1. Alrik Danielson, President and CEO
SKF Q1 results 2018
Alrik Danielson, President and CEO
16 November, 2018

2. 7.5% Organic sales growth 2,625 M Operating profit
A record start to 2018
7.5% Organic sales growth
Record-high sales of 20,560 M, organic growth +7.5%
Record-high reported operating profit 2,625 M (2,295)
Operating margin 12.8% (11.7)
Cash flow 259 M (64)
2,625 M Operating profit
12.8% Operating margin
16 November, 2018

3. Improving performance towards our targets
Targets set in 2016 and valid over a business cycle:
7.5%
Organic growth:
Target: 5%
12.8%
Operating margin:
Target: 12%
66%
Net debt / equity:
Target: <80%
31.7%
Net working capital:
Target: 25%
15.0%
Return on capital employed:
Target: 16%
16 November, 2018

4. Sales growth in all markets Organic growth in local currency Q1 2018 vs Q1 2017
Europe
+7.6%
North
America
+3.2%
Asia/Pacific
+13.2%
Latin
America
+0.7%
Middle East
& Africa
+11.0%
16 November, 2018

5. Rotating equipment performance creates value
Customer
performance
Connected to customer applications, SKF will create and capture value and deliver functionality
Connections include:
Condition monitoring
Integrated supply chain
Application
knowhow
Foresight
Create customer value
Product & service
Insight
Hindsight
16 November, 2018

6. 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
16 November, 2018

7. SKF to supply bearings to Volkswagen’s all-electric MEB vehicle powertrain platform
16 November, November, November, November, 2018

8. LEAP Engine : a success for SKF
SKF is a development partner in manufacturing, design and testing of main shaft and gearbox bearings
Ceramic hybrid main shaft ball bearings
SKF supports the LEAP program with a global supply chain, with plants in US and Europe.
Key figures
14,300 total engine orders and commitments as of Feb. 2018
Sole engine for Boeing 737 and COMAC C919 aircrafts, and 50% market share on Airbus A320neo
SKF has now produced more than 6,000 main shaft bearings
SKF selected for all main shaft and most gearbox bearings for the LEAP Engine
SKF has now produced more than 6,000 bearings for the LEAP Engine
16 November, 2018

9. Q1 results – the details Christian Johansson, CFO2
Q1 results – the details Christian Johansson, CFO

10. Sales development 2017 2018 Q1 Q2 Q3 Q4 Organic +8.0 +7.5 +8.2
Percent y-o-y Q1 Q2 Q3 Q4
Organic
+8.0
+7.5
+8.2
Structure
-2.0
-0.7
-0.6
Currency
+4.9
-3.0
-3.6
-1.9
Net sales
+10.9
+10.4
+4.3
+4.0
16 November, 2018

11. Organic sales growth
16 November, 2018

12. Operating profit
16 November, 2018

13. Operating profit
16 November, 2018

14. Performance by customer group
Industrial
Net sales 14,241 M
Organic sales +8.5%
Operating margin 15.0%, (14.0)
Automotive
Net sales 6,319 M
Organic sales +5.5%
Operating margin 7.7%, (6.8)
16 November, 2018

15. 12.8% Operating margin SKF Group – Q1 2018
Financial performance (SEKm)
2018
2017
Net sales
20 560
19 601
Cost of goods sold
Gross profit
5 248
4 974
Gross margin, %
25.5%
25.4%
Selling and administrative expenses
-2 700
-2 691
Other operating income/expense 77 12
Operating profit
2 625
2 295
Operating margin, %
12.8
11.7
Financial income and expense, net
-200
-170
Profit before taxes
2 425
2 125
Taxes
-638
-654
Net profit
1 787
1 471
Basic earnings per share, SEK
3.77
3.09
12.8% Operating margin
16 November, November, November, November, 2018

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

17. Net working capital 31.7% of annual sales
16 November, 2018

18. Net debt/equity improved to 66 percent in the quarter
16 November, 2018

19. Guidance for 2018* Q2 2018: Financial net: around -200 million
Currency impact on the operating profit is expected to be around 160 million negative compared with 2017, based on exchange rates per 31 March, 2018.
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.
16 November, 2018

20. Reporting changes No adjustment for IAC on operating profit
No sequential demand guidance
Segment definitions have been aligned with industry standard
Segment changes:
Cars & Light trucks has been renamed to Light vehicles and includes two-wheelers
Industrial Heavy and Special has been split in Agriculture, Food and Beverage, Industrial Drives and Marine
Industrial General has been reclassified to Industrial Drives
Other Industry has been renamed to Other Industrial
16 November, 2018

21. Summary – Q1 a good start to 2018
7.5% Organic sales growth
Continued growth in Q1
Record-high sales and operating profit
Expect to see continued growth in Q2 – higher volumes year-over-year
2,625 M Operating profit
12.8% Operating margin
16 November, 2018

22. April 2018: SKF demand outlook Q2 2018
Demand compared to the second 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, significantly higher in Asia and relatively unchanged in North America and Latin America.
16 November, 2018

23. SKF Q1 results 2018 Q & A
16 November, 2018

24. Financial calendar Q1 report 26 April Virtual Roadshow 15 May
JP Morgan Capital Goods Conference London
15 June
Q2 report
19 July
SEB Industrial & Technology Seminar Stockholm
23 August
SHB Nordic Large Cap Seminar Stockholm
12 September
Q3 report
25 October
Capital Markets Day
November
16 November, 2018

25. 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".

26. 16 November, 2018