From friction to intelligence — one SEK 91.6 bn industrial group, and SEK 33.5 bn of it is recurring aftermarket & services that dampens the cycle — with the Automotive spin-off, SKF Vertevo, in flight.

SEK 3.9 bn more adjusted operating profit a year — to the >17% target — and SEK 1.6 bn of one-time cash, from the business SKF already runs.

Five moves do it, by sharpening the industrial pure-play. One lifts margin — scaling SIS and the aftermarket, plus rightsizing (move 1) — taking adjusted operating profit from SEK 11.7 bn to SEK 15.6 bn, margin 12.7% → 17.0%. One grows the recurring book — aftermarket & services (move 2). Two free cash — collect faster (move 3) and tighten net working capital (move 4) — releasing SEK 1.6 bn. One deploys the fortress balance sheet (move 5). Each card says exactly what you do and what changes.

Reported sales fell SEK 7.1 bn in FY2025 — but that is currency, not demand: organic was only -0.4%, and H1 2026 has turned to +1.9% organic.

The right number for demand is organic. FY2025 net sales of SEK 91.6 bn were down 7.2% reported but only −0.4% organically — and current trading has turned up, with H1 2026 organic at +1.9% and the adjusted margin already at 13.7%. Because SKF is booking slightly faster than it ships (1.01x), the recovery has momentum.

The resilience underneath is the recurring book: SEK 33.5 bn of aftermarket & services is 37% of sales and more than half of Industrial revenue — sold through the industry's largest network of ~17,000 distributor locations, so it holds up even when OEM demand dips.

Three segments, six end-markets — and the growth is tilting to aerospace, magnetics and the industrial aftermarket.

SKF reports three restated segments (built for the separation). Bearing Solutions is the industrial bearing core at SEK 49.2 bn, and Specialized Industrial Solutions (SIS) — aerospace, lubrication, sealing and magnetic — is the fast-growing, margin-expansion engine at SEK 18.8 bn, growing 4.5%. Automotive (SKF Vertevo) at SEK 23.6 bn is the in-flight spin-off — stand-alone inside the group since Jan 2026, Nasdaq Stockholm listing planned Q4 2026.

By end-market, the pattern is clear: the volume sits in industrial distribution and machinery, but the growth is concentrating in aerospace and defence. Industrial distribution & aftermarket is the biggest demand pool, while aerospace & defence grows fastest at 9% a year, with machinery, rail & automation close behind. Automotive OEM is flat-to-down as the cycle softens. The shift toward aerospace, magnetics and the aftermarket is where SKF should place its bets.

The factories are where SKF earns its margin — and keeps its promise to deliver on time, at zero-defect quality.

SKF produces through ~90 factory & logistics sites across ~28 countries and serves 130 countries, running 12,500 machines condition-monitored. This is the heart of the business: every grinding line, heat-treatment cell and assembly line must run at high utilization and first-pass quality — that is what converts bearing-grade steel into margin.

Throughput quality is good but short of target. Factory OEE is 84% against a 90% goal, on-time delivery (OTIF) is 96.2%, and 96.8% of output is first-pass. The number that matters most is how full the capacity is: at 84% utilization against a 90% target, this is the single biggest efficiency lever across the bearing and specialty lines.

Where the SEK 91.6 bn gets made and sold — and where the recovery is turning.

Revenue is spread across four regions, with Europe still the largest base. EMEA — the Gothenburg, Schweinfurt and Airasca heartland — carries the group and reports clean site-level numbers, though H1 2026 organic there was soft (−0.6%). The turn is in Asia and the Americas: China & Northeast Asia (+3.2% organic) and India & Southeast Asia (+3.7%) are growing region-for-region, and the Americas (+2.3%) is turning on tariff-compensating pricing. The watch-item is footprint transition, not demand: the Americas consolidation is mid-flight.

The SEK 33.5 bn of aftermarket & services is SKF's least-cyclical, highest-quality income — and it grows through the distribution network, not the OEM cycle.

SKF's most valuable income stream is the SEK 33.5 bn of aftermarket & services from distribution, condition-monitoring/REP contracts and vehicle aftermarket — now 37% of total revenue and rising. And it compounds. At a 106% net retention, existing distributor & REP wallets grow their spend 6% each year on average — so the book grows before SKF wins a single new account. Currency was the only real drag on the FY2025 book.

Margins set to expand on mix and the separation — but the near-term prize is cash and working-capital discipline as the carve-out build unwinds.

Net sales are SEK 91.6 bn, down 7.2% reported (currency) but −0.4% organic, with a 26.8% gross margin and SEK 11.7 bn of adjusted operating profit (a 12.7% adjusted margin; 8.5% reported after IAC). The margin path is up — as SIS and the aftermarket scale and rightsizing lands, opex trends from 15.4% of revenue toward 14.1%, and Vertevo's dilution leaves with the spin.

Cash is the near-term story — the separation working-capital build dented H1 2026 operating cash flow. SKF takes 65 days to collect what it is owed against a 60-day target, and SEK 2.4 bn of it is more than 60 days late out of SEK 16.3 bn owed in total. Every collection day is worth about SEK 251 M of cash — so closing that gap frees real money to fund capex and the dividend.

SEK 40.0 bn of inputs, bought across six core supplier groups — bearing-grade steel above all.

SKF buys bearing-grade steel, components & sealing materials, energy, logistics, contract manufacturing and chemicals from six supplier groups, totaling SEK 40.0 bn. The biggest by far, bearing-grade steel at SEK 18.0 bn — then components at SEK 8.0 bn — is where price, recycled content and green-steel sourcing matter most. And SKF pays its suppliers in 58 days against a 60-day target — taking the full terms would hold onto cash longer for free.

SKF is becoming an industrial pure-play — the brand portfolio & the Vertevo spin, each on its own margin journey.

SKF grew from a 1907 Gothenburg bearing house into the world's largest bearing maker — bearings, then lubrication (Lincoln, Alemite), slewing (Kaydon), the value segment (PEER), condition monitoring (@ptitude / IMx / Axios) and RecondOil circularity, and now the Automotive spin-off, SKF Vertevo. The brands tracked here carry SEK 98.9 bn of revenue across overlapping lenses, with SEK 38.9 bn of recurring, aftermarket income. The strategy is simple: sharpen the industrial pure-play, move each brand up the value chain, and lift its margin through scale, mix and services. It is working — profit from these brands is up SEK 13.1 bn as they have scaled — but only 70% of the planned programs have been realized, with the newest or transferring lines (Vertevo, Cooper, RecondOil, condition monitoring) still in flight.

Data note: AB SKF is a listed company (Nasdaq Stockholm: SKF B), so the headline financials are real FY2025 anchors (SEK). Granular operational detail (per-site, per-brand, per-machine, named-channel receivables) is modelled and illustrative, anchored to the public structural facts. The "LIVE" indicator and source tags reflect the governed SQLite metric layer that powers this cockpit.