SKF-B.ST

AB SKF (publ)

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Bull / Bear Details

SKF's Q2 2025 showed resilient margins despite FX/tariffs and weak autos. Industrial returned to growth and aerospace is a long-term tailwind. Near term, stock

Thesis

SKF's Q2 2025 showed resilient margins despite FX/tariffs and weak autos. Industrial returned to growth and aerospace is a long-term tailwind. Near term, stock trades on margin defense, industrial momentum, and execution of the automotive spin-off/rightsizing plan.

Bull case

Margin defense proven in Q2 with 13.3% adjusted margin despite -9% FX headwind
Aerospace business secured long contracts beyond 2030, growing double digits
Rightsizing program (SEK 2bn savings) should offset spin dis-synergies and lift efficiency

Bear case

Auto organic sales -6.2% YoY, no near-term fix
Tariff/FX headwinds could erode margins if pricing power slips
Automotive spin-off complex with execution risk and potential dis-synergies

Key Factors5 rows

Key Factor	Why It Matters	What To Watch	What It Signals	Where/How To Track	Free Alt Data
Rightsizing & cost savings	SEK 2bn savings program critical to offset spin dis-synergies and lift efficiency.	Layoffs/FTE updates, cost savings run-rate commentary	Execution success = stronger LT margin profile; disruption = bearish	Company announcements, local Swedish labor press	Workforce data (you have), union/press releases (IF Metall in Sweden)
Industrial demand momentum	Industrial is 72% of sales, turned positive (+2.4%) after several weak quarters.	Order growth in aerospace, lubrication, magnetics; Asia/India/SE Asia sales	Continued growth = bullish; reversion to negative = bearish	Regional PMI data, Capex/industrial orders in EU/Asia, SKF distributor updates	S&P Global PMI (free headline), India rail/agriculture stats, Google Trends for “SKF bearings” or “industrial bearings”
Automotive spin-off progress	Separation could unlock value but is complex; execution risk is high.	Approvals, milestones, CMD (Nov 2025) commentary	Progress = multiple expansion; delays/dis-synergies = de-rate	SKF press releases, regulatory filings, CMD in Nov	Swedish news wires (DI.se), EU competition filings
Aerospace & secular growth lanes	Aerospace ~9% of industrial, growing double digits, LT contracts signed.	Aero aftermarket orders, defense demand, contract extensions	Sustained double-digit growth = structural tailwind; slowdown = bearish	Airbus/Boeing delivery data, defense orders, SKF aerospace releases	Airbus/Boeing monthly deliveries (free), defense procurement sites, Google Trends “aerospace bearings”
Margin resilience vs. FX/tariffs	Pricing power is the biggest near-term buffer; margins held despite -9% FX impact.	Q3 margin guidance, commentary on tariff offsets, surcharges adoption	Ability to pass on costs = stable margins = bullish; inability to offset = bearish	Company filings, earnings calls, analyst notes (Bloomberg/Reuters)	Trade/tariff news (USTR releases), Swedish krona vs USD/CNY (XE.com), SKF customer forums/distributor chatter

Key Reported Metrics3 rows

Metric	Why It Matters	Last Period
Automotive organic sales growth	Auto still 28% of sales; weak demand drags results. Investors want to see stabilization, especially in Europe/Americas.	'-6.2% YoY
Adjusted operating margin	Proves pricing power and cost efficiency against FX/tariffs. Q2 margin resilience drove positive stock reaction.	13.3% (vs. 13.0% last year)
Industrial organic sales growth	Industrial is 72% of sales and the profit engine; first quarter of positive growth after a weak stretch. Continuation would confirm recovery.	'+2.4% YoY

Key Questions

Can SKF sustain pricing/mix strength and margin resilience against FX and tariff headwinds?

Question 2: Will the Automotive spin-off unlock value or create costly dis-synergies and execution risk?
Question 3: Can industrial demand (esp. aerospace, Asia, and lubrication) offset auto weakness and cyclical softness in Europe?

NotesTable

Date	Comment	Comment Type	Comment Sentiment	Link	IS CHANGE	Price Reaction
2025-07-18	Q2 results showed margin resilience despite FX and weak autos. Industrial returned to growth (+2.4% org) with 16.6% margin, while auto declined (-6.2%). Rightsizing program announced, auto spin progressing. Cash flow solid, tariffs offset via pricing. Positive reaction on robust margins and aerospace strength.	Earnings Transcript	Bullish			+3.19% (vs SPY: +3.07%)