1. SKF Nine-month results 2014
Tom Johnstone, President and CEO
15 October 2014
11 April 2017

2. Alrik Danielson, new President and CEO from 1 January 2015
B.Sc in Business Administration and International Economics from the University of Gothenburg
Previous positions within SKF:
Financial controller in Gothenburg
President, Industrial Division in Spain and Portugal
President, SKF do Brazil
President, Industrial Division
and several other managerial positions.
Höganäs AB, President and CEO

3. Examples of new business
Doosan Heavy Industries and Construction, SKF Supergrip Bolts South Korea SKF Nautilus bearing
A leading Chinese locomotive manufacturer Traction motor bearings
HSD SpA, Italy Super precision bearings and engineering support
A major Australian customer Maintenance contract in the agriculture industry
Medical device manufacturer in California, Slewing ring bearings USA

4. Examples of new business
Tesla Motors Bearing for the gearbox, e-motor and wheels
Volvo Cars Wheel hub bearing units
Scania Wheel bearing units and high pressure valve stem seals

5. Customer awards
Supplier Performance Award – Snecma, Safran Group, France
Best Supplier Award – Weg Electric Motor Manufacturing Co., Ltd, China
Best Supplier Award – Shanghai Hanbell Precise Machinery Co. Ltd., China
Excellent Engineering Development Award – Shanghai Automobile Gear Works (SAGW), China
Fiat Qualitas Award – Fiat, Argentina
Certificate of Appreciation for quality and delivery performance – Honda, India

6. Highlights New Kaydon factory at the SKF Campus in Cajamar, Brazil.
New Global Technical Center in the greater Chicago area, US.
For the 15th year in a row, one of the world’s most sustainable companies by the Dow Jones Sustainability World Index (DJSI).
For the 14th consecutive year, a constituent of the FTSE4Good Index Series.

7. Examples of new products and solutions
SKF Multilog Online System IMx-B
Tapered roller bearing unit for passenger railway applications
Compact tapered roller bearing unit for heavy freight
SKF Mudblock cassette seals, MUD 11
SKF Machine Tool Observer MTx
SKF Multilog On-line System IMx-M
SKF Static Motor Analyzer Baker AWA-IV
PuraBreeze 100

8. SKF Group – Q3 2014 Financial performance (SEKm) 2014 2013 Net sales
17,787
15,623
Operating profit
2,073
1,923
Operating margin, %
11.7
12.3
Operating margin excl. one-time items, %
11.8
12.9
Profit before tax
1,827
1,717
Basic earnings per share, SEK
3.01
2.47
Cash flow after investments before financing excl. EU payment
1,476
1,135
Cash flow after investments before financing
Organic sales growth in local currency:
SKF Group
3.3%
Europe 0%
Strategic Industries
9.1%
North America 3%
Regional Sales and Service
0.8%
Asia 8%
Automotive
-0.5%
Latin America
Middle East and Africa 7%
Key points
Sales volumes up by 1.9% y-o-y.
Manufacturing was relatively unchanged compared to last year.

9. SKF Group – Nine month 2014 Financial performance (SEKm) 2014 2013
Net sales
52,476
47,167
Operating profit
6,193
5,240
Operating margin, %
11.8
11.1
Operating margin excl. one-time items, %
12.2
Profit before tax
5,375
4,581
Basic earnings per share, SEK
8.27
6.57
Cash flow after investments before financing excl. EU payment
2,640
1,390
Cash flow after investments before financing
-185
Organic sales growth in local currency:
SKF Group
4.6%
Europe 2%
Strategic Industries
8.7%
North America 3%
Regional Sales and Service
1.7%
Asia
11%
Automotive
2.8%
Latin America 1%
Middle East and Africa
14%
Key points
Sales volumes up by 3.8% y-o-y.
Manufacturing was slightly higher compared to last year.

10. Organic sales growth in local currency
% change
y-o-y
2012
2013
2014

11. Organic sales growth in local currency
% y-o-y
4.5%
-0.7%
-2.5%
Structure in 2012: 0.4%
Structure in 2013: 2.5%
Structure in 2014: 4.7%

12. Sales development by geography Organic growth in local currency Q3 2014 vs Q3 2013
Europe 0%
North
America 3%
Asia/Pacific 8%
Latin
America 0%
Middle East
& Africa 7%

13. Sales development by geography Organic growth in local currency YTD 2014 vs YTD 2013
Europe 2%
North
America 3%
Asia/Pacific
11%
Latin
America 1%
Middle East
& Africa
14%

14. Components in net sales
2012
2013
2014
Percent y-o-y Q1 Q2 Q3 Q4
Volume
-0.8
-2.8
-5.0
-5.9
-8.7
-1.6
2.2
7.1
6.2
3.6
1.9
Structure
-0.1
0.0
0.8
1.0
1.5
2.6
1.1
4.8
4.7
3.8
5.4
Price/mix
2.0
0.5
0.7
-0.6
-0.2
-0.4
1.3
Sales in local currency
-3.7
-4.2
-6.5
0.4
3.1
11.7
10.5
8.4
8.6
Currency
-2.7
-3.6
-4.0
-2.2
-2.1
5.3
Net sales
1.4
2.8
-6.4
-7.8
-10.5
-4.6
0.9
9.6
10.4
9.5
13.9

15. Operating profit as reported
SEKm
2012
2013
2014

16. Operating profit excluding one-time items
SEKm
2012
2013
2014

17. Operating margin One-time items * Excluding one-time items 12.0* 11.9*%
12.0*
11.9*
11.8
11.3
5.8

18. Operating margin per business area as reported%
Regional Sales and Service
Specialty Business
Strategic Industries
Automotive
2012
2013
2014

19. Operating margin per business area excl. one-time items%
Regional Sales and Service
Specialty Business
Strategic Industries
Automotive
2012
2013
2014

20. SKF’s programme to improve efficiency and reduce cost
Restructuring, SEKm:
Q4/12
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14
Total
Cost taken
200
250
190 50
490
100 20
810
People affected
530
410
320
130
860
170 30
1,590
Giving future gross savings, SEKm:
Full year gross saving
150
100 80 40
220 5
475
Realized gross savings from total programme, SEKm:
vs 2012
vs 2013
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14
2014
Restructuring 15 35 75
200 70 50 10
130
S&A
Purchasing
100
400 60
260
Total
165
185
225
800
150
110
390
Note: Run rate Q SEK 1,340 million vs 2012.

21. Operating profit bridge, Q3 2014
SEKm
+100
-432
+110
+65
+112
+165
2,073
+30
1,923
Q3 2013
Volumes excl. Specialty Business
Price/mix
Specialty Business
Savings
One-time items
Currencies
Other*
Q3 2014
* R&D, S&A, IT, inflation etc.

22. Operating profit bridge, nine month 2014
SEKm
+505
-120
-829
+390
+352
6,193
+225
+430
5,240
Q1-Q3 2013
Volumes excl. Specialty Business
Price/mix
Specialty Business
Savings
One-time items
Currencies
Other*
Q1-Q3 2014
* R&D, S&A, IT, inflation etc.

23. Net working capital as % of annual sales
Target: 27% %
2012
2013
2014

24. Return on capital employed
One-time items
* Excluding one-time items %
17.1*
15.1*
13.9*
16.2
8.5
7.5
ROCE: Operating profit plus interest income, as a percentage of twelve months rolling average of total assets less the average of non-interest bearing liabilities.

25. Cash flow, after investments before financing
SEKm 1) 5) 4) 3) 2)
2012
2013
2014
Excl. acq. and div.: 1) Q SEK 1,707 million
2) Q SEK -69 million
3) Q SEK 871 million
4) Q SEK 1,170 million
Excl. EU payment 5) Q SEK 1,423 million

26. Net debt AB SKF, dividend paid (SEKm): 2012 Q2 2,504 2013 Q2 2,530
Cash out from major
acquisitions (SEKm):
2012 Q3 829
2013 Q1 823
2013 Q4 7,900
EU payment (SEKm):
2014 Q2 2,825
2012
2013
2014
Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.

27. Debt structure, maturity years
850
500
500
200
110
100
100
Available credit facilities:
EUR 500 million 2019
SEK 3,000 million 2016
EUR 150 million 2017
No financial covenants nor material adverse change clause

28. October 2014: SKF demand outlook Q4 2014
Demand compared to the fourth quarter 2013
The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be slightly higher for Strategic Industries, relatively unchanged for Regional Sales and Service and slightly lower for Automotive.
Demand compared to the third quarter 2014
The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be relatively unchanged for Strategic Industries, slightly higher for Regional Sales and Service and slightly lower for Automotive.
Manufacturing
Manufacturing is expected to be slightly lower year over year and compared to the third quarter.

29. SKF demand outlook Q4 2014, main regions
Share of net sales 2013
Europe
42%
Asia Pacific
24%
North America
Latin America 7%
Total
Sequential trend for Q4 2014
Q4 2014
vs Q4 2013
+/- + -

30. SKF demand outlook Q4 2014, main business areas
Share of net sales 2013
Strategic
Industries
29%
Regional Sales and Service
39%
Automotive
27%
Total
Sequential trend for Q4 2014
Q4 2014
vs Q4 2013 +
+/- -

31. SKF sequential volume trend Q4 2014, Industries
Share of net sales 2013
29%
Industrial distribution 6%
Aerospace
13%
Industrial, heavy, special and off-highway
11%
Industrial, general 5%
Energy 4%
Railway 2%
Two-wheelers and Electrical
14%
Cars and light vehicles
Vehicle service market
Trucks

32. Guidance for the fourth quarter 2014*
Tax level: < 30%
Financial net: around SEK -220 million
Currency impact on operating profit vs Q4: SEK +230 million
Full year: SEK +110 million
Additions to PPE: around SEK 1.7 billion for 2014
* Guidance is approximate and based on current assumptions and exchange rates.

33. SKF’s priorities Sustainable profitable growth
Expand the platform concept
Exploit the asset life cycle approach
Develop new products and grow SKF BeyondZero portfolio
Extend and grow second brands
Acquisitions
Capital efficiency
Fixed capital
Net working capital
Investments & Innovation
New and existing facilities
Research and development
IT systems and mobility
Cost reduction
Business Excellence
Consolidation of manufacturing
Optimization and productivity improvements
Reduction in purchasing costs

34. 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; “Important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.