SKF employees are pictured lubricating equipment at one of the company’s plants. Submitted photo

Ongoing global restructuring efforts at SKF are paying off on the company’s bottom line to the tune of 300 million Swedish kroner.

Company officials discussed SKF’s rightsizing plans during its quarterly conference call with investor analysts recently. SKF, which owns the SKF Aeroengine plant in Falconer, reported an operating profit of just over 2.6 billion SEK for the first quarter of 2026 compared to 2.9 billion SEK in the first quarter of 2025. Net sales fell to 21.9 billion SEK, down from 24 billion SEK in the first quarter last year. First quarter profits increased to 2,951,000 million SEK, compared to a loss in the first quarter of 2025.

Susanne Larsson, SKF chief financial officer, said the SKF recorded a decrease of 8.7% in net sales in the first quarter of 2026, largely driven by currency headwinds. The gross margin ended at 29.3%, down .5% compared to the first quarter in 2026, and an adjusted operating margin of 13.5%, which was flat year-over-year. Organic growth was 2.4%.

SKF has been in the midst of a global rightsizing for more than a year. Those efforts, Larsson said, resulted in savings of 300 million Swedish kroner. Rightsizing has included plant closures, including the April 7 announcement that SKF is closing its plant in Monterrey, Mexico, and moving its work to SKF’s automotive operation in Puebla, Mexico, and SKF’s industrial operation in La Silla, also located in the Monterrey area. The Monterrey factory was originally established as a shared factory for both Industrial and Automotive, and to support a forecasted increase in demand for electric vehicles (EV) in the Americas. Following the decision to separate the businesses, combined with the lower than anticipated EV growth, the Monterrey facility exceeds the operational requirements of each individual business. The new manufacturing set-up aims to become more efficient and competitive, while having the capabilities to meet future increased electrification demand.

The relocation will eliminate around 390 roles at the Monterrey site, while around 100 new positions will be created at the Puebla and La Silla sites

“The right sizing savings in the quarter amounted to SEK 300 million, and we expect the run rate of the savings to be fairly linear from the SEK 1.2 billion we had in quarter one to the SEK 2 billion we aim for in the end of quarter four 2027. For the full year 2026, we expect the savings to continue to be somewhat higher than the negative dis-synergies effect,” Larsson said.

Company officials reported for the first time with a new structure reflecting separate industrial and automotive businesses. Rickard Gustafson, SKF president and CEO, said the separation of the automotive division is expected to be completed by the fourth quarter of 2026.

Gustafson said the automotive business has a clear focus on accelerating profitable growth and improving efficiency. The value of new contracts signed over the past year has increased significantly compared to before the separation was announced, something Gustafson said supports future growth and profitability. Offerings in higher-margin and higher-growth areas like electric vehicles and commercial vehicles is one of the main contributors to the positive momentum in the division.

“We are creating two strong, independent businesses, one fully dedicated and fully focused Industrial business and one fully focused Automotive business that will unlock the full potential for both businesses as we move forward,” Gustafson said. “We are pleased that while doing all this change, we continue to progress on our strategic initiatives and that we are strengthening our position in high-value Industrial segments to build a strong platform for future profitable growth.”

Currency issues that affected SKF stem from a weaker dollar and a weaker Chinese yuan in 2026 compared to the same period in 2025 that impacted SKF’s operating margin by 2.1%.

All told, SKF’s financial outlook for the rest of the year is unchanged from the start of the year, with SKF officials expecting market demand in the second quarter to be similar to first quarter demand and organic growth to be unchanged.

“In Q1, we delivered a strong margin despite volatile markets, significant currency headwind and a relatively weak automotive demand,” Gustafson said. “Our solid performance was due to strong portfolio management and continued cost actions, including rightsizing initiatives. At the same time, we continued to progress our strategic priorities.”