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
Comments and numbers refer to continuing operations excluding Mining Systems
*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
Comments and numbers refer to continuing operations excluding Mining Systems
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.
Comments and numbers refer to continuing operations excluding Mining Systems
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%
Comments and numbers refer to continuing operations excluding Mining Systems
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
44%SHARE OF REVENUES
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
41%SHARE OF REVENUES
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
41%SHARE OF REVENUES
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
41%SHARE OF REVENUES
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
41%SHARE OF REVENUES
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
15%SHARE OF REVENUES
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
15%SHARE OF REVENUES
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
Executive Vice President and
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
Executive Vice President and
Head of Human Resources
ÅSA THUNMAN
Executive Vice President and
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
33
TO DOMORE