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The SKF Group

The SKF Group. First-quarter results 2007 Tom Johnstone, President and CEO. Major events 2007. Introduction of new energy-efficient bearings and solutions. Acquisitions: Preventive Maintenance Company Inc. (PMCI), USA ABBA Linear Tech Co., Ltd., Taiwan

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The SKF Group

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  1. The SKF Group First-quarter results 2007 Tom Johnstone, President and CEO

  2. Major events 2007 • Introduction of new energy-efficient bearings and solutions. • Acquisitions: • Preventive Maintenance Company Inc. (PMCI), USA • ABBA Linear Tech Co., Ltd., Taiwan • Automatic Lubrication Systems (ALS), Canada • SKF invests SEK 600 million to increase capacity in Göteborg. • Sale of forging business in Luchow, Germany

  3. First quarter 2007

  4. Operating margin % 2006 2007 2005

  5. Operating margin % 13.1 12.6 10.8 11.3* 10.4* * excluding income from the jointly controlled company Oy Ovako Ab

  6. Operating margin per division % Service Industrial Automotive 2006 2007 2005

  7. Sales in local currencies (excl. structural changes) % change y-o-y 2006 2007 2005

  8. Growth development / local currency % Y-o-Y 13.7 7.5 7.3 Acquisitions / Divestments Organic growth

  9. Net sales development per quarter 2005 2006 2007 Percent y-o-y

  10. Cash flow, after investments before financing MSEK Cash out from acquisitions: 2005 MSEK 419 2006 MSEK 2,129 2007 Q1 MSEK 214 Cash from Ovako: 2006 Q4 MSEK 1,217 2006 2007 2005

  11. Cash flow after operating investments before financial items MSEK 2006 2007 2005

  12. Net cash (Short-term financial assets - loans) MSEK AB SKF, dividend paid: 2005 Q2, MSEK 1,366 2006 Q2, MSEK 1,821 2005 Q2, Redemption, MSEK 2,846 2005 2006 2007

  13. Inventories as % of annual sales % Target, end 2007 - 18% 2006 2007 2005

  14. SKF capital structure • The AB SKF Board proposes to the AGM in April 2007 to decide on: • a 12.5% increase in the dividend, SEK 4.50 per share • a share split 2:1 combined with an automatic redemption procedure of one share for SEK 10 • a mandate to the Board to repurchase up to 5% of the company's share Adding up to a total distribution to shareholders of SEK 6.6 billion

  15. April 2007: Outlook for the second quarter 2007(compared to the first quarter 2007) The market demand for SKF's products and services in the second quarter of 2007 is expected to be higher for the Group. The demand is expected to be higher in Europe and Latin America, significantly higher in Asia and relatively unchanged in North America. The demand is expected to be higher in the Industrial and Service Division and slightly higher in the Automotive Division. The manufacturing level for the second quarter will be unchanged compared to the first quarter 2007 and significantly higher compared to the second quarter last year.

  16. Volume development * * Updated in March 2007 from slightly higher to higher.

  17. Financial targets – long term Operating margin, level 12% Growth in local currencies, per annum 6-8% Return on capital employed 24% Gearing around 50% Inventories, by end 2007 18%

  18. Guidance 2007 • Underlying tax level: around 32-33% • Financial netQ2: around minus SEK 100-120 million Full year forecast: around minus SEK 500 million • Exchange ratesQ2: a negative effect of approximately SEK 200 million Full year: a negative effect of approximately SEK 550 million • Additions to property, plant and equipment: • slightly above SEK 2 billion Guidance based on current assumptions and exchange rates

  19. Acquisition – ABBA Linear Tech Co., Ltd. • Annual turnover: SEK 250 million • 400 employees • A leading Asian manufacturerof profile rail guides. • Price: SEK 400 million for 90%shareholding

  20. Acquisitions 2007 Automatic Lubrication Systems (ALS) • Yearly sales: approximately CAD 2 million • 13 employees • A leading service company to mobile transportation equipment and industrial machinery customers for lubrication systems Preventive Maintenance Company Inc. • Annual turnover: USD 10 million • 70 employees • A market leader in Predicitve maintenance (PdM) services

  21. Bearings and units Bearings and units • Acquisitions: • New factories: • Significant manufacturing • expansion: • Restructuring: • Setting new standards: • SNFA SAS, France • Dalian, China • Shanghai, China • Jakarta, Indonesia • Busan, South Korea • India • North America • Det Norske Veritas and Germanischer Lloyd announced official verification - SKF Explorer bearings has set a new performance standard. • SKF Life Theory - new standard for bearing life calculations. • Brazil • Mexico • Sweden • France

  22. Seals/Mechatronics/Services/Lubrication systems Seals Mechatronics • Acquisitions: • New factories: • Significant • manufacturing • expansion: • ABBA Linear Tech Co., Ltd., Taiwan • Shanghai, China • Macrotech Polyseal Inc., USA • Economos Austria GmbH, Austria • Taegu, Korea • Bulgaria • India • Mexico Lubrication systems Services • Acquisitions: • Precision Balancing & Analyzing, USA • Monitek Australia, Australia • Preventive Maintenance Company Inc., USA • Safematic lubrication, Finland • Automatic Lubrication Systems, Canada

  23. SKF Energy efficient bearings Providing a minimum of 30% reduction in energy consumption. Deep groove ball bearings Taper roller bearings

  24. Energy-efficient solutions SKF actuatorsin buildingscut energy useby 30-50%. SKF actuators in spot welding cut energy use by more than 90% in welding robots. SKF Client Energy and Environment Analysis (CEEA)is a web-based tool thatidentifies high-energy consumption areas withinan operation. SKF throttle-by-wirereduces fuel use by 5%in business jets. SKF magnetic bearingsin gas compressors reduce energy by 90%.

  25. Cautionary statement • This report 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 20-F report on file with the SEC (United States Securities and Exchange Commission) under "Forward-Looking Statements" and "Risk Factors".

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