INTERIM REPORT SECOND QUARTER SANDVIK: Interim Report on the second quarter 2017

Transcription

1 INTERIM REPORT SECOND QUARTER SANDVIK: Interim Report on the second quarter 217

2 SUMMARY STRONG MOMENTUM ORDER INTAKE +17% REVENUES +9% POSITIVE DEVELOPMENT IN ALL BUSINESS AREAS AND REGIONS EARNINGS GROWTH AND MARGIN IMPROVEMENT ALSO EXCLUDING POSITIVE IMPACT FROM FX IMPORTANT STEPS TOWARDS PORTFOLIO CONSOLIDATION MINING SYSTEMS SPS NEW ANNOUNCEMENT: WIRE 2 SANDVIK: Interim Report on the second quarter 217

3 MARKET DEVELOPMENT % of group revenue FY16 Y/Y order intake Y/Y UNDERLYING DEMAND TREND segment bubble size share of group revenue 216 Q/Q underlying demand trend EUROPE 4% +5% NORTH AMERICA 2% +4% ASIA 2% +4% AFRICA/MIDDLE EAST 9% +35% SOUTH AMERICA 5% +17% AUSTRALIA 6% +42% 3 SANDVIK: Interim Report on the second quarter 217

4 ORDER INTAKE STRONG ORDER GROWTH; 12% EXCL. MAJOR ORDERS REPORTED P/V 17% REVENUES GROWTH IN ALL BUSINESS AREAS AND MAJOR REGIONS REPORTED P/V 9% Order intake, reported Organic order intake, 12M rolling Revenues, reported Organic revenues, 12M rolling 4 SANDVIK: Interim Report on the second quarter 217

5 EBIT DEVELOPMENT % 18% 17% 16% 15% 14% ADJUSTED % EBIT GROWTH EXCLUDING FX AND METAL HIGHEST EARNINGS IN FIVE YEARS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q % 12% 11% 1% EBIT % 15.8 SUPPORTED BY SIGNIFICANT REVENUE GROWTH AND SAVINGS EBIT reported Items affecting comparability EBIT%* *Adjusted for items affecting comparability 5 SANDVIK: Interim Report on the second quarter 217

6 SANDVIK MACHINING SOLUTIONS STRONG UNDERLYING GROWTH Negative working day effect of -3% Larger orders PBT +1% Positive development in all major regions Increased activity in automotive, general engineering and energy Q2 216 Q2 217 ORDER INTAKE REVENUES OPERATING PROFIT % OF REVENUES % % *At fixed exchange rates for comparable units EBIT & ROCE DEVELOPMENT SHARE OF REVENUES 216 4% CHANGE +6%* +5%* +18% 4% 35% EARNINGS AND MARGIN IMPROVEMENT 1 5 3% 15% earnings growth excluding positive FX 1 25% Support from revenue growth and structural efficiency measures % 15% 6 SANDVIK: Interim Report on the second quarter 217 EBIT¹ EBIT%¹ ROCE%² ¹Adjusted for items affecting comparability ²ROCE: EBIT adj. annualized, CE 1Q avg.

7 SANDVIK MINING AND ROCK TECHNOLOGY STRONG ORDER INTAKE Strong development in replacement equipment Strong growth in aftermarket business Gold, silver and zinc strongest commodities, signs of improvement for copper Q2 216 Q2 217 ORDER INTAKE REVENUES OPERATING PROFIT % OF REVENUES % % *At fixed exchange rates for comparable units EBIT & ROCE DEVELOPMENT 2 SHARE OF REVENUES % CHANGE +23%* +17%* n/a 3% 7 SIGNIFICANT EARNINGS AND MARGIN GROWTH Earnings primarily supported by significant revenue growth Previous year period impacted by some merger activities (Sandvik Mining and Sandvik Construction) Highest profit and margin in five years SANDVIK: Interim Report on the second quarter EBIT¹ EBIT%¹ ROCE%² ¹Adjusted for items affecting comparability ²ROCE: EBIT adj. annualized, CE 1Q avg. 25% 2% 15% 1% 5%

8 SANDVIK MATERIALS TECHNOLOGY STABLE ALBEIT COMPETITIVE ENVIRONMENT Stable underlying order development ~% Alloy surcharges impacted order intake by +6% Large orders by +34% Energy segment stabilizing Increased competition for standardized products MIX DETERIORATION IMPACT OPERATING PROFIT Underlying revenues +2% excl. alloy surcharges Unfavorable mix for core- and standard Q2 216 Q2 217 ORDER INTAKE REVENUES ADJ. OP. PROFIT % OF REVENUES¹ UNDERLYING MARGIN³ % 8.5% % 6.4% *At fixed exchange rates for comparable units EBIT & ROCE DEVELOPMENT SHARE OF REVENUES % CHANGE +4%* +7%* -37% 2% 15% 1% 5% 8 PORTFOLIO ADJUSTMENT - WIRE SANDVIK: Interim Report on the second quarter EBIT¹ EBIT%¹ ROCE%² EBIT%³ % ¹Adjusted for items affecting comparability ²ROCE: EBIT adj. annualized, CE 1Q avg. ³EBIT adj. for items affecting comparability and metal prices

9 TOMAS ELIASSON CFO 9

10 FINANCIAL SUMMARY Q2 GROWTH, % ORDER REVENUES INTAKE ORGANIC: CURRENCY: STRUCTURE: TOTAL Q2 216 Q2 217 CHANGE % ORDER INTAKE ¹ REVENUES ¹ ADJUSTED OPERATING PROFIT² % OF REVENUES NWC %³ CASH FLOW ROCE %³ EPS CONT. OPS., SEK EPS GROUP TOTAL, SEK ¹ At fixed exchange rates for comparable units ² Profit adjusted for items affecting comparability of -45 million SEK in Q2 217 ³ Quarterly calculation i.e. annualized adj. EBIT or revenues and 1Q average CE or NWC 4 Cash flow before acquisitions and disposals, financial items and taxes 1 SANDVIK: Interim Report on the second quarter 217

11 BRIDGE ANALYSIS SANDVIK GROUP Q2 216 PRICE/ VOLUME/ PRODUCTIVITY CURRENCY STRUCTURE ONE-OFFS* Q2 217 REVENUES ADJUSTED EBIT ADJUSTED EBIT MARGIN 13.3% 47% % MARGIN ACCRETION / DILUTION +2.7% +.2% -.4% * Includes metal price effects within Sandvik Materials Technology of +177 in alloy surcharges on revenues and -63 in metal price effect on EBIT (+9 Q2 216 vs. -54 Q2 217). Structure +5 topline for SMS, on EBIT. 11 SANDVIK: Interim Report on the second quarter 217

12 NET WORKING CAPITAL RATIO ON RECORD-LOW LEVEL RELATIVE NWC BY BA % 45% 4% 25 3% 35% % 3% 25% % 2% NWC (continuing operations) NWC % of revenues (continuing operations) Sandvik Machining Solutions Sandvik Materials Technology Sandvik Mining & Rock Technology Other Operations 12 SANDVIK: Interim Report on the second quarter 217

13 FREE OPERATING CASH FLOW Q2 216 Q2 217 Δ EBITDA + non cash NWC change Capex* FOCF** *Including investments and disposals in rental, tangible and intangible assets **Cash flow before acquisitions and disposals, financial items and taxes Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Free operating cash flow Free operating cash flow 12M rolling Adjusted EBITA* 12M rolling 8 *Adjusted for items affecting comparability 13 SANDVIK: Interim Report on the second quarter 217

14 FINANCIAL NET DEBT GEARING ,4 1,2 1,,8,6 NET DEBT LOWERED BY -2% Y/Y TO 28 BILLION SEK NET GEARING.71 IN LINE WITH TARGET OF <.8 INCLUDING DIVIDEND PAYMENT ,4 Net debt excl. net pension liability Net pension liability Net gearing incl. net pension liabilities 14 SANDVIK: Interim Report on the second quarter 217

15 OUTCOME AND GUIDANCE Q2 217 Underlying currency effect (): +49 (+4) Total currency effect (): +264 Metal price effect (): -54 (~) Q3 217 Underlying currency effect (): +* Metal price effect (): -1** FULL YEAR 217 Capex (BSEK): ~3.9 (H1: 1.5) Net financial items (BSEK): -1.4 to -1.5 (H1: -.6) Tax rate (%): (H1: 27.5) *Based on currency rates end of June 217 **Based on currency rates, stock levels and metal prices at the end of June SANDVIK: Interim Report on the second quarter 217

16 MINING SYSTEMS EXIT SIGNED DISPOSAL AGREEMENT WITH FLSMIDTH SIGNED SUBCONTRACTOR AGREEMENT WITH FLSMIDTH Mining-related projects Non-mining related projects + mining projects close to finalization ~8% SIGNED WITH NEPEAN CONVEYORS Conveyor components ~2% 16 Earlier announced charge of -847 remains unchanged

17 SUMMARY REVENUE GENERATION ON BACK OF RECENT STRONG ORDER INTAKE REVENUE GROWTH +9% POSITIVE DEVELOPMENT IN ALL BUSINESS AREAS AND MAJOR REGIONS STABILITY CREATE A STABLE PLATFORM PROFITABILITY IMPROVE PERFORMANCE IMPROVED PERFORMANCE EARNINGS GROWTH AND MARGIN IMPROVEMENT ALSO WHEN EXCLUDING POSITIVE IMPACT FROM FX GROWTH GENERATE GROWTH PORTFOLIO CONSOLIDATION

18 BACK-UP SLIDES 18

19 MINING (27%) ENERGY (12%) GENERAL ENGINEERING (23%) CONSTRUCTION (12%) AUTOMOTIVE (14%) AEROSPACE (6%) END-CUSTOMER SEGMENTS (% of group revenues 216 excl. Mining systems; Other e.g. consumer goods, electronics, chemical and miscellaneous was 6% ) 19 SANDVIK: Interim Report on the second quarter 217

20 PROFITABILITY DEVELOPMENT GROUP LEVERAGE: +47% , ,75 EBIT Q2 216 ORGANIC GROWTH ANNOUNCED SAVINGS PROGRAMS CURRENCY METAL PRICE EFFECT SMT STRUCTURE EBIT Q2 217 ADJUSTED MARGIN 13.3% 15.8% 2 SANDVIK: Interim Report on the second quarter 217

21 BRIDGE ANALYSIS PRICE/ VOLUME/ STRUCTURE Q2 216 PRODUCTIVITY CURRENCY ONE-OFFS* Q2 217 MACHINING SOLUTIONS REVENUES EBIT EBIT MARGIN % % % MINING AND ROCK TECHNOLOGY REVENUES EBIT EBIT MARGIN % % % MATERIALS TECHNOLOGY REVENUES ADJUSTED EBIT ADJUSTED EBIT MARGIN % n/a % * Includes metal price effects in SMT, bottom line: +9 in Q2 216 vs. -54 in Q2 217, alloy surcharges topline: Structure SMS: topline: 5 and bottom line: 21 SANDVIK: Interim Report on the second quarter 217

22 CREATING A LEANER COMPANY SAVINGS ANNUAL RUN-RATE () VS. LAST YEAR AND TOTAL SANDVIK MACHINING SOLUTIONS SANDVIK MINING AND ROCK TECHNOLOGY SANDVIK MATERIALS TECHNOLOGY GROUP ACTIVITIES TOTAL ANNUAL RUN-RATE VS. LAST YEAR TARGET 2.1 BSEK SAVINGS ANNUAL RUN-RATE SUPPLY CHAIN OPTIMIZATON * (1 333) ADJUST OF COST BASE/ RIGHT SIZING (762) TOTAL * (2 95) *Other operations contributed by on annual run-rate compared with previous year to the supply chain optimization program 22 SANDVIK: Interim Report on the second quarter 217

23 2 PRODUCTION UNITS CLOSED END OF Q2 SUPPLY CHAIN OPTIMIZATION PROGRAM CONTINUING OPERATIONS FIRST PHASE - FINALIZED AT END Q RUN-RATE SAVINGS 6 END OF Q4 (out of 69 target) SECOND PHASE - 8 UNITS IN SCOPE (7 UNITS CLOSED) - TARGET SAVINGS 32 ACHIEVED at year end 216 THIRD PHASE - 5 UNITS IN SCOPE (3 UNITS CLOSED) - TARGET SAVINGS 323 at year end SANDVIK: Interim Report on the second quarter 217

24 OTHER OPERATIONS NON-STRATEGIC ASSETS SHARE OF REVENUES 216 6% SIGNED CONTRACT FOR PROCESS SYSTEMS DISPOSAL Expected closure no later than Q1 218 STRONG UNDERLYING DEMAND Underlying demand developed positively for both Hyperion and Process Systems Some timing issues for Process Systems EARNINGS IMPACTED BY TRANSACTION RELATED COSTS Earnings growth off-set by about -4 in transaction related costs Underlying margin at 12.8% 24 SANDVIK: Interim Report on the second quarter 217

25 OTHER OPERATIONS NON-STRATEGIC ASSETS SHARE OF REVENUES 216 6% ORDER INTAKE REVENUES % 2% 1 15% EBIT 124 ROCE 13.1% 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q % 5% Revenues EBIT % reported ROCE %² EBIT % adjusted¹ ¹Adjusted for items affecting comparability ²ROCE: EBIT adj. annualized, CE 1Q avg. 25 SANDVIK: Interim Report on the second quarter 217

26 LOAN AND DURATION PROFILE LONG TERM 88% SHORT TERM 12% AMOUNT AVERAGE DURATION US Private Placement 4,952 3 years Fin institutions, EIB, NIB 1,728 6 years Swedish MTN 5,928 4 years European MTN 1,62 9 years Bank loans 2,91 2 years Share swap - - US Private Placement months Fin institutions, EIB, NIB months Swedish MTN 2,92 2 months Bank loans 93 1 month Share swap 85 1 month Cash position Revolving Credit facilities 7,451 9,1 TOTAL 29,681 5 years 26 SANDVIK: Interim Report on the second quarter 217

27 LOAN MATURITY PROFILE SANDVIK: Interim Report on the second quarter 217

28 GUIDANCE CAPEX CURRENCY EFFECTS METAL PRICE EFFECTS NET FINANCIAL ITEMS TAX RATE Estimated at about 3.9 BSEK for 217 Given currency rates at end of June 217 the effect on operating profit from transaction and translation would be + for Q3 217 Given currency rates, stock levels and metal prices at the end of June 217, it is estimated that effect on operating profit in Q3 217 will be about -1 Net financial items is estimated to be -1.4 to -1.5 BSEK for 217 The tax rate is estimated to about 26 28% for SANDVIK: Interim Report on the second quarter 217

29 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 and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialisation and technological difficulties, supply disturbances, and the major customer credit losses.