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UPDATE 2-SKF CEO to step down in 2015 after decade at helm
August 21, 2014 / 7:46 AM / 3 years ago

UPDATE 2-SKF CEO to step down in 2015 after decade at helm

* Former Hoganas CEO Danielson to become new top exec

* Danielson back at SKF after 9 years at Hoganas

* Johnstone also plans to leave SKF board (Adds quotes, detail, background, amends slug for media clients)

By Johannes Hellstrom and Niklas Pollard

STOCKHOLM, Aug 21 (Reuters) - The head of the world’s biggest maker of bearings, Sweden’s SKF, will step down at the end of the year after a decade in charge, succeeded by returning company veteran Alrik Danielson.

Tom Johnstone, a Scotsman and one of just a handful of foreigners at the helm of a Swedish blue-chip business, tried to make SKF less prone to sharp swings in profitability by pushing into services, adding new product areas such as lubrication systems and exiting some activities including engineering steel.

Danielson’s return had been expected after he left metal powders maker Hoganas earlier this year. It appears unlikely to herald a major shift in strategy, but may rekindle speculation over the future of SKF’s automotive business.

The unit’s profitability has long lagged SKF’s industrial business. While Johnstone committed to boosting its performance, questions over a possible sale may return to face Danielson.

“I think the timing is right, the process is right and I think Alrik is the right guy for SKF,” Johnstone told Reuters.

Johnstone said he would remain on the boards of Swedish investment company Investor and outdoor equipment maker Husqvarna.

But he plans to step down from the SKF board. “I have a very clear view on that. I don’t think a previous CEO should be in that position. That’s just my personal opinion,” he said.

Johnstone is known for a frank, fast-talking style and a broad Scottish accent that can be a challenge for Swedish ears. His humour and jovial manner got him voted Sweden’s “funniest CEO” by the youth wing of the country’s shareholder association.

“I think it’s a sad day in capital goods,” said James Moore, an analyst at Redburn. “He’s been there 11 years, lifted sales from 41 billion to 70 billion if you take this year. He’s taken the margin from 8 to 12 percent with great shareholder return.”

The market reaction to Johnstone’s planned departure was muted. SKF shares were down 0.6 percent by 1000 GMT, compared to a gain of 0.4 percent in a European industrials index.

Danielson worked at SKF from 1987 to 2005, holding jobs including president of its Industrial Division and serving on its executive committee before moving to Hoganas, which he led through the deep slump of the 2008/2009 financial crisis and its buy-out from the stock market last year.

Johnstone has been employed at Gothenburg-based SKF, a competitor of U.S. Timken <TKR.N< and Germany’s Schaeffler AG, since 1977 and has been its chief executive since 2003. He turns 60 next year, which was the retirement age in his contract. (Additional reporting by Mia Shanley; editing by Michael Urquhart and Tom Pfeiffer)

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