SKF reduces capacity and cost in light of weakening demand

SKF reduces capacity and cost in light of weakening demand

The automotive segments have continued to rapidly fall and a negative trend is
now also seen for the industrial segments leading to a much lower total demand
for the Group in the fourth quarter. SKF has initiated a number of actions
involving a reduction of the workforce by around 2,500 people globally.

In conjunction with the nine-month report, SKF presented an outlook for the
fourth quarter expecting slightly lower total demand for the Group. The negative
development within the automotive business has accelerated during the fourth
quarter leading to significantly weaker demand than foreseen. Many customers
have reduced production and are taking an extended shutdown period in December
and January.

Demand is now also reducing in the industrial markets. This trend has
accelerated during the quarter. The demand from industrial OEM and aftermarket
is lower than for the same period last year. Segments like railway, aerospace
and energy continue to develop well, however at a lower growth level than
anticipated.

Actions were started already during the third quarter to reduce the Group's
production and adapt to this lower demand level. These actions have been
intensified during the current quarter. Overtime has been significantly reduced,
reductions are being made with temporary workers, the full use of flexibility
arrangements including time-banks is being made and short time working has been
implemented in a number of factories. The number of temporary workers will
reduce by around 1,300. About 2,400 people, primarily in Europe, will be in
short time working at the end of this quarter.

The total estimated volume decrease for the SKF Group for the fourth quarter,
compared to last year, will be around 15%. With the activities taken, plus a
very positive price/mix and positive currency effects, the estimated operating
profit for the Group for the fourth quarter, before restructuring and
impairments, will be around SEK 1,600 million to SEK 1,700 million, based on
current assumptions.

As previously communicated, the SKF Group will take restructuring and impairment
charges in the fourth quarter to adapt the overall capacity to the new market
conditions. This will affect a number of operations primarily in Europe and USA
and will involve an  additional reduction of around 1,200 people globally,
mainly within the Automotive Division. Main countries affected are USA, France,
Italy, Ukraine, Brazil and Argentina.

The total restructuring and impairment cost involved is around SEK 470 million.
During the fourth quarter around SEK 340 million will be taken of which SEK 250
million in the Automotive Division. Around SEK 90 million are write downs and
impairments, not affecting the future cash flow. The benefit of these actions is
around SEK 250 million per year when fully implemented by early 2010.

SKF's financial net will be negatively impacted by around SEK 170 million in the
fourth quarter, as around USD 100 million of USD hedged currency flows for 2009
are defined as economic hedges which are recognized immediately. 

Cautionary statement
This press release 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; "Most important factors influencing the
financial results", "Financial risks" and "Sensitivity analysis", and in the
latest quarterly report under "Risks and uncertainties in the business".

Göteborg, 10 December 2008
Aktiebolaget SKF
(publ.)

Tom Johnstone
President and CEO

AB SKF may be required to disclose the information provided 
herein according to the Securities Markets Act and/or the Financial Instruments
Trading Act. The information was submitted for publication at 08.30 am on 10
December 2008.

For further information, please contact:
PRESS: Ingalill Östman, SKF Group Communication, tel: +46 31-337 3260, mobile: 
+46 706-973260, e-mail: ingalill.ostman@skf.com
IR: Marita Björk, SKF Investor Relations, tel: +46 31-337 1994, mobile: +46
705-181994,          
e-mail: marita.bjork@skf.com

SKF is a leading global supplier in the areas of bearings, seals, mechatronics,
services and lubrication systems. The Group's service offer includes technical
support, maintenance services, engineering consultancy and training. SKF is
represented in more than 130 countries and has 15,000 distributor locations
worldwide. The Group's annual sales 2007 were SEK 58,559 million. The number of
employees was 42,888.