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STOCKHOLM, April 25 (Reuters) - Sweden’s SKF reported forecast-beating first quarter operating earnings boosted by strong results in its main industrial business, showing its ability to handle slowing demand ahead.
The Gothenburg-based company, which derives about 70 percent of sales from its industrial business and the rest from its automotive unit, forecast slightly lower demand in the second quarter compared to the same period a year ago.
SKF, the world’s largest maker of industrial bearings, has been hit by weaker demand since last year from slowing car markets, particularly in China and Europe, while industrial demand so far has proven surprisingly resilient.
“In the second quarter of 2019, we expect to see slightly lower volumes for the Group, relatively unchanged for Industrial and lower for Automotive,” SKF CEO Alrik Danielson said in a statement.
The company, which competes with companies such as Germany’s Schaeffler, said its first-quarter operating profit rose to 2.66 billion crowns ($282 million) from 2.63 billion a year ago, beating the 2.42 billion crowns expected in a poll of analysts.
In contrast, Shaeffler’s sales are heavily weighted towards the vehicle industry.
SKF said its automotive business in the quarter was hit by significantly reduced sales volumes in North America and lower sales volumes in Europe and Asia.
SKF’s Danielson said the company would continue to focus on strengthening its balance sheet and weather rising costs in the face of slowing demand growth.
“These efforts are showing on the bottom line and my firm belief is that SKF is in a very good position entering a market with slowing demand,” Danielson said.
After a very weak share performance in the final months of 2018, SKF’s stock has soared this year, up 33 percent, sharply outperforming Schaeffler and the broader European industrial sector index.
$1 = 9.4264 Swedish crowns Reporting by Johannes Hellstrom Editing by Niklas Pollard and Edmund Blair