The skf group skf investor Relations

The SKF Group

• SKF Investor Relations

• July 2013

SKF - A truly global company

• Established: 1907

• Sales 2012: SEK 64,575 million

• Employees 2012: 46,775

• Production sites: around 140 in 28 countries

• SKF presence: in over 130 countries

• Distributors/dealers: 15,000 locations

• Global certificates: ISO 14001

• OHSAS 18001 certification

Net sales by customer segment* 2012

Net sales 2012, Geographical distribution*

Operating margin

Return on capital employed

Growth in local currencies

Long-term financial targets

• 27%

• Return on capital employed

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

SKF Group Vision

SKF BeyondZero

• SKF launched the BeyondZeroTM portfolio with products and solutions, which will both improve energy efficiency and reduce the environmental impact.

• SKF revised targets for its climate strategy and also partnered with the WWF in their Climate Savers Programme.

23 SKF Solution Factories 2013

SKF Solution Factory

Slab continuous caster – metal industry

Wheel-loader – Construction

Peru

• Peru

• Industria Textil Piura

• 60,000 E2 deep groove ball bearing

Acquisition 2003-2013 Identifying gaps and opportunities in all platforms

SKF Half-year results 2013

• Tom Johnstone, President and CEO

Highlights Q2 2013

Highlights Q2 2013

New products - examples

SKF Restructuring programme – costs and expected savings

SKF Group – Q2 2013

• Financial performance 2013 2012

• Net sales, SEKm 16,392 17,174

• Operating profit, SEKm 1,837 2,049

• Operating margin, % 11.2 11.9

• Operating margin excl. restructuring,% 12.4 12.7

• Profit before tax, SEKm 1,627 1,774

• Cash flow, SEKm 1,147 686

• Organic sales growth in local currency:

• SKF Group: -2.2%

• Strategic Industries: -7.6%

• Regional Sales and Service: -4.8%

• Automotive: 7.7%

• Key points

• Sales volumes down by -1.6% y-o-y

• Manufacturing relatively unchanged compared to last year

• Inventories 21.6% of sales

Growth development by geography Organic growth in local currency Q2 2013 vs Q2 2012

Growth development by geography Organic growth in local currency YTD 2013 vs YTD 2012

Components in net sales

Growth in local currency, including structure

Operating profit

Operating margin

Operating margin

Operating margin per business area

Inventories as % of annual sales

Return on capital employed

Cash flow, after investments before financing

Net debt

Second quarter 2013

Half year 2013

July 2013: SKF demand outlook Q3 2013

SKF demand outlook Q3 2013, regions

SKF demand outlook Q3 2013, business areas

SKF sequential volume trend Q3 2013, main segments

Guidance for the third quarter 2013*

• Tax level: around 30%

• Financial net for the third quarter: Around SEK -200 million

• Currency impact on operating profit versus 2012 Q3: SEK -100 million

• Full year: SEK -450 million

• Additions to PPE: Around SEK 1.7 billion for 2013

Key focus areas 2013

• Managing the uncertain and different demand environment

• - Profit and cash flow

• Initiatives and actions to support long-term financial targets - New factories in Mysore and Bengaluru in India
• - New warehouse in Shanghai, China
• - SKF Campus in Shanghai, China, including: ‣ New factory for automotive ‣ Global Technical Centre China ‣ SKF Solution Factory ‣ SKF College
• - Integration of new acquisitions, GBC and BVI
• - Cost reduction and efficiency programme
• - New IT systems
• Business Excellence and competence development

Cost reduction – specific programme 2012-2015

• Main activities:

• Consolidation of manufacturing - merger between sites - transfer to faster growing markets with more local production

• Optimization and productivity improvements - in the manufacturing and demand chain processes - in administration and support functions

• Reduction in purchasing cost - mainly through standardization and rationalization of the supplier base.

• Reduction of annual cost by SEK 3 billion by the end of 2015

• - Total cost for the programme around SEK 1.5 billion

• - 2,500 people impacted,

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

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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