The SKF Group reported strong financial performance in Q4 2010, with operating profit of SEK 2,202 million compared to SEK 1,004 million in 2009. Organic sales growth was 17.2% overall and in all divisions and regions. The acquisition of Lincoln Industrial was completed. The outlook for Q1 2011 was for significantly higher demand and manufacturing levels compared to Q1 2010.

1. 0
1 February 2011

2. The SKF Group
Tom Johnstone, President and CEO
1 February 2011

3. Key points, Q4 report 2
• Strong performance
Operating profit: SEK 2,202 m (1,004). Operating margin: 14.3% (7.2)
Profit before tax: SEK 2,048 m (765)
Cash flow: SEK -5,966 m (1,445),
Cash flow excl. acquisition of Lincoln Industrial SEK 798 m
• Strong organic sales development in local currency:
SKF Group: +17.2%
All divisions and regions showed very good growth
• Completed acquisition of Lincoln Industrial
Outlook for Q1 for SKF Group
• Demand
Significantly higher compared to Q1 2010
Slightly higher sequentially compared to Q4 2010, adjusted for normal seasonality
• Manufacturing level
Significantly higher year over year
Slightly higher compared to Q4 2010, adjusted for normal seasonality
1 February 2011

4. Acquisition of Lincoln Industrial, Q4 2010 3
• A leading supplier of lubrication systems and tools
• Headquarter in St. Louis, Missouri, USA
• Sales of around USD 400 m in 2010
• About 2,000 employees
• Total purchase price net: around SEK 6.8 bn
• Financing: around SEK 3.2 bn cash (net) and SEK 3.6 bn debt
1 February 2011

5. New facilities opened in 2010 4
Tver, Russia Haridwar, India Ahmedabad, India
3
factories
1
Global Technical
Centre in Shanghai
9 Solution Factories - in total 17
1 February 2011

6. Examples of new product launches in 2010 5
Four-row tapered Low friction X-Tracker SKF Engineering
roller bearing Simulation
Services
SKF Commutation
Sensor-Bearing Unit
SKF MetroCon – SKF Crane Asset SKF Overrunning SKF Hydraulic
Management Alternator driven lubricator
Pulley
Unit
CBM for elevators and
escalators SKF Drum Support SKF Cam Follower
Unit Unit
SKF solutions for SKF SPEEDI-SLEEVE
special pumps
High SKF Low SKF One Way
performance Friction Clutch 2010: 251 first filings of patent applications
seal Engine
Seal
1 February 2011

7. Six Sigma 6
2010 status:
• 463 Black Belts
• 2,059 Green Belts
• 1,155 projects closed
Hard savings
2005: SEK 150 m
2006: SEK 200 m
2007: SEK 302 m 4 dimensions:
2008: SEK 462 m ”Standard” Six Sigma, Design for Six
2009: SEK 430 m Sigma, Lean Six Sigma and Six Sigma
2010: SEK 468 m for Growth
1 February 2011

8. Sales volume 7
% change y-o-y
20
15
10
5
0
-5
-10
-15
-20
-25
-30
-35
2008 2009 2010
1 February 2011

9. Sales in local currencies (excl. structural changes) 8
% change y-o-y
20
15
10
5
0
-5
-10
-15
-20
-25
-30
2008 2009 2010
1 February 2011

10. Growth in local currency 9
(Organic growth + acquisition/divestments)
% y-o-y
20
14.2%
15
10 7.1%
5 -19.0%
0
-5
-10
-15
-20
2008 2009 2010
Organic growth
Acquisitions/Divestments
1 February 2011

11. Growth development by geography 10
Local currency Q4 2010 vs Q4 2009
Europe
+17%
North America
+17%
Asia/Pacific
+20%
Latin America
+16%
Middle East
& Africa +8%
1 February 2011

12. Growth development by geography 11
Local currency 2010 vs 2009
Europe
+7%
North America
+13%
Asia/Pacific
+31%
Latin America
+20%
Middle East
& Africa
+10%
1 February 2011

13. Components in net sales 12
2008 2009 2010 Full
Percent y-o-y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 year
Volume 4.9 6.2 2.7 -13.0 -26.9 -30.8 -24.9 -14.1 5.3 16.6 19.0 16.3 14.1
Structure 1.0 1.3 0.5 2.4 1.4 1.1 1.2 0.4 0.0 0.0 0.0 0.0 0.0
Price / Mix 3.8 4.0 6.4 8.5 7.1 5.6 3.7 0.3 -0.3 -0.5 0.3 0.9 0.1
Sales in local 9.7 11.5 9.6 -2.1 -18.4 -24.1 -20.0 -13.4 5.0 16.1 19.3 17.2 14.2
currency
Currency -1.2 -4.1 -0.9 10.3 13.6 12.2 6.6 -1.4 -7.7 -5.2 -3.2 -6.2 -5.6
Net sales 8.5 7.4 8.7 8.2 -4.8 -11.9 -13.4 -14.8 -2.7 10.9 16.1 11.0 8.6
1 February 2011

14. Operating profit 13
SEKm
2 400
2 200
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
2008 2009 2010
Restructuring and one-time items
1 February 2011

15. Operating margin 14
%
16
14
12
10
8
6
4
2
0
2008 2009 2010
Restructuring and one-time items
1 February 2011

16. Operating margin 15
%
16
14.2*
14 12.7*
12 13.8
12.2
10
8.0*
8
6
5.7
4
2
0
2008 2009 2010
Restructuring and one-time items
* Excluding restructuring and one-time items
1 February 2011

17. Operating margin per division 16
%
18
16
14 Service
12 Industrial
10
8 Automotive
6
4
2
0
-2
-4
-6
-8
-10
-12
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009 2010
Excluding one-off items
(eg. restructuring, impairments, capital gains)
1 February 2011

18. Fourth quarter 2010 17
SEKm 2010 2009
Net sales 15,409 13,887
Operating profit 2,202 1,004
Operating margin, % 14.3 7.2
Operating margin excl. restructuring, % 14.9 10.1
Profit before taxes 2,048 765
Net profit 1,350 505
Basic earnings per share, SEK 2.87 1.05
Cash flow* -5,966 1,445
Cash flow* excl. acquisition of Lincoln Industrial 798
*after investments before financing
1 February 2011

19. Full year 2010 18
SEKm 2010 2009
Net sales 61,029 56,227
Operating profit 8,452 3,203
Operating margin, % 13.8 5.7
Operating margin excl. restructuring, % 14.2 8.0
Profit before taxes 7,549 2,297
Net profit 5,296 1,705
Basic earnings per share, SEK 11.28 3.61
Cash flow* -2,838 5,752
Cash flow* excl. acquisition of Lincoln Industrial 3,926
*after investments before financing
1 February 2011

20. Inventories as % of annual sales 19
% Long-term target level: 18%
25
24
23
22
21
20 X Excluding acquisition
of Lincoln Industrial
19
18
2008 2009 2010
1 February 2011

21. Cash flow, after investments before financial items 20
SEKm
2 500
2 000
1 500
1 000
500
X Excluding acquisition
of Lincoln Industrial
0
-500
-1 000
-1 500 Cash out from
-2 000 acquisitions (SEKm):
-2 500
-3 000 2008 1,284
-3 500
-4 000 2009 241
-4 500
-5 000 2010 6,799
-5 500
-6 000
2008 2009 2010
1 February 2011

22. Return on capital employed 21
%
30
24.0 24.0
25
20
15
9.1
10
5
0
2008 2009 2010
ROCE: Operating profit plus interest income, as a percentage of
twelve months average of total assets less the average of non-
interest bearing liabilities.
1 February 2011

23. Net debt 22
(Short-term financial assets minus loans and post-employment benefits)
SEKm AB SKF,
0 dividend paid (SEKm):
2008 Q2 2,277
-2 000
2009 Q2 1,594
-4 000 2010 Q2 1,594
-6 000
-8 000 Redemption (SEKm):
-10 000 2008 Q2 2,277
-12 000 Cash out from
-14 000 acquisitions (SEKm):
-16 000
2008 1,284
-18 000 2009 241
2008 2009 2010 2010 6,799
1 February 2011

24. Debt structure 23
Maturity years, EURm
600
530
500 446 400*
400*
400
300
200
100 100
100 55 130
130
0
2010 2011 2012 2013 2014 2015 2016
• Credit facilities: • No financial covenants nor material
EUR 500 m 2014, whereof EUR 400* m utilized adverse change clause
SEK 3,000 m 2017, unutilized
1 February 2011

25. Key focus areas ahead 2010 24
• Profit and cash flow
• Adjustment of manufacturing output to new
demand levels
• Growing segments and geographies
• Strengthening the platform/segment approach
• Competence development
SKF Care and Six Sigma as guiding lights
1 February 2011

26. Key focus areas ahead 2010 25
• Profit and cash flow
• Adjustment of manufacturing output to new
demand levels
• Growing segments and geographies
• Strengthening the platform/segment approach
• Competence development
SKF Care and Six Sigma as guiding lights
1 February 2011

27. Dividend proposal 26
AB SKF’s Board proposes the Annual General Meeting
an increase in the dividend of 43%, giving a dividend
of SEK 5.00 (3.50) per share
1 February 2011

28. December 2010: 27
Outlook for the first quarter 2011
Development compared to the first quarter last year
The demand for SKF products and services is expected to be significantly
higher for the Group, the divisions and for the different geographical
areas.
Development compared to the fourth quarter 2010 and adjusted for
normal seasonality
The demand is expected to be slightly higher for the Group and for the
different geographical areas. The Industrial Division and the Service
Division are expected to be slightly higher and the Automotive Division
higher.
Manufacturing level
The manufacturing level will be significantly higher year on year and
slightly higher compared to the fourth quarter, adjusted for normal
seasonality.
1 February 2011

29. Volume trends, regions 28
(based on current assumptions and adjusted for seasonality)
Net sales Daily volume trends for: Outlook Q1
2010 Q4 2010 Q1 2011 2011 vs 2010
Europe 46% +++
North America 18% +++
Asia Pacific 27% +++
Latin America 7% +++
Total +++
1 February 2011

30. Volume trends, divisions 29
(based on current assumptions and adjusted for seasonality)
Net sales Daily volume trends Outlook Q1
2010 for Q1 2011 2011 vs 2010
Industrial 32% +++
Service 36% +++
Automotive 30% +++
Total +++
1 February 2011

31. Sequential volume trend main segments Q1 2011 30
(based on current assumptions)
Net sales 2010
5% Energy
25% Industrial distribution
18% Industrial OEM, General+Special
10% Industrial OEM, Heavy + Off-highway
5% Aerospace
4% Railway
14% Cars
12% Vehicle Service Market
3% Electrical and two-wheeler
4% Trucks
1 February 2011

32. Guidance for the first quarter 2011 31
• Tax level: around 30%
• Financial net for the first quarter:
Around SEK -200 m
• Exchange rates on operating profit versus 2010
Q1: SEK -150 m
Full year: SEK -900 m
• Additions to PPE: Around SEK 2.3 bn for 2011
Guidance is approximate and based on current assumptions and exchange rates.
1 February 2011

33. Long-term financial targets 32
Targets
Operating margin level 15%
Annual sales growth in local currencies 8%
ROCE 27%
Inventory to sales 18%
1 February 2011

34. Main initiatives going forward 33
• Accelerate profitable growth
• Reduce cost and eliminate waste
• Invest for growth
One SKF and SKF Care as guiding lights
1 February 2011

35. Main actions going forward 34
Accelerate profitable growth
• Continue to strengthen the platform/segment
approach
• Increase the development, launch and
commercialisation of new offerings (green)
• Value based selling – using
Documented Solutions Programme
• Strengthen our service business
• Acquisitions to strengthen platform offer
• Develop other brands of the SKF Group
1 February 2011

36. Main actions going forward 35
Reduce cost and eliminate waste
• Build on Manufacturing Excellence into other
areas - Business Excellence
• Increased manufacturing and sourcing in
Best Cost Countries
• Reduce product cost through ICR* activities
* ICR means Integrated Cost Reduction
1 February 2011

37. Main actions going forward 36
Invest for growth
• Increase sales and engineering resources
• Additional factories in growth markets
• Additional SKF Solution Factories
• Increase spending in R&D and improve global
network
- accelerate plans for India and China
1 February 2011

38. Key focus areas ahead 2011 37
• 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
1 February 2011

39. Cautionary statement 38
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”.
1 February 2011

40. 39
1 February 2011