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SKF Q3 results 2015 Alrik Danielson, President and CEO

SKF Q3 2015 results show a growth in net sales, but a decline in operating profit. Sales development by geography and customer industry is provided, along with highlights of new business in Q3 2015.

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SKF Q3 results 2015 Alrik Danielson, President and CEO

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  1. SKF Q3 results 2015Alrik Danielson, President and CEO 16 October 2015

  2. Q3 2015 Summary Net sales 18.4 bn 17.8 bn Operating profit* 1 976 M 2 092 M Cash flow** 1 808 M 1 476 M * Excluding one-time items ** After net investments before financing, excluding acquisitions and divestments and EU payment in 2014 • Sales 18 367 SEKm, +3.3% yoy • Organic sales -4.7% • Operating profit* 1 976 SEKm (2 092) • Operating margin* 10.8% (11.8) • Profit before tax 1 348 SEKm (1 827) • Cash flow after investments before financing 1 808 SEKm (1 476)

  3. Sales development by geographyOrganic growth in local currency Q3 2015 vs Q3 2014 Europe -0.7% North America -10.8% Asia/Pacific -7.8% Latin America 0.9% Middle East & Africa 12.2%

  4. Sales development by Customer Industry Industrial Distribution Industry, general Energy Railway Industrial, heavy and special and Off-highway Trucks Cars and light trucks Aerospace Two-wheelers and Electrical VehicleService Market

  5. Highlights - examples of new business in Q3 2015 • Geely Auto, China Wheel hub and MacPherson suspension bearing units • MAN, Germany Truck-matched wheel-end units • Tsakos Columbia Shipmanagement Condition monitoring solutions S.A. (TCM), Greece • Hanbell, China Strategic cooperation agreement to jointly develop magnetic chiller centrifugal compressors

  6. Highlights – other quarterly highlights • Divestment of Canfield Technologies, Inc. to Gen Cap America, a private equity firm headquartered in Nashville, Tennessee completed. • A new Kaydon bearings manufacturing facility opened in Cajamar, São Paulo, Brazil • New products:- upgraded a range of small size sealed SKF Explorer spherical roller bearings, that can significantly improve reliability and reduce maintenance of gearless traction motors for elevators. - a new generation of highly effective and easily maintained shaft seals for wind turbines.- a new SKF Customized Interfacing that integrates the SKF@ptitude condition monitoring suite with customers ERP and CMMS solutions.

  7. SKF Q3 results 2015Christian Johansson, CFO 16 October 2015

  8. Sales development Net sales, SEK bn 18.4 17.8

  9. Organic sales growth % change y-o-y 2013 2014 2015

  10. Operating profit excluding one-time items SEKm 2013 2014 2015

  11. Operating profit bridge, Q3 2015 SEKm +150 2 073 +350 -15 1 825 -130 -343 -260 Q3 2014 One-time items at 2014 exchange rates Organic sales Currency impact Savings from cost-reduction programme Divested/aquired companies Other* Q3 2015 * Includes, manufacturing and purchasing impacts, IT project, R&D and general inflation.

  12. Operating performance per business area Industrial MarketOperating margin*, % 14.6% 13.0% Net sales 11 079 SEKm Organic sales -5.3% Operating margin declined to 13.0% Automotive MarketOperating margin*, % Net sales 4 795 SEKm Organic sales -0.5% Operating margin improved to 5.7% 5.7% 4.6% Specialty BusinessOperating margin*, % 11.0% Net sales 2 424 SEKm Organic sales -8.2% Operating margin declined to 11.0% Canfield Technologies divested 13.4% * Excluding one-time items

  13. Cost reduction programme from December 2014

  14. SKF Group – Q3 2015

  15. Cash flow, after investments before financing* SEKm 2013 2014 2015 * Excluding acquisitions and divestments and EU payment in Q2 2014.2013 and 2014 are restated

  16. Net working capital as % of annual sales % Total NWC 29.7% Target: 27% Inventories 20.5% Trade receivables 17.0% Trade payables 7.8% 2014 2015 2013

  17. Financial position Net debtSEK bn Net debt/equity% 114% 2013 2014 2015 2013 2014 2015 Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.

  18. Debt structure, maturity years 850 500 500 200 110 100 • Available credit facilities: • EUR 500 million 2019 • SEK 3 000 million 2018 • EUR 150 million 2017 • No financial covenants nor material adverse change clause

  19. Guidance for 2015* • Q4 2015: • Financial net: around -300 million • Currency impact on operating profit vs 2014 Q4: +250 million, based on exchange rates per September 30. • 2015: • Tax level: below 30% for 2015 • Additions to PPE: around 2 000million for 2015 * Guidance is approximate and based on current assumptions and exchange rates.

  20. 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 is the expected volume development in the markets where our customers operate.

  21. October 2015: SKF demand outlook Q4 2015 Demand compared to the fourth quarter 2014 The demand for SKF’s products and services is expected to be lower for the Group where demand for the Automotive Market is expected to be relatively unchanged, while demand for the Specialty Business is expected to be slightly lower and demand for the Industrial Market is expected to be lower. Split by market, demand is expected to be relatively unchanged in Europe and Latin America and significantly lower in North America and Asia. Demand compared to the third quarter 2015 The demand for SKF’s products and services is expected to be slightly lower for the Group where demand for the Industrial Market and the Automotive Market is expected to be slightly lower while demand for the Specialty Business is expected to be relatively unchanged. Split by market, demand is expected to be relatively unchanged in Europe and slightly lower in North America, Latin America and Asia.

  22. Financial calendar

  23. SKF Q3 results 2015Q & A 16 October 2015

  24. 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 www.skf.com) under the Administration Report; “Important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.

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