Sweden''s SKF, the world''s largest maker of industrial bearings, reported a better than expected rise in profits and margins on Tuesday, helped by a successful campaign to increase prices for some of its products as demand improved.
After suffering falls in like-for-like sales in four of the past five years, SKF has returned to growth this year amid a sharp pick-up in global industrial demand.
But with intense competition in the bearings industry analysts and investors have worried the company may struggle to raise prices sufficiently despite the stronger demand.
SKF said its third-quarter operating profit, excluding items affecting comparability, rose to 2.21 billion Swedish crowns ($264 million) from 1.81 billion in the same period last year, ahead of the average forecast of 1.97 billion crowns given in a Reuters poll of analysts.
The adjusted operating margin in the quarter was 11.9 percent, up from 10.1 percent a year ago and ahead of the average forecast of 10.5 percent.
SKF''s shares were up 2.9 percent at 191.20 crowns at 1255 GMT, reversing a slight decline ahead of the results.
The shares have had a strong run recently, up more than 20 percent since hitting a year-low in late August and boosted in recent weeks by strong results from Nordic industrial peers like Atlas Copco and Sandvik.
SKF said like-for-like sales increased by 8 percent in the last quarter, ahead of the 6.8 percent predicted by analysts.
"During the quarter, we have seen the positive effects from the industrial distribution price increases announced in the first half of the year," Chief Executive Alrik Danielson said in a statement.
"Where contractual terms allow, we have also increased prices to OEMs (original equipment manufacturers)."
The company, which counts Germany''s Schaeffler among its top rivals, said it expected demand to be higher in the fourth quarter compared with a year ago but relatively unchanged from the third quarter.
SKF is going through big changes under Danielson, who since taking the helm two years ago has cut thousands of staff and begun a drive to modernise and automate its factories. ($1 = 8.3677 Swedish crowns) (Reporting by Johannes Hellstrom; Editing by Greg Mahlich)
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