Slide 1: Good progress towards a more efficient Sandvik
Sandvik Interim report on fourth quarter 2013 Good progress towards a more efficient Sandvik 1 Sandvik fourth quarter 2013
Slide 2: Full-year highlights
Sandvik Interim report on fourth quarter 2013 Full-year highlights • Strategy execution • Stabilized demand as the year • Supply Chain optimization progressed initiative launched • Continued strong progress at • Financial performance Sandvik Materials Technology • Invoiced sales 87,328 MSEK, -7% • S
Slide 3: Quarterly highlights
Sandvik Interim report on fourth quarter 2013 Quarterly highlights • Steps towards a more efficient Sandvik • Stable demand • Closure of three units initiated • Agreement reached to acquire Varel International Energy Inc. • Adjusted EBIT 2,390 MSEK, 11.0% • Nonrecurring charges -1,800 MSEK • Currenc
Slide 4: Invoicing by market
Sandvik Interim report on fourth quarter 2013 Invoicing by market 39% +2% 17% 20% -2% -5% 9% 8% 7% -5% -22% -39% Share of Group total Invoicing (p/v) Q4 2013, change compared with Q4 2012 4 Sandvik fourth quarter 2013
Slide 5: Customer segments
Sandvik Interim report on fourth quarter 2013 Consumer related Other Aerospace Mining Customer Energy segments Invoicing growth vs. Q4 2012 > 10% Automotive 0 to 10% -10 to 0% < -10% Construction Demand trend compared to preceding quarter Pie chart representing share of invoicing 2013 Engineering 5
Slide 6: Order intake
Sandvik 30 000 150% Interim report on fourth quarter 2013 25 000 125% Order intake 20 000 100% Order intake 20,794 MSEK 15 000 75% • Major mining systems order in excess of 650 MSEK 10 000 50% Change p/v +1% 5 000 25% 0 0% -5 000 -25% -10 000 -50% Order intake Organic order intake change y-o-y 6 San
Slide 7: Invoicing
Sandvik Interim report on fourth quarter 2013 30 000 120% 25 000 100% Invoicing 20 000 80% Invoicing 21,770 MSEK 15 000 60% Change p/v -8% 10 000 40% 5 000 20% 0 0% -5 000 -20% -10 000 Invoicing Organic invoicing change y-o-y -40% 7 Sandvik fourth quarter 2013
Slide 8: EBIT and ROCE
Sandvik Interim report on fourth quarter 2013 6 000 40% 5 000 30% EBIT and ROCE 4 000 Q4 2013 3 000 20% Reported 2 000 • EBIT 590 MSEK 10% 1 000 • EBIT margin 2.7% • ROCE reported rolling 12 months 12.6% 0 0% 20002001200220032004200520062007200820092010201120122013 Adjusted for nonrecurring charges
Slide 9: Cash flow
Sandvik Operating cash flow Interim report on fourth quarter 2013 MSEK 5 000 Capex / Depreciation 350% 4 500 Cash flow 4 000 300% Cash flow from operating 3 500 250% activities +2,857 MSEK 3 000 200% 2 500 150% 2 000 1 500 100% 1 000 50% 500 *2013 Q3 Adjusted due to tax payment of about 5,800 MSEK r
Slide 10: Net Working Capital
Sandvik Interim report on fourth quarter 2013 Net Working Capital Net working capital MSEK Net working capital / Invoiced sales 35 000 45% 40% 30 000 35% 25 000 30% 20 000 25% Target 15 000 20% 15% 10 000 10% 5 000 5% 0 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10 Sandvik fourth quar
Slide 11: Bridge analysis
Sandvik Interim report on fourth quarter 2013 Bridge analysis Price/ Structure, MSEK Q4 2012 volume/ Currency Q4 2013 one-offs* Productivity Sandvik Group Invoiced sales 24,328 -1,690 -820 -50 21,770 EBIT 2,134 -470 -180 -890 590 EBIT margin 8.8% -28% 2.7% * Includes metal price effects 11 Sandvik f
Slide 12: Sandvik Mining
Sandvik Interim report on fourth quarter 2013 Sandvik Mining • Order intake stable at low level • Investments by mining companies remained low • Customer production levels largely maintained • Adjusted EBIT at 10.5% • Nonrecurring charges -1,250 MSEK • Currency effects -50 MSEK Unchanged • Significa
Slide 13: Sandvik Machining Solutions
Sandvik Interim report on fourth quarter 2013 Sandvik Machining Solutions • Stable market conditions • Signs of improvement in Europe and Asia • Stable demand in North America • Adjusted EBIT at 19.5% • Nonrecurring charges -350 MSEK Strong • Currency effects -80 MSEK cash flow • Strong cash flow •
Slide 14: Sandvik Materials Technology, Construction and Venture
Sandvik Interim report on fourth quarter 2013 • Sandvik Materials Technology • Signs of improved demand • Strong operating margin, 13% excluding metal price effects • Strategic investment in Primary finalized • Sandvik Construction • Signs of improved demand from a low level • Order intake +15% p/v
Slide 15: Summary
Sandvik Interim report on fourth quarter 2013 Summary • Good progress towards a more efficient Sandvik • Supply chain optimization initiated • Reduced cost base • Inventory reduction • Materials Technology turnaround • Acquisition creating a platform for further growth in the oil and gas sector 15 S
Slide 16: Tomas Nordahl, President Sandvik Venture
Sandvik Interim report on fourth quarter 2013 Tomas Nordahl President Sandvik Venture 16 Sandvik fourth quarter 2013
Slide 17: Varel joining forces with Sandvik for accelerated success!
Varel joining forces with Sandvik for accelerated success! 17 Sandvik fourth quarter 2013
Slide 18: Joining forces
Joining forces ► 20 years of strong growth ► Extensive knowledge in materials science and drilling ► Strong customer value proposition ► Strong commercial positions in ► Large scale R&D capabilities attractive segments ► Strong global presence ► International presence 18 Sandvik fourth quarter 2013
Slide 19: What Varel offers Sandvik
What Varel offers Sandvik ► Entry into oil & gas drilling ► High growth ► Good profitability ► Strong synergies with Sandvik 19 Sandvik Sandvik fourth quarter Machining 2013 Solutions
Slide 20: What Sandvik offers Varel
What Sandvik offers Varel ► Strong support for continued growth ► Leading knowledge and capabilities in highly relevant materials ► Global infrastructure to support further globalization 20 Sandvik Sandvik fourth quarter Machining 2013 Solutions
Slide 21: Strong complementarity between Varel and Sandvik
Strong complementarity between Varel and Sandvik Diamond cutters Carbide cutters (Hyperion) (Hyperion/Wolfram) Carbide matrix body Machined steel body (Hyperion/Wolfram) (Machining Solutions) 21 Sandvik fourth quarter 2013
Slide 22: Combining the companies respective strengths to grow the business further
Combining the companies respective strengths to grow the business further • Varel will be; • a platform for further expansion in the oil and gas sector • a new stand-alone entity within Sandvik Venture 22 Sandvik Sandvik fourth quarter Machining 2013 Solutions
Slide 23: Questions & Answers
Questions & Answers 23 Sandvik Sandvik fourth quarter Machining 2013 Solutions
Slide 24: Back-up slides
Sandvik Interim report on fourth quarter 2013 Back-up slides 24 Sandvik fourth quarter 2013
Slide 25: Quarterly financials
Sandvik Interim report on fourth quarter 2013 Quarterly financials vs MSEK Q4 2012 Q4 2013 Q4 2012 Order intake 21,070 20,794 +1%* Invoicing 24,328 21,770 -8%* EBIT 2,134 590 -72% EBIT margin 8.8% 2.7% - Operating cash flow +4,520 +2,857 -37% Cash flow after investing activities +3,036 +1,255 -59% *
Slide 26: Sandvik Mining
Sandvik 10 000 MSEK 50% Interim report on fourth quarter 2013 8 000 40% Sandvik Mining 6 000 30% Q4 2013 • Order intake 6,514 MSEK • Invoicing 7,334 MSEK 4 000 20% • EBIT -480 MSEK • ROCE 18.5% 2 000 10% 0 0% 2007 2008 2009 2010 2011 2012 2013 -2 000 -10% Invoicing EBIT margin ROCE 12 months 26 Sand
Slide 27: Sandvik Machining Solutions
10 000 MSEK 50% Sandvik Interim report on fourth quarter 2013 8 000 40% Sandvik Machining Solutions 6 000 30% Q4 2013 • Order intake 7,354 MSEK 4 000 20% • Invoicing 7,363 MSEK • EBIT 1,084 MSEK 2 000 10% • ROCE 26.3% 0 0% 2007 2008 2009 2010 2011 2012 2013 -2 000 -10% Invoicing EBIT margin ROCE 12
Slide 28: Sandvik Materials Technology
Sandvik MSEK Interim report on fourth quarter 2013 6 000 60% 5 000 50% Sandvik Materials 4 000 40% Technology 3 000 30% Q4 2013 2 000 20% • Order intake 3,672 MSEK • Invoicing 3,360 MSEK 1 000 10% • EBIT 350 MSEK 0 0% • Adjusted for metal price effects, 430 MSEK, 2007 2008 2009 2010 2011 2012 2013 1
Slide 29: Sandvik Construction
Sandvik MSEK Interim report on fourth quarter 2013 4 000 40% Sandvik 3 000 30% Construction 2 000 20% Q4 2013 • Order intake 1,792 MSEK 1 000 10% • +15 p/v excluding backlog adjustment • Invoicing 2,174 MSEK • EBIT -223 MSEK 0 0% 2007 2008 2009 2010 2011 2012 2013 • ROCE 1.9% -1 000 -10% -2 000 -20%
Slide 30: Sandvik Venture
Sandvik MSEK Interim report on fourth quarter 2013 4 000 40% 3 000 30% Sandvik Venture 2 000 20% Q4 2013 1 000 10% • Order intake 1,456 MSEK 0 0% • Invoicing 1,538 MSEK 2007 2008 2009 2010 2011 2012 2013 • EBIT 309 MSEK -1 000 -10% • ROCE 9.6% -2 000 -20% -3 000 -30% -4 000 -40% -5 000 -50% Invoicin
Slide 31: Income statement
Sandvik Interim report on fourth quarter 2013 Income statement MSEK Q4 2012 Q3 2013 Q4 2013 Invoiced sales 24,328 20,416 21,770 Cost of goods sold -16,797 -13,319 -15,714 Gross profit 7,531 31% 7,097 35% 6,056 28% Admin, sales and R&D costs -5,472 -4,600 -5,479 Other operating income and expenses 75
Slide 32: Bridge analysis
Sandvik Interim report on fourth quarter 2013 Bridge analysis Price/volume/ Structure, MSEK Q4 2012 Currency Q4 2013 productivity one-offs Sandvik Mining Invoiced sales 9,812 -1,970 -500 - 7,334 EBIT 1,203 -550 -50 -1,080 -480 EBIT margin 12% -28% -7% Sandvik Machining Solutions Invoiced sales 7,152
Slide 33: Bridge analysis
Sandvik Interim report on fourth quarter 2013 Bridge analysis Price/volume/ Structure, MSEK Q4 2012 Currency Q4 2013 productivity one-offs Sandvik Construction Invoiced sales 2,382 -140 -70 - 2,174 EBIT 83 -100 - -200 -223 EBIT margin 3% -73% -10% Sandvik Venture Invoiced sales 1,352 150 -20 +50 1,5
Slide 34: Balance sheet
Sandvik Interim report on fourth quarter 2013 Balance sheet vs MSEK Q4 2012 Q3 2013 Q4 2013 Q4 2012 Intangible fixed assets 11,423 11,484 11,947 +5% Tangible fixed assets 25,516 24,779 25,255 -1% Financial fixed assets 6,267 7,866 8,150 +30% Inventories 25,508 24,036 23,318 -9% Receivables 21,512 19
Slide 35: Loan and duration profile
Sandvik Interim report on fourth quarter 2013 Loan and duration profile Average Long term 77% Amount MSEK duration US Private Placement 5,462 6 years Fin institutions, EIB, NIB 2,708 7 years Swedish MTN 6,858 5 years European MTN 6,085 12 years Bank loans 327 2 years Share swap 1,778 2 years Short t
Slide 36: Loan maturity profile
Sandvik Interim report on fourth quarter 2013 Loan maturity profile 6 000 Loan Cash position 4 000 2 000 0 -2 000 -4 000 -6 000 36 Sandvik fourth quarter 2013
Slide 37: Financial key figures
Sandvik Interim report on fourth quarter 2013 Financial key figures MSEK Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Cash flow from operations +4,520 +2,207 +2,640 -2,571 +2,857 Capex 1,429 898 942 1,042 1,541 ROCE, 12 months 19.8% 17.6% 16.0% 14.7% 12.6% ROE, 12 months 25.3% 21.8% 19.2% 17.6% 15.3% Net
Slide 38: Guidance
Sandvik Interim report on fourth quarter 2013 Guidance Metal price effects Given currency rates, stock levels and metal prices at end of December, no material impact to operating profit is estimated for Q1 2014. Net financial items Currency effects Net financial items is estimated Given currency rat
Slide 39: Disclaimer statement
Sandvik Interim report on fourth quarter 2013 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