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1 February 2011

The SKF Group

Tom Johnstone, President and CEO

1 February 2011

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1 February 2011

Key points, Q4 report

• 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

• DemandSignificantly higher compared to Q1 2010Slightly higher sequentially compared to Q4 2010, adjusted for normal

seasonality

• Manufacturing levelSignificantly higher year over yearSlightly higher compared to Q4 2010, adjusted for normal seasonality

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1 February 2011

• 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

Acquisition of Lincoln Industrial, Q4 2010

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1 February 2011

New facilities opened in 2010

3factories

9 Solution Factories - in total 17

Haridwar, India Ahmedabad, India

Tver, Russia

1 Global Technical

Centre in Shanghai

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1 February 2011

Examples of new product launches in 2010

SKF Commutation Sensor-Bearing

Unit

Four-row tapered roller bearing

SKF MetroCon –

CBM for elevators and escalators

Low friction X-Tracker

SKF Cam Follower

UnitSKF SPEEDI-SLEEVE

SKF One Way Clutch

SKF Crane Asset Management

SKF Hydraulic driven lubricator

SKF Engineering

Simulation Services

SKF solutions for special pumps

SKF Overrunning Alternator

Pulley Unit

SKF Drum Support Unit

SKF Low Friction Engine

Seal

High performance seal

2010: 251 first filings of patent applications

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1 February 2011

Six Sigma

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 2008: SEK 462 m 2009: SEK 430 m 2010: SEK 468 m

4 dimensions:”Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth

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1 February 2011

Sales volume

-35-30-25-20-15-10-505

101520

% change y-o-y

2008 2009 2010

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1 February 2011

Sales in local currencies (excl. structural changes)

-30-25-20-15-10-505

101520

% change y-o-y

2008 2009 2010

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1 February 2011

-20

-15

-10

-5

0

5

10

15

20

2008 2009 2010

Growth in local currency(Organic growth + acquisition/divestments)

% y-o-y

Acquisitions/Divestments

Organic growth

7.1%-19.0%

14.2%

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1 February 2011

Europe+17%

Asia/Pacific +20%

Latin America +16% Middle

East & Africa +8%

North America +17%

Growth development by geography Local currency Q4 2010 vs Q4 2009

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1 February 2011

Europe+7%

Asia/Pacific +31%

Latin America +20% Middle

East & Africa

+10%

North America +13%

Growth development by geography Local currency 2010 vs 2009

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1 February 2011

Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Full

year

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

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

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

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

-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

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

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currency

Currency

Net sales

2008 2009 2010

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1 February 2011

Operating profit

0200400600800

1 0001 2001 4001 6001 8002 0002 2002 400SEKm

2008 2009

Restructuring and one-time items

2010

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1 February 2011

Operating margin

%

0

2

4

6

8

10

12

14

16

2008 2009

Restructuring and one-time items

2010

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1 February 2011

Operating margin

0

2

4

6

8

10

12

14

16

2008 2009 2010

%

12.2

5.7

12.7*

8.0*

Restructuring and one-time items* Excluding restructuring and one-time

items

14.2*

13.8

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1 February 2011

-12-10-8-6-4-202468

1012141618

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Operating margin per division

IndustrialService

Automotive

%

2008

Excluding one-off items(eg. restructuring, impairments, capital gains)

2009 2010

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1 February 2011

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

Fourth quarter 2010

*after investments before financing

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1 February 2011

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

Full year 2010

*after investments before financing

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1 February 2011

18

19

20

21

22

23

24

25

Inventories as % of annual sales

% Long-term target level: 18%

2008 2009 2010

XExcluding acquisition of Lincoln Industrial

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1 February 2011

Cash flow, after investments before financial items

-6 000-5 500-5 000-4 500-4 000-3 500-3 000-2 500-2 000-1 500-1 000

-5000

5001 0001 5002 0002 500

SEKm

2008 2009 2010

Cash out fromacquisitions (SEKm):

2008 1,2842009 2412010 6,799

XExcluding acquisition of Lincoln Industrial

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1 February 2011

Return on capital employed

0

5

10

15

20

25

30

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.

%

24.0

9.1

24.0

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1 February 2011

Net debt (Short-term financial assets minus loans and post-employment benefits)

-18 000

-16 000

-14 000

-12 000

-10 000

-8 000

-6 000

-4 000

-2 000

0SEKm AB SKF,

dividend paid (SEKm):2008 Q2 2,2772009 Q2 1,5942010 Q2 1,594

Redemption (SEKm): 2008 Q2 2,277

2008 2009 2010

Cash out fromacquisitions (SEKm):

2008 1,2842009 2412010 6,799

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1 February 2011

Debt structure

Maturity years, EURm

55

446

530

100100

• Credit facilities:EUR 500 m 2014, whereof EUR 400* m

utilizedSEK 3,000 m 2017, unutilized

• No financial covenants nor material adverse change clause

130

400*

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016

130

400*

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1 February 2011

Key focus areas ahead 2010

• 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

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1 February 2011

Key focus areas ahead 2010

• 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

.

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1 February 2011

Dividend proposal

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

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1 February 2011

December 2010: Outlook for the first quarter 2011

Development compared to the first quarter last yearThe 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 seasonalityThe 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 levelThe manufacturing level will be significantly higher year on year and slightly higher compared to the fourth quarter, adjusted for normal seasonality.

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1 February 2011

Volume trends, regions(based on current assumptions and adjusted for seasonality)

Daily volume trends for: Q4 2010 Q1 2011

Net sales2010

Europe46%

North America

18%

Asia Pacific27%

Latin America

7%

Total

Outlook Q12011 vs

2010

+++

+++

+++

+++

+++

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1 February 2011

Volume trends, divisions(based on current assumptions and adjusted for seasonality)

Daily volume trends for Q1

2011

Net sales2010

Industrial32%

Service36%

Automotive30%

Total

Outlook Q12011 vs

2010

+++

+++

+++

+++

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1 February 2011

5%

25%

18%

10%

5%

4%

14%

12%

3%

4%

Energy

Industrial distribution

Industrial OEM,

General+Special

Industrial OEM, Heavy + Off-

highway

Aerospace

Railway

Cars

Vehicle Service Market

Electrical and two-wheeler

Trucks

Sequential volume trend main segments Q1 2011(based on current assumptions)

Net sales 2010

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1 February 2011

Guidance for the first quarter 2011

• Tax level: around 30%

• Financial net for the first quarter:Around SEK -200 m

• Exchange rates on operating profit versus 2010Q1: SEK -150 mFull 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.

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1 February 2011

Long-term financial targets

Targets

Operating margin level 15%

Annual sales growth in local currencies 8%

ROCE 27%

Inventory to sales 18%

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1 February 2011

Main initiatives going forward

• Accelerate profitable growth

• Reduce cost and eliminate waste

• Invest for growth

One SKF and SKF Care as guiding lights

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1 February 2011

Main actions going forward

Accelerate profitable growth

• Continue to strengthen the platform/segment approach

• Increase the development, launch and commercialisation of new offerings (green)

• Value based selling – usingDocumented Solutions Programme

• Strengthen our service business

• Acquisitions to strengthen platform offer

• Develop other brands of the SKF Group

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1 February 2011

Main actions going forward

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

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1 February 2011

Main actions going forward

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

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1 February 2011

Key focus areas ahead 2011

• 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

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1 February 2011

Cautionary statement

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”.

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1 February 2011