Aktiebolaget SKF Business Report FY2008

Business Highlights

Financial Overview (in million Kronor)
  FY2008 FY2007 Rate of change(%) Factors
Net Sales 63,361 58,559 8.2 -
Operating profit 7,710 7,539 2.3


Net Sales 18,727 19,449 (3.7) -The decrease in net sales was attributable to organic growth of -3.8%, structure of -0.5% and currency effects of 0.6%.

-Sales were lower to the car and light truck industry in Europe and significantly lower in North America.

-Sales to the heavy truck industry in Europe were relatively unchanged and significantly lower in North America.

-Sales to the vehicle service market were slightly lower in Europe, relatively unchanged in North America and significantly higher in Asia.
Operating profit 627 1,135 (44.8)

-In South America, a new order of wheel-bearing units was received from Fiat Brazil, for both current and future models of Fiat Palio and Fiat Uno.

-Tesla Motors chose the Company to deliver bearings for the Tesla Roadster sports car. This is an all-electric sports car with zero emissions, powered by recyclable battery cells.

-A new contract with a trailer axle manufacturer, Guangdong Fuwa Engineering Manufacturing Co. Ltd., China to supply the sealing part for truck axles.

-In Mexico, the Company has supplied complex bonded piston seals fo CVT transmissions to its customer Jatco Inc.

-The Company supplies a new magnetic sensor bearing to Valeo. This new magnetic sensor bearing is part of Valeo's StARS (Starter Alternator Reversible System) micro-hybrid system that helps reduce fuel consumption and CO2 emission in city driving.

-In Sept. 2008, the Company acquired GLO S.r.L. operation in Italy from Metaldyne Corporation. GLO is a wholly-owned subsidiary of Metaldyne Corporation. GLO develops and produces constant velocity joints for the aftermarket and OEM automotive industry. (From a press release on Sep 2, 2008)

Workforce Reduction
-Actions were taken in the third and fourth quarters of 2008 to adapt production levels to the fall in demand that began in the third quarter, initially in the automotive segment. Around 2,500 employees, of which 1,300 were temporary, will have to leave mainly in the Automotive Division. The main countries affected are the USA, France, Italy, Ukraine, Brazil and Argentina.

Transfer of Automotive Seals Production
-In Oct. 2008, the Company announced plans to transfer the manufacturing of automotive seals products from its facility in Elgin, Illinois, United States to other seals factories in Mexico and the US. The consolidation process is expected to take place over a period of 12 months. (From a press release on Oct 27, 2008)


R&D Expenditure (in million Kronor)
  FY2008 FY2007 FY2006
R&D Expenditure 1,175 900 875
Patents (No. of first filings) 179 186 176

Product Development
Rotor Positioning Bearing
-In partnership with the French customer Valeo, a new rotor-positioning bearing solution for alternators was developed to fit the Valeo StARS micro hybrid system, for which serial production started in September 2008. The system features a stop-start function that cuts off the engine at red lights or in traffic jams and restarts again, quickly and silently, when the driver engages a gear or releases the brake. The first customer applications are for the Citroen C2 and C3 passenger cars and the Smart micro hybrid drive models.

Bearings for Wheel Ends and the Electrical Motor for EV
-The Company will provide Tesla Motors Inc. with bearings for wheel ends and the electrical motor for the Roadster Sport, a high-performance sports car based on an all-electric, zero-emissions vehicle. The Company and Tesla Motors develop technologies that provide alternatives to internal combustion engines and thereby reduce dependence on fossil fuels.

Investment Activities

Capital Expenditure (in million Kronor)
  FY2008 FY2007
Total 2,531 1,907

Overseas Investment
-In Sept. 2008, the Company inaugurated its wholly-owned automotive components facility, SKF (Shanghai) Automotive Technologies Co. Ltd., in Anting Auto Town, Shanghai. Approx. 25 million USD has been invested in two channels producing hub bearing units for cars. An automotive technology centre will also be built in this facility. (From a press release on Sep 9, 2008)

-In 2008, the technology centre in Bangalore, India, was expanded.

-In 2007, the Company announced the building of a new factory in Haridwar, India. The factory will be built in 2009 and go into operation in the first quarter of 2010.