SKF Year-End Report 2006

01.02.2007

SKF reports record profits and record sales for the full year and for the fourth quarter of 2006. The Board proposes a 12.5% increase in the dividend to SEK 4.50 per share and an extra distribution of SEK 4,553 million, corresponding to SEK 10 per share, adding up to a total distribution to shareholders of SEK 6,603 millions.

The outlook is for continued volume growth for the first quarter of 2007. SKF announces new long-term targets.

The fourth quarter included restructuring expenses, impairments and write-offs of SEK 400 million. The quarter also include an income from the jointly controlled company Oy Ovako Ab of SEK 480 million, which includes the result from the operation and the gain on the sale of Oy Ovako Ab's subsidiaries. The full year figure was SEK 725 million.

The increase of 9.9% in net sales for the quarter, in SEK, was attributable to: volume 8.8%, structure 4.6%, price/mix 2.3% and currency effects -5.8%. For the full year, the increase of 7.7%, in SEK, was attributable to: volume 5.3%, structure 0.1%, price/mix 2.1% and currency effects 0.2%.

Sales development in the fourth quarter (excl. structural effects)

Sales in the fourth quarter, calculated in local currencies and compared to sales in the same quarter last year, were significantly higher. Sales were significantly higher in Europe, Asia and Latin America and slightly higher in North America. Sales for the Industrial Division and the Service Division were significantly higher and sales for the Automotive Division were higher.

The manufacturing level for the fourth quarter of 2006 was slightly higher compared to the third quarter 2006 and higher compared to the fourth quarter last year.

Sales development for the full year (excl. structural effects)

Sales for the full year, calculated in local currencies and compared to last year, were higher. Sales were higher in Europe with Germany, Spain, Italy, Sweden and Central and East Europe showing the best performance. Sales in North America were relatively unchanged. Sales in Asia were significantly higher, in particular China and India showed a strong development. Sales in Latin America were higher with Brazil being strong. Sales were significantly higher for the Industrial Division and the Service Division and slightly higher for the Automotive Division.

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.

Source: SKF Group

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