31 January 2008

1

The SKF Group

Year-end results 2007

Tom Johnstone, President and CEO

31 January 2008

3Strong Q4, strong full-year, positive outlook

• Strong sales growth

• Operating profit, excl. one-time items, up with

around 20%

• Strong cash flow

• Continued good volume growth for the first

quarter 2008

• Proposed distribution to shareholders of SEK

4,554 million

31 January 2008

4Major events during the fourth quarter 2007

• Acquisition completed of S2M, magnetic bearings

• SKF and GE Aviation agreed to establish a company for the manufacture and refurbish of bearings for GE's engines for large aircraft

• Announced to build a factory in Russia for tapered bearing units to supply the Russian railway market

• Announced to close the manufacturing facility in Glasgow, United States, and reduce the number of employees at the Fontenay-le-Comte facility in France

• New business:

Started a joint project with Knorr-Bremse to develop condition monitoring of brake control systems

Signed a long-term service contract to supply ArcelorMittal

Gained business on new hybrid pinion unit solution for automotive, provides 30% friction reduction

31 January 2008

5Highlights previous quarters 2007

Main acquisitions:• ABBA Linear Tech Co., Ltd., Taiwan

• Three service companies in North America

Other highlights:

•announced investments for two new factories in India

• announced significant investments in Sweden

• announced the development of energy-efficient

bearings

and a number of other energy-efficient solutions

• distributed SEK 6,603 million to shareholders

• was included in the DJSI World and DJSI STOXX

indexes for the

eighth year in succession, and in the FTSE4Good

Index for the

seventh year in succession

31 January 2008

6

SEKm 2007 2006

Net sales 15,070 13,895

Operating profit 1,831 1,858

Operating margin 12.1% 13.4%*

Profit before taxes 1,710 1,846

Net profit 1,105 1,257

Basic earnings per share, SEK 2.33 2.67

Cash flow after operating investments before financial items 617 1,561

Cash flow after operating investments before financial items, excluding acquisitions

1,123 2,022

Fourth quarter 2007

* 9.9% excluding Ovako

31 January 2008

7

SEKm 2007 2006

Net sales 58,559 53,101

Operating profit 7,539 6,707

Operating margin 12.9% 12.6%*

Profit before taxes 7,138 6,387

Net profit 4,767 4,432

Basic earnings per share, SEK 10.09 9.48

Cash flow after operating investments before financial items 2,126 2,158

Cash flow after operating investments before financial items, excluding acquisitions

3,335 4,287

Year-end results 2007

* 11.3% excluding Ovako

31 January 2008

8Operating margin

%

0123456789

1011121314

2005 2006 2007

Long-term target: 12% operating margin level

31 January 2008

9Operating margin

0

2

4

6

8

10

12

14

2005 2006 2007

%

* excluding income from the jointly controlled company Oy Ovako Ab

12.6

10.8

12.9

10.4*11.3*

Long-term target: 12% operating margin level

31 January 2008

10

0

2

4

6

8

10

12

14

16

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

Operating margin per division

Industrial

Service

Automotive

%

2005 2006 2007

31 January 2008

11Sales in local currencies (excl. structural changes)

0

2

4

6

8

10

12

14

16% change y-o-y

2005 2006 2007

31 January 2008

12

02468101214

2005 2006 2007

Growth development in local currency

% Y-o-Y

Acquisitions/DivestmentsOrganic growth

7.3* 7.5*

13.2

* Excluding effect from Ovako: 2005 10.4%

2006 10.1%

Long-term target: 6-8% growthin local currencies, per annum

31 January 2008

13Net sales development per quarter

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

8.3 7.6 5.1 1.3 6.0 2.5 3.3 8.8 7.9 6.9 9.0 6.3

2.3 0.2 -2.9 -3.7 -4.9 -0.5 1.1 4.6 4.0 4.6 3.7 1.0

3.6 3.6 2.1 2.6 2.9 2.0 2.0 2.3 1.8 2.7 2.0 3.2

14.2 11.4 4.3 0.2 4.0 4.0 6.4 15.7 13.7 14.2 14.7 10.5

-3.2 0.2 3.2 9.4 8.0 1.0 -2.1 -5.8 -5.6 -2.3 -1.9 -2.0

11.0 11.6 7.5 9.6 12.0 5.0 4.3 9.9 8.1 11.9 12.8 8.5

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currency Currency

Net sales

2005 2006 2007

31 January 2008

14Growth development by geography

Europe 15%

North America 7%

Asia 15%

Latin America 11%

Local currency 2007 vs 2006

31 January 2008

15Industrial Division

Acquisitions

• ABBA Linear Tech Co., Ltd.

• S2M

SEKm 2007 2006

Net sales 19,266

17,176

Sales incl. intra-Group sales

29,318

26,698

Operating profit 3,430 3,027

Operating margin 11.7% 11.3%

Net sales growth 12.2%

organic growth 10.0% structure 5.0%currency effects -2.8%

Major investments

• New factory for large size bearings in India• Increased investments in Sweden• New factory for tapered roller bearing in Russia

• In Q4 2006, SEK 210 m in restructuring charges, impairments and write-offs• In Q4 2007, SEK 30 m in restructuring activities and other one-time items

31 January 2008

16Highlights Industrial Division

• SKF will supply the tapered roller bearing units to the Île de France suburban trains manufactured by Bombardier Transportation

• A long term supply agreement with Suzlon Energy Ltd

• SKF and Caterpillar forged a strategic partnership

• SKF Agri Hub, a relubrication free solution for agricultural implements

• Developed a lubrication system for machine tool spindles

• SKF Conro Low, a relubrication free roll unit for the lower

segments in continuous slab casters

Photo: Bombardier Transportation

31 January 2008

17Service Division

Acquisitions

• Preventive Maintenance Company Inc. (PMCI)

• Baker Instruments Company

• Automatic Lubrication Systems (ALS)

SEKm 2007 2006

Net sales 19,597

17,984

Sales incl. intra-Group sales

21,393

19,761

Operating profit 2,846 2,362

Operating margin 13.3% 12.0%

• In Q4 2006, SEK 20 million in restructuring charges and write-offs

Net sales growth 9.0%

organic growth 12.0% structure 0.8%currency effects -3.8%

31 January 2008

18Highlights Service Division

• A partnership with Aker Kvaerner for condition based maintenance for the offshore and onshore oil and gas industry

• A two-year IMS contract signed with the world's leading producer of bleached eucalyptus pulp, Brazilian company Aracruz

• An agreement with Meridium, Inc. granting SKF non-exclusive rights to license and distribute Meridium Asset Performance Management System software

• Expansion of SKF’s 360° Solution programme

• Expansion of SKF power transmission products into the European market

• Introduction of the SKF Certified Rebuilder programme for electric motors

• SKF Caster Analyst System, load and temperature measurement for slab casters

• New important tools: The @ptitude Monitoring Suite and SKF Client Needs Analysis for Energy and Sustainability

31 January 2008

19Automotive Division

Acquisitions

• the remaining 40% shareholding in SKF (Shanghai) Bearing Company Ltd.

SEKm 2007 2006

Net sales 19,617

17,869

Sales incl. intra-Group sales

23,795

21,807

Operating profit 1,154 946

Operating margin 4.8% 4.3%Major investments

• expansion of the seal manufacturing facility in Judenburg, Austria• Haridwar, Uttarakhand in India – ball bearings

Net sales growth 9.8%

organic growth 8.3% structure 3.8%currency effects -2.3%

• In Q4 2006, SEK 170 m in restructuring charges, impairments and write-offs• In Q4 2007, SEK 270 m in restructuring activities and other one-time items

31 January 2008

20Highlights Automotive Division

• business for the steering column bearing with Piaggio in India

• business for wheel hub units for a four-wheeler light vehicle with Piaggio in India

• business with Hendrickson in the USA for the recently launched SKF Wheel End Monitor, which helps track possible damage and wear to trailer wheel bearings

• a wheel bearing solution to be manufactured in Spain for the new Renault Master platform

• wheel bearings for the new Ford Focus generation in North America, with the Chinese company Shanghai Automotive Industry Corporation for a new car platform and for a new Alfa Romeo platform

• additional business in China for two Chery models

• SKF and Haldex have jointly developed an integrated truck hub unit with a dual disc brake and fixed caliper

31 January 2008

21Six Sigma

• 4 dimensions:

”Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth

• 2007 status:

16 Master Black Belts

378 Black Belts

1,614 Green Belts

704 projects closed, whereof 145 replicated

915 projects ongoing

• Hard savings in 2007: SEK 302 m (up >50% from 2006)

31 January 2008

22Cash flow, after operating investments before financial items

-700

-500-300

-100

100

300500

700

9001 100

1 300

1 500

1 700

2005 2006 2007

SEKm

Cash out from acquisitions (SEKm): 2005 4192006 2,1292007 1,209

Cash in from Ovako (SEKm):2006 Q4 1,2172007 Q2 46

31 January 2008

23Net debt (Short-term financial assets minus loans)

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

SEKm

AB SKF, dividend paid (SEKm):

2005 Q2 1,3662006 Q2 1,8212007 Q2 2,049

2005 Q2, redemption 2,8462007 Q2,redemption 4,554

2005 2006 2007

31 January 2008

24Net debt (Short-term financial assets minus loans and post-employment benefits)

-9000

-7000

-5000

-3000

-1000

1000

2005 2006 2007

SEKm

31 January 2008

25

18

19

20

21

22

23

Inventories as % of annual sales

%

2005 2006 2007

Long-term target: 18%

31 January 2008

26Return on capital employed

20

21

22

23

24

25

26

2005 2006 2007

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: 24%

31 January 2008

27SKF capital structure

1.a 11.1% increase in the dividend,SEK 5.00 per share

2.a share split 2:1 combined with anautomatic redemption procedureof one share for SEK 5.00

3.a mandate to the Board to repurchase the company's own shares

Adding up to a total distribution to shareholders ofSEK 4,554 million

The AB SKF Board proposes the AGM to decide on:

31 January 2008

28January 2008: Outlook for the first quarter 2008(compared to the fourth quarter 2007)

The market demand for SKF's products and services in the first quarter of 2008 is expected to be higher for the Group. The demand is expected to be higher in Europe, significantly higher in Asia and Latin America and relatively unchanged in North America. The demand is expected to be higher in all divisions.

The manufacturing level for the first quarter 2008 will be unchanged compared to the fourth quarter 2007, and higher than the first quarter 2007.

31 January 2008

29Volume development

Daily volume trend for: Q4 2007 Q1 2008

Net sales2007

Europe 56%

North America

18%

Asia Pacific 18%

Latin America

5%

Total

Outlook Q12008 vs

2007

++

=

+++

+++

++

31 January 2008

31Key focus areas ahead

• Strengthen the platform/segment approach

• Maintain a positive price/mix

• Focus on fast growing segments and geographies

• Drive operational efficiency and Six Sigma

• Manage material costs and supply

• Attract and retain the best people

Use sustainability as a guiding light

31 January 2008

32

Employee CareEmployee Care

Community CareCommunity Care

Business CareBusiness Care

SKF Corporate Sustainability

Environment CareEnvironment Care

BeyondZeroTM SKF CareSKF Care

Operating margin

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 YTDQ3

31 January 2008

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To equip the worldwith SKF

knowledge

SKF Group Vision

31 January 2008

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