Slide 1: Interim Report First Quarter 2016
INTERIM REPORT FIRST QUARTER 2016
Slide 2: Summary
SUMMARY CHALLENGING MARKETS LOW VOLUMES IMPACT PROFITABILITY SAVINGS MEASURES SUPPORT EARNINGS AND LEVERAGE ACTIONS TO IMPROVE STRUCTURE 2 SANDVIK: Interim Report on the first quarter 2016 Comments and numbers refer to continuing operations unless otherwise stated
Slide 3: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2015 % of group Y/Y Q/Q underlying revenue 2015 order intake demand trend EUROPE 39% +7% NORTH AMERICA 21% -26% ASIA 20% -8% AFRICA/MIDDLE EAST 10% -16% SOUTH AMERICA 6% -4% AUSTRALIA 4% +5% 3 SANDVIK: Interi
Slide 4: Order Intake Revenues
ORDER INTAKE REVENUES SEQUENTIAL IMPROVEMENT POSITIVE BOOK-TO-BILL IN CHALLENGING MARKET REPORTED P/V REPORTED P/V 20 299 -7% 19 700 -7% MSEK MSEK 25 000 90 000 25 000 90 000 20 000 85 000 20 000 85 000 15 000 80 000 15 000 80 000 10 000 75 000 10 000 75 000 2013 2014 2015 2016 2013 2014 2015 2016 O
Slide 5: Adjusted EBIT Development
ADJUSTED EBIT DEVELOPMENT MSEK 3500 -19% 16% 3000 14% REPORTED 2500 12% 10% 2 413 • ORGANIC DECLINE 2000 MSEK • CURRENCY HEADWIND 8% 1500 6% EBIT % • SAVINGS 1000 500 4% 2% 12.2% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 EBIT adjusted EBIT adjusted % *Adjusted for nonrecurring
Slide 6: Sandvik Machining Solutions
SHARE OF GROUP TOTAL INVOICING 2015 38% SANDVIK MACHINING SOLUTIONS MSEK Q1 2015 Q1 2016 CHANGE CHALLENGING MARKETS ORDER INTAKE 8 596 8 050 -4%* − EU overall stable; east outperformed west REVENUES 8 438 7 803 -5%* − NA challenging across most segments ADJ. OP. PROFIT 1 809 1 587 -12% − Asia weak,
Slide 7: Sandvik Mining
SHARE OF GROUP’S TOTAL INVOICING 2015 26% SANDVIK MINING Q1 2015 Q1 2016 CHANGE TOUGH MARKETS MSEK 5 610 − Equipment: weak overall demand ORDER INTAKE 4 734 -8%* REVENUES 5 489 4 952 -1%* − Aftermarket: slight overall decrease and some ADJ. OP. PROFIT 841 685 -19% price pressure for consumables % OF
Slide 8: Sandvik Materials Technology, Construction and Venture
SANDVIK MATERIALS SANDVIK CONSTRUCTION SANDVIK VENTURE TECHNOLOGY − Large orders of ~600MSEK in − Challenging market conditions, − Order intake -13% y/y; weak capex related O&G products order intake -9% y/y demand particularly in oil and gas − Positive book-to-bill of 1.1 in − Positive book-to-bill
Slide 9: Tomas Eliasson CFO
TOMAS ELIASSON CFO SANDVIK P|
Slide 10: Financial Summary
TOTAL GROWTH: -10% ORGANIC: -7 CURRENCY: -4 FINANCIAL SUMMARY STRUCTURE: 0 MSEK Q1 2015 Q1 2016 CHANGE % FY2015 ORDER INTAKE 22 574 20 299 -7* 83 597 REVENUES 21 960 19 700 -7* 85 845 OPERATING PROFIT 1 199 2 413 +101 7 271 % OF REVENUES 5.5 12.2 8.5 ADJ. OPERATING PROFIT 2 977 2 413 -19 10 593 % OF
Slide 11: Profitability Development
PROFITABILITY DEVELOPMENT GROUP LEVERAGE: 2,977 -368 -10% +253 -375 +26 -100 2,413 0 EBIT Q115 ORGANIC ANNOUNCED CURRENCY OTHER METAL PRICE STRUCTURE EBIT Q116 GROWTH SAVINGS EFFECT SMT ADJUSTED PROGRAMS MARGIN 13.6% 12.2% 11 SANDVIK: Interim Report on the first quarter 2016 Comments and numbers ref
Slide 12: Bridge Analysis
BRIDGE ANALYSIS SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q1 2015 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2016 REVENUES 21 960 -1 179 -833 -248 19 700 EBIT 1 199 -115 -375 1 704 2 413 EBIT MARGIN 5.5% -10% - - 12.2% * Includes metal price effects 12 SANDVIK: Interim Report on the first quarter 2016 Com
Slide 13: Net Working Capital BA Contribution
NET WORKING CAPITAL BA CONTRIBUTION MSEK 29 000 50% 50% 27 000 45% 45% 25 000 40% 40% 23 000 35% 35% 21 000 30% 30% 19 000 25% TARGET 25% 17 000 20% 20% 15 000 15% 15% 2013 2014 2015 2016 2013 2014 2015 2016 Net working capital Sandvik Machining Solutions Sandvik Mining Net working capital / revenue
Slide 14: Cash Flow
CASH FLOW MSEK MSEK 4 500 16 000 4 000 14 000 3 500 12 000 • SEASONAL BUILD-UP OF NWC 3 000 10 000 2 500 2 000 8 000 • INVESTMENTS 0.7 BSEK, 1 500 6 000 LOW IN LINE WITH NORMAL 1 000 4 000 SEASONALITY 500 2 000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 Operating cash flow Operat
Slide 15: Financial Net Debt
FINANCIAL NET DEBT MSEK 40 000 3,0 35 000 2,5 30 000 2,0 • NET GEARING 0.69 25 000 WELL BELOW TARGET OF <0.8 20 000 1,5 • ND/EBITDA ~2 15 000 1,0 10 000 LOWEST SINCE Q1 2014 0,5 5 000 0 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 Net debt excl. pension Net gearing ND/EBITDA 15 SAN
Slide 16: Outcome and Guidance
OUTCOME AND GUIDANCE Q1 2016 Currency effect (MSEK): -375 (-300) Metal price effect (MSEK): -106 (-130) Q2 2016 Currency effect (MSEK): -500 Metal price effect (MSEK): -50 FULL YEAR 2016 - UNCHANGED Capex (BSEK): <4.1 Net financial items (BSEK): 1.7-1.9 Tax rate (%): 26-28 16 SANDVIK: Interim Report
Slide 17: Conclusions
CONCLUSIONS WEAK END-MARKETS SOLID PROFITABILITY ACTIONS TO CHANGE STRUCTURE 17
Slide 18: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 19: End-Customer Segments
AUTOMOTIVE MINING (12%) (28%) GENERAL CONSTRUCTION ENGINEERING (11%) (24%) ENERGY AEROSPACE (13%) (6%) END-CUSTOMER SEGMENTS (% OF GROUP REVENUES 2015 EXCL. MINING SYSTEMS) 19 SANDVIK: Interim Report on the first quarter 2016 Comments and numbers refer to continuing operations unless otherwise state
Slide 20: Change in Currency Model - As of Q1
CHANGE IN CURRENCY MODEL - AS OF Q1 REPORTING GUIDANCE BEFORE 2016 AS OF Q1 2016 UNCHANGED 1 TRANSACTION REPORTED AS UNCHANGED incl. realized hedges CURRENCY REPORTED AS TRANSACTION 2 & TRANSLATION TRANSLATION EFFECT CURRENCY TOTAL CURRENCY EFFECT 3 EFFECTS HEDGES realized and unrealized, bridge ite
Slide 21: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2015 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2016 MACHINING SOLUTIONS REVENUES 8 438 -437 -198 - 7 803 EBIT 1 129 -63 -159 680 1 587 EBIT MARGIN 13.4% -14% - - 20.3% MINING REVENUES 5 489 -56 -481 - 4 952 EBIT 215 55 -211 626 685 EBIT MARGIN 3.9% N/A - - 1
Slide 22: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2015 PRODUCTIVITY CURRENCY ONE-OFFS Q1 2016 CONSTRUCTION REVENUES 2 144 -105 -94 - 1 945 EBIT -95 19 -1 160 83 EBIT MARGIN -4.4% N/A - - 4.3% VENTURE REVENUES 2 172 -380 -39 10 1 763 EBIT 192 -96 -38 37 95 EBIT MARGIN 8.8% -25% - - 5.4% 22 SANDVIK: In
Slide 23: Creating a Leaner Company
CREATING A LEANER COMPANY SAVINGS ANNUAL RUN-RATE (MSEK) VS. LAST YEAR AND TOTAL TARGET TOTAL 2.1 BSEK SANDVIK SANDVIK SANDVIK GROUP ANNUAL SANDVIK SANDVIK MACHINING MATERIALS CONSTRUCTION ACTIVITIES RUN-RATE VS. MINING VENTURE SOLUTIONS TECHNOLOGY LAST YEAR SAVINGS ANNUAL RUN-RATE SUPPLY CHAIN OPTI
Slide 24: Restructuring Our Footprint
RESTRUCTURING OUR FOOTPRINT SUPPLY CHAIN OPTIMIZATION PROGRAM FIRST PHASE CONTINUING OPERATIONS - FINALIZED AT END Q4 2015 - RUN-RATE SAVINGS 600 MSEK END OF Q4 150 FIRST PHASE -10 (out of 690 MSEK target) SECOND PHASE SECOND PHASE -8 - 8 UNITS IN SCOPE, (1 UNIT CLOSED, 3 PLANNED FOR CLOSURE IN Q2)
Slide 25: Sandvik Materials Technology
SANDVIK MATERIALS TECHNOLOGY CHALLENGING MARKET CONDITIONS • Persistently weak demand in oil and gas • Further increased competition in standardized tubular products LARGE ORDERS ~600MSEK • Positive book-to-bill EBIT 216 MSEK, 6.7% • Excluding metal price effect 10.0%, on par with last year • Metal
Slide 26: Sandvik Materials Technology
SANDVIK MATERIALS TECHNOLOGY ORDER INTAKE REVENUES MSEK 3,488 3,231 4 000 40% 3 000 30% MSEK MSEK 2 000 20% EBIT ROCE 1 000 10% 216 1.0% 0 2013 2014 2015 2016 0% MSEK -1 000 -10% Revenues Excluding metal price effects 322 MSEK, 10.0 % -2 000 EBIT margin -20% EBIT margin, excl metal price effect and
Slide 27: Sandvik Construction
SANDVIK CONSTRUCTION CHALLENGING MARKET CONDITIONS • Positive book-to-bill 1.1 • Aftermarket stable MARGIN IMPROVEMENT AND ALL-TIME LOW ABSOLUTE NWC • Adjusted EBIT 83 MSEK, 4.3% • Less under-absorption and savings support margin • All-time low absolute NWC and low NWC in relation to revenues 22.9%
Slide 28: Sandvik Construction
SANDVIK CONSTRUCTION ORDER INTAKE REVENUES MSEK 2,087 1,945 2 500 25% 2 000 20% MSEK MSEK 1 500 15% 1 000 10% 500 5% EBIT ROCE 0 0% 83 3.8% -500 2013 2014 2015 2016 -5% MSEK -1 000 -10% -1 500 -15% Revenues EBIT margin ROCE 12 months 28 SANDVIK: Interim Report on the first quarter 2016 Comments and
Slide 29: Sandvik Venture
SANDVIK VENTURE WEAK OVERALL DEMAND • Persistently weak demand in oil and gas • Positive book-to-bill supported by good order intake in Process Systems for industrial processing UNDERABSORPTION IMPACT EARNINGS • Adjusted EBIT 95 MSEK, 5.4% • Price pressure in Wolfram and Drilling and Completions • F
Slide 30: Sandvik Venture
SANDVIK VENTURE ORDER INTAKE REVENUES MSEK 1,936 1,763 2 500 2 000 25% 20% MSEK MSEK 1 500 15% 1 000 10% EBIT ROCE 95 3.2% 500 0 5% 0% MSEK 2013 2014 2015 2016 -500 -5% Revenues EBIT margin ROCE 12 months 30 SANDVIK: Interim Report on the first quarter 2016 Comments and numbers refer to continuing o
Slide 31: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement 6,424 4 years Fin institutions, EIB, NIB 1,976 7 years 85% Swedish MTN European MTN 8,030 10,117 4 years 10 years Bank loans 2,836 3 years Share swap - - SHORT TERM Commercial paper - - Fin institutions, EIB, NIB 3
Slide 32: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK 8 000 Loan Cash position 6 000 4 000 2 000 0 -2 000 -4 000 -6 000 32 SANDVIK: Interim Report on the first quarter 2016 Comments and numbers refer to continuing operations unless otherwise stated
Slide 33: Guidance
GUIDANCE CAPEX Estimated at below 4.1 BSEK for 2016 CURRENCY Given currency rates at end of March 2016 the effect on EBIT from transaction and translation EFFECTS would be -500 MSEK for Q2 2016 METAL PRICE Given currency rates, stock levels and metal prices at the end of March 2016, it is estimated
Slide 34: 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