1
SKF Q3 results 2015
Alrik Danielson, President and CEO
16 October 2015
2
Q3 2015 Summary
Net sales
18.4 bn
17.8 bn


Sales 18 367 SEKm, +3.3% yoy
Organic sales -4.7%
Q3
Q4
Q1
Q2
Q3
Operating profit*



Operating profit* 1 976 SEKm (2 092)
Operating margin* 10.8% (11.8)
Profit before tax 1 348 SEKm (1 827)
Q3

1 976 M
2 092 M
Q4
Q1
Q2
Q3
Cash flow**
Cash flow after investments before financing
1 808 SEKm (1 476)
1 808 M
1 476 M
Q3
* Excluding one-time items
** After net investments before financing, excluding acquisitions and divestments and EU payment in 2014
© SKF Group
Slide 2
16 October 2015
Q4
Q1
Q2
Q3
3
Sales development by geography
Organic growth in local currency Q3 2015 vs Q3 2014
Europe
-0.7%
North
America
-10.8%
Asia/Pacific
-7.8%
Latin
America
0.9%
© SKF Group
Slide 3
16 October 2015
Middle East
& Africa
12.2%
4
Sales development by Customer Industry
Industrial Distribution
Industry, general
Energy
Railway
Cars and light trucks
Trucks
Two-wheelers and Electrical
Vehicle Service Market
© SKF Group
Slide 4
16 October 2015
Industrial, heavy and special
and Off-highway
Aerospace
5
Highlights - examples of new business in Q3 2015

Geely Auto, China
Wheel hub and MacPherson
suspension bearing units

MAN, Germany
Truck-matched wheel-end units

Tsakos Columbia Shipmanagement
S.A. (TCM), Greece
Condition monitoring solutions

Hanbell, China
Strategic cooperation agreement
to jointly develop magnetic chiller
centrifugal compressors
© SKF Group
Slide 5
16 October 2015
6
Highlights – other quarterly highlights
 Divestment of Canfield Technologies, Inc. to Gen Cap America, a private
equity firm headquartered in Nashville, Tennessee completed.
 A new Kaydon bearings manufacturing facility opened in Cajamar,
São Paulo, Brazil
 New products:
- upgraded a range of small size sealed SKF Explorer spherical roller
bearings, that can significantly improve reliability and reduce
maintenance of gearless traction motors for elevators.
- a new generation of highly effective and easily maintained shaft seals
for wind turbines.
- a new SKF Customized Interfacing that integrates the SKF@ptitude
condition monitoring suite with customers ERP and CMMS solutions.
© SKF Group
Slide 6
16 October 2015
7
SKF Q3 results 2015
Christian Johansson, CFO
16 October 2015
8
Sales development
Net sales,
SEK bn
20
17.8
15
10
5
0
Q3
© SKF Group
Slide 8
Q4
16 October 2015
2015
18.4
Q1
Q2
Q3
Percent y-o-y
Q1
Q2
Q3
Organic
1.4
-1.5
-4.7
Structure
0
-0.2
-0.8
Currency
14.9
12.9
8.8
Net sales
16.3
11.2
3.3
9
Organic sales growth
% change
y-o-y
8
6
4
2
0
-2
-4
-6
-8
-10
2013
© SKF Group
Slide 9
16 October 2015
2014
2015
10
Operating profit excluding one-time items
SEKm
3000
12000
2500
10000
2000
8000
1500
6000
1000
4000
500
2000
0
0
2013
© SKF Group
Slide 10
16 October 2015
2014
2015
11
Operating profit bridge, Q3 2015
SEKm
2500
+150
2 073
+350
2000
-15
1 825
-130
-343
-260
1500
1000
500
0
Q3 2014
One-time
items at 2014
exchange
rates
Organic
sales
Currency
impact
Savings from
cost-reduction
programme
Divested/
aquired
companies
* Includes, manufacturing and purchasing impacts, IT project, R&D and general inflation.
© SKF Group
Slide 11
16 October 2015
Other*
Q3 2015
12
Operating performance per business area
Industrial Market
Operating margin*, %
14.6%
15.0
13.0%
10.0
5.0



Net sales 11 079 SEKm



Net sales 4 795 SEKm




Net sales 2 424 SEKm
Organic sales -5.3%
Operating margin declined to 13.0%
0.0
Automotive Market
15.0
Operating margin*, %
10.0
4.6%
5.7%
5.0
Organic sales -0.5%
Operating margin improved to 5.7%
0.0
Specialty Business
Operating margin*, %
15
13.4%
10
5
0
* Excluding one-time items
© SKF Group
Slide 12
16 October 2015
11.0%
Organic sales -8.2%
Operating margin declined to 11.0%
Canfield Technologies divested
13
Cost reduction programme from December 2014
Cost reduction programme
Q1
2015
Q2
2015
Q3
2015
YTD
2015
Target
Restructuring cost in the
quarter
535
224
121
880
1 400
Full year savings from people
that will leave SKF
460
173
307
940
1 200
Number of people that will
leave
575
270
594
1 439
1 500
-
80
150
230
-
Savings included in the 2015
Operating profit
© SKF Group
Slide 13
16 October 2015
14
SKF Group – Q3 2015
Financial performance (SEKm)
Net sales
Cost of goods sold
Gross profit
Gross margin, %
Selling and administrative expenses
Other operating expenses
Operating profit
One-time items
Operating profit excl. one-time items
Operating margin, %
Operating margin excl. one-time items, %
Financial income and expense, net
Profit before taxes
Taxes
Net profit
Basic earnings per share, SEK
© SKF Group
Slide 14
16 October 2015
2015
2014
18 367
-13 849
4 518
24.6
-2 698
5
1 825
-151
1 976
9.9
10.8
-477
1 348
-573
775
1.59
17 787
-13 225
4 562
25.6
-2 495
6
2 073
-19
2 092
11.7
11.8
-246
1 827
-420
1 407
1.84
15
Cash flow, after investments before financing*
SEKm
3,000
12,000
10,000
2,000
8,000
6,000
1,000
4,000
2,000
0
0
-2,000
-1,000
-4,000
2013
2014
2015
* Excluding acquisitions and divestments and EU payment in Q2 2014.
2013 and 2014 are restated
© SKF Group
Slide 15
16 October 2015
16
Net working capital as % of annual sales
%
35
Total NWC 29.7%
30
Target: 27%
25
Inventories
20.5%
20
Trade receivables
17.0%
15
10
Trade payables
7.8%
5
0
Q1
Q2
2013
© SKF Group
Slide 16
16 October 2015
Q3
Q4
Q1
Q2
2014
Q3
Q4
Q1
Q2
2015
Q3
17
Financial position
Net debt
Net debt/equity
SEK bn
%
0
160%
-5
140%
120%
-10
114%
100%
-15
80%
-20
60%
-25
40%
-30
20%
-35
0%
2013
2014
2015
2013
Net debt: Loans and net provisions for post-employment benefits
less short-term financial assets excluding derivatives.
© SKF Group
Slide 17
16 October 2015
2014
2015
18
Debt structure, maturity years
EURm
850
900
800
700
600
500
500
500
400
300
200
200
100
100
110
2016
2017
0
2015
• Available credit facilities:
EUR 500 million 2019
SEK 3 000 million 2018
EUR 150 million 2017
© SKF Group
Slide 18
16 October 2015
2018
•
2019
2020
2021
No financial covenants nor material
adverse change clause
19
Guidance for 2015*
Q4 2015:
 Financial net: around -300 million
 Currency impact on operating profit vs 2014 Q4: +250 million,
based on exchange rates per September 30.
2015:
 Tax level: below 30% for 2015
 Additions to PPE: around 2 000 million for 2015
* Guidance is approximate and based on current assumptions and exchange rates.
© SKF Group
Slide 19
16 October 2015
20
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 Group
Slide 20
16 October 2015
21
October 2015: SKF demand outlook Q4 2015
Demand compared to the fourth quarter 2014
The demand for SKF’s products and services is expected to be lower for the
Group where demand for the Automotive Market is expected to be relatively
unchanged, while demand for the Specialty Business is expected to be
slightly lower and demand for the Industrial Market is expected to be lower.
Split by market, demand is expected to be relatively unchanged in Europe
and Latin America and significantly lower in North America and Asia.
Demand compared to the third quarter 2015
The demand for SKF’s products and services is expected to be slightly
lower for the Group where demand for the Industrial Market and the
Automotive Market is expected to be slightly lower while demand for the
Specialty Business is expected to be relatively unchanged. Split by market,
demand is expected to be relatively unchanged in Europe and slightly lower
in North America, Latin America and Asia.
© SKF Group
Slide 21
16 October 2015
22
Financial calendar
© SKF Group
Capital Markets Day 2015
November 4
Report on the fourth quarter 2015
February 2
Annual Report 2015
March 8
Annual General Meeting
March 31
Report on the first quarter 2016
April
Slide 22
16 October 2015
23
SKF Q3 results 2015
Q&A
16 October 2015
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 www.skf.com) under the
Administration Report; “Important factors influencing the financial results", "Financial
risks" and "Sensitivity analysis”.
© SKF Group
Slide 24
16 October 2015