Slide 1: Interim Report Fourth Quarter 2020
INTERIM REPORT FOURTH QUARTER 2020
Slide 2: Summary Q4
SUMMARY Q4 SHIFTING TO GROWTH • First quarter with positive order intake (excl. major orders) since Q1 2019 • Record order intake noted in SMRT • Improved sequential demand in SMM driven by automotive • Good development in medical, industrial heating and consumer segments in SMT • Announced intentio
Slide 3: Q4 Launch - GC4425 and GC4415
Q4 LAUNCH - GC4425 AND GC4415 PAIRED UP FOR PRODUCTIVE STEEL TURNING • Second generation Inveio® coating technology delivers market-leading performance in steel turning • New substrates, a unique combination of good toughness and resistance against plastic deformation, offer a reliable performance •
Slide 4: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT % of group revenue 2020 Mining 40% Engineering 23% Automotive 11% Energy 10% Construction 8% Aerospace 5% % of group Q4 Y/Y Demand trend revenue 2020 order intake Sequential Q/Q EUROPE 35% -2% NORTH AMERICA 22% -23% ASIA 20% +4% AFRICA/MIDDLE EAST 9% +2
Slide 5: Order Intake and Revenues
ORDER INTAKE REVENUES COVID-19 RELATED DECLINE WITH SEQUENTIAL IMPROVEMENT REPORTED P/V REPORTED P/V 22,051 -2% 22,408 -6% SEK M SEK M 30 000 110 000 30 000 110 000 100 000 100 000 25 000 25 000 90 000 90 000 20 000 20 000 80 000 80 000 15 000 70 000 15 000 70 000 2016 2017 2018 2019 2020 2016 2017
Slide 6: EBIT Development
GROUP LEVERAGE: EBIT DEVELOPMENT N/A -11% SEK M • Margin at 20.1% (19.1) • 19.5% (18.4) excluding metal price EBIT ADJUSTED 4,505 6 000 effects 20% 5 000 • Adjusted EBIT excluding currency on par with Q4 2019 16% 4 000 SEK M • Resilient earnings performance 12% 3 000 in all business areas and SMRT 2
Slide 7: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2020 46% SANDVIK MINING AND Q4 2019 Q4 2020 CHANGE ROCK TECHNOLOGY SEK M ORDER INTAKE 10,685 10,926 15%* REVENUES 12,197 10,833 -1%* ORDERS INCREASED ORGANICALLY BY 15% ADJ. OP. PROFIT 2,630 2,346 -11% − Record high order intake in the quarter % OF REVENUES 21.6% 21.7% − Strong org
Slide 8: Sandvik Manufacturing and Machining Solutions
SHARE OF REVENUES 2020 38% SANDVIK MANUFACTURING AND MACHINING SOLUTIONS SEK M Q4 2019 Q4 2020 CHANGE ORDER INTAKE 9,820 8,434 -7%* RECOVERY DRIVEN BY AUTOMOTIVE REVENUES 9,844 8,139 -11%* − Customer activity in parts of Europe and Asia intensified ADJ. OP. PROFIT 2,000 1,742 -13% − Slightly improve
Slide 9: Sandvik Materials Technology
SHARE OF REVENUES 2020 16% SANDVIK MATERIALS SEK M Q4 2019 Q4 2020 CHANGE TECHNOLOGY ORDER INTAKE 4,144 2,691 -31%* REVENUES 4,013 3,436 -10%* ADJ. OP. PROFIT 659 528 -20% REVENUES PARTLY SUPPORTED BY BACKLOG % OF REVENUES 16.4% 15.4% − Continued high weakness in the oil and gas segment and soft aer
Slide 10: Tomas Eliasson, CFO
TOMAS ELIASSON CFO 10
Slide 11: Financial Summary Q4
GROWTH Q420, % ORDER REVENUES FINANCIAL SUMMARY Q4 INTAKE ORGANIC: -2 -6 CURRENCY: -9 -9 STRUCTURE: -2 -2 TOTAL -12 -16 SEK M Q4 2019 Q4 2020 CHANGE Q1-Q4 Q1-Q4 CHANGE % 2019 2020 % ORDER INTAKE 25,179 22,051 -2¹ 104,075 86,287 -12¹ REVENUES 26,583 22,408 -6¹ 103,238 86,404 -11¹ ADJUSTED OPERATING P
Slide 12: Bridge Analysis
GROUP LEVERAGE: BRIDGE ANALYSIS N/A SANDVIK GROUP PRICE/ VOLUME/ METAL PRICE SEK M Q4 2019 PRODUCTIVITY CURRENCY EFFECTS SMT STRUCTURE Q4 2020 REVENUES 26,583 -1,467 -2,162 -130 -417 22,408 ADJUSTED EBIT 5,066 +35 -494 -45 -58 4,505 ADJUSTED EBIT MARGIN 19.1% 20.1% MARGIN ACCRETION / DILUTION +1.3%
Slide 13: Summary Savings Programs Q4
SUMMARY SAVINGS PROGRAMS Q4 SEK M SANDVIK MANUFACTURING & SANDVIK MINING & SANDVIK MATERIALS Total Annualized GROUP MACHINING SOLUTIONS ROCK TECHNOLOGY TECHNOLOGY COMMON Program from Q3 2019 120 30 20 10 180 1,700 Work time reduction 140 45 15 5 205 n/a Other temporary savings 270 180 25 25 500 n/a
Slide 14: Net Financials
NET FINANCIALS SEK M Q4 19 Q4 20 • Interest net down year on year due to lower Interest net -120 -96 debt Pension -56 -32 • Temporary revaluations of currency hedges Bank charges -11 -12 and positive effects from electricity and Other fin income & costs -18 -14 commodity hedges Leases IFRS16 -28 -27
Slide 15: Reported and Underlying Tax Rate
REPORTED AND UNDERLYING TAX RATE Q4 2019 Q4 2020 REPORTED 118.5% 22.7% EXCLUDING IAC 17.5% 24.1% NORMALIZED 23.5% 24.1% IN LINE WITH 23-25% GUIDANCE FOR 2020 15 SANDVIK: Interim Report on the fourth quarter 2020 Comments and numbers refer to continuing operations unless otherwise stated.
Slide 16: Net Working Capital, Relative NWC
NET WORKING CAPITAL RELATIVE NWC INVENTORY REDUCTIONS ACROSS ALL BUSINESS AREAS SEK M 30 000 35% 40% 27 500 35% 25 000 30% 22 500 30% 20 000 25% 25% 17 500 15 000 20% 20% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Sandvik Manufacturing and Machining Solutions NWC (continuing operations) Sandv
Slide 17: Free Operating Cash Flow
FREE OPERATING CASH FLOW SEK M 8 000 24 000 SEK M Q4 2019 Q4 2020 22 000 6 000 EBITDA + non-cash 5,805 5,285 20 000 NWC change 2,093 1,903 18 000 4 000 Capex* -1,381 -1,248 16 000 FOCF** +6,517 +5,941 14 000 2 000 12 000 *Including investments and disposals in rental, tangible and intangible assets
Slide 18: Net Debt
NET DEBT SEK M GEARING 1,2 40 000 1,0 • Net gearing at 0.04 30 000 0,8 20 000 0,6 • Financial Net Cash position SEK 8.8 B 10 000 0,4 0 0,2 -10 000 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 2019 2020 Financial net debt Net pension liability Leases Gearing 18 SANDV
Slide 19: Outcome Q4
OUTCOME Q4 Q4 2020 Underlying currency effect (SEK M): - 536 (-350) Total currency effect (SEK M): - 494 Metal price effect in quarter (SEK M): +129 (+50) Capex (SEK B): 1.1 Interest net (SEK B): -0.1 Underlying tax rate (%): 24.1 19 SANDVIK: Interim Report on the fourth quarter 2020 Comments and nu
Slide 20: Dividend Proposal
DIVIDEND PROPOSAL SEK 11.12 10.39 8.61 Payout ratio % 8.04 6.14 2.11 2016 2017 2018 2019 2020 5.48 4.54 11.12 2.00* 50 44 41 - 75 2.73 4.25 4.50* 3.50 2.75 2016 2017 2018 2019 2020 Adjusted EPS Extra dividend Ordinary dividend SANDVIK: Interim Report on the fourth quarter 2020 *Proposed dividend Com
Slide 21: Guidance Q1 21 and FY2021
GUIDANCE Q121 AND FY2021 CAPEX (CASH) Estimated to <SEK 4.0 B for 2021 CURRENCY Given currency rates at end of December 2020 the effect on operating profit from transaction and EFFECTS translation would be SEK -750 M for Q1 2021 METAL PRICE Given currency rates, stock levels and metal prices at the
Slide 22: Shifting to Growth
SHIFTING TO GROWTH CONTINUED RECOVERY AND RECORD MARGINS • Solid demand in mining and sequential uptick in our short cycle business driven by automotive • Record margins supported by previously announced savings programs and reduced spend LOOKING AHEAD • Recovery expected to continue, yet uncertaint
Slide 23: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 24: End-Customer Segments
MINING ENERGY (40%) (10%) GENERAL CONSTRUCTION ENGINEERING (8%) (23%) AUTOMOTIVE AEROSPACE (11%) (5%) END-CUSTOMER SEGMENTS (% of group revenues 2020 excl. Mining systems, Varel Oil & Gas and Other Operations; Other e.g. consumer goods, electronics, chemical and miscellaneous accounted for 3%.) 24 S
Slide 25: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT N/A 5,066 -494 -884 920 -45 -58 4,505 ADJ. ORGANIC SAVINGS CURRENCY METAL PRICE STRUCTURE ADJ. EBIT Q4 19 GROWTH EFFECT SMT EBIT Q4 20 ADJUSTED EBIT MARGIN 19.1% 20.1% 25 SANDVIK: Interim Report on the fourth quarter 2020 Comments and numbers refer to contin
Slide 26: Bridge Analysis by Business Area
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE/ SEK M Q4 2019 PRODUCTIVITY CURRENCY METALS SMT* Q4 2020 MACHINING SOLUTIONS REVENUES 9,844 -1,037 -716 +48 8,139 ADJUSTED EBIT 2,000 -97 -124 -36 1,742 ADJUSTED EBIT MARGIN 20.3% -9% - - 21.4% MINING AND ROCK TECHNOLOGY REVENUES 12,197 -144 -1,270 -50 10,833
Slide 27: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement - - 76% Fin institutions, EIB, NIB - - Swedish MTN 1,000 3 years European MTN 10,342 6 years Bank loans 22 1.5 years Share swap - - SHORT TERM US Private Placement - - 24% Fin institutions, EIB, NIB - - Swedish MTN
Slide 28: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK AVERAGE 4 000 INTEREST RATE: ~5% 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 28 SANDVIK: Interim Report on the fourth 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