SKF Automotive Market Update and Growth Strategy with Cost Efficiency Focus

1. SKF Automotive CMD 2013

3. SKF Automotive speakers Tryggve Sthen President SKF Automotive Bernd Stephan Director, Business unit Trucks Edward Holweg Director, Product and Systems Development

4. Agenda SKF Automotive • Market update • Way ahead • Special focus - Trucks • Special focus - SKF knowledge engineering • Key business message • Q&A

5. Market update

6. Sales in local currencies and demand outlook SKF demand outlook for Q3 2013 Sales in local currencies excl. structure change y-o-y YTD 2013

7. Business recovering Operating margin Sales development 8,5% Q2, 2013 5,8% 5% SEK billion Percent Excl one time costs

8. Customer segments Cars Trucks Two wheelers Vehicle aftermarket Other

9. SKF Automotive organisation Five global business units with clear roles & responsibilities. Vehicle Service Market Sealing Solutions Car Chassis Trucks PTE & TW Aurelio Nervo Bernd Stephan Franco Ferro Christer Cedervall John Bohenick

10. Light vehicle production Total growth 2013/2012: +2,3% +3.0 % Values in K units +4.8 % -3.1 % Source: IHS July 2013

11. Two wheeler production Total growth 2013/2012: +8% +8.3% Values in K units -1.4% +4.2 % Source: Frost & Sullivan and others, July 2013

12. Trucks production (GVW>6t) Total growth 2013/2012: +3% Values in K units +4,2% -0,4% -6,6% Source: LMC Report Q2 2013

13. The way ahead

14. Winning customers SKF Automotive strategy Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

15. Winning customers Growth drivers - Winning customers Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

16. Growing with winning OEM customers Recent successful cases

17. Supplier recognition • GM Supplier of the Year Award 2012 • 3 consecutive years!

18. SAIC Zhan Jinping,Suspension System Manager

19. SAIC • Excellent supplier important for brand building • SKF best in R&D and quick response time • Need SKF technology to meet goals

20. GeelyChen Yong,Purchasing Manager

21. Geely • Brand positioning • Localization in China • High performance and energy efficient products

22. Winning customers Growth drivers - Aftermarket Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

23. Customers Performance • Asia distributor network grown with 40 new in half year 2013 • Consolidation of national distributors to Int. trading groups • Formed Global Product Management organization • Significantly increased flexibility and capacity in packaging centers • Extensive sales and marketing efforts to launch SKF branded CV-Joint kits Growing the vehicle aftermarket Products • Growing range • 600 new kits in 2013 = 20.600 kits • Global customer need for local markets • Step up in-sourcing • Continued re-sourcing to have the right suppliers • Flexible production capacity OE to aftermarket

24. Winning customers Growth drivers – Engineering partner Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

25. 12 engineering centers Engineering partner Solving customer issues • Local engineering globally • SKF Global Technical Centers – expansion in fast growing markets • Simulation and calculation expertise • Testing and evaluation expertise • Reducing lead times by more than 10 times • Reducing weight and friction with up to 50%

26. SKF Turbocharger Ball Bearing Unit SKF StopGo SKF Low Weight Hub Bearing Unit SKF Rotor Positioning Bearing E2 TRB for truck final drive SKF Low Friction Engine Seal SKF Low Friction Hub Bearing Unit SKF Bus Door Actuator High performance seal for hub bearing unit SKF BeyondZero portfolio - Automotive • Energy efficient solutions to reduce CO2 emissions and fuel/energy consumption. SKF Sealed Energy Efficient deep groove ball bearing High pressure valve stem seal SKF Rotor Positioning Sensor-Bearing Unit for traction motors SKF eDrive Ball Bearing

27. Winning customers SKF Automotive – Reducing cost Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

28. 50 factories in 45 locations 45% in fast growing markets Cost reduction programmes Sustainable cost reductions through a number of global programmes • Manufacturing footprint • Investment focus in best cost countries • Cost reduction from sourcing and design • Business Excellence • Manufacturing • Management and administration • Six Sigma • Quality • Inventory optimization

29. Business Excellence in Guadalajara, Mexico • Inventory reduction (days of inventory) - 33% • Down time reduction - 30% • Increased efficiency +19% • Scrap reduction - 44% How was this achieved? • Deep dive to understand the gap vs. ideal lean conditions • Master schedule • Daily management process with visual inspection • All people involved and committed • Continuous improvements

30. Shanghai ATC II Manufacturing and engineering footprint – Asia Expansion in Asia • Factory inaugurated and in production: Jinan, China • New factory being built: ATC II Shanghai, China • SKF Global Technical Centers expanding in India and China • 12 factories in Asia Taegu Jinan Busan Haridwar Shanghai ATC+SSBC Wuhu Pune Bangalore Mysore Jakarta

31. SKF Automotive Lets move out…..

32. SKF Automotive CMD 2013

33. Key business message

34. Winning customers SKF Automotive – The way ahead Growth Fast growing markets Engineering partner After-market Strategic account manage-ment Productivity Cost and capital efficiency Offers for regional demand Cost reductions

35. SKF Automotive – Driving profitable growth Competitive advantages SKF BeyondZero portfolio • SKF brand • SKF knowledge engineering • Technology leadership • Global presence; sales, engineering and manufacturing • Value added products and solutions • Energy efficient solutions • Credibility • Life cycle management • Calculations and measurements • External audit/review Growth drivers Cost focus • Fast growing markets • Sustainability • Reduce waste • Adapt and adjust for low inventory cost • Optimize product cost for optimized customer value

36. SKF Automotive – Key business message, Sept 2013 • Well positioned product portfolio, with clear positive environmental impact • Good growth sequentially • Improvements of order intake • Earnings recovering in first half 2013 • Overall heading in the right direction

37. SKF Automotive Open for questions… Thank you