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The SKF Group

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Title: The SKF Group


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The SKF Group
First-quarter result, 2006Tom Johnstone,
President and CEO
3
Major events 2006
  • It was announced that Rautaruukki, SKF and
    Wärtsilä are exploring strategic options for the
    ownership of Ovako.
  • Macrotech Polyseal Inc. was acquired, a leader
    in fluid power seals. Yearly sales,
    approximately SEK 250 million. 397 employees.
  • A memorandum of understanding was signed to buy
    100 of the shares of SNFA, a leading french
    manufacturer of bearings for aerospace and
    machine tool applications. Sales in 2004, 73,1
    million euros. Approximately 700 employees.
  •   SKF received an order from Alstom for
    approximately 1 500 axleboxes equipped with
    compact tapered roller bearing units which
    incorporate SKF sensors to monitor the bearing
    temperature as well as speed and train
    positioning.

4
First quarter 2006
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Operating margin

2003
2004
2005
2006
6
Operating marginexcl. income from jointly
controlled company OY Ovako Ab

2003
2004
2005
2006
7
Operating margin per division

Industrial
Service
Automotive
2004
2005
2006
8
Sales in local currencies (excl. structural
changes)
change y-o-y
2003
2004
2005
2006
9
Net sales development per quarter
2004
2005
2006

Percent y-o-y
10
Growth development / local currency6 annual
growth rate (whereof 4 organic)
Y-o-Y
11.8
7.3
(Organic 8.9, Net acq/div -4,9)
5.2
4.0
Acquisitions / Divestments
Organic growth
11
Cash flow, after investments before financing
MSEK
2003
2004
2005
2006
12
Net cash
(Short-term financial assets - loans)
MSEK
Dividend paid 2003 Q2, MSEK 911 2004 Q2, MSEK
1 138 2005 Q2, MSEK 1 366Proposal 2006 Q2,
MSEK 1 821 2004 Q2, Pension
MSEK 3 100 2005 Q2, Redemption, MSEK 2 846
2004
2005
2003
2006
13
Inventories as of annual sales

Target, end 2007 - 18
2006
2004
2005
2003
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April 2006 Outlook for the second quarter 2006
The market demand for SKF's products and
services in the second quarter of 2006 is
expected to be slightly higher compared to the
first quarter 2006. The demand is expected to be
slightly higher in Europe and North America,
significantly higher in Asia and to remain on a
high level in Latin America. The manufacturing
level for the second quarter of 2006 will be
unchanged compared to the first quarter 2006.
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Volume development
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SKF Group targets
  • 10 Operating margin level
  • 6 Growth per annum
  • 20 ROCE
  • 18 Inventory / sales

2006
2007
17
Guidance 2006
  • Underlying tax level around 32
  • Financial net, annual level approximately MSEK
    200
  • Currency, based on current assumptions and
    exchange rates a positive MSEK 150 for Q2, 2006
    and a positive MSEK 450 for the year
  • Additions to property, plant and equipment in
    line with depreciations

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Acquisition - Macrotech Polyseal Inc.
  • Macrotech is a leader in fluid power seals for
    industrial customers in the US market
  • SKF acquired 51 of the shares in April and
    will, as part of the agreement acquire the
    remaining 49 within three years
  • Yearly sales approximately USD 33 million
  • Factories in Salt Lake City, USA
  • 397 employees

Buffer seals for large rod applications
Rod wipers for linear actuators
Piston seals for rotary manifold
Rod seals
Piston seals
19
The new Pendolino train from Alstom
1,500 axleboxes equipped with compact tapered
roller bearing units and SKF sensors to monitor
temperature, speed and train positioning.
The new Pendolino generation is the fourth
generation of trains based on tilting technology,
which are equipped with SKF bearing solutions.
20
SKF electromechanical solution
NIMAK, a German spot welding equipmentmanufacture
r, will be using the SKFelectromechanical
solution in theirwelding guns.
21
Spindle service, some recent events
  • SKF signed a cooperation agreement covering
    machine tool spindle services with the
    Japanese company Niigata Machine Techno Co
    Ltd. . This means that SKF will provide
    spindle services for Niigata Machine Techno's
    customers.
  • SKF signed a global service agreement with
    Alteams Oy in Finland for the reconditioning
    of machine tool spindles used in their production
    locations in Finland, Sweden, China, and
    Russia.

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Cautionary statement
This report 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
20-F report on file with the SEC (United States
Securities and Exchange Commission) under
"Forward-Looking Statements" and "Risk Factors".
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