SKF (Buy, TP: SEK290.00) - Raw materials and FX blot Q1
The Q1 report was in line with consensus, but 9% below our forecast on adj. EBIT. The FX headwind was SEK300m higher than we had expected and explains almost the entire deviation. Raw materials and logistics costs were up significantly YOY in Q1, and price rises to compensate have not yet started to take full effect. We believe SKF is well placed for the transition to electric vehicles, and our 2021–2022e adj. EBIT is 5–8% above consensus on continued cost efficiency and demand recovery. BUY and SEK290 target price reiterated.AB SKF is the parent company of the SKF Group, which supplies products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems. Services include technical support, maintenance services, condition monitoring, asset optimization, engineering consultancy and training. Co.'s business areas are: SKF Industrial Market - Strategic Industries, which includes bearings and bearing accessories and lubrication systems; SKF Industrial Market - Regional Sales and Service, which develops SKF Solution Factory facilities providing engineering capability; and SKF Automotive, which develops and manufactures bearings, seals and related products and services.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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