© SKF Group April 22, 2023Slide 1

Industrial Market, Strategic Industries

© SKF Group

Speakers

25 min Rakesh MakhijaPresident

Strategic Industries

15 min Rutger Barrdahl DirectorRailway and Off-highway

15 min Ole K Jødahl

Director

Industrial Drives

5 min Key business message & Summary

15 min Q&A

CMD 2013

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Agenda

Strategic Industries agenda & overview

Significant news

Strategy and market direction

Value and Cost leadership

Asset Life Cycle – ‘every business must have a service business’

SKF BeyondZero

Outlook and key business message

CMD 2013

© SKF Group

Industrial Market, Strategic Industries

Net Sales 2012 = SEK 20,204 million

No. of employees = 19,096

Full responsibility for sales to both OEM and end users, as well as business development, manufacturing, and engineering

% of net sales by geographical area (2012):

Middle East, Africa

Asia, Pacific

North America

Europe

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Film

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Voice of the Customer – what is important to them

Energy efficiency

Reliability

Cost reduction

Uptime

Partnership

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Significant news

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Aerospace

Significant news

Long-term contract worth SEK 900 million with Turbomeca

Awarded key bearing programs with the industry leaders (Pratt GTF, Bell 525, Eurocopter X4, Safran LEAP X)

Renewed long-term agreements with major partners such as GE and Agusta- Westland

SKF Aerospace Innovation Centers with Penn State Erie, The Behrend College, and a co-Chair with INSA Lyon dedicated to the study of lubricated interfaces in aerospace

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Railway

Start up of production and global launch of a new range of Tapered Roller Bearing units (AAR) for freight cars, strengthening our role in the large freight wagon markets.

Major orders of wheel set bearings (TBU) for very high speed trains (>300 km/h) in China, with the customers Tangshan Loco and Changchun Railway Co.

Very strong overall growth in our Chinese railway business for passenger train applications.

Significant news

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Renewable Energy

Three-year agreement signed with Siemens Windpower for supply of the new generation SKF Nautilus bearings

Success with SKF WindCon systems to Vestas Services in multiple markets

Supplier and development partner to David Brown Wind for gearbox development for a multi-megawatt offshore wind turbine model

SKF in forefront development in the ocean energy market with supply agreements with several manufacturers of wave and tidal turbine devices

Launch of the SKF Wind Industry Quality Standard

Significant news

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Traditional Energy

Extended service contract with two major oil producers on the Norwegian shelf, SEK 40 million over 5 years

Service contract with major USA oil & gas pipeline (20,000km) in the US, 3 years SEK 20 million

Contracts for condition monitoring, bearings and maintenance services with a major Latin American oil company for SEK 20 million over 3 years

Supplying Magnetic Bearing technology for two new major off shore projects in Australia for the Ichthys Gas Field

Significant news

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Industrial Drives

Received large prototype orders from major Chinese and American air-blower customers for our new high speed permanent magnet motors using magnetic bearings

Tripled seal sales to a leading German gearbox producer. We are the main seal supplier to several of their manufacturing locations

New product start of Full Complement Cylinder Roller Bearings in a market that was traditionally dominated by our competitors in Germany

Significant news

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Precision

Large order achieved in material joining applications for Automotive industry, to supply SKF Electromechanical Cylinders (based on SKF superior roller screw technology)

Global launch of new telescopic pillar for ophthalmic and infant care devices

Initiated Super Precision bearings production in Charleston, US to better serve the North America machine tool market

Machine Tool Competence Centre in Shanghai

Significant news

CMD 2013

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Lubrication

Equipped BEUMER belt conveyer complex for unloading iron ore vessels in Malaysia with 100 SKF automatic lubrication systems

Secured Oil Circulation System and Grease lubrication systems for three new machines at Metso Paper Sweden AB

Supplying 25 Automatic Lubrication System including installation, testing and documentation to the Norwegian Public Roads Administration

Photo: BEUMER Group GmbH & Co. KG

Significant news

CMD 2013

Strategy and market direction

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SI agenda – short to medium term

• Making growth happen – profitably

• Every business must have a service business

• Manufacturing Development – cost, quality, and safety

• Execute SI organization efficiency programs – footprint, stock optimization, and cost reduction

• China, Germany, USA, and India

• M&A

• SKF BeyondZero portfolio

• Building a great SI organization – meritocracy, excitement and vibrancy

Value and Cost Leadership – the road to sustained leadership

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Idea

Design

Develop

Manufacture

OEM Supply

- Operator Inspections (technology & processes) - Condition Monitoring & prognostics- Remote Diagnostics & Onsite Investigations- Maintenance & Reliability Engineering- Mechanical Services / Troubleshooting- Root Cause Failure Analysis - Reliability analysis & improvement assessment

- Concept evaluation & simulation- Detailed calculations & virtual testing - Design validation & real testing - Series production - Factory Acceptance Test > OEM Asset

End User Install

Operate

Monitor

Maintain

Repair

Restore

- Commissioning > Site Acceptance Test- Asset Register development & spare parts plan- Maintenance strategy deployment

End User Install

Capture the full potential of the asset life cycle

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Asset life cycle management for wind industry

Specifications(Active involvement in standardization committees and other industry bodies)

Manufacturing and testing•Customized mainshaft solutions(Nautilus, Self aligning / CARB and rigid)•Industry specific gearbox offerings;(HC-CRB, separable HC-CRB, black-oxidized)•Generator solutions;(XL-hybrid bearings, Insocoat bearings)•Sealing solutions, Lubrication systems

Design and develop•Engineering Consultancy Services•Calculation and simulation tools•Design development partnership with turbine manufacturers•R&D and testing activities

Operate and Monitor•WindCon monitoring system•Remote monitoring services•Lubricants•Mechanical & Training services•Asset Efficiency programs

Maintenance & Repairs•Bearings & seals replacement parts•Gearbox Spare part kits•Gearbox refurbishment services•Logistic services

Installation•Alignment services•Bearing mounting services

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Value built around Asset Life Cycle Management

Idea

Desig

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Develo

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Man

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ure

Insta

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Op

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te

Mon

itor

Main

tain

Rep

air

R

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OEM

END USER

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Value propositions for wind aftermarket

Spare parts

Driveline services

Condition based maintenance

Remote monitoring & Asset Management Services

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Availability – Spare Parts Management Program for wind

SKF Spare Parts Management

Lead time Availability

Spare parts for gearboxes, main bearings, generators,…

• Bearings

• Housings

• Seals

• Lubrication systems

As wind farms age, the O&M cost increase

In order to maintain turbine performance and reliability, a Spare Parts Program is needed to ensure

• Availability of key and critical components

• Short lead times and committed service levels

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Actively develop and implement new, efficient solutions and services

Root cause failure analysis on large drive train components like main shaft and gearbox

Development of upgrade packages

Wind turbines specific improvement programs

SKF driveline services

Offer

Drive line service offers:

• Upgrading instead of replacing

• Bearing remanufacturing

• Application analysis

• Training

LCOE reduction by early involvement!

Levellized Cost of Energy (LCOE) - Driveline services for wind

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Reduce maintenance – Condition Based Maintenance for wind

Condition Based Maintenance

WindCon + Active WindCon

Vattenfall – Vestas V80 – Esbjerg

Sweden

Maintenance

cost

Availability

CBM enables value positioning in terms of:

• Upgrading customer assets

• Increasing power output

• Increasing uptime

Clear industry trend to equip multi MW WTGs with condition monitoring systems

Large utilities upgrade their wind farms with CMS

Market focus still on hardware

Values lies in the efficient remote diagnostic capabilities and expertise.

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Maintenance complexity

Bu

sin

ess

im

pact

1

23

4

Condition Monitoring Electrical Motor Monitoring

Advanced DiagnosticsTurbomachinery & Pumps

Mechanical SupportAlignment, Balancing

Maintenance strategy

Oil and gas services

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Magnetic Systems services

Installed base:Large installed base and growing

Worldwide organization

Activities:Field support service (tuning, commissioning, assistance)

Spare parts

Retrofit and upgrades

Maintenance & training

Success factors:Short lead time and service level commitment

Competent service organization

New Collaborative Business Model

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Probabilistic risk assessment (PRA) is a systematic and comprehensive methodology used to evaluate risks associated with complex engineered systems and facilities. In a PRA, risk is characterized by two quantities:

the magnitude (severity) of the possible adverse consequences, and

the likelihood (probability) of occurrence of each consequence.

SKF (ERIN) has established a proven track record as the leading provider of Probabilistic Risk Assessment (PRA) consulting services to the power industry.

Traditional Power services

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Lubrication - service

Rautaruukki Steel Mill, Raahe, Finland

20,000 lubrication points automated by SKF“Ruukki Metals OY has signed a lubrication service contract with SKF in Finland.

The service covers several areas of the mill and is worth 500,000 euro”

Ruukki

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Lubrication – Top of Rail (TOR) Conditioning Systems

We undertake full responsibility for installation, commissioning, including civil works.

CMD 2013

The SKF BeyondZero portfolio

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The SKF BeyondZero portfolio – Strategic Industries

Servo actuator SKF E2DGBB

High endurance Slewing bearings

Dry lubrications for conveyor belts

Energy efficient blowers

Active magnetic systems

CTBU low friction seal

SKF solar linear actuator

Sour gas compressor bearings

ELI spherical plain bearing Food line Y-

bearings

Cylinder lubrication unit Titanium bearings

for Aerospace

SKF Nautilus

SKF Solar Hub

SKF Flowline

SRB + CARB

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Business Unit presentations

Outlook and key business message

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Performance 2011 – 2013 YTD

2011

Net sales

Operating margin

20 807 SEKm

20 093SEKm

13.9%

(14%) restated

9.8%

(10.2%)

2012

9 348SEKm

9.2%

(11.2%)

Half year 2013

10 792SEKm

9.8%

(10.7%)

Half year 2012

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Market trend per industry

Aerospace:Strong demand driven by single aisle demand, Boeing and Airbus, supporting a stable, high, build rateContinuing growth in RIC

Railway & Off-highway:Railways: Asia coming back on growth track, Europe and USA in stable modeSKF: Continued strong Agri businessContraction in mining related business

Renewable energy:SKF: Renewable Energy in a phase of business recovery, positive projectionsOngoing quick globalization of industry, with new emerging markets developingTrend of expanding turbine sizes and wind industry going offshore

SI overall outlook:•Modest improvement in overall business environment•Speed of change will differ between segments•China growth expected to improve•Drive life cycle growth strategy

CMD 2013

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Market trend per industry

Traditional energy:Deepwater and subsea exploration & production continue to be growth areasNatural gas boom impacting future investments in transportation (pipelines)Hydraulic fracturing technology now being implemented in UK and China

Industrial Drives:Modest global business growthEnergy efficiency importance increases - The BeyondZero portfolio and our new launches supports the growthSKF: New range of application specific performance solutions

Precision:Moderate business recovery with higher growth in USA, China and IndiaSKF: Increase regional manufacturing footprintSKF: Ongoing product cost reduction programs

Lubrication:SKF: Increased focus on key developing segments (Agriculture, Oil & Gas)SKF: Integration and synergy-building continue according to planSKF: Focused on key growth markets (Russia, Asia, and Latin America)

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Key business message – Strategic Industries

Growth drivers

• Every business must have a service business

• China, Germany, USA, and India

• The SKF BeyondZero portfolio

Competitive advantage

• Life cycle management

• Five technology platforms

• Global footprint with local competence

Cost efficiency

• Manufacturing Development – cost, quality, and safety

• Execute SI organization efficiency programs – footprint, stock optimization, and cost reduction

• Business Excellence across SI

CMD 2013

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The Value and Cost Leadership Equation

1930 Oil & Gas Journal ad

valued

CMD 2013