1. Alrik Danielson, President and CEO
SKF Q4 results 2017
Alrik Danielson, President and CEO
19 September, 2018

2. Key events in the fourth quarter
Digitalisation and connectivity
SKF Enlight Centre – a first-of-its-kind, asset based machine health monitoring system, featuring a radically simplified user interface.
SKF SimPro Expert – a new advanced simulation software tool that gives customers the power to develop applications taking advantage of the performance of SKF bearing arrangements.
New business
Agreement with Koncar to supply bearings and axleboxes for low-floor electric and diesel-electric trains.
Selected to supply several components to the next- generation electric powertrain platform for a large OEM
19 September, 2018

3. New multi-year agreement with ArcelorMittal
19 September, 2018

4. Continued organic growth and margin improvement in Q4
Sales 19,480 M, organic sales +8.2% compared to Q4 2016
Adjusted operating profit 2,092 M (1 741), full year 9,096 (7,544)
Adjusted operating margin 10.7% (9.3), full year 11.7% (10.4)
Items affecting comparability -75 M (-155)
Cash flow 1,704 M (1,428), full year 4,753 (7,717)
Profit before tax 1,784 M (1,376), full year 7,658 (6,739)
Proposed dividend SEK 5.50 (5.50)
10.7% Operating margin*
* Adjusted for items affecting comparability
19 September, 2018

5. Sales development by geography Organic growth in local currency Q4 2017 vs Q4 2016
Europe
+9.1%
North
America
+4.7%
Asia/Pacific
+10.0%
Latin
America
+7.3%
Middle East
& Africa
+13.3%
19 September, 2018

6. Q4 results – the details Christian Johansson, CFO2
Q4 results – the details Christian Johansson, CFO

7. Sales development 2016 2017 Q4 Q1 Q2 Q3 Organic +1.2 +8.0 +7.5 +8.2
Percent y-o-y Q4 Q1 Q2 Q3
Organic
+1.2
+8.0
+7.5
+8.2
Structure
-1.8
-2.0
-0.7
-0.6
Currency
+3.7
+4.9
-3.0
-3.6
Net sales
+3.1
+10.9
+10.4
+4.3
+4.0
19 September, 2018

8. Organic sales growth
19 September, 2018

9. Adjusted operating profit*
SEK bn, 12m moving
SEK bn
2.1
2.1
1.7
1.7
2014
2015
2016
2017
* Adjusted for items affecting comparability
19 September, 2018

10. Operating profit
19 September, 2018

11. Performance by customer group
Industrial
Net sales 13,487 M, full year 53,972 (50,588)
Organic sales +7.7%
Adjusted operating margin* 12.9%, full year 13.7% (12.1)
Automotive
Net sales 5,994 M, full year 23,966 M (22,001)
Organic sales +9.6%
Adjusted operating margin* 5.9%, full year 7.2% (6.5)
* Adjusted for items affecting comparability
19 September, 2018

12. 10.7% Operating margin* SKF Group – Q4 2017
Financial performance (SEKm)
2017
2016
Net sales
19 481
18 732
Cost of goods sold
Gross profit
4 790
4 395
Gross margin, %
24.6%
23.5%
Gross margin, excluding IAC, %
23.8%
Selling and administrative expenses
-2 762
-2 834
Other operating expenses
-11 25
Operating profit
2 017
1 586
Items affecting comparability
-75
-155
Adjusted operating profit
2 092
1 741
Operating margin, %
10.4
8.5
Adjusted operating margin, %
10.7
9.3
Financial income and expense, net
-233
-210
Profit before taxes
1 784
1 376
Taxes
179
-406
Net profit
1 963
970
Basic earnings per share, SEK
4.12
1.95
10.7% Operating margin*
* Adjusted for items affecting comparability
19 September, September, September, September, 2018

13. Positive impact from the US tax reform
Q4 2017
Federal corporate income tax cut from 35% to 21% beginning in Including state taxes, total corporate income tax is around 25%.
In Q4, revaluation of deferred tax assets/liabilities led to a positive effect on the tax cost of around SEK 770 M and a negative effect in other comprehensive income of around SEK 400 M.
2018
In 2018, SKF’s US corporate income tax will be reduced by around USD 10 M.
The SKF Group tax rate is expected to be around 29%, excluding effects from divestments/acquisitions.
19 September, 2018

14. Cash flow after investments before financing*
* After investments before financing (excluding acquisitions and divestments and EU payment in Q ) 2013 and 2014 are restated
19 September, 2018

15. Net working capital 29.0% of annual sales
19 September, 2018

16. Net debt decreased by 0.9 billion in the quarter
19 September, 2018

17. Guidance for 2018* Q1 2018: Financial net: around -225 million
Currency impact on the operating profit is expected to be around 300 million negative compared with 2017, based on exchange rates per 31 December, 2017.
2018:
Tax level: around 29% for 2018, excluding effects from divestments
Additions to property, plant and equipment: around 2,400 million for
* Guidance is approximate and based on current assumptions and exchange rates.
19 September, 2018

18. February 2018: SKF demand outlook Q1 2018
Demand compared to the first quarter 2017 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, relatively unchanged in North America, significantly higher in Asia and slightly higher in Latin America. Demand compared to the fourth quarter 2017 The demand for SKF’s products and services is expected to be slightly higher for the Group and Industrial and higher for Automotive. Demand is expected to be higher in Europe, North America and in Latin America and lower in Asia.
19 September, 2018

19. Financial calendar Q4 report 1 February Stockholm Roadshow
US Roadshow
5-6 February
Annual report 2017
March
Carnegie Capital Goods seminar Stockholm
14 March
BAML London Conference
20 March
Annual General Meeting
27 March
Q1 report
26 April
JP Morgan Conference London
15 June
19 September, 2018

20. SKF Q4 results 2017 Q & A
19 September, 2018

21. 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”.

22. 19 September, 2018