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28 January 2010

The SKF Group

Year-end results 2009

Tom Johnstone, President and CEO

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28 January 2010

Key points, full-year report

• Strong cash flow

Q4: SEK 1,445 m Full year: SEK 5,752 m

• Dramatic volume drop year over year Improving trend sequentially during second half

Q4: -14.1% Full year: -24.3%

• Positive price/mix

Q4: 0.3% Full year: 4.3%

• Capacity adjustments and cost reduction efforts giving results

- significant short-time working being utilized, December 13,000 people

- reduction of 4,900 people since Q3 2008 (whereof 3,800 in 2009)

- annualised savings from all programmes, around SEK 1,050 million

• Demand outlook for Q1

- year over year: slightly higher

- sequentially: slightly higher

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28 January 2010

New businesses, some examples

• A Memorandum of Understanding for strategic partnership signed with Sinovel Wind Co. Ltd.

• A five year condition based maintenance contract with Total E&P UK for providing condition based maintenance services.

• A service contract with Transocean that covers asset reliability services for 59 of Transocean's drilling rigs.

• A long-term contract for the supply of bearings to Hero Honda of India.

• An order for axleboxes and drive system bearings to CSR Zhuzhou Electric Locomotive Co., Ltd.

ZELC.

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28 January 2010

Investing in knowledge 2009

• Agreement with Ricardo to develop energy-efficient solutions.

• Contract signed with Cambridge University to set up a SKF University Technology Centre (UTC) on steels and also withImperial College London to set up a SKF UTC on tribology.

• Seven new SKF Solution Factories opened around the world.

• A SKF Global Testing Centre inaugurated in Bengaluru, India.

• Expanded range of sealed spherical roller bearings.

• More than 20 new market offers.

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28 January 2010

Sales volume

-35

-30

-25

-20

-15

-10

-5

0

5

10% change y-o-y

2007 2008 2009

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28 January 2010

Sales in local currencies (excl. structural changes)

-30

-25

-20

-15

-10

-5

0

5

10

15% change y-o-y

2007 2008 2009

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28 January 2010

-25

-20

-15

-10

-5

0

5

10

15

2007 2008 2009

Growth in local currency(Organic growth + acquisition/divestments)

% y-o-y

Acquisitions/Divestments

Organic growth

13.2%

Long-term target level: 6-8% per annum

7.1%

-19.0%

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28 January 2010

Western Europe-26%

Asia/Pacific -6%

Latin America -

2%

Eastern Europe -

20%

Middle East & Africa +3%

North America -

18%

Growth development by geography Local currency 2009 vs 2008

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28 January 2010

Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

7.9 6.9 9.0 6.3 4.9 6.2 2.7 -13.0 -26.9

-30.8 -24.9 -14.1

4.0 4.6 3.7 1.0 1.0 1.3 0.5 2.4 1.4 1.1 1.2 0.4

1.8 2.7 2.0 3.2 3.8 4.0 6.4 8.5 7.1 5.6 3.7 0.3

13.7 14.2 14.7 10.5 9.7 11.5 9.6 -2.1 -18.4 -24.1 -20.0 -13.4

-5.6 -2.3 -1.9 -2.0 -1.2 -4.1 -0.9 10.3 13.6 12.2 6.6 -1.4

8.1 11.9 12.8 8.5 8.5 7.4 8.7 8.2 -4.8 -11.9 -13.4 -14.8

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currencyCurrency

Net sales

2007 2008 2009

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28 January 2010

Operating profit

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200SEKm

2007 2008 2009

Restructuring and one-time items

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28 January 2010

Operating margin

%

0

2

4

6

8

10

12

14

16

2007

Long-term target level: 12%

2008 2009

Restructuring and one-time items

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28 January 2010

Operating margin

0

2

4

6

8

10

12

14

2007 2008 2009

%

12.9 12.2

Long-term target level: 12%

5.7

13.3* 12.7*

8.0*

Restructuring and one-time items* Excluding restructuring and one-time

items

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28 January 2010

-12-10-8-6-4-202468

1012141618

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Operating margin per division

Industrial

Service

Automotive

%

2007 2008

Excluding one-off items (eg. restructuring, impairments, capital gains)

2009

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28 January 2010

Activities to adapt to lower demand

• Cost and restructuring programmes People Costs charged to

operating profit

Q4 2008 2,500 SEK 340 m Q1 2009 500 SEK 175 m

Q2 2009 900 SEK 500 mQ3 2009 70 SEK 200 mQ4 2009 450 SEK 400 m

4,420 SEK 1,615 m

December 2009, around 4,900 people had left the Group since the third quarter 2008, of which around 2,800 people under the programmes.

When fully, implemented total savings from these activities will be

around SEK 1,050 m.

• Around 13,000 people in short-time working December 2009.

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28 January 2010

SEKm 2009 2008

Net sales 13,887 16,307

Operating profit 1,004* 1,450

Operating margin, % 7.2% 8.9%

Operating margin excl. restructuring, %

10.1% 11.0%

Profit before taxes 765 1,107

Net profit 505 819

Basic earnings per share, SEK 1.05 1.75

Cash flow after investments before financial items

1,445 -150

Fourth quarter 2009

* Q4 restructuring around SEK 400 mOperating profit excl. restructuring activities SEK 1,404

m

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28 January 2010

SEKm 2009 2008

Net sales 56,227 63,361

Operating profit 3,203* 7,710

Operating margin, % 5.7% 12.2%

Operating margin excl. restructuring, %

8.0% 12.7%

Profit before taxes 2,297 6,868

Net profit 1,705 4,741

Basic earnings per share, SEK 3.61 10.14

Cash flow after investments before financial items

5,752 65

Full year 2009

* 2009 restructuring around SEK 1,275 mOperating profit excl. restructuring activities SEK 4,478

m

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28 January 2010

18

19

20

21

22

23

24

25

Inventories as % of annual sales

%

2007

Long-term target level: 18%

2008 2009

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28 January 2010

Cash flow, after investments before financial items

-1 000

-500

0

500

1 000

1 500

2 000

2 500

2007

SEKm

Cash out fromacquisitions* (SEKm):

2007 1,2092008 1,2842009 241

2008 2009

* including non-controlling interests.

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28 January 2010

Return on capital employed

0

5

10

15

20

25

30

2007 2008 2009

ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities.

%

Long-term target level: 24%

24.9 24.0

9.1

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28 January 2010

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):2007 Q2 2,0492008 Q2 2,2772009 Q2 1,594

Redemption (SEKm):

2007 Q2 4,5542008 Q2 2,277

2007 2008 2009

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28 January 2010

Debt structure

Amount in million Maturity

Euro Bond EUR 132 2010-06

SEK Bond SEK 556*) 2011-06

Term loan in euro EUR 150 2013-06

Euro Bond EUR 400**) 2013-12

Euro loans EUR 130 2014-03

Euro loan EUR 100 2016-06

After early repurchase in Q4

2009 of:

*) SEK 944 million**) EUR 100 million

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28 January 2010

Key focus areas ahead 2009

• Profit and cash flow- maintain positive price/mix- drive operational efficiency and cost reduction- reduce working capital and investments

• Adjustment of manufacturing output to new demand levels- restructuring- short-time working

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

SKF Care and Six Sigma as guiding lights

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28 January 2010

Key focus areas ahead 2009

• Profit and cash flow- maintain positive price/mix- drive operational efficiency and cost reduction- reduce working capital and investments

• Adjustment of manufacturing output to new demand levels- restructuring- short-time working

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

SKF Care and Six Sigma as guiding lights

.

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28 January 2010

SKF capital structure

• a dividend of SEK 3.50 per share

• a mandate to the Board to repurchase a maximum of 5% of the company's own shares

The AB SKF Board proposes the Annual General Meeting to decide on:

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28 January 2010

Volume trends(based on current assumptions)

Daily volume trends for: Q4 2009 Q1 2010

Net sales2009

Europe51%

North America

17%

Asia Pacific23%

Latin America

6%

Total

Outlook Q12010 vs

2009

-

-

+++

+++

+

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28 January 2010

7%

14%

11%

7%

5%

22%

16%

12%

3%

3%

Aerospace

Cars

Industrial OEM, Heavy+Off-

highway

Energy

Railway

Industrial distribution

Industrial OEM,

General+Special

Vehicle Service Market

Trucks

Electrical and two-wheeler

Sequential volume trend main segments Q1 2010(based on current assumptions)

Net sales 2009

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28 January 2010

Volume trends, Divisions(based on current assumptions)

Daily volume trends for Q1

2010

Net sales2009

Industrial34%

Service35%

Automotive29%

Total

Outlook Q12010 vs

2009

---

+

+++

+

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28 January 2010

December 2009: Outlook for the first quarter 2010

Sales development compared to first quarter last year

The demand for SKF products and services is expected to be slightly higher for the Group in total. In Europe and North America it is expected to be slightly lower and in Asia and Latin America significantly higher. It is expected to be significantly lower for the Industrial Division, slightly higher for the Service Division and significantly higher for the Automotive Division.

Sales development compared to the fourth quarter 2009

The demand is expected to be slightly higher for the SKF Group in total. It is expected to be slightly higher in Europe, Asia and Latin America and relatively unchanged in North America. For the Industrial Division it is expected to be relatively unchanged, and slightly higher for both the Service Division and Automotive Division.

Manufacturing level

The manufacturing level will be higher year on year and slightly higher compared to the fourth quarter 2009.

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28 January 2010

Guidance for the first quarter 2010

• Tax level: around 30%

• Financial net for the first quarter:Around SEK -175 million

• Exchange rates on operating profit versus 2009Q1: SEK -175 million

Full year: SEK -400 million

• Additions to PPE: Around SEK 1.5 billion for 2010

Guidance is approximate and based on current assumptions and exchange rates.

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28 January 2010

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

SKF Care and Six Sigma as guiding lights

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28 January 2010

SKF Care

Employee Care

Community CareEnvironmental Care

Business Care

BeyondZeroT

M

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009

SKF Care

Operating margin

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28 January 2010

SKF Group Vision

To equip the worldwith SKF

knowledge

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28 January 2010

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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28 January 2010