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The SKF Group

The SKF Group. Nine-month results 2007 Tom Johnstone, President and CEO. Major events during the third quarter 2007. SKF signed an agreement to acquire the magnetic bearing company S2M. The acquisition is subject to approval by relevant authorities.

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The SKF Group

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  1. The SKF Group Nine-month results 2007 Tom Johnstone, President and CEO

  2. Major events during the third quarter 2007 • SKF signed an agreement to acquire the magnetic bearing company S2M. The acquisition is subject to approval by relevant authorities. • SKF and Meridium, Inc. signed an agreement allowing SKF to license and distribute Meridium’s software and to provide consultation, implementation and training services for asset management using Meridium APM software applications. • SKF has been selected to be a member of Dow Jones' Sustainability World Indexes (DJSI World) and the pan-European sustainability benchmark (DJSI STOXX) for the eighth year in succession.

  3. Third quarter 2007 * 11.9% excluding Ovako

  4. Nine months 2007 *11.7% excluding Ovako

  5. Operating margin % 2006 2007 2005

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

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

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

  9. Growth development / local currency Acquisitions / Divestments Organic growth % Y-o-Y 14.2 7.5* 7.3* * Excluding effect from Ovako: 2005 10.4% 2006 10.1%

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

  11. Cash flow, after operating investments before financial items SEKm Cash out from acquisitions (SEKm): 2005 419 2006 2,129 YTD September 2007 703 Cash in from Ovako (SEKm): 2006 Q4 1,217 2007 Q2 46 2006 2007 2005

  12. Net cash (Short-term financial assets - loans) SEKm AB SKF, dividend paid (SEKm): 2005 Q2 1,366 2006 Q2 1,821 2007 Q2 2,049 2005 Q2, redemption 2,846 2007 Q2, redemption 4,554 2005 2006 2007

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

  14. Return on capital employed % 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. September 2007: Outlook for the fourth quarter 2007(compared to the third quarter 2007) The market demand for SKF's products and services in the fourth quarter of 2007 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 fourth quarter 2007 will be unchanged compared to the third quarter 2007, while higher in absolute terms due to normal seasonality, and significantly higher than the fourth quarter 2006.

  16. Volume development

  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%

  18. Guidance 2007 • Tax level: around 32-33% • Financial netAround minus SEK 130 million per quarter • Exchange rates on operating profit versus 2006Q4: a negative effect of approximately SEK 130 million Full year: a negative effect of approximately SEK 630 million • Additions to property, plant and equipment: • slightly above SEK 2 billion Guidance based on current assumptions and exchange rates

  19. New automotive business • Ford Motor Company • Front and rear wheel bearings for the new Ford Focus • Shanghai Automotive Industry Corporation • Front and rear wheel bearings for a new car platform • Fiat Group Automobiles • Rear wheel bearing for a new Alfa Romeo platform • Gigant Group • Integrated truck hub unit

  20. New railway business • Bombardier Transportation • a special tapered roller bearing design to the Ile de France suburban trains Photo: Bombardier Transportation

  21. Cautionary statement • 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 annual report (available on www.skf.com) under the Board of Directors' Report; "Most important factors influencing the financial result", "Financial risks" and "Sensitivity analysis", and in this quarterly report under "Risks and uncertainties in the business."

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