Slide 1: Interim Report First Quarter 2020
INTERIM REPORT FIRST QUARTER 2020 1
Slide 2: My First Impressions and Initial Focus Areas
MY FIRST IMPRESSIONS… • Knowledgeable and passionate colleagues with business focus • Responsibility and accountability in the businesses • Strong market positions in most segments …AND INITIAL FOCUS AREAS • Getting to know the people, businesses and customers • Execution on announced efficiency mea
Slide 3: Corona Update
CORONA UPDATE Q1 LARGELY AS EXPECTED • Disruptions in China with one week of extended production closure after Chinese New Year • Full capacity approached after a couple of weeks GLOBAL ESCALATION OF CORONA SITUATION THROUGH MARCH • Some disruption in our production due to local governmental restric
Slide 4: Summary Q1
SUMMARY Q1 ORDERS DECLINE -11% ON RECORD-HIGH COMPARABLES • Large orders received in SMT • Protracted lead times in customer orders in SMRT • Decline in short-cycle business; SMS and large parts of SMT • Sharp drop in SMS demand at the end of March ADJUSTED OPERATING PROFIT AT 15.8% (18.3) • All bus
Slide 5: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2019 % of group Y/Y Sequential underlying revenue FY19 order intake demand trend (Q4/Q1) EUROPE 37% -14% NORTH AMERICA 23% -14% ASIA 19% -6% AFRICA/MIDDLE EAST 9% -8% AUSTRALIA 7% +0% SOUTH AMERICA 5% -4% 5 S
Slide 6: Order Intake and Revenues
ORDER INTAKE REVENUES DECLINE ON HIGH COMPARABLES NEGATIVE GROWTH IN ALL THREE BUSINESS AREAS REPORTED P/V REPORTED P/V 25 356 -11% 23 620 -7% SEK M SEK M 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 2020
Slide 7: EBIT Development
EBIT DEVELOPMENT SEK M -18% 6 000 22% • MARGIN AT 17.5% EBIT ADJUSTED • Excluding in period metal and FX-revaluation effects in SMRT 3 728 5 000 19% 4 000 16% • UNDERABSORPTION DUE TO MSEK VOLUME DECLINE -7%, AND: • Negative impact from 3 000 13% EBIT % ADJUSTED revaluation/hedges SEK -212 M 2 000 1
Slide 8: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2019 44% SANDVIK MINING AND Q1 2019 Q1 2020 CHANGE ROCK TECHNOLOGY SEK M ORDER INTAKE 11 369 10 570 -8%* REVENUES 10 103 9 775 -5%* ORDERS DECLINE -8% FROM RECORD LEVELS ADJ. OP. PROFIT 1 817 1 661 -9% − Equipment orders drop at a high-teen rate primarily driven % OF REVENUES 18.0%
Slide 9: Sandvik Machining Solutions
SHARE OF REVENUES 2019 41% SANDVIK MACHINING Q1 2019 Q1 2020 CHANGE SOLUTIONS SEK M ORDER INTAKE 11 105 10 124 -12%* DEMAND DECLINED ACROSS MAJOR REGIONS AND REVENUES 10 679 9 766 -12%* SEGMENTS ADJ. OP. PROFIT 2 654 2 054 -23% − Decline intensified at the end of the quarter as the corona % OF REVEN
Slide 10: Sandvik Materials Technology
SHARE OF REVENUES 2019 15% SANDVIK MATERIALS SEK M Q1 2019 Q1 2020 CHANGE TECHNOLOGY ORDER INTAKE 4 930 4 365 -14%* REVENUES 3 773 3 782 -3%* ADJ. OP. PROFIT 307 139 -55% LARGE ENERGY ORDERS RECEIVED ALBEIT INCREASED MARKET UNCERTAINTY % OF REVENUES 8.1% 3.7% UNDERLYING MARGIN³ 10.4% 9.0% − Sharp dr
Slide 11: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 11
Slide 12: Financial Summary Q1
GROWTH Q120, % ORDER REVENUES INTAKE FINANCIAL SUMMARY Q1 ORGANIC: CURRENCY: STRUCTURE: -11 +2 -0 -7 +2 -0 TOTAL -9 -6 SEK M Q1 2019 Q1 2020 CHANGE % ORDER INTAKE 27 873 25 356 -11¹ REVENUES 25 025 23 620 -7¹ ADJUSTED OPERATING PROFIT 4 567 3 728 -18 % OF REVENUES 18.3 15.8 FINANCE NET -378 -416 -10
Slide 13: Bridge Analysis
GROUP UNDERLYING LEVERAGE: BRIDGE ANALYSIS -39% SANDVIK GROUP PRICE/ VOLUME/ METAL PRICE SEK M Q1 2019 PRODUCTIVITY CURRENCY EFFECTS SMT STRUCTURE Q1 2020 REVENUES 25 025 -1 872 +427 +62 -22 23 620 ADJUSTED EBIT 4 567 -726 +12 -116 -9 3 728 ADJUSTED EBIT MARGIN 18.3% -39% 15.8% MARGIN ACCRETION / DI
Slide 14: Savings Measures Ahead of Plan
SAVINGS MEASURES AHEAD OF PLAN SEK 1.4 B IN ANNUALIZED RUN-RATE SANDVIK MINING & SANDVIK MACHINING SANDVIK MATERIALS GROUP ROCK TECHNOLOGY SOLUTIONS TECHNOLOGY COMMON ANNUALIZED RUN-RATE SAVINGS END OF Q1 2020 ~1 400 SEK M, OUT OF SEK 1 700 M IN SCOPE 880 400 80 60 ACTUAL ACHIEVED IN 2019 ~400 260 8
Slide 15: Net Financials
NET FINANCIALS SEK M Q1 19 Q1 20 Underlying interest net -168 -126 • Temporary revaluations of hedges Pension -35 -31 • Predominantly electricity prices Bank charges -15 -14 • Nickel and molybdenum Other fin income & costs -4 -10 • Firm order hedges Leases IFRS16 -26 -25 FX & other asset classes -13
Slide 16: Reported and Underlying Tax Rate
REPORTED AND UNDERLYING TAX RATE Q1 2019 Q1 2020 REPORTED 25.0% 21.8% EXCL. IAC 25.0% 19.2% NORMALIZED* 25.0% 23.1% IN LINE WITH 23-25% GUIDANCE FOR 2020 *Including positive one-off tax implications as well as items affecting comparability 16 SANDVIK: Interim Report on the first quarter 2020 Comment
Slide 17: Net Working Capital, Relative NWC by BA
NET WORKING CAPITAL RELATIVE NWC BY BA SMRT SEASONAL INVENTORY BUILD-UP SEK M 30 000 40% 45% 40% 27 500 35% 35% 25 000 30% 30% 22 500 25% 25% 20 000 20% 20% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Sandvik Machining Solutions Sandvik Mining & Rock Technology NWC (continu
Slide 18: Free Operating Cash Flow
FREE OPERATING CASH FLOW SEK M SEK M Q1 2019 Q1 2020 EBITDA + non-cash 5 815 4 505 NWC change -1 577 -697 Capex* -887 -680 FOCF** +3 352 +3 128 *Including investments and disposals in rental, tangible and intangible assets **Cash flow before acquisitions and disposals, financial items and taxes *Adj
Slide 19: Net Debt
NET DEBT SEK M GEARING 45 000 1.3 1.1 35 000 • Net gearing at 0.17 0.9 25 000 0.7 • Net cash position SEK 1.4 B 15 000 0.5 • >SEK 30 B in cash and undrawn 5 000 0.3 -5 000 0.1 credit lines Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 2020 Financial net debt
Slide 20: Outcome Q1
OUTCOME Q1 Q1 2020 Underlying currency effect (SEK M): +224 (~150) Total currency effect (SEK M): +12 Metal price effect in quarter (SEK M): -201 (-200) Capex (SEK B): 0.7 Interest net (SEK B): -0.1 Normalized tax rate (%): 23.1 20 SANDVIK: Interim Report on the first quarter 2020 Comments and numbe
Slide 21: Guidance 2Q20 and FY2020
GUIDANCE 2Q20 AND FY2020 UPDATED FROM ABOUT SEK 4 B CAPEX (CASH) Estimated to <SEK 4 B for 2020 CURRENCY Given currency rates at end of March 2020 the effect on operating profit from transaction and EFFECTS translation would be SEK +100 M for Q2 2020 METAL PRICE Given currency rates, stock levels an
Slide 22: Managing Near-Term Challenges
MANAGING NEAR-TERM CHALLENGES EFFICIENCY MEASURES WHILE SECURING MARKET LEADING POSITIONS • Protecting the earnings by additional SEK ~1.5 B short-term and SEK ~1 B structural savings • Will not jeopardize long-term competitive advantage ROBUST FINANCIAL SHAPE • SEK >30 B in accessible cash • Net ca
Slide 23: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 24: End-Customer Segments
MINING ENERGY (37%) (10%) GENERAL CONSTRUCTION ENGINEERING (8%) (22%) AUTOMOTIVE AEROSPACE (12%) (7%) END-CUSTOMER SEGMENTS (% of group revenues 2019 excl. Mining systems and Other Operations; Other e.g. consumer goods, electronics, chemical and miscellaneous accounted for 4%.) 24 SANDVIK: Interim R
Slide 25: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT -39% 4,567 -1,086 +12 -116 3,728 -9 +360 ADJ. ORGANIC SAVINGS CURRENCY METAL PRICE STRUCTURE ADJ. EBIT Q1 19 GROWTH EFFECT SMT EBIT Q1 20 ADJUSTED EBIT MARGIN 18.3% 15.8% 25 SANDVIK: Interim Report on the first quarter 2020 Comments and numbers refer to cont
Slide 26: Bridge Analysis by Business Area
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE SEK M Q1 2019 PRODUCTIVITY CURRENCY METALS SMT* Q1 2020 MACHINING SOLUTIONS REVENUES 10 679 -1 232 +251 +68 9 766 ADJUSTED EBIT 2 654 -673 +76 -3 2 054 ADJUSTED EBIT MARGIN 24.9% -55% - - 21.0% MINING AND ROCK TECHNOLOGY REVENUES 10 103 -461 +92 +42 9 775 ADJ
Slide 27: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement - - Fin institutions, EIB, NIB - - 81% Swedish MTN European MTN 1 650 11 469 3 years 7 years Bank loans 9 2 years Share swap - - SHORT TERM US Private Placement - - Fin institutions, EIB, NIB - - 19% Swedish MTN Eu
Slide 28: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK AVERAGE INTEREST RATE: ~6% 28 SANDVIK: Interim Report on the first quarter 2020 Comments and numbers refer to continuing operations unless otherwise stated.
Slide 29: 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