Industrial Division

Presented by Henrik LangePresident, Industrial Division

SKF Capital Markets Day 2008

Actuation & Motion Control

Miniature profile rails

Ball & Roller Screws

Magnetic bearings Teliscopic pillars

• Responsible for the SKF business in electro-mechanical actuators, linear drives, ball & roller screws, actuation systems & magnetic bearings

• Strengthening SKF´s position within by-wire applications

• Main industry focus: medical, health care, oil & gas, machine tool and factory automation

Aerospace and High Precision Bearing

• Offers solutions based on bearings, structural components and seals to the global Aerospace market

• SKF High Precision Bearings offer solutions for the machine tool industry

Railways

• The leading bearing, and service supplier to the global railway industry.

• SKF axleboxes and sensorized bearing solutions are market leading

• SKF supply maximized performance and minimized lifecycle cost for railway operators all over the world

Lubrication systems

• Provides industry leading centralized lubrication system solutions

• Product & solutions developed and manufactured by Willy Vogel AG and SKF Muurame

• Main industry focus: machine tool, pulp & paper, wind energy and marine

General industryIndustrial transmissions, fluid power, materials handling, other industries

Heavy industryMetal-working, mining, pulp & paper

Special industrial equipmentEnergy, food & beverage, machine tools, marine, medical & healthcare, printing and textiles

General industry

Vehicle Service Market

Trucks

Off-highway

Railway

Aerospace

Cars

Special industrial equipment

Heavy industry

Industrialdistribution

Two-wheeler & house hold equipment

SKF Group net sales by customer segment

Industrial businessCars and light trucks

Aftermarket Commercial transport

Net sales comparison by customer segment

SKF Group Industrial Division

General industry

Vehicle Service Market

Trucks

Off-highway

Railway

Aerospace

Cars

Special industrial equipment

Two-wheeler & house hold equipment

Heavy industry

Industrialdistribution

Energy 9%

General industry 31%

Heavy industry 9%

Off-highway 8%

Railway 8%

Special industrial equipment 28%

Commercial transport 32%

Aerospace 16%

Industrial businessCars and light trucks

Aftermarket Commercial transport

Creating and capturing value with OEMs

Customer's

customer

Customer business process

IdeaTechnology

& Business

drives

InitialDev

Design &

Engineering

VerificationDef

DesignPrototyping

Test SerialLaunch

Procurement

LaunchSales

After salesSupport

Services

SKF Products & Solutions• design optimization

• test & verification

• trouble shooting

• system integration

Creating & capturing value in many industries

Energy• Fossil• Hydro Oil & Gas• Hydrogen carbon• Nuclear• Wind

Commercial transport• Aerospace• Marine• Off-highway• Railways

Special industrial equipment• Food & beverage• Healthcare• Machine tools• Medical • Printing

Heavy Industry• Metal-working• Mining• Pulp & paper

General Industry• Industrial

transmissions• Industrial electrical• Materials handling• Pump

No moisture

No corrosion

Cleanliness

No waste water & dry floors

Minimum lubrication consumption

Dry film lubricant drastically reduces

consumption of lubricant and waste water

SKF new value propositions for food & beverage industry

SKF new value proposition for agriculture industry

• Five times increased farm productivity (20,000->100,000 ha)• Reduced cost of ownership by 30%• Reduced seed bed pollution up to 500 kg of grease / machine• Reduced cost of management by 90%

SKF Agri Hub

Reduced: Grease usage, warranty costIncreased: Farm productivity & profitability

SKF new value proposition for metalworking industry

SKF ConRo

• No re-lubrication required

• Extended roll service life

• Simplified mounting

• Reduced environmental impact

• Lower operating costs

SKF Caster Analyst

• An online monitoring system for casters

• Collects and analyzes load and temperature data

• Helps secure slab quality

• Contributes to process optimization

Industrial Division manufacturing

• Responsible for the manufacturing of a wide range of bearings

• 135 channels• Min OD 20 mm• Max OD 8,000 mm• 130 M bearings / year• 15,000 bearings / hour

Main focus:• Manufacturing Excellence

•ODR •Resetting•Net Output•Supply chain•Capacity utilization

Sweden

France

Germany

India

China

USA

2010 / 2005 +350%

SKF capacity developmentlarge size bearing manufacturing footprint 2005-2010

Wind energy market development

•Annual average growth 1995-2007: 26%

•Annual average growth 2007-2012: 21%

•By 2007: Wind contributed to 1% of global electricity needs

•By 2017; Wind expected tosupply 6% of global electricitydemand

Annual Global Wind Power DevelopmentActual 1990-2007 Forecast 2008-2012 Prediction 2013-2017

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

1990 2007 2012 2017

MW

Prediction Offshore (Forecast) Forecast Existing capacitySource: BTM Consult ApS - March 2008

Products: Large and medium size bearingsfor power generation/renewable energy, metal, industrial transmission, mining & construction

Factory Area:50,000 sqm (step 1+2)Investment: RMB ~1000 m (step 1+2)Employees : From 240 to 600 (by 2009) Start: 2007 (step 1)

2009 (step 2)

SKF capacity build up in Asia: Dalian, China

SKF capacity build up in Asia: Ahmedabad, India

Products: Large Size BearingsLand Area : 137,000 sqmInvestment : SEK 450 millionEmployees : 300 Start: 2009

New railway manufacturing in Russia

Land Area: 85,000 sqmFactory size, step 1: 9,000 sqmInvestment: SEK 235 mEmployees: 150Start production: 2010

The best people - SKF the employer of the year in

• 16,000 young professionalsin Sweden were asked to judge their own company

• 310 companies took part• SKF valued as the best employer

of the year

• SKF Dalian valued as the Best and Preferred Employer 2007 by Dalian Government, Dalian Labor Bureau, Dalian Daily News and Dalian Social Security System Bureau

Sweden Dalian, China

Industrial Division acquisitions

Jaeger(2005)

ABBA (2007)

SNFA(2006)

Safematic(2006)

Vogel(2004)

Period 2004 – 2008:A total annual turnover

of SEK 3.3 billion acquired**) at acquisition date

S2M(2007)

QPM(2008)

SKF & S2M: global leadership in magnetic bearings

Magnetic bearings provide:

• Environmentally friendly oil free operation• No wear –virtually maintenance free operation• Vibration free operation with advanced controls• Expanded speed/power range• Advanced machine condition monitoring • Low energy consumption

S2M• Acquired by SKF:

Dec 2007• Headquarter:

Vernon, France• Annual sales:

EUR 40 million• 200 employees

• QPM is located in Monroe, USA (close to Seattle)

• Manufactures metallic rods for various aerospace applications

• Joint customer base: e.g. Airbus, Boeing, Dassault and Eurocopter

• This acquisition will support SKF's growth in the metallic rod business in North America.

Acquired by SKF: March 200812 employees

Going for growth in airframe rods business

Sustained profitable growth

2007 (SEKm) 2007/2006 Q1 2008 (SEKm) Q1 2008/Q1 2007

Net sales 19 266

BOI

Operating Margin

Net sales 19,693

Operating profit

Operating margin

3,434

+13%

+13%

(11.4%*)+11.8%

5,528

1,012

12.5%

+12%

+15%

(12.2%*)

*) previous year operating margin

Industrial Division key business messages

• Continue to create and capture value through the launch of new market offers to existing and new customers based on specific industry segment needs

• Effective account management with an improved key account management structure

• Continued focus on operational excellence in manufacturing

• Employee development through focus on competence and motivation

• Drive a sustainable profitable growth in the industrial market