SKF First quarter report 2016

Gothenburg, 28 April 2016:

Alrik Danielson, President and CEO:

“Although we experienced challenges in many markets in the first quarter, the
benefits from the cost reduction initiatives implemented during 2015 are now
materializing. This is evid­enced by the Group’s operating performance in the
quarter and our operating margin of 11.1%, a decline of one percentage point.
The Automotive Market profit improvement programme that was launched during the
fourth quarter of 2015 is also progressing well and contributed to an operating
margin of 7.4%, an improvement of two percentage points.

Sales within Industrial Market were lower than expected, mainly related to China
and North America. Within Automotive Market, sales to the car and truck
industries in Europe and Asia were both strong, whilst sales in North America
were weak.

We have continued our activities to focus our business port­folio around our
core bearing business. As a result we have agreed to divest our fly-by-wire and
Kaydon velocity control businesses for a total consideration of about SEK 3
billion.

In order to simplify and further drive organic sales growth and improve
profitability, we have adjusted our structure to four areas; Industrial Sales
Americas, Industrial Sales Europe and MEA, Industrial Sales Asia, and Automotive
and Aerospace. In addition, we have combined the responsibility for our end-to
-end procurement, manufacturing and logistics operations into the newly formed
Bearing Operations and formed a new structure for product and business
development.

Entering the second quarter 2016, we expect sequentially slightly higher demand
for the Group’s products and services, driven mainly by Asia and North America.”

Key figures, SEKm                 Q1 2016  Q1 2015
Net sales                         17 720   19 454
Operating profit excl. one-time   1 972    2 376
items
Operating margin excl. one-time   11.1     12.2
items, %
One-time items in operating       -97      -655
profit
Operating profit                  1 875    1 721
Operating margin, %               10.6     8.8
Profit before taxes, excl.        1 755    2 167
operating and financial one-time
items
Profit before taxes               1 658    1 592
Net cash flow after investments   510      988
before financing

Net sales change y-o-y, %:  Organic  Structure  Currency  Total
Q1 2016                     -6.1     -0.8       -2.0      -8.9

Organic sales      Europe  North    Latin    Asia  Middle East
change in                  America  America        & Africa
local currencies,
per region y-o-y,
%:
Q1 2016            -1.9    -11.0    -3.1     -9.3  1.0

Outlook for the second quarter 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 unchanged and demand
for the Industrial Market is expected to be lower. Demand is expected to be
relatively unchanged in Europe, lower in Asia and Latin America and
significantly lower in North America.

Demand compared to the first quarter 2016
The demand for SKF’s products and services is expected to be slightly higher for
the Group. Demand for the Industrial Market and Automotive Market is expected to
be higher, and demand for Specialty Business is expected to be relatively
unchanged. Demand is expected to be relatively unchanged in Europe and in Latin
America, higher in North America and significantly higher in Asia.

A teleconference will be held on 28 April 2016 at 09:00 (CEST):

SE: +46 8 5065 3936
UK: +44 20 3427 1912
US: +1 646 254 3364

You will find all information regarding the SKF First quarter report 2016 on the
Group’s IR website.

Aktiebolaget SKF
      (publ)

AB SKF is required to disclose the information provided herein pursuant to the
Securities Markets Act and/or the Financial Instruments Trading Act. The
information was submitted for publication at 08:00 on 28 April 2016.
For further information, please contact:
PRESS: Theo Kjellberg, Director, Press Relations
tel: 46 31 337 6576, mobile: 46 725-776576, e-mail: theo.kjellberg@skf.com

INVESTOR RELATIONS: Patrik Stenberg, Head of Investor Relations
Patrik Stenberg, 46 31-337 2104; 46 705-472 104; patrik.stenberg@skf.com
SKF is a leading global supplier of bearings, seals, mechatronics, lubrication
systems, and services which include technical support, maintenance and
reliability services, engineering consulting and training. SKF is represented in
more than 130 countries and has around 17,000 distributor locations worldwide.
Annual sales in 2015 were SEK 75 997 million and the number of employees was 46
635. www.skf.com

® SKF is a registered trademark of the SKF Group.