Slide 1: Interim Report First Quarter 2014
INTERIM REPORT APRIL 25 FIRST QUARTER 2014
Slide 2: Summary Q1 2014
SUMMARY Q1 2014 IMPROVED DEMAND IN MANY AREAS • Positive book-to-bill • Major orders from the energy segment, 1,300 MSEK • Major orders from the mining industry, 1,000 MSEK COST REDUCTION AT SANDVIK MINING • Annual run-rate by end Q1, 500 MSEK CLOSURE OF PRODUCTION UNITS INITIATED EBIT 2,478 MSEK, 1
Slide 3: Invoicing by Markets and Segments
INVOICING BY MARKETS AND SEGMENTS MARKETS, SHARE OF GROUP TOTAL CUSTOMER SEGMENTS EUROPE ASIA Consumer related Invoicing growth vs Q1 2013 Other 41% 18% Aerospace > +5% -5 to +5% -5%* +3%* Energy < -5% NORTH AMERICA AUSTRALIA 18% 7% Automotive Mining +3%* -28%* AFRICA SOUTH AMERICA 8% 8% Constructio
Slide 4: Order Intake and Invoicing
ORDER INTAKE INVOICING 22,496 MSEK 20,783 MSEK CHANGE P/V +2% CHANGE P/V -4% MSEK MSEK 30,000 150% 30,000 120% 25,000 125% 25,000 100% 20,000 100% 20,000 80% 15,000 75% 15,000 60% 10,000 50% 10,000 40% 5,000 25% 5,000 20% 0 0% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2007 2008 2009 2010 2011 201
Slide 5: EBIT and Cash Flow
EBIT 2,478 MSEK CASH FLOW MARGIN 11.9% CASH FLOW FROM OPERATING ACTIVITIES 759 MSEK MSEK MSEK 5,000 40% 5,000 350% 300% 4,000 4,000 30% 250% 3,000 3,000 20% 200% 2,000 2,000 150% 10% 100% 1,000 1,000 50% 0% 0 2007 2008 2009 2010 2011 2012 2013 2014 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 -10% -
Slide 6: Strengthening Group Executive Management
STRENGTHENING GROUP EXECUTIVE MANAGEMENT SCOT SMITH ÅSA THUNMAN NEW PRESIDENT OF SANDVIK MINING NEW EVP AND GENERAL COUNSEL • 30 years of industrial • Long experience from experience, out of both law firm and the which 11 years within corporate business the mining industry • Most recently at • Most
Slide 7: Our Way Forward
OUR WAY FORWARD SANDVIK SANDVIK SANDVIK SANDVIK SANDVIK MINING MACHINING MATERIALS CONSTRUCTION VENTURE SOLUTIONS TECHNOLOGY Shifting geographic footprint Adjusting overcapacity Accelerate growth of strategic Realign production footprint Develop existing portfolio closer to customers (reducing produ
Slide 8: Financial Targets
FINANCIAL TARGETS CURRENT TARGET MANAGEMENT FOCUS • Product launches through focused R&D GROWTH -4% 8% • Increase exposure towards high growth markets and segments • Adjust geographic footprint • Reduce Net Working Capital ROCE 13%* 25% • Selective capital allocation (investments) • Restore earnings
Slide 9: Mats Backman, CFO
MATS BACKMAN CFO SANDVIK |__|
Slide 10: Restructuring Our Footprint
RESTRUCTURING OUR FOOTPRINT PRODUCTION UNITS Reduce number of production units from 150 to 125 over next three to four years 150 Initiated closures Initial phase launched in Q4 2013 • Closure of ~10 units 125 • Annual savings of 800 MSEK at end 2015 • Total restructuring cost 900 MSEK (Q4 2013) 100
Slide 11: Net Working Capital
NET WORKING CAPITAL MSEK 35,000 45% 40% 30,000 35% 25,000 30% 20,000 25% TARGET 15,000 20% 15% 10,000 10% 5,000 5% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 Net working capital Net working capital / Invoiced sales 10 Sandvik Interim Report on first quarter 2014
Slide 12: Net Working Capital by Business Area
NET WORKING CAPITAL % OF INVOICING BY BUSINESS AREA 60% 50% 40% 30% TARGET 20% 10% 0% 2007 2008 2009 2010 2011 2012 2013 2014 Sandvik Mining Sandvik Machining Solutions Sandvik Materials Technology Sandvik Construction 11 Sandvik Interim Report on first quarter 2014
Slide 13: Addressing the NWC Gap
ADDRESSING THE NWC GAP • 4 SANDVIK MINING SANDVIK MATERIALS TECHNOLOGY • Optimize material flow Primary to Tube • Supply chain optimization program • Stock replenishment • Review accounts receivable process including increased focus on pre-payments • 1 • Stock replenishment SANDVIK CONSTRUCTION • Su
Slide 14: Summary
SUMMARY IMPROVED DEMAND IN MANY AREAS PROGRESS ON SUPPLY CHAIN OPTIMIZATION FOCUS ON NET WORKING CAPITAL STRENGTHENING GROUP EXECUTIVE MANAGEMENT 13 Sandvik Interim Report on first quarter 2014
Slide 15: Back-up Slides
BACK-UP SLIDES SANDVIK |__|
Slide 16: Sandvik Mining Q1 2014
SANDVIK MINING Q1 2014 WEAKER DEMAND COST REDUCTIONS • Quarterly run-rate end Q1, 125 MSEK EBIT 688 MSEK, 10.4% • Currency effects -130 MSEK INITIATIVE TO OPTIMIZE SUPPLY CHAIN • Closure of unit in South Africa initiated 15 Sandvik Interim Report on first quarter 2014
Slide 17: Sandvik Mining Q1 2014
SANDVIK MINING Q1 2014 MSEK Order intake 6,055 MSEK 10,000 50% Invoicing 6,601 MSEK 8,000 40% 6,000 30% EBIT 688 MSEK 4,000 20% ROCE 15.2% 2,000 10% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 -2,000 -10% Invoicing EBIT margin ROCE 12 months 16 Sandvik Interim Report on first quarter 2014
Slide 18: Sandvik Machining Solutions Q1 2014
SANDVIK MACHINING SOLUTIONS Q1 2014 INCREASED MARKET ACTIVITY • Increased activity in automotive and aerospace • Europe developed favorably from a low level EBIT 1,480 MSEK, 20.0% • Currency effects -25 MSEK INITIATIVE TO OPTIMIZE SUPPLY CHAIN • Closure of units in UK and Italy initiated 17 Sandvik
Slide 19: Sandvik Machining Solutions Q1 2014
SANDVIK MACHINING SOLUTIONS Q1 2014 MSEK Order intake 7,719 MSEK 10,000 50% Invoicing 7,400 MSEK 8,000 40% EBIT 1,480 MSEK 6,000 30% 4,000 20% ROCE 28.0% 2,000 10% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 -2,000 -10% Invoicing EBIT margin ROCE 12 months 18 Sandvik Interim Report on first quarter
Slide 20: Sandvik Materials Technology Q1 2014
SANDVIK MATERIALS TECHNOLOGY Q1 2014 IMPROVED BUSINESS CONDITIONS SEVERAL MAJOR ENERGY ORDERS SECURED • About 1,300 MSEK IMPROVED PROFITABILITY • Operating margin, 11.1% adjusted for metal price effect INVENTORY BUILD-UP • Increased stock availability for oil & gas and core and standard 19 Sandvik I
Slide 21: Sandvik Materials Technology Q1 2014
SANDVIK MATERIALS TECHNOLOGY Q1 2014 MSEK Order intake 4,633 MSEK 6,000 30% 5,000 Invoicing 3,547 MSEK 20% 4,000 EBIT 421 MSEK 3,000 10% Adjusted for metal price effects, 2,000 395 MSEK, 11.1 % of invoicing 0% 1,000 ROCE 10.4% 0 2007 2008 2009 2010 2011 2012 2013 2014 -10% -1,000 -20% Invoicing -2,0
Slide 22: Sandvik Construction Q1 2014
SANDVIK CONSTRUCTION Q1 2014 CONTINUED MARKET UNCERTAINTY • Europe increased from low level EARNINGS IMPACTED BY LOW SALES AND CURRENCY EFFECTS • Currency effect -50 MSEK and -15 MSEK to preceding quarter INITIATIVE TO OPTIMIZE SUPPLY CHAIN • Closure of unit in UK initiated 21 Sandvik Interim Report
Slide 23: Sandvik Construction Q1 2014
SANDVIK CONSTRUCTION Q1 2014 MSEK Order intake 2,336 MSEK 4,000 40% Invoicing 1,871 MSEK 3,000 30% 2,000 20% EBIT -11 MSEK 1,000 10% ROCE -0.1% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 -1,000 -10% -2,000 Invoicing EBIT margin ROCE 12 months -20% 22 Sandvik Interim Report on first quarter 2014
Slide 24: Sandvik Venture Q1 2014
SANDVIK VENTURE Q1 2014 IMPROVED MARKET CONDITIONS • Positive development in all product areas and major regions STRONGER EARNINGS • EBIT 233 MSEK, 17.1% • Favorable product mix VAREL ACQUISITION PROCESS CONTINUES ACCORDING TO PLAN 23 Sandvik Interim Report on first quarter 2014
Slide 25: Sandvik Venture Q1 2014
SANDVIK VENTURE Q1 2014 MSEK Order intake 1,749 MSEK 3,000 40% 2,000 30% Invoicing 1,362 MSEK 20% 1,000 EBIT 233 MSEK 10% 0 2007 2008 2009 2010 2011 2012 2013 2014 0% ROCE 11.4% -1,000 -10% -2,000 -20% -3,000 -30% -4,000 -40% -5,000 -50% Invoicing EBIT margin ROCE 12 months 24 Sandvik Interim Report
Slide 26: Bridge Analysis Sandvik Group
BRIDGE ANALYSIS SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q1 2013 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2014 Invoicing 22,098 -800 -500 -15 20,783 EBIT 2,557 -80 -200 200 2,478 EBIT margin 11.6% -10% - - 11.9% * Includes metal price effects 25 Sandvik Interim Report on first quarter 2014
Slide 27: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2013 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2014 SANDVIK MINING Invoicing 8,313 -1,200 -500 - 6,601 EBIT 1,211 -400 -130 - 688 EBIT margin 15% -33% - - 10% SANDVIK MACHINING SOLUTIONS Invoicing 6,977 350 25 40 7,400 EBIT 1,141 225 -25 140 1,480 EBIT margi
Slide 28: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2013 PRODUCTIVITY CURRENCY ONE-OFFS Q1 2014 SANDVIK CONSTRUCTION Invoicing 2,046 -150 -25 - 1,871 EBIT 103 -60 -50 - -11 EBIT margin 5% -40% - - -1% SANDVIK VENTURE Invoicing 1,271 40 15 35 1,362 EBIT 116 120 - - 233 EBIT margin 9% 300% - - 17% 27 San
Slide 29: Loan and Duration Profile
LOAN AND DURATION PROFILE LONG TERM 83% AMOUNT MSEK AVERAGE DURATION US Private Placement 5,414 6 years Fin institutions, EIB, NIB 2,698 7 years Swedish MTN 6,861 4 years European MTN 6,061 12 years Bank loans 314 3 years Share swap 1,657 1 years SHORT TERM 17% Commercial paper 1,595 2 months Fin in
Slide 30: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK 3,000 Loan Cash position 2,000 1,000 0 -1,000 -2,000 -3,000 -4,000 -5,000 -6,000 9 Months 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2032 2033 29 Sandvik Interim Report on first quarter 2014
Slide 31: 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