Slide 1: Interim Report Third Quarter 2020
INTERIM REPORT THIRD QUARTER 2020
Slide 2: Today's Announcements – Onwards to an Exciting Future
TODAY’S ANNOUNCEMENTS – ONWARDS TO AN EXCITING FUTURE SMT LISTING UPDATE FORMING A NEW BUSINESS AREA • Board decided to proceed with listing of • Crushing and Screening to form a new Sandvik Materials Technology business area – Sandvik Rock Processing • Greater focus and clarity for both Solutions (
Slide 3: Summary Q3
SUMMARY Q3 GRADUAL RECOVERY • Partially improved sentiment in SMS offset by aerospace demand • Continued high uncertainty in O&G affected SMT’s order intake • Mining order intake increased year on year driven by equipment CONTINUED RESILIENCE IN EARNINGS PERFORMANCE • Adjusted operating profit at 17
Slide 4: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT % of group revenue 2019 Mining 37% Engineering 21% Automotive 11% Energy 12% Construction 8% Aerospace 7% % of group Y/Y Demand trend revenue 2019 order intake during Q3 EUROPE 37% -21% NORTH AMERICA 23% -22% ASIA 19% -4% AFRICA/MIDDLE EAST 9% +2% AUSTR
Slide 5: Order Intake and Revenues
ORDER INTAKE REVENUES COVID-19 RELATED DECLINE WITH SEQUENTIAL IMPROVEMENT REPORTED P/V REPORTED P/V 19 909 -11% 20 145 -11% SEK M SEK M 30 000 110 000 30 000 110 000 100 000 100 000 25 000 25 000 90 000 90 000 20 000 20 000 80 000 80 000 15 000 70 000 15 000 70 000 2016 2017 2018 2018 2019 2020 201
Slide 6: EBIT Development
GROUP LEVERAGE: EBIT DEVELOPMENT -19% SEK M -24% • Margin at 17.3% (18.3) • 17.5% (18.1) excluding metal price EBIT ADJUSTED 3,493 effects 6 000 22% • -1.0% negative effect from changed exchange rates 5 000 19% SEK M • Resilient earnings performance in all business areas 4 000 16% EBIT % ADJUSTED •
Slide 7: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2019 44% SANDVIK MINING AND Q3 2019 Q3 2020 CHANGE ROCK TECHNOLOGY SEK M ORDER INTAKE 11,006 10,133 2%* REVENUES 11,244 9,935 -2%* ORDERS INCREASED ORGANICALLY BY 2% ADJ. OP. PROFIT 2,338 2,083 -11% − Equipment orders grew significantly due to robust sentiment and timing % OF REVEN
Slide 8: Sandvik Machining Solutions
SHARE OF REVENUES 2019 41% SANDVIK MACHINING SOLUTIONS SEK M Q3 2019 Q3 2020 CHANGE ORDER INTAKE 9,609 7,298 -19%* GRADUAL RECOVERY REVENUES 9,927 7,325 -21%* − Europe -19%, North America -25% and Asia -15% year on year ADJ. OP. PROFIT 2,173 1,377 -37% − Significant negative impact from aerospace, m
Slide 9: Sandvik Materials Technology
SHARE OF REVENUES 2019 15% SANDVIK MATERIALS SEK M Q3 2019 Q3 2020 CHANGE TECHNOLOGY ORDER INTAKE 3,867 2,477 -34%* REVENUES 3,482 2,886 -13%* ADJ. OP. PROFIT 236 116 -51% OIL & GAS AND AEROSPACE IMPACTS DEMAND % OF REVENUES 6.8% 4.0% − Continued high uncertainty in the oil and gas segment and soft
Slide 10: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 10
Slide 11: Financial Summary Q3
GROWTH Q320, % ORDER REVENUES FINANCIAL SUMMARY Q3 INTAKE ORGANIC: -11 -11 CURRENCY: -8 -8 STRUCTURE: -2 -2 TOTAL -20 -20 SEK M Q3 2019 Q3 2020 CHANGE Q1-Q3 Q1-Q3 CHANGE % 2019 2020 % ORDER INTAKE 24,992 19,909 -11¹ 78,897 64,236 -15¹ REVENUES 25,163 20,145 -11¹ 76,655 63,996 -13¹ ADJUSTED OPERATING
Slide 12: Bridge Analysis
GROUP LEVERAGE: BRIDGE ANALYSIS -19% SANDVIK GROUP PRICE/ VOLUME/ METAL PRICE SEK M Q3 2019 PRODUCTIVITY CURRENCY EFFECTS SMT STRUCTURE Q3 2020 REVENUES 25,163 -2,749 -1,732 -77 -459 20,145 ADJUSTED EBIT 4,617 -516 -525 -78 -4 3,493 ADJUSTED EBIT MARGIN 18,3% -19% 17.3% MARGIN ACCRETION / DILUTION -
Slide 13: Summary Savings Programs Q3
SUMMARY SAVINGS PROGRAMS Q3 SEK M Total Annualized SANDVIK MINING & SANDVIK MACHINING SANDVIK MATERIALS GROUP ROCK TECHNOLOGY SOLUTIONS TECHNOLOGY COMMON Program from Q3 2019 160 110 25 20 315 1,700 Work time reduction 295 110 50 15 470 n/a Other temporary savings 380 205 20 25 630 n/a Total 835 425
Slide 14: Net Financials
NET FINANCIALS SEK M Q3 19 Q3 20 • Interest net down year on year due to lower Interest net -99 -79 debt Pension -35 -32 • Other financial income & cost impacted by Bank charges -7 -9 the capital gain of approximately SEK 600 M Other fin income & costs -5 +591 from the divestment of Gesac Leases IFR
Slide 15: Reported and Underlying Tax Rate
REPORTED AND UNDERLYING TAX RATE Q3 2019 Q3 2020 REPORTED 25.8% 20.1% EXCLUDING IAC 26.0% 23.6% IN LINE WITH 23-25% GUIDANCE FOR 2020 15 SANDVIK: Interim Report on the third quarter 2020 Comments and numbers refer to continuing operations unless otherwise stated.
Slide 16: Net Working Capital Relative NWC
NET WORKING CAPITAL RELATIVE NWC INVENTORY REDUCTIONS ACROSS ALL BUSINESS AREAS SEK M 30 000 40% 45,0% 40,0% 27 500 35% 35,0% 25 000 30% 30,0% 22 500 25% 25,0% 20 000 20% 2016 2017 2018 2019 2020 20,0% 2016 2017 2018 2019 2020 Sandvik Machining Solutions Sandvik Mining & Rock Technology NWC (continu
Slide 17: Free Operating Cash Flow
FREE OPERATING CASH FLOW SEK M 8 000 24 000 SEK M Q3 2019 Q3 2020 22 000 6 000 EBITDA + non-cash 5,533 4,739 20 000 NWC change 1,392 877 18 000 4 000 Capex* -1,085 -749 16 000 FOCF** +5,840 +4,867 14 000 2 000 12 000 *Including investments and disposals in rental, tangible and intangible assets **Ca
Slide 18: Net Debt
NET DEBT SEK M GEARING 45 000 1,2 1,0 35 000 • Net gearing at 0.05 0,8 25 000 0,6 • Net cash position SEK 8.0 B 15 000 0,4 5 000 0,2 -5 000 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 2019 2020 Financial net debt Net pension liability Leases Gearing 18 SANDVIK: Interi
Slide 19: Outcome Q3
OUTCOME Q3 Q3 2020 Underlying currency effect (SEK M): -482 (-250) Total currency effect (SEK M): -525 Metal price effect in quarter (SEK M): -25 (-50) Capex (SEK B): 0.6 Interest net (SEK B): -0.1 Normalized tax rate (%): 23.6 19 SANDVIK: Interim Report on the third quarter 2020 Comments and number
Slide 20: Guidance Q4 20 and FY2020
GUIDANCE Q420 AND FY2020 CAPEX (CASH) Estimated to <SEK 3.5 B for 2020 CURRENCY Given currency rates at end of September 2020 the effect on operating profit from transaction and EFFECTS translation would be SEK -350 M for Q4 2020 METAL PRICE Given currency rates, stock levels and metal prices at the
Slide 21: Strong Margins Through Recovery Phase
STRONG MARGINS THROUGH RECOVERY PHASE GRADUAL RECOVERY AND CONTINUED RESILIENCE IN EARNINGS PERFORMANCE • Stabilization and gradual recovery in several businesses • Strong support from previously announced savings programs and reduced spend STRONG BALANCE SHEET • Good cash flow • Net cash position L
Slide 22: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 23: End-Customer Segments
MINING ENERGY (37%) (12%) GENERAL CONSTRUCTION ENGINEERING (8%) (21%) AUTOMOTIVE AEROSPACE (11%) (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%.) 23 SANDVIK: Interim R
Slide 24: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT -19% 4,617 -525 -1,931 -78 3,493 -4 1,414 ADJ. ORGANIC SAVINGS CURRENCY METAL PRICE STRUCTURE ADJ. EBIT Q3 19 GROWTH EFFECT SMT EBIT Q3 20 ADJUSTED EBIT MARGIN 18.3% 17.3% 24 SANDVIK: Interim Report on the third quarter 2020 Comments and numbers refer to con
Slide 25: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE/ SEK M Q3 2019 PRODUCTIVITY CURRENCY METALS SMT* Q3 2020 MACHINING SOLUTIONS REVENUES 9,927 -2,127 -523 +48 7,325 ADJUSTED EBIT 2,173 -639 -140 -18 1,377 ADJUSTED EBIT MARGIN 21.9% -30% - - 18.8% MINING AND ROCK TECHNOLOGY REVENUES 11,244 -235 -1,066 -8 9,935
Slide 26: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement - - 81% Fin institutions, EIB, NIB - - Swedish MTN 1,650 2 years European MTN 10,861 6 years Bank loans 32 2 years Share swap - - SHORT TERM US Private Placement - - 19% Fin institutions, EIB, NIB - - Swedish MTN 2
Slide 27: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK AVERAGE 4 000 INTEREST RATE: ~5% 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 27 SANDVIK: Interim Report on the third quarter 2020 Comments and numbers refer to continuing operations unless otherwise stated
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