SKF Annual General Meeting 2011

Tom Johnstone

President and CEO

Organic growth in local currencies

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

10152025

2008 2009 2010

% changey-o-y

Key focus areas ahead 2010

• Profit and cash flow

•

Adjustment of manufacturing output to new demand levels

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

Key focus areas ahead 2010

• Profit and cash flow

•

Adjustment of manufacturing output to new demand levels

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

Organic growth in local currencies

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

10152025

2008 2009 2010 2011

Net

sales

SEK 61,029 m

Operating profit

SEK 8,452 m

Basic earnings

per share

SEK 11.28

AB SKF’s

Board

propose

a dividend of SEK 5.00

% changey-o-y

To equip the worldwith SKF knowledge

SKF Group Vision

SKF Care

Employee Care

Community CareEnvironmental Care

Business Care

BeyondZeroTM

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010

SKF Care

Operating margin

Business Care

SKF Care

• Financial targets

• Shareholder value

• Customer satisfaction

• Quality –

product and processes

• Business ethics

• Responsible demand chain

Business care

Operating margin

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010

Long-term financial targets

New targets

Operating margin level 15%

Annual sales growth in local currencies 8%

ROCE 27%

How

to reach

our

long

term goals

• Accelerate profitable growth

• Reduce

cost

and eliminate

waste

• Invest for growth

Examples of new businesses

•

CSR Zhuzhou

Electric Locomotive Co Ltd. (ZELC)

• Izuzu• Volkswagen• GM• Fuwa

Engineering

• Goldwind

• WinWinD

SKF Distributor College -

Number 100,000

Certificate 100,000: Self-aligning bearing systems

16 March 2011

Ronnie Yandle FLORIDA BEARINGS INC ORLANDO

Lincoln Industrial

•

A leading supplier of lubrication systems and tools

•

Headquartered in St. Louis, Missouri, USA

•

9 manufacturing

and engineering

centres

globally

•

Sales of around USD 400 m in 2010

•

About 2,000 employees

North America

Europe

Asia

Other

Geogaphic

sales

split

SKF Commutation Sensor-Bearing Unit

Four-row tapered roller bearing

SKF MetroCon

–

CBM for elevators and escalators SKF Cam Follower

UnitSKF SPEEDI-SLEEVE

SKF One Way Clutch

SKF Crane Asset Management

SKF Hydraulic driven lubricator

SKF Engineering Simulation

Services

SKF solutions for special pumps

SKF Overrunning Alternator

Pulley Unit

SKF Drum Support Unit

SKF Low Friction Engine

Seal

High performance seal

Examples

of new product

launches

in 2010

Low friction X-Tracker

Examples

of new product

launches

in 2010

SKF Commutation Sensor-Bearing Unit

Four-row tapered roller bearing

Low friction X-Tracker

SKF Cam Follower Unit

SKF SPEEDI-SLEEVE

SKF One Way Clutch

SKF Crane Asset Management

SKF Hydraulic driven lubricator

SKF Engineering Simulation

Services

SKF solutions for special pumps

SKF Overrunning Alternator

Pulley Unit

SKF Drum Support Unit

SKF Low Friction Engine

Seal

High performance seal

SKF MetroCon

–

CBM for elevators and escalators

Examples

of new product

launches

in 2010

SKF Commutation Sensor-Bearing Unit

Four-row tapered roller bearing

SKF MetroCon

–

CBM for elevators and escalators SKF Cam Follower

UnitSKF SPEEDI-SLEEVE

SKF One Way Clutch

SKF Crane Asset Management

SKF Hydraulic driven lubricator

SKF Engineering Simulation

Services

SKF solutions for special pumps

SKF Overrunning Alternator

Pulley Unit

SKF Drum Support Unit

SKF Low Friction Engine

Seal

High performance seal

Low friction X-Tracker

SKF energy efficient (E2) bearings

PeruIndustria

Textil

Piura•

60,000 E2 DGBB

IndiaSangam

GroupCalculated return on investment within 37 days.

ChinaConveyors used in mining industry. • 130,000 pcs E2 bearings

IndonesiaLeuwijaya Textile•

30,000 E2 bearing

•

potential 325,000 for 3 different customers

Stop-Start

function

for hybrids

SKF Rotor Positioning Bearing enables Stop-Start function•

Cuts CO2

up to 25% in dense urban traffic

•

New 3-year contract signed for the newly launched i-StARS

•

Existing contract for the first generation of Valeo’s

StARS

(Starter Alternator Reversible System)

How

to reach

our

long

term goals

• Accelerate profitable growth

• Reduce

cost

and eliminate

waste

• Invest for growth

The journey towards Business Excellence

SKF Business Excellence

SKF Bridge of Manufacturing

Excellence

SKF Six

Sigma

Zero

defect

concept

TQM and employee

involvement

The temple

of Manufacturing

Excellence

The SKF channel

concept

SKF quality

management system

How

to reach

our

long

term goals

• Accelerate profitable growth

• Reduce

cost

and eliminate

waste

• Invest for growth

Research and development

2010

+5%2011

+15%251 first filings

of patent applications

2 new Global Technical

Centre

4University Technology

Centre

Investments in R&D

New facilities

17 Solution Factories

–

more

to come…

3new

factories

3 under

construction

+

Responsible demand chain

SKF’s

requirements………addresses……......to ensure

Social / EHS issues

Working ethics

Business ethics

Total returns

-

SKF versus

OMX Index

27/12 2002 = Index 100

Updated: 1 April 2011

50

100

150

200

250

300

350

400

450

500

550

600

2003 2004 2005 2006 2007 2008 2009 2010 2011

SKF

OMX –Stockholm Allshares

Environmental Care

Environmental Care

SKF Care

• ISO 14001 EMS

• Climate change strategy

• REACH –

chemicals

• Water

• Material consumption

• Wastes and recycling

Reduce energy intensity

Compressed air management

Frequency control in honing oil pump motor

Waste heat recycling Building insulation

LED lighting

Energy Assessments fromSKF Energy Competence Center

LEED standard in new building constructions

SKF USA Inc. head office

SKF Tver

Factory, RussiaSKF Tver

factory, Russia

Employee

Care

Employee Care

• Human rights and labour standard

• Zero Accidents + OHSAS 18001

• Health and fitness

• Working Climate Analysis

• Training and development

SKF Care

SKF Zero Accidents performance

•

Reduced accident rates by close to 90% since 1994 (accident rate 13.78)

•

OHSAS 18001 global certification in 2005

•

Health and fitness programmes in different units

Zero Accidents rate for SKF Group

SKF College campus

Campus Buenos Aires

Campus Elgin

Campus Shanghai

Campus Pune

Campus Göteborg

Community Care

Community Care

• Education and vocational training

• Sports

• Health

• Helping underprivileged people

• Event/prize/award

SKF Care

Gothia

Cup & Meet the World

SKF Care

Employee Care

Community CareEnvironmental Care

Business Care

BeyondZeroTM

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010

SKF Care

Operating margin

FTSE4Good Index Series 2001-2011

DJSI World Index 2000–2010Sector leader in Industrial Engineering

2003, 2005, 2009

Utmärkelser

Ethibel

PIONEER & Ethibel

EXCELLENCE Investment Registers 2005-2010

-20

-15

-10

-5

0

5

10

15

20

25

30

2008 2009 2010 Q1 2011

Sales growth in local currency%

7.1

-19.0

0

2

4

6

8

10

12

14

16

2008 2009 2010 Q1 2011

Operating margin%

12.2

5.7

0

5

10

15

20

25

2008 2009 2010 Q1 2011

Return on capital employed

% 24.0

9.1

14.3

24.0

14.2

SKF Group performance

15.026.4

25.6

Long-term targets• 15%

Operating margin

level• 8% Growth

per annum

(local)• 27%

Return

on capital

employed

Key focus areas ahead 2011

•

Develop the business in line with the long-term

financial targets

• Drive initiatives for profitable growth

• Integration of Lincoln Industrial

• Business Excellence and competencedevelopment

One SKF and SKF Care as guiding lights