SKF to Cut 1,500 Jobs Worldwide

STOCKHOLM--SKF AB (SKF-B.SK) on Wednesday said it would cut 1,500 jobs worldwide in an effort to improve profitability.

With flattish demand for its products and a tough pricing environment, SKF is restructuring its business to improve productivity as it strives to reach an operating margin of 15%. It set that target in 2010 and has not yet reached it.

The job cuts, announced by SKF's new chief executive Alrik Danielson, followed the merger of two of SKF's business areas, announced in December and implemented this month. The changes are expected to generate 1.2 billion kronor ($145 million) in full-year savings. The cost of the program, which will be implemented within 2015, is estimated to SEK1.4 billion.

SKF's shares traded up more than 5% on the news Wednesday.

Shares in the company have performed well during the last quarter due to its low exposure to the mining and oil sectors, relatively large exposure to the North American market and currency tailwinds, but focus going forward will likely be on the progress of Mr. Danielson's turnaround program.

SKF Wednesday said net profit for the three months ending Dec. 31 was SEK881 million ($106.7 million), up from a net loss of SEK2.04 billion the same period last year.

Sales in the fourth quarter were SEK18.5 billion, up from SEK16.4 billion the same period a year ago. Operating profit was SEK1.6 billion, up from an operating loss of SEK1.5 billion a year ago.

Write to Christina Zander at [e-mail]

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