0. Tom Johnstone, President and CEO September 2012
SKF Group
Tom Johnstone, President and CEO
September 2012
22 April 2017

1. SKF - A truly global company
Established: 1907
Sales 2011: SEK 66,216 million, (~ USD 10 bn)
Employees 2011: 46,039
Production sites: around 130 in 32 countries
SKF presence: in over 130 countries
Distributors/dealers: 15,000 locations
Global certificates: ISO 14001
OHSAS certification
Since 1907 and the invention and patent of the self aligning ball bearing SKF has made an astonishing journey.
SKF went global very early and grew at a rapid rate. As early as 1920s, the company was well established in Europe, America, Australia, Asia and Africa.
Today when people talk about the importance of the BRIC countries. SKF has been established there for a very long time, e.g Brazil and Russia 1914, China 1916 and India 1923.
22 April 2017

2. (2002) (1998) SKF 2011 % of group total Net sales*
(48)
(44)
(53)
Net sales*
(47)
(46)
(53)
Average number of employees
Tangible asset
(10)
(12)
(9)
(13)
(14)
(8)
(25)
(14)
(19)
(26)
(13)
(18)
(5)
(14)
(12)
(3)
(9)
(3)
(6)
(5)
(4)
(5)
(12)
(15)
(3)
(9)
(3)
(4)
(4)
(3)
(3)
(2)
(0)
(2)
(2)
(0)
North America
Latin America
Western Europe
Sweden
Eastern Europe
Middle East and Africa
Asia/ Pacific
* Previously published shares have been restated to reflect customer delivery locations.
22 April 2017

3. Net sales by customer segment 2011
Cars and light vehicles
Industrial distribution
Aerospace
Railway
Off-highway
Trucks
Two-wheeler and Electrical
Vehicle Service Market
Energy
Industrial, general
Industrial, heavy and special
Previously published shares have been restated to reflect the new business structure from 2012.
22 April 2017

4. Long-term financial targets8%
Changes in sales in local currency
15%
Operating margin, level
27%
Return on capital employed

5. SKF Group – operating margin development%

6. SKF today – more robust, more diverse
How did we get there?
SKF today – more robust, more diverse
Divesting and outsourcing component manufacturing, reducing fixed cost and invested capital
Manufacturing footprint in best cost countries
Reducing working capital
Customized solutions, value added products, technology platforms
Diversifying growth, faster growing segments and geographies
Acquisitions supporting growth and profitability
22 April 2017 6 6

7. Growth development by geography Local currencies H1 2012 vs H1 2011
Europe -2.3%
North America +11.6%
Asia/Pacific -8.0%
Latin America +13.8%
Middle East & Africa +2.2%

8. SKF demand outlook Q3 2012, regions
Share of net sales
2011*
Europe
44%
Asia Pacific
28%
North America
19%
Latin America 8%
Total
Sequential trends for:
Q Q3 2012
Q3 2012
vs Q3 2011 -
+/- ++ +
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
22 April 2017

9. SKF sequential demand trend Q3 2012
Share of net sales 2011* 5%
28%
13%
12%
10% 4% 3%
Energy
Aerospace
Industrial distribution
Industrial, general
Industrial, heavy, special and off-highway
Vehicle service market
Railway
Two-wheelers and electrical
Cars and light vehicles
Trucks
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
22 April 2017

10. Main initiatives going forward
Accelerate profitable growth
Reduce cost and eliminate waste
Invest in Growth
22 April 2017 10

11. Main initiatives going forward
Accelerate profitable growth
- intensify the platform and industry approach
- launch more new offerings – green and BZ portfolio
- strengthen the service business
- focus on faster growing regions/ industries
- develop other brands
Reduce cost and eliminate waste
- Business Excellence throughout the Group
- BCC manufcaturing and sourcing
- integrated cost reduction activities (ICR)
Invest in growth
- Sales and engineering resources
- Factories in growth markets
- Solution factories
- R&D
- Acquisitions
- New IT systems
22 April 2017 11

12. SKF platforms – managing and reducing friction/energy
Market SEK 75 bn
~ USD 12 bn
Market SEK 320 bn
~ USD 50 bn
Market SEK 30 bn
~ USD 5 bn PT
Market SEK 70 bn
~ USD 11 bn
Market > SEK 40 bn
~ USD 6 bn
Market SEK 100 bn
~ USD 16 bn

13. SKF platforms – managing and reducing friction/energy
Market SEK 75 bn
~ USD 12 bn
Market SEK 320 bn
~ USD 50 bn
Market SEK 30 bn
~ USD 5 bn
Addressable market > USD 100 bn PT
Market SEK 70 bn
~ USD 11 bn
Market > SEK 40 bn
~ USD 6 bn
Market SEK 100 bn
~ USD 16 bn

14. R&D – investments and main areas
+30%
Same
+10%
+20%
Patents +30% %
Main areas
Environment
Core technologies
New products
Strengthen R&D activities in fast growing regions
Strengthen links with universities and high schools
22 April 2017

15. Examples of new products launched in 2012
Servo Actuator for industrial applications
A hand-held,
18-volt,
lithium-ion
grease gun
Next generation SNL, SE housings
SKF Solar Hub
SKF Compact Wire Steering Bearing
SKF Speed
Sensor Unit
SKF Thruster
Monitoring
Integrated monotube seal
SKF Nautilus
range
extensions
SKF Bus Door
Actuator
22 April 2017

16. Investing for the future
Dalian, China
Jinan, China
Mysore, India
Bengaluru, India
It is critical to have a strong manufacturing footprint in Asia and in 2010 we inaugurated two new factories in India, Haridwar for our two wheeler business and one factory in Ahmedabad for our large size bearings. But only that, we also took decisions to invest in a new seals factory in India, Mysore which now is under construction and step 3 in Dalian, China , where we are building a new factory for medium size bearings.
22 April 2017 16 16

17. Acquisitions 2003-2012 Identifying gaps and opportunities in all platforms
Bearings
and units
Seals
Services
Lubrication
systems
Mechatronics
Technologies/ Products
Geographies
Segments
SNFA (2006)
Economos (2006)
Baker (2007)
Vogel (2004)
ABBA (2007)
GLO (2008)
Macrotech (2006)
Safematic (2006)
Jaeger (2005)
S2M (2007)
Lincoln Industrial (2010)
QPM (2008)
PMCI (2007)
ALS (2007)
TCM (2003)
Scandrive (2003)
PB&A (2006)
Sommers (2005)
Monitek (2006)
Cirval (2008)
PEER (2008)
GBC (2012)
Focus on industrial and aftermarket business.
22 April 2017 17 17

18. General Bearing Corporation
Established in 1955, headquarter in West Nyack, NY, USA.
Four factories in China, one ball bearing factory, two tapered roller bearing factories and one precision roller factory.
1,750 employees, 140 are located in USA and 1,610 in China.
Sales in 2011: around USD 155 million
Focused to serve OEM and end-user customers within the transportation markets: Truck, Trailer, Automotive, and Industrial.
Brands:
22 April 2017 18

19. Strategy for second brands
Capture mid-market growth
Lower cost manufacturing
Global market approach
Segment focus - PEER, Industrial segments - GBC, Auto, HD segments

20. Branding strategy – to address the market
Knowledge engineering
Documented value
Cost reduction
Brand
High
Middle
Application specific products
Low
Second brands
Strong cost focus
Peer/General/Hyatt brands

21. SKF BeyondZero portfolio
BeyondZeroTM +
Customers:
SKF BeyondZero portfolio
Innovate and offer our customers
new technologies, products and
services with enhanced environmental
performance characteristics.
Suppliers
Transportation
SKF
Manufacturing
Reduce the negative environmental
impact from our own operations and
those of our suppliers.
Scope 2
Scope 1
Scope 3
BeyondZero -
When we launched the BeyondZero concept, we had two goals in mind:
First, we wanted to focus on reducing the negative environmental impact from our own operations. This meant that we focused on reducing the environmental impact from SKF’s operations, such as the carbon emissions from SKF manufacturing but also the carbon emissions from our suppliers.
The second goal was:
To increase. the positive environmental impact delivered by SKF solutions through innovating and offering new technologies, products and services with enhanced environmental performance characteristics.
This second goal is really all about helping our customers in all segments and industries to reduce the environmental impact from their products, services and processes.
By combining these two goals, BeyondZero is SKF’s ambition to make an overall positive contribution towards the environmental challenges faced by the planet. And, ladies and gentlemen, today we will focus on how SKF is meeting this second goal.
22 April 2017

22. BeyondZero portfolio – how it works
DESIGNED FOR
Total direct CO2 savings
Total revenue
Criteria
Life cycle trade off’s
Base line comparison
CO2 / environmental savings
APPLIED FOR
Total enabled CO2 savings
Total revenue
SKF products and solutions are qualified into the portolio only after they have satisfied specific performance criteria when compared to a defined baseline, established and demonstrated by using methods such as life cycle assessments.
Basically, we provide positive environmental impacts for our customers in two fundamental ways:
First, we design SKF solutions which on their own create significant environmental benefits at our customer. These are called “Designed for environment”.
The “Designed for environment” category can be illustrated by the E2 bearing, which in itself uses 30% less energy compared to a standard bearing.
Second, we apply SKF solutions to help the enablement of certain technologies, such as: i) renewable energy, or ii) a certain technology in the customers’ applications. These are called “Applied for the environment”.
The “Applied for environment” category can be illustrated by the SKF rotor positioning bearing that enables the use of a stop-start system in cars for better fuel economy.
Finally, independent third party reviews will be carried out by our auditors, KPMG.
22 April 2017

23. BeyondZero portfolio - Industrial
SKF Energy Monitoring Service for pump systems helped reduce 1,700 tonnes of CO2 emission per year.
SKF ConRo reduced CO2 emissions with 1.5 tonne per unit and year.
Let’s take a look at some of the products for the industrial market.
SKF EMS: In a recent survey with SCA, an SKF customer in the pulp and paper industry, SKF helped them identify a nearly 70% improvement potential in 8 pump systems out of 300 pumps installed in on of their pulp and paper factories.
This equals to the reduction of the factory annual electricity demand by up to 2,500MWh or 1% of the factory total electricity use.
Converted into a CO2 emission reduction , this equates to a reduction of about 1,700 tonnes* per year that the customer can claim, as well as reduced energy costs. If 500 factories similar to an example case applied the same service the yearly CO2 savings would be tonnes.
SKF ConRo extends roll line unit service life by 25% or more and reduces total operating cost of up to 50% per roll line unit which in turn reduces an estimated average of 1.5 tons CO2 per roll per year. In a continuous casting machine with 400 rolls, this means an annual CO2 reduction of approximately 600 tons.
If all continuous slab caster mills in China used ConRo, the world would save 100,000 tonnes of carbon emissions.
SKF Solar Linear Actuators: Our tests show that in a case where 58 m2 panels are fitted with an SKF Solar Linear Actuator, CASD-60, there is an increase of the energy production from one solar panel by 5.8 MWh/year. This means that one panel using an SKF solar actuator reduces 4.4 tonnes of CO2. On average, a 15% increase in power generation can be anticipated in comparison to rigid PV solar panel systems.
The scale of modern solar parks is often in the order of 100 MW; it is reasonable to assume that actuators are used for a park with 5000 to solar panels. This means that one modern solar park with 5000 solar panels using our solution reduces CO2 by 220,000 tonnes per year.
SKF Solar Linear Actuator contributes to increasing the energy production from one solar panel which 4.4 tonnes CO2 /year
22 April 2017

24. BeyondZero portfolio - Industrial
Replacement of hydraulic lifts with two SKF CASM electric cylinders produced a CO2 savings of 4.9 tonnes per year for one machine.
SKF products and solutions for renewable energy help display CO2
SKF CASM electric cylinders are used around the world in a wide range of industries ranging from packaging, factory automation, food and beverage and material handling industries. Normally they replace pneumatic cylinders. However, our customer, Indian Textile Engineers, replaced hydraulic lifts with the CASM and reduced their energy consumption by 7 megawatts. This translates into a savings of nearly 5 tonnes of CO2 for only one machine per year.
If hydraulic actuators are replaced with this technology in similar cases like for Indian Textiles, the savings would be tonnes of CO2.
Renewable energy products: As an Applied for the Environment, all SKF product and solutions for the renewable energy segment help to displace tonnes of CO2 everyday they are in operation in wind, solar, and ocean energy applications.
Our E2 bearings reduce friction by 30% and they are found in many applications, including electric motors. According to the book, Walking the Torque, by the Internatinoal Energy Agency, electric motor-driven systems (EMDS) consume – more than 40% of global electricity consumption - the largest amount of electricity of any end use We calculate that if our E2 bearings were used in all new motors from sizes 1-50 HP, a yearly 290,000 tonnes of CO2e emissions would be avoided compared to the standard design version.
If SKF were to equip all new motors ranging from sizes 1-50 HP with its current SKF E2 bearing range, a yearly 290,000 tonnes of CO2 emissions would be avoided.
22 April 2017

25. BeyondZero portfolio - Automotive
SKF bus door actuator saves 1,900 kg CO2/year compared using pressurized air for operating the doors.
SKF Rotor Positioning bearing reduces fuel consumption and CO2 emissions up to 15%.
SKF StopGo for two-wheelers Reduces CO2 emissions by 5 g per kilometre.
The SKF bus actuator requires 80 to 90% less energy than a pneumatic system does and because of this, the compressor system size can be reduced to require smaller engine. These two benefits produce almost a 3% improvement in the fuel economy which calculates to 1900 kg CO2/year compared to a bus that uses pressurized air for operating the doors. Not to mention the savings from reduced fuel costs for bus owners.
SKF Rotor Positioning Bearing helps make Stop-Start possible. In dense urban traffic, Stop-Start can reduce fuel consumption and CO2 emissions up to 15%. Based on an annual mileage of 14,500km, this solution saves 75kg CO2 per vehicle per year.
SKF StopGo reduces CO2 emissions by 5 g per kilometre. With an annual mileage of 7875 km, this equates to a reduction of 36 kg/ CO2 per year. If one million motorcycles were equipped with the SKF solution, the reduction would be 36,000 tonnes of CO2 per year. The results are based on a test of a motorcycles of the size CC used in Indian urban traffic over one year.
22 April 2017

26. BeyondZero portfolio - Automotive
SKF Low Friction Seal reduces friction by up to 55%, which provides a CO2 savings of over 1 g per kilometre.
A light commercial vehicle with four SKF Low Weight Hub Bearing Units reduces CO2 by 5.0 kg CO2 per year.
SKF products and solutions for electric vehicles
The SKF Low Friction Engine Seal reduces friction by up to 55%, which provides a CO2 savings of over 1 g per kilometre. Based on an annual mileage of 14,500km, this equates to a reduction of 14.5 kg/ CO2 per year. If one million cars were equipped with the SKF solution the reduction would be 14,500 tonnes of CO2 per year. Results are applicable to four seals* used in a 4-cylinder gasoline engine mid-size passenger car.
A light commercial vehicle with four SKF Low Weight Hub Bearing Units reduces CO2 by 0.25g CO2 per km. When based on an annual mileage of 14,500km, the saving is 3.6 kg CO2 per year. This equates to a reduction of 3600 tonnes of CO2 per year if one million cars were equipped with the SKF solution.
SKF is committed to improving automotive industry solutions
Electric vehicles offer an efficient and low-CO2 alternative to ICE-powered passenger cars. As electric vehicles gain worldwide market share, the demand
for optimized E-powertrain solutions is also increasing.
As a dedicated long-term industry partner, SKF remains committed to improving the efficiency and longevity of automotive products, including powertrains. Subsequently, SKF offers a complete portfolio of E-powertrain solutions that deliver a multitude of production and performance advantages:
22 April 2017

27. Climate strategy – BeyondZero – Targets
Customer solutions
Quadruple (x4) the revenue from the BeyondZero portfolio from Billion SEK in 2011 to 10 Billion SEK by 2016.
Reduce the total annual energy use of the SKF Group by 5 % below the level by 2016.
Reduce the energy use per production output (value added) by 5% year- over-year during the period ( ).
SKF’s own
operations
Reducing CO2 emissions/ tonne-kilometre for all transports managed by SKF Logistics Services by 30% compared to 2011 by the end of
Transport and
distribution
Raw material and
components
100% of SKF's energy intensive suppliers certified according to ISO Energy Management Standard by 2016.
SKF climate strategy focuses on 4 areas
These targets are part of SKF partnership with WWF and our participation in the Climate Savers programme
22 April 2017

28. Key focus areas ahead 2012
Managing the uncertain and different demand environment - regions and segments
Profit and cash flow
- inventory management
Initiatives and actions to support long-term financial targets
Continue the integration of Lincoln
Business Excellence and competence development
Implement the new organization for the Industrial market
One SKF and SKF Care as guiding lights
22 April 2017

29. 22 April 2017