"In the first quarter, the customer's market demand is in line with our expectations, but in the North American market, due to the reduction in demand and reserves in the supply chain, the decline in market demand exceeded our expectations. Sales (in local currency) fell by 5%, mainly reflected in the industrial market, although the car sales growth, but still can not offset the impact of declining sales in the industrial market.
Faced with challenging market conditions this year, we will focus on improving the balance sheet, adjusting the organizational structure and working style.
Therefore, I believe that the level of our cash flow will continue to maintain a strong momentum, net working capital decreased, net debt further reduced.
Thanks to the 2015 organizational restructuring, we have a more streamlined organization, and more focused on the development of our core business: can improve the mechanical efficiency of the rotating shaft bearings and solutions. Our cost reduction program has been effectively implemented, the number of employees affected reached 2100. In addition, we have reduced about 400 temporary staff and agents. We will continue to carry out cost savings for specific activities or transactions within the group as a whole, as we continue to divest non core businesses.
According to our forecast of market situation, competition situation and industrial development level, and taking into account the subsequent reform of the company, the group has adjusted its financial objectives. Our new financial objective is to measure the growth rate of internal sales in local currency by 5% in a business cycle, with an operating margin of about $12%, as measured by ifrs. In terms of capital, we will be in a more efficient way to manage our working capital, net working capital to 25% of sales. Due to the adjustment of the operating margin target, the target of the occupied capital return (ROCE) has also been adjusted to 16%. The goal of achieving a net debt to equity ratio of 80% remains unchanged. Although the task is arduous, but we believe that we can achieve these goals.
Into the first quarter of 2016, we expect the macroeconomic will continue to show uncertainty, while the subsequent demand will remain relatively unchanged, but compared with the previous year, slightly lower.
The market is still full of challenges, but I firmly believe that by changing the organizational structure, pay more attention to customer applications, we are still able to achieve a certain development."
Key figures, 2015 fourth quarter of the year of the fourth quarter of 2014, 20152014 years, SEKm
Net sales 18215184.997599770 9.75
Operating profit excluding one-time items 172620.7886558 2.91
Operating margin, excluding one-time items,% 9.5 11.2 11.4 11.7
Disposable -470 687 -490 in the operating profit of the project -687
Operating profit: 103916.0869687 8.01
Operating margin,% 5.7 8.7 9.2 11
Pre tax profit, excluding business and financial disposable items 1626176378577258
Pre tax profit of 65312.9358346 to 6.68
Net cash flow before financing 1966212664162137
Year on year net sales change (%): total internal sales structure
2015 fourth quarter -5.2 -1.0 -1.5
Full year -2.6 -0.5 10.2 7.1
Internal sales changes in local currency per year (%): North America, Latin America, Asia, Middle East and Africa
2015 fourth quarter 0,3 -0.5 -8.7 -12.7 10.8
Full year 0.4 0,5 -4.2 -8.1 13.2
Dividend plan
The board of directors decided at the annual general meeting on the proposed dividend unchanged, still SEK 5.50 per share.
Outlook for the first quarter of 2016
Market demand compared to the first quarter of 2015
The market, products and services on demand decreased slightly in the sky in the group. Automotive business and specialty business demand is expected to remain relatively unchanged, while industrial market demand is expected to decline. European market demand is expected to remain relatively unchanged, the Asian and Latin American markets will decline slightly, the North American market will decline significantly.
Market demand compared to the fourth quarter of 2015
The market's products and services to the needs of Skye in the range of the group will remain relatively unchanged. It is expected that the demand for automotive business will grow, the special business will grow slightly, and the industrial market will remain unchanged. Demand is expected to grow in Europe, North America will decline slightly, Latin America and Asia will decline.
The conference call will be held at 14:00 on February 2, 2016 (Central European summer time):
Sweden: +46 850653937
UK: +44 2034271904
United States: +1 6462543365
You can get all the information about the 2015 SKF's annual report from the IR website.
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