February 1, 2018 / 1:21 PM / 8 months ago

UPDATE 1-Bearings maker SKF sees stronger demand ahead after fourth quarter tops forecast

(Adds CEO comment, shares, background, details)

STOCKHOLM, Feb 1 (Reuters) - The world’s largest maker of industrial bearings, SKF, reported fourth-quarter core earnings just ahead of market forecasts on Thursday and said it expected demand would increase slightly in the current quarter.

After suffering falls in like-for-like sales for two straight years, Sweden’s SKF returned to growth in 2017 on the back of a sharp pick-up in global industrial demand that has begun boosting earnings across the group.

The company said its quarterly operating profit, excluding items affecting comparability, rose to 2.09 billion Swedish crowns ($266 million) from 1.74 billion a year earlier, just topping a forecast of 2.03 billion in a poll of analysts.

Gothenburg-based SKF said like-for-like sales increased by 8.2 percent in the quarter, higher than the 7.3 percent seen by analysts and supported by strong demand in both its main industrial business and its automotive arm.

With intense competition and heavy price pressure in the bearings industry in recent years, analysts and investors have worried the company may struggle to raise prices sufficiently despite the stronger demand.

“Our focus on raising prices, for both distributors and OEM’s (original equipment manufacturers), and controlling costs is bearing fruit,” Chief Executive Alrik Danielson said in a statement.

Germany’s Schaeffler, one of SKF’s fiercest rivals, said in January it had seen faster than expected sales growth in the fourth quarter. On Thursday, Schaeffler forecast sales growth of 5 to 6 percent this year, adjusted for currency fluctuations.

SKF’s share price has rallied more than 20 percent in the past half year, more than double the rise in the European industrial sector index.

It was down 0.4 percent at 1226 GMT, roughly unchanged from where it was before its earnings report was released.

The company proposed an unchanged dividend of 5.50 crowns per share, slightly below the 5.79 crown mean analyst forecast. ($1 = 7.8703 Swedish crowns) (Reporting by Johannes Hellstrom; Editing by Niklas Pollard and Susan Fenton)

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