Slide 1: Interim Report First Quarter 2017
INTERIM REPORT FIRST QUARTER 2017 1 SANDVIK: Interim Report on the first quarter 2017
Slide 2: Summary
SUMMARY STRONG MOMENTUM ORDER INTAKE +16% POSITIVE DEVELOPMENT IN ALL BUSINESS AREAS AND REGIONS EARNINGS GROWTH AND MARGIN IMPROVEMENT ALSO EXCLUDING POSITIVE IMPACT FROM FX RECORD-HIGH FIRST QUARTER CASH FLOW 2 SANDVIK: Interim Report on the first quarter 2017 Comments and numbers refer to continu
Slide 3: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2016 % of group Y/Y Q/Q underlying revenue FY16 order intake demand trend EUROPE 40% +5% NORTH AMERICA 20% +41% ASIA 20% +7% AFRICA/MIDDLE EAST 9% +36% SOUTH AMERICA 5% +8% AUSTRALIA 6% +29% 3 SANDVIK: Interi
Slide 4: Order Intake and Revenues
ORDER INTAKE REVENUES STRONG ORDERS AND BOOK-TO-BILL OF 114% GROWTH IN ALL THREE MAJOR REGIONS REPORTED P/V REPORTED P/V 24 916 16% 21 767 5% MSEK MSEK 25 000 100 000 25 000 100 000 95 000 95 000 20 000 20 000 90 000 90 000 15 000 15 000 85 000 85 000 10 000 80 000 10 000 80 000 2013 2014 2015 2016
Slide 5: EBIT Development
EBIT DEVELOPMENT MSEK +45% 4 000 18% 3 500 17% REPORTED • 18% EBIT GROWTH 3 000 2 500 16% 15% 3 507 EXCLUDING FX AND METAL 2 000 14% MSEK PRICE EFFECTS 1 500 13% EBIT % 1 000 12% • SUPPORTED BY 500 0 11% 10% 16.1 HEALTHY REVENUE GROWTH Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 SAVINGS MEASURES 2014 201
Slide 6: Sandvik Machining Solutions
SHARE OF REVENUES 2016 40% SANDVIK MACHINING SOLUTIONS MSEK Q1 2016 Q1 2017 CHANGE IMPROVING MARKET CONDITIONS ORDER INTAKE 8 304 9 450 +10%* − Support from working days of 3% 8 025 REVENUES 8 909 +7%* − Blanket orders received for Powder & blanks, OPERATING PROFIT 1 652 2 071 +25% ~2% on order inta
Slide 7: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2016 38% SANDVIK MINING AND ROCK TECHNOLOGY MSEK Q1 2016 Q1 2017 CHANGE STRONG ORDER INTAKE ORDER INTAKE 7 266 10 247 +30%* − Order growth driven primarily by equipment 7 344 REVENUES 8 378 +6%* replacements 705 OPERATING PROFIT 1 184 +68% • Large order in underground drilling and
Slide 8: Sandvik Materials Technology
SHARE OF REVENUES 2016 16% SANDVIK MATERIALS TECHNOLOGY MSEK Q1 2016 Q1 2017 CHANGE STABILIZING MARKETS ORDER INTAKE 3 488 3 746 +5%* − Stable underlying order development 3 231 REVENUES 3 275 -1%* • Alloy surcharges impacted order intake by +5% OPERATING PROFIT 216 334 +54% − One large umbilicals o
Slide 9: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 9
Slide 10: Financial Summary Q1
GROWTH, % ORDER REVENUES INTAKE FINANCIAL SUMMARY Q1 ORGANIC: CURRENCY: +16 +5 +5 +5 STRUCTURE: 0 0 TOTAL +23 +10 MSEK Q1 2016 Q1 2017 CHANGE % ORDER INTAKE 20 299 24 916 +16¹ REVENUES 19 700 21 767 +5¹ OPERATING PROFIT 2 413 3 507 +45 % OF REVENUES 12.2 16.1 NWC %² 28.0 24.5 CASH FLOW³ 1 899 3 682
Slide 11: Bridge Analysis
BRIDGE ANALYSIS SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q1 2016 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2017 REVENUES 19 700 822 1 049 196 21 767 EBIT 2 413 458 401 235 3 507 EBIT MARGIN 12.2% 56% - - 16.1% MARGIN ACCRETION / DILUTION +1.7% +1.1% +1.1% * Includes metal price effects within Sandvik Ma
Slide 12: Net Working Capital / Relative NWC by BA
NET WORKING CAPITAL RELATIVE NWC BY BA MSEK 27 500 35% 45% 40% 25 000 30% 35% 30% 22 500 25% 25% 20 000 20% 20% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Sandvik Machining Solutions Sandvik Mining & Rock Technology NWC (continuing operations) Sandvik Materials Technology Other Operations NWC
Slide 13: Free Operating Cash Flow
FREE OPERATING CASH FLOW MSEK 4 500 15 000 MSEK Q1 2016 Q1 2017 ∆ EBITDA + non cash 3 377 4 772 +1 395 3 500 12 500 NWC change -736 -226 +510 Capex* -742 -864 -122 2 500 10 000 FOCF** 1 899 3 682 +1 783 *Including investments and disposals in rental, tangible and intangible assets **Cash flow before
Slide 14: Financial Net Debt
FINANCIAL NET DEBT MSEK GEARING 40 000 1,5 • NET DEBT LOWERED BY -21% Y/Y TO 26 BILLION SEK 30 000 1,2 • NET GEARING 0.63 20 000 0,9 – IN LINE WITH TARGET OF <0.8 10 000 0,6 • S&P CREDIT RATING 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0,3 OUTLOOK IMPROVED 2013 2014 2015 2016 2017 Net deb
Slide 15: Outcome and Guidance
OUTCOME AND GUIDANCE Q1 2017 Currency effect (MSEK): +401 (+400) Metal price effect (MSEK): +129 (~0) Q2 2017 Currency effect (MSEK): +400* Metal price effect (MSEK): +0** FULL YEAR 2017 Capex (BSEK): ~3.9 (Q1: 703) Net financial items (BSEK): -1.4 to -1.5 (Q1: -387) Tax rate (%): 26-28 (Q1: 26.9) *
Slide 16: Summary
SUMMARY STRONG MOMENTUM IN ORDERS STABILITY PROFITABILITY SUPPORT FUTURE REVENUE CREATE A STABLE PLATFORM IMPROVE PERFORMANCE GENERATION IMPROVED PERFORMANCE GROWTH GENERATE GROWTH STRENGTHENING OF BALANCE SHEET ─ RECORD-HIGH Q1 CASH FLOW ─ NET GEARING ON LOWEST LEVEL IN RECENT HISTORY
Slide 17: Back-up Slides
BACK-UP SLIDES 17
Slide 18: End-customer Segments
MINING ENERGY (27%) (12%) GENERAL CONSTRUCTION ENGINEERING (12%) (23%) AUTOMOTIVE AEROSPACE (14%) (6%) END-CUSTOMER SEGMENTS (% of group revenues 2016 excl. Mining systems; Other e.g. consumer goods, electronics, chemical and miscellaneous was 6% ) 18 SANDVIK: Interim Report on the first quarter 201
Slide 19: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT +56% 3,507 0 +235 +401 +135 +323 2,413 EBIT Q1 2016 ORGANIC ANNOUNCED CURRENCY METAL PRICE STRUCTURE EBIT Q1 2017 GROWTH SAVINGS EFFECT SMT PROGRAMS MARGIN 12.2% 16.1% 19 SANDVIK: Interim Report on the first quarter 2017 Comments and numbers refer to continu
Slide 20: Bridge Analysis by Business Area
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2016 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2017 MACHINING SOLUTIONS REVENUES 8 025 559 311 14 8 909 EBIT 1 652 227 192 0 2 071 EBIT MARGIN 20.6% +41% - - 23.2% MINING AND ROCK TECHNOLOGY REVENUES 7 344 419 615 - 8 378 EBIT 705 296 183 - 1 184 EBIT MARGIN
Slide 21: Creating a Leaner Company
CREATING A LEANER COMPANY SAVINGS ANNUAL RUN-RATE (MSEK) VS. LAST YEAR AND TOTAL TARGET 2.1 BSEK GROUP TOTAL SANDVIK MACHINING SANDVIK MINING AND SANDVIK MATERIALS ACTIVITIES ANNUAL RUN-RATE SOLUTIONS ROCK TECHNOLOGY TECHNOLOGY VS. LAST YEAR SAVINGS ANNUAL RUN-RATE SUPPLY CHAIN OPTIMIZATON 225 64 41
Slide 22: 19 Production Units Closed End of Q1
19 PRODUCTION UNITS CLOSED END OF Q1 SUPPLY CHAIN OPTIMIZATION PROGRAM FIRST PHASE CONTINUING OPERATIONS - FINALIZED AT END Q4 2015 - RUN-RATE SAVINGS 600 MSEK END OF Q4 (out of 690 MSEK target) SECOND PHASE - 8 UNITS IN SCOPE (7 UNITS CLOSED) - TARGET SAVINGS 320MSEK ACHIEVED at year end 2016 THIRD
Slide 23: Other Operations
SHARE OF REVENUES 2016 6% OTHER OPERATIONS NON-STRATEGIC ASSETS IMPROVED DEMAND, BOOK-TO-BILL 1.2 • Increased demand in particular for Hyperion with some larger blanked orders booked • Solid order intake also for Process System EARNINGS SUPPORTED BY FX • Despite revenue growth of +5%, earnings impro
Slide 24: Other Operations
SHARE OF REVENUES 2016 6% OTHER OPERATIONS NON-STRATEGIC ASSETS ORDER INTAKE REVENUES MSEK 2 000 20% 1 473 1 205 1 500 15% MSEK MSEK 1 000 10% EBIT ROCE 500 5% 126 13.4% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0% MSEK 2015 2016 2017 Revenues EBIT margin reported ROCE 12 month rolling EBIT reported EBIT margin
Slide 25: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement 5,230 4 years Fin institutions, EIB, NIB 1,704 7 years 86% Swedish MTN European MTN 6,230 10,475 4 years 9 years Bank loans 3,035 2 years Share swap - - SHORT TERM US Private Placement 1,667 5 months Fin institutio
Slide 26: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 26 SANDVIK: Interim Report on the first quarter 2017 Comments and numbers refer to continuing operations unless otherwise stated
Slide 27: Guidance
GUIDANCE CAPEX Estimated at about 3.9 BSEK for 2017 CURRENCY Given currency rates at end of March 2017 the effect on operating profit from transaction and EFFECTS translation would be +400 MSEK for Q2 2017 METAL PRICE Given currency rates, stock levels and metal prices at the end of March 2017, it i
Slide 28: Disclaimer Statement
DISCLAIMER STATEMENT “Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially affected by other factors for example, the effect of economic conditions, exchange-rate