SKF First quarter report 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.¡± 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 2016at 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.