SKF AB Sponsored ADR Class B

Strong industrial (continuing ops) momentum: +4.3% organic growth and margin expansion - Q3 2026 SKF continuing operations delivered organic growth of 4.3% YoY; supported by selective higher OEM demand (notably defense, drives, infrastructure) and strong commercial execution, especially in Specialized Industrial Solutions (SIS). - Adjusted operating margin rose to 16.3% (+0.9pp YoY), driven by commercial execution, ongoing rightsizing, and SIS margin expansion. - SIS specifically: very strong organic growth across all 4 sub-businesses; adjusted operating profit margin improved +2.4pp to 14% (key drivers: price/mix, portfolio/pruning benefits, and growth mix shifting toward Magnetics & Aerospace).

Rightsizing program: ahead of schedule (clear “good” surprise for investors) - SKF is on track to achieve SEK 2bn annual run-rate savings ~6 months earlier than previously communicated. - Now expected to complete by mid-2027 (first half 2027) instead of second half 2027. - This is already showing up in results: positive margin impact and continuing progress, intended to reduce “items affecting comparability” later in the transformation cycle.

Segment / market opportunities: Magnetics growth platform (structural tailwinds) - Magnetics highlighted as ~SEK 1.5bn business with solid double-digit growth historically. - Growth themes: data centers, semiconductors, energy; SKF emphasizes full ecosystem offering (magnetic bearings, motors, drives/control cabinets, condition monitoring). - Value proposition (why demand should persist): higher energy efficiency (up to ~30% for customers), uptime/less maintenance (oil-free / reduced mechanical contact), and AI scaling via embedded sensors. - SKF plans to scale manufacturing (automation + capacity build-out in Morocco and China) and continue R&D.