Skf Ab Class A · OMXSTO:SKF_A

Skf Ab Class A — Q1 2016 Earnings Presentation

27 slides from Skf Ab Class A's earnings presentation, April 2016

1. Slide 1: SKF Q1 results 2016

   SKF Q1 results 2016 Alrik Danielson, President and CEO © SKF Group

2. Slide 2: Q1 Summary

   Q1 Summary Alrik Danielson, CEO

3. Slide 3: Q1 summary

   Q1 summary  Net sales and earnings affected by lower demand in China and the US  Sales SEK 17 720 M, -8.9% yoy  Organic sales -6.1%  Operating profit* SEK 1 972 M (2 376)  Operating margin* 11.1% (12.2)  Profit before tax SEK 1 658 M (1 592) 11.1% * Excluding one-time items Operating margin* ©

4. Slide 4: Sales development by geography

   Sales development by geography Organic growth in local currency Q1 2016 vs Q1 2015 Europe -1.9% North America -11.0% Asia/Pacific -9.3% Latin America -3.1% Middle East & Africa +1.0% © SKF Group © SKF Group

5. Slide 5: Sales development by Customer Industry

   Sales development by Customer Industry © SKF Group

6. Slide 6: Highlights in the quarter

   Highlights in the quarter  Zapopan, Mexico New plant for automotive seals solutions opened  5G Enabled Manufacturing Cooperation between SKF, Ericsson and Chalmers University  Agreements signed to divest fly-by- Total consideration of SEK 3 billion wire & Kaydon Velocity Control  New organizatio

7. Slide 7: Highlights - examples of new business in Q1 2016

   Highlights - examples of new business in Q1 2016  Las Bambas, Peru Lubrication systems and bearing contracts  Jeep Renegade Hub units and seals  Valmet Long-term collaboration on bearings, units and lubrication systems  Zhenhua Heavy Industries Bearings, condition monitoring and service solution

8. Slide 8: Divestments in 2015 and 2016

   Divestments in 2015 and 2016  Erin Engineering, May 2015  Purafil & Kaydon filtration, June 2015 KAYDON FILTRATION  Canfield technologies, August 2015  Fly-by-wire*, March 2016  Kaydon Velocity Control*, April 2016 * Agreements subject to regulatory approvals © SKF Group © SKF Group

9. Slide 9: Q1 results – the details

   Q1 results – the details Christian Johansson, CFO

10. Slide 10: Sales development

    Sales development 2015 2016 Percent y-o-y Q1 Q2 Q3 Q4 Q1 Organic 1.4 -1.5 -4.7 -5.2 -6.1 Structure 0 -0.2 -0.8 -1.0 -0.8 Currency 14.9 12.9 8.8 4.7 -2.0 Net sales 16.3 11.2 3.3 -1.5 -8.9 © SKF Group © SKF Group

11. Slide 11: Organic sales growth

    Organic sales growth © SKF Group © SKF Group

12. Slide 12: Operating profit excluding one-time items

    Operating profit excluding one-time items © SKF Group © SKF Group

13. Slide 13: Operating profit

    Operating profit © SKF Group © SKF Group

14. Slide 14: Operating performance per business area

    Operating performance per business area  Net sales SEK 10 307 M  Organic sales -9.3%  Operating margin declined to 12.7%  Net sales SEK 2 493 M  Organic sales -3.3%  Operating margin improved to 12.1%  Net sales SEK 4 912 M  Organic sales -0.2%  Operating margin improved to 7.4% * Excluding

15. Slide 15: SKF Group – Q1 2016

    SKF Group – Q1 2016 Financial performance (SEKm) 2016 2015 Net sales 17 720 19 454 Cost of goods sold -13 305 -14 652 Gross profit 4 415 4 802 Gross margin, % 24.9% 24.7 Selling and administrative expenses -2 516 -3 121 Other operating expenses -24 40 Operating profit 1 875 1 721 One-time items -97

16. Slide 16: Cost management

    Cost management  Continuous reduction in fixed cost, fixed cost index of 94 in Q1 (Q4 2014=100)  Reduction with more than 600 employees in the quarter  Activity-based cost reductions continue with high focus Fixed cost index: © SKF Group 94 © SKF Group

17. Slide 17: Cash flow after investments before financing

    Cash flow after investments before financing* © SKF Group © SKF Group

18. Slide 18: Net working capital as % of annual sales

    Net working capital as % of annual sales © SKF Group © SKF Group

19. Slide 19: Effects from the announced divestments

    Effects from the announced divestments Fly-by-wire Kaydon Velocity Control  Net sales EUR 37 million  Net sales USD 120 million  150 Employees  550 employees  Agreement* announced on March  Agreement* announced on April 26, 17, 2016 2016  Purchase consideration EUR 39  Purchase consideration

20. Slide 20: Increased net debt due to lower discount rates for post-employment benefits

    Increased net debt due to lower discount rates for post-employment benefits © SKF Group © SKF Group

21. Slide 21: Guidance for 2016

    Guidance for 2016* Q2 2016:  Financial net: around -250 million  Currency impact on the operating profit is expected to be around -300 million compared with 2015 based on exchange rates per March 31. 2016:  Tax level: below 30% for 2016  Additions to property, plant and equipment: around 2,000 m

22. Slide 22: SKF demand outlook - Definition

    SKF demand outlook - Definition The demand outlook for SKFs products and services represents management's best estimate based on current information about the future demand from our customers. The demand outlook is the expected volume development in the markets where our customers operate. © SKF Gro

23. Slide 23: April 2016: SKF demand outlook Q2 2016

    April 2016: SKF demand outlook Q2 2016 Demand compared to the second quarter 2015 The demand for SKF’s products and services is expected to be slightly lower for the Group. Demand for the Automotive Market is expected to be slightly higher, demand for Specialty Business is expected to be relatively

24. Slide 24: Financial calendar

    Financial calendar Report on the second quarter 2016 July 21 Report on the third quarter 2016 October 26 © SKF Group © SKF Group

25. Slide 25: SKF Q1 results 2016 Q&A

    SKF Q1 results 2016 Q&A

26. Slide 26: Cautionary statement

    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 expectat

27. Slide 27: Slide 27

SKF — Q1 2016 Earnings Presentation on 6ix