3. Key points, Q1 report 2
• Strong operating profit and margin
SEK 1,702 m versus SEK 768 m previous year
11.8% versus 5.2% previous year
• Production levels increased during the quarter
Significantly higher year over year.
• Sales in local currency:
Industrial Division: -12.1%
Service Division: +8.2%
Automotive Division: +26.2%
Negative price/mix influenced by higher automotive sales versus industrial market.
• Improving demand outlook for Q2
Significantly higher compared to Q2 2009
Slightly higher sequentially compared to Q1 2010
• Manufacturing level
Significantly higher year over year
Higher compared to average Q1 2010
20 April 2010
4. Highlights 2010 3
• Inauguration of two new factories in India:
- The Haridwar factory will manufacture deep groove ball bearings and primarily
serve the two-wheeler market and the vehicle service market in India. Total
investment: around SEK 250 million.
- The Ahmedabad factory will manufacture medium to large size bearings of
various types to serve customer segments such as wind energy and heavy
industries. Total investment: around SEK 450 million.
Photos
• A programme was concluded in March for adjusting the manufacturing capacity in
Gothenburg, Sweden. The total cost of these activities is around SEK 90 million and
the benefit of these actions will be around SEK 50 million per year.
• The ninth SKF Solution Factory was inaugurated in Houston, USA
20 April 2010
6. Sales in local currencies (excl. structural changes) 5
% change y-o-y
15
10
5
0
-5
-10
-15
-20
-25
-30
2008 2009 2010
20 April 2010
7. Growth in local currency 6
(Organic growth + acquisition/divestments)
Long-term target level: 6-8% per annum
% y-o-y
10 7.1% 5.0%
5 -19.0%
0
-5
-10
-15
-20
-25
2008 2009 YTD March
2010
Organic growth
Acquisitions/Divestments
20 April 2010
8. Growth development by geography 7
Local currency Q1 2010 vs Q1 2009
Europe
-6%
North America
+1%
Asia/Pacific
+34%
Latin America
+21%
Middle East
& Africa
+11%
20 April 2010
14. First quarter 2010 13
SEKm 2010 2009
Net sales 14,446 14,849
Operating profit 1,702 768
Operating margin, % 11.8% 5.2%
Operating margin excl. restructuring, % 12.4% 6.4%
Profit before taxes 1,504 531
Net profit 1,070 394
Basic earnings per share, SEK 2.27 0.86
Cash flow after investments before 32 523
financial items
20 April 2010
15. Inventories as % of annual sales 14
% Long-term target level: 18%
25
24
23
22
21
20
19
18
2008 2009 2010
20 April 2010
16. Cash flow, after investments before financial items 15
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.
20 April 2010
17. Return on capital employed 16
Long-term target level: 24%
%
30
24.0
25
20
15 11.9
9.1
10
5
0
2008 2009 YTD March 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.
20 April 2010
19. SKF capital structure 18
The AB SKF Board proposes the Annual General Meeting
to decide on:
• a dividend of SEK 3.50 per share
• a mandate to the Board to repurchase
a maximum of 5% of the company's own shares
20 April 2010
20. Volume trends 19
(based on current assumptions)
Net sales Daily volume trends for: Outlook Q2
2009 Q1 2010 Q2 2010 2010 vs 2009
Europe 51% ++
North America 17% ++
Asia Pacific 23% +++
Latin America 6% +++
Total +++
20 April 2010
21. Sequential volume trend main segments Q2 2010 20
(based on current assumptions)
Net sales 2009
7% Aerospace
14% Cars
7% Energy
5% Railway
22% Industrial distribution
16% Industrial OEM, General+Special
12% Vehicle Service Market
11% Industrial OEM, Heavy + Off-highway
3% Trucks
3% Electrical and two-wheeler
20 April 2010
22. Volume trends, Divisions 21
(based on current assumptions)
Net sales Daily volume trends Outlook Q2
2009 for Q2 2010 2010 vs 2009
Industrial 34% +
Service 35% +++
Automotive 29% +++
Total +++
20 April 2010
23. March 2010: Outlook for the second quarter 2010 22
Sales development compared to second quarter last year
The demand for SKF products and services is expected to be significantly higher
for the Group in total. In Europe and North America it is expected to be higher
and in Asia and Latin America significantly higher. It is expected to be slightly
higher for the Industrial Division and significantly higher both for the Service
Division and Automotive Division.
Sales development compared to the first quarter 2010
The demand is expected to be slightly higher for the SKF Group in total. In
Europe and North America it is expected to be slightly higher and in Asia and
Latin America higher. For both the Industrial Division and Service Division it is
expected to be slightly higher and for the Automotive Division higher.
Manufacturing level
The manufacturing level will be significantly higher year on year and higher
compared to the average of the first quarter 2010.
20 April 2010
24. Guidance for the second quarter 2010 23
• Tax level: around 30%
• Financial net for the second quarter:
Around SEK -150 million
• Exchange rates on operating profit versus 2009
Q2: SEK -200 million
Full year: SEK -500 million
• Additions to PPE: Around SEK 1.5 billion for 2010
Guidance is approximate and based on current assumptions and exchange rates.
20 April 2010
25. Key focus areas ahead 2010 24
• 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
20 April 2010
26. SKF Care 25
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
20 April 2010
27. SKF Group Vision 26
To equip the world
with SKF knowledge
20 April 2010
28. Cautionary statement 27
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”.
20 April 2010
