Automotive Division

Tryggve Sthen

President, Automotive Division

• Automotive Division update– Key financials– Division overview

• Cost reductions

• Growth in Asia

Presentation outline

1Automotive Division update

Automotive Division overview

Cars Trucks Two wheelers Vehicle service market

Home appliances

& Power tools

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2000

2004

2005

2006

2007

2008

2009

2010

Q1

A good AD journey for many years…

18.6

Excl. One-time costs

Sales development

Record operating margin

0%

1%

2%

3%

4%

5%

6%

7%

8%SEKb

6.0%

0

2

4

6

8

10

12

14

16

18

20

2000

2004

2005

2006

2007

2008

2009

2010

Q1

The great secession in 2008-2009 followed by a strong recovery

4.4

Excl. One-time costs

Sales development

Record operating margin

0%

1%

2%

3%

4%

5%

6%

7%

8%SEKb

7.2%

2Cost reductions

Reducing costs – lower cost & better cash

•Cost cutting

•Down sizing

•Managing cash

Lower cost

&better cash

Capacity flexibility- Lay-offs and early retirements Q4 2008 and H1 2009

Europe• Lutsk• Fontenay• Varese• St Cyr• Leverkusen

Asia • Pune

Americas• Glasgow closure• Elgin• Salt Lake City• Tortuguitas• Cajamar

• In total about 2,000 people

• All sites affected, mainly:

Capacity flexibility

2009: At peak about 9,000 people in short-time work

Reducing costs - restructuring

•Cost cutting

•Down sizing

•Managing cash

•Plant restructuring in Europe & North America

•Shift of production

Restructuring

Lower cost

&better cash

Factory closures/restructuring over the last few years

North America

• Aiken

• Springfield

• Franklin

• Glasgow

• Elgin

• Seneca

Europe• Fontenay, France • Schweinfurt, Germany

• Leverkusen, Germany

Shift in manufacturing footprint

Latin America growth• Mexico

– Seals– Bearings

• Brazil

Asia expansion• China new HBU

plant• Korea 2 new

plants• Indonesia new

plant • India new plant

Manufacturing increasefrom 30% in 2008 to 45% in 2010

East Europe growth• Ukraine capacity• Bulgaria capacity

Reducing costs

•Benchmarking

•Six Sigma

•Manufacturing Excellence

•Cost cutting

•Down sizing

•Managing cash

•Plant restructuring in Europe & North America

•Shift of production

Internal improveme

nts

Restructuring

Lower cost

&better cash

3Growth

Growth strategy in Asia

•Grow with winning customers

Value for customer

s

Bearings and seals to Fuwa trailer axles

• Guangdong Fuwa Engineering Manufacturing Co. Ltd. is the largest trailer axle manufacturer in the world

• Several bearing and seal contracts

Bearings to Yuchai engine

• Yuchai is the largest diesel engine manufacturer in China

• Recently secured important bearing contract

Yuchai engineHub bearing unit 1 Fan unit

Haridwar factory inaugurated 7 April

• Haridwar factory to supply ball bearings to Hero Honda and other automotive customers

in the region as well as to the aftermarket

• Contract with Hero Honda for 5 years production:

> 100 million bearings

Growth strategy in Asia

•Product introduction targeting Asia demand

Broad product offering

Value for customer

s

Grow with winning customers

Asia targeting product launches in the last 6 months

• 12 new products launched globally

• 4 specifically targeting the Asia market

SKF One Way Clutch

Hub Bearing Unit 1

for compact cars

SKF Rocker Arm Bearing &

SKF Rocker Arm Bearing Unit

Growth strategy in Asia

Product introduction targeting Asia demand

Aftermarket

penetration

Broad product offering

Value for Customer

s

Grow with winning customers

•Product range expansion

•Dealer network expansion

Aftermarket business in China

Product Range • New product lines added

• New kits added to existing product lines

Dealer network

2007 12 Distributor/Dealers

2008 + 82009 + 62009 = 26 (end of year)

The way ahead

Growth

Value for

customer

Broad green offerin

g

After-market

Emerging

marketsDown-sizing

Restruct-uring

Internal improve-

ments

Cost reductions