sandvik better than before · (sps, hyperion, wire and varel o&g) but including acquisitions,...

SANDVIKBETTER THAN BEFORE

1

Comments and numbers refer to continuing operations excluding Mining Systems

Adoption of IFRS16 Leases as of 2019

2

2015 2016 2017 2018

19%

12%

STRONG CASH

& LOW DEBT

INCREASED PACE

IN M&A

RESHAPING THE

GROUP

STRONG PERFORMANCE IMPROVEMENTEBIT %: ~170 BPS ANNUAL INCREASE

2019

3

STRONG CASH

& LOW DEBT

INCREASED PACE

IN M&A

RESHAPING THE

GROUP

DECENTRALIZED

STRONG PERFORMANCE MANAGEMENT

TRANSPARENCY AND QUICK DIAGNOSTICS

FOCUS ON CORE

SIX ASSETS IDENTIFIED AS NON-CORE SO FAR

CLEAR ACCOUNTABILITY, SPEED IN DECISION MAKING AND

ENTREPRENEURIAL DRIVE

Ongoing: Varel O&G

Completed: Mining Systems, Wire, SPS, Hyperion,

Fagersta Stainless

STRONG PERFORMANCE IMPROVEMENT

4

SMTPOWER OF ONE

STRONG CASH

& LOW DEBT

INCREASED PACE

IN M&A

RESHAPING THE

GROUP: SMT

LAST YEARS’ ACTIONS

FUNDAMENTALS IN PLACE....RIGHT TIME FOR

NEXT STEP

Strong performer in relevant peer group

Successful turnaround >10% margin & ~10% ROCE

Organizational restructuring done with new

management in place

Sufficient cash generation and well-invested

First in mind for capital allocation

Full focus from board

Evaluated on own merits

Debt-free gives flexibility

Focus on core

5

STRONG CASH

& LOW DEBT

INCREASED PACE

IN M&A

RESHAPING THE

GROUP

CREATING FLEXIBILITY AND GROWTH OPPORTUNITIES

0.1

0.4

0.7

1

1.3

12 000

14 000

16 000

18 000

2015 2016 2017 2018 2019

FOCF Net gearing

6

GOING FOR GROWTH

STRONG CASH

& LOW DEBT

INCREASED PACE

IN M&A

RESHAPING THE

GROUP

ROUND TOOL

COMPANIES

5

CONSUMABLES

COMPANY

1

SOFTWARE MEASUREMENT

COMPANY

HEATING SYSTEMS

COMPANIES

2

13 acquisitions in 2018-2020

highest number in 10 years and >2 BSEK added in revenues

1

BATTERY ELECTRIC

SOLUTIONS COMPANY

1

DIGITAL MINING

COMPANY

1

HIGH PRECISION

TUBING COMPANY

1ADDITIVE MANUFACTURING

COMPANY

1 ?

REMAINING RELEVANT THROUGH CHANGE

AUTONOMOUS

MINING

DIGITAL

MANUFACTURING AND MINING

PREDICTIVE

MAINTAINANCE

SAFER

EMOPLOYEES

ELECTRIFICATION/

BATTERIFICATION

JOINING FORCES ENABLE NEW SOLUTIONS

LESS CAPITAL

INVESTMENTS

CUSTOMER

NEEDS

MORE PRODUCTIVITY

LONGTERM SUCCESS

POSITIONING OPTICS

MATHEMATICAL MODELLING LASERS

METALLURGY ROCK CRUSHING

EQUIPMENT DESIGN MINING METHODOLOGY

TECHNICAL SKILLS

CORE COMPETENCIES

CAD/CAM/CAE

QUALITY ASSURANCE

MEASUREMENT

METAL CUTTING

MINING EQUIPMENTAPPLICATIONS

PRODUCTS

8

KEY FOCUS AREAS

MAINTAIN AND

STRENGTHEN LEADING

POSITIONS AND

DISPOSE OF NON-CORE

ASSETS

DEVELOP SOLUTIONS

OFFERING TO CREATE

VALUE OVER A LARGER

PART OF THE VALUE

CHAIN

IMPROVED THROUGH-

CYCLE PERFORMANCE

BY COST AND CAPITAL

EFFICIENCY

FOUR

SUSTAINABILITY

GOALS

AIMING FOR

2030

TH

RO

UG

H-C

YC

LE

10

≥16%

TROUGH EBIT %

ADJUSTED

ROLLING 12 MONTHS

NET DEBT/

EQUITY

<0.5INCL. NET PENSION LIABILITIES

AN

NU

AL

TH

RO

UG

H-C

YC

LE

TR

OU

GH

Note: All targets including Sandvik Materials Technology

DIVIDEND

PAYOUT RATIO

OF ADJUSTED EARNINGS

PER SHARE

50%

GROWTH %

INCLUDING M&A

≥5%

GROWTH AND TROUGH MARGIN

11

ADJUSTED EBIT %

TROUGH

BUBBLE SIZE: REVENUES

5 BUSINESSESFOCUSING ON STABILITY & PROFITABILITY

CORESOME FROM LOW BASE

GROWTH RATES >10% FOR

2X GROWTHVS. GROUP AVERAGE

FOR ACQUIRED BUSINESSES

-2 -1 0 1 2 3 4 5 6 7

15

5

10

25

20

NEW TARGET:

TROUGH EBIT%

≥16% PLUS

CAGR GROWTH %

NEW TARGET:

THROUGH-CYCLE GROWTH

≥5%

GROUP

Note: Historic growth based on peak-to-peak, trough margin for the same period. Excluding both finalised and planned disposals

(SPS, Hyperion, Wire and Varel O&G) but including acquisitions, excluding metal prices in Sandvik Materials Technology.

RECORD-HIGH DEMAND LEVEL AND

PERFORMANCE IMPROVEMENT

12

REVENUES

103.2BSEK

ADJUSTED EBIT

19.2BSEK

ADJUSTED EBIT %

18.6FREE OPERATING

CASH FLOW

18.0BSEK

ROCE %*

21.3DIVIDEND

0SEK PER SHARE

MSEK MSEK


*ROCE calculated with adjusted EBIT and 4Q avg. CE

-10%

0%

10%

20%

80 000

90 000

100 000

110 000

2015 2016 2017 2018 2019

Revenues Orders

Org. dev revenues Org. dev orders

12%

14%

16%

18%

20%

10 000

12 500

15 000

17 500

20 000

2015 2016 2017 2018 2019

EBIT adjusted Adj. EBIT %

QUARTERLY ORGANIC GROWTH

DEMAND ON HIGH LEVELHOWEVER NEGATIVE GROWTH

FINANCIAL OVERVIEW

13

10%

15%

20%

25%

30%

10 000

15 000

20 000

25 000

30 000

2016 2017 2018 2019 2020

Order intake Revenues

EBIT % adjusted ROCE 12M rolling EBIT adj.

-15%

-10%

-5%

0%

5%

10%

15%

20%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2016 2017 2018 2019 2020

Organic order intake growth Organic revenue growth

14

SANDVIK MACHINING

SOLUTIONS

SANDVIK MINING &

ROCK TECHNOLOGYSANDVIK MATERIALS

TECHNOLOGYGROUP

COMMON

880

260

400

80

80

10

60

10

ANNUALIZED RUN-RATE SAVINGS END OF Q1 2020

SEK M, OUT OF SEK 1 700 M IN SCOPE

~1 400

SAVINGS MEASURES AHEAD OF PLANSEK 1.4 B IN ANNUALIZED RUN-RATE

ACTUAL ACHIEVED IN 2019

~400SEK M

220 100 20 15

ACTUAL ACHIEVED IN Q1 2020

~360SEK M

REDUCTION OF ~2000* EMPLOYEES IN SINCE Q3 2019*2500 if employees who left already in H1 2019 in SMS are included

LEADING POSITIONS

TO DRIVE SUSTAINABLE PRODUCTIVITY AND GROWTH

15

ADVANCED STAINLESS STEEL AND

SPECIAL ALLOYS

METAL CUTTING MINING AND ROCK TECHNOLOGY

16

SANDVIK

MACHINING SOLUTIONS

41% 46%

SANDVIK MINING AND

ROCK TECHNOLOGY

44% 45%

SANDVIK

MATERIALS TECHNOLOGY

15% 9%

Share of revenues 2019 excl. group

activities and Other operations

Share of adjusted operating profit 2019 excl. group

activities and Other operations

…ORGANIZED IN THREE BUSINESS AREAS


MINING

37%

SEGMENT EXPOSURE

AUTOMOTIVE

12%

ENERGY

10%

ENGINEERING

22%

8%

AEROSPACE

7%

OTHER

4%

CONSTRUCTION

Share of revenues 2019 by end-segment excl. Other Operations. Other: consumer goods, electronics, chemicals and miscellaneous.


MARKET

DEVELOPMENT

18

ORDER INTAKE DEVELOPMENT

EUROPE 37% -14% -8%

NORTH AMERICA 23% -14% +1%

ASIA 19% -6% -3%

AFRICA/MIDDLE EAST 9% -8% +4%

SOUTH AMERICA 5% -4% +5%

AUSTRALIA 7% +0% +21%

% OF GROUP

REVENUES FY2019 Q1 2020 FY 2019

SANDVIK GROUP 100% -11% -2%


19

44%

MINING AND ROCK PROCESSING EXPERTISE AND SERVICE

SHARE OF REVENUES

2019

CRUSHING &

SCREENING

AFTERMARKET

MECHANICAL

CUTTING

MINE

AUTOMATIONLOADING &

HAULINGSURFACE

DRILLING

UNDERGROUND

DRILLING TUNNELING

BREAKING

SANDVIK MINING AND ROCK

TECHNOLOGY

DEMAND DRIVERS

• Mining: mining capex, metal and mineral prices and extraction

levels

• Construction: infrastructure spending, GDP

• Oil & Gas: oil and gas prices, E&P spend

INDUSTRY TRENDS • Environment, Health and Safety

• Remote locations and declining ore grades

• Energy consumption and water scarcity

• Semi to full automation

• Importance of service

• Larger operations, massive mining

MARKET CHARACTERISTICS• Large aftermarket

• Several small-sized customers in construction related market

• Few large customers in mining related market. Key exposure in

underground mining with few competitors LARGEST GLOBAL COMPETITORS:

EPIROC, METSO, CATERPILLAR, JOY GLOBAL, TEREX20

44%SHARE OF REVENUES

2019

REVENUES BY

PRODUCT AREA

REVENUES BY

END-MARKET

Mining 82%

Construction

18%

SANDVIK MINING AND ROCK

TECHNOLOGY

Aftermarket

60%

Equipment

40%

21

MSEK

REVENUES

BY REGION

COMMODITY

EXPOSURE MINING

33%

18%6%

2%

11%

7%

4%

8%

6%1%3%

Gold CopperZinc Other base metalsCoal Platinum group metalsIron ore Other mineralsOther metals DiamondsNickel


2019

REVENUES & RETURNS

*Adjusted for items affecting comparability

SANDVIK MINING AND

ROCK TECHNOLOGY

*All excluding Drilling and Completions (Varel O&G)

North

America 21%

Europe 16%

South America 9%

Australia 15%

Asia 21%

Africa/

Middle East 18%

5%

10%

15%

20%

25%

30%

35%

40%

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2016 2017 2018 2019 2020

Revenues EBIT %

EBIT %* ROCE %

22

SANDVIK MACHINING SOLUTIONS

CUTTING-EDGE ENGINEERING


2019

Applications

Products

TURNING MILLINGDRILLING

TOOLING

SYSTEMSINSERTS ROUND TOOLS

RAW MATERIAL &

POWDERS

RECYCLING

DIGITAL SOLUTIONS &

SERVICES

ADDITIVE

MANUFACTURING

MACHINING SOLUTIONS DEMAND DRIVERS

• Primary metals consumption leading to global industrial

METAL CUTTING INDUSTRY TRENDS

• Development in machine tools and material technology drives

increased importance of niche applications and special products

• Growth in additive manufacturing

• Growing mid-market segment, especially in emerging markets

• Indirect channels growing in importance

• Importance of digitalization developing fast

MARKET CHARACTERISTICS

• Market size: About 200 BSEK

• Growth rates: Driven by Industrial Production in

relevant segments, and technological development

23


2019SANDVIK MACHINING SOLUTIONS

The world's

leading supplier

of metal cutting

tools, solutions,

service and

know-how for the

metalworking

industry.

Leading

manufacturer of

metal cutting

tools, providing

complete

solutions for the

metal cutting

industry.

Innovative

solutions for

turning, drilling,

milling and

threading

operations and

multilevel service

programs.

PREMIUM BRANDS MID-MARKET BRANDS

Indexable tools,

round tools and

other products for

metal cutting.

DIVISIONS

KENNAMETAL

KYOCERA

ISCAR (IMC GROUP)

OSG

SUMITOMO

MITSUBISHI

WIDIA (KENNAMETAL)

TAEGUTEC(IMC GROUP)

GÜRING

MAPAL

KORLOY

PREMIUM BRANDS MID-MARKET AND NICHE BRANDS

LARGEST GLOBAL COMPETITORS:

PASSION FOR

EXCELLENCE

MAKING IT

EASIER

ENGINEERING

KOMPETENZ

SIMPLY

RELIABLE

24


2019

SMS SUPPLY

Raw material

supplier, virgin

and recycled.

Develops metal

powder and round

tool blanks.

HC STARCK

GTP

ZHUZHOU

MULTY-BRAND STRATEGY

SANDVIK MACHINING SOLUTIONS

ADDITIVE

MANUFACTURING

As of 1 Jan 2019

fine powder for

additive

manufacturing

and metal

injection molding

has moved from

SMT to SMS

APPLIED MANUFACTURING

TECHNOLOGIES

AMT has a dual

mission to support

the divisions

within our core

business with

digital expertise

and solutions, and

at the same time

grow a portfolio of

its own with digital

service- and

product offerings

25

REVENUES & RETURNS

Automotive 26%

REVENUES BY

END-MARKET

REVENUES

BY REGION


2019

South America 2%

North America 23% Europe 54%

Australia 1%

Africa/Middle East 1%

Asia 19%

MSEK

*Adjusted for items affecting comparability

SANDVIK MACHINING

SOLUTIONS

Energy 9%

Aerospace 16%

Other 3%

General

Engineering 46%

10%

20%

30%

40%

50%

7 000

8 000

9 000

10 000

11 000

2016 2017 2018 2019 2020

Revenues EBIT %

EBIT %* ROCE %

LARGEST GLOBAL COMPETITORS:

SUMITOMO, VALLOUREC, TUBACEX, HITACHI, BÖHLER

UDDEHOLM, THYSSENKRUPP VDM, UGITECH, JIULI

DEMAND DRIVERS

• Energy demand and oil prices (Oil & Gas and Nuclear)

• Global industrial production

• Consumer demand (razors, electronics, white goods)

• Automotive production

INDUSTRY TRENDS

• Increasingly advanced material requirements

• Increased demands on safety and reliability

• Environmental demands on longer lifecycles

and sustainability, e.g. reduce energy consumption

• Increased requirements on productivity

and cost-efficiency

MARKET CHARACTERISTICS

• Market size: ~130 BSEK

DIVISIONS

Leading producer of

seamless tube, pipe

and

bar in stainless steels

and other advanced

materials.

Business units:• Oil & Gas

• Nuclear

• Core and standard

• Specialized

The leading

electrical heating

supplier and brand,

and actor in welding

and stainless wire.

KANTHALTUBE

26


2019SANDVIK MATERIALS TECHNOLOGY

Leading precision

strip actor.

STRIP

Share of revenues

MEETING THE ENERGY CHALLENGE

MSEK

Africa/Middle

East 2%

Consumer &

Electronics 12%

Chemical 6%

Automotive 6%

General Engineering

21%

Energy 44%

REVENUES BY

END-MARKET

REVENUES

BY REGION

27


2019

REVENUES & RETURNS

SANDVIK MATERIALS

TECHNOLOGY

Europe 56%

North America 24%

Australia 0%

Asia 17%

South

America 1%

Construction 3%

*Adjusted for items affecting comparability and metal price effects

Other 5%

Aerospace 3%

-20%

-10%

0%

10%

20%

1 000

2 000

3 000

4 000

5 000

2016 2017 2018 2019 2020

Revenues EBIT %

EBIT %* ROCE %

TOMAS ELIASSON

Executive Vice President and

Chief Financial Officer

JESSICA ALM


Head of Group Communications

GÖRAN BJÖRKMAN

President of

Sandvik MaterialsTechnology

LARS BERGSTRÖM

Acting President of

Sandvik Machining Solutions

HENRIK AGER

President of

Sandvik Mining and Rock Technology

JOHAN KERSTELL


Head of Human Resources

ÅSA THUNMAN


General Councel

STEFAN WIDING – as of 1 Feb 2020

President and

Chief Executive Officer

28

GROUP EXECUTIVE MANAGEMENT

LOAN AND DURATION PROFILE

Cash position SEK 17 469 M

Committed Credit facilities SEK 9 100 M

SHORT TERM

19%

LONG TERM

81%

AMOUNT MSEK AVERAGE DURATION

US Private Placement - -

Fin institutions, EIB, NIB - -

Swedish MTN 1 650 3 years

European MTN 11 469 7 years

Bank loans 9 2 years

Share swap - -

US Private Placement - -

Fin institutions, EIB, NIB - -

Swedish MTN 2 000 3 months

European MTN 776 10 months

Share swap 225 2 months

TOTAL 16 086 5 years

29

End of the first quarter 2020

LOAN MATURITY PROFILE

MSEK

30

AVERAGE

INTEREST RATE:

~6%

End of the first quarter 2020

Estimated to <SEK 4 B for 2020

GUIDANCE 2Q20 AND FY2020

NORMALIZED

TAX RATE

INTEREST NET

CAPEX (CASH)

CURRENCY

EFFECTS

METAL PRICE

EFFECTS

The tax rate is estimated to 23%-25% for 2020

Given currency rates at end of March 2020 the effect on operating profit from transaction and

translation would be SEK +100 M for Q2 2020

Given currency rates, stock levels and metal prices at the end of March 2020, it is estimated

that effect on operating profit in Q2 2020 will be SEK -150 M

Underlying interest net is estimated at about SEK -500 M for 2020

31

UPDATED FROM

ABOUT SEK 4 B

Ticker: SDVKY

Exchange: OTC

CUSIP: 800212201

ISIN: US8002122013

Ratio: 1 ADR : 1 non-restricted B share

32

MANAGED BY DEUTSCHE BANK

Depositary bank: Deutsche Bank Trust Company Americas

Contact details of the ADR broker helpline:

New York: +1 212 250 9100

London: +44 207 547 6500

Hong Kong: +852 2203 7854

E-mail: [email protected]

ADR website: www.adr.db.com

Depositary bank’s local custodian: Nordea Bank AB

SANDVIK ADR PROGRAM

mailto:[email protected]

http://www.adr.db.com/

33

TO DOMORE

sandvik better than before · (sps, hyperion, wire and varel o&g) but including acquisitions,...

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