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SKF is seeing profits and operating margins increase despite largely flat sales while warning investors that ongoing global turmoil is still clouding its outlook.
SKF, which operates the SKF Aeroengine USA plant in Falconer, saw adjusted operating profit increase to 3.22 billion Swedish kroner in the second quarter of 2026 from 3.09 billion Swedish kroner a year earlier. The profit increases brought the company's overall adjusted operating margin to 13.9% in the second quarter of 2026 from 13.3% for the same quarter in 2025. Net profit in the second quarter more than doubled to 1.33 billion Swedish kroner, while operating profit increased to 2.22 billion Swedish kroner in the second quarter from 1.30 billion Swedish kroner in the same time period in 2025 aided by lower restructuring charges than a year earlier.
SKF's industrial businesses continued to underpin earnings, with Rickard Gustafson, SKF CEO, saying quarters in the company's Specialized Industrial Solutions segment and growth in aerospace, magnetic solutions and aftermarket activities helped to offset continued softness in automotive demand.
"I'm pleased to see the strong margin development in SIS with growth in targeted areas including aftermarket," Gustafson said. "As previously communicated, an improved margin development for SIS is one key lever to deliver on our mid- and long-term targets for our industrial business."
SKF's separation of its automotive business is continuing, Gustafson said, with the business now separated and operating as a standalone business within the SKF Group. Gustafson said a CEO has been named for the stand-alone automotive business, with the separation expected to be completed near the end of 2026.
The company has also been dealing with the aftermath of the U.S. Supreme Court's February ruling that tariffs imposed under IEEPA were unlawful, paving the way for up to $166 billion in refunds. SKF is among the companies that paid tariffs under the IEEPA.
"Tariff refunds were received largely during the second quarter, with payments to customers following the completion of refunds – meaning not all have been done," said Susanne Larsson, SKF chief financial and sustainability officer and senior vice president group finance and sustainability. "The result, the impact of the tariff, all in all, around the reclaim is somewhat positive in the quarter two results."
Looking ahead, SKF officials said they expect organic sales to strengthen somewhat year over year in the third quarter, citing early signs of improving demand in some industrial markets. However, the company warned that geopolitical tensions, including the conflict in the Middle East, continue to cloud the outlook.
"We’ve given signs of improved market demand in certain industries, we expect organic sales to strengthen somewhat in quarter three year-over-year, considering still the geopolitical turmoil and the conflict in the Middle East that is certainly remaining unpredictable," Larsson said. "Guidance also for quarter three around currency on the operating profit is estimated to be a positive 100 million (Swedish kroner), applying the exchange rate as per the end of June."