1. Alrik Danielson, President and CEO
SKF Q3 results 2016
Alrik Danielson, President and CEO

2. Q3 Summary Alrik Danielson, CEO1
Q3 Summary Alrik Danielson, CEO

3. 10.1% Operating margin* Q3 summary
Total sales in line with our expectations
Sales SEK M, -2.5% compared with Q3 2015, organic sales -0.6%
Operating profit, excluding one-time items SEK M (1 976)
Operating margin, excluding one-time items % (10.8)
Cash flow SEK M (1 808)
Profit before tax SEK M (1 348)
10.1% Operating margin*
* Excluding one-time items

4. Sales development by geography Organic growth in local currency Q3 2016 vs Q3 2015
Europe
-0.6%
North
America
-3.5%
Asia/Pacific
+3.8%
Latin
America
-6.5%
Middle East
& Africa
+0.3%

5. Sales development by Customer Industry

6. SKF technologies in new generation of Scania trucks
SKF solutions contribute to improved comfort and fuel efficiency in Scania’s new generation of trucks
SKF provides gearbox bearings, prop-shaft bearings and engine bearings and seals.
The tailor-made wind deflector, which uses linear actuation technology to allow for ease of adjustment, is also being supplied by SKF.
Updated front- and rear-wheel truck hub units, which reduce friction by up to 30%, compared to standard wheel bearing sets.

7. Collaboration agreement with GE Oil & Gas for active magnetic bearing applications
Collaboration agreement widens scope of use for active magnetic bearings for turbo machinery within the oil and gas sector.
Non-exclusive, license-based collaboration agreement.
SKF provides GE with front-end engineering design to installation, testing and service to customers.
Basis for future collaboration in active magnetic bearings into other GE Oil & Gas turbo machinery, such as steam and gas turbines.

8. New business
SKF´s technology in Metsä Group´s pioneering bioproduct mill
Eight-tonne bearing for mining application
Bearings and housing to Chilean pulp and paper manufacturer
Bogie components for major Algerian rail freight project
Wheel hub bearing units for Alfa Romeo Giulia

9. New products
SKF spherical roller bearings for wind turbine main shafts
Simplex intermediate shaft bearing for marine
Vibracon for marine
SKF Dynamic Stabilizer Cover for marine
SKF centrifugal Lip Seal for railway

10. Q3 results – the details Christian Johansson, CFO2
Q3 results – the details Christian Johansson, CFO

11. Sales development 2015 2016 Q3 Q4 Q1 Q2 Organic -4.7 -5.2 -6.1 -4.4
Percent y-o-y Q3 Q4 Q1 Q2
Organic
-4.7
-5.2
-6.1
-4.4
-0.6
Structure
-0.8
-1.0
-2.0
Currency
8.8
4.7
-3.0
+0.1
Net sales
3.3
-1.5
-8.9
-8.0
-2.5

12. Organic sales growth

13. Operating profit excluding one-time items

14. Operating profit

15. Operating performance by segment
Industrial
Net sales SEK M
Organic sales -2.8%
Operating margin* declined to 11.7%
Automotive
Net sales SEK M
Organic sales +4.4%
Operating margin* improved to 6.6%
* Excluding one-time items

16. SKF Group – Q3 2016 Financial performance (SEKm) 2016 2015 Net sales
17 912
18 367
Cost of goods sold
Gross profit
4 496
4 518
Gross margin, %
25.1
24.6
Selling and administrative expenses
-2 317
-2 698
Other operating expenses 12 5
Operating profit
2 191
1 825
One-time items
380
-151
Operating profit excl. one-time items
1 811
1 976
Operating margin, %
12.2
9.9
Operating margin excl. one-time items, %
10.1
10.8
Financial income and expense, net
-142
-477
Profit before taxes
2 049
1 348
Taxes
-660
-573
Net profit
1 389
775
Basic earnings per share, SEK
2.97
1.59

17. Cost management
Continuous reduction in fixed cost, fixed cost index decreased to 97 in Q3 (Q4 2014=100)
The number of employees increased by in the quarter – mainly temporary employees and agency personnel
Activity-based cost reductions continue with high focus
Fixed cost index: 97

18. Cash flow after investments before financing*

19. Net debt reduced by 1.4 bn in the quarter

20. Changes to the US pension plan
Defined benefit plans closed as of December 31, 2016
New defined contribution plan in place
Financial effects: Q3 operating income: + SEK 618 M (curtailment gain) Q3 Cash flow: - SEK 613 M, (cash contribution to the plan, net of taxes)
USD 10 M reduced cost in 2017

21. Net working capital 30.3% of annual sales – negative currency effect of 1.1 pp.

22. Guidance for 2016* Q4 2016: Financial net: around -225 million
Currency impact on the operating profit is expected to be around +/- 0 million compared with 2015 based on exchange rates per June 30.
2016:
Tax level: around 32% for 2016, excluding effects from divestments
Additions to property, plant and equipment: around 2,000 million for
* Guidance is approximate and based on current assumptions and exchange rates.

23. SKF demand outlook - Definition
The demand outlook for SKFs products and services represents management's best estimate based on current information about the future demand from our customers. The demand outlook reflects the expected volume development adjusted for acquisitions/divestments in the markets where our customers operate.

24. October 2016: SKF demand outlook Q4 2016
Demand compared to the fourth quarter 2015 The demand for SKF’s products and services is expected to be relatively unchanged for the Group and for Industrial. Demand for Automotive is expected to be slightly higher. Demand is expected to relatively unchanged in Europe, lower in North America, slightly higher in Asia and higher in Latin America. Demand compared to the third quarter 2016 The demand for SKF’s products and services is expected to be relatively unchanged for the Group including both Industrial and Automotive. Demand is expected to be slightly higher in Europe, lower in North America and relatively unchanged in Asia and in Latin America.

25. Financial calendar Roadshow London & Paris November 2 & 3
Report on the fourth quarter
February 2
Annual Report
March
Annual General Meeting
March 29
Capital Markets Day
April 6

26. SKF Q3 results 2016 Q & A

27. 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”.