Slide 1: Interim Report First Quarter 2018
INTERIM REPORT FIRST QUARTER 2018 1
Slide 2: Summary Q1
SUMMARY Q1 STRONG START TO THE YEAR • +7% ORDER GROWTH DESPITE DIFFICULT COMPARABLES • POSITIVE DEVELOPMENT IN ALL BUSINESS AREAS RECORD HIGH EARNINGS AND IMPROVED MARGIN • IMPROVED OPERATING MARGIN IN ALL BUSINESS AREAS NWC BUILD-UP IMPACT CASH FLOW ACTIVE PORTFOLIO MANAGEMENT • INVESTMENTS IN TITA
Slide 3: Market Development
Y/Y UNDERLYING DEMAND TREND MARKET DEVELOPMENT segment bubble size – share of group revenue 2017 Sequential % of group Y/Y underlying revenue FY17 order intake demand trend EUROPE 39% +6% NORTH AMERICA 21% +0% ASIA 20% +19% AFRICA/MIDDLE EAST 9% +1% SOUTH AMERICA 5% +9% AUSTRALIA 6% +8% 3 SANDVIK: I
Slide 4: Order Intake and Revenues
ORDER INTAKE REVENUES RECORD HIGH ORDER INTAKE FOR SMS DOUBLE DIGIT GROWTH IN ALL BA:S REPORTED P/V REPORTED P/V 25 419 7% 23 685 14% MSEK MSEK 30 000 100 000 30 000 100 000 25 000 90 000 25 000 90 000 20 000 80 000 20 000 80 000 15 000 70 000 15 000 70 000 2014 2015 2016 2017 2018 2014 2015 2016 20
Slide 5: EBIT Development
EBIT DEVELOPMENT MSEK +22% 5 000 19% EBIT REPORTED • ~31% GROWTH 4 000 16% 4 271 EXCLUDING FX AND METALS MSEK • SUPPORTED BY 3 000 13% EBIT % REPORTED STRONG REVENUE GROWTH 2 000 10% 18.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 2018 EBIT* EBIT%* *Adjusted for items aff
Slide 6: Sandvik Machining Solutions
SHARE OF REVENUES 2017 40% SANDVIK MACHINING Q1 2017 Q1 2018 CHANGE SOLUTIONS MSEK ORDER INTAKE 9 450 10 198 +8%* REVENUES 8 904 9 761 +10%* RECORD-HIGH ORDER LEVEL OPERATING PROFIT 2 068 2 538 +23% % OF REVENUES 23.2% 26.0% STRONG MARKETS *At fixed exchange rates for comparable units − Positive dev
Slide 7: Sandvik Mining and Rock Technology
SHARE OF REVENUES 2017 40% SANDVIK MINING AND Q1 2017 Q1 2018 CHANGE ROCK TECHNOLOGY MSEK ORDER INTAKE 10 247 10 230 +4%* REVENUES 8 371 9 324 +16%* STRONG UNDERLYING MARKET CONTINUED OPERATING PROFIT 1 173 1 402 +19% − Underlying equipment demand overall stable Y/Y. % OF REVENUES 14.0% 15.0% Order
Slide 8: Sandvik Materials Technology
SHARE OF REVENUES 2017 15% SANDVIK MATERIALS MSEK Q1 2017 Q1 2018 CHANGE TECHNOLOGY ORDER INTAKE 3 746 4 024 +13%* REVENUES 3 277 3 738 +18%* STRONG RECOVERY IN SHORT-CYCLE OPERATING PROFIT 335 369 +10% BUSINESS 10.2% 9.9% % OF REVENUES − Most notable improvement for core- and standard UNDERLYING MA
Slide 9: Tomas Eliasson, CFO
TOMAS ELIASSON CFO SANDVIK |_|
Slide 10: Financial Summary Q1
GROWTH, % ORDER REVENUES FINANCIAL SUMMARY Q1 ORGANIC: CURRENCY: INTAKE +7 -2 +14 -2 STRUCTURE: -3 -2 TOTAL +2 +9 MSEK Q1 2017 Q1 2018 CHANGE % ORDER INTAKE 24 916 25 419 +7¹ REVENUES 21 758 23 685 +14¹ OPERATING PROFIT 3 495 4 271 +22 % OF REVENUES 16.1 18.0 NWC %² 24.5 23.2 CASH FLOW ³ 3 682 2 095
Slide 11: Bridge Analysis
GROUP LEVERAGE: BRIDGE ANALYSIS +39% SANDVIK GROUP PRICE/ VOLUME/ STRUCTURE MSEK Q1 2017 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2018 REVENUES 21 758 2 861 -517 -417 23 685 ADJUSTED EBIT 3 495 1 113 -255 -82 4 271 ADJUSTED EBIT MARGIN 16.1% 39% - - 18.0% MARGIN ACCRETION / DILUTION +2.7% -0.7% -0.1% • In
Slide 12: Net Working Capital, Relative NWC by BA
NET WORKING CAPITAL RELATIVE NWC BY BA BUILD-UP TO SUPPORT ORDER INTAKE MSEK 27 500 35% 45% 40% 25 000 30% 35% 30% 22 500 25% 25% 20 000 20% 20% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Sandvik Machining Solutions Sandvik Mining & Rock Technology NWC (continuing operations) Sandvik Material
Slide 13: Free Operating Cash Flow
FREE OPERATING CASH FLOW MSEK 6 000 16 000 MSEK Q1 2017 Q1 2018 Δ 4 000 14 000 EBITDA + non cash 4 760 5 670 +910 NWC change -213 -2 710 -2 497 Capex* -864 -865 -1 2 000 12 000 FOCF** 3 682 2 095 -1 587 *Including investments and disposals in rental, tangible and intangible assets **Cash flow before
Slide 14: Financial Net Debt
FINANCIAL NET DEBT MSEK GEARING 40 000 1,4 1,2 • NET GEARING AT 0.27 30 000 1,0 20 000 0,8 0,6 • STANDARD & POOR’S OUTLOOK 10 000 UPGRADE TO POSITIVE 0,4 0 0,2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 2018 Net debt excl. pension Net pension liability Net gearing incl. n
Slide 15: Outcome and Guidance
OUTCOME AND GUIDANCE Q1 2018 Underlying currency effect (MSEK): -263 (-250) Total currency effect (MSEK): -255 Metal price effect in quarter (MSEK): +101 (~100) Q2 2018 Underlying currency effect (MSEK): ~0* Metal price effect in quarter (MSEK): +100** FULL YEAR 2018 Capex (BSEK): ~4 (Q1: 0.74) Net
Slide 16: Looking Forward
LOOKING FORWARD FOCUS ON EFFICIENCY MEASURES Y3 Focus on long-term success GRASP GROWTH OPPORTUNITIES NEXT STEP FOR PROFITABILITY AND GROWTH
Slide 17: Back-up Slides
BACK-UP SLIDES SANDVIK P|
Slide 18: End-Customer Segments
MINING ENERGY (31%) (11%) GENERAL CONSTRUCTION ENGINEERING (11%) (24%) AUTOMOTIVE AEROSPACE (13%) (6%) END-CUSTOMER SEGMENTS (% of group revenues 2017 excl. Mining systems; Other e.g. consumer goods, electronics, chemical and miscellaneous was 4% ) 18 SANDVIK: Interim Report on the first quarter 201
Slide 19: Profitability Development
GROUP LEVERAGE: PROFITABILITY DEVELOPMENT +39% +20 -255 -28 +2 -56 4,271 +1,093 3,495 EBIT Q1 17 ORGANIC ANNOUNCED CURRENCY METAL PRICE OTHER STRUCTURE EBIT Q1 18 GROWTH SAVINGS EFFECT SMT PROGRAMS REPORTED MARGIN 16.1% 18.0% 19 SANDVIK: Interim Report on the first quarter 2018 Comments and numbers
Slide 20: Bridge Analysis
BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE MSEK Q1 2017 PRODUCTIVITY CURRENCY ONE-OFFS* Q1 2018 MACHINING SOLUTIONS REVENUES 8 904 907 -50 - 9 761 EBIT 2 068 501 -31 - 2 538 EBIT MARGIN 23.2% +55% - - 26.0% MINING AND ROCK TECHNOLOGY REVENUES 8 371 1 365 -412 - 9 324 EBIT 1 173 481 -252 - 1 402 EBIT M
Slide 21: Other Operations
SHARE OF REVENUES 2017 5% OTHER OPERATIONS HYPERION CLOSURE EXPECTED DURING SUMMER 2018 • Carve-out process progressing according to plan ROBUST UNDERLYING MARKET • Strong revenue development +7% • Margin at 11.9% 21 SANDVIK: Interim Report on the first quarter 2018 Comments and numbers refer to con
Slide 22: Other Operations: Non-Strategic Assets - Hyperion
SHARE OF REVENUES 2017 5% OTHER OPERATIONS NON-STRATEGIC ASSETS - HYPERION MSEK ORDER INTAKE REVENUES 2 000 25% 967 862 1 500 20% MSEK MSEK 1 000 15% EBIT ROCE² 500 10% 102 14.3% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 5% MSEK 2015 2016 2017 2018 Revenues ROCE %² EBIT% adjusted¹ ¹Adjusted for items
Slide 23: Loan and Duration Profile
LOAN AND DURATION PROFILE AMOUNT MSEK AVERAGE DURATION LONG TERM US Private Placement 4 831 3 years Fin institutions, EIB, NIB 1 469 5 years 96% Swedish MTN European MTN 5 647 11 290 3 years 8 years Bank loans 174 1 year Share swap - - SHORT TERM US Private Placement 0 0 month Fin institutions, EIB,
Slide 24: Loan Maturity Profile
LOAN MATURITY PROFILE MSEK 4 500 AVERAGE 4 000 INTEREST RATE: 3 500 ~4% 3 000 2 500 2 000 1 500 1 000 500 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 24 SANDVIK: Interim Report on the first quarter 2018 Comments and numbers refer to continuing operations unless
Slide 25: Guidance
GUIDANCE CAPEX Estimated at about 4 BSEK for 2018 CURRENCY Given currency rates at end of March 2018 the effect on operating profit from transaction and EFFECTS translation would be ~0 MSEK for Q2 2018 METAL PRICE Given currency rates, stock levels and metal prices at the end of March 2018, it is es
Slide 26: 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