Industrial Division

Presented by Henrik LangePresident, Industrial Division

Industrial Division in short

Responsible for:

• Sales to Industrial OEM customers and the Business Areas:

− Linear Motion, Precision Technologies, and Railways

• The Industrial segment marketing

• Product development & production of:

− A wide range of bearings and related products

− Lubrication systems

• 40 Manufacturing units

• 50 Sales units

• 5 Service units

40 Manufacturing units

• 50 Sales units

• 5 Service units

•

Industrial Division sales portion of SKF Group

Net sales: 11 BSEK Net sales growth: 10%

Operating margin: 9.7% Employees: 11,500

2004

Industrial Division

Industrial Division sales by segment & geography, 2004

Geographical AreaSegment

North America 15%

Asia 10%

Western Europe 75%

Other 12%

Other general machinery 3%

Pulp & paper/Metals/

Mining& Construction

16%

Fluid machinery 10%

Railways 13%

Machine tools/Linear Motion 16%

Industrial electrical/Textile/Printing 8%

Agriculture & Forestry/Material handling 12%

Industrial transmission 10%

Our way of working in the industrial value chain

The industrial value chain

OEMsD/Ds

End users

Solution & Service Offerings

Solution & Service Offerings

The Industrial Market

Industrial Division Service Division

Way of working

Key Entanglement with the customer

Go-To-Market Activities

Sales

Market Pull

Techn.Push

Value Proposition

IndustrySegments

Develop solutions for: Manufacturing, Product & Process Dev, R&D,Business Dev

Define Function: Marketing, Value Proposition & Business Dev

New industrial launch process

Feb

March

April

Aug

Sales Kick-OffFeb Launches

Sales Kick-OffFeb Launches

Sales Kick-OffSep Launches

Feb LaunchFeb Launch

Sep Launch Sep Launch

Segment StrategyUpdate

Feb

Sep

Creating and Capturing Value

Key entanglements with our customers

customer sales

prod.dev

production

segmentscustomer sales

prod.dev

manufacturing

segment

marketing

prod.dev

segment

marketing

sales

manufacturing

• Product Development & Engineering

• Sales

• Manufacturing

• Segment marketing

Important differentiators

• Engineering Services - a differentiator

• Knowledge Management – an enabler

Sharing competence within SKF and with our customers

Extranet portals - a way of entering our customers design process earlier

customer

product dev

• Sales of hybrid bearings enabled by the relationship via Engineering Consultancy

Netherlands:

Driving knowledge in medical

High precision and positioning table solution for Siemens new Lithoskop & Urological Table

SKF Equipped:

The Mechatronic Platform for Actuation, Controls and Guides

Customer Benefit:

Increased Productivity

Driving knowledge in off-road

•HAMM new series of tandem rollers vehicles•Advanced Mechatronic Steering Unit (AMSU)•350 units (first year)

SKF Equipped:

The Bearing & Mechatronic Platforms

Customer Benefit:

• Improved Steering Properties• Improved ergonomic for the driver• Supplied with a complete unit design from SKF

- enabling shorter Time To Market

Driving knowledge through partnership

• Gigabox- A new axlebox suspension system • Unique system for railway bogies• Developed together by SKF and ContiTech

SKF Equipped:• Compact TBU• Integration of rubber springs

and hydraulic dampers into the axlebox

Customer Benefit:•Maintenance free (1 Giga m=1 million km or 10 years)

•Less noise•Less wear•Improved corrosion resistance

2005-05-26 ©SKF Slide 8 /HOSKF SKF Coupling Systems AB

Operational excellence in manufacturing

1. Focused Actions

• Resetting

• Supply Chain Concept

• Operator Driven Reliability

• Continuous Improvement

2. Excellent Processes

3. Profitable Growth

Team Work

New LSB plant in China

Acquisitions

Integration of Vogel on Plan

•Many new orders received

•Joint sales activites launched in many markets

•Approximately 150 sales & application engineers trained

The latest acquisition

We welcome

to the world of SKF

Jaeger Industrial Co Ltd

• Leading supplier in Asia-Pacific

• 750 employees & annual turnover MSEK 320

• 50% sales volume in Asia

• Complete range of actuation systems

• Low cost manufacturing and high volume capabilities

• Manufacturing plants both in Taiwan and China-ISO 9001

Synergies products vs applications

Products

Electricactuators

Electronic&

controls

Applications Satellite TV Door openers General industry, Healthcare, Medical

Growth potential + +++ +++++

Synergies with SKF + +++++

Summary - Key message

• Improved & strengthened way of working in the industrial market

• Continue to create and capture value in the industrial market place

• Continued drive for Operational Excellence

• Acquisitions

Committed to Drive Profitable Growth in the Industrial Market!