1. Alrik Danielson, President and CEO
SKF Q3 results 2017
Alrik Danielson, President and CEO
12 September, 2018

2. Key events in the third quarter
Digitalisation and connectivity
SKF SimPro Quick – an easier and faster bearing evaluation tool for shaft analysis
IMx-8 remote condition monitoring solution selected by Sirius Shipping
Investments
New European aeronautical test centre dedicated to high-speed aeronautical bearings in France
Investments in increased automation in the US and in Germany
Structure
Decision to consolidate seals manufacturing in the US
12 September, 2018

3. New line of spherical roller bearings for the wind industry
Bearing being mounted in the test rig
Sven Wingquist Test Centre
12 September, 2018

4. Continued organic growth and margin improvement in Q3
Sales SEK M, organic sales +8.0% compared to Q3 2016
Adjusted operating profit SEK M (1 811)
Adjusted operating margin 11.9% (10.1)
Items affecting comparability SEK -246 M (+380)
Cash flow SEK 681 M (1 554)
Profit before tax SEK M (2 049)
11.9% Operating margin*
* Adjusted for items affecting comparability
12 September, 2018

5. Pricing
Industrial distribution - price increases implemented in all markets
Industrial Original Equipment Manufacturers and end users - prices have been increased where contractual terms allow
Automotive vehicle aftermarket - price increases implemented
Automotive Original Equipment Manufacturers - relatively unchanged prices
12 September, 2018

6. Sales development by geography Organic growth in local currency Q3 2017 vs Q3 2016
Europe
+6.3%
North
America
+3.3%
Asia/Pacific
+11.8%
Latin
America
+14.1%
Middle East
& Africa
+23.3%
12 September, 2018

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

8. Sales development 2016 2017 Q3 Q4 Q1 Q2 Organic -0.6 +1.2 +8.0 +7.5
Percent y-o-y Q3 Q4 Q1 Q2
Organic
-0.6
+1.2
+8.0
+7.5
Structure
-2.0
-1.8
-0.7
Currency
+0.1
+3.7
+4.9
-3.0
Net sales
-2.5
+3.1
+10.9
+10.4
4.3
12 September, 2018

9. Organic sales growth
12 September, 2018

10. Adjusted operating profit*
12 September, 2018

11. Operating profit
12 September, 2018

12. Performance by customer group
Industrial
Net sales SEK
Organic sales +9.5%
Adjusted operating margin* 13.8%
Automotive
Net sales SEK M
Organic sales +4.9%
Adjusted operating margin* 7.6%
* Adjusted for items affecting comparability
12 September, 2018

13. 11.9% Operating margin* SKF Group – Q3 2017
Financial performance (SEKm)
2017
2016
Net sales
18 627
17 862
Cost of goods sold
Gross profit
4 561
4 489
Gross margin, %
24.5
25.1
Gross margin, excluding IAC, %
25.7%
23.7%
Selling and administrative expenses
-2 583
-2 310
Other operating expenses
-13
-12
Operating profit
1 965
2 191
Items affecting comparability
-246
+380
Adjusted operating profit
2 211
1 811
Operating margin, %
10.5
12.2
Adjusted operating margin, %
11.9
10.1
Financial income and expense, net
-273
-142
Profit before taxes
1 692
2 049
Taxes
-586
-660
Net profit
1 106
1 389
Basic earnings per share, SEK
2.29
2.97
11.9% Operating margin*
* Adjusted for items affecting comparability
12 September, 2018

14. Cost management
The fixed cost index was 99 at the end of Q3, adjusted for the costs related to the implementation of our new ERP system Unite the index was 95.
The number of employees increased by 680 in the quarter, adjusted for the divestment of Reelcraft, – of which 538 permanent employees, and 142 temporary employees including agency personnel.
Activity-based cost reductions continue with high focus
12 September, 2018

15. Cash flow after investments before financing*
12 September, 2018

16. Net working capital 29.4% of annual sales
12 September, 2018

17. Net debt decreased by 1.3 billion in the quarter
Net debt/equity, %
12 September, 2018

18. Guidance for 2017* Q4 2017: Financial net: around SEK -225 million
Currency impact on the operating profit is expected to around 300 million negative compared with 2016, based on exchange rates per September 30, 2017.
2017:
Tax level: around 30% for 2017, excluding effects from divestments
Additions to property, plant and equipment: around SEK 2,200 million for
* Guidance is approximate and based on current assumptions and exchange rates.
12 September, 2018

19. October 2017: SKF demand outlook Q4 2017
Demand compared to the fourth quarter 2016 The demand for SKF’s products and services is expected to be higher for the Group, including Industrial and Automotive. Demand is expected to be higher in Europe, North America and in Asia and significantly higher in Latin America. Demand compared to the third quarter 2017 The demand for SKF’s products and services is expected to be relatively unchanged for the Group including Industrial and Automotive. Demand is expected to be slightly higher in Europe and relatively unchanged in North America, Asia and in Latin America.
12 September, 2018

20. Financial calendar Q3 report 31 October London-Paris Roadshow
7-8 November
Goldman Sachs Conference London
27 November
Roadshow Asia
29-30 November
SKF in China
1 December
Q4 report
1 February, 2018
12 September, 2018

21. SKF Q3 results 2017 Q & A
12 September, 2018

22. 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; “Risk management at SKF" and "Sensitivity analysis”.

23. 12 September, 2018