The SKF Group

SKF Investor Relations

February

2011

1SKF -

A truly global company

Established: 1907

Sales 2010: SEK 61,029 million

Employees: 44,742

Production sites: around 130 in 32 countries

SKF presence: in over 130 countries

Distributors/dealers: 15,000 locations

Global certificates:

ISO 14001OHSAS 18001 certification

2

Aerospace

Railway

Off-highway

Trucks

Two-wheeler and Electrical

General industry

Heavy industry

Special industrial equipment

Vehicle Service Market

Industrial distribution

Cars and light trucks

Commercial transport

Industrial business

Net sales by customer segment 2010

Energy

14%

5%

4%

3%

3%

13%

7%5%5%

12%

25%

4%

3

63

53

79

1

24

10

5

10

6

0

27

38

18

7

11

41

26

43

North America

Latin America

Western

Europe

Eastern Europe

Middle East and Africa

Asia/Pacific

Net sales

Average number of employees

Tangible asset

% of group total

SKF 2010

(18)

(8)(13)

(26)(13)

(14)

(2002) (1998)

(25)

(14)

(19)

(10) (12) (9)

Sweden

4

To equip the worldwith SKF knowledge

SKF Group Vision

5Investing

in new factories

Ahmedabad, India

Tver, Russia

Haridwar, India

Dalian, China

6SKF Solution Factory

Segments & Application Knowledge Platforms

& Technology

Competence

Capabilities

Sealing

Solutions Mechanical

Services Lubrication

Solutions

Training

Center

Bearing Service Workshop Condition

Monitoring

Services Remote

Monitoring

Center

MaPro/CoMo

Product

Repair A & MC

SKFSolution Factory

7

OpenedPlanned

Tianjin

TaiwanShanghai

Pune

Istanbul

JohannesburgBrasil

“IXION”

Colombia

Moscow

HoustonMonterreyMexico

Edmonton

Nordic (Gothenburg)

UK

Germany

Italy

France

17 SKF Solution Factories 2010

8

New pitch bearingdesign with improvedcorrosion protection

DRTRB-unit “Nautilus”

with segmented cagefor minimized friction

New CRB-design withextra-high carrying capacityfor wind-gearboxes.

XL Hybrid bearingswith ceramic ballsfor superior insulation

SKF WindCon

3.0/WebconIntranet supervisedcondition monitoring

Automatic centralizedlubrication kits for reduced maintenance cost

SKF wind energy industry

9What is SKF knowledge?

10

Bearingsand units

SKF’s

platforms

11

Seals

SKF’s

platforms

12

Mechatronics

SKF’s

platforms

13SKF’s

platforms

Lubrication systems

14SKF’s

platforms

Services

15Acquisition

2003-2010 Identifying

gaps and opportunities

in all platforms

SealsBearingsand units

LubricationsystemsServices Mechatronics

Products

Technologies

Geographies

Segments

SNFA

(2006)

S2M

(2007)

QPM

(2008)

Economos

(2006)

Macrotech

(2006)

Macrotech

(2009)

Baker

(2007)

PMCI

(2007)

PB&A

(2006)

Monitek

(2006)

Safematic

(2006)

Vogel

(2004)

ALS

(2007)

Sommers

(2005)

ABBA

(2007)

Jaeger

(2005)

Peer

(2008)

GLO

(2008)

TCM (2003)

Scandrive

(2003)

Cirval

(2008)

Lincoln Industrial

(2010)

16

~20% Raw material (example: bars, tubes and rings)

~50% Components (example: forged and turned rings)

~30% Other (shop supplies and traded products etc.)

Cost split, % of total expenses (2010: SEK 52,438 m)

Employees

~35%

Other

~27%

Material

~34%

~4%

Depreciation & amortization

The SKF Group

Tom Johnstone, President and CEO

1 February 2011

18Key points, Q4 report

• Strong performance Operating profit:

SEK 2,202 m (1,004). Operating margin:

14.3% (7.2)Profit before tax: SEK 2,048 m (765)Cash flow:

SEK -5,966 m (1,445), Cash flow excl. acquisition of Lincoln Industrial SEK 798 m

• Strong organic sales development in local currency:SKF Group:

+17.2%All divisions and regions showed very good growth

•

Completed acquisition of Lincoln Industrial

Outlook for Q1 for SKF Group• Demand

Significantly higher compared to Q1 2010Slightly higher sequentially compared to Q4 2010, adjusted for normal seasonality

• Manufacturing levelSignificantly higher year over yearSlightly higher compared to Q4 2010, adjusted for normal seasonality

19

•

A leading supplier of lubrication systems and tools

•

Headquarter in St. Louis, Missouri, USA

•

Sales of around USD 400 m in 2010

•

About 2,000 employees

•

Total purchase price net:

around SEK 6.8 bn

•

Financing: around

SEK 3.2 bn

cash

(net) and SEK 3.6 bn

debt

Acquisition of Lincoln Industrial, Q4 2010

20New facilities

opened

in 2010

3factories

9 Solution Factories

-

in total 17

Haridwar, India Ahmedabad, IndiaTver, Russia

1Global Technical

Centre in Shanghai

21Examples

of new product

launches

in 2010

SKF Commutation Sensor-Bearing Unit

Four-row tapered roller bearing

SKF MetroCon

–

CBM for elevators and escalators

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

2010: 251 first filings

of patent applications

22Six

Sigma

2010 status:•

463 Black Belts

•

2,059 Green Belts

•

1,155 projects

closed

Hard savings2005: SEK 150 m 2006:

SEK 200 m2007:

SEK 302 m2008: SEK 462 m2009:

SEK 430 m2010:

SEK 468 m

4 dimensions:”Standard”

Six

Sigma, Design for Six

Sigma, Lean

Six

Sigma and Six

Sigma for Growth

23Sales volume

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

101520

% change y-o-y

2008 2009 2010

24Sales in local currencies (excl. structural changes)

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

101520

% change y-o-y

2008 2009 2010

25

-20

-15

-10

-5

0

5

10

15

20

2008 2009 2010

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

% y-o-y

Acquisitions/Divestments

Organic growth

7.1%-19.0%

14.2%

26

Europe

+17%

Asia/Pacific +20%

Latin America +16%

Middle East & Africa +8%

North America +17%

Growth

development

by geography Local

currency

Q4 2010 vs Q4 2009

27

Europe

+7%

Asia/Pacific +31%

Latin America +20%

Middle East & Africa +10%

North America +13%

Growth

development

by geography Local

currency

2010 vs 2009

28Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Fullyear

4.9 6.2 2.7 -13.0 -26.9 -30.8 -24.9 -14.1 5.3 16.6 19.0 16.3 14.1

1.0 1.3 0.5 2.4 1.4 1.1 1.2 0.4 0.0 0.0 0.0 0.0 0.0

3.8 4.0 6.4 8.5 7.1 5.6 3.7 0.3 -0.3 -0.5 0.3 0.9 0.1

9.7 11.5 9.6 -2.1 -18.4 -24.1 -20.0 -13.4 5.0 16.1 19.3 17.2 14.2

-1.2 -4.1 -0.9 10.3 13.6 12.2 6.6 -1.4 -7.7 -5.2 -3.2 -6.2 -5.6

8.5 7.4 8.7 8.2 -4.8 -11.9 -13.4 -14.8 -2.7 10.9 16.1 11.0 8.6

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currency

Currency

Net sales

2008 2009 2010

29Operating profit

0200400600800

1 0001 2001 4001 6001 8002 0002 2002 400SEKm

2008 2009

Restructuring

and one-time

items

2010

30Operating margin

%

0

2

4

6

8

10

12

14

16

2008 2009

Restructuring

and one-time

items

2010

31Operating margin

0

2

4

6

8

10

12

14

16

2008 2009 2010

%

12.2

5.7

12.7*

8.0*

Restructuring

and one-time

items

* Excluding

restructuring

and one-time

items

14.2*

13.8

32

-12-10

-8-6-4-202468

1012141618

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

Operating margin per division

IndustrialService

Automotive

%

2008

Excluding one-off items

(eg. restructuring, impairments, capital gains)

2009 2010

33

SEKm 2010 2009

Net sales 15,409 13,887

Operating profit 2,202 1,004

Operating margin, % 14.3 7.2

Operating margin excl. restructuring, % 14.9 10.1

Profit before taxes 2,048 765

Net profit 1,350 505

Basic earnings per share, SEK 2.87 1.05

Cash flow* -5,966 1,445

Cash flow* excl. acquisition of Lincoln Industrial 798

Fourth quarter 2010

*after investments before financing

34

SEKm 2010 2009

Net sales 61,029 56,227

Operating profit 8,452 3,203

Operating margin, % 13.8 5.7

Operating margin excl. restructuring, % 14.2 8.0

Profit before taxes 7,549 2,297

Net profit 5,296 1,705

Basic earnings per share, SEK 11.28 3.61

Cash flow* -2,838 5,752

Cash flow* excl. acquisition of Lincoln Industrial 3,926

Full year 2010

*after investments before financing

35

18

19

20

21

22

23

24

25

Inventories as % of annual sales

% Long-term target level: 18%

2008 2009 2010

X Excluding

acquisition

of Lincoln Industrial

36Cash flow, after investments before financial items

-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 500SEKm

2008 2009 2010

Cash out fromacquisitions (SEKm):

2008 1,2842009

2412010

6,799

X Excluding

acquisition

of Lincoln Industrial

37Return on capital employed

0

5

10

15

20

25

30

2008 2009 2010

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

interest bearing liabilities.

%

24.0

9.1

24.0

38Net 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

0

SEKm AB SKF, dividend paid (SEKm):2008 Q2

2,2772009 Q2

1,5942010 Q2

1,594

Redemption (SEKm):2008 Q2

2,277

2008 2009 2010

Cash out fromacquisitions (SEKm):

2008 1,2842009

2412010

6,799

39Debt structure

Maturity years, EURm

55

446

530

100100

•

Credit

facilities:

EUR 500 m 2014, whereof

EUR 400* m utilized

SEK 3,000 m 2017, unutilized

•

No financial

covenants

nor

material adverse

change

clause

130

400*

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016

130

400*

40Key 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

41Key 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

42Dividend proposal

AB SKF’s Board proposes the Annual General Meeting

an increase in the dividend of 43%, giving a dividend of SEK 5.00 (3.50) per share

43December 2010: Outlook for the first quarter 2011

Development compared to the first quarter last yearThe demand for SKF products and services is expected to be significantly higher for the Group, the divisions and for the different geographical areas.

Development compared to the fourth quarter 2010 and adjusted for

normal seasonalityThe demand is expected to be slightly higher for the Group and for the different geographical areas. The Industrial Division and the Service Division are expected to be slightly higher and the Automotive Division higher.

Manufacturing levelThe manufacturing level will be significantly higher year on year and slightly higher compared to the fourth quarter, adjusted for normal seasonality.

44Volume

trends, regions (based

on current

assumptions

and adjusted

for seasonality)

Daily volume

trends for: Q4 2010 Q1 2011

Net

sales2010

Europe 46%

North America 18%

Asia

Pacific 27%

Latin America 7%

Total

Outlook Q12011 vs 2010

+++

+++

+++

+++

+++

45Volume

trends, divisions (based

on current

assumptions

and adjusted

for seasonality)

Daily volume

trends for Q1 2011

Net

sales2010

Industrial 32%

Service 36%

Automotive 30%

Total

Outlook Q12011 vs 2010

+++

+++

+++

+++

46

5%

25%

18%

10%

5%

4%

14%

12%

3%

4%

Energy

Industrial distribution

Industrial OEM, General+Special

Industrial OEM, Heavy

+ Off-highway

Aerospace

Railway

Cars

Vehicle

Service Market

Electrical

and two-wheeler

Trucks

Sequential

volume

trend main

segments Q1 2011 (based

on current

assumptions)

Net

sales

2010

47Guidance for the first quarter 2011

•

Tax level: around 30%

•

Financial net for the first quarter: Around SEK -200 m

•

Exchange rates on operating profit versus 2010 Q1: SEK -150 m

Full year: SEK -900 m

•

Additions to PPE: Around SEK 2.3 bn

for 2011

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

48Long-term financial

targets

Targets

Operating margin level 15%Annual sales growth in local currencies 8%ROCE 27%Inventory to sales 18%

49Main initiatives

going

forward

• Accelerate profitable growth

• Reduce

cost

and eliminate

waste

• Invest for growth

One SKF and SKF Care as guiding lights

50Main actions

going

forward

Accelerate profitable growth

• Continue

to strengthen

the platform/segment approach

• Increase

the development, launch

and commercialisation

of new offerings

(green)

• Value

based

selling

–

using Documented

Solutions Programme

• Strengthen

our

service business

• Acquisitions

to strengthen

platform

offer

• Develop

other

brands of the SKF Group

51Main actions

going

forward

Reduce

cost

and eliminate

waste

•

Build

on Manufacturing

Excellence

into

other areas -

Business Excellence

•

Increased

manufacturing

and sourcing

in Best Cost

Countries

• Reduce

product

cost

through

ICR* activities

* ICR means

Integrated

Cost

Reduction

52Main actions

going

forward

Invest for growth

• Increase

sales

and engineering

resources

• Additional

factories

in growth

markets

• Additional

SKF Solution Factories

•

Increase

spending in R&D and improve

global network

-

accelerate

plans for India

and China

53Key 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

54Cautionary

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”.

55Welcome

to the IR website

–

www.skf.com

> Investors

Investor Relations function:Head:Marita BjörkTel: +46 31 3371994Mobile: +46 705 181994E-mail: marita.bjork@skf.com

Assistant:Anna AlteTel: +46 31 3371988Mobile: +46 705 271988E-mail: anna.alte@skf.com

Event coordinator and secretary:Helena KarlssonTel: +46 31 3372142Mobile: +46 705 642142E-mail: helena.karlsson@skf.com

56