3. Key points, Q2 report 2
• Record levels
Operating profit: SEK 2,239 m (474). Q209 include SEK 500 m in restructuring
Operating margin: 14.3% (3.4)
• Organic sales development in local currency:
Industrial Division: +7.1%
Service Division: +17.0%
Automotive Division: +23.6%
Outlook for Q3
• Demand
Significantly higher compared to Q3 2009
Slightly higher sequentially compared to Q2 2010, adjusted for normal seasonality
• Manufacturing level
Significantly higher year over year
Relatively unchanged compared to Q2 2010, adjusted for normal seasonality
15 July 2010
4. Highlights 2010 3
• SKF inaugurated:
− a new factory in Tver, Russia, to produce the new generation of
SKF’s sealed and pre-lubricated compact tapered bearing units
for railway customers.
− a Global Technical Centre China in Shanghai.
− three new SKF Solution Factories, one in Schweinfurt, Germany,
one in Montigny, France and one in Moscow, Russia.
• SKF signed a framework agreement with the State Forestry
Administration in China to plant new forests.
15 July 2010
5. Highlights 2010 4
• SKF has assisted S-OIL, a large South Korean oil refinery, to increase
productivity and reduce potential production downtime.
• SKF was awarded an agreement with ZF Sachs Italy to supply
140,000 oil seals and wiper seals for motorcycle forks.
• SKF signed a three-year contract with Valeo to supply
SKF Rotor Positioning Bearings for the new i-StARS,
Valeos stop-start system.
• SKF received the “Golden Mousetrap” award
in the 2010 “Best products awards” for the
new SKF Machine Condition Advisor.
15 July 2010
7. Sales in local currencies (excl. structural changes) 6
% change y-o-y
20
15
10
5
0
-5
-10
-15
-20
-25
-30
2008 2009 2010
15 July 2010
8. Growth in local currency 7
(Organic growth + acquisition/divestments)
Long-term target level: 6-8% per annum
% y-o-y
15
10.4%
10
7.1%
5
-19.0%
0
-5
-10
-15
-20
2008 2009 YTD June 2010
Organic growth
Acquisitions/Divestments
15 July 2010
9. Growth development by geography 8
Local currency Q2 2010 vs Q2 2009
Europe
+9%
North America
+11%
Asia/Pacific
+36%
Latin America
+24%
Middle East
& Africa +9%
15 July 2010
10. Growth development by geography 9
Local currency H1 2010 vs H1 2009
Europe
+1%
North America
+6%
Asia/Pacific
+35%
Latin America
+23%
Middle East &
Africa +10%
15 July 2010
16. Second quarter 2010 15
SEKm 2010 2009
Net sales 15,709 14,167
Operating profit 2,239 474
Operating margin, % 14.3% 3.4%
Operating margin excl. restructuring, % 14.3% 6.9%
Profit before taxes 2,047 312
Net profit 1,451 323
Basic earnings per share, SEK 3.09 0.69
Cash flow after investments before 1,160 2,425
financial items
15 July 2010
17. Half year 2010 16
SEKm 2010 2009
Net sales 30,155 29,016
Operating profit 3,941 1,242
Operating margin, % 13.1% 4.3%
Operating margin excl. restructuring, % 13.4% 6.6%
Profit before taxes 3,551 843
Net profit 2,521 717
Basic earnings per share, SEK 5.36 1.55
Cash flow after investments before 1,192 2,948
financial items
15 July 2010
18. Inventories as % of annual sales 17
% Long-term target level: 18%
25
24
23
22
21
20
19
18
2008 2009 2010
15 July 2010
19. Cash flow, after investments before financial items 18
SEKm
2 500
Cash out from
2 000 acquisitions* (SEKm):
1 500 2008 1,284
2009 241
1 000
500
0
-500
-1 000
2008 2009 2010
* including non-controlling interests.
15 July 2010
20. Return on capital employed 19
Long-term target level: 24%
%
30
24.0
25
20 16.8
15
9.1
10
5
0
2008 2009 YTD June 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.
15 July 2010
22. Debt structure 21
Maturity years, EURm
500
400 450
300
200
100 130
100 100
55
0
2010 2011 2012 2013 2014 2015 2016
• Repaid eurobond EUR 132 m, due June 2010
• Repaid EUR 100 m on loan, due June 2013
• New eurobond EUR 100 m, due April 2015
15 July 2010
23. June 2010: Outlook for the third quarter 2010 22
Development compared to third quarter last year
The 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 second quarter 2010 and adjusted
for normal seasonality
The demand is expected to be slightly higher for the SKF Group in total.
It is expected to be unchanged in Europe, slightly higher in North
America and higher in Asia and Latin America. For the Automotive
Division it is expected to be relatively unchanged and for the Industrial
Division and Service Division it is expected to be slightly higher.
Manufacturing level
The manufacturing level will be significantly higher year on year and
relatively unchanged compared to the second quarter, adjusted for
normal seasonality.
15 July 2010
24. Volume trends, regions 23
(based on current assumptions and adjusted for seasonality)
Net sales Daily volume trends for: Outlook Q3
2009 Q2 2010 Q3 2010 2010 vs 2009
Europe 51% +++
North America 17% +++
Asia Pacific 23% +++
Latin America 6% +++
Total +++
15 July 2010
25. Volume trends, divisions 24
(based on current assumptions and adjusted for seasonality)
Net sales Daily volume trends Outlook Q3
2009 for Q3 2010 2010 vs 2009
Industrial 34% +++
Service 35% +++
Automotive 29% +++
Total +++
15 July 2010
26. Sequential volume trend main segments Q3 2010 25
(based on current assumptions)
Net sales 2009
14% Cars
7% Aerospace
7% Energy
5% Railway
22% Industrial distribution
16% Industrial OEM, General+Special
12% Vehicle Service Market
11% Industrial OEM, Heavy + Off-highway
3% Electrical and two-wheeler
3% Trucks
15 July 2010
27. Guidance for the third quarter 2010 26
• Tax level: around 30%
• Financial net for the third quarter:
Around SEK -175 million
• Exchange rates on operating profit versus 2009
Q3: +/- 0
Full year: SEK -250 million
• Additions to PPE: Around SEK 1.5 billion for 2010
Guidance is approximate and based on current assumptions and exchange rates.
15 July 2010
28. Key focus areas ahead 2010 27
• 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
15 July 2010
29. SKF Care 28
Business Care Employee Care
14
12
10
8
6
4
2
0
2003 2004 2005 2006 2007 2008 2009
Operating margin
BeyondZeroTM SKF Care
Environmental Care Community Care
15 July 2010
30. SKF Group Vision 29
To equip the world
with SKF knowledge
15 July 2010
31. Cautionary statement 30
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”.
15 July 2010
