Slide 1: Interim Report First Quarter 2019
INTERIM REPORT FIRST QUARTER 2019 1
Slide 2: Summary Q1
SUMMARY Q1 CUSTOMER ACTIVITY ON A HIGH LEVEL • ORDER INTAKE +6% • BOOK-TO-BILL RATIO OF 111% • LARGE ORDERS RECEIVED IN SMT IMPROVED EARNINGS AND MARGIN AT 18.3% PORTFOLIO ADDITIONS • ROUND TOOLS: WETMORE AND OSK • BATTERY TECHONOLOGY AND DIGITAL MINING: ARTISAN AND NEWTRAX S&P UPGRADE TO A- FROM BB
Slide 3: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2018 % of group Y/Y Sequential underlying revenue FY18 order intake demand trend (Q4/Q1) EUROPE 38% +8% NORTH AMERICA 21% +6% ASIA 20% -4% AFRICA/MIDDLE EAST 9% +2% SOUTH AMERICA 5% +22% AUSTRALIA 7% +24% 3 S
Slide 4: Order Intake and Revenues
ORDER INTAKE REVENUES RECORD-HIGH LEVEL FOR SMS AND LARGE ORDER IN SMT SEASONALLY WEAK FOR SMRT REPORTED P/V REPORTED P/V 27 873 6% 25 025 3% 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 20
Slide 5: EBIT Development
EBIT DEVELOPMENT MSEK +7% 6 000 22% EBIT • OVERALL STABLE 5 000 19% 4 567 EXCLUDING FX, STRUCTURE AND METALS MSEK 4 000 16% EBIT % • IMPACTED BY 3 000 13% 18.3 SHARP DECLINE IN TUNGSTEN POWDER BUSINESS 2 000 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 EBIT* EBIT%*
Slide 6: Sandvik Machining Solutions
SHARE OF REVENUES 2018 41% SANDVIK MACHINING Q1 2018 Q1 2019 CHANGE SOLUTIONS MSEK ORDER INTAKE 10 287 11 105 -1%* ORDERS ON RECORD-HIGH LEVEL REVENUES 9 859 10 679 -1%* − Tungsten powder business impacted ADJ. OP. PROFIT 2 555 2 654 +4% orders/revenues negatively by -1% % OF REVENUES 25.9% 24.9% −
Slide 7: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2018 44% SANDVIK MINING AND Q1 2018 Q1 2019 CHANGE ROCK TECHNOLOGY MSEK ORDER INTAKE 10 230 11 839 +9%* REVENUES 9 324 10 573 +6%* STRONG UNDERLYING MARKET ADJ. OP. PROFIT 1 402 1 795 +28% − Equipment and aftermarket in strong growth 15.0% 17.0% % OF REVENUES − Strategic automation
Slide 8: Sandvik Materials Technology
SHARE OF REVENUES 2018 15% SANDVIK MATERIALS MSEK Q1 2018 Q1 2019 CHANGE TECHNOLOGY ORDER INTAKE 3 935 4 930 +23%* REVENUES 3 640 3 773 +4%* STRONG DEVELOPMENT IN PROJECT BUSINESS OPERATING PROFIT 352 307 -13% % OF REVENUES 9.7% 8.1% − Major energy orders of ~1 BSEK UNDERLYING MARGIN³ 6.9% 10.4% − I
Slide 9: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 9
Slide 10: Financial Summary Q1
GROWTH Q119, % ORDER REVENUES INTAKE FINANCIAL SUMMARY Q1 ORGANIC: CURRENCY: STRUCTURE: +6 +6 -2 +3 +6 -3 TOTAL +10 +6 MSEK Q1 2018 Q1 2019 CHANGE % Q1-4 2018 ORDER INTAKE 25 419 27 873 +6¹ 102 440 REVENUES 23 685 25 025 +3¹ 100 072 ADJUSTED OPERATING PROFIT 4 271 4 567 +7 18 625 % OF REVENUES 18.0
Slide 11: Bridge Analysis
GROUP LEVERAGE: BRIDGE ANALYSIS +9% SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q1 2018 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2019 REVENUES 23 685 614 +1 338 -612 25 025 EBIT 4 271 56 +564 -324 4 567 EBIT MARGIN 18.0% 9% - - 18.3% MARGIN ACCRETION / DILUTION -0.2% +1.3% -0.9% • Includes metal price eff
Slide 12: Bridge Analysis excl. Tungsten Powder Impact
GROUP UNDERLYING LEVERAGE: BRIDGE ANALYSIS +30% SANDVIK GROUP EXCL. TUNGSTEN POWDER IMPACT ORGANIC TUNGSTEN STRUCTURE MSEK Q1 2018 EXCL. TUNGSTEN BUSINESS CURRENCY ONE-OFFS* Q1 2019 REVENUES 23 685 752 -137 +1 338 -612 25 025 EBIT 4 271 223 -167 +564 -324 4 567 EBIT MARGIN 18.0% ~30% 18.3% MARGIN AC
Slide 13: Net Financials
NET FINANCIALS MSEK Q1 18 Q1 19 Interest net -166 -168 Pension -30 -35 • GUIDANCE UNCHANGED Bank charges -13 -15 ~1 BSEK Other fin income & costs -7 -4 IFRS16 -26 • LOOKING AHEAD: PREMATURE FX & other asset classes -35 -131 PAYMENT OF LONG-TERM DEBT Total -253 -378 13 SANDVIK: Interim Report on the
Slide 14: Net Working Capital
NET WORKING CAPITAL RELATIVE NWC BY BA RECEIVABLES INCREASE AND DELIVERY PREPARATION IN SMRT AND SMT MSEK 27 500 35% 45% 40% 25 000 30% 35% 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 (
Slide 15: Free Operating Cash Flow
FREE OPERATING CASH FLOW MSEK 8 000 20 000 MSEK Q1 2018 Q1 2019 18 000 6 000 EBITDA + non-cash 5 670 5 853 16 000 NWC change -2 710 -1 577 4 000 Capex* -864 -924 14 000 FOCF** 2 095 3 352 2 000 12 000 *Including investments and disposals in rental, tangible and intangible assets and right-of-use ass
Slide 16: Financial Net Debt
FINANCIAL NET DEBT MSEK GEARING 50 000 1,4 1,2 • NET GEARING AT 0.2 40 000 1,0 30 000 0,8 • ~3 BSEK ADDED DUE TO IFRS 16 0,6 20 000 0,4 • S&P UPGRADE TO A- 10 000 0,2 0 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 Leases Net pension liability Financial net debt Net
Slide 17: Outcome Q1 and Guidance
OUTCOME Q1 AND GUIDANCE Q1 2019 Underlying currency effect (MSEK): +533 (~500) Total currency effect (MSEK): +564 Metal price effect in quarter (MSEK): -85 (-150) Q2 2019 Underlying currency effect (MSEK): +300* Metal price effect in quarter (MSEK): +100** FULL YEAR 2019 Capex (BSEK): <4.4 (incl. 0.
Slide 18: Summary Q1
SUMMARY Q1 STRONG DEMAND PROTECT MARGINS CONTINUE ACQUIRING GROWTH
Slide 19: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 20: End-Customer Segments
MINING ENERGY (34%) (11%) GENERAL CONSTRUCTION ENGINEERING (9%) (23%) AUTOMOTIVE AEROSPACE (12%) (6%) END-CUSTOMER SEGMENTS % of group revenues 2018 excl. Mining systems; Other e.g. consumer goods, electronics, chemical and miscellaneous was 5% . 20 SANDVIK: Interim Report on the first quarter 2019
Slide 21: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT +9% -186 -138 +564 4,567 4,271 +56 EBIT Q1 18 ORGANIC CURRENCY METAL PRICE STRUCTURE EBIT Q1 19 GROWTH EFFECT SMT EBIT MARGIN 18.0% 18.3% 21 SANDVIK: Interim Report on the first quarter 2019 Comments and numbers refer to continuing operations unless otherwis
Slide 22: Bridge Analysis by Business Area
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2018 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2019 MACHINING SOLUTIONS REVENUES 9 859 -80 +611 +288 10 679 ADJUSTED EBIT 2 555 -159 +240 +18 2 654 ADJUSTED EBIT MARGIN 25.9% -199% - - 24.9% MINING AND ROCK TECHNOLOGY REVENUES 9 324 574 +558 +118 10 573 ADJU
Slide 23: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement 3 431 2 years Fin institutions, EIB, NIB 1 117 4 years 82% Swedish MTN European MTN 3 647 11 448 3 years 7 years Bank loans 138 1 year Share swap - - SHORT TERM US Private Placement 1 837 2 months Fin institutions,
Slide 24: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK 4 500 AVERAGE 4 000 INTEREST RATE: 3 500 ~4% 3 000 2 500 2 000 1 500 1 000 500 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 24 SANDVIK: Interim Report on the first quarter 2019 Comments and numbers refer to continuing operations unless other
Slide 25: Guidance
GUIDANCE CAPEX Estimated to <4.4 BSEK for 2019 including 0.4 BSEK due to IFRS 16 CURRENCY Given currency rates at end of March 2019 the effect on operating profit from transaction and EFFECTS translation would be +300 MSEK for Q2 2019 METAL PRICE Given currency rates, stock levels and metal prices a
Slide 26: 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