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SKF - A truly global company

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0 SKF Investor Relations October 2014
The SKF Group SKF Investor Relations October 2014 19 April 2017

1 SKF - A truly global company
Established: 1907 Sales 2013: SEK 63,597 million Employees 2013: 48,401 Production sites: around 165 in 28 countries SKF presence: in over 130 countries Distributors/dealers: 15,000 locations Global certificates: ISO 14001 OHSAS certification Since 1907 and the invention and patent of the self aligning ball bearing SKF has made an astonishing journey. SKF went global very early and grew at a rapid rate. As early as 1920s, the company was well established in Europe, America, Australia, Asia and Africa. Today when people talk about the importance of the BRIC countries. SKF has been established there for a very long time, e.g Brazil and Russia 1914, China 1916 and India 1923. 15 October 2014 19 April 2017

2 Net sales - 2013 Cars and light trucks Middle East & Africa
North America Industrial distribution Asia/Pacific Aerospace Railway Off-highway Latin America Eastern Europe Trucks Two-wheelers and Electrical Sweden Vehicle aftermarket Energy 9% Industrial, general Industrial, heavy and special Western Europe * Previously published shares have been restated in February 2013 15 October 2014 19 April 2017

3 (2002) (1998) SKF 2013 % of group total Net sales
Average number of employees (48) (44) (53) Tangible asset (47) (46) (53) (10) (12) (9) (13) (14) (8) (25) (14) (19) (26) (13) (18) (5) (14) (12) (3) (9) (3) (6) (5) (4) (5) (12) (15) (3) (9) (3) (4) (4) (3) (3) (2) (0) (2) (2) (0) North America Latin America Western Europe Sweden Eastern Europe Middle East and Africa Asia/Pacific 15 October 2014 19 April 2017

4 Operating margin as reported
% 15 October 2014 19 April 2017

5 Return on capital employed
% 15 October 2014 19 April 2017

6 Growth in local currencies
% 15 October 2014 19 April 2017

7 15% 8% 20% Financial targets Operating margin
Changes in sales in local currency incl. structure 20% Return on capital employed One-time items One-time items for the individual year 15 October 2014 19 April 2017

8 SKF’s priorities Sustainable profitable growth
Expand the platform concept Exploit the asset life cycle approach Develop new products and grow SKF BeyondZero portfolio Extend and grow second brands Acquisitions Capital efficiency Fixed capital Net working capital Investments & Innovation New and existing facilities Research and development IT systems and mobility Cost reduction Business Excellence Consolidation of manufacturing Optimization and productivity improvements Reduction in purchasing costs 15 October 2014

9 To equip the world with SKF knowledge SKF Group Vision
Throughout its 100-year history SKF has been a technology leader. SKF´s fundamental strength is its ability to develop technologies, products and services that create competitive advantages. The company does this by combining its knowledge across the SKF technology platforms and through innovation and development, creating new value propositions for SKF customers. A key thrust is the work directed to SKF sustainability, reducing energy losses for a cleaner, brighter environment. By partnering with SKF, customers get access to our worldwide bank of experience and our global network of top research laboratories and universities. This can take even best-in-class customers to higher levels of performance. 15 July 2014 19 April 2017

10 SKF BeyondZero SKF launched the BeyondZeroTM portfolio with products and solutions, which will both improve energy efficiency and reduce the environmental impact. SKF revised targets for its climate strategy and also partnered with the WWF in their Climate Savers Programme. SKF’s climate targets: • Increase revenue from SKF BeyondZero portfolio from SEK 2.5 billion to SEK 10 billion by 2016 • Reduce total annual energy use by 5% below the 2006 level by 2016 • Reduce energy use per production output by 5% y-o-y from 2012 to 2016 • Reduce CO2 emissions per tonne-kilometre by 30% 2016 vs 2011 for transports managed by SKF Logistics Services • Major suppliers certified according to ISO by 2016 15 October 2014

11 28 SKF Solution Factory – October 2014
Australia Perth Brazil Cajamar Canada Edmonton Canada Toronto Columbia Bogota China Shanghai China Tianjin China Urumqi France Montigny Germany Schweinfurt India Pune India Manesar Italy Turin Mexico Monterrey Netherlands Ridderkerk Netherlands Nieuwegein Poland Katowice Romania Bucharest Russia Moscow United Arab Emirats Abu Dhabi South Africa Witfield Spain Madrid Sweden Gothenburg Taiwan Taichung Turkey Istanbul UK Luton USA Cleveland USA Houston 15 October 2014

12 SKF Solution Factory Capabilities Segments & Application Knowledge
Platforms & Technology Competence SKF Solution Factory Capabilities Sealing Solutions Mechanical Services Lubrication Solutions Bearing Service Workshop Condition Monitoring Services Remote Monitoring Center MaPro/CoMo Product Repair A & MC Training Center 15 October 2014 19 April 2017

13 Slab continuous caster – metal industry
Telescopic actuators for mould adjustment SKF ConRo Compact roll line units SKF ConRo Low roll line units SKF ConRo Top roll line units SKF DryLube Bearings and SNL Housings for roll out table SKF sealed self-aligning bearing system (CARB and spherical roller bearings) and centralized lubrication system for roll lines SKF Caster Analyst System for roll lines 15 October 2014 19 April 2017

14 Wheel-loader – Construction
Chassis lubrication Centralized lubrication systems Central gear Hybrid pinion units Motor hood Electromechanical actuators Wheel end • Integrated smart wheel bearing units with sensors • SKF Mudblock cassette seals 15 October 2014

15 Wind turbine - Energy New CRB-design with extra-high carrying capacity
for wind-gearboxes. New pitch bearing design with improved corrosion protection SKF WindCon 3.0/Webcon Intranet supervised condition monitoring DRTRB-unit SKF Nautilus with segmented cage for minimized friction Automatic centralized lubrication kits for reduced maintenance cost XL Hybrid bearings with ceramic balls for superior insulation 15 October 2014 19 April 2017

16 SKF’s environmentally positive customer solutions
SKF’s solutions which realize significant environmental benefits Designed for environment Applied for environment Up to 15% better fuel economy of the car Stop-start system E2 - 30% less energy compared to a standard bearing SKF sensor bearing A solution that is primarily designed to improve environmental performance by itself A solution that enables improved environmental performance in a specific application Not sure how you feel about this Tom, but I would like us to start talking externally in the language of the Eco Portfolio, even if we are not yet ready to quantify sales or CO2 in these terms. 15 October 2014 19 April 2017 16

17 SKF energy efficient (E2) bearings
China Conveyors used in mining industry. 130,000 E2 bearing India Sangam Group Peru Industria Textil Piura 60,000 E2 deep groove ball bearing Indonesia Leuwijaya Textile 30,000 E2 bearing potential 325,000 for 3 different customers The China case is new – in 2010 we gained significant new business for E2 DGBB used in long conveyor belts at a number of mines and mineral processing plants across China. These use around 6,000 DGBB per KM, and of course the cumulative bearing friction is very significant. We have just received orders for around 130,000 pcs, and these will save around 4000 tonnes of CO2 in a five year period (compared to the SKF E2 reference). 15 October 2014 19 April 2017 17

18 What is SKF knowledge? Page 18
The three dimensions of knowledge engineering: The cultural/geographical dimension –understanding of cultures and regions where we live and work SKF is a global company with a local presence. We intimately understand the demands of our customers and their customers. Wherever they are. Our local expertise is supported by global industry specialists who can put those needs in perspective and draw upon successes in similar situations around the world. They in turn are backed by a worldwide manufacturing footprint and a fine-meshed service and support network to put our solutions to work. The customer dimension- industries and segments The number of SKF customers is about two million. Over the years, SKF has progressively organized itself into application areas that are now centred around nearly 40 specialized customer industries. The competence dimension – our technical platform SKF’s specialist teams who are competent in areas ranging from bearings and units to seals, mechatronics, services and lubrication, work closely together to provide advanced integrated solutions. Since SKF began operating the Group´s efforts in the area of research and development have resulted in numerous innovations that have created new standards and new products and solutions in the bearing industry. In 2007, the number of first filings of patent applications was 186. Through our knowledge, SKF can help customers improve their effectiveness, making them more successful and profitable. By combining our technical knowledge with the extensive experience we have from many specialized customer industries together with the understanding for local customer demands we can help customers overcome their specific challenges. Altogether we call this SKF Knowledge. 15 October 2014 19 April 2017 19 April, 2017

19 SKF technology platforms
Page 19 SKF technology platforms Bearings and units SKF has a broad range of bearing types produced globally. This include high-quality, high-performance, low-friction, standard and customized solutions to critical and standard applications. Units are product combinations integrated into solutions with unique performance, used in specific applications requiring a compact design, combined performance and light weight. Pictures upper left; Bearings Housings Engineering products Y-units Pictures from bottom left; Engineered products Hub unit (can be found on cars or forklifts) Sensorized bearings 15 October 2014 19 April 2017 19 April, 2017

20 SKF technology platforms
Page 20 SKF technology platforms Seals SKF develops and produces sealing solutions for the automotive and industrial markets, as well as seals integrated into bearings. SKF provides value added sealing solutions because of its excellent technical and application knowledge across the closely related platforms of seals, bearings, lubrication, mechatronics and service, which is leveraged in addressing customer needs ." Pictures from upper left; Sensorized engine crankshaft seal with integrated retainer assembly Shock absorber seal, Speedi Sleeve A repair sleeve for worn shafts Pictures from bottom left; Latest generation engine valve stem seal capable of handling pressure Latest generation Metric Rubber OD Seal available in a comprehensive size range from stock Heavy Duty large diameter seal used e.g in wind, metals and mining applications Sample of different types of Hydraulic Seals 15 October 2014 19 April 2017 19 April, 2017

21 SKF technology platforms
Page 21 SKF technology platforms Mechatronic Within mechatronics SKF is combining its strong mechanical experience and electronic technology. This covers systems for precision multi-axis positioning, intelligent monitoring and by-wire applications, as well as components such as ball and roller screws, actuators, rail guides and sensor modules. A number of mechanical and electronic products are combined into modules and sub-systems addressing unique needs where SKF has specialist industrial-specific expertise. Pictures from left; Linear motion assortment High efficiency screws and guides, Electromechanical actuators Magnetic bearing system and one sensorized bearing, Aeronautical throttle control + Electromechanical Parking Brake 15 October 2014 19 April 2017 19 April, 2017

22 SKF technology platforms
Page 22 SKF technology platforms Lubrication systems SKF offers products, solutions and vast support within areas such as industrial lubricants, lubrication consultancy, lubricator equipment, lubrication assessment, lubricant analysis, lubricant recommendations and automatic lubrication systems. Around 36% of premature bearing failures are caused by poor or inadequate lubrication. We help businesses to prevent these costly failures. We deliver the right lubricant, in the right amount, at the right time, with the right lubrication system to the right lubrication point. We are a global partner for lubrication systems and tribology knowledge, the combination of friction, wear and lubrication sciences. We provide integrated lubrication solutions with leading technologies, where and when our customers need them and across all industry segments and applications. Images from left; . Centralized lubrication systems - grease systems Lubricants [SKF bearing grease] - Manual lubricators [SKF grease gun] Centralized lubrication systems - Minimal quantity lubrication [MQL] systems 15 October 2014 19 April 2017 19 April, 2017

23 SKF technology platforms
Page 23 SKF technology platforms Service The Service platform delivers value throughout the entire life cycle of an asset. Engineering consultancy and engineering services in the design phase, maintenance and logistics services in the operations stage and in the final stage upgrading, refurbishment, bearing dismounting and mounting, alignment, balancing and post-maintenance testing. SKF also offers a wide spectrum of training for customers, on and off site, around the globe. Images from upper left: Bearing remanufacturing services SKF Multilog On-line System IMx-T Asset Efficiency Optimisation process Mechanical Maintenance Services Asset Management Services Images from bottom left: Suite - integrated software for on-line, portable, and operator driven monitoring solutions Portable monitoring solutions. This also extends to cover Maintenance Products. SKF Wireless Monitoring System V/T 15 October 2014 19 April 2017 19 April, 2017

24 Acquisition 2003-2014 Identifying gaps and opportunities in all platforms
Bearings and units Lubrication systems Seals Services Mechatronics Products Technologies Geographies Industries SNFA (2006) Economos (2006) Baker (2007) Safematic (2006) ABBA (2007) GLO (2008) Macrotech (2006) Macrotech (2009) Jaeger (2005) S2M (2007) Kaydon (2013) GLOi (2014) Vogel (2004) Lincoln Industrial (2010) QPM (2008) PMCI (2007) ALS (2007) TCM (2003) Scandrive (2003) PB&A (2006) Sommers (2005) Monitek (2006) Cirval (2008) Hofmann Engineering North America (2014) Peer (2008) BVI (2013) GBC (2012) 15 October 2014 19 April 2017

25 SKF Nine-month results 2014
Tom Johnstone, President and CEO 15 October 2014 19 April 2017

26 Alrik Danielson, new President and CEO from 1 January 2015
B.Sc in Business Administration and International Economics from the University of Gothenburg Previous positions within SKF: Financial controller in Gothenburg President, Industrial Division in Spain and Portugal President, SKF do Brazil President, Industrial Division and several other managerial positions. Höganäs AB, President and CEO

27 Examples of new business
Doosan Heavy Industries and Construction, SKF Supergrip Bolts South Korea SKF Nautilus bearing A leading Chinese locomotive manufacturer Traction motor bearings HSD SpA, Italy Super precision bearings and engineering support A major Australian customer Maintenance contract in the agriculture industry Medical device manufacturer in California, Slewing ring bearings USA

28 Examples of new business
Tesla Motors Bearing for the gearbox, e-motor and wheels Volvo Cars Wheel hub bearing units Scania Wheel bearing units and high pressure valve stem seals

29 Customer awards Supplier Performance Award – Snecma, Safran Group, France Best Supplier Award – Weg Electric Motor Manufacturing Co., Ltd, China Best Supplier Award – Shanghai Hanbell Precise Machinery Co. Ltd., China Excellent Engineering Development Award – Shanghai Automobile Gear Works (SAGW), China Fiat Qualitas Award – Fiat, Argentina Certificate of Appreciation for quality and delivery performance – Honda, India

30 Highlights New Kaydon factory at the SKF Campus in Cajamar, Brazil.
New Global Technical Center in the greater Chicago area, US. For the 15th year in a row, one of the world’s most sustainable companies by the Dow Jones Sustainability World Index (DJSI). For the 14th consecutive year, a constituent of the FTSE4Good Index Series.

31 Examples of new products and solutions
SKF Multilog Online System IMx-B Tapered roller bearing unit for passenger railway applications Compact tapered roller bearing unit for heavy freight SKF Mudblock cassette seals, MUD 11 SKF Machine Tool Observer MTx SKF Multilog On-line System IMx-M SKF Static Motor Analyzer Baker AWA-IV PuraBreeze 100

32 SKF Group – Q3 2014 Financial performance (SEKm) 2014 2013 Net sales
17,787 15,623 Operating profit 2,073 1,923 Operating margin, % 11.7 12.3 Operating margin excl. one-time items, % 11.8 12.9 Profit before tax 1,827 1,717 Basic earnings per share, SEK 3.01 2.47 Cash flow after investments before financing excl. EU payment 1,476 1,135 Cash flow after investments before financing Organic sales growth in local currency: SKF Group 3.3% Europe 0% Strategic Industries 9.1% North America 3% Regional Sales and Service 0.8% Asia 8% Automotive -0.5% Latin America Middle East and Africa 7% Key points Sales volumes up by 1.9% y-o-y. Manufacturing was relatively unchanged compared to last year.

33 SKF Group – Nine month 2014 Financial performance (SEKm) 2014 2013
Net sales 52,476 47,167 Operating profit 6,193 5,240 Operating margin, % 11.8 11.1 Operating margin excl. one-time items, % 12.2 Profit before tax 5,375 4,581 Basic earnings per share, SEK 8.27 6.57 Cash flow after investments before financing excl. EU payment 2,640 1,390 Cash flow after investments before financing -185 Organic sales growth in local currency: SKF Group 4.6% Europe 2% Strategic Industries 8.7% North America 3% Regional Sales and Service 1.7% Asia 11% Automotive 2.8% Latin America 1% Middle East and Africa 14% Key points Sales volumes up by 3.8% y-o-y. Manufacturing was slightly higher compared to last year.

34 Organic sales growth in local currency
% change y-o-y 2012 2013 2014

35 Organic sales growth in local currency
% y-o-y 4.5% -0.7% -2.5% Structure in 2012: 0.4% Structure in 2013: 2.5% Structure in 2014: 4.7%

36 Sales development by geography Organic growth in local currency Q3 2014 vs Q3 2013
Europe 0% North America 3% Asia/Pacific 8% Latin America 0% Middle East & Africa 7%

37 Sales development by geography Organic growth in local currency YTD 2014 vs YTD 2013
Europe 2% North America 3% Asia/Pacific 11% Latin America 1% Middle East & Africa 14%

38 Components in net sales
2012 2013 2014 Percent y-o-y Q1 Q2 Q3 Q4 Volume -0.8 -2.8 -5.0 -5.9 -8.7 -1.6 2.2 7.1 6.2 3.6 1.9 Structure -0.1 0.0 0.8 1.0 1.5 2.6 1.1 4.8 4.7 3.8 5.4 Price/mix 2.0 0.5 0.7 -0.6 -0.2 -0.4 1.3 Sales in local currency -3.7 -4.2 -6.5 0.4 3.1 11.7 10.5 8.4 8.6 Currency -2.7 -3.6 -4.0 -2.2 -2.1 5.3 Net sales 1.4 2.8 -6.4 -7.8 -10.5 -4.6 0.9 9.6 10.4 9.5 13.9

39 Operating profit as reported
SEKm 2012 2013 2014

40 Operating profit excluding one-time items
SEKm 2012 2013 2014

41 Operating margin One-time items * Excluding one-time items 12.0* 11.9*
% 12.0* 11.9* 11.8 11.3 5.8

42 Regional Sales and Service
Operating margin per business area as reported % Regional Sales and Service Specialty Business Strategic Industries Automotive 2012 2013 2014

43 Regional Sales and Service
Operating margin per business area excl. one-time items % Regional Sales and Service Specialty Business Strategic Industries Automotive 2012 2013 2014

44 SKF’s programme to improve efficiency and reduce cost
Restructuring, SEKm: Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 2013 Q1/14 Q2/14 Q3/14 Total Cost taken 200 250 190 50 490 100 20 810 People affected 530 410 320 130 860 170 30 1,590 Giving future gross savings, SEKm: Full year gross saving 150 100 80 40 220 5 475 Realized gross savings from total programme, SEKm: vs 2012 vs 2013 Q1/13 Q2/13 Q3/13 Q4/13 2013 Q1/14 Q2/14 Q3/14 2014 Restructuring 15 35 75 200 70 50 10 130 S&A Purchasing 100 400 60 260 Total 165 185 225 800 150 110 390 Note: Run rate Q SEK 1,340 million vs 2012.

45 Operating profit bridge, Q3 2014
SEKm +100 -432 +110 +65 +112 +165 2,073 +30 1,923 Q3 2013 Volumes excl. Specialty Business Price/mix Specialty Business Savings One-time items Currencies Other* Q3 2014 * R&D, S&A, IT, inflation etc.

46 Operating profit bridge, nine month 2014
SEKm +505 -120 -829 +390 +352 6,193 +225 +430 5,240 Q1-Q3 2013 Volumes excl. Specialty Business Price/mix Specialty Business Savings One-time items Currencies Other* Q1-Q3 2014 * R&D, S&A, IT, inflation etc.

47 Net working capital as % of annual sales
Target: 27% % 2012 2013 2014

48 Return on capital employed
One-time items * Excluding one-time items % 17.1* 15.1* 13.9* 16.2 8.5 7.5 ROCE: Operating profit plus interest income, as a percentage of twelve months rolling average of total assets less the average of non-interest bearing liabilities.

49 Cash flow, after investments before financing
SEKm 1) 5) 4) 3) 2) 2012 2013 2014 Excl. acq. and div.: 1) Q SEK 1,707 million 2) Q SEK -69 million 3) Q SEK 871 million 4) Q SEK 1,170 million Excl. EU payment 5) Q SEK 1,423 million

50 Net debt AB SKF, dividend paid (SEKm): 2012 Q2 2,504 2013 Q2 2,530
Cash out from major acquisitions (SEKm): 2012 Q3 829 2013 Q1 823 2013 Q4 7,900 EU payment (SEKm): 2014 Q2 2,825 2012 2013 2014 Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.

51 Debt structure, maturity years
850 500 500 200 110 100 100 Available credit facilities: EUR 500 million 2019 SEK 3,000 million 2016 EUR 150 million 2017 No financial covenants nor material adverse change clause

52 October 2014: SKF demand outlook Q4 2014
Demand compared to the fourth quarter 2013 The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be slightly higher for Strategic Industries, relatively unchanged for Regional Sales and Service and slightly lower for Automotive. Demand compared to the third quarter 2014 The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be relatively unchanged for Strategic Industries, slightly higher for Regional Sales and Service and slightly lower for Automotive. Manufacturing Manufacturing is expected to be slightly lower year over year and compared to the third quarter.

53 SKF demand outlook Q4 2014, main regions
Share of net sales 2013 Europe 42% Asia Pacific 24% North America Latin America 7% Total Sequential trend for Q4 2014 Q4 2014 vs Q4 2013 +/- + -

54 SKF demand outlook Q4 2014, main business areas
Share of net sales 2013 Strategic Industries 29% Regional Sales and Service 39% Automotive 27% Total Sequential trend for Q4 2014 Q4 2014 vs Q4 2013 + +/- -

55 SKF sequential volume trend Q4 2014, Industries
Share of net sales 2013 29% Industrial distribution 6% Aerospace 13% Industrial, heavy, special and off-highway 11% Industrial, general 5% Energy 4% Railway 2% Two-wheelers and Electrical 14% Cars and light vehicles Vehicle service market Trucks

56 Guidance for the fourth quarter 2014*
Tax level: < 30% Financial net: around SEK -220 million Currency impact on operating profit vs Q4: SEK +230 million Full year: SEK +110 million Additions to PPE: around SEK 1.7 billion for 2014 * Guidance is approximate and based on current assumptions and exchange rates.

57 SKF’s priorities Sustainable profitable growth
Expand the platform concept Exploit the asset life cycle approach Develop new products and grow SKF BeyondZero portfolio Extend and grow second brands Acquisitions Capital efficiency Fixed capital Net working capital Investments & Innovation New and existing facilities Research and development IT systems and mobility Cost reduction Business Excellence Consolidation of manufacturing Optimization and productivity improvements Reduction in purchasing costs

58 Cautionary statement This presentation contains forward-looking statements that are based on the current expectations of the management of SKF. Although management believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those implied in the forward-looking statements as a result of, among other factors, changes in economic, market and competitive conditions, changes in the regulatory environment and other government actions, fluctuations in exchange rates and other factors mentioned in SKF's latest annual report (available on under the Administration Report; “Important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.

59 Welcome to the IR website – www.skf.com > Investors
Investor Relations function: Head: Marita Björk Tel: Mobile: Investor Relations: Anna Alte Tel: Mobile: Event and road shows coordinator: Helena Karlsson Tel: Mobile: 15 July 2014 19 April 2017

60 15 July 2014 19 April 2017


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