Alrik Danielson, President and CEO
17 April 2015
1

Examples of new business in Q1 2015
•
Chongqing General Industry (Group) Co and JiangSu High-speed permanent magnetic
Jin Tong Ling Fluid Machinery Technology Co, China blower solutions
•
Volvo Car Corporation, Sweden Wheel hub bearing units with low friction grease
•
Autopartes NAPA, Mexico Agreement to market
SKF’s product range
•
Citroen C4 Cactus, Peugeot 2008 and Fiat 500X Products and solutions
2
© SKF Group Slide 2 17 April 2015

Highlights
•
SKF has worked closely with Scuderia Ferrari to produce bearing sets manufactured from specially developed tool steel
•
Re-signed the contract as a Ducati Corse Official
Technical partner
•
Achieved the energy management ISO 50001 certification on a global scale
•
SKF will invest SEK 190 million to modernize its spherical roller bearing factory in Gothenburg, Sweden
© SKF Group Slide 3 17 April 2015
3

SKF Generalized Bearing Life Model
Surface vs sub-surface failure modes internal geometry load rating limiting speed steel composition heat treatment surface finish coatings lubrication contamination resistance wear resistance reduced vibration longer service life lower noise reduced friction reduced vibration corrosion resistance
© SKF Group
17 April 2015
4

Innovations at Hannover Fair
•
Two new oil-free bearing solutions for centrifugal compressors in chillers
•
A solution to improve the reliability, safety and performance of jack-up gearboxes used in the offshore oil and gas industry and in the renewable energy industry
•
A new shaft alignment tool , specifically designed for usage with smartphones or tablets
•
A new magnetic bearing control cabinet for turbo-machinery, for onshore, offshore and subsea turbo-machinery
•
SKF Enlight, combines a powerful new mobile app with a special
Bluetooth-enabled sensor
•
SKF Data Collect, a cloud-based solution to record and manage data
© SKF Group Slide 5
17 April 2015
5

6
Construction of a large-size bearing test centre in Schweinfurt, Germany
The test center will have two large size test rigs, one for wind turbines and one for other industries. The investment will total SEK 360 million, and is expected to be completed during the first half of 2017.
© SKF Group Slide 6
17 April 2015

Christian Johansson, new Senior Vice President and CFO
7
•
Bachelor of Science in Business
Administration, Stockholm University
•
Currently CFO at Gunnebo AB
•
Christian has solid executive experience managing global business services.
Before joining Gunnebo:
-Vice President Region Americas and EMEA for Volvo Business Services
-SVP and CFO for Volvo Trucks
-Regional Director, Central Eastern Europe within ABB Service World Wide.
•
Christian will start his new position in
SKF no later than October 2015.
© SKF Group Slide 7 17 April 2015

SKF Group – Q1 2015
Financial performance (SEKm)
Net sales
Operating profit
Operating margin, %
Operating margin excl. one-time items, %
Profit before taxes
Basic earnings per share, SEK
Cash flow after investments before financing
2015
19 454
1 721
8.8
12.2
1 592
2.46
988
2014
16 734
2 024
12.1
11.4
1 787
2.72
-63*
Organic sales change y-o-y:
SKF Group
Industrial Market
Automotive Market
Specialty Business
1.4%
1.8%
0.6%
0.7%
Europe
North America
Asia
1.0%
-2.4%
5.6%
Latin America 0.4%
Middle East and Africa 14.2%
Manufacturing was higher y-o-y and compared to last year.
* Previously published cash flow information is restated
© SKF Group
Slide 8 17 April 2015
8

Organic sales growth in local currency
% change y-o-y
8
6
4
-6
-8
-10
-2
-4
2
0
2013 2014
© SKF Group Slide 9 17 April 2015
2015
9

Organic sales growth in local currency
% y-o-y
6
4
2
0
-2
-4
-0.7%
3.9%
© SKF Group Slide 10 17 April 2015
2013 2014
Structure in 2013: 2.5%
Structure in 2014: 3.7%
Structure in 2015: 0%
1.4%
Q1 2015
10

Sales development by geography
Organic growth in local currency Q1 2015 vs Q1 2014
Europe
1.0%
North
America
-2.4%
Latin
America
0.4% Middle East
& Africa
14.2%
© SKF Group Slide 11 17 April 2015
Asia/Pacific
5.6%
11

Components in net sales
Percent y-o-y
2013
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3
Organic -8.0
-2.2
2.0
6.9
1.5
2.6
1.1
4.8
5.8
4.6
3.2
4.7
3.8
5.4
2.8
0.9
Structure
Sales in local currency
Currency
Net sales
-6.5
0.4
3.1
11.7
10.5
8.4
8.6
3.7
-4.0
-5.0
-2.2
-2.1
-0.1
1.1
5.3
8.9
-10.5
-4.6
0.9
9.6
10.4
9.5
13.9
12.6
Q4
2015
Q1
1.4
0
1.4
14.9
16.3
12
© SKF Group Slide 12 17 April 2015

Operating profit as reported
SEKm
2 500
2 000
1 500
1 000
500
0
-500
-1 000
-1 500
-2 000
2013
© SKF Group Slide 13 17 April 2015
2014 2015
13

Operating profit excluding one-time items
SEKm
2500
2000
1500
1000
500
0
2013
© SKF Group Slide 14 17 April 2015
2014 2015
14

Operating margin
8
6
4
2
0
%
16
14
12
10
© SKF Group Slide 15 17 April 2015
11.9*
5.8
2013 2014
11.7*
11.0
One-time items
* Excluding one-time items
12.2*
8.8
15
Q1 2015

Operating margin per business area as reported
12
9
6
%
18
15
Industrial Market
Specialty Business*
3
0
-3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2013 2014 2015
* Q4 2013, impacted by cost related to Kaydon acquisition
© SKF Group Slide 16 17 April 2015
Automotive Market
16

Operating margin per business area excl. one-time items
17
12
9
6
%
18
15
3
0
-3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2013 2014 2015
© SKF Group Slide 17 17 April 2015
Industrial Market
Specialty Business
Automotive Market

Operating profit bridge, Q1 2015
SEKm
2500
2000
+2 024 -700
1500
-1 547
1000
500
+120 0
+450 0 -173
+1 721
0
Q1 2014 One-time items at
2014 exchange rates
Organic sales growth in local currencies
Acquisitions/ divestments
Currency impact
* Includes general inflation, manufacturing and purchasing impacts, IT project and running costs, and R&D..
Savings from restructuring programme
Other*
© SKF Group Slide 18 17 April 2015
Q1 2015
18

Restructuring programme
•
Main activities:
- merging the two industrial businesses
- streamlining of supporting country organisations in all main countries
- general staff optimization and productivity improvements
•
Reduction of annual cost by SEK 1.2 billion by the end of 2016.
Total cost for the programme around SEK 1.4 billion, covering 1 500 people.
Major part of the programme expected to be implemented within 2015
•
After first quarter 2015 around 40% of planned activities are in progress
Cost, SEKm
People affected
Cost savings in Q1
Annual cost savings, SEKm:
Q1 2015
535
575
-
460 effective beginning 2016
© SKF Group Slide 19 17 April 2015
19

Net working capital as % of annual sales
Target: 27%
33
32
31
30
%
35
34
29
28
27
26
25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2013 2014 2015
© SKF Group Slide 20 17 April 2015
20

Return on capital employed
14.8*
13.9
One-time items
* Excluding one-time items
%
20
15
10
15.1*
14.5*
12.6
5 7.5
0
2013 2014 YTD 2015
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.
© SKF Group Slide 21 17 April 2015
21

Cash flow, after investments before financing*
SEKm
3 000
2 000
1 000
0
-1 000
-2 000
-3 000
-4 000
-5 000
-6 000
-7 000
1)
2013
Excl. acq. and div.:
© SKF Group Slide 22
Excl. EU payment
17 April 2015
2)
3)
1) Q1 2013
2) Q3 2013
3) Q4 2013
4) Q2 2014
2014
SEK -69 million
SEK 871 million
SEK 1 122 million
SEK 1 423 million
4)
2015
* 2013 and 2014 are restated
22

Net debt
SEKm
0
-5 000
-10 000
-15 000
-20 000
-25 000
-30 000
-35 000
AB SKF, dividend paid
(SEKm)
:
2013 Q2
2014 Q2
2 530
2 530
Cash out from major acquisitions (SEKm) :
2013 Q1
2013 Q4
823
7 900
2013 2014 2015
Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.
© SKF Group Slide 23 17 April 2015
EU payment (SEKm) :
2014 Q2 2 825
23

Debt structure, maturity years
EURm
900
800
700
600
500
400
300
200
100
0
100 100
110
2015 2016 2017
© SKF Group Slide 24
• Available credit facilities:
EUR 500 million 2019
SEK 3 000 million 2018
EUR 150 million 2017
17 April 2015
500 500
850
200
2018 2019 2020 2021
• No financial covenants nor material adverse change clause
24

April 2015: SKF demand outlook Q2 2015
Demand compared to the second quarter 2014
The demand for SKF’s products and services is expected to be relatively unchanged for the Group and for Europe. For Asia it is expected to be higher and for North and Latin America slightly lower. Per business area, for both Industrial Market and Automotive Market it is expected to be relatively unchanged, and for Specialty Business to be slightly higher.
Demand compared to the first quarter 2015
The demand for SKF’s products and services is expected to be relatively unchanged for the Group, Europe and North America. For Asia it is expected to be higher and for Latin America slightly lower. Per business area, for both Industrial Market and Automotive Market it is expected to be relatively unchanged, and for Specialty Business to be slightly higher.
Manufacturing
Manufacturing is expected to be relatively unchanged year over year and compared to the first quarter.
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© SKF Group Slide 25 17 April 2015

Guidance for 2015*
Q2 2015:
• Financial net: around SEK -230 million
• Currency impact on operating profit vs 2014
Q2: SEK +800 million
2015:
• Tax level: below 30% for 2015
• Additions to PPE: around SEK 1 700 million for 2015
* Guidance is approximate and based on current assumptions and exchange rates.
© SKF Group
Slide 26
17 April 2015
26

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”.
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© SKF Group Slide 27 17 April 2015