(Bloomberg) -- SKF AB is conducting a strategic review of its aerospace operations as the Swedish industrial group trims peripheral businesses and lays out its future strategy after activist Cevian Capital built a stake.
“We will constantly look for opportunities to improve our performance or drive shareholder value through portfolio optimization,” Chief Executive Officer Rickard Gustafson said on Thursday in a speech at the capital markets day in London.
“We can play in the game for actually acquiring more, strengthening your business or actually exit some or sell parts of your business in order to drive the shareholder value,” he said.
Bloomberg News reported previously that SKF is considering a disposal of its business making specialty components for the aerospace industry like bearings and sealings, citing people familiar with the mater.
SKF also confirmed its long-term financial targets and discussed strategy at its capital markets day. The company’s stock has declined 21% this year in Stockholm, giving the company a market value of about 78 billion Swedish krona ($7.5 billion).
Aerospace accounted for 5% of SKF’s 82 billion Swedish krona in net sales last year, according to the company’s annual report. The business has experienced “signficant volatility” and was “extremely impacted” by the pandemic, the chief executive said.
“We also recognize that here there’s an active ongoing consolidation in this industry,” Gustafson said, adding that the decision to review aerospace wasn’t due to outside pressure. “We believe there is significant potential for additional shareholder value to actively participate in this ongoing consolidation.”
Cevian, the activist investor led by Christer Gardell, disclosed a stake in SKF in August. The Stockholm-based investment firm said at the time it sees “significant long-term value potential in the company, which isn’t at all reflected in the share price.” It’s since increased its holding to 7.9%, making it the company’s second-biggest owner.
The activist regularly targets industrial companies it views as undervalued, including automotive supplier Autoliv Inc. as well as ABB Ltd. in Switzerland, which sometimes leads to asset sales.
SKF announced cost cuts in October, including about 1,000 job losses, after operating profit missed average analyst estimates amid rising input costs and economic headwinds in Europe.
--With assistance from Jan-Henrik Förster and Jonas Ekblom.
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