3. Q2 2011 2
• Strong performance
2011 2010
Operating profit,SEKm 2,623 2,239
Operating margin, % 15.7 14.3
Profit before tax, SEKm 2,446 2,047
Cash flow, SEKm 1,300 1,160
• Strong organic sales growth in local currency:
SKF Group: +14.2%
Europe: +14.0% Industrial Division: +18.5%
North America: +15.8% Service Division: +16.6%
Asia: +16.9% Automotive Division: +6.2%
Latin America: +2.9%
Outlook for Q3 for SKF Group
• Demand
Significantly higher compared to Q3 2010
Slightly higher sequentially compared to Q2 2011
• Manufacturing level
Significantly higher year over year
Relatively unchanged compared to Q2 2011
15 July 2011
4. H1 2011 3
• Strong performance
H1 2011 H1 2010
Operating profit, SEKm 5,127 3,941
Operating margin, % 15.3 13.1
Profit before tax, SEKm 4,764 3,551
Cash flow, SEKm 1,672 1,192
• Strong organic sales growth in local currency:
H1 2011
SKF Group: +17.6%
Europe: +17.7%
North America: +20.1%
Asia: +19.2%
Latin America: +10.0%
Industrial Division: +19.7%
Service Division: +19.3%
Automotive Division: +12.6%
15 July 2011
5. Highlights Q2 2011 4
• SKF and Chalmers University of Technology agreed to establish a
University Technology Centre (UTC) within the area of sustainability
and environment.
• SKF issued a EUR 500 million Eurobond with a maturity of seven years.
• SKF Logistics Services was awarded ”Best service provider” by the
Belgian Shippers’ Council Organization of Traffic Management (OTM).
• SKF awarded and celebrated its 100,000th certificate in the SKF
Distributor College.
• SKF signed a strategic partnership agreement with Maanshan Iron
& Steel (MaSteel) in Nanjing, China.
• SKF Asset Management conference was held in Buenos Aires, Argentina
15 July 2011
6. New businesses in Q2 2011 5
SKF:
• entered a long-term contract with Bombardier Aerospace to supply
over 40 different rod assemblies and titanium bearings.
• signed a contract, worth EUR 15 million, with MAN Diesel Turbo for
magnetic bearings and related electronic components to be used in
two sub-sea natural gas sets of compressors.
• entered into a project with Volvo Car Corporation and Volvo Group
aimed at evaluating industrialization of flywheel systems.
• gained new business in Columbia for the remanufacturing of large
size bearings.
• expanded the range of the SKF Hub Knuckle Module. The Ferrari 458
Italia sports car is equipped with this new single nut hub bearing unit.
15 July 2011
7. Example of new products 6
SKF DryLube bearings
New series of virtually maintenance free bearings with an extended
service life in extreme temperatures. The main areas for SKF DryLube
is within the metal industry and the food & beverage industry.
SKF Low Weight Hub Bearing Unit
A new wheel-end solution that contributes to a significant weight
reduction and thereby reduces fuel consumption and CO2 emissions.
This hub bearing unit is mainly for larger cars and light trucks
SKF Double Clutch Bearing Set
Provides higher efficiency and reduces fuel consumption and CO2 emissions
for double clutch transmissions compared to standard transmissions.
This bearing set is mainly for cars.
15 July 2011
9. Organic growth in local currencies 8
% change y-o-y
25
20
15
10
5
0
-5
-10
-15
-20
-25
-30
2009 2010 2011
15 July 2011
10. Growth development by geography 9
Organic growth Q2 2011 vs Q2 2010
Europe
+14%
North America
+16%
Asia/Pacific
+17%
Latin America
+3%
Middle East
& Africa
+12%
15 July 2011
11. Growth development by geography 10
Organic growth H1 2011 vs H1 2010
Europe
+18%
North America
+20%
Asia/Pacific
+19%
Latin America
+10%
Middle East
& Africa +8%
15 July 2011
12. Growth in local currency 11
Long-term target: 8% per annum
Total growth -19.0% 14.2% 22.3%
% y-o-y
20 17.6%
14.2%
15
10
4.7%
5 1.0% 0.0%
0
-5
-10
-15
-20
-20.0%
-25
2009 2010 YTD June 2011
Organic growth
15 July 2011
Acquisitions/Divestments
18. Second quarter 2011 17
SEKm 2011 2010
Net sales 16,712 15,709
Operating profit 2,623 2,239
Operating margin, % 15.7 14.3
Profit before taxes 2,446 2,047
Net profit 1,743 1,451
Basic earnings per share, SEK 3.76 3.09
Cash flow, after investments before financing 1,300 1,160
15 July 2011
19. Half year 2011 18
SEKm 2011 2010
Net sales 33,414 30,155
Operating profit 5,127 3,941
Operating margin, % 15.3 13.1
Profit before taxes 4,764 3,551
Net profit 3,363 2,521
Basic earnings per share, SEK 7.20 5.36
Cash flow, after investments before financing 1,672 1,192
15 July 2011
20. Inventories as % of annual sales 19
% Long-term target level: 18%
25
24
23
22
21
20
19
18
2009 2010 2011
15 July 2011
21. Cash flow, after investments before financing 20
SEKm
2 500
2 000
1 500
1 000 Cash out from
500 *
acquisitions (SEKm):
0
-500 2009 241
-1 000
-1 500 2010 6,799
-2 000 2011 6
-2 500
-3 000
-3 500
-4 000
-4 500
-5 000
-5 500
-6 000
2009 2010 2011
* SEK 798 million, excluding the acquisition
of Lincoln Industrial.
15 July 2011
22. Return on capital employed 21
Long-term target: 27%
%
30
25.9
24.0
25
20
15
9.1
10
5
0
2009 2010 YTD June 2011
ROCE: Operating profit plus interest income, as a percentage of
twelve months average of total assets less the average of non-
interest bearing liabilities.
15 July 2011
23. Net debt 22
(Short-term financial assets minus loans and post-employment benefits)
SEKm
0
AB SKF,
-2 000
dividend paid (SEKm):
-4 000
2009 Q2 1,594
-6 000 2010 Q2 1,594
-8 000 2011 Q2 2,277
-10 000
Cash out from
-12 000
acquisitions (SEKm):
-14 000
2009 241
-16 000 2010 6,799
-18 000 2011 6
2009 2010 2011
15 July 2011
24. Debt structure 23
Maturity years, EURm
600
500
500 446
400
300
200
130
100 100
100
0 0 0
0
2011 2012 2013 2014 2015 2016 2017 2018
• Credit facilities: • No financial covenants nor material
EUR 500 m 2014 adverse change clause
SEK 3,000 m 2017
15 July 2011
25. July 2011: Outlook for the third quarter 2011 24
Demand compared to the third quarter last year
The demand for SKF’s products and services is expected to be significantly higher for the
Group as well as for Asia and Latin America. For Europe and North America it is expected
to be higher.
It will be significantly higher for the Industrial Division and for the Service Division and
higher for the Automotive Division.
Demand compared to the second quarter 2011 and adjusted for normal seasonality
The demand for SKF’s products and services is expected to be slightly higher for the
Group as well as for North America. It is expected to be relatively unchanged for Europe,
higher in Asia and significantly higher in Latin America. For the Industrial Division and
the Service Division it is expected to be slightly higher and for the Automotive Division
relatively unchanged.
Manufacturing level
The manufacturing level will be significantly higher year on year and relatively
unchanged compared to the second quarter, adjusted for normal seasonality.
15 July 2011
26. Demand outlook, regions 25
(based on current assumptions and adjusted for normal seasonality)
Share of net sales Sequential trends for: Q3 2011
2010 Q2 2011 Q3 2011 vs Q3 2010
Europe 46% ++
North America 18% ++
Asia Pacific 27% +++
Latin America 6% +++
Total +++
15 July 2011
27. Demand outlook, divisions 26
(based on current assumptions and adjusted for normal seasonality)
Share of net sales Sequential trends for Q3 2011
2010 Q3 2011 vs Q3 2010
Industrial 32% +++
Service 36% +++
Automotive 30% ++
Total +++
15 July 2011
28. Sequential volume trend main segments Q3 2011 27
(based on current assumptions and adjusted for normal seasonality)
Share of net
sales 2010
14% Cars
12% Vehicle Service Market
5% Energy
25% Industrial distribution
18% Industrial OEM, General+Special
10% Industrial OEM, Heavy + Off-highway
5% Aerospace
4% Railway
4% Trucks
3% Electrical and two-wheeler
15 July 2011
29. Guidance for the third quarter 2011 28
• Tax level: around 30%
• Financial net for the third quarter:
Around SEK -175 m
• Exchange rates on operating profit versus 2010
Q3: SEK -400 m
Full year: SEK -1.3 bn
• Additions to PPE: Around SEK 2.0 bn for 2011
Guidance is approximate and based on current assumptions and exchange rates.
15 July 2011
30. Key focus areas ahead 2011 29
• Profit and cash flow
- manage currency and material headwinds
• Manufacturing and suppliers to support growth
• Growing segments and geographies
• Initiatives and actions to support long term targets
• Integration of Lincoln Industrial
• Business Excellence and competence development
One SKF and SKF Care as guiding lights
15 July 2011
31. Cautionary statement 30
This presentation contains forward-looking statements that are based on the
current expectations of the management of SKF.
Although management believes that the expectations reflected in such forward-
looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Accordingly, results could differ
materially from those implied in the forward-looking statements as a result of,
among other factors, changes in economic, market and competitive conditions,
changes in the regulatory environment and other government actions, fluctuations
in exchange rates and other factors mentioned in SKF's latest annual report
(available on www.skf.com) under the Administration Report; “Important factors
influencing the financial results", "Financial risks" and "Sensitivity analysis”.
15 July 2011
