Quarterly Report • Jul 16, 2021
Quarterly Report
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| MSEK | Q2 2020 | Q2 2021 | CHANGE % | Q1-Q2 2020 | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Order intake | 18,971 | 25,857 | 36 | 44,327 | 51,704 | 17 |
| Organic growth, % 1) | -23 | 43 | – | -17 | 26 | – |
| Revenues | 20,230 | 23,460 | 16 | 43,851 | 45,151 | 3 |
| Organic growth, % 1) | -20 | 22 | – | -14 | 11 | – |
| Operating profit | 1,508 | 4,754 | N/M | 4,270 | 9,010 | N/M |
| Adjusted operating profit 2) | 2,837 | 4,469 | 58 | 6,565 | 8,639 | 32 |
| % of revenues | 14.0 | 19.1 | – | 15.0 | 19.1 | – |
| Adjusted profit after net financial items 2, 3) | 2,858 | 4,372 | 53 | 6,169 | 8,272 | 34 |
| Profit for the period | 1,098 | 3,514 | N/M | 2,933 | 6,700 | N/M |
| Adjusted profit for the period 2, 3) | 2,165 | 3,374 | 56 | 4,839 | 6,468 | 34 |
| Earnings per share, diluted, SEK | 0.88 | 2.80 | N/M | 2.35 | 5.33 | N/M |
| Adjusted earnings per share, diluted, SEK 2, 3) | 1.73 | 2.69 | 56 | 3.87 | 5.15 | 33 |
| Return on capital employed, % 4) | 6.9 | 21.3 | – | 9.3 | 18.5 | – |
| Free operating cash flow | 2,531 | 3,088 | 22 | 5,706 | 6,035 | 6 |
| Net working capital % 4) | 31.0 | 24.2 | – | 27.5 | 25.9 | – |
1) Change from the preceding year at fixed exchange rates for comparable units. 2) Adjusted for items affecting comparability of SEK 285 million in Q2 2021 (-1,329) and SEK 371 million YTD 2021 (-2,295). Q2 2021 is mainly related to closure of a defined benefit pension plan in US, partially offset by SMT separation costs. 2020 is primarily related to savings measures and by costs related to Varel Oil & Gas disposal in Q1. See page 23. 3) There are no items affecting comparability reported on net financial items for 2021 (0). 4) Quarter is quarterly annualized and year-to-date numbers are based on a four quarter average.
Tables and calculations in the report do not always agree exactly with the totals due to rounding. Comparisons refer to the year-earlier period, unless otherwise stated. Comments and numbers in the report relate to continuing operations, unless otherwise stated. Alternative performance measures and definitions used in this report are explained on page 26. For more information see home.sandvik. N/M = not meaningful
Following a solid start to the year, we concluded yet another quarter with positive momentum. We delivered strong growth in order intake and revenues on the back of a solid order backlog and with some increased pressure in the global supply chain. Organic order intake and revenues for the Group grew year on year by 43% and 22%, respectively. The adjusted operating profit margin was a solid 19.1% (14.0%), supported by increased volumes and good underlying operating leverage. I am also very pleased with the high pace of M&A activities carried out by all our business areas during this period, which resulted in five signed agreements during and after the quarter.
We continued to see strong demand in our mining business, with orders now well above pre-covid levels and, consequently, Sandvik Mining and Rock Solutions reported order intake above SEK 10 billion for the second consecutive quarter. I am also happy with the SEK140 million battery-electric vehicle (BEV) orders we received in June, which was a significant record for BEV orders in a month. Organic order intake growth was 31% year on year and 38% excluding major orders. On June 23, we announced the intention to acquire the Australian rock tools supplier Tricon, and on July 7, we closed the DSI Underground acquisition.
Sandvik Rock Processing Solutions delivered a strong quarter with organic order intake and revenue growth of 61%, and 29% respectively. Revenues were supported by a strong order backlog, both in mining and construction. Sandvik Rock Processing Solutions also announced its first acquisition as a standalone business area: Kwatani, a South African-based supplier of large multi-slope screens and feeders.
Sandvik Manufacturing and Machining Solution's organic order intake and revenues grew year on year by 44% and 33% respectively. The daily order intake in the first two weeks of July was up ~20% compared with the first two weeks of July last year. During June and July we announced three acquisitions: Cambrio, a leading company with an end-to-end portfolio in CAD/CAM software for manufacturing industries, DWFritz Automation, a global provider of precision metrology,
inspection- and assembly solutions for advanced manufacturing and Fanar, a round tools company in Poland. These acquisitions will play an important role in our ambition to expand our digital offering and enhance our position within design, planning and metrology, and to increase our market share in round tools.
Sandvik Materials Technology's order intake was SEK 4 billion, a significant sequential improvement driven by our short-cycle businesses and with the receipt of some additional umbilical orders. Organic order intake grew by 74%, on the back of a very challenging second quarter last year, but also strong underlying demand in most customer segments.
We are indeed operating in a different business environment compared with a year ago, with stronger momentum for both our short and long-cycle businesses. The economic recovery and high demand are posing some challenges on a global scale, with raw material and component shortages, as well as container and port imbalances to name a few. While the impact of this is difficult to predict I feel confident in the underlying business momentum. We are seeing strong demand for our products and services, and are combining this with solid operational execution and profitability levels. We are also stepping up the pace of acquisitions, firmly executing on our shift to growth ambition.
Stefan Widing President and CEO
| Q2 | ORDER INTAKE | REVENUES |
|---|---|---|
| Organic, % | 43 | 22 |
| Structure, % | 1 | 1 |
| Currency, % | -6 | -6 |
| TOTAL, % | 36 | 16 |
Organic order intake increased by 43% year on year driven by strong development across the Group. Revenues increased organically by 22% year on year.
The positive momentum in the mining and the construction segments continued with strong underlying demand. Sandvik Mining and Rock Solutions (SMR) and Sandvik Rock Processing Solutions (SRP) reported strong organic order intake growth year on year, of 31% and 61%, respectively. Revenues in the quarter were solid, despite the impact from global supply chain bottlenecks and longer lead times in both businesses.
Organic order intake increased by 44% year on year in Sandvik Manufacturing and Machining Solutions. Demand was on par with the first quarter with a slight acceleration at the end of the quarter which was noted across US and Europe, in particular Germany. Automotive and general engineering remained on robust levels. The oil and gas segment continued its slow recovery, and positive signals in the aerospace segment was noted, although with limited impact on the business to date. Revenues increased by 33% year on year.
Sandvik Materials Technology reported a strong organic order intake growth of 74% year on year. The growth was driven by a broad-based positive development across all divisions and demand in several of the customer segments is now well above pre-covid levels. The oil and gas segment continued to recover with some minor umbilical orders. Revenues remained negatively impacted by the weak umbilical backlog.
The Group's demand strengthened both year on year and sequentially across most regions, with the largest increase noted in Europe and North America. Asia, mainly driven by China, grew strongly year on year, albeit at a lower rate due to more challenging comparables than in the other regions.
Changed exchange rates had a negative impact of -6% on both order intake and revenues.
| Q2 | UNDERLYING MARKET DEVELOPMENT | MINING 40% of 2020 revenues |
GENERAL ENGINEERING 23% |
AUTOMOTIVE 11% |
ENERGY 10% |
CONSTR. 8% |
AERO 5% |
|
|---|---|---|---|---|---|---|---|---|
| % of 2020 Group revenue |
Order intake Y/Y (excl. large orders) |
|||||||
| Europe | 37% | +63% (+63%) | ||||||
| North America | 21% | +49% (+49%) | ||||||
| Asia | 21% | +34% (+28%) | ||||||
| Africa/ Middle East |
8% | +15% (+34%) | ||||||
| Australia | 8% | +1% (+22%) | ||||||
| South America | 5% | +88% (+88%) |
Reported gross profit amounted to SEK 9,845 million (6,597). Adjusted gross profit increased by 31% to SEK 9,780 million (7,451) mainly due to higher volumes and the adjusted gross margin increased to 41.7% (36.8).
Sales, administration and R&D costs excluding items affecting comparability increased by 16% year on year mainly due to reversals of temporary savings in the preceding year. The overall ratio to revenues on a reported basis decreased to 21.2% (23.2).
Adjusted operating profit increased by 58% and amounted to SEK 4,469 million (2,837) and the adjusted operating margin increased to 19.1% (14.0). Adjusted operating profit, excluding positive metal price effects in Sandvik Materials Technology of SEK 50 million in the period, increased by 52% to SEK 4,420 million (2,913). The adjusted operating margin excluding metal price effects was 18.8% (14.4) for the second quarter, and 18.7% (17.0) for the rolling twelve-month period. The impact from changed exchange rates was negative at SEK -659 million year on year.
Reported operating profit of SEK 4,754 million (1,508) was positively impacted by items affecting comparability of SEK 285 million.
The interest net was reduced slightly to SEK -88 million (-90) due to debt repayments and higher interest on deposits. Net financial items amounted to SEK -97 million (20), with lower impact from temporary revaluations effects.
The tax rate, excluding items affecting comparability, for continuing operations was 22.8% (24.3). The reported tax rate for continuing operations was 24.5% (28.1) and 24.6% (28.2) for the Group in total.
Profit for the period amounted to SEK 3,514 million (1,098), corresponding to earnings per share, diluted, of SEK 2.80 (0.88) and adjusted earnings per share, diluted of SEK 2.69 (1.73).
The permanent savings and cost initiatives that were announced in 2020 had a positive impact of SEK 190 million in the quarter, corresponding to an annualized run-rate of SEK 760 million out of the total SEK 1,300 million in targeted savings. The majority of savings from these iniatives will be realized this year. Reversal of temporary savings had a negative impact in the quarter of approximately SEK -765 million year on year, due to higher discretionary spend and lower work time reductions compared to the same period last year.
ADJUSTED GROSS PROFIT AND MARGIN
*Excluding metal price effects
Adj. earnings per share, rolling 12 months
Capital employed decreased slightly year on year due to a lower cash position. Capital employed decreased sequentially and amounted to SEK 89.9 billion (95.2), mainly due to a lower cash position. Adjusted return on capital employed improved sequentially to 18.5% (18.0) explained by lower capital employed and higher earnings.
Net working capital decreased year on year and amounted to SEK 22.9 billion (24.5) mainly due to changed exchange rates, and increased sequentially explained by higher inventories and accounts receivables somewhat offset by higher liabilities. Net working capital in relation to revenues decreased to 24.2% compared to the first quarter (24.7%).
Investments in tangible and intangible assets were in line with the preceding year and amounted to SEK 0.9 billion (0.9), corresponding to 76% of scheduled depreciations.
The financial net cash position of SEK 4.9 billion (3.5) was higher compared to last year and lower sequentially (10.7) due to the dividend payout of SEK 8 billion, partly offset by positive cash flow from operations. The net pension liability decreased year on year to SEK 5.5 billion (7.3), and sequentially (6.5), mainly due to higher discount rates, and the closure of a US pension plan. Total net debt amounted to SEK 3.9 billion (7.0) and increased sequentially from SEK -1.2 billion in the first quarter. The net debt to equity ratio was 0.06 (0.11), improving year on year and declining sequentially (-0.02).
Free operating cash flow increased year on year to SEK 3.1 billion (2.5).
| FREE OPERATING CASH FLOW, MSEK | Q2 2020 | Q2 2021 |
|---|---|---|
| EBITDA + non-cash items | 3,514 | 5,162 |
| Net Working Capital change | -89 | -1,152 |
| Capex 1) | -894 | -921 |
| FREE OPERATING CASH FLOW 2) | 2,531 | 3,088 |
1) Including investments and disposals of rental equipment of SEK -239 million (-185) and tangible and intangible assets of SEK -683 million (-709). 2) Free operating cash flow before acquisitions and disposals of companies, financial net items and paid taxes.
RECORD ORDER MONTH FOR BAT-TERY ELECTRIC VEHICLE ORDERS
ACQUISITION OF DSI CLOSED JULY 7
| GROWTH | ||
|---|---|---|
| Q2 | ORDER INTAKE |
REVENUES |
| Organic, % | 31 | 21 |
| Structure, % | 0 | 0 |
| Currency, % | -6 | -5 |
| TOTAL, % | 24 | 15 |
Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.
Key items impacting order intake and revenues year on year:
Sandvik received orders for battery-electric mining vehicles (BEVs) amounting to about SEK 140 million in June, combined with commitments for battery-as-a-service (BaaS) contracts. This represents an important step in the ambition to grow the share of automation and electrification. During the quarter, Sandvik signed an agreement to acquire Tricon Drilling Solutions Pty. Ltd, a privately-owned supplier of rock tools for the mining industry, based in Perth, Australia. On July 7, Sandvik completed the previously announced acquisition of DSI Underground, the global leader in ground support and reinforcement products, systems and solutions for the underground mining and tunneling industries.
ORDER INTAKE, REVENUES AND BOOK-TO-BILL
| Adj. operating margin, rolling 12 months | |||
|---|---|---|---|
| FINANCIAL OVERVIEW, MSEK | Q2 2020** | Q2 2021 | CHANGE % | Q1-Q2 2020** | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Order intake * | 8,400 | 10,399 | 31 | 16,998 | 20,868 | 33 |
| Revenues * | 7,899 | 9,090 | 21 | 16,143 | 17,109 | 15 |
| Operating profit | 934 | 1,827 | 96 | 2,387 | 3,471 | 45 |
| % of revenues | 11.8 | 20.1 | 14.8 | 20.3 | ||
| Adjusted operating profit 1) | 1,601 | 1,827 | 14 | 3,055 | 3,471 | 14 |
| % of revenues | 20.3 | 20.1 | 18.9 | 20.3 | ||
| Return on capital employed 2) | 16.7 | 33.6 | 28.3 | 34.7 | ||
| Number of employees 3) | 11,741 | 13,230 | 13 | 11,741 | 13,230 | 13 |
* Change at fixed exchange rates for comparable units. ** Last years figures has been restated due the new BA structure as of January 1, 2021.
1) Operating profit adjusted for items affecting comparability of SEK 0 million Q2 2021 (-667) and for YTD 2021 the impact was SEK 0 million (-667). For 2020 primarily related to structural and volume related saving measures. See page 23. 2) Quarter is quarterly annualized and the year to date numbers are based on a four quarter average. 3) Full-time equivalent.
CONTINUED STRONG UNDERLYING DEMAND
STRONG PROFITABILITY
AGREEMENT TO ACQUIRE KWATANI
| ORDER | ||
|---|---|---|
| Q2 | INTAKE | REVENUES |
| Organic, % | 61 | 29 |
| Structure, % | 6 | 4 |
| Currency, % | -7 | -7 |
| TOTAL, % | 56 | 23 |
| Change compared to same quarter last year. The | ||
| table is multiplicative, i.e. the different components | ||
| must be multiplied to determine the total effect. |
Key items impacting order intake and revenues year on year:
SAM by Sandvik, our rock processing digital service, was announced in April. SAM will drive collaboration, connectivity and productivity across customers' entire operation. It will provide customers with direct access to data, analytics, communications, e-commerce, inspection tools, custom on-site reporting, information and predictions based on our AI modeling for customers' connected equipment. During the quarter, an agreement to acquire South African based Kwatani was signed. Kwatani's strong offering in large multi slope screens for the mining industry will add to Sandvik's existing portfolio while also strengthening Sandvik's capabilities in comminution.
| FINANCIAL OVERVIEW, MSEK | Q2 2020** | Q2 2021 | CHANGE % | Q1-Q2 2020** | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Order intake * | 1,373 | 2,147 | 61 | 3,346 | 4,505 | 42 |
| Revenues * | 1,590 | 1,964 | 29 | 3,121 | 3,691 | 25 |
| Operating profit | 232 | 334 | 44 | 439 | 617 | 40 |
| % of revenues | 14.6 | 17.0 | 14.1 | 16.7 | ||
| Adjusted operating profit 1) | 232 | 334 | 44 | 439 | 617 | 40 |
| % of revenues | 14.6 | 17.0 | 14.1 | 16.7 | ||
| Return on capital employed 2) | 19.8 | 30.7 | 21.4 | 26.8 | ||
| Number of employees 3) | 1,636 | 1,869 | 14 | 1,636 | 1,869 | 14 |
* Change at fixed exchange rates for comparable units. ** Last years figures has been restated due to the new BA structure as of January 1, 2021.
1) There are no items affecting comparability for 2021 (0). See page 23. 2) Quarter is quarterly annualized and the year to date numbers are based on a four quarter average. 3) Full-time equivalent.
SOLID PROFIT MARGIN
THREE ACQUSITIONS ANNOUNCED DURING AND AFTER THE QUARTER
| GROWTH | ||
|---|---|---|
| Q2 | ORDER INTAKE |
REVENUES |
| Organic, % | 44 | 33 |
| Structure, % | 2 | 2 |
| Currency, % | -7 | -7 |
| TOTAL, % | 36 | 25 |
| Change compared to same quarter last year. The table is multiplicative, i.e. the different components |
must be multiplied to determine the total effect.
Key items impacting order intake and revenues year on year:
Three acquisitions were announced during and after the quarter; Sandvik Manufacturing Solutions signed an agreement to acquire Cambrio, a company with an end-to-end portfolio in CAD/ CAM software for manufacturing industries and DWFritz, a global provider of precision metrology, inspection and assembly solutions for advanced manufacturing. Sandvik Machining Solutions signed a deal to acquire Fanar, a manufacturer of round tools in Poland.
| FINANCIAL OVERVIEW, MSEK | Q2 2020 | Q2 2021 | CHANGE % | Q1-Q2 2020 | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Order intake * | 6,821 | 9,270 | 44 | 16,945 | 18,649 | 18 |
| Revenues * | 7,247 | 9,083 | 33 | 17,013 | 17,865 | 13 |
| Operating profit | 645 | 2,096 | N/M | 2,335 | 4,109 | 76 |
| % of revenues | 8.9 | 23.1 | 13.7 | 23.0 | ||
| Adjusted operating profit 1) | 927 | 2,097 | N/M | 2,981 | 4,109 | 38 |
| % of revenues | 12.8 | 23.1 | 17.5 | 23.0 | ||
| Return on capital employed 2) | 8.0 | 25.9 | 17.1 | 20.4 | ||
| Number of employees 3) | 15,079 | 18,028 | 20 | 15,079 | 18,028 | 20 |
* Change at fixed exchange rates for comparable units.
1) Operating profit adjusted for items affecting comparability of SEK -1 million in Q2 2021 (-282) and SEK -1 million YTD 2021 (-646). For 2020 all are related to savings measures. See page 23. 2) Quarter is quarterly annualized and the year to date numbers are based on a four quarter average. 3) Full-time equivalent.
GROWTH ACROSS ALL DIVISIONS
SOLID MARGIN
SOMEWHAT IMPROVED SENTIMENT IN OIL & GAS AND AEROSPACE
| Q2 | ORDER INTAKE |
REVENUES |
|---|---|---|
| Organic, % | 74 | -4 |
| Structure, % | 0 | 0 |
| Currency, % | -5 | -5 |
| TOTAL, % | 70 | -5 |
| Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect. Alloy surcharges accounts for 4% of order intake |
Key items impacting order intake and revenues year on year:
The quest to produce fossil-free steel creates growth opportunities for Kanthal. During the second quarter, the Kanthal division within Sandvik Materials Technology signed a strategic partnership with HYBRIT (Hydrogen Breakthrough Ironmaking Technology). Fossil free heating is an important component in the groundbreaking technological development towards a completely fossil free value chain from mine to steel.
and revenues respectively.
| FINANCIAL OVERVIEW, MSEK | Q2 2020 | Q2 2021 | CHANGE % | Q1-Q2 2020 | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Order intake * | 2,377 | 4,041 | 74 | 6,742 | 7,681 | 18 |
| Revenues * | 3,495 | 3,324 | -4 | 7,277 | 6,486 | -9 |
| Operating profit | -83 | 355 | N/M | 11 | 692 | N/M |
| % of revenues | -2.4 | 10.7 | 0.2 | 10.7 | ||
| Adjusted operating profit 1) | 248 | 394 | 59 | 388 | 749 | 93 |
| % of revenues | 7.1 | 11.8 | 5.3 | 11.5 | ||
| Return on capital employed, % 2) | -2.5 | 11.8 | 4.2 | 9.7 | ||
| Number of employees 3) | 5,193 | 5,283 | 2 | 5,193 | 5,283 | 2 |
* Change at fixed exchange rates for comparable units.
1) Operating profit adjusted for items affecting comparability of SEK -39 million in Q2 2021 (-331) and SEK -57 million YTD 2021 (-377), primarily related to the internal separation of Sandvik Materials Technology offset by a partial release of structural initiative from 2020. For 2020 it is related to savings measures and the internal separation. See page 23. 2) Quarterly number is annualized and the year-to-date number is based on four quarter average. 3) Full-time equivalent.
INCREASE IN GHG EMISSIONS DUE TO HIGHER PRODUCTION LEVELS
DIVERSITY CONTINUED TO IMPROVE
The quarter marked a period with continued focus on making the sustainability shift. Safety campaigns were initiated and we continued to pursue our clean electricity project for example. However, key figures in the quarter met difficult comparisons with same period last year when production activities was significantly lower as a consequence of the pandemic. As operations have now returned to more normal levels, the trend was negative year on year, although the long-term trend is moving in the right direction.
Together with their customers, our divisions Rock Tools (within Sandvik Mining and Rock Solutions) and Wolfram (within Sandvik Manufacturing and Machining Solutions) have created a value- adding new ecosystem that brings both sustainability and finan- cial benefits.The initiative consists of a sustainable supply chain for circular mining bits whereby a bespoke chemical recycling process enables the extraction of key minerals, such as tungsten and wolfram carbide, using a locally installed separation unit for mining bits. Sandvik repurchases the used mining bits and uses a local supplier to extract the minerals needed to produce new mining bits, which not only yields increased circularity of raw materials, but also CO2 and cost reductions, in addition to important local societal and economic impacts resulting from the establishment of new local sustainable businesses. The CO2 reductions are achieved in transportation and the production of new mining bits.
Female Managers (number of) Share of Female Managers (%)
| SUSTAINABILITY OVERVIEW | Q2 2020 | Q2 2021 | CHANGE % | Rolling 12 months | |
|---|---|---|---|---|---|
| Circularity | Total waste, thousand tonnes* | 16 | 19 | 18.4 | 75 |
| Circularity | Waste recovered, % of total | 76 | 65 | -3 | 71.6 |
| Climate | Total CO2, thousand tonnes* | 64 | 77 | 2.9 | 286 |
| People | Total recordable injury frequency rate, R12M frequency / million working hours |
3.5 | 3.6 | 14.7 | 3.6 |
| People | Lost time injury frequency rate, R12M frequency / million working hours |
1.5 | 1.5 | 8.9 | 1.5 |
| Fair play | Share of female managers, % | 18.3 | 19.3 | 4.6 | 19.3 |
* Excluding tailings and slag to other disposal
For definitions see home.sandvik
PEOPLE - ZERO HARM
The parent company's invoiced sales for the first sixth months of 2021 amounted to SEK 6,414 million (5,241) and the operating result was SEK 2,643 million (2,075). Result from shares in Group companies of SEK -772 million (-1,776) primarily consists of result from disposal of intragroup shares to establish
the legal structure of SMT offset by dividends. Interest-bearing liabilities, less cash and cash equivalents and interest-bearing assets, amounted to SEK 14,203 million (8,068). Investments in property, plant and machinery amounted to SEK 351 million (161).
For the first six months of 2021, demand for Sandvik's products increased compared to the same period in the preceding year, with organic order intake growth of 26%. Excluding the impact of large orders, organic order intake growth was 27%. Revenues increased organically by 11%.
Underlying customer activity increased in most of the segments with an strong underlying demand in the mining and construction segments. Demand in the aerospace and energy segments remained subdued during the period, but positive signs of improvement was noted, while demand in both general engineering and automotive increased. Organic order intake grew at a double digit rate in all regions. Changed exchange rates had a negative impact of -8% and -7% on order intake and revenues, respectively. Sandvik's order intake amounted to SEK 51,704 million (44,327), and revenues were SEK 45,151 million (43,851), implying a book-to-bill ratio of 115%.
Adjusted operating profit increased by 32% year on year to SEK 8,639 million (6,565) and the adjusted operating margin was 19.1% (14.0).
The reported operating profit increased by 111% to SEK 9,010 million (4,270) and the operating margin was 20.0% (9.7). Changed metal prices had a positive impact of SEK 169 million (-277) in the period.
Net financial items amounted to SEK -368 million (-396) and profit after financial items was SEK 8,642 million (3,874).
The tax rate, excluding items affecting comparability, for continuing operations was 21.8% (21.6). The reported tax rate for continuing operations was 22.5% (24.3) and 22.5% (24.4) for the Group in total.
Profit for the period amounted to SEK 6,700 million (2,933) for continuing operations and SEK 6,693 million (2,917) for the Group total Earnings per share for continuing operations amounted to SEK 5.34 (2.35) while earnings per share for the Group total amounted to SEK 5.33 (2.34).
Net debt decreased year-on-year to SEK 3.9 billion (7.0) resulting in a net debt to equity ratio of 0.06 (0.11).
During the first six months two acquisitions were announced, screens and feeders manufacturer Kwatani and rock tools supplier Tricon.
| COMPANY/UNIT | CLOSING DATE | REVENUES | NO. OF EMPLOYEES |
|
|---|---|---|---|---|
| 2020 | ||||
| Sandvik Rock Processing Solutions | Allied Construction Partners LLC | October 2, 2020 | 29 MUSD in 2019 | 38 |
| Sandvik Manufacturing and Machining Solutions |
Miranda Tools | December 23, 2020 | 200 MSEK in 2019 | 580 |
| Sandvik Manufacturing and Machining Solutions |
Oqton 1) | December 30, 2020 | N/A | N/A |
| Sandvik Manufacturing and Machining Solutions |
CGTech | December 31, 2020 | 470 MSEK in 2019 | 180 |
1) Sandvik is a minority owner and the investment is reported as a financial asset.
| Preliminary goodwill and other intangible assets |
Purchase price on cash and debt free basis |
|
|---|---|---|
| – | – | Acquisitions 2021 |
| COMPANY/UNIT | CLOSING DATE | REVENUES | NO. OF EMPLOYEES |
|---|---|---|---|
| Xiamen Golden Egret Special Alloy Co., Ltd. (Gesac) 1) |
July 15, 2020 | N/A | N/A |
1) Sandvik divested its 10% minority holding.
On January 15, Sandvik Manufacturing and Machining Solutions announced that it had acquired a minority stake in Oqton, a leading provider of AI-powered manufacturing solutions.
On May 7, Sandvik Rock Processing Solutions announced the acquisition of Kwatani, a leading supplier of screens and feeders for the mining industry. The transaction is expected to close during Q4 2021.
On June 23, Sandvik Mining and Rock Solutions announced the acquisition of Tricon, a supplier of rock tools for the mining industry. The transaction is expected to close during Q3 2021.
On June 30, Sandvik Mining and Rock Solutions announced it had received orders for battery-electric mining vehicles (BEVs) amounting to about SEK 140 million in June, marking Sandvik's highest ever order intake for mining BEVs in a single month.
Guidance below relates to continuing operations. Sandvik does not provide a market outlook or business performance forecasts. However, guidance relating to certain
On July 8, it was announced that Christophe Sut has been appointed as President of the Sandvik Manufacturing Solutions Business Area segment and a new member of the Sandvik Group Executive Management, effective no later than 1 January 2022.
On July 12, Sandvik Manufacturing and Machining Solutions announced the acquisition of DWFritz Automation Inc., a leading global provider of precision metrology, inspectionand assembly solutions for advanced manufacturing. The transaction is expected to close during the second half of 2021.
On July 15, Sandvik Machining Solutions within business area Sandvik Manufacturing and Machining Solutions announced the acquisition of Fabryka Narzędzi FANAR S.A. (Fanar). The transaction is expected to close during the fourth quarter of 2021.
non-operational key figures considered useful when modeling financial outcome is provided in the table below:
| CAPEX (CASH) | Estimated at SEK <4.0 billion for 2021. |
|---|---|
| CURRENCY EFFECTS | Based on currency rates at the end of June 2021, it is estimated that transaction and translation currency effects will have an impact of about SEK -50 million on operating profit for the third quarter of 2021, compared with the year-earlier period. |
| METAL PRICE EFFECTS | In view of currency rates, inventory levels and metal prices at the end of June 2021, it is estimated that there will be an impact of about SEK +200 million on operating profit in Sandvik Materials Technology for the third quarter of 2021. |
| INTEREST NET | Estimated at about SEK -0.4 billion in 2021. |
| TAX RATE | Estimated at 22% - 24% for 2021, excluding items affecting comparability |
A growth of at least 5% through a business cycle.
A trough EBIT margin of at least 16% rolling 12 months, adjusted for IAC and metal prices.
A dividend payout ratio of 50% of EPS, adjusted for IAC, through a business cycle.
A net debt/equity ratio below 0.5.
The 2030 sustainability targets focus on the areas of circularity, climate, people and ethics. These targets are reported on a quarterly basis and can be found on page 11.
This interim report was prepared in accordance with IFRS, applying IAS 34, Interim Financial Reporting. The same accounting and valuation policies were applied as in the most recent annual report with the exception of new and revised standards and interpretations effective as of January 1, 2021.
The interim report for the Parent Company has been prepared in accordance with the Annual Accounts Act and the Securities Market Act, which is in line with standard RFR 2 Reporting by a legal entity issued by the Swedish Financial Reporting Board.
IASB has published amendments of standards that are effective as of January 1, 2021 or later. The standards have not had any material impact on the financial reports.
No transactions between Sandvik and related parties that significantly affected the company's position and results took place.
As of June 30, there has been no significant impact on the financial reporting due to Covid-19 related to valuation of goodwill, expected credit losses, valuation of inventory or government grants.
As an international group with a wide geographic spread, Sandvik is exposed to several strategic, business and financial risks. Strategic risk at Sandvik is defined as emerging risks affecting the business long-term, such as industry shifts, technological shifts and macroeconomic developments. The business risks can be divided into operational, sustainability, compliance, legal and commercial risks. The financial risks include currency risks, interest rates, raw material prices, tax risks and more. These risk areas can all impact the business negatively both long and short-term but often also create business opportunities if managed well. Risk management at Sandvik begins with an assessment in operational management teams where the material risks for their operations are first identified, followed by an evaluation of the probability of the risks occurring and their potential impact on the Group. Once the key risks have been identified and evaluated risk mitigating activities to eliminate or reduce the risks are agreed on. For a more detailed description of Sandvik's analysis of risks and risk universe, see the Annual Report for 2020.
The second quarter noted a strong year on year increase in both order intake and revenues, explained by easier comparables as the second quarter last year was heavily impacted by the pandemic. Sequentially, the demand remained on par with the first quarter, indicating an underlying solid demand. With the general business environment improving with higher demand and hence higher market activities as a consequence, imbalances in the global supply chain has to a certain extent had an impact on Sandvik's operations. Furthermore, despite an improved covid situation, risks and uncertainties connected to the pandemic do remain and are monitored closely by Sandvik. Sandvik is also continuously following up on risks related to the Covid-19 pandemic and take necessary measures to protect employees, and other stakeholders.
| MSEK | Q2 2020 | Q2 2021 | CHANGE % | Q1-Q2 2020 | Q1-Q2 2021 | CHANGE % |
|---|---|---|---|---|---|---|
| Continuing operations | ||||||
| Revenues | 20,230 | 23,460 | 16 | 43,851 | 45,151 | 3 |
| Cost of goods sold | -13,634 | -13,615 | 0 | -28,068 | -26,241 | -7 |
| Gross profit | 6,597 | 9,845 | 49 | 15,783 | 18,910 | 20 |
| % of revenues | 32.6 | 42.0 | 36.0 | 41.9 | ||
| Selling expenses | -2,496 | -2,865 | 15 | -5,695 | -5,509 | -3 |
| Administrative expenses | -1,374 | -1,207 | -12 | -2,967 | -2,630 | -11 |
| Research and development costs | -819 | -912 | 11 | -1,734 | -1,753 | 1 |
| Other operating income and expenses | -400 | -107 | -73 | -1,117 | -7 | -99 |
| Operating profit | 1,508 | 4,754 | N/M | 4,270 | 9,010 | N/M |
| % of revenues | 7.5 | 20.3 | 9.7 | 20.0 | ||
| Financial income | 83 | 164 | 96 | 357 | 264 | -26 |
| Financial expenses | -63 | -261 | N/M | -754 | -632 | -16 |
| Net financial items | 20 | -97 | N/M | -396 | -368 | -7 |
| Profit after net financial items | 1,528 | 4,657 | N/M | 3,874 | 8,642 | N/M |
| % of revenues | 7.6 | 19.9 | 8.8 | 19.1 | ||
| Income tax | -430 | -1,143 | N/M | -941 | -1,943 | N/M |
| Profit for the period, continuing operations | 1,098 | 3,514 | N/M | 2,933 | 6,700 | N/M |
| % of revenues | 5.4 | 15.0 | 6.7 | 14.8 | ||
| Loss for the period, discontinued operations | -4 | -3 | -28 | -16 | -6 | -62 |
| Profit for the period, Group total | 1,094 | 3,511 | N/M | 2,917 | 6,693 | N/M |
| Profit (loss) for the period attributable to | ||||||
| Owners of the parent company | 1,101 | 3,513 | 2,930 | 6,690 | ||
| Non-controlling interest | -7 | 3 | -13 | 3 | ||
| Earnings per share, SEK | ||||||
| Continuing operations, basic | 0.88 | 2.80 | N/M | 2.35 | 5.34 | N/M |
| Continuing operations, diluted | 0.88 | 2.80 | N/M | 2.35 | 5.33 | N/M |
| Group total, basic | 0.88 | 2.80 | N/M | 2.34 | 5.33 | N/M |
| Group total, diluted | 0.88 | 2.80 | N/M | 2.33 | 5.33 | N/M |
| OTHER COMPREHENSIVE INCOME | ||||||
| Items that will not be reclassified to profit (loss) | ||||||
| Actuarial gains (losses) on defined benefit pension plans | 1,687 | 758 | 169 | 2,963 | ||
| Tax relating to items that will not be reclassified | -366 | -162 | -34 | -623 | ||
| Total items that will not be reclassified to profit (loss) | 1,321 | 596 | 135 | 2,340 | ||
| Items that will be reclassified subsequently to profit (loss) | ||||||
| Foreign currency translation differences | -2,943 | -632 | -881 | 1,673 | ||
| Cash flow hedges | 7 | 12 | 8 | 24 | ||
| Tax relating to items that may be reclassified | -3 | -2 | -3 | -6 | ||
| Total items that may be reclassified subsequently to profit (loss) |
-2,939 | -623 | -876 | 1,691 | ||
| Total other comprehensive income | -1,618 | -26 | -741 | 4,031 | ||
| Total comprehensive income | -524 | 3,485 | 2,176 | 10,724 | ||
| Total comprehensive income attributable to | ||||||
| Owners of the parent company | -517 | 3,481 | 2,189 | 10,720 | ||
| Non-controlling interest | -7 | 3 | -13 | 4 |
N/M = not meaningful. For definitions see home.sandvik
| MSEK | DEC 31, 2020 | JUN 30, 2020 | JUN 30, 2021 |
|---|---|---|---|
| Intangible assets | 21,004 | 19,289 | 21,136 |
| Property, plant and equipment | 23,975 | 25,048 | 24,087 |
| Right-of-use assets | 2,891 | 3,083 | 3,245 |
| Financial assets | 7,285 | 7,342 | 7,953 |
| Inventories | 21,473 | 24,780 | 24,662 |
| Current receivables | 18,387 | 19,548 | 21,968 |
| Cash and cash equivalents | 23,752 | 18,952 | 17,251 |
| Assets held for sale | 361 | 152 | 203 |
| Total assets | 119,128 | 118,192 | 120,506 |
| Total equity | 65,082 | 64,241 | 67,707 |
| Non-current interest-bearing liabilities | 22,358 | 22,648 | 19,033 |
| Non-current non-interest-bearing liabilities | 3,741 | 3,802 | 3,896 |
| Current interest bearing liabilities | 4,352 | 3,755 | 3,163 |
| Current non-interest-bearing liabilities | 23,424 | 23,568 | 26,537 |
| Liabilities related to assets held for sale | 171 | 178 | 169 |
| Total equity and liabilities | 119,128 | 118,192 | 120,506 |
| Group total | |||
| Net working capital 1) | 20,096 | 24,491 | 22,878 |
| Loans | 14,900 | 15,450 | 12,297 |
| Non-controlling interests in total equity | 1 | 2 | 5 |
1) Total inventories, trade receivables, accounts payable and other current non-interest bearing receivables and liabilities, excluding tax assets and liabilities
| MSEK | DEC 31, 2020 | JUN 30, 2020 | JUN 30, 2021 |
|---|---|---|---|
| Interest-bearing liabilities excluding pension liabilities and leases | 14,923 | 15,467 | 12,314 |
| Less cash and cash equivalents | -23,752 | -18,952 | -17,251 |
| Financial net cash | -8,829 | -3,485 | -4,937 |
| Net pensions liabilities | 8,509 | 7,314 | 5,484 |
| Leases | 2,965 | 3,157 | 3,338 |
| Net debt | 2,645 | 6,986 | 3,885 |
| Net debt to equity ratio | 0.04 | 0.11 | 0.06 |
| MSEK | EQUITY RELATED TO OWNERS OF THE PARENT COMPANY |
NON-CONTROLLING INTEREST |
TOTAL EQUITY |
|---|---|---|---|
| Opening equity January 1, 2020 | 61,844 | 14 | 61,858 |
| Adjustment on correction of error | -53 | – | -53 |
| Opening equity January 1, 2020 | 61,791 | 14 | 61,805 |
| Changes in non-controlling interest | 2 | -2 | 0 |
| Total comprehensive income for the period | 3,077 | -11 | 3,066 |
| Share based program | 210 | – | 210 |
| Closing equity December 31, 2020 | 65,081 | 1 | 65,082 |
| Opening equity January 1, 2021 | 65,081 | 1 | 65,082 |
| Changes in non-controlling interest | 0 | 0 | 0 |
| Total comprehensive income for the period | 10,720 | 4 | 10,724 |
| Share based program | 41 | 0 | 41 |
| Dividends | -8,140 | – | -8,140 |
| Closing equity June 30, 2021 | 67,703 | 5 | 67,707 |
For definitions see home.sandvik
| MSEK | Q2 2020 | Q2 2021 | Q1-Q2 2020 | Q1-Q2 2021 |
|---|---|---|---|---|
| Continuing operations | ||||
| Cash flow from operating activities | ||||
| Income after net financial items | 1,528 | 4,657 | 3,874 | 8,642 |
| Adjustment for depreciation, amortization and impairment losses | 1,637 | 1,355 | 3,108 | 2,687 |
| Other adjustments for non-cash items | 583 | -443 | 1,491 | -541 |
| Payment to pension fund | -81 | -95 | -273 | -204 |
| Income tax paid | -614 | -1,136 | -1,642 | -2,161 |
| Cash flow from operating activities before changes in working capital | 3,0531) | 4,338 | 6,5581) | 8,423 |
| Changes in working capital | ||||
| Change in inventories | 267 | -1,299 | -863 | -2,630 |
| Change in operating receivables | 2,284 | -1,363 | 1,061 | -2,773 |
| Change in operating liabilities | -2,640 | 1,510 | -984 | 3,095 |
| Cash flow from changes in working capital | -89 | -1,152 | -786 | -2,308 |
| Investments in rental equipment | -307 | -313 | -436 | -498 |
| Proceeds from sale of rental equipment | 122 | 74 | 157 | 118 |
| Cash flow from operating activities, net | 2,7801) | 2,948 | 5,4941) | 5,735 |
| Cash flow from investing activities | ||||
| Acquisitions of companies and shares, net of cash acquired | -132 | 4 | -221 | 7 |
| Proceeds from sale of companies and shares, net of cash disposed | 32 | 374 | 799 | 385 |
| Acquisitions of tangible assets | -719 | -570 | -1,317 | -1,104 |
| Proceeds from sale of tangible assets | 111 | 41 | 235 | 64 |
| Acquisitions of intangible assets | -100 | -154 | -215 | -301 |
| Other investments, net | -37 | -60 | -29 | -72 |
| Cash flow from investing activities, net | -846 | -364 | -747 | -1,021 |
| Cash flow from financing activities | ||||
| Repayment of borrowings | -137 | -19 | -2,184 | -2,746 |
| Proceeds from borrowings | 145 | 16 | 162 | 24 |
| Amortization, lease liabilities | -231 | -263 | -481 | -516 |
| Dividends paid | – | -8,140 | – | -8,140 |
| Cash flow from financing activities, net | -2231) | -8,406 | -2,5031) | -11,378 |
| Total cash flow from continuing operations | 1,711 | -5,823 | 2,244 | -6,664 |
| Total cash flow from discontinued operations | -54 | -10 | -60 | -14 |
| Cash flow for the period, Group total | 1,657 | -5,833 | 2,184 | -6,678 |
| Cash and cash equivalents at beginning of the period | 17,469 | 23,137 | 16,987 | 23,752 |
| Foreign exchange rate differences in cash and cash equivalents | -175 | -53 | -219 | 177 |
| Cash and cash equivalents at the end of the period | 18,952 | 17,251 | 18,952 | 17,251 |
| Group Total | ||||
| Cash flow from operations | 2,725 | 2,940 | 5,433 | 5,723 |
| Cash flow from investing activities | -845 | -366 | -746 | -1,023 |
| Cash flow from financing activities | -223 | -8,406 | -2,503 | -11,378 |
| Group total cash flow | 1,657 | -5,833 | 2,184 | -6,678 |
1) Figures have been restated due to reclassification of payment to pension fund from financing activities to operating activities.
| MSEK | Q2 2020 | Q2 2021 | Q1-Q2 2020 | Q1-Q2 2021 |
|---|---|---|---|---|
| Revenues | 2,227 | 3,300 | 5,241 | 6,414 |
| Cost of sales and services | -500 | -825 | -849 | -1,506 |
| Gross profit | 1,727 | 2,475 | 4,392 | 4,908 |
| Selling expenses | -236 | -229 | -508 | -435 |
| Administrative expenses | -342 | -421 | -804 | -761 |
| Research and development costs | -312 | -354 | -633 | -680 |
| Other operating income and expenses | -263 | -222 | -372 | -389 |
| Operating profit | 574 | 1,249 | 2,075 | 2,643 |
| Result from shares in group companies | -12 | -814 | -1,766 | -772 |
| Interest income/expenses and similar items | -32 | -113 | -71 | -77 |
| Profit after net financial items | 530 | 322 | 238 | 1,794 |
| Appropriations | 398 | -9 | 2,559 | -44 |
| Income tax expenses | -187 | -333 | -525 | -537 |
| Profit for the period | 741 | -20 | 2,272 | 1,213 |
| MSEK | DEC 31, 2020 | JUN 30, 2020 | JUN 30, 2021 |
|---|---|---|---|
| Intangible assets | 39 | 57 | 170 |
| Property, plant and equipment | 3,219 | 3,183 | 3,232 |
| Financial assets | 54,107 | 54,492 | 51,818 |
| Inventories | 676 | 806 | 729 |
| Current receivables | 6,294 | 4,269 | 5,179 |
| Cash and cash equivalents | – | – | 0 |
| Total assets | 64,335 | 62,807 | 61,128 |
| Total equity | 37,731 | 37,132 | 30,846 |
| Untaxed reserves | 937 | 663 | 982 |
| Provisions | 750 | 593 | 606 |
| Non-current interest-bearing liabilities | 11,346 | 12,461 | 9,936 |
| Non-current non-interest-bearing liabilities | 123 | 154 | 97 |
| Current interest-bearing liabilities | 10,466 | 8,060 | 15,873 |
| Current non-interest-bearing liabilities | 2,982 | 3,744 | 2,788 |
| Total equity and liabilities | 64,335 | 62,807 | 61,128 |
| Interest-bearing liabilities and provisions minus cash and | |||
| cash equivalents and interest-bearing assets | 7,057 | 8,068 | 14,203 |
| Investments in fixed assets | 430 | 161 | 351 |
For definitions see home.sandvik
ORDER INTAKE BY REGION
| CHANGE * | SHARE | CHANGE * | SHARE | |||||
|---|---|---|---|---|---|---|---|---|
| MSEK | Q2 2021 | % | % 1) | % | Q1-Q2 2021 | % | % 1) | % |
| THE GROUP | ||||||||
| Europe | 9,451 | 63 | 63 | 37 | 18,406 | 24 | 28 | 36 |
| North America | 5,554 | 49 | 49 | 21 | 10,878 | 23 | 24 | 21 |
| South America | 1,337 | 88 | 88 | 5 | 2,691 | 50 | 50 | 5 |
| Africa/Middle East | 2,133 | 15 | 34 | 8 | 4,620 | 22 | 31 | 9 |
| Asia | 5,347 | 34 | 28 | 21 | 10,847 | 30 | 24 | 21 |
| Australia | 2,036 | 1 | 22 | 8 | 4,262 | 17 | 16 | 8 |
| Total Continuing Operations 2) | 25,857 | 43 | 47 | 100 | 51,704 | 26 | 27 | 100 |
| SANDVIK MINING AND ROCK SOLUTIONS** | ||||||||
| Europe | 1,440 | 50 | 50 | 14 | 2,562 | 40 | 40 | 12 |
| North America | 2,219 | 39 | 39 | 21 | 4,377 | 37 | 37 | 21 |
| South America | 877 | 93 | 93 | 8 | 1,777 | 60 | 60 | 9 |
| Africa/Middle East | 1,825 | 15 | 37 | 18 | 4,005 | 27 | 38 | 19 |
| Asia | 2,228 | 46 | 30 | 21 | 4,328 | 40 | 25 | 21 |
| Australia | 1,809 | -3 | 19 | 17 | 3,818 | 15 | 14 | 18 |
| Total 2) | 10,399 | 31 | 38 | 100 | 20,868 | 33 | 32 | 100 |
| SANDVIK ROCK PROCESSING SOLUTIONS** | ||||||||
| Europe | 684 | 67 | 67 | 32 | 1,361 | 49 | 49 | 30 |
| North America | 471 | 70 | 70 | 22 | 1,028 | 24 | 24 | 23 |
| South America | 159 | 28 | 28 | 7 | 325 | 30 | 30 | 7 |
| Africa/Middle East | 163 | 27 | 27 | 8 | 352 | 3 | 3 | 8 |
| Asia | 533 | 68 | 68 | 25 | 1,167 | 71 | 71 | 26 |
| Australia | 137 | 88 | 88 | 6 | 273 | 63 | 63 | 6 |
| Total | 2,147 | 61 | 61 | 100 | 4,505 | 42 | 42 | 100 |
| SANDVIK MANUFACTURING AND MACHINING SOLUTIONS | ||||||||
| Europe | 5,088 | 50 | 50 | 55 | 10,283 | 20 | 20 | 55 |
| North America | 1,989 | 48 | 48 | 21 | 3,901 | 13 | 13 | 21 |
| South America | 199 | 118 | 118 | 2 | 375 | 69 | 69 | 2 |
| Africa/Middle East | 71 | 58 | 58 | 1 | 142 | 8 | 8 | 1 |
| Asia | 1,856 | 23 | 23 | 20 | 3,820 | 14 | 14 | 20 |
| Australia | 67 | 4 | 4 | 1 | 128 | 0 | 0 | 1 |
| Total | 9,270 | 44 | 44 | 100 | 18,649 | 18 | 18 | 100 |
| SANDVIK MATERIALS TECHNOLOGY | ||||||||
| Europe | 2,238 | 117 | 117 | 55 | 4,199 | 17 | 40 | 55 |
| North America | 875 | 73 | 73 | 22 | 1,572 | 17 | 24 | 20 |
| South America | 101 | 151 | 151 | 3 | 214 | -0 | -0 | 3 |
| Africa/Middle East | 73 | -21 | -21 | 2 | 121 | -14 | -14 | 2 |
| Asia | 730 | 16 | 16 | 18 | 1,532 | 26 | 26 | 20 |
| Australia | 23 | 166 | 166 | 1 | 43 | 65 | 65 | 1 |
| Total | 4,041 | 74 | 74 | 100 | 7,681 | 18 | 31 | 100 |
*At fixed exchange rates for comparable units compared with the year-earlier period. ** Last years figures has been restated due to the new BA structure as of January 1, 2021.
1) Excluding major orders which is defined as above SEK 400 million in Sandvik Rock Processing solutions and above SEK 200 million in Sandvik Mining and Rock Solutions and Sandvik Materials Technology. 2) Includes rental fleet order intake in Q2 of SEK 193 million and for the first six months SEK 383 million recognized according to IFRS 16.
| MSEK | Q2 2021 | CHANGE*, % | SHARE % | Q1-Q2 2021 | CHANGE*, % | SHARE % |
|---|---|---|---|---|---|---|
| THE GROUP | ||||||
| Europe | 8 276 | 19 | 35 | 16 034 | 5 | 36 |
| North America | 5 082 | 23 | 22 | 9 603 | 5 | 21 |
| South America | 1 125 | 51 | 5 | 2 191 | 29 | 5 |
| Africa/Middle East | 2 185 | 29 | 9 | 4 306 | 24 | 10 |
| Asia | 4 768 | 21 | 20 | 9 276 | 19 | 21 |
| Australia | 2 025 | 9 | 9 | 3 741 | 3 | 8 |
| Total Continuing Operations | 23 460 | 22 | 100 | 45 151 | 11 | 100 |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 |
| Group total 1) | 23 460 | 22 | 100 | 45 151 | 11 | 100 |
| SANDVIK MINING AND ROCK SOLUTIONS** | ||||||
| Europe | 1 014 | -6 | 11 | 1 765 | -10 | 10 |
| North America | 1 947 | 34 | 21 | 3 562 | 19 | 21 |
| South America | 726 | 64 | 8 | 1 417 | 33 | 8 |
| Africa/Middle East | 1 872 | 27 | 21 | 3 690 | 25 | 22 |
| Asia | 1 696 | 21 | 19 | 3 305 | 20 | 19 |
| Australia | 1 835 | 10 | 20 | 3 370 | 3 | 20 |
| Total 1) | 9 090 | 21 | 100 | 17 109 | 15 | 100 |
| SANDVIK ROCK PROCESSING SOLUTIONS** | ||||||
| Europe | 581 | 20 | 30 | 1 140 | 16 | 31 |
| North America | 482 | 30 | 25 | 842 | 29 | 23 |
| South America | 153 | 46 | 8 | 289 | 15 | 8 |
| Africa/Middle East | 178 | 42 | 9 | 350 | 30 | 9 |
| Asia | 468 | 40 | 24 | 866 | 40 | 23 |
| Australia | 102 | -11 | 5 | 203 | 7 | 6 |
| Total | 1 964 | 29 | 100 | 3 691 | 25 | 100 |
| SANDVIK MANUFACTURING AND MACHINING SOLUTIONS | ||||||
| Europe | 4 985 | 37 | 55 | 9 844 | 14 | 55 |
| North America | 1 931 | 39 | 21 | 3 697 | 7 | 21 |
| South America | 189 | 112 | 2 | 364 | 57 | 2 |
| Africa/Middle East | 70 | 40 | 1 | 139 | 6 | 1 |
| Asia | 1 841 | 14 | 20 | 3 696 | 10 | 21 |
| Australia | 67 | 7 | 1 | 126 | 2 | 1 |
| Total | 9 083 | 33 | 100 | 17 865 | 13 | 100 |
| SANDVIK MATERIALS TECHNOLOGY | ||||||
| Europe | 1 697 | -6 | 51 | 3 285 | -11 | 51 |
| North America | 722 | -20 | 22 | 1 502 | -26 | 23 |
| South America | 57 | -48 | 2 | 120 | -22 | 2 |
| Africa/Middle East | 64 | 37 | 2 | 128 | 11 | 2 |
| Asia | 762 | 34 | 23 | 1 409 | 32 | 22 |
| Australia | 22 | 17 | 1 | 42 | 32 | 1 |
| Total | 3 324 | -4 | 100 | 6 486 | -9 | 100 |
* At fixed exchange rates for comparable units compared with the year-earlier period. ** Last years figures has been restated due to the new BA structure as of January 1, 2021.
1) Includes rental fleet revenues in Q2 of SEK 231 million and for the first six months SEK 402 million recognized according to IFRS 16.
| MSEK | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
% | CHANGE % * |
|---|---|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions** | 8,598 | 8,400 | 8,519 | 9,314 | 34,832 | 10,469 | 10,399 | 24 | 31 |
| Sandvik Rock Processing Solutions** | 1,973 | 1,373 | 1,614 | 1,612 | 6,571 | 2,358 | 2,147 | 56 | 61 |
| Sandvik Manufacturing and Machining Solutions | 10,124 | 6,821 | 7,298 | 8,434 | 32,677 | 9,379 | 9,270 | 36 | 44 |
| Sandvik Materials Technology | 4,365 | 2,377 | 2,477 | 2,691 | 11,910 | 3,641 | 4,041 | 70 | 74 |
| Other Operations | 297 | 0 | – | 0 | 297 | – | – | 0 | 0 |
| Continuing operations | 25,356 | 18,971 | 19,909 | 22,051 | 86,287 | 25,847 | 25,857 | 36 | 43 |
| Discontinued operations | 0 | 0 | 0 | 1 | 1 | 0 | 1 | 0 | 0 |
| Group Total 1) | 25,356 | 18,971 | 19,909 | 22,052 | 86,288 | 25,847 | 25,858 | 36 | 43 |
| MSEK | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
% | CHANGE % * |
|---|---|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions** | 8,244 | 7,899 | 8,399 | 9,031 | 33,572 | 8,019 | 9,090 | 15 | 21 |
| Sandvik Rock Processing Solutions** | 1,531 | 1,590 | 1,536 | 1,802 | 6,459 | 1,727 | 1,964 | 23 | 29 |
| Sandvik Manufacturing and Machining Solutions | 9,766 | 7,247 | 7,325 | 8,139 | 32,477 | 8,782 | 9,083 | 25 | 33 |
| Sandvik Materials Technology | 3,782 | 3,495 | 2,886 | 3,436 | 13,598 | 3,162 | 3,324 | -5 | -4 |
| Other Operations | 297 | 0 | 0 | 0 | 297 | – | – | 0 | 0 |
| Continuing operations | 23,620 | 20,230 | 20,145 | 22,408 | 86,404 | 21,691 | 23,460 | 16 | 22 |
| Discontinued operations | 2 | -1 | 0 | 4 | 6 | 2 | 1 | N/M | N/M |
| Group Total 1) | 23,623 | 20,229 | 20,146 | 22,412 | 86,409 | 21,693 | 23,461 | 16 | 22 |
| MSEK | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
CHANGE % |
|---|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions** | 1,453 | 934 | 1,820 | 2,192 | 6,400 | 1,644 | 1,827 | 96 |
| Sandvik Rock Processing Solutions** | 208 | 232 | 263 | 288 | 990 | 283 | 334 | 44 |
| Sandvik Manufacturing and Machining Solutions | 1,690 | 645 | 1,377 | 894 | 4,606 | 2,012 | 2,096 | N/M |
| Sandvik Materials Technology | 94 | -83 | 110 | 371 | 492 | 336 | 355 | N/M |
| Group activities | -168 | -178 | -89 | -258 | -694 | -19 | 142 | N/M |
| Other Operations | -515 | -42 | -22 | 0 | -578 | 0 | 0 | N/M |
| Continuing operations | 2,762 | 1,508 | 3,459 | 3,487 | 11,216 | 4,256 | 4,754 | N/M |
| Discontinued operations | -12 | -4 | -3 | -13 | -32 | -3 | -3 | -28 |
| Group Total 1) | 2,750 | 1,504 | 3,456 | 3,474 | 11,184 | 4,253 | 4,751 | N/M |
| % | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions** | 17.6 | 11.8 | 21.7 | 24.3 | 19.1 | 20.5 | 20.1 |
| Sandvik Rock Processing Solutions** | 13.6 | 14.6 | 17.1 | 16.0 | 15.3 | 16.4 | 17.0 |
| Sandvik Manufacturing and Machining Solutions | 17.3 | 8.9 | 18.8 | 11.0 | 14.2 | 22.9 | 23.1 |
| Sandvik Materials Technology | 2.5 | -2.4 | 3.8 | 10.8 | 3.6 | 10.6 | 10.7 |
| Other Operations | N/M | N/M | N/M | N/M | N/M | N/M | N/M |
| Continuing operations | 11.7 | 7.5 | 17.2 | 15.6 | 13.0 | 19.6 | 20.3 |
| Discontinued operations | N/M | N/M | N/M | N/M | N/M | N/M | N/M |
| Group Total 1) | 11.6 | 7.4 | 17.2 | 15.5 | 12.9 | 19.6 | 20.2 |
* Change at fixed exchange rates for comparable units compared with the year-earlier period. ** Last years figures has been restated due to the new BA structure as of January 1, 2021. 1) Internal transactions had negligible effect on business area profits.
N/M = Non-meaningful.
| MSEK | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
CHANGE % |
|---|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions* | 1,453 | 1,601 | 1,820 | 2,011 | 6,885 | 1,644 | 1,827 | 14 |
| Sandvik Rock Processing Solutions* | 208 | 232 | 263 | 335 | 1,038 | 283 | 334 | 44 |
| Sandvik Manufacturing and Machining Solutions | 2,054 | 927 | 1,377 | 1,742 | 6,100 | 2,013 | 2,097 | N/M |
| Sandvik Materials Technology | 139 | 248 | 116 | 528 | 1,032 | 355 | 394 | 59 |
| Group activities | -138 | -129 | -82 | -112 | -461 | -124 | -182 | 42 |
| Other Operations | 11 | -42 | 0 | – | -31 | – | 0 | N/M |
| Continuing operations | 3,728 | 2,837 | 3,494 | 4,505 | 14,563 | 4,170 | 4,469 | 58 |
| Discontinued operations | -12 | -4 | -3 | -13 | -32 | -3 | -3 | -28 |
| Group Total 1) | 2,750 | 1,504 | 3,456 | 3,474 | 11,184 | 4,253 | 4,751 | N/M |
| % | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions* | 17.6 | 20.3 | 21.7 | 22.3 | 20.5 | 20.5 | 20.1 |
| Sandvik Rock Processing Solutions* | 13.6 | 14.6 | 17.1 | 18.6 | 16.1 | 16.4 | 17.0 |
| Sandvik Manufacturing and Machining Solutions | 21.0 | 12.8 | 18.8 | 21.4 | 18.8 | 22.9 | 23.1 |
| Sandvik Materials Technology | 3.7 | 7.1 | 4.0 | 15.4 | 7.6 | 11.2 | 11.8 |
| Other Operations | 3.8 | N/M | N/M | N/M | -10.4 | N/M | N/M |
| Continuing operations | 15.8 | 14.0 | 17.3 | 20.1 | 16.9 | 19.2 | 19.1 |
| Discontinued operations | N/M | N/M | N/M | N/M | N/M | N/M | N/M |
| Group Total 1) | 15.7 | 14.0 | 17.3 | 20.0 | 16.8 | 19.2 | 19.0 |
| MSEK | Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
Q2 2021 |
|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions* | – | -667 | 0 | 182 | -485 | – | – |
| Sandvik Rock Processing Solutions* | – | – | – | -48 | -48 | – | – |
| Sandvik Manufacturing and Machining Solutions | -364 | -282 | – | -848 | -1,494 | 0 | -1 |
| Sandvik Materials Technology | -45 | -331 | -6 | -157 | -540 | -19 | -39 |
| Group activities | -30 | -49 | -7 | -146 | -233 | 105 | 324 |
| Other Operations | -526 | – | -21 | – | -547 | – | – |
| Continuing operations | -965 | -1,329 | -35 | -1,018 | -3,347 | 86 | 285 |
| Discontinued operations | – | – | – | – | – | – | – |
| Group Total | -965 | -1,329 | -35 | -1,018 | -3,347 | 86 | 285 |
* Last years figures has been restated due to the new BA structure as of January 1, 2021. 1) Internal transactions had negligible effect on business area profits.
Q1 2020 - Sandvik reported items affecting comparability of total SEK -965 million, comprising of costs of SEK -364 million related to Sandvik Manufacturing and Machining Solutions (SMM) and the closure of a manufacturing plant in Germany. Other operations included a negative impact of SEK -526 million related to the realized effect from reversal of the accumulated currency translation in Other Comprehensive Income due to the divestment of Varel. An additional SEK -75 million of costs related to the internal separation of Sandvik Materials Technology (SMT), out of which SEK -45 million in SMT and SEK -30 million in Group activities.
Q2 2020 - Sandvik reported items affecting comparability of SEK -1,329 million , comprising of cost related to structural and volume related savings measures of SEK -1,334 million. As well as costs related to the separation of SMT of SEK -24 million and a capital gain of SEK 29 million in SMT.
Q3 2020 - Sandvik reported items affecting comparability of SEK -35 million, comprising of SEK -21 million of final purchase price adjustment of the divestment of Varel. As well as cost related to the separation of SMT of SEK -13 million. Q4 2020 - reported EBIT was impacted by one-off costs totaling SEK -1,018 million, comprising long-term savings measures announced in December at a net cost of SEK -1,010 million, including a reversal of a provision made in Q2 2020 for Sandvik Mining and Rock Technology (SMR) and costs related to the separation of SMT of SEK -7 million.
Q1 2021 - Sandvik reported items affecting comparability of SEK 86 million, comprising of a net gain of a divested property SEK 115 million and costs related to the separation of SMT of SEK -29 million.
Q2 2021- Sandvik reported items affecting comparability of SEK 285 million, comprising of a positive impact from closure of a pension plan in US of SEK 343 million and a release of SEK 39 million related to a structural initiative during 2020 in SMT, offset by costs related to the separation of SMT of SEK -97 in total.
| Q1 | Q2 | Q3 | Q4 | Q1-Q4 | Q1 | Q2 | |
|---|---|---|---|---|---|---|---|
| MSEK | 2020 | 2020 | 2020 | 2020 | 2020 | 2021 | 2021 |
| Group activities | – | – | 588 | – | 588 | – | – |
| Group Total | – | – | 588 | – | 588 | – | – |
Q3 2020 - Sandvik reported items affecting comparability of SEK 588
million on net financial items related to the disposal of the minority holding in
Xiamen Golden Egret Special Alloy Co., Ltd. (Gesac).
| Q2 2020 | Reported tax, MSEK |
Reported tax, % | IAC, MSEK | IAC, % | Tax excluding IAC, MSEK |
Tax excluding IAC, % |
|---|---|---|---|---|---|---|
| Continued operations | -430 | 28.1 | 263 | 19.8 | -693 | 24.3 |
| Discontinued operations | – | – | – | – | – | – |
| Group total | -430 | 28.2 | 263 | 19.8 | -693 | 24.3 |
| Q2 2021 | Reported tax, MSEK |
Reported tax, % | IAC, MSEK | IAC, % | Tax excluding IAC, MSEK |
Tax excluding IAC, % |
| Continued operations | -1,143 | 24.5 | -145 | 50.9 | -998 | 22.8 |
| Discontinued operations | – | – | – | – | – | – |
| Group total | -1,143 | 24.6 | -145 | 50.9 | -998 | 22.8 |
| MSEK | DEC 31, 2020 | JUN 30, 2020 | JUN 30, 2021 |
|---|---|---|---|
| Inventories | 21,718 | 24,780 | 24,743 |
| Trade receivables | 12,369 | 12,934 | 14,729 |
| Account payables | -7,024 | -6,495 | -8,579 |
| Other receivables | 3,128 | 3,725 | 3,964 |
| Other liabilities | -9,862 | -10,453 | -11,908 |
| Net working capital | 20,330 | 24,491 | 22,949 |
| Tangible assets | 23,975 | 25,048 | 24,087 |
| Intangible assets | 21,006 | 19,289 | 21,137 |
| Other assets (incl. cash and cash equivalents) | 74,032 | 73,703 | 75,161 |
| Other liabilities | -27,184 | -27,370 | -30,449 |
| Capital employed | 91,830 | 90,670 | 89,936 |
| CONTINUING OPERATIONS | Q2 2020 | Q2 2021 | Q1-Q4 2020 |
|---|---|---|---|
| Tax rate, % | 28.1 | 24.5 | 22.3 |
| Return on capital employed, % 1, 2) | 6.9 | 21.3 | 13.3 |
| Return on total equity, % 1) | 6.8 | 20.1 | 13.6 |
| Return on total capital, % 1) | 5.3 | 16.1 | 10.2 |
| Shareholders' equity per share, SEK | 51.2 | 54.0 | 51.9 |
| Net debt/equity ratio | 0.11 | 0.06 | 0.04 |
| Net debt/EBITDA | 0.72 | 0.14 | 0.41 |
| Equity/assets ratio, % | 54 | 56 | 55 |
| Net working capital, % 1, 2) | 31.0 | 24.2 | 27.5 |
| Earnings per share, basic, SEK | 0.88 | 2.80 | 6.99 |
| Earnings per share, diluted, SEK | 0.88 | 2.80 | 6.98 |
| EBITDA, MSEK | 3,146 | 6,109 | 17,180 |
| Cash flow from operations, MSEK | 2,780 | 2,948 | 15,414 |
| Funds from operations (FFO), MSEK | 3,053 | 4,338 | 14,063 |
| Interest coverage ratio, % | 4,828 | 1,662 | 1,497 |
| Number of employees 3) | 34,174 | 38,995 | 37,122 |
1) Quarter is quarterly annualized and the annual number is based on a four quarter average. 2) 12-month rolling 2Q 2021 ROCE reported at 18.5% (9.3%) and NWC % reported at 25.9 (27.5). 3) Full-time equivalent.
| GROUP TOTAL | Q2 2020 | Q2 2021 | Q1-Q4 2020 |
|---|---|---|---|
| Tax rate, % | 28.2 | 24.6 | 22.4 |
| Return on capital employed, % 1, 2) | 6.9 | 21.2 | 13.3 |
| Return on total equity, % 1) | 6.8 | 20.1 | 13.6 |
| Return on total capital, % 1) | 5.2 | 16.0 | 10.1 |
| Shareholders' equity per share, SEK | 51.2 | 54.0 | 51.9 |
| Net debt/equity ratio | 0.11 | 0.06 | 0.04 |
| Net debt/EBITDA | 0.72 | 0.14 | 0.41 |
| Equity/assets ratio, % | 54 | 56 | 55 |
| Net working capital, % 1, 2) | 31.1 | 24.2 | 27.5 |
| Earnings per share, basic, SEK | 0.88 | 2.80 | 6.96 |
| Earnings per share diluted, SEK | 0.88 | 2.80 | 6.95 |
| EBITDA, MSEK | 3,141 | 6,106 | 17,149 |
| Cash flow from operations, MSEK | 2,725 | 2,940 | 15,347 |
| Funds from operations (FFO), MSEK | 2,982 | 4,330 | 13,935 |
| Interest coverage ratio, % | 4,714 | 1,658 | 906 |
| Number of employees 3) | 34,179 | 38,994 | 37,125 |
| No. of shares outstanding at end of period ('000) | 1,254,386 | 1,254,386 | 1,254,386 |
| Average no. of shares, ('000) | 1,254,386 | 1,254,386 | 1,254,386 |
| Average no. of shares, diluted, ('000) | 1,256,213 | 1,255,882 | 1,256,055 |
1) Quarter is quarterly annualized and the annual number is based on a four quarter average. 2) 12-month rolling 2Q 2021 ROCE reported at 18.5% (9.1%) and NWC % reported at 25.9 (27.6). 3) Full-time equivalent.
Sandvik presents certain financial measures that are not defined in the interim report in accordance with IFRS. Sandvik believes that these measures have an important purpose of providing useful supplemental information to investors and the company's management when they allow evaluation of trends and the company's performance. As not all companies calculate the financial measures in the same way, these are not always comparable to measures used by other companies. These financial measures should not be seen as a substitute for measures defined under IFRS. For definitions of alternative performance measures that Sandvik uses see below.
Profit/loss adjusted for items affecting comparability attributable to equity holders of the Parent Company divided by the average number of shares outstanding during the year including shares that will be allotted in the long-term incentive programs.
Earnings before interest and taxes adjusted for items affecting comparability.
Earnings before interest and taxes adjusted for items affecting comparability and metal price effects. Metal price effects are one of the non-operational key figures that Sandvik provides quarterly guidance for, as the metal price effects are volatile and difficult for the investors to predict.
Profit after net financial items adjusted from items affecting comparability.
Capital employed is defined as total net working capital plus tangible and intangible assets, other current assets (incl. cash and cash equivalents) less other current liabilities.
Earnings before interest, taxes and depreciation adjusted for non-cash items plus the change in net working capital minus investments and disposals of rental equipment and tangible and intangible assets.
Sandvik reports operating profit, profit after net financial items and earnings per share adjusted for IAC. IAC includes capital gains and losses from divestments and larger restructuring initiatives, impairments, capital gains and losses from divestments of financial assets as well as other material items having a significant impact on the comparability.
Earnings before interest and taxes.
Change in order intake and revenues after adjustments for exchange rate effects and structural changes such as divestments and acquisitions. Sandvik generates the majority of its revenues in currencies other than in the reporting currency (i.e. SEK, Swedish Krona) and divest and acquire companies. Organic growth is used to analyze the underlying sales performance in the Group.
Interest-bearing current and non-current liabilities, including net pension liabilities and leases, less cash and cash equivalents.
Interest-bearing current and non-current liabilities, including net pension liabilities and leases, less cash and cash equivalents divided by total equity.
Total of inventories, trade receivables, account payables and other current non-interest-bearing receivables and liabilities, including those classified as liabilities and assets held for sale, but excluding tax assets and liabilities and provisions.
Operating profit/loss plus financial income, as a percentage of a four quarter average capital employed.
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, commercialization and technological difficulties, supply disturbances, and major customer credit losses.
The Board of Directors and the CEO certify that the six-month report gives a fair overview of the Parent Company's and the Group's operations, financial position and results, and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.
Stockholm July 16, 2021 Sandvik Aktiebolag (publ)
Jennifer Allerton Board member
Johan Molin Chairman of the Board
Marika Fredriksson Board member
Tomas Kärnström Board member
Thomas Lilja Board member
Claes Boustedt Board member
Andreas Nordbrandt Board member
Helena Stjernholm Board member
Kai Wärn Board member
Stefan Widing President and CEO Board member
The Company's Auditor has not reviewed the report for the first six months of 2021.
This information is information that Sandvik AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 11.30 CEST on July 16, 2021.
Additional information may be obtained from Sandvik Investor Relations on +46 70 782 63 74 (Louise Tjeder) or tel +46 79 060 87 17 (Emelie Alm).
A telephone conference will be held on July 16, 2021 at 13.00 CEST.
Information is available at home.sandvik/ir
Sandvik AB, Corp Reg. No: 556000-3468 Box 510 SE-101 30 Stockholm +46 8 456 11 00
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