SKF Half-year report 2016

Gothenburg, 21 July 2016:

Alrik Danielson, President and CEO:

“Net sales in the second quarter was SEK 18.4 billion. Organic sales development
was in-line with our expectations, 4% higher than the previous quarter and 4%
lower year-over-year.

Although markets remain challenging, our cost reduction initiatives, including
the profit improvement programme within Automotive, are materializing according
to plan. This contrib­uted to an 11% operating margin excluding one-time items.
Cash flow generation was a solid SEK 1.2 billion (excluding divestments and
acquisitions), around SEK 500 million higher than last year. This continued
resilient performance is a sign that we are on the right track in our effort to
shape SKF into being leaner, more customer-focused and competitive.

The consolidation of three factories in North America was announced on 9 June,
including an investment of SEK 150 million in manufacturing upgrades. This is
the latest activity in our ongoing programme of investments in making our
manufac­turing more flexible, competitive and better suited to serve our
customers.

The divestments of our Kaydon velocity control and fly-by-wire businesses were
completed on 30 June. As a result, we received SEK 3 125 million, which
contributed positively to cash flow in the quarter. The effect on net profit was
SEK -380 million, mainly related to taxes that we expect to pay in the coming
quarters. In total, over SEK 4 billion has now been raised through the
divestments of non-core businesses during the last 12 months.

As we look ahead, we see signs of the market stabilizing. Entering the third
quarter of 2016, demand for SKF’s products and services is expected to be
relatively unchanged compared to the same period last year. Sequentially, demand
is expected to be weaker, in-line with normal seasonality.”

Key figures, SEKm                 Q2 2016  Q2 2015  YTD 2016  YTD 2015
Net sales                          18 370   19 961    36 090    39 415
Operating profit excl. one-time     2 020    2 577     3 992     4 953
items
Operating margin excl. one-time      11.0     12.9      11.1      12.6
items, %
One-time items in operating          -145     -194      -242      -849
profit
Operating profit                    1 875    2 383     3 750     4 104
Operating margin, %                  10.2     11.9      10.4      10.4
Profit before taxes, excl.          1 801    2 435     3 556     4 602
operating and financial one-time
items
Profit before taxes                 1 656    2 241     3 314     3 833
Net cash flow after investments     4 225    1 654     4 735     2 642
before financing

Net sales change y-o-y, %:  Organic  Structure  Currency  Total
Q2 2016                        -4.4       -0.6      -3.0   -8.0
YTD                            -5.3       -0.7      -2.4   -8.4

Organic sales change in local  Europe  North America    Latin  Asia  Middle
currencies, per region y-o-y,                         America        East &
%:                                                                   Africa
Q2 2016                           1.8          -13.1     -2.1  -5.9     1.8
YTD                              -0.1          -12.1     -2.8  -7.5     1.4

Outlook for the third quarter 2016

Demand compared to the third quarter 2015
The demand for SKF’s products and services is expected to be relatively
unchanged for the Group, including both Automotive and Industrial. Demand is
expected to be slightly higher in Europe, relatively unchanged in Latin America,
slightly lower in Asia and significantly lower in North America.

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

A teleconference will be held on 21 July at 9:00 (CEST):
SE: +46 8 5065 3936
UK: +44 20 3427 1914
US: +1 212 444 0895

You will find all information regarding the SKF Half-year report 2016 on the
Group’s IR website.

Aktiebolaget SKF
      (publ)

The information in this press release is information which AB SKF is required to
disclose under the EU Market Abuse Regulation (EU) No 596/2014 and pursuant to
the Securities Markets Act. The information was provided by the above contact
persons for publication on 21 July 2016 at 8:00 CEST
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.