AB SKF (publ)

Thank you. And good morning and welcome to all of you participating on this conference call for SKF's first quarter results. As usual, we'll start with a presentation. It will last about 25 minutes or so. It will start by Rikard Gustafsson giving his summary of the quarter and then followed up by Niklas Rosenlev's presentation of the financial performance. After that, we will be ready to interact with you over the phone or over the chat if you want to post your questions there. So with that very brief intro, I will leave the word, the floor, and more importantly, the clicker to Rickard.

Thank you very much, Patrick, and a warm welcome, everyone, and thank you for joining us for this interim report presentation. In the quarter, we have further accelerated our intelligent and clean transition to drive profitable growth. And I'm pleased to report a strong set of numbers with sales, adjusted operating profit and cash flow at record levels for the first quarter in absolute terms. Net sales were strong in the quarter, just north of 26.5 billion Swedish kronor, representing an organic growth of just above 10%. The adjusted operating profit came in at 3.5 billion Swedish krona, corresponding to an adjusted operating margin of 13.1%. The positive margin development compared to previous quarter was mainly due to continued strong price realization, but also our efficiency and portfolio management efforts that we have been driven throughout the quarter. However, post-inflation remained at the high level throughout the quarter. Net cash flow was significantly up versus Q1 last year and came in at 2.7 billion Swedish krona. This is largely related to the improved net operating profit as well as our efforts to improve networking capital. And you will hear more about this from Niklas shortly. So all in all, we saw strong organic sales growth as well as continued sequential price realization in the quarter. This supporting an improved adjusted operating profit versus previous quarter and the same quarter last year. Turning to our strategic growth framework. Once again, I'm happy to report tangible progress across all four growth levers. In Q1, we saw strong double-digit organic growth in most targeted segments. Growth was particularly strong for electrical vehicles, as can see on this chart, up 25% in the quarter. But also in segments that we highlighted in our capital markets day, such as railway and renewable energy, came in with strong double-digit growth. Turning to new technologies, In the beginning of the year, we integrated the SKF Bearing app into the Ansys platform. This enabling for customers to quickly simulate and create SKF Bearing models in real time, while using the Ansys system for the application design and specifications. We continue to expand our service in aftermarket business, In the quarter, we saw an increasing interest in our performance-based railway contracts. And I will share more details about this also shortly. And finally, on portfolio management. Tactical and strategic activities are ongoing, as we described in detail at our Capital Markets Day in December. All business areas are actively driving price and pruning sub-performing contracts, segments or products. So with this overview, let's now take a deeper look into our industrial business. In industrial, we saw strong organic growth of 10%, with approximately two-thirds coming from price mix. As you can see in the chart, by region, we saw solid growth in Americas of 5%, driven by heavy industries and industrial distribution. We saw strong organic growth in EMEA, and it's actually surprisingly positive to see the resilience in EMEA, and the growth was up 11%, especially strong in aerospace and material handling. Organic growth in China and Northeast Asia come in at 12%, a clear rebound after the COVID reopening, especially in industries relying on domestic demand, such as wind, metals, and heavy industries. And finally, we also saw strong momentum and growth momentum in India and Southeast Asia, growing some 14% in the quarter, driven by wind, rail, agriculture, food and beverage, and heavy industries. The adjusted operating margin came in at a satisfying 17%. And due to solid pricing momentum, cost takeout and active portfolio management, we can report an improved adjusted operating profit compared to last year at 3.2 billion Swedish krona. As I mentioned, our tactical portfolio management activities, they do continue. And we have accelerated our efforts across industries and geographies, starting with broad-based pricing initiatives. Now we're also seeing tactical portfolio shifts primarily within Americas and EMEA. And our strong organic growth is a result of further enhanced competitiveness. And I would like to highlight, to bring to your attention, three key differentiators in this presentation. Firstly, we're going to talk about sustainability and how that is enabling us to further drive growth in clean tech, how we drive regionalization to enhance our competitiveness, and how we commercialize our technical and innovation leadership. But starting with sustainability, This is a clear value driver for SKF. Our total revenues from Cleantech now significantly exceeds 10 billion Swedish krona. And for your reference, we define Cleantech as renewable energy, electrical vehicles, electric railway, recycling industries, bearing remanufacturing, recon oil and magnetic bearings. In the quarter, we noticed especially strong growth in electrical railway, with customer wins of three major metro operators in Asia. So why these wins? Well, SKF, we have a strong rail value proposition. We help our customers to lower the total cost of ownership from reduced maintenance and increased train utilization. Our contracts often includes bearings, condition monitoring, and bearing refurbishment. And bearing refurbishment is a critical part of the circular economy, an area of growing importance among many of our customers. Our recent achievements in our sustainability transition are also science-based target initiatives, validation of our emission reduction targets for 2030 and 2050. We are now among the world's top 5% of companies receiving SBTI approval for both mid- and long-term net zero targets. We have an A- or leadership climate rating from CDP. And in 2022, more than half of all electricity used by SKF was derived from renewable resources, a major milestone in our net zero journey. When it comes to localization and regionalization, it's a cornerstone in our strategic framework, and India and Southeast Asia is being no exception. India is poised to double its current annual GDP from almost 3.5 trillion U.S. dollars to a mind-blowing 7 trillion dollars by 2030. Of course, this is a huge potential for us. And we are well positioned to benefit from this, but also to help India in its growth aspirations. We have a rich and long history in the country. Actually, in Q1, we celebrated our 100 years of operations in India. We have a robust presence in the country with six manufacturing sites, eight distribution centers, four solution factories. We have a nationwide supplier and distributor network and a global technical center for end-to-end engineering. But in order to take part of the fast-growing Indian economy, the ability to develop and manufacture products locally is and will be key. Therefore, we have recently invested some 250 million Swedish krona to further improve our local manufacturing capabilities, boost our supply chain network, and secure additional engineering capabilities. And finally, an example on how we commercialize our technical innovation and leadership. SKF, we are a key manufacturer in the machine tool segment with annual sales of about 2 billion Swedish krona. Within this segment, we offer a wide range of super precision bearings, often with ceramic rolling elements. Super precision bearings come with a strong value proposition. They enable high speed and high load with maximum reliability and temperature stability. A recent success case is a new contract with a Swiss-based high-end spindle producer. We won this business due to that our engineers were able to deliver a bearing solution with leading technical design, advanced ring material and innovative heat treatment, surpassing the performance of standard superposition bearings. So with this, let's shift focus and now turn our spotlight to our automotive business. In automotive, organic growth was also very strong, up 12% in the quarter. In this case, more of a balance between price mix and volume. Again, as you can see in this chart, we saw a continued good growth of 12% in Americas, especially driven by light vehicles and a solid vehicle aftermarket. In EMEA, organic growth was 17%, with strong growth both from trucks and passenger cars. In comparison to Q1 last year, we noted an exceptionally strong growth in EV sales in Europe to both traditional OEMs and pure EV producers. In China and Northeast Asia, demand relying on local consumption and exports such as light vehicles and vehicle aftermarket were low and resulting in a negative growth of 2% as evident on this chart. India and Southeast Asia maintained a strong organic growth of 15%, primarily due to high demand for light vehicles. Our operating profit here came in at 300 million Swedish krona, corresponding to a 3.6 operating margin. We saw a positive price contribution both from OEM and the aftermarket. And in comparison to last year, the operating margin is impacted to some negative mix effects. So with that said, I would like to reinforce that we continue to see an improvement in the underlying automotive profitability as we progress the strategic shift in the portfolio. And we are making good progress in this strategic shift and well aligned to deliver on the 1.2 billion of revenues that we're about to exit of non-strategic sales by the end of 2023. And as you all recall, these exits are primarily related to ICE powertrain applications. Strategically, we are pleased to note the continued strong growth in EVs, the vehicle aftermarket and commercial vehicles, all according to our strategic shift. And talking about EVs, we also want to give you an example on how we participate in the electrification of the two wheelers. We have partnered up with a company named Cake, which is a Swedish maker of premium lightweight electrical motorcycles aiming at launching the first fossil-free two-wheeler. SKF, we will provide bearings produced with a minimal carbon footprint as part of Cake's ambition to create the cleanest dirt bike ever. SKF bearings will be used in key areas of the bike, such as steering, wheels, frame, and of course, the e-motor. With this, it's time for me to hand over to Niklas to give you some more details on our numbers in the quarters. So, Niklas.

Thank you, Rickard, and hello, everyone.