Slide 1: Interim Report Fourth Quarter 2019
INTERIM REPORT FOURTH QUARTER 2019 1
Slide 2: 2019 – Record Earnings and Cash Flow
2019 – RECORD EARNINGS AND CASH FLOW STRONG PERFORMANCE RECORD-HIGH CASH FLOW AND HIGH PACE IN DESPITE LACK OF GROWTH ESSENTIALLY DEBT-FREE STRUCTURAL DECISIONS 20% 18 000 1 10% 0% 16 000 0.7 DECISION TO SEPARATE SMT -10% 2015 2016 2017 2018 2019 14 000 0.4 Org. dev revenues Org. dev orders VAREL O&
Slide 3: Summary Q4
SUMMARY Q4 ROBUST DEMAND IN MINING AND ENERGY BUT WEAK IN SHORT-CYCLE BUSINESS • ORDER INTAKE -6% • MAJOR ORDERS RECEIVED IN SMT • SMRT ORDERS ON HIGH LEVEL; STABILIZING GROWTH • SHARP DECLINE IN SMS AND PARTS OF SMT ADJ. EARNINGS AT RECORD LEVEL OF 5.1 BSEK • SUPPORTED BY SAVINGS, FX AND METAL PRIC
Slide 4: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2019 % of group Y/Y Sequential underlying revenue FY19 order intake demand trend (Q3/Q4) EUROPE 37% -19% NORTH AMERICA 23% +0% ASIA 19% +2% AFRICA/MIDDLE EAST 9% +3% AUSTRALIA 7% +12% SOUTH AMERICA 5% -2% 4 S
Slide 5: Order Intake and Revenues
ORDER INTAKE REVENUES WEAKNESS IN SHORT-CYCLE BUSINESSES RECORD-HIGH FOR SMRT REPORTED P/V REPORTED P/V 25 179 -6% 26 583 -2% MSEK MSEK 30 000 110 000 30 000 110 000 25 000 100 000 25 000 100 000 20 000 90 000 20 000 90 000 15 000 80 000 15 000 80 000 2015 2016 2017 2018 2019 2015 2016 2017 2018 201
Slide 6: EBIT Development
EBIT DEVELOPMENT MSEK +9% 6 000 22% EBIT ADJUSTED • -2% DECLINE 5 066 5 000 19% EXCLUDING FX, STRUCTURE AND METALS 4 000 16% MSEK 3 000 13% EBIT % ADJUSTED • SUPPORTED BY 2 000 10% 19.1 SAVINGS OF ~250 MSEK Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 EBIT* EB
Slide 7: Sandvik Machining Solutions
SHARE OF REVENUES 2019 41% SANDVIK MACHINING Q4 2018 Q4 2019 CHANGE SOLUTIONS MSEK ORDER INTAKE 10 357 9 820 -10%* DEMAND DECLINED ACROSS REGIONS AND REVENUES 10 406 9 844 -10%* SEGMENTS ADJ. OP. PROFIT 2 480 2 000 -19% % OF REVENUES 23.8% 20.3% − Mostly notable in EU and the automotive segment *At
Slide 8: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2019 44% SANDVIK MINING AND Q4 2018 Q4 2019 CHANGE ROCK TECHNOLOGY MSEK ORDER INTAKE 10 988 10 685 -7%* REVENUES 11 254 12 197 +3%* ORDERS ON HIGH LEVEL, STABILIZING GROWTH ADJ. OP. PROFIT 2 260 2 630 +16% − Growth -3% excluding one major order last year 20.1% 21.6% % OF REVENUES −
Slide 9: Sandvik Materials Technology
SHARE OF REVENUES 2019 15% SANDVIK MATERIALS MSEK Q4 2018 Q4 2019 CHANGE TECHNOLOGY ORDER INTAKE 3 817 4 144 +6%* REVENUES 3 842 4 013 +1%* STRONG ORDERS IN ENERGY ADJ. OP. PROFIT 212 659 N/A − Large energy orders of 1.1 BSEK (LY: 250 MSEK) % OF REVENUES 5.5% 16.4% 7.7% − Order growth -16% excl. lar
Slide 10: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 10
Slide 11: Financial Summary Q4 and FY19
GROWTH Q419, % ORDER REVENUES INTAKE FINANCIAL SUMMARY Q4 AND FY19 ORGANIC: CURRENCY: STRUCTURE: -6 +4 +1 -2 +4 +0 TOTAL -2 +2 MSEK Q4 2018 Q4 2019 CHANGE % Q1-4 2018 Q1-4 2019 CHANGE % ORDER INTAKE 25 627 25 179 -6¹ 102 440 104 075 -2¹ REVENUES 25 968 26 583 -2¹ 100 072 103 238 +0¹ ADJUSTED OPERATI
Slide 12: Bridge Analysis
GROUP UNDERLYING LEVERAGE: BRIDGE ANALYSIS -11% SANDVIK GROUP PRICE/ VOLUME/ METAL PRICE MSEK Q4 2018 PRODUCTIVITY CURRENCY EFFECTS SMT STRUCTURE Q4 2019 REVENUES 25 968 -770 +1 105 +155 +125 26 583 ADJUSTED EBIT 4 665 -87 +297 +259 -68 5 066 ADJUSTED EBIT MARGIN 18.0% -11% 19.1% MARGIN ACCRETION /
Slide 13: Reported and Underlying Tax Rate
REPORTED AND UNDERLYING TAX RATE Q4 2019 Q1-4 2019 REPORTED 118.5% 28.2% EXCL. IAC (VAREL & PROVISIONS) 17.5% 23.5% NORMALIZED 23.5% 25.1% IN LINE WITH 25-27% GUIDANCE FOR 2019 13 SANDVIK: Interim Report on the fourth quarter 2019 Comments and numbers refer to continuing operations unless otherwise
Slide 14: Net Financials
NET FINANCIALS MSEK Q4 18 Q4 19 FY 19 Underlying interest net -133 -120 -532 • FY 2019 IMPACTED BY One-off, loan redemption -202 • ONE-OFF COST FOR REDEMPTION Pension -32 -56 -160 OF 5.1 BSEK IN LONG-TERM DEBT Bank charges -13 -11 -44 Other fin income & costs +13 -18 -25 • INTEREST NET REDUCTION BY
Slide 15: Net Working Capital, Relative NWC by BA
NET WORKING CAPITAL RELATIVE NWC BY BA INVENTORY REDUCTION ACROSS BA:S MSEK 30 000 40% 45% 40% 27 500 35% 35% 25 000 30% 30% 22 500 25% 25% 20 000 20% 20% 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Sandvik Machining Solutions Sandvik Mining & Rock Technology NWC (continuing operatio
Slide 16: Free Operating Cash Flow
FREE OPERATING CASH FLOW MSEK 8 000 20 000 18 000 MSEK Q4 2018 Q4 2019 6 000 EBITDA + non-cash 5 432 5 899 16 000 NWC change +2 273 +2 093 4 000 Capex* -1 442 -1 381 14 000 FOCF** 6 263 6 611 2 000 12 000 *Including investments and disposals in rental, tangible and intangible assets 0 10 000 **Cash
Slide 17: Net Debt
NET DEBT MSEK GEARING 50 000 1.4 1.2 40 000 1.0 • NET GEARING AT 0.18 30 000 0.8 20 000 0.6 • LOW FINANCIAL NET DEBT 0.4 OF ~0.5 BSEK 10 000 0.2 0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 Financial net debt Net pension liability Leases Gearing 17 SANDV
Slide 18: Dividend Proposal
DIVIDEND PROPOSAL 18% ANNUAL INCREASE SINCE 2016, 6% INCREASE VS. LY 12 11.12 10.39 Payout ratio % 10 8.04 2016 2017 2018 2019 8 50 44 41 40 6 5.48 4 2.75 3.5 4.25 4.5* 2 0 2016 2017 2018 2019 Divi dend EPS ad justed *Proposed dividend SANDVIK: Interim Report on the fourth quarter 2019 Comments and
Slide 19: Outcome Q4 and 2019
OUTCOME Q4 AND 2019 Q4 2019 Underlying currency effect (MSEK): +391 (~400) Total currency effect (MSEK): +297 Metal price effect in quarter (MSEK): +174 (~300) FULL YEAR 2019 Capex (BSEK): 4.1 (<4) FY18: 3.9 Net financial items (BSEK): 1.2 (~1.2) FY18: 0.8 Normalized tax rate (%): 25.1 (25% - 27%) F
Slide 20: Guidance 1Q20 and FY2020
GUIDANCE 1Q20 AND FY2020 CAPEX (CASH) Estimated to about 4 BSEK for 2020 CURRENCY Given currency rates at end of December 2019 the effect on operating profit from transaction and EFFECTS translation would be +150 MSEK for Q1 2020 METAL PRICE Given currency rates, stock levels and metal prices at the
Slide 21: Well Positioned for the Future
WELL POSITIONED FOR THE FUTURE MARKET LEADER IN ITS NICHES REMAIN RELEVANT THROUGH CHANGE ACTIVE DECENTRALIZED BUSINESS MODEL PORTFOLIO MANAGEMENT MORE AGILE INCREASED RESILIENCE RESILIENCE STRONG FINANCIAL POSITION ADD TO AN ALREADY STRONG PLATFORM
Slide 22: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 23: Savings Measures Ahead of Plan
SAVINGS MEASURES AHEAD OF PLAN 1 BSEK IN ANNUALIZED RUN-RATE SANDVIK MINING & SANDVIK MACHINING SANDVIK MATERIALS GROUP ROCK TECHNOLOGY SOLUTIONS TECHNOLOGY COMMON ANNUALIZED RUN-RATE SAVINGS END OF 2019 ~1 000 MSEK, OUT OF 1 700 MSEK IN SCOPE 600 320 40 40 ACTUAL ACHIEVED IN 2019 ~400 260 80 10 10
Slide 24: End-Customer Segments
MINING ENERGY (37%) (10%) GENERAL CONSTRUCTION ENGINEERING (8%) (22%) AUTOMOTIVE AEROSPACE (12%) (7%) END-CUSTOMER SEGMENTS (% of group revenues 2019 excl. Mining systems and Other Operations; Other e.g. consumer goods, electronics, chemical and miscellaneous accounted for 4%.) 24 SANDVIK: Interim R
Slide 25: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT -11% -68 5,066 +259 4,665 +297 -337 +250 EBIT Q4 18 ORGANIC SAVINGS CURRENCY METAL PRICE STRUCTURE EBIT Q4 19 GROWTH EFFECT SMT ADJUSTED EBIT MARGIN 18.0% 19.1% 25 SANDVIK: Interim Report on the fourth quarter 2019 Comments and numbers refer to continuing op
Slide 26: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q4 2018 PRODUCTIVITY CURRENCY METALS SMT* Q4 2019 MACHINING SOLUTIONS REVENUES 10 406 -1 083 +448 +73 9 844 ADJUSTED EBIT 2 480 -566 +105 -19 2 000 ADJUSTED EBIT MARGIN 23.8% -52% - - 20.3% MINING AND ROCK TECHNOLOGY REVENUES 11 254 375 +510 +58 12 197 A
Slide 27: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement - - Fin institutions, EIB, NIB - - 87% Swedish MTN European MTN 3 648 11 469 2 years 7 years Bank loans 89 1 year Share swap - - SHORT TERM US Private Placement - - Fin institutions, EIB, NIB - - 13% Swedish MTN Ba
Slide 28: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK AVERAGE INTEREST RATE: ~4% 28 SANDVIK: Interim Report on the fourth quarter 2019 Comments and numbers refer to continuing operations unless otherwise stated.
Slide 29: 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