1. Key data 2008 2007
Net sales, SEKm 63,361 58,559
Operating profit, SEKm 7,710 7,539
Profit before taxes, SEKm 6,868 7,138
Basic earnings per share, SEK 10.14 10.09
Diluted earnings per share, SEK 10.13 10.07
Dividend per share, SEK 3.50 5.00
Cash flow after operating investments
before financial items, SEKm 65 2,126
Return on capital employed, % 24.2 25.4
Equity/assets ratio, % 36.6 39.6
Additions to tangible assets, SEKm 2,531 1,907
Registered number of employees,
31 December 44,799 42,888
SKF in brief 2008
® SKF Group 2009 • Publication 7024 EN • Printed in Sweden
Aktiebolaget SKF • SE-415 50 Göteborg, Sweden
Tel. +46 31-337 10 00 • www.skf.com
This is SKF
SKF Group is the leading global supplier of products, solutions and Research and development
services within rolling bearings, seals, mechatronics, services and Technical development, quality and marketing have been in focus
lubrication systems. Services include technical support, maintenance at SKF since the very start. The Group’s efforts in research and
services, condition monitoring and training. development have resulted in numerous innovations, forming bases
for new standards, products and solutions in the bearing world.
The SKF Group In 2008, the number of first filings of patent applications was 179.
SKF was founded in 1907, and grew at a rapid rate to become a
global company. As early as 1920, the company was well estab- Certification
lished in Europe, America, Australia, Asia and Africa. Today, SKF is The Group has global IS0 14001 environmental certification and
represented in more than 130 countries. The company has more global health and safety management standard OHSAS 18001
than 100 manufacturing sites and also sales companies supported certification. Its operations are also certified in accordance with
by about 15,000 distributor locations. SKF also has a widely used either ISO 9001 or applicable customer segment standards, e.g.
e-business marketplace and an efficient global distribution ISO/TS 16949 (Automotive), AS9100 Aviation or IRIS (Railway).
system.
SKF Care
Three divisions, 40 segments SKF defines sustainability as SKF Care, comprising Business Care,
SKF does business mainly through three divisions: Industrial Environmental Care, Employee Care and Community Care. Within
Division and Service Division, servicing industrial original equipment each of these four cornerstones, key focus areas and targets are
manufacturers (OEMs) and aftermarket customers respectively, defined to drive continuous performance improvement.
and Automotive Division, servicing automotive OEMs and after-
market customers. SKF operates in around 40 customer segments,
whereof examples include automotive, wind energy, railway, machine
tool, medical, food & beverage and paper industries.
Geographic distributions of net sales, average number of
employees and property, plant and equipment (per cent)
Net sales
Average number of employees 64
Property, plant and equipment 51 51
19 22 19
17
12 9
5 6 5 8
4 4 3 1 0
North America Latin America Western Europe Eastern Europe Middle East Asia / Pacific
and Africa
2

2. SKF – the knowledge engineering The competence dimension – technology platforms
company SKF’s five technology plat-
forms are Bearings and
units, Seals, Mechatronics,
The SKF vision is “To equip the world with SKF knowledge”. To take Services, and Lubrication
the knowledge from over 100 years of operation to develop and Systems. SKF’s specialist
deliver products, services and solutions which enable customers to teams in each platform work
develop their business successfully and profitably. SKF knowledge closely together with the
can be defined as the combination of the following three dimensions. segments and sales organization to provide advanced integrated
solutions to meet the customers’ needs to develop new products,
to improve their production efficiency and to improve their com-
The geographic dimension – global and local presence petitiveness and profitability.
SKF is a global company
with a local presence which Using all three dimensions to build customer value is what SKF
has primarily been in place calls “The power of knowledge engineering”.
since the early years of the
SKF Group. Wherever cus-
tomers are located local
expertise, supported by
global industrial specialists
and technical experts, combine the required SKF competences to
be able to make a specific offer for that customer which meets his Vision, mission, drivers
local needs. The global experts draw upon knowledge and sucesses
from similar industries worldwide. and values
Vision Drivers
The customer dimension – industries and segments To equip the world with • Profitability
SKF knowledge • Quality
SKF’s customers can be • Innovation
found in very many indus- • Speed
tries and industry segments, Mission • Sustainability
currently defined as around To strengthen SKF’s global
40 specialized segments. leadership and sustain
Each customer and segment profitable growth by being Values
has different technical and the preferred company: • Empowerment
commercial challenges. • for our customers, • High ethics
Working in so many different industries enables SKF to both distributors and suppliers • Openness
develop specific products and services for each industry and also • for our employees • Teamwork
to take knowledge from one industry and apply it in another • for our shareholders
industry.
4 5
Financial objectives and strategy Shares and shareholders
Financial targets SKF’s A and B shares have been quoted on the NASDAQ OMX
SKF’s long-term financial targets were announced in January 2007. Stockholm since 1914. The total number of shares traded in 2008
was 1,564,934,260. SKF’s ADRs are traded on the OTC market.
The targets are:
An A share gives the entitlement to one vote and a B share to one-
• an operating margin level of 12%
tenth of a vote.
• annual sales growth in local currencies of 6–8%
• a return on capital employed of 24%. A shares, unrestricted 47,746,034
B shares, unrestricted 407,605,034
Strategy Total 455,351,068
SKF’s business strategy to achieve long-term profitable growth
and attain financial targets includes:
Geographic ownership
• keeping a clear and dedicated customer focus
• developing new products, solutions and services with higher Europe excl. Sweden
Sweden
added value which enable customers to improve their efficiency USA
and performance while lowering their total cost Rest of the world
• improving price quality by applying the SKF platform and
segment approach to deliver value to customers
• strengthening the product portfolio through greater investment The five largest shareholders
in R&D and through acquisitions as of 31 December 2008 In percent of In percent of
voting2008
rights share capital
• focusing on rapidly expanding segments and regions
• reducing capital employed and fixed costs Foundation Asset Management 28.82 12.04
Skandia 4.46 1.21
• attracting, retaining and developing the right people.
Alecta 4.45 4.31
Swedbank Robur Funds 4.34 3.22
AFA Sickness Insurance 3.19 3.47
Operating margin Growth development/ Return on capital
local currency employed
Aquisitions/Divestments
Price trend of SKF’s shares
SEK
Organic growth
160
© NASDAQ OMX
% % Y-o-Y % 140
13.2
12.9
120
25.4
15
12.6
15 30
24.7
11.8
12.2
24.2
21.8
10.8
25 100
19.0
9.9
10 10 20
7.5*
11.3*
7.3*
80
10.4*
7.1
15 200,000
5 5 10 60 150,000
5 100,000
50,000
0 0 0
04 05 06 07 08 04 05 06 07 08 04 05 06 07 08 40
04 05 06 07 08
* Excluding income from the * Excluding effect from sale
previously jointly controlled of Oy Ovako Ab 2005: 10.4% B share A share OMX Stockholm_PI (normalized after B share)
company Oy Ovako Ab 2006: 10.1% Number of A shares traded, thousands Number of B shares traded, thousands
6 7

3. Net sales by customer segment Industrial Division
The Industrial Division serves industrial Original Equipment
Industrial distribution 23%
Cars and light trucks 13%
Manufacturer (OEM) customers with product development and
Vehicle service market 9% production of a wide range of bearings – such as spherical and
Aerospace 5% cylindrical roller bearings, angular contact ball bearings, medium
Special industrial machinery 6%
Railway 3% deep groove ball bearings and high precision bearings – as well
Industrial
Energy 6% Off-highway 4%
as lubrication systems, linear motion products, by-wire systems
Heavy industry 8% Trucks 5%
Two-wheelers and Electrical 3%
and couplings. The SKF industrial market is divided into around
General industry 14%
30 customer segments.
The SKF divisions
Net sales by customer segment
Net sales by customer segment
SKF’s business is mainly divided into three divisions, each focusing Special industrial machinery 16%
on specific customer groups worldwide. The divisions are inter- Energy 14%
General industry 20%
dependent, however, in that they constitute a market within the
SKF Group with products, services and know-how on offer to each Off-highway 8%
other to enable any of the divisions to serve its final customers.
Railway 8%
Heavy industrial machinery 10%
Aerospace 15%
Other 9%
Industrial Division 2008 2007
Net sales, SEKm 22,748 19,693
Net sales incl. intra-Group sales, SEKm 33,260 29,157
Operating profit, SEKm 3,929 3,434
Operating margin* 11.8% 11.8%
Assets and liabilities, net, SEKm 17,819 13,803
Registered number of employees 18,909 18,547
* Operating margin is calculated on sales incl. intra-Group sales.
8 9
Service Division Automotive Division
The Service Division serves the global industrial aftermarket, The Automotive Division serves manufacturers of cars, light
mainly via a network of around 7,000 distributors, providing trucks, heavy trucks, buses, two-wheelers, and the vehicle service
products and knowledge-based services to increase customers’ market. In addition, it also serves the market for home appliances,
plant asset efficiency. Solutions include consulting, mechanical power tools and electric motors. SKF develops and manufactures
services, predictive and preventive maintenance, condition bearings, seals and related products and service solutions. Prod-
Service
monitoring, decision-support systems and performance-based ucts include wheel hub bearing units, tapered roller bearings,
contracts. The division is also responsible for all SKF’s sales in small deep groove ball bearings, seals, automotive specialty
certain smaller markets. SKF Logistics Services supplies logistics Automotive
products and complete repair kits for the vehicle service market,
services to the SKF Group and external customers. including a range of driveshafts and constant velocity joints.
Net sales by customer segment Net sales by customer segment
Net sales by customer segment Net sales by customer segment
Service and service-
related products 18% Other 15%
Two-wheelers 3%
Bearings 82% Vehicle service market 26%
Cars 41%
Trucks 15%
Service Division 2008 2007 Automotive Division 2008 2007
Net sales, SEKm 21,529 19,339 Net sales, SEKm 18,727 19,449
Net sales incl. intra-Group sales, SEKm 23,670 21,136 Net sales incl. intra-Group sales, SEKm 23,215 23,703
Operating profit, SEKm 3,444 2,860 Operating profit, SEKm 627 1,135
Operating margin* 14.6% 13.5% Operating margin* 2.7% 4.8%
Assets and liabilities, net, SEKm 5,015 4,367 Assets and liabilities, net, SEKm 10,894 9,464
Registered number of employees 6,322 5,859 Registered number of employees 16,550 17,119
* Operating margin is calculated on sales incl. intra-Group sales. * Operating margin is calculated on sales incl. intra-Group sales.
10 11

4. Sustainability
Sustainability is one of SKF’s key business drivers together with • As a result of SKF’s drive in reducing energy intensity at manu-
Profitability, Quality, Innovation and Speed. SKF’s approach to sus- facturing operations and the carbon intensity of the energy used,
taining growth while meeting environmental and social challenges an absolute reduction of Scope 1 and 2 carbon dioxide emissions
is to work determinedly to integrate the long-term sustainable (according to the GHG Protocol) of 50,000 tonnes was achieved.
development approach into its business practices, processes as This is equivalent to a 9.1% reduction compared to the 2007 total,
well as product and solution offerings to the market and industry. surpassing the Group’s target by some 4 percentage points.
Sustainability at SKF centres on the SKF Care approach to • A new target for solvent reduction was defi ned, to achieve an
business, the environment, employees and the community. absolute 50% reduction by 2012, compared to 2007. A total of
10% reduction was achieved in 2008.
• SKF also aims for a minimum 80% recycling rate for grinding swarf
by 2012. The current 2008 recycling percentage of grinding
swarf Group-wide was at 64%.
Business Care Employee Care
Employee Care
BeyondZero SKF Care • 105 out of 206 SKF units worldwide achieved zero recordable
accidents for four quarters or more in 2008 and the accident rate
has fallen by 74% since the Zero Accidents target was established
Environmental Community
Care Care in 2000. Apart from that, health and fitness, HIV/Aids programmes,
skills and competence training continued to be a focus area under
Employee Care.
• SKF employees provide their feedback on SKF’s performance in
Business Care relation to company values and key focus areas annually through
• SKF endorses the Global Compact Ten Principles. The SKF Code of the global Working Climate Analysis. The analysis also measures
Conduct is applicable to all employees worldwide and compliance the working climate in different departments and individual
audit is carried out biennially at all units. teams in terms of trust, co-operation, personal development
• The SKF Code of Conduct for Suppliers and Sub-Contractors as and continuous improvement. Follow-up discussions are sub-
well as the SKF Code of Conduct for Authorized Distributors have sequently conducted by managers with their teams to identify
been released with the aim to enforce an ethical demand chain. and implement improvement plans.
• In continuing its launch of new bearing families offering energy-
efficient solutions, SKF released the energy-efficient (E2) spher- Community Care
ical and cylindrical roller bearings. The SKF E2 bearing family • SKF encourages its local management to be actively involved
outperforms standard ISO products, providing a minimum 30% in communities not only by providing fi nancial means but also
energy saving for customers, and is intended for a wide range of commitment through viable voluntary work and sports activities,
applications, such as industrial and wind energy transmissions. education, training, and helping under-privileged society. This
is demonstrated through for instance SKF’s engagement in the
Environmental Care Philippines to provide education for the indigenous residents,
• The SKF Group-wide ISO 14001 Environmental Management as well as supporting and helping local communities through
certificate comprised 90 sites in 28 countries at the end of 2008. paid voluntary schemes offered to the employees.
12 13
Management as of 1 January 2009
Tom Johnstone* President and Chief Executive Officer
Tore Bertilsson* Executive Vice President, AB SKF and
Chief Financial Officer
Henrik Lange* President, Industrial Division
Vartan Vartanian* President, Service Division
Tryggve Sthen* President, Automotive Division
Alan Begg Senior Vice President, Group Technology
Development and Quality The following topics related to the SKF Annual Report
Carina Bergfelt General Counsel 2008 including Sustainability Report are to be found
Giuseppe Donato Senior Vice President and Advisor at www.skf.com, choose Investors and Reports.
Eva Hansdotter Senior Vice President, Group Human
Resources and Sustainability • Articles of Association
Phil Knights Senior Vice President, Global Relations
• SKF Code of Conduct
Manfred Neubert President, SKF GmbH
Bo-Inge Stensson Senior Vice President, Group Demand • SKF Environmental, Health and Safety Policy
Chain and IT • Environmental performance data
Ingalill Östman Senior Vice President, Group • Zero Accidents – award winners
Communications
• Production sites
* member of the Group Executive Committee • Compliance table to GRI G3 Guidelines (GRI Index Table)
• AA1000 AS (2003)
• Carbon dioxide emissions, data
Board of Directors as of 21 April 2009
Elected by the Annual Peter Grafoner
General Meeting Lars Wedenborn
Leif Östling, Chairman Joe Loughrey
Tom Johnstone, President
and CEO Employee representatives
Ulla Litzén Kennet Carlsson
Winnie Kin Wah Fok Lennart Larsson
Hans-Olov Olsson Jeanette Stenborg
Lena Treschow Torell Marie Petersson
14 15