SKF's Auto Division Delivers Again: Permanent Cost Savings May Be the One Positive From the Pandemic

SKF's fourth-quarter results were in line with our expectations on revenue, down less than 1% organically year over year, but better on margins, expanding 290 basis points year over year. The full-year adjusted EBIT margin expanded by 50 basis points, and we expect the company to be able to retain these gains, due to cost savings achieved in 2020, with roughly half remaining permanent, and a continued recovery in demand. We are maintaining our SEK 175 fair value estimate. Our narrow moat rating remains intact.