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15 July 2011

SKF Half-year results 2011

Tom Johnstone, President and CEO

15 July 2011

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15 July 2011

Q2 2011

• Strong performance 2011 2010

Operating profit, SEKm 2,6232,239Operating 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

• DemandSignificantly higher compared to Q3 2010Slightly higher sequentially compared to Q2 2011

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

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15 July 2011

H1 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%

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15 July 2011

•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

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New 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.

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Example of new products

SKF DryLube bearings New 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.

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Sales volume

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

10152025

% change y-o-y

2009 2010 2011

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Organic growth in local currencies

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

10152025

% change y-o-y

2009 2010 2011

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15 July 2011

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

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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

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-25

-20

-15

-10

-5

0

5

10

15

20

2009 2010 YTD J une 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%

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Components 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

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Operating profit

0200400600800

1 0001 2001 4001 6001 8002 0002 2002 4002 6002 800

SEKm

2009

Restructuring and one-time items

2010 2011

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Operating margin

%

0

2

4

6

8

10

12

14

16

2009

Restructuring and one-time items

2010

Long-term target level: 15%

2011

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Operating 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

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-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

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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

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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

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18

19

20

21

22

23

24

25

Inventories as % of annual sales

% Long-term target level: 18%

2009 2010 2011

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Cash 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 500

SEKm

2009 2010

Cash out fromacquisitions (SEKm):

2009 2412010 6,7992011 6

2011

* SEK 798 million, excluding the acquisition of Lincoln Industrial.

*

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Return 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

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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):2009 Q2 1,5942010 Q2 1,5942011 Q2 2,277

2009 2010

Cash out fromacquisitions (SEKm):

2009 2412010 6,7992011 6

2011

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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

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July 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.

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Demand outlook, regions(based on current assumptions and adjusted for normal seasonality)

Sequential trends for: Q2 2011 Q3 2011

Share of net sales2010

Europe46%

North America

18%

Asia Pacific27%

Latin America

6%

Total

Q3 2011 vs Q3 2010

++

++

+++

+++

+++

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Demand outlook, divisions(based on current assumptions and adjusted for normal seasonality)

Sequential trends for Q3 2011

Share of net sales2010

Industrial32%

Service36%

Automotive30%

Total

Q3 2011 vs Q3 2010

+++

+++

++

+++

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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

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Guidance 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 2010Q3: SEK -400 mFull 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.

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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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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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