Financial Overview

(in million Kronor)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Rate of change (%)	Factors
Overall
Net Sales	64,575	66,216	(2.5)	-
Operating profit	7,333	9,612	(23.7)	-
Automotive
Net Sales	17,123	18,043	(5.1)	1)
Operating profit	467	1,477	(68.4)	-

Factors
1) Automotive
-Net sales in FY ended Dec. 31, 2012 decreased by 5.1% year-on-year. The decrease in net sales was attributable to organic growth of -3.4% and currency effects of -1.7%.

Contracts

-The Company has signed contracts with Audi for the delivery of SKF components for use on a range of vehicle models. The contracts, estimated at nearly 1 billion SEK, approximately 116 million euros, include the delivery of four different versions of wheel bearing units for the wheel ends and a range of bearings for the new double clutch transmission. The SKF wheel bearing units include an active ABS system and the flexible design provides a cost-effective solution for a range of vehicles, from compacts to SUVs, using Audi's new modular MLB Evo-platform. The transmission and clutch bearings are designed to meet Audi specific double clutch transmission requirements. Deliveries will begin in 2013 from SKF factories in Spain and Italy. (From a press release on November 27, 2012)

-The Company announced the delivery of the new SKF Bus Door Actuator, an actuator system that enables smooth opening and closing of bus doors, to Volvo Buses. Developed in cooperation with Volvo Buses, the SKF Bus Door Actuator requires 80-90% less energy than a pneumatic door system, which reduces the fuel consumption by around 2%. This reduction equates to a savings of 1.9 ton of CO2 /year when compared to a bus using pressurized air to open and close the doors. Delivery of the components will begin in the first quarter of 2013. The Company manufactures the SKF Bus Door Actuator in Gothenburg, Sweden. Volvo Buses introduced the door actuator on the Volvo "7900" Hybrid bus last month at the IAA exhibition in Hannover, Germany. (From a press release on October 8, 2012)

-The Company announced that it has signed a seven-year contract with Volvo Car Corporation for the delivery of rear wheel hub bearing units and front suspension bearing units for the newly launched Volvo "V40" car model. The contract covers the full production volume for the model series. The products are manufactured in Italy and France and the Company has already started delivering the products. (From a press release on June 21, 2012)

-The Company announced it has signed a three-year contract with Scania worth around 150 million SEK (approximately 17 million euros). The contract involves the delivery of SKF bearings for truck wheel end units and transmissions to Scania production facilities in Brazil. Initial delivery of the components will be from Europe, but beginning later in 2012, the Company will manufacture them locally in its factory located in Cajamar, Brazil. (From a press release on February 7, 2012)

-In 2012, the Company started production and deliveries of the SKF split truck hub unit for use in front and rear truck axles to CNHTC - China National Heavy Truck Group Co. Ltd.

-The Company and Mazda signed a contract for the delivery of the Company's bonded piston seals for automatic transmissions, for the current Mazda "CX-5" car model.

-The Company started supplying tapered roller bearings to the Japanese customers Isuzu and Hino for their truck rear axles.

-In 2012, GM awarded the Company new contracts for hub bearing units and transmission bearings for future global vehicle and powertrain platforms.

Acquisitions

-The Company announced that its acquisition of General Bearing Corporation (GBC) has now closed. SKF pays around 125 million USD. General Bearing Corporation is headquartered in West Nyack, New York, the U.S., and has around 1,750 employees, most of which are located in China where the company operates four factories. During 2011, the company generated sales of around 155 million USD. GBC has focused much of its capabilities to serve OEM and End-user customers within the transportation markets: Truck, Trailer, Automotive, and Industrial. It will continue to operate as an independent subsidiary within the SKF Group. (From a press release on August 3, 2012)

Business Partnership

-In 2012, the Company entered a partnership agreement with Protean Electric, a US-based in-wheel electric motor manufacturer. The Company will supply wheel bearing systems with integrated sealing and sensors for Protean's in-wheel motors. Together with Protean, the Company will also investigate additional areas of cooperation in order to exploit new market opportunities.

Recent Development Outside Sweden

<India>
-In 2012, production started at the new factory in Mysore, India and the Company will deliver various types of seals to both automotive and industrial applications.

Awards

-SKF Sealing Solutions Korea Co., Ltd. has received the GM Supplier of the Year awarded for the third consecutive year. (From a press release on May 30, 2012)

R&D Expenditure

(in million Kronor)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
Overall	1,607	1,481	1,184
No. of first filings	421	325	251

R&D Facilities

-The Company holds technical centers as follows:

• Gothenburg, Sweden
• Nieuwegein, The Netherlands
• Shanghai, China
• Bengaluru, India

-The Company announced further investments in Chinese market through establishing a new SKF Campus in Jiading, Shanghai. The investment includes a new automotive factory for wheel bearings for passenger cars, as well as the relocation and expansion of the Global Technical Centre China (GTCC), SKF Solution Factory and SKF College to the new site. The GTCC includes product development, engineering services, metallurgy and chemistry labs, manufacturing process development, testing and product investigation. (From a press release on September 10, 2012)

Product Development

Low friction hub bearing unit
-The Company launched the SKF Low Friction Hub Bearing Unit, an energy efficient wheel end for cars. The product reduces friction by more than 20 percent compared to previous generations of SKF standard hub units, and provides CO2 savings of up to 0.6 g per km. When based on an annual mileage of 14,500 km, the saving is 9 kg CO2 per year. (From a press release on December 3, 2012)

eDrive ball bearing
-The Company launched the new SKF eDrive Ball Bearing. This bearing has been developed based on the SKF Energy Efficient deep groove ball bearing (E2) design. It addresses the specific requirements of high power density electric motors for electric and hybrid vehicles. The SKF eDrive Ball Bearing enable lower levels of friction and heat dissipation, supporting higher electric motor efficiency and operating speeds. These combined together increase mileage for electric and hybrid vehicles. As well as improving the motor efficiency and power density it also contributes to extend the battery lifetime by enabling a reduction in the number of charging cycles. SKF eDrive Ball Bearing can also be integrated with other sensor-bearing units like for example the SKF Rotor Positioning Sensor-Bearing Unit. (From a press release on May 21, 2012)

Fluoroelastomer seal material
-The Company was the first company globally to develop and bring into production a fluoroelastomer seal material with a temperature range of -30 to +200℃, but still resistant to highly aggressive lubricants and also with oil compatibility in driveline applications.

Capital Expenditure

(in million Kronor)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
Overall	1,968	1,839	1,651

Investments Outside Sweden

<China>
-The Company announced that it inaugurated its new bearing and hub unit factory in Jinan, Shandong Province in China. The factory will provide tapered roller bearings and SKF Split Truck Hub Units for the truck market, as well as serve the industrial markets and the vehicle aftermarket. The investment amounts to around 590 million SEK, approximately 69 million euros. The factory is now operational and employs around 500 people. (From a press release on September 13, 2012)

-The Company announced further investments in Chinese market through establishing a new SKF Campus in Jiading, Shanghai. The investment includes a new automotive factory for wheel bearings for passenger cars, as well as the relocation and expansion of the Global Technical Centre China (GTCC), SKF Solution Factory and SKF College to the new site. The GTCC includes product development, engineering services, metallurgy and chemistry labs, manufacturing process development, testing and product investigation. The investment for the land, new factory, and relocation of technical centre is around 700 million SEK, approximately 83 million euros. The new automotive factory will manufacture mainly hub bearing units for the automotive market. The new campus will cover an area of 45,000 square meters and will employ around 900 people in 2015, of which 400 will be part of GTCC. Construction is planned to start in the third quarter of 2012 and to be completed in the fourth quarter of 2013. SKF sales in China started in 1912 and today the Company has 18 factories and over 7,000 employees in China. (From a press release on September 10, 2012)

-In 2012, the Company invested in greater transmission manufacturing capacity in China for producing deep groove ball bearings for new business from transmission manufacturers, such as the new gearbox business with Shanghai Auto Gear Works.

<Mexico>
-In North America demand grew significantly and the Company invested in additional manufacturing capacity in Puebla, Mexico.