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					The SKF Group



Year-end result, 2006



Tom Johnstone,
President and CEO
2007-01-30
                                                                                     2

Fourth quarter 2006

MSEK                                                        2006             2005
Net sales                                                 13,895        12,648
Operating profit                                           1,858             1,268
Operating margin                                           13.4%         10.0%
Profit before taxes                                        1,846             1,275
Net profit                                                 1,257              862
Basic earnings per share, SEK                                2.67             1.85
Cash flow after investments before financing              1,627*              529

* including acquisitions of MSEK 461 and Ovako Cash proceeds of MSEK 1,217


2007-01-30
                                                                                     3

Year-end result 2006

MSEK                                                        2006            2005
Net sales                                                 53,101          49,285
Operating profit                                           6,707           5,327
Operating margin                                           12.6%           10.8%
Profit before taxes                                        6,387           5,253
Net profit                                                 4,432           3,607
Basic earnings per share, SEK                                9.48            7.73
Cash flow after investments before financing              2,231*           2,430

* including acquisitions of MSEK 2,129 (418) and Ovako Cash proceeds of MSEK 1,217


2007-01-30
                                         4

Operating margin

    %
    14
    13
    12
    11
    10
     9
     8
     7
     6
     5
     4
     3
     2
     1
     0

             2003   2004   2005   2006

2007-01-30
                                                            5

Operating margin

     %
     14
                                                  12.6 %
     12                                 10.8 %
                               9.9 %              11.3 %*
     10
                                        10.4 %*
              8.0 %
       8

       6

       4

       2

       0
                2003            2004     2005      2006
  * excluding income from the jointly
    controlled company Oy Ovako Ab
2007-01-30
                                                                             6

Operating margin per division

   %
  14                                                            Service
  12
  10
                                                                Industrial
   8
   6
   4
                                                                Automotive
   2
   0
       Q1    Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4
       2004                 2005                2006


2007-01-30
                                             7

Sales in local currencies (excl. structural chang

% change y-o-y
  16
  14
  12
  10
   8
   6
   4
   2
   0
        2003     2004   2005   2006

2007-01-30
                                                    8

Growth development / local currency


% Y-o-Y
                          11.8
  12
  10
                                      7.3    7.5
    8
    6         5.2

    4
    2
    0
             2003         2004        2005   2006
         Acquisitions / Divestments
         Organic growth
2007-01-30
                                                                                                  9

      Net sales development per quarter

                     2004                        2005                        2006
Percent y-o-y       Q1     Q2     Q3     Q4     Q1      Q2    Q3     Q4     Q1     Q2     Q3     Q4


 Volume            4.8     8.9    9.6   10.2    8.3    7.6   5.1    1.3     6.0   2.5    3.3    8.8


 Structure         0.1     0.0    2.2    2.0    2.3    0.2   -2.9   -3.7   -4.9   -0.5   1.1    4.6


 Price / Mix       1.1     1.8    2.3    4.2    3.6    3.6   2.1    2.6     2.9   2.0    2.0    2.3


 Sales in local    6.0    10.7   14.1   16.4   14.2   11.4   4.3    0.2     4.0   4.0    6.4 15.7
 currency
 Currency          -4.6   -2.3   -2.9   -3.8   -3.2    0.2   3.2    9.4     8.0   1.0    -2.1   -5.8


 Net sales         1.4     8.4   11.2   12.6   11.0   11.6   7.5    9.6    12.0   5.0    4.3    9.9


      2007-01-30
                                                 10

Growth development/local currency
2006 vs 2005


                         Europe
                         6.4%




North                               Asia 16.1%
America 3.6%


               Latin
               America 6.3%




2007-01-30
                                                                                    11

Industrial Division

MSEK                             2006       2005
Net sales                       17,083    14,750     Net sales growth       15.8%
Sales incl. intra-Group sales   26,600    23,616     organic growth         11.9%
                                                     structure               4.0%
Operating profit                 3,008      2,354
                                                     currency effects       -0.1%
Operating margin                 11.3%      10.0%


Acquisitions                             New factories
• SNFA                                   • Dalian, China - large size bearings
• John Crane's lubrication systems       • Pinghu, China - electromechanical
  business (SKF Safematic Inc.)            actuators and actuation systems

Restructuring charges, impairments and write-offs
• In Q4 2006, MSEK 210

2007-01-30
                                                                                12

Service Division

 MSEK                              2006      2005
 Net sales                       17,678     16,115   Net sales growth    9.7%
                                                     organic growth      9.6%
 Sales incl. intra-Group sales   19,344     17,653
                                                     structure           0.2%
 Operating profit                 2,316      2,072   currency effects   -0.1%
 Operating margin                  12.0       11.7

 Acquisitions
 • Precision Balancing & Analyzing (PB&A)
 • Monitek Australia
 • RC DEI Norge AS
 • PMCI (in January 2007)

 Restructuring charges and write-offs
 • In Q4 2006, MSEK 20

2007-01-30
                                                                                  13

Automotive Division

 MSEK                             2006      2005
 Net sales                       18,255   17,423      Net sales growth    4.8%
 Sales incl. intra-Group sales   21,919   20,990      organic growth      2.2%
                                                      structure           1.9%
 Operating profit                  999       560      currency effects    0.7%
 Operating margin                   4.6       2.7

 Acquisitions                     New factories
 • Economos                       • Jakarta, Indonesia - small deep groove ball
 • Macrotech Polyseal Inc.          bearings
                                  • Shanghai, China - bearing
                                  • Busan and Taegu, Korea - bearing and seals

 Restructuring charges, impairments and write-offs
 • In Q4 2006, MSEK 170

2007-01-30
                                                             14

Six Sigma


3 Dimensions:
”Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma

2006 status:
• 205 Black Belts
• 1,135 Green Belts
• 400 + projects (total 760 projects)


Savings in 2006: approximately MSEK 200



2007-01-30
                                                        15
Cash flow, after investments before
financing

MSEK
1 800
1 600
1 400                          Cash out from acquisitions:
1 200                          2006 MSEK 2,129
1 000                          2005 MSEK 418
                               2004 MSEK 644
  800
  600
                               Cash from Ovako in Q4:
  400                          2006 MSEK 1,217
  200
    0
-200

        2004   2005   2006



2007-01-30
                                                16
Cash flow, after investments before financing
excl. acquisitions and cash effects from
Ovako sale
        MSEK
         1 600

         1 400

         1 200

         1 000

              800

              600

              400

              200

               0

                    2004   2005   2006


 2007-01-30
                                                                        17

    Net cash
    (Short-term financial assets - loans)

 MSEK

5 500                                              AB SKF, dividend paid:
                                                   2003 Q2, MSEK     911
4 500
                                                   2004 Q2, MSEK 1,138
3 500
                                                   2005 Q2, MSEK 1,366
2 500                                              2006 Q2, MSEK 1,821

1 500
                                                   2004 Q2, Pension:
  500
                                                            MSEK 3,100
 -500                                              2005 Q2, Redemption,
                                                            MSEK 2,846
-1 500
          2003      2004        2005        2006

    2007-01-30
                                                                  18

Inventories as % of annual sales

    %
    23
                                         Target, end 2007 - 18%
    22

    21

    20

    19

    18
         Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
         2003        2004        2005        2006

2007-01-30
                                                             19

SKF capital structure


The AB SKF Board proposes the AGM to decide on:

1. a 12.5% increase in the dividend,
   SEK 4.50 per share                     Adding up to a total
2. a share split 2:1 combined with an     distribution to
   automatic redemption procedure         shareholders of
   of one share for SEK 10                SEK 6.6 billion


3. a mandate to the Board to repurchase
   up to 5% of the company's share


2007-01-30
                                              21

 Financial targets

                              2003
                             -2006
Operating margin              10% level

Growth in local currencies     6% per annum

Return on capital employed    20%

Inventories                   18% (2007)




 2007-01-30
                                                     22

 Financial targets

                              2003
                             -2006
Operating margin              10% level         

Growth in local currencies     6% per annum     

Return on capital employed    20%               

Inventories                   18% (2007)   on plan




 2007-01-30
                                                                 23

 Financial targets

                              2003              2007
                             -2006        - long term
Operating margin              10% level          12% level

Growth in local currencies     6% per annum     6-8% per annum

Return on capital employed    20%                24%

Inventories                   18% (2007)         18% (2007)

Gearing                      < 50%         around 50%


 2007-01-30
                                                          24

Financial targets

  Operating margin level                 12%

  • Focus on positive price mix
         - new products and solutions
         - eliminate loss making business

  • Operational efficiency, utilisation and flexibility

  • Increased production in best cost countries

  • Reduced purchasing cost

  • Six Sigma
2007-01-30
                                                                                           25

Operating margin - a longer perspective

   %
                         1993 - 2003
  14
  12
  10
   8
   6
   4
   2
   0
  -2
  -4
     93

              94

                    95

                          96

                                97

                                      98

                                            99

                                                  00

                                                        01

                                                              02

                                                                    03

                                                                          04

                                                                                05

                                                                                      06
   19

             19

                   19

                         19

                               19

                                     19

                                           19

                                                 20

                                                       20

                                                             20

                                                                   20

                                                                         20

                                                                               20

                                                                                     20
              Excluding income from Ovako




2007-01-30
                                                                                           26

Operating margin - a longer perspective

   %
                         1993 - 2003                                           2004-2006
  14
  12
  10
   8
   6
   4
   2
   0
  -2
  -4
     93

              94

                    95

                          96

                                97

                                      98

                                            99

                                                  00

                                                        01

                                                              02

                                                                    03

                                                                          04

                                                                                05

                                                                                      06
   19

             19

                   19

                         19

                               19

                                     19

                                           19

                                                 20

                                                       20

                                                             20

                                                                   20

                                                                         20

                                                                               20

                                                                                     20
              Excluding income from Ovako




2007-01-30
                                                                                             27

Operating margin - a longer perspective

   %
                        1993 - 2003                             2004-2006 New target level
  14
  12
  10
   8
   6
   4
   2
   0
  -2
  -4
     93

             94

                  95

                       96

                            97

                                 98

                                      99

                                           00

                                                01

                                                     02

                                                          03

                                                               04

                                                                    05

                                                                         06

                                                                              07

                                                                                   08

                                                                                        09
  19

        19

              19

                   19

                        19

                             19

                                  19

                                       20

                                            20

                                                 20

                                                      20

                                                           20

                                                                20

                                                                     20

                                                                          20

                                                                               20

                                                                                    20
              Excluding income from Ovako




2007-01-30
                                                             28

Financial targets

Growth in local currencies                       6-8% *
• Platform/segment approach to continue to be strengthened
             - organic investments
             - acquisitions
             - increased R&D spending
             - new products/solutions

•Focus on fast growing regions and segments
             - BRIC economies
             - industrial segments

  * Growth target 2/3rd organic , 1/3rd acquisition

2007-01-30
                                                                  29
Growth in local currencies – a longer
perspective

   %
  12
  10
   8
   6
   4
   2
   0
  -2
  -4
  -6
         1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006




2007-01-30
                                                                 30

Financial targets


ROCE                                     24%

• Continued focus on operating capital reduction in % of sales
             - inventory and accounts receivables
             - fixed assets

• Improved profit




2007-01-30
                                                                                     31

ROCE – a longer perspective

   %
  30
  25
  20
  15
  10
   5
   0
  -5
         1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

         As from 2003, restated according to IFRS except for financial instruments
         As from 2005, financial instruments accounted for in accordance with IFRS


2007-01-30
                                                                 32

 Financial targets

                              2003              2007
                             -2006        - long term
Operating margin              10% level          12% level

Growth in local currencies     6% per annum     6-8% per annum

Return on capital employed    20%                24%

Inventories                   18% (2007)         18% (2007)

Gearing                      < 50%         around 50%


 2007-01-30
                                                                         33
January 2007: Outlook for the first quarter 2007
(compared to the fourth quarter 2006)



    The market demand for SKF's products and services in the first
    quarter 2007 is expected to be slightly higher. The demand is
    expected to be higher in Europe and Latin America, significantly
    higher in Asia and to be unchanged in North America. The demand
    for the Industrial and Service Division's products and services is
    expected to be higher and for the Automotive Division is expected
    to be slightly lower.

    The manufacturing level for the first quarter of 2007 will be
    unchanged compared with the fourth quarter 2006 and higher
    compared with the first quarter 2006.




 2007-01-30
                                                                        34

Volume development


             Net sales         Daily volume trend for:   Outlook Q1
              2006             Q4 2006       Q1 2007     2007 vs 2006

 Europe                  56%                                  +

 North America           19%                                  -

 Asia Pacific            18%                                 +++

 Latin America           6%                                  ++

 Total                                                        +



2007-01-30
                                                                35

Guidance 2007

• Underlying tax level: around 32-33%

• Financial net:
  Q1 around MSEK 75
  annual level towards year end around MSEK 450

• Exchange rates:
  Q1: a negative effect of approximately MSEK 200
  Full year:a negative effect of approximately MSEK 550

• Additions to property, plant and equipment: around the same
  level as in 2006, above depreciation.


Guidance based on current assumptions and exchange rates

2007-01-30
                                                                           36

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".


2007-01-30

				
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