15 July 2011

0

SKF Half-year results 2011

Tom Johnstone, President and CEO

15 July 2011

15 July 2011

2Q2 2011

• Strong performance 2011

2010

Operating profit,SEKm

2,623

2,239Operating margin, %

15.7

14.3Profit before tax, SEKm

2,446

2,047Cash 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 2010Slightly higher sequentially compared to Q2 2011

• Manufacturing levelSignificantly higher year over yearRelatively unchanged compared to Q2 2011

15 July 2011

3H1 2011

• Strong performance H1 2011

H1 2010

Operating profit, SEKm

5,127

3,941Operating margin, % 15.3

13.1Profit before tax, SEKm

4,764

3,551Cash 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

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

Highlights Q2 2011

15 July 2011

5New businesses

in Q2 2011

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

6Example

of new products

SKF DryLube

bearingsNew 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

7Sales volume

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

10152025

% change y-o-y

2009 2010 2011

15 July 2011

8Organic growth in local currencies

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

10152025

% change y-o-y

2009 2010 2011

15 July 2011

9

Europe

+14%

Asia/Pacific +17%

Latin America +3%

Middle East & Africa +12%

North America +16%

Growth

development

by geography Organic

growth

Q2 2011 vs Q2 2010

15 July 2011

10

Europe

+18%

Asia/Pacific +19%

Latin America +10%

Middle East & Africa +8%

North America +20%

Growth

development

by geography Organic

growth

H1 2011 vs H1 2010

15 July 2011

11

-25

-20

-15

-10

-5

0

5

10

15

20

2009 2010 YTD June 2011

Growth in local currency

% y-o-y

Acquisitions/DivestmentsOrganic growth

-19.0% 14.2% 22.3%

Long-term target: 8% per annum

Total growth

4.7%

17.6%

0.0%

14.2%

1.0%

-20.0%

15 July 2011

12Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

-26.9 -30.8 -24.9 -14.1 5.3 16.6 19.0 16.3 20.1 12.6

1.4 1.1 1.2 0.4 0.0 0.0 0.0 0.0 5.0 4.4

7.1 5.6 3.7 0.3 -0.3 -0.5 0.3 0.9 1.3 1.6

-18.4 -24.1 -20.0 -13.4 5.0 16.1 19.3 17.2 26.4 18.6

13.6 12.2 6.6 -1.4 -7.7 -5.2 -3.2 -6.2 -10.8 -12.2

-4.8 -11.9 -13.4 -14.8 -2.7 10.9 16.1 11.0 15.6 6.4

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currency

Currency

Net sales

2009 2010 2011

15 July 2011

13Operating profit

0200400600800

1 0001 2001 4001 6001 8002 0002 2002 4002 6002 800

SEKm

2009

Restructuring

and one-time

items

2010 2011

15 July 2011

14Operating margin

%

0

2

4

6

8

10

12

14

16

2009

Restructuring

and one-time

items

2010

Long-term target

level: 15%

2011

15 July 2011

15Operating margin

0

2

4

6

8

10

12

14

16

2009 2010 YTD June 2011

%

5.7

8.0*

Restructuring

and one-time

items

* Excluding

restructuring

and one-time

items

15.3

Long-term target

level: 15%

14.2*

13.8

15 July 2011

16

-12-10

-8-6-4-202468

1012141618

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Operating margin per division

IndustrialService

Automotive

%

Excluding one-off items

(eg. restructuring, impairments, capital gains)

2009 2010 2011

15 July 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

Second quarter 2011

15 July 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

Half year 2011

15 July 2011

19

18

19

20

21

22

23

24

25

Inventories as % of annual sales

% Long-term target level: 18%

2009 2010 2011

15 July 2011

20Cash flow, after investments before financing

-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 500SEKm

2009 2010

Cash out fromacquisitions (SEKm): 2009

2412010

6,7992011

6

2011

* SEK 798 million,

excluding

the acquisition

of Lincoln Industrial.

*

15 July 2011

21Return on capital employed

0

5

10

15

20

25

30

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.

%

9.1

24.0

Long-term target: 27%

25.9

15 July 2011

22Net 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

0

SEKm

AB SKF, dividend paid (SEKm):2009 Q2

1,5942010 Q2

1,5942011 Q2

2,277

2009 2010

Cash out fromacquisitions (SEKm): 2009

2412010

6,7992011

62011

15 July 2011

23

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016 2017 2018

Debt structure

Maturity years, EURm

446

100100

•

Credit

facilities:

EUR 500 m 2014 SEK 3,000 m 2017

•

No financial

covenants

nor

material adverse

change

clause

130

500

000

15 July 2011

24July

2011:

Outlook for the third quarter 2011

Demand

compared

to the third

quarter

last yearThe 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 seasonalityThe 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

levelThe manufacturing level will be significantly higher year on year and relatively unchanged compared to the second quarter, adjusted for normal seasonality.

15 July 2011

25Demand

outlook, regions (based

on current

assumptions

and adjusted

for normal seasonality)

Sequential

trends for: Q2 2011 Q3 2011

Share

of net

sales2010

Europe 46%

North America 18%

Asia

Pacific 27%

Latin America 6%

Total

Q3 2011 vs Q3 2010

++

++

+++

+++

+++

15 July 2011

26Demand

outlook, divisions (based

on current

assumptions

and adjusted

for normal seasonality)

Sequential

trends for Q3 2011

Share

of net

sales2010

Industrial 32%

Service 36%

Automotive 30%

Total

Q3 2011 vs Q3 2010

+++

+++

++

+++

15 July 2011

27

14%

12%

5%

25%

18%

10%

5%

4%

4%

3%

Cars

Vehicle

Service Market

Energy

Industrial distribution

Industrial OEM, General+Special

Industrial OEM, Heavy

+ Off-highway

Aerospace

Railway

Trucks

Electrical

and two-wheeler

Sequential

volume

trend main

segments Q3 2011 (based

on current

assumptions

and adjusted

for normal seasonality)

Share

of net

sales

2010

15 July 2011

28Guidance for the third quarter 2011

•

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

29Key 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

15 July 2011

30Cautionary

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”.

15 July 2011

31