The SKF Group

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The SKF Group
First-quarter results 2007 Tom Johnstone,
President and CEO
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Major events 2007

• Introduction of new energy-efficient bearings
  and solutions.
• Acquisitions
• Preventive Maintenance Company Inc. (PMCI), USA
• ABBA Linear Tech Co., Ltd., Taiwan
• Automatic Lubrication Systems (ALS), Canada
• SKF invests SEK 600 million to increase capacity
  in Göteborg.
• Sale of forging business in Luchow, Germany

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First quarter 2007
MSEK 2007 2006
Net sales 14,371 13,289
Operating profit 1,886 1,609
Operating margin 13.1 12.1
Profit before taxes 1,825 1,599
Net profit 1,214 1,138
Basic earnings per share, SEK 2.57 2.45
Cash flow after investments before financing 538 801
Cash flow after operating investments before financial items -653 177
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Operating margin

2005
2006
2007
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Operating margin

13.1
12.6
10.8
11.3
10.4
excluding income from the jointly controlled
company Oy Ovako Ab
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Operating margin per division

Service
Industrial
Automotive
2006
2007
2005
8
Sales in local currencies (excl. structural
changes)
change y-o-y
2006
2007
2005
9
Growth development / local currency
Y-o-Y
13.7

7.5
7.3
Acquisitions / Divestments
Organic growth
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Net sales development per quarter
2005
2006
2007

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
8.3 7.6 5.1 1.3 6.0 2.5 3.3 8.8 7.9
2.3 0.2 -2.9 -3.7 -4.9 -0.5 1.1 4.6 4.0
3.6 3.6 2.1 2.6 2.9 2.0 2.0 2.3 1.8
14.2 11.4 4.3 0.2 4.0 4.0 6.4 15.7 13.7
-3.2 0.2 3.2 9.4 8.0 1.0 -2.1 -5.8 -5.6
11.0 11.6 7.5 9.6 12.0 5.0 4.3 9.9 8.1
Percent y-o-y

Volume
Structure
Price / Mix
Sales in local currency
Currency Net sales

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Cash flow, after investments before financing
MSEK
Cash out from acquisitions 2005 MSEK 419 2006
MSEK 2,129 2007 Q1 MSEK 214 Cash from
Ovako 2006 Q4 MSEK 1,217
2006
2005
2007
12
Cash flow after operating investments before
financial items
MSEK
2005
2006
2007
13
Net cash (Short-term financial assets - loans)
MSEK
AB SKF, dividend paid 2005 Q2, MSEK 1,366 2006
Q2, MSEK 1,821 2005 Q2, Redemption, MSEK
2,846
2005
2006
2007
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Inventories as of annual sales

Target, end 2007 - 18
2006
2005
2007
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SKF capital structure

• The AB SKF Board proposes to the AGM in April
  2007 to decide on
• a 12.5 increase in the dividend, SEK 4.50 per
  share
• a share split 21 combined with an automatic
  redemption procedure of one share for SEK 10
• a mandate to the Board to repurchase up to 5
  of the company's share

Adding up to a total distribution to shareholders
of SEK 6.6 billion
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April 2007 Outlook for the second quarter
2007(compared to the first quarter 2007)
The market demand for SKF's products and services
in the second quarter of 2007 is expected to be
higher for the Group. The demand is expected to
be higher in Europe and Latin America,
significantly higher in Asia and relatively
unchanged in North America. The demand is
expected to be higher in the Industrial and
Service Division and slightly higher in the
Automotive Division. The manufacturing level for
the second quarter will be unchanged compared to
the first quarter 2007 and significantly higher
compared to the second quarter last year.
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Volume development
Net sales 2006 Net sales 2006
Europe 54
North America 20
Asia Pacific 18
Latin America 5
Total
Outlook Q2 2007 vs 2006





Daily volume trend for Q1 2007 Q2 2007 Daily volume trend for Q1 2007 Q2 2007







Updated in March 2007 from slightly higher to
higher.
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Financial targets long term
Operating margin, level 12 Growth in
local currencies, per annum 6-8 Return on
capital employed 24 Gearing around
50 Inventories, by end 2007 18
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Guidance 2007

• Underlying tax level around 32-33
• Financial netQ2 around minus SEK 100-120
  million Full year forecast around minus SEK 500
  million
• Exchange ratesQ2 a negative effect of
  approximately SEK 200 million Full year a
  negative effect of approximately SEK 550 million
• Additions to property, plant and equipment
• slightly above SEK 2 billion

Guidance based on current assumptions and
exchange rates
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Acquisition ABBA Linear Tech Co., Ltd.

• Annual turnover SEK 250 million
• 400 employees
• A leading Asian manufacturerof profile rail
  guides.
• Price SEK 400 million for 90shareholding

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Acquisitions 2007

• Preventive Maintenance Company Inc.
• Annual turnover USD 10 million
• 70 employees
• A market leader in Predicitve maintenance (PdM)
  services

• Automatic Lubrication Systems (ALS)
• Yearly sales
• approximately CAD 2 million
• 13 employees
• A leading service company to mobile
  transportation equipment and industrial machinery
  customers for lubrication systems

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Bearings and units
Bearings and units

• Acquisitions
• New factories
• Significant manufacturing
• expansion
• Restructuring
• Setting new standards

• SNFA SAS, France
• Dalian, China
• Shanghai, China
• Jakarta, Indonesia
• Busan, South Korea
• India
• North America
• Det Norske Veritas and Germanischer Lloyd
  announced official verification - SKF Explorer
  bearings has set a new performance standard.
• SKF Life Theory - new standard for bearing life
  calculations.

• Brazil

• Mexico

• Sweden

• France

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Seals/Mechatronics/Services/Lubrication systems
Seals
Mechatronics
Acquisitions New factories Significant
manufacturing expansion

• ABBA Linear Tech Co., Ltd., Taiwan
• Shanghai, China

• Macrotech Polyseal Inc., USA
• Economos Austria GmbH, Austria
• Taegu, Korea
• Bulgaria

• India

• Mexico

Services
Lubrication systems
Acquisitions

• Safematic lubrication, Finland
• Automatic Lubrication Systems, Canada

• Precision Balancing Analyzing, USA
• Monitek Australia, Australia
• Preventive Maintenance Company Inc., USA

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SKF Energy efficient bearings
Providing a minimum of 30 reduction in energy
consumption. Deep groove ball
bearings Taper roller bearings
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Energy-efficient solutions
SKF actuators in spot welding cut energy use by
more than 90 in welding robots.
SKF actuatorsin buildingscut energy useby
30-50.
SKF Client Energy and Environment Analysis
(CEEA)is a web-based tool thatidentifies
high-energy consumption areas withinan
operation.
SKF throttle-by-wire reduces fuel use by 5in
business jets.
SKF magnetic bearingsin gas compressors reduce
energy by 90.
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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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