1. Alrik Danielson, President and CEO
SKF Q2 results 2018
Alrik Danielson, President and CEO
12 November, 2018

2. A record second quarter
9.0% Organic sales growth
Record-high sales of 22,620 M, organic growth 9.0%
Record-high reported operating profit 2,925 M (2,315)
Operating margin 12.9% (11.4)
Cash flow 2,182 M (1,412)
2,925 M Operating profit
12.9% Operating margin
12 November, 2018

3. Industrial business performing well; growth also picking up in North America 11% organic growth and 15% operating margin
12 November, 2018

4. Automotive business outperforming the market, margin continues to strengthen 5% organic growth and operating margin 9%
12 November, 2018

5. Improving performance towards our targets
Targets set in 2016 and valid over a business cycle:
9.0%
Organic growth:
Target: 5%
12.9%
Operating margin:
Target: 12%
67%
Net debt / equity:
Target: <80%
31.1%
Net working capital:
Target: 25%
15.8%
Return on capital employed:
Target: 16%
12 November, 2018

6. Sales growth in all markets Organic growth in local currency Q2 2018 vs Q2 2017
Europe
+8.7%
North
America
+5.3%
Asia/Pacific
+17.2%
Latin
America
-3.2%
Middle East
& Africa
+5.6%
12 November, 2018

7. Unplanned production stops cost billions Every time a machine is stopped and opened for maintenance when not needed drives cost New technology provides radically different tools for SKF to strengthen the competitiveness of our customers
12 November, 2018

8. New Rotating Performance Center in Göteborg
12 November, 2018

9. Q2 results – the details Christian Johansson, CFO

10. Sales development 2017 2018 Q2 Q3 Q4 Q1 Organic +7.5 +8.0 +8.2 +9.0
Percent y-o-y Q2 Q3 Q4 Q1
Organic
+7.5
+8.0
+8.2
+9.0
Structure
-2.0
-0.7
-0.6
Currency
+4.9
-3.0
-3.6
-1.9
+3.4
Net sales
+10.4
+4.3
+4.0
+11.8
12 November, 2018

11. Organic sales growth
12 November, 2018

12. Operating profit
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13. Operating profit
12 November, 2018

14. Performance by customer group
Industrial
Net sales 15,930 M
Organic sales +10.7%
Operating margin 14.6%, (13.7)
Automotive
Net sales 6,690 M
Organic sales +5.2%
Operating margin 8.9%, (6.4)
12 November, 2018

15. 12.9% Operating margin SKF Group – Q2 2018
Financial performance (SEKm)
2018
2017
Net sales
22 620
20 229
Cost of goods sold
Gross profit
5 725
5 100
Gross margin, %
25.3%
25.2%
Selling and administrative expenses
-2 829
-2 776
Other operating income/expense 29 -9
Operating profit
2 925
2 315
Operating margin, %
12.9
11.4
Financial income and expense, net
-142
-258
Profit before taxes
2 783
2 057
Taxes
-759
-837
Net profit
2 024
1 220
Basic earnings per share, SEK
4.25
2.51
12.9% Operating margin
12 November, November, November, November, 2018

16. Cash flow after investments before financing*
12 November, 2018

17. Net working capital – finished goods inventories reduced in the quarter
12 November, 2018

18. Net debt/equity ratio stable, despite dividend payment
12 November, 2018

19. Guidance for 2018* Q3 2018: Financial net: around -200 million
Currency impact on the operating profit is expected to be around 180 million positive compared with 2017, based on exchange rates per 30 June, 2018.
2018:
Tax level: around 28% for 2018, excluding effects from divestments
Additions to property, plant and equipment: around 2,400 million for 2018
* Guidance is approximate and based on current assumptions and exchange rates.
12 November, 2018

20. Summary – Q2 a record quarter
2,925 M Operating profit
Continued growth in Q2
Record-high sales and operating profit
Good cash flow
Expect to see continued growth in Q3 – higher volumes year-over-year
12.9% Operating margin
2,182 M Cash flow
12 November, 2018

21. July 2018: SKF demand outlook Q3 2018
Demand compared to the third 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 significantly higher in Asia, higher in Europe and North America, and slightly lower in Latin America.
12 November, 2018

22. SKF Q2 results 2018 Q & A
12 November, 2018

23. Financial calendar SEB Industrial & Technology Seminar Stockholm
23 August
SHB Nordic Large Cap Seminar Stockholm
12 September
Roadshow Paris & the Netherlands
September
Roadshow Germany
US Roadshow
October
Q3 report
25 October
Capital Markets Day
29 November
12 November, 2018

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 investors.skf.com) under the Administration Report; “Risk management" and "Sensitivity analysis”.

25. 12 November, 2018