A world of reliable rotation

Alrik Danielson, President & CEO

Welcome to Schweinfurt!

© SKF Group

Our vision: a world of reliable rotation

Strategic priorities

Create and capture

customer value

Application

driven innovation

World class

manufacturing

Cost

competitiveness

Maximize cash

flow over time

© SKF Group

Developments since we last met

Automotive

turn-aroundBalance sheet

Pricing Focus on costs

Application-specific

performance

Factory

investments

Growth

▪ Fast and customer focused

▪ Refocused on the core business (8 divestments in 3 years)

▪ Strengthened financial position

▪ Lowered cost level

=> market share growth, record sales & record high profit

SKF – in business for 111 years, fit and ready for the future!

6.9%Organic growth:

Target: 5%

12.2%Operating margin:

Target: 12%

60%Net debt / equity:

Target: <80%

16.5%Return on capital employed:

Target: 16%

29.0%Net working capital:

Target: 25%

© SKF Group

SKF’s value propositions around the rotating shaft

Customer value

Hindsight ForesightInsight

© SKF Group

➢ It’s not about predicting failure, it is also

about maximise production and planned

maintenance

➢ Performance contracts are not new to SKF

➢ Our value propositions make us unique:

Detect, Analyse & Fix

➢ Digitalization makes it exciting right now!

➢ Fee-based contracts enable us to capture

value in a much better way

Unplanned downtime impacts cost and competitiveness

© SKF Group

SKF Digital Platform

SKF’s digital platform connects the value chain

Connecteddevices

Partnernetworks

API Asset status

API Machine health reports

to SKF’s REP Center

API Sales leads

to SKF API

Sales leads to

distributorsAPIAsset status

Customer application

SKF engineering tools and product development

© SKF Group

The REP journey – from a customer’s perspectiveC

usto

mer

valu

e c

rea

ted

an

d c

ap

ture

d

Manual processes;

simplistic business modelsAutomated processes;

strategic partnerships

Level 1

Transactional

Level 2

Service Model

Level 3

Performance

Level 4

Disruptive1980’s

2000’s

Progress follow-up

▪ 4 million measuring points

▪ Of which 1.5 million connected

to our centers

▪ Strong growth – # measuring points

more than doubled in two years

REP centers Supporting further growth of REP business

Sweden

Germany

GermanyBrazil Australia

REP in practice: Fibria pulp mills, Brazil

© SKF Group

Development of REP business models with FibriaBrazilian pulp manufacturer

2000 2007 2012 2018

Performance-based

service contract

Unplanned downtime

reduced by 50%

Remote analysis

introduction continues to

increase productivity

Cloud-based wireless

monitoring solutions

4 s

ite

s

3 s

ite

s

2 s

ite

s

1 s

ite

➢ Four long-term contracts

signed since 2000

➢ Fee based transaction model

with bonus for improved

output

➢ x6 increase in annual revenue

➢ Direct link between # of CoMo

points; reduction in needed

manpower

REP in practice: Big River Steel Hot Mill, Arkansas

© SKF Group

▪ Monthly fee arrangement:

▪ Bearings

▪ Seals

▪ CoMo

▪ Leveraging SKF technology to connect asset health

to the supply chain improving reliability of component

supply.

Big River Steel

✓ Improve reliability

✓ Reduce unplanned downtime

✓ Reduce costs

Digital solutions as an enabler in other industries

▪ Updated product launched in Q1 2018

▪ 10+ operators already using system in Europe, Asia and Australia

▪ Enables new business models in the rail industry

▪ Partnership signed with train control systems supplier

SKF Insight™ Rail

© SKF Group

▪ Financial performance and importance in continuing to

strengthen SKF

▪ Product development connected to REP and Product value

proposition

▪ Automotive – turnaround success and future focus areas

▪ Manufacturing footprint and world-class technology

development

Highlights for the rest of the day