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SKF: 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
Operating margin excl. one-time 11.0 12.9 11.1 12.6
items, %
One-time items in operating -145 -194 -242 -849
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
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

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:

INVESTOR RELATIONS: Patrik Stenberg, Head of Investor Relations
Patrik Stenberg, +46 31-337 2104; +46 705-472 104;

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.

® SKF is a registered trademark of the SKF Group.


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