Sandvik Ab · OMXSTO:SAND
Sandvik Ab — Investor Day (2006)
32 slides from Sandvik Ab's investor day presentation, Oct 19, 2006
Slide 1: Capital Markets Day 2006
CAPITAL MARKETS DAY 2006 Anders Thelin President Sandvik Tooling
Slide 2: Background and Q2 comments
z Background and Q2 comments z Sandvik Tooling business model z Growth in selected areas z Global growth and activities Sandvik Tooling
Slide 3: Background and Q2 comments
z Background and Q2 comments z Sandvik Tooling business model z Growth in selected areas z Global growth and activities Sandvik Tooling
Slide 4: Sandvik Tooling
Sandvik Tooling Tools and tooling systems for metalworking Solutions for productive metalworking using products in cemented carbide, high-speed steel, diamond, special ceramics 2005 z Sales: SEK 20,800 M z ROCE: 31.3% z EBIT: SEK 4,420 M, 21.2% ROS z 15,000 employees Sandvik Tooling
Slide 5: Financial objectives
Financial objectives Sandvik Sandvik Sandvik Mining and Materials Tooling Construction Technology Growth >6 % 6% 4-5 % EBIT 20 % 10-15 % 12-15 % ROCE >20 % 20 % 15-18 % average during a business cycle Sandvik Tooling
Slide 6: Sandvik Tooling Q2 2006
Sandvik Tooling Q2 2006 Invoiced sales EBIT- margin*/ z All-time high quarter SEK M, Quarter ROCE 12-months* 9 Q2 invoicing 7 000 35% 9 EBIT 9 EBIT-margin 6 000 30% 9 ROCE 5 000 25% * z Solid business climate 4 000 20% z Invoiced sales + 6% 3 000 15% 9 Organic sales growth + 5% z EBIT-margin 23.2% (
Slide 7: Invoicing growth Q2 2006
Invoicing growth Q2 2006 1.5% High underlying 3% organic growth 9.5% z H1 2006 organic growth: 5% 9 Reported 7% 9 Underlying 8.5% Reported Fewer Improved Underlying organic working customer organic invoicing days mix invoicing growth growth All-time high EBIT-margin Sandvik Tooling
Slide 8: Sandvik Tooling business model
z Background and Q2 comments z Sandvik Tooling business model z Growth in selected areas z Global growth and activities Sandvik Tooling
Slide 9: Our customer offer
Our customer offer Sandvik Tooling
Slide 10: Creating customer value
Creating customer value Sandvik Tooling
Slide 11: Productivity leverage
Productivity leverage SEK 2 500 billion ≈ SEK 110 billion 2.500.000 MSEK Tools Workpiece Machinery & Operators Overhead Material Equipment 4-5% Sandvik Tooling
Slide 12: Productivity leverage
Productivity leverage Tools Decreased tool price or -1 % Workpiece Increased tool life material Machinery & equipment 1. Output/time Productivity improvement 8 760 h Operators -15 % 20% increased metal removal rate Output Overhead Overhead (Customer value) 2. Capacity utilization Sandvik Tooling
Slide 13: Our customer markets
Our customer markets 100% ≈ SEK 110 billion Application Customer Geographical areas categories markets Heavy Energy machinery Aerospace Drilling Turning General Americas Die& Mold Engineering Europe Milling Asia-Pacific Automotive Sandvik Tooling
Slide 14: Drivers of superior growth
Drivers of superior growth - Yearly organic invoicing growth 1993-2005 Multibrand strategy >6 % Global presence Sales and Marketing Sandvik Tooling Production and growth distribution premium Research and Development Market growth ~3 % Sandvik Tooling
Slide 15: Market leadership
Market leadership Sales distribution Estimate 2005 100% ≈ SEK 110 billion Sandvik Tooling ~20 % There is another 80% to compete Kennametal for! Iscar Kyocera Seco Tungaloy OSG Sumitomo Mitsubishi Sandvik Tooling
Slide 16: Growth in selected areas
z Background and Q2 comments z Sandvik Tooling business model z Growth in selected areas z Global growth and activities Sandvik Tooling
Slide 17: Favourable general trends
Favourable general trends New product Metal components in introductions Higher fuel costs medical applications Smaller, stronger, Shorter product lighter products life cycles High relative labor costs in mature Stricter environmental economies regulations Sandvik Tooling
Slide 18: New product introductions
New product introductions - successful companies TOYOTA BMW Doubling hybrid car From 6 to 10 high-end models - from 7 to 14 SANDVIK model series in five years COROMANT NOKIA SAMSUNG Camera mobiles from <20% >30 new to >50% of mobile phone Reduced portfolio models in development since 2004 2006 Q2 le
Slide 19: Our offers meet customer needs
Our offers meet customer needs Trends Demand Earphone mold New product Shorter product introductions life cycles Sheet metal die Offer Faster die and mold production z High metal removal rate z Improved surface finish + 176% invoicing growth 1998-2005 (Germany) Sandvik Tooling
Slide 20: Our offers meet customer needs
Our offers meet customer needs Trends Demand Higher fuel costs Stricter environmental regulations Offer Lighter vehicles z Efficient aluminum machining + 50% order intake growth 2004-2006E Sandvik Tooling
Slide 21: Our offers meet customer needs
Our offers meet customer needs Trends Demand Higher fuel costs Stricter environmental regulations Offer Lighter engines 9 High strength/weight materials More fuel efficient engines 9 Heat resistant materials z + 50% invoicing growth 2003-2005 z 3000 inserts per engine Sandvik Tooling
Slide 22: Our offers to meet customer needs
Our offers to meet customer needs Trends Demand Tools -1% Workpiece High relative labor material costs in mature Machinery economies & equipment Offer Operators -15% Overhead Overhead Drastically higher productivity – new Target customer savings: machining methods > € 100 M during 2006 Sandvik Tooli
Slide 23: Global growth and activities
z Background and Q2 comments z Sandvik Tooling business model z Growth in selected areas z Global growth and activities Sandvik Tooling
Slide 24: Market leader in major industrial markets
Market leader in major industrial markets… % share of global production, 2005 25% 20% 15% 10% 5% 0% USA Japan China Germany Eastern UK Italy * Europe *Note: Market leadership among non-Asian manufacturers Source: Economist Intelligence Unit Sandvik Tooling
Slide 25: ...and in emerging markets
…and in emerging markets… Actual production growth, 2005 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% China South Korea* India Germany Japan* Eastern USA Europe *Note: Market leadership among non-Asian manufacturers Source: Economist Intelligence Unit Sandvik Tooling
Slide 26: ...and where the absolute growth is
…and where the absolute growth is Production growth 2005, in SEK billion 1400 1200 1000 800 600 400 200 0 pe *a * y e n l na a e SA ly K zi an ro nc pa di or U Ita ra hi U Eu In m K a Ja B C Fr er h n ut G er So st Ea *Note: Market leadership among non-Asian manufacturers Source: Economist Intellige
Slide 27: Expansion in emerging markets
Expansion in emerging markets Sandvik Tooling in China Index, Invoicing 100=1999 N:o of employees 500 e ar Key priorities y 400 w th/ z Implementation of multi- gro g brand strategy icin o z Recruiting and training of 300 inv % sales force 28 z New customer training 200 center in Shanghai z Increase
Slide 28: Outgrowing the market
Outgrowing the market - Organic growth 1993-2005 Sandvik Tooling, >8% carbide cutting tools Sandvik Tooling, ~7% current mix ~6% Sandvik Tooling, actual mix Cutting tool ~3% market average Sandvik Tooling
Slide 29: Growth activities 2006-2010
Growth activities 2006-2010 Multibrand strategy z Enhanced brand positioning Global presence z Sales force expansion Sales and Marketing z Value selling Production and z Further consolidation distribution z Productivity improvements Research and Development z Decrease lead times Market growth z Cust
Slide 30: Future opportunities
Future opportunities Sandvik Tooling Sandvik Tooling
Slide 31: www.sandvik.com
NL www.sandvik.com
Slide 32: Cautionary Statement
Cautionary 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 effected by other factors like for example, the effect of economic conditions, exchange-