyclical company, basked in
strong demand through the first half of last year and racked up
record sales and earnings for 2011 despite a slowdown as the
euro zone crisis took centre stage towards the year end.
While a global company, almost half of sales come from
Europe. The International Monetary Fund forecast this week the
euro zone would suffer a recession this year despite central
bank action to fight a credit crunch.
Demand in Northern and Eastern Europe was firm, markets in
countries such as Spain, Italy and France remained hard hit by
debt woes and related austerity but were now showing signs of
bottoming out, Johnstone said in a conference call.
"When I look at daily sales activity it is not dropping more
in these markets. It is holding fairly stable as we can see at
the moment," he said.
SKF, which competes with the likes of U.S. group Timken
and Germany's Shaeffler, said group sales in the first
quarter inched up to 16.9 billion crowns from a year-ago 16.7
billion crowns, beating the 16.6 billion seen by analysts.
Sales volumes, a better demand measure as its strips out
price, product mix and currency swings, dipped 0.8 percent,
better than the forecast 3.8 percent decline.
In contrast to surging revenues in North America, organic
sales in Asia declined 8 percent in local currencies in the
first quarter, not least due to a slowdown in China as
authorities sought to temper feverish growth in a soft landing.
"But we saw some improvement in our business as we went
through the quarter in Asia," Johnstone said and forecast a
recovery in sales to the renewable energy and railways sectors,
both important segments for the company in China.
(Editing by Mark Potter and Mike Nesbit)