Slide 1: Interim Report Third Quarter 2015
INTERIM REPORT OCTOBER 23 THIRD QUARTER 2015
Slide 2: Summary Q3 2015
Comments and numbers refer to continuing operations unless otherwise stated SUMMARY Q3 2015 RECORD HIGH Q3 CASH FLOW • Continued focus on net working capital WEAK DEMAND • Order intake 19,726 MSEK, P/V -8% LOW VOLUMES IMPACT PROFITABILITY • EBIT 2,325 MSEK, 11.2% • Currency effect +370 MSEK • Saving
Slide 3: Order Intake by Markets
ORDER INTAKE BY MARKETS Order intake compared with ORDER INTAKE Q3 2015 SHARE OF GROUP TOTAL preceding quarter* NORTH AMERICA EUROPE ASIA 21% 39% 19% SOUTH AMERICA AFRICA/MIDDLE EAST AUSTRALIA 6% 10% 5% *) excluding currency SANDVIK: Interim Report on the third quarter 2015 3 Comments and numbers re
Slide 4: Invoicing by Customer Segments
INVOICING BY CUSTOMER SEGMENTS Consumer related Other Aerospace ORGANIC INVOICING GROWTH VS Q3 2014 Energy Mining -6% > +5% –5 to +5% < –5% Automotive Demand trend compared with preceding quarter Construction General Engineering SANDVIK: Interim Report on the third quarter 2015 4 Comments and number
Slide 5: Order Intake 19,726 MSEK / Invoicing 20,745 MSEK
ORDER INTAKE INVOICING 19,726 MSEK 20,745 MSEK CHANGE P/V -8% CHANGE P/V -6% MSEK MSEK 30 000 90% 30 000 90% 25 000 25 000 70% 70% 20 000 20 000 50% 50% 15 000 15 000 10 000 30% 10 000 30% 5 000 5 000 10% 10% 0 0 2011 2012 2013 2014 2015 -10% 2011 2012 2013 2014 2015 -10% -5 000 -5 000 -10 000 Order
Slide 6: EBIT 2,325 MSEK and Cash Flow
EBIT 2,325 MSEK CASH FLOW EBIT MARGIN 11.2% CASH FLOW FROM OPERATIONS 3,953 MSEK MSEK MSEK 5 000 40% 5 000 350% 300% 4 000 30% 4 000 250% 3 000 20% 3 000 200% 2 000 10% 2 000 150% 100% 1 000 0% 1 000 50% 0 -10% 0 0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 -1 000 EBIT EBIT margin -20% Cash
Slide 7: Net Working Capital
NET WORKING CAPITAL MSEK 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% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net working capital Net working capital / Invoiced sales (incl Mining Systems) Net working capital / Invoiced sales (continuing operati
Slide 8: Bridge Analysis
BRIDGE ANALYSIS SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q3 2014 PRODUCTIVITY CURRENCY ONE-OFFS* Q3 2015 INVOICING 20,907 -1,000 1,270 -440 20,745 EBIT 2,488 -290 370 -250 2,325 EBIT MARGIN 12% -29% - - 11% * Includes metal price effects 8 SANDVIK: Interim Report on the third quarter 2015 Comment
Slide 9: Creating a Leaner Company
CREATING A LEANER COMPANY SAVINGS Q3 ANNUAL RUNRATE (MSEK) Target 1.7 bn. SANDVIK SANDVIK SANDVIK MATERIALS SANDVIK SAVINGS MACHINING SOLUTIONS MINING TECHNOLOGY CONSTRUCTION ANNUAL RUN-RATE SUPPLY CHAIN 189 236 10 124 559 (1,240*) OPTIMIZATION ADJ COST 57 104 285*** (480) 52 - BASE **) TOTAL 241 23
Slide 10: Guidance
GUIDANCE GUIDANCE Q4 2015 CURRENCY EFFECT: +100 MSEK METAL PRICE EFFECT: - 100 MSEK FULL YEAR GUIDANCE 2015 CAPEX: About 4.0 bn. SEK NET FINANCIAL ITEMS: -1.8 to -2.0 bn. SEK TAX RATE: 26-28% for 2015 10 SANDVIK: Interim Report on the third quarter 2015 Comments and numbers refer to continuing opera
Slide 11: Summary Q3 2015
SUMMARY Q3 2015 STRONG CASH FLOW WEAK DEMAND LOW VOLUMES IMPACT PROFITABILITY PORTFOLIO REVIEW AND INTERNAL EFFICIENCY MEASURES NEW CEO AS OF 1 NOVEMBER SANDVIK: Interim Report on the third quarter 2015 11 Comments and numbers refer to continuing operations unless otherwise stated
Slide 12: Back-up Slides
BACK-UP SLIDES 12 SANDVIK: Interim Report on the third quarter 2015
Slide 13: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q3 2014 PRODUCTIVITY CURRENCY ONE-OFFS* Q3 2015 MACHINING SOLUTIONS INVOICING 7,658 -390 570 - 7,836 EBIT 1,496 -175 140 - 1,459 EBIT MARGIN 20% -45% - - 19% MINING INVOICING 5,121 360 235 - 5,712 EBIT 640 80 130 - 847 EBIT MARGIN 12% +22% - - 15% MATERI
Slide 14: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q3 2014 PRODUCTIVITY CURRENCY ONE-OFFS Q3 2015 CONSTRUCTION INVOICING 2,232 -320 130 - 2,037 EBIT 1 50 45 - 99 EBIT MARGIN 0% N/A - - 5% VENTURE INVOICING 2,155 -300 140 - 1,994 EBIT 133 -90 -35 80* 91 EBIT MARGIN 6% -30% - - 5% *) PPA assigned to invent
Slide 15: Net Working Capital
NET WORKING CAPITAL % OF INVOICING BY BUSINESS AREA 60% 50% 40% 30% TARGET 20% 10% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sandvik Machining Solutions Sandvik Mining Sandvik Materials Technology Sandvik Construction SANDVIK: Interim Report on the third quarter 2015 Comments and numbers refer
Slide 16: Restructuring Our Footprint
RESTRUCTURING OUR FOOTPRINT SUPPLY CHAIN OPTIMIZATION PROGRAM FIRST PHASE TOTAL 7 UNITS closed to date 150 FIRST PHASE -10 (of which 1 unit closed in Q3) 3 UNITS REMAINING in Q4 2015 SECOND PHASE -9 RUNRATE SAVINGS 549 MSEK END OF Q3 out of 690 MSEK target at year end 2015 SECOND PHASE 125 6 UNITS I
Slide 17: Supply Chain Optimization
SUPPLY CHAIN OPTIMIZATON SAVINGS TARGET (MSEK) FOR CONTINUING INFORMATION RELATED TO ORIGINAL SAVINGS NEW TARGET FOR DISCONTINUED NEW GROUP TOTAL TARGET FOR MINING SANDVIK MINING OPERATIONS SUPPLY CHAIN 500 -110 390 690 OPTIMIZATION I SUPPLY CHAIN -50 400 350 550 OPTIMIZATON II TOTAL 900 -160 740 -1
Slide 18: Sandvik Machining Solutions – Q3 2015
SANDVIK MACHINING SOLUTIONS – Q3 2015 STRONG CASH FLOW • Continued inventory reduction CHALLENGING MARKET CONDTIONS • Mixed development in Europe, overall negative growth • Indirect oil and gas exposure impacts North America • Low demand in Asia, Japan the positive exception EBIT 1,459 MSEK, 18.6% •
Slide 19: Sandvik Machining Solutions – Q3 2015
SANDVIK MACHINING SOLUTIONS – Q3 2015 ORDER INTAKE INVOICING MSEK 10 000 50% 7,841 7,836 8 000 40% MSEK MSEK 6 000 30% 4 000 20% EBIT ROCE 1,459 26.9% 2 000 0 10% 0% MSEK 2011 2012 2013 2014 2015 -2 000 Invoicing EBIT margin ROCE 12 months -10% 19 SANDVIK: Interim Report on the third quarter 2015 Co
Slide 20: Sandvik Mining – Q3 2015
SANDVIK MINING – Q3 2015 STABLE MARKET CONDITIONS • But with higher uncertainty MARGIN IMPROVEMENT • EBIT 847 MSEK, 14.8% • Currency effects +130 MSEK • Savings +74 MSEK SUPPLY CHAIN OPTIMIZATION • One additional unit closed PORTFOLIO REVIEW • Intent to divest Mining Systems communicated 20 SANDVIK:
Slide 21: Sandvik Mining – Q3 2015
SANDVIK MINING – Q3 2015 ORDER INTAKE INVOICING MSEK 4,977 5,712 10 000 8 000 50% 40% MSEK MSEK 6 000 30% 4 000 20% EBIT ROCE 847 19.8 2 000 0 10% 0% MSEK 2011 2012 2013 2014 2015 -2 000 -10% Invoicing EBIT margin ROCE 12 months 21 SANDVIK: Interim Report on the third quarter 2015 Comments and numbe
Slide 22: Sandvik Materials Technology – Q3 2015
SANDVIK MATERIALS TECHNOLOGY – Q3 2015 CHALLENGING MARKET CONDITIONS • Persistently weak demand in oil and gas • Further increased competition in standardized products EBIT 49 MSEK, 1.5% • Excluding metal price effect 5.8 % • Metalprice effect -135 MSEK • Currency effects +65 MSEK • Adjustment of co
Slide 23: Sandvik Materials Technology – Q3 2015
SANDVIK MATERIALS TECHNOLOGY – Q3 2015 ORDER INTAKE INVOICING MSEK 2,847 3,161 6 000 30% 5 000 20% MSEK MSEK 4 000 3 000 10% 2 000 EBIT ROCE 1 000 0% 49 5.7% -1 000 0 2011 2012 2013 2014 2015 -10% MSEK -2 000 -20% Invoicing Excluding metal price effects and nonrecurring items, 184 MSEK, 5.8 % -3 000
Slide 24: Sandvik Construction – Q3 2015
SANDVIK CONSTRUCTION – Q3 2015 CHALLENING MARKET CONDITIONS • Relatively higher activity in North America SIGNIFICANT MARGIN IMPROVEMENT • EBIT 99 MSEK, 4.9% • Currency effect +45 MSEK • Savings 57 MSEK ONE LARGE ORDER • Tunneling order of 220 MSEK to Australia 24 SANDVIK: Interim Report on the thir
Slide 25: Sandvik Construction – Q3 2015
SANDVIK CONSTRUCTION – Q3 2015 ORDER INTAKE INVOICING MSEK 2,179 2,037 4 000 40% 3 000 30% MSEK MSEK 2 000 20% 1 000 10% EBIT ROCE 99 2.8% 0 -1 000 2011 2012 2013 2014 2015 0% -10% MSEK -2 000 -20% Invoicing EBIT margin ROCE 12 months 25 SANDVIK: Interim Report on the third quarter 2015 Comments and
Slide 26: Sandvik Venture – Q3 2015
SANDVIK VENTURE – Q3 2015 PERSISTANTLY CHALLENGING MARKET CONDITIONS IN OIL AND GAS SEASONALLY LOW VOLUMES IMPACT EARNINGS • EBIT 91 MSEK, 4.6% • Currency effect -35 MSEK • Ongoing savings initiatives ACQUISITION OF EQUIPMENT MANUFACTURER WITHIN PROCESS SYSTEMS 26 SANDVIK: Interim Report on the thir
Slide 27: Sandvik Venture – Q3 2015
SANDVIK VENTURE – Q3 2015 ORDER INTAKE INVOICING MSEK 1,878 1,994 3 000 2 000 50% 40% 30% MSEK MSEK 20% 1 000 10% 0 0% EBIT ROCE 2011 2012 2013 2014 2015 -10% 91 6.0% -1 000 -2 000 -20% -30% MSEK -40% -3 000 -50% Invoicing EBIT margin ROCE 12 months 27 SANDVIK: Interim Report on the third quarter 20
Slide 28: Our Way Forward
OUR WAY FORWARD KEY PRIORITIES BY BUSINESS AREA SANDVIK SANDVIK SANDVIK SANDVIK SANDVIK MACHINING MATERIALS MINING CONSTRUCTION VENTURE SOLUTIONS TECHNOLOGY • Leverage from Multi-brand • Consolidate footprint: • Accelerate growth of • Sales efficiency and • Accelerate growth of model, with backend M
Slide 29: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement 6,667 4 years Fin institutions, EIB, NIB 2,358 7 years 89% Swedish MTN European MTN 10,042 10,345 4 years 11 years Bank loans 2,770 3 years Share swap - - SHORT TERM Commercial paper - - Fin institutions, EIB, NIB
Slide 30: 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 30 SANDVIK: Interim Report on the third quarter 2015 Comments and numbers refer to continuing operations unless otherwise stated
Slide 31: Updated Guidance
UPDATED GUIDANCE CAPEX Estimated at about 4 bn. SEK for 2015. CURRENCY EFFECTS Given currency rates at end of September the effect on EBIT would be +100 MSEK for Q4 2015. Given currency rates, stock levels and metal prices at the end of September, it is METAL PRICE EFFECTS estimated that effects on
Slide 32: 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