SKF AB (Sweden), the world's largest bearing maker, posted third quarter 2002 profits up 16% over 2001, even as sales dipped 1.8%.

Net sales for the quarter were MSEK 10,047 (USD $1.07 billion), down from MSEK 10,228 ($1.10 billion) a year ago.

Third quarter net profit, however, hit MSEK 582 ($62.5 million), up sharply from 2001's MSEK 489 ($52.5 million).

SKF said that, overall, sales in Europe and North America grew slightly for this year's third quarter, while Asian region sales also showed continued strength.

From 2001, inventory has been sold down to 20.6% of annual sales from 22.5%. Similarly, the company's equity to asset ratio is now 41.9% from 39.4% in 2001. Return on capital employed for the running fiscal year was 16.0%, up from 15.3% in 2001.

Changes in currency values hurt SKF sales during the quarter, accounting for an apparent 8.3% drop in sales. The company attributed the remainder to structure (plus 2.0%), volume effects (plus 3.3%), more favorable price/sales mix (plus 1.2%), for the net sales decline of 1.8%.

Cash flow after investments, before financing, for the third quarter was MSEK 1,368, up from MSEK 1,092 a year ago.

SKF is optimistic about the fourth quarter. President and CEO, Sune Carlsson, said, "The predicted recovery in market demand this year for the Group is progressing step by step in a a number of segments and regions. Production will be increased to meet the expected higher market demand."

Total sales for the quarter were MSEK 3,708, returning operating profit of MSEK 360, from MSEK 364 in 2001. The operating margin held steady at 9.7%.

The company said industrial sales were flat in Europe and Asia, while the North American market improved slightly over 2001.

Total sales were MSEK 3,553, up from MSEK 3,540, while the operating margin hit 3.1% from only 1.8% in 2001. The company earned MSEK 110 from MSEK 65 a year ago.

SKF indicated that sales of bearing and seal products to the car and light truck industry in Europe was up from 2001. Sales in North America were significantly higher than 2001.

The heavy truck industry continued to find its footing, after a spate of recent problems. Sales to the heavy truck industry last quarter were flat in Europe but higher in the United States.

The vehicle service business reported considerably higher sales compared to 2001.

Total sales were MSEK 1,568, down from MSEK 1,634 in 2001. The operating result was MSEK 97, up sharply from MSEK 56 for third quarter 2001 -- reflecting an operating margin of 6.2%, versus 3.4% in 2001.

Overall sales for the quarter were MSEK 3,582, down from MSEK 3,706 in 2001. Operating profit, however, rose to 10% or MSEK 357, up from 9.3% or MSEK 344 a year ago.

SKF said European sales were flat from 2001, down in North America, but improved in Asian markets.

Sales were MSEK 1,404, down from MSEK 1,501 a year ago. Operating profit dropped to MSEK 28, or 2.0%, from MSEK 39 or 2.6% a year ago.

The soft worldwide aerospace market was partially to blame, while the Ovako Steel operation saw improved demand and turned to a slight MSEK 1 profit, from an MSEK 30 loss in 2001.