Page 0 SKF Automotive CMD 2013 22 April, 2017 22 April 2017

SKF Automotive speakers Page 2 SKF Automotive speakers Tryggve Sthen President SKF Automotive Bernd Stephan Director, Business unit Trucks Edward Holweg Product and Systems Development 22 April 2017

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

Market update

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 Europe North America Latin America Asia Middle East & Africa Total Automotive +/- + +++ Trucks ++ --- Cars and light vehicles Vehicle service market -- Two-wheelers and electrical Sequential trend

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

Customer segments Cars Trucks Two wheelers Vehicle aftermarket Other

SKF Automotive organisation Five global business units with clear roles & responsibilities. Vehicle Service Market Sealing Solutions Trucks Car Chassis PTE & TW Bernd Stephan Aurelio Nervo Franco Ferro Christer Cedervall John Bohenick What are the message you want to bring with this slide poining to our internal organisation? Is it to show any improved result after we reorganized to have a more powertrain focus has improved our support to our customers inlide with their increased need for energy efficient powertrain solution ? 22 April 2017

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

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

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

The way ahead

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

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

Growing with winning OEM customers Recent successful cases Examples of solutions that has been awarded business by our customers will be shown in the exhibition for further information and open dialogue…… Mention that some of our customers do not allow us to do any PR or external communication when we sign contracts. Some allow us to do this after the car model has been properly launched by our customers. GM = SoY award PR Volvo cars = HBU3 SPA order PR Audi = Transmission PR Fiat = HBU3 PR Scania = Transmission PR and high pressure valve stem seals CNHTC = Split THU1 and seals PRs Daimler = SKF Gear Bearing Unit (ok) Great Wall = HBU 22 April 2017

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

SAIC Zhan Jinping, Suspension System Manager

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

Geely Chen Yong, Purchasing Manager

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

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

Growing the vehicle aftermarket Products Asia distributor network grown with 40 new in half year 2013 Consolidation of national distributors to Int. trading groups Formed Global Product Management organization Customers Significantly increased flexibility and capacity in packaging centers Extensive sales and marketing efforts to launch SKF branded CV-Joint kits Performance 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 Performance Significantly increased flexibility and capacity in our packaging centers enabling full capture of stronger performance in business cycles Extensive sales and marketing efforts to launch SKF branded CV-joints strengthen market position 22 April 2017

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

Solving customer issues 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% 12 engineering centers

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

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

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 50 factories in 45 locations 45% in fast growing markets 22 April 2017

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 22 April 2017

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 Jinan Taegu Busan Haridwar Shanghai ATC+SSBC Wuhu Shanghai ATC II Pune Bangalore Mysore Jakarta

Lets move out….. SKF Automotive Suggestions for input to this slide: Comp. adv. Application engineering Low friction/energy efficient solutions Local acoring and prescence globally (for a long time) Growth drivers BeyondZero portfolio How to continue to grow Cost 22 April 2017

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Key business message

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

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 22 April 2017

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

Open for questions… Thank you SKF Automotive Open for questions… Thank you 22 April 2017