Sandvik Ab · OMXSTO:SAND
Sandvik Ab — Investor Day (September 2010)
35 slides from Sandvik Ab's investor day presentation, September 2010
Slide 1: Capital Markets Day 2010 – Prepared for the future
CAPITAL MARKETS DAY 2010 Prepared for the future Anders Thelin President Sandvik Tooling Sandvik Tooling Sandvik Capital Markets Day September 2009 page 1
Slide 2: Prepared for the future
Prepared for the future Business update Effects of 2009 tactics Our way of working Presence in BRIC markets Conclusions Sandvik Tooling Sandvik Capital Markets Day September 2010 page 2
Slide 3: Business update
Business update Sandvik Tooling Tools and tooling systems for metalworking Wear parts and superabrasive components 2009 Targets Sales 19,078 MSEK ROCE -2.2% Growth > 7% EBIT -527 MSEK, -2.8% 15,296 employees ROCE > 30% Sandvik Tooling Sandvik Capital Markets Day September 2010 page 3
Slide 4: Background
Background Sandvik Coromant order intake in fixed rate vs. previous year %, Quarterly 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sandvik Tooling Sandvik Capital Markets Day September 2010 page 4
Slide 5: Sandvik Tooling order intake
Sandvik Tooling Order intake at fixed rates, excl Wolfram MSEK Reference year Q4 2007 – Q3 2008 8 000 7 000 --------------------------- 6 000 -19% -23% 5 000 -34% -43% -42% 4 000 3 000 2 000 1 000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 2010 Sandv
Slide 6: Business update
Business update Sandvik Tooling Q2 MSEK 8 000 Invoicing 40% EBIT margin Order intake +45% (P/V) 6 000 ROCE 12 months 30% 6 295 MSEK Invoiced sales +38% (P/V) 4 000 20% 6 122 MSEK EBIT 21.0% of sales 2 000 10% 1 283 MSEK ROCE 7.7% 0 0% -2 000 -10% -4 000 -20% 2000 2001 2002 2003 2004 20
Slide 7: Cutting tool customers
Sandvik Tooling Cutting tool customers Indexable tools Round tools Material platform Customers within adjacent applications Sandvik Tooling Sandvik Capital Markets Day September 2010 page 7
Slide 8: Mergers and organizational changes
Mergers and organizational changes Cutting Cutting tool tool customers customers Valenite Indexable Indexable Walter Safety Dormer Safety tools tools Round Round tools tools Material Material platform platform Customers Customers within within adjacent adjacent applications applications Sandvik Tool
Slide 9: Mergers and organizational changes
Mergers and organizational changes Merger of Walter & Valenite 130 sales engineers transferred to Walter Headcount reduction ≈ 200 persons Merger of Dormer & Precision Twist Drill Product assortment harmonization Triumph brand divested Continued consolidation of production units Crys
Slide 10: Successful integration of Wolfram
Successful integration of Wolfram Securing supply of raw material Recycling World class tungsten carbide Improves profit margin of Sandvik Tooling Sandvik Tooling Sandvik Capital Markets Day September 2010 page 10
Slide 11: Prepared for the future
Prepared for the future Business update Effects of 2009 tactics Our way of working Presence in BRIC markets Conclusions Sandvik Tooling Sandvik Capital Markets Day September 2010 page 11
Slide 12: 2009 tactics
D D aayy aarrkkeettss 2009 tactics M M it itaall 22000099 pp CCaa 2–3 years downturn and -40% order intake Reduce Cost Production capacity Net Working Capital Safeguard R&D resources and competencies Sales resources and competencies Fast ramp up of delivery capacity Gain market sha
Slide 13: Full speed within R&D
Full speed within R&D Effects of 2009 tactics Cost reductions 6% Increased personnel 2% Patents on a high level 2001 2002 2003 2004 2005 2006 2007 2008 2009 US patents related to cutting tools Sandvik Tooling Sandvik Capital Markets Day September 2010 page 13
Slide 14: Full speed within R&D
Full speed within R&D Effects of 2009 tactics Intensified cooperation with customers and universities AMRC in Sheffield CEROC in Fondettes Aerospace center in Fair Lawn Sandvik Tooling Sandvik Capital Markets Day September 2010 page 14
Slide 15: Over 8,000 new products
Over 8,000 new products 10,000 fewer stock keeping units net Grades in Stratapax BZN® 9100 CoroMill®316 Polymill Grades in HPHT tools BZN® 7100 GC 1115 Aerolong Flow control BZN 9100®PCBN grades Coromant Capto® C 10 Aerofinish TG6 micro drilling grade Versimax™ CoroMill® 360 WSM10 MP12 Sub-micron Co
Slide 16: Personnel cost reductions
Personnel cost reductions Effects of 2009 tactics Number of Employees Jan Feb Mar April May June July Aug Sept Oct Nov Dec Jan Feb Mar April May June 2009 2010 Full Time Employees Employees in time reduction programs converted to full time employee equivalence Sandvik Tooling Sandvik Capital Markets
Slide 17: NWC sustainable improvements
NWC sustainable improvements Effects of 2009 tactics Wolfram acquisition Net Working Capital, % of external invoicing 50 45 40 35 Stock parameter fine tuning 30 25 Assortment rationalization 20 Reduced DSO 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sandvik Tooling Sandvik Capi
Slide 18: Cash flow and EBIT, Q1 + Q2
Cash flow and EBIT, Q1 + Q2 MSEK Effects of 2009 Tactics Q1 + Q2 Q1 + Q2 Q1 + Q2 Q1 + Q2 Q1 + Q2 Q1 + Q2 Sandvik Tooling Sandvik Capital Markets Day September 2010 page 18
Slide 19: EBIT 2008-2010 YTD June
EBIT 2008-2010 YTD June Effects of 2009 tactics 24% 18% -2% EBIT 2008 Invoicing Inventory Others Cost EBIT 2009 Invoicing Inventory Others Cost EBIT 2010 changes savings changes savings Sandvik Tooling Sandvik Capital Markets Day September 2010 page 19
Slide 20: Insights
Insights Preparedness and flexibility War room Keep sales resources and R&D Fast ramp up Larger amplitudes in the future %, Quarterly Sandvik Coromant order intake in fixed rate vs. previous year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 21: Prepared for the future
Prepared for the future Business update Effects of 2009 tactics Our way of working Presence in BRIC markets Conclusions Sandvik Tooling Sandvik Capital Markets Day September 2010 page 21
Slide 22: From ore to finished product
From ore to finished product Sandvik Tooling Sandvik Capital Markets Day September 2010 page 22
Slide 23: Consequence
Consequence 40% 40% EBIT ROCE 12 months Advantages Reduced risk 30% 30% Optimized processes and properties Full benefit from all added value 20% 20% Disadvantages 10% 10% More capital Volume sensitive 0% 0% Consequence -10% -10% Improved profitability over a business cycle -20% -20
Slide 24: Consistent track record
Consistent track record Operating margin* % of sales 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 *Excluding goodwill write off for PTD Sandvik Tooling Sandvik Capital Markets Day September 2010 page 24
Slide 25: Concept holders, Standard holders
Addressing premium, high growth applications Concept holders Die & Gear Heavy Deep hole PCD/CBN and cutters mould milling machining machining Concept inserts Standard holders and cutters Premium, high Premium, high Standard growth applications inserts growth applications Sandvik Tooling Sandvik Capi
Slide 26: Prepared for the future
Prepared for the future Business update Effects of 2009 tactics Our way of working Presence in BRIC markets Conclusions Sandvik Tooling Sandvik Capital Markets Day September 2010 page 26
Slide 27: Growing importance of BRIC
Growing importance of BRIC +26% +25% 53% +59% 18% 21% +33% BRIC 2% +63% +42% 19% 5% +10% 1% % Order intake (p/v) June YTD 2010 compared with 2009 % Share of Tooling total Sandvik Tooling Sandvik Capital Markets Day September 2010 page 27
Slide 28: Market leader in BRIC
Market leader in BRIC Strong local presence Local manufacturing Global strength 1994 1983 Russia China 1962 India 1949 Brazil Sandvik Tooling Sandvik Capital Markets Day September 2010 page 28
Slide 29: Our presence in China
Our presence in China Over 440 sales and application engineers 4 Production units 3 Application and Productivity Centers Sales units Production units, Application and Productivity Centers Sandvik Tooling Sandvik Capital Markets Day September 2010 page 29
Slide 30: Sandvik ranks top 10 of Green companies in China
Sandvik ranks top 10 of Green companies in China Sandvik Tooling Sandvik Capital Markets Day September 2010 page 30
Slide 31: Prepared for the future
Prepared for the future Business update Effects of 2009 tactics Our way of working Presence in BRIC markets Conclusions Sandvik Tooling Sandvik Capital Markets Day September 2010 page 31
Slide 32: Conclusions
Conclusions Sandvik Tooling
Slide 33: Re-established profitability
Re-established profitability % of sales Operating margin* 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 *Excluding *Excluding goodwill goodwill write write offofffor forPTD PTD Sandvik Tooling Sandvik Capital Markets Day September 2010 page 33
Slide 34: Q&A session
Q&A session Sandvik Tooling Sandvik Capital Markets Day September 2009 page 34
Slide 35: 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-