Bearings maker SKF flags supply chain woes after profit miss

STOCKHOLM (Reuters) -Bearings maker SKF warned on Tuesday of continued supply chain problems affecting its automotive business after posting third-quarter earnings below market expectations, sending its shares down nearly 6%.

SKF said its industrial business had maintained strong momentum despite logistics constraints and cost inflation, while its automotive business had been hit by supply problems.

A global shortage of semiconductors has forced automakers to cut output despite the demand recovery from the depths of the COVID-19 pandemic.

The world’s biggest maker of industrial bearings said its automotive business had been significantly affected by reduced production at key customers, especially in September.

“Even though we are far from satisfied with the automotive results, it has been difficult to fully mitigate an extremely challenging and volatile supply chain situation in the global automative industry,” Chief Executive Rickard Gustafson said in a webcast.

Shares in SKF, which competes against Germany’s Schaeffler, have risen by 1.6% this year but slid by 5.9% in early trade on Tuesday.

Sales at SKF’s automotive business, which generates about 25% of total sales, fell 5.2% in the third quarter while the industrial division, which accounts for 75% of sales, reported a 13.3% rise.

“Given the uncertainties in the market, we expect organic sales for the fourth quarter to be in line with the previous year,” Gustafson said.

The company’s quarterly organic net sales grew by 7.7 from the pandemic-hit corresponding period last year.

Operating earnings rose to 2.59 billion Swedish crowns ($302.1 million) from 1.92 billion crowns a year earlier, missing the 2.71 billion crown average forecast in Refinitiv poll.

($1 = 8.5737 Swedish crowns)

Reporting by Helena SoderpalmEditing by Kirsten Donovan and David Goodman