Quarterly Report • Apr 20, 2021
Quarterly Report
Open in ViewerOpens in native device viewer
| FINANCIAL OVERVIEW, MSEK | Q1 2020 | Q1 2021 | CHANGE % | Q1-Q4 2020 |
|---|---|---|---|---|
| Order intake | 25,356 | 25,847 | 2 | 86,287 |
| Organic growth, % 1) | $-11.0$ | 12.2 | $-1.5$ | |
| Revenues | 23,620 | 21,691 | -8 | 86,404 |
| Organic growth, $\%$ 1) | $-7.5$ | 1.0 | $-5.9$ | |
| Operating profit | 2,762 | 4,256 | 54 | 11,216 |
| Adjusted operating profit $2$ | 3,728 | 4,170 | 12 | 14,563 |
| % of revenues | 15.8 | 19.2 | 16.9 | |
| Adjusted profit after net financial items 2, 3) | 3,311 | 3,900 | 18 | 14,029 |
| Profit for the period | 1,835 | 3,185 | 74 | 8,753 |
| Adjusted profit for the period $2,3$ | 2,674 | 3,093 | 16 | 10,823 |
| Earnings per share, diluted, SEK | 1.46 | 2.53 | 73 | 6.98 |
| Adjusted earnings per share, diluted, SEK 2,3) | 2.13 | 2.46 | 15 | 8.63 |
| Return on capital employed, % 4) | 12.5 | 18.6 | 13.3 | |
| Free operating cash flow | 3,176 | 2,946 | $-7$ | 16,425 |
| Net working capital $%$ 4) | 26.8 | 24.7 | 27.5 |
1) Change from the preceding year at fixed exchange rates for comparable units. 2) Adjusted for items affecting comparability of SEK 86 million in Q1 2021 (-965) and SEK-3.3 billion YTD 2020. Q1 2021 is mainly impacted by a capital gain from a divestment of property partially offset by separation costs. The FY 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 Q1 2021 (0), full year 2020 includes SEK 0.6 billion. See page 24. 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
We had a solid start to the year, and the first quarter was characterized by continued improvement, and positive momentum. Organic order intake for the Group grew by a strong +12% year on year, with record-high order levels in our mining businesses and a continued positive trajectory for our short-cycle businesses. The gradual uptick in demand for Sandvik's solutions was broad-based, with the exception of the aerospace and energy segments that remained subdued, but with the latter showing signs of improved customer activity. Group organic revenues increased by +1% year on year and, despite the negative impact from currency, adjusted operating profit improved year on year. We delivered a significantly stronger adjusted operating margin of 19.2% (15.8), driven by continued operational efficiency improvements and lower spend. During the quarter, we generated a total of SEK 550 million in long-term and temporary savings compared with the preceding year.
We continued to see strong momentum in mining with accelerating demand for our equipment, parts and services. The order intake level for Sandvik Mining and Rock Solutions was at an all-time high, driven by organic growth of +36% year on year. The positive sentiment was noted across the board, and we reported historically high order intake levels in our Load and Haul, Underground Drilling and Surface Drilling divisions. In March, we launched our new surface drilling system Top Hammer XL, with field tests showing major sustainability and productivity benefits, such as a 50% reduction in fuel consumption as well as a productivity gain of +20%.
As communicated earlier, this marks the first time that Sandvik Rock Processing Solutions is being reported as a separate business area. The separation allows for greater focus and execution on the different growth objectives and increases the transparency of our ambitions. Sandvik Rock Processing Solutions delivered a strong organic order intake and revenue growth of +28% and +19%, respectively, driven by strong underlying demand both in the mining and the construction segments.
Demand in Sandvik Manufacturing and Machining Solutions has continued to improve across all our major markets and organic
order intake was on par with the preceding year. While general engineering is now back on the levels seen in the preceeding year and the automotive segment has continued to strengthen, the aerospace segment remained at a low level. The daily order intake in the beginning of April started with a low to mid-single digit improvement rate compared to the first quarter of 2021.
Sandvik Materials Technology's order intake declined by -13% as a consequence of lower demand in our long-cycle oil and gas segment, although a number of minor order for umbilicals were placed towards the latter part of the quarter. Excluding major orders related to the energy segment in the year earlier period, order intake increased by +3% driven by a strong development in our short-cycle businesses and in particular industrial heating systems.
During the quarter, we also launched our new company purpose, in addition to a refined strategy based on six strategic objectives aligned with well-defined measurables and a systematic approach to reach our targets for 2025. Our focus is on shifting to growth, striving to be an employer of choice as well as our customer's first choice, staying agile through the cycle by excelling in operational efficiency, and continuing the digital and sustainability shifts.
While the pandemic and its consequences are still not behind us, and our business still face uncertainties, market conditions and global output trends are positive and we can conclude a quarter with positive momentum, a shift to growth and a solid set of results. Looking ahead, I feel confident that the high organizational commitment to our strategic objectives will ensure further progress and value creation. We will make the shift, and advance the world through engineering.
Stefan Widing President and CEO
FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK
Organic order intake in the quarter increased by 12% year on year. The increase in revenues was more modest, at 1%.
Sandvik Mining and Rock Solutions and Sandvik Rock Processing Solutions reported strong development in organic order intake year on year, with growth of 36% and 28%, respectively. The increased customer activity was noted on a broad regional front, reflecting strong underlying demand, but also partially underpinned by pre-orders to secure deliveries in time as well as certain catch-up effects as a consequence of the uncertainties that arose in the prior year. While global supply chain bottlenecks, such as container imbalances and component shortages, had a limited impact on the performance in the current period, the high order backlog levels pose some challenges going forward. Excluding major orders received in the quarter of SEK 660 million, Sandvik Mining and Rock Solutions organic order intake increased by 27 %.
A continued improvement was noted in our short-cycle businesses, driven by automotive and general engineering. Sandvik Manufacturing and Machining Solutions reported flat year on year development in organic order intake. Organic order intake development in Sandvik Materials Technology of -13% year on year was negatively impacted by continued low demand in the energy segment. A slight improvement in customer sentiment was noted at the end of the quarter in light of rising oil prices and a market stabilization. Excluding major orders received in the year-earlier period of SEK 660 million related to the energy segment, Sandvik Materials Technology's organic order intake increased by 3%.
The Group's demand in Europe improved sequentially at a double-digit rate driven by automotive and mining activity, and reported flat development in year on year organic order intake. North America increased by 5% year on year, driven by a strong mining demand but was somewhat offset by continued soft demand in the oil & gas and aerospace segments. Organic order intake in Asia strengthened further, by 27% year on year.
Changed exchange rates had a negative impact of -9% on both order intake and revenues.
| Q1 | 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 | 35% | $-1\%$ (+5%) | ||||||
| North America | 22% | $+5\%$ ( $+7\%$ ) | ||||||
| Asia | 20% | $+26\% (+21\%)$ | ||||||
| Africa/ Middle East |
9% | $+29\%$ (+29%) | ||||||
| Australia | 9% | $+38\%$ (+11%) | ||||||
| South America | 5% | $+27\% (+27\%)$ |
Reported gross profit amounted to SEK 9,065 million (9,186). Adjusted gross profit declined by -5% to SEK 9,065 million (9,553) mainly due to exchange rate effects. The adjusted gross margin increased to 41.8% (40.4).
Sales and administration costs excluding items affecting comparability declined by -14% year on year, with the largest decline noted in sales costs. The overall ratio to revenues on a reported basis decreased to 18.7% (20.3).
Adjusted operating profit increased by 12% and amounted to SEK 4,170 million (3,728) and the adjusted operating margin increased to 19.2% (15.8). Adjusted operating profit, excluding metal price effects in Sandvik Materials Technology of SEK 119 million in the period, increased by 3% to SEK 4,051 million (3,929). The adjusted operating margin excluding metal price effects was 18.7% (16.6) for the first quarter, and 17.6% (17.9) for the rolling twelve months period. The impact from changed exchange rates was negative at SEK-483 million year on year.
Reported operating profit was impacted by items affecting comparability of SEK 86 million mainly related to a capital gain from a divested property.
The interest net was reduced to SEK-90 million (-126) due to debt repayments and lower hedging cost. Net financial items amounted to SEK-271 million (-416), with the increase mainly related to temporary revaluations and hedge effects in the preceding year.
The tax rate, excluding items affecting comparability, for continuing operations was 20.7% (19.2). The reported tax rate for continuing operations was 20.1% (21.8) and 20.1% (21.9) for the Group in total.
Profit for the period amounted to SEK 3,185, million (1,835), corresponding to earnings per share, diluted, of SEK 2.53 (1.46) and adjusted earnings per share, diluted of SEK 2.46 (2.13).
The first quarter included total savings of SEK 550 million. The savings impact from the cost-reduction activities announced in July 2019 amounted to approximately SEK 70 million in the quarter. The new cost initiatives that were announced in 2020, had an impact of SEK 125 million in the first quarter. The majority of savings from these measures will come into effect during this year. Temporary savings in the quarter amounted to approximately SEK 355 million, related to lower discretionary spending and work time reductions.
ADJUSTED GROSS PROFIT AND MARGIN
------- Adj. earnings per share, rolling 12 months
Capital employed increased year on year and amounted to SEK 95.2 billion (93.6), mainly due to a higher cash position. Return on capital employed improved to 18.6% (12.5) on account of higher reported earnings.
Net working capital decreased year on year and amounted to SEK 22.5 billion (25.7) mainly due to changed exchange rates, and was up sequentially with higher inventories and accounts receivables somewhat offset by higher liabilities. Net working capital in relation to revenues decreased year on year to 24.7% (26.8) and was at a stable level on a sequential basis.
Investments in tangible and intangible assets were in line with the preceding year and amounted to SEK 0.8 billion (0.7), corresponding to 70% of scheduled depreciations.
The financial net cash position of SEK 10.7 billion (1.4) was significantly higher compared to last year and improved sequentially (8.8). The net pension liability decreased year on year to SEK 6.5 billion (9.1), and sequentially (8.5), mainly due to higher discount rates. Total net debt amounted to SEK-1.2 billion (11.1) and improved sequentially from SEK 2.6 billion in the fourth quarter. The net debt to equity ratio was at -0.02 (0.17) and improved year on year and sequentially $(0.04)$ .
Free operating cash flow decreased slightly year on year to SEK 2.9 billion (3.2).
| FREE OPERATING CASH FLOW, MSEK | 01 2020 | 01 2021 |
|---|---|---|
| EBITDA + non-cash items | 4,553 | 4,902 |
| Net Working Capital change | -697 | $-1.156$ |
| Capex $\frac{1}{2}$ | -680 | $-800$ |
| FREE OPERATING CASH FLOW 2) | 3.176 | 2.946 |
1) Including investments and disposals of rental equipment of SEK-142 million (-94) and tangible and intangible assets of SEK-658 million (-587). 2) Free operating cash flow before acquisitions and disposals of companies, financial net items and paid taxes
FREE OPERATING CASH FLOW
LAUNCH OF TOP HAMMER XL
Key items impacting order intake and revenues year on year:
| . | ||
|---|---|---|
| O 1 | ORDER INTAKE |
REVENUES |
| Organic, % | 36 | 8 |
| Structure, % | 0 | n |
| Currency, % | $-10$ | $-10$ |
| TOTAL, % | 22 | $-3$ |
| Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be the collection between the components of the collection of the CC of the collection of the collection of the collection of the collection of the collection of the collection of the collection of the collection of the colle |
During the quarter, Sandvik launched a new surface drilling system, Top Hammer XL, that increases the application area of top hammer into larger hole diameters. The system comprises a drill rig, rock drill and rock tools developed to work seamlessly together for optimal drilling performance and increased productivity. The system has been proven in several field tests around the world. The results show up to 50% reduction in fuel consumption as well as a significant reduction in total drilling costs.
* 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 Q1 2021 (0) and for YTD 2020 the impact was SEK-485 million 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
Key items impacting order intake and revenues year on year:
Adjusted operating profit:
| GROWTH | ||
|---|---|---|
| ORDER | ||
| Q 1 | INTAKE | REVENUES |
| Organic, % | 28 | 19 |
| Structure, % | $\overline{4}$ | 5 |
| Currency, % | $-10$ | $-9$ |
| TOTAL, % | 20 | 13 |
| Change compared to same quarter ast year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect. |
Driven by quality and built for rock, the Sandvik UK373 wheeled cone crusher was launched in North America. The UK373 is a complete closed-circuit crushing unit featuring Sandvik cone crusher technology and a triple shaft, three deck screen. Suitable for a high-capacity secondary application or a high-reduction tertiary application, this flexibility means that it's suitable for hard or soft rock processing up to 300 metric tons per hour. Designed with enhanced safety features and powered by electricity, this unit offers a sustainable rock processing solution.
| FINANCIAL OVERVIEW, MSEK | O1 2020** | O1 2021 | CHANGE % | O1-O4 2020** |
|---|---|---|---|---|
| Order intake * | 1,973 | 2,358 | 28 | 6,571 |
| Revenues* | 1,531 | 1,727 | 19 | 6,459 |
| Operating profit | 208 | 283 | 36 | 990 |
| % of revenues | 13.6 | 16.4 | 15.3 | |
| Adjusted operating profit 1) | 208 | 283 | 36 | 1,038 |
| % of revenues | 13.6 | 16.4 | 16.1 | |
| Return on capital employed, $%$ 2) | 17.6 | 26.6 | 21.9 | |
| Number of employees 3) | 1,797 | 1,832 | 1,736 |
* 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) Operating profit adjusted for items affecting comparability of SEK 0 million Q1 2021 (0) and for YTD 2020 the impact was SEK-48 million 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.
STRONG SEQUENTIAL IMPROVEMENT IN ORDER INTAKE
ORDER INTAKE ON PAR WITH LAST YEAR
SOLID MARGINS
Key items impacting order intake and revenues year on year:
During the quarter, Seco introduced a new cutting tool, the Turbo 16, with improved performance in terms of smoother cutting action and low noise levels. A comprehensive range of inserts give the Turbo 16 exceptional flexibility. They are the first Seco products to feature Data Matrix tags, scannable codes that store product and batch information.
GROWTH
Organic, %
Structure, %
Currency, % TOTAL, %
Change compared to same quarter last
is multiplicative, i.e. the different compo
multiplied to determine the total effect.
$Q1$
ORDER
INTAKE
$\overline{0}$
$\overline{2}$
$\overline{17}$
ompared to same quarter last year. The table
REVENUE
ORDER INTAKE, REVENUES AND BOOK-TO-BILI
| FINANCIAL OVERVIEW, MSEK | O1 2020 | O1 2021 | CHANGE % | O1-O4 2020 |
|---|---|---|---|---|
| Order intake * | 10,124 | 9,379 | $\mathbf 0$ | 32,677 |
| Revenues * | 9,766 | 8,782 | $-3$ | 32,477 |
| Operating profit | 1,690 | 2,012 | 19 | 4,606 |
| % of revenues | 17.3 | 22.9 | 14.2 | |
| Adjusted operating profit 1) | 2,054 | 2,013 | $-2$ | 6,100 |
| % of revenues | 21.0 | 22.9 | 18.8 | |
| Return on capital employed, $%$ 2) | 20.6 | 25.4 | 14.6 | |
| Number of employees 3) | 18,291 | 17,950 | $-2$ | 17,301 |
* Change at fixed exchange rates for comparable units
1) Operating profit adjusted for items affecting comparability of SEK 0 million in Q1 2021 (-364) and SEK-1,494 million YTD 2020 all 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
POSITIVE ORDER INTAKE DEVELOP-MENT EXCLUDING MAJOR ORDERS
CONTINUED WEAKNESS IN OIL & GAS AND AEROSPACE SEGMENTS
SEPARATION PROCEEDING AC-CORDING TO PLAN
| GROWTH | ORDER | |
|---|---|---|
| Q 1 | INTAKE | REVENUES |
| Organic, % | $-13$ | $-13$ |
| Structure, % | $-1$ | O |
| Currency, % | $-6$ | -6 |
| TOTAL, % | $-17$ | $-16$ |
| Change compared to same quarter ast year. The table is multiplicative, i.e. the different components must be mul- tiplied to determine the total effect. Alloy surcharges ac- counts for 2% of order intake and revenues respectively. |
Key items impacting order intake and revenues year on year:
Adjusted operating profit
Sandvik Materials Technology invested in New Hydraulic and Instrumentation Tubing Factory in Mehsana, India. This will increase the Sandvik Materials Technology's footprint in Asia and enables it to leverage the growth opportunities created by the transition toward a higher share of natural gas in the energy mix.
ORDER INTAKE, REVENUES AND BOOK-TO-BILL
| FINANCIAL OVERVIEW, MSEK | O1 2020 | O1 2021 | CHANGE % | O1-O4 2020 |
|---|---|---|---|---|
| Order intake * | 4,365 | 3,641 | $-13$ | 11,910 |
| Revenues* | 3,782 | 3,162 | $-13$ | 13,598 |
| Operating profit | 94 | 336 | 258 | 492 |
| % of revenues | 2.5 | 10.6 | 3.6 | |
| Adjusted operating profit 1) | 139 | 355 | 155 | 1,032 |
| % of revenues | 3.7 | 11.2 | 7.6 | |
| Return on capital employed, $%$ $\frac{2}{3}$ | 28 | 11.5 | 3.9 | |
| Number of employees 3) | 5.774 | 5.128 | $-11$ | 5.084 |
* Change at fixed exchange rates for comparable units
1) Operating profit adjusted for items affecting comparability of SEK-19 million in Q1 2021 (-45) and SEK-540 million YTD 2020 related to savings measures and the internal separation of Sandvik Materials Technology. See page 23. 2) Quarterly number is annualized and the year-to-date number is based on four quarter average. 3) Full-time equivalent
GREEN HOUSE GAS EMISSIONS NORMALIZED VS LAST YEAR'S DE-CREASE
INJURY RATE INCREASED SEQUEN-TIALLY
CONTINUED IMPROVEMENT IN SHARE OF FEMALE MANAGERS
First quarter 2021
Our divisions Parts & Services (included in Sandvik Mining and Rock Solutions) and Additive Manufacturing (included in Sandvik Manufacturing and Machining Solutions) have, together with external suppliers, developed 3D printing of spare parts for mining equipment and put it into production. To date, six parts have been produced using the 3D printing technique that have been adopted permanently into serial production with a significant weight reduction as a result. This has halved the CO2 emissions from transportation of the products, leads to reduced inventories and lead times and has generated SEK 1.5 million in revenue for the six parts developed so far. Based on this successful outcome, the next step is to further reduce CO2 emissions by moving the 3D printers closer to the end-customers. The offering will be expanded with the objective of having more than thirty 3D-printed parts on the market by the end of 2021.
PEOPLE - ZERO HARM
MAKF
WE PLAY
FAIR
WE BUIL
RCULARIT
WE SHIF
CLIMAT
| SUSTAINABILITY OVERVIEW | O1 2020 | O1 2021 | CHANGE % | O1-O4 2020 | |
|---|---|---|---|---|---|
| Circularity | Total waste, thousand tonnes* | 17 | 22 | 27.9 | 72 |
| Circularity | Waste recovered, % of total | 65.9 | 72.9 | 10.7 | 67.6 |
| Climate | Total CO 2 , thousand tonnes* | 84 | 80 | $-5.2$ | 278 |
| People | Total recordable injury frequency rate, R12M frequency / million working hours |
3.8 | 3.5 | $-8.1$ | 3.2 |
| People | Lost time injury frequency rate, R12M frequency / million working hours |
1.5 | 1.6 | 3.6 | 1.4 |
| Fair play | Share of female managers, % | 17.9 | 18.6 | 3.5 | 18.5 |
* Excluding tailings and slag to other disposal
For definitions see home sandvik
The parent company's invoiced sales after the first three months of 2021 amounted to SEK 3,114 million (3,014) and the operating result was SEK 1,391 million (1,501). Result from shares in Group companies of SEK 42 million (-1,753) for the first three months consists primarily of dividends offset by result from disposal of shares. Interest-bearing liabilities, less cash and cash equivalents and interest-bearing assets, amounted to SEK 6,696 million (8,126). Investments in property, plant and machinery amounted to SEK 102 million (71).
| COMPANY/UNIT | CLOSING DATE | REVENUES | NO. OF EMPLOYEES |
|
|---|---|---|---|---|
| 2020 | ||||
| Sandvik Manufacturing and Machining Solutions |
Quimmico Centro Technológico (QCT) | June 1, 2020 | 90 MSEK in 2019 | 130 |
| 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 |
Ogton 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.
| Purchase price on cash and debt free basis |
Preliminary goodwill and other intangible assets |
|
|---|---|---|
| Acquisitions 2021 | - |
| COMPANY/UNIT | CLOSING DATE | REVENUES | NO. OF EMPLOYEES |
|
|---|---|---|---|---|
| 2020 | ||||
| Sandvik Manufacturing and Machining Solutions |
Xiamen Golden Egret Special Alloy Co., Ltd. (Gesac) $1$ |
July 15, 2020 | N/A | N/A |
1) Sandvik divested its 10% minority holding.
There were no significant events in the first quarter.
There were no significant events after the first quarter.
Guidance below relates to continuing operations.
Sandvik does not provide a market outlook or business performance forecasts. However, guidance relating to certain
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 March 2021, it is estimated that transaction and translation currency effects will have an impact of about SEK-350 million on operating profit for the second 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 March 2021, it is estimated that there will be an impact of about SEK +50 million on operating profit in Sandvik Materials Technology for the second 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 |
Sandvik has four long-term financial targets, defined in 2019
A growth of at least 5 percent 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 etics. 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 March 31, 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 first quarter noted broad-based improvement. The overall recovery is expected to continue to be gradual, given the remaining uncertainties in some key end-markets. Sandvik is continuously following up on risks related to the Covid-19 pandemic and mitigating activities to reduce the impacts on the Group.
INCOME STATEMENT
| MSEK | Q1 2020 | Q1 2021 | CHANGE % | Q1-Q4 2020 |
|---|---|---|---|---|
| Continuing operations | ||||
| Revenues | 23,620 | 21,691 | -8 | 86,404 |
| Cost of goods sold | $-14,434$ | $-12,626$ | -13 | $-54,167$ |
| Gross profit | 9,186 | 9,065 | $-1$ | 32,237 |
| % of revenues | 38.9 | 41.8 | 37.3 | |
| Selling expenses | $-3,199$ | $-2,644$ | $-17$ | $-10,710$ |
| Administrative expenses | $-1,593$ | $-1,423$ | -11 | $-5,504$ |
| Research and development cost | $-915$ | $-841$ | -8 | $-3,429$ |
| Other operating income and expenses | $-717$ | 100 | $-114$ | $-1,378$ |
| Operating profit | 2,762 | 4,256 | 54 | 11,216 |
| % of revenues | 11.7 | 19.6 | 13.0 | |
| Financial income | 104 | 100 | -4 | 1,163 |
| Financial expenses | $-520$ | $-371$ | -29 | $-1,110$ |
| Net financial items | $-416$ | $-271$ | $-35$ | 54 |
| Profit after net financial items | 2,346 | 3,986 | 70 | 11,270 |
| % of revenues | 9.9 | 18.4 | 13.0 | |
| Income tax | $-511$ | $-800$ | 57 | $-2,517$ |
| Profit for the period, continuing operations | 1,835 | 3,185 | 74 | 8,753 |
| % of revenues | 7.8 | 14.7 | 10.1 | |
| Loss for the period, discontinued operations | $-12$ | $-3$ | -75 | $-32$ |
| Profit for the period, Group total | 1,823 | 3,182 | 75 | 8,721 |
| Profit (loss) for the period attributable to | ||||
| Owners of the parent company | 1,829 | 3,177 | 8,735 | |
| Non-controlling interest | $-6$ | 5 | $-14$ | |
| Earnings per share, SEK | ||||
| Continuing operations, basic | 1.47 | 2.54 | 73 | 6.99 |
| Continuing operations, diluted | 1.46 | 2.53 | 73 | 6.98 |
| Group total, basic | 1.46 | 2.53 | 74 | 6.96 |
| Group total, diluted | 1.46 | 2.53 | 73 | 6.95 |
| OTHER COMPREHENSIVE INCOME | ||||
| Items that will not be reclassified to profit or loss | ||||
| Actuarial gains/losses on defined benefit pension plans | $-1,518$ | 2,205 | $-1,146$ | |
| Tax relating to items that will not be reclassified | 332 | $-461$ | 225 | |
| Total items that will not be reclassified to profit or loss | $-1,185$ | 1,744 | $-921$ | |
| Items that will be reclassified subsequently to profit or loss | ||||
| Foreign currency translation differences | 2,062 | 2,338 | -4,754 | |
| Cash flow hedges | 1 | 13 | 28 | |
| Tax relating to items that may be reclassified | $\mathbf 0$ | -4 | -8 | |
| Total items that may be reclassified subsequently to profit or loss | 2,063 | 2,347 | -4,734 | |
| Total other comprehensive income | 878 | 4,090 | $-5,655$ | |
| Total comprehensive income | 2,701 | 7,273 | 3,066 | |
| Total comprehensive income attributable to | ||||
| Owners of the parent company | 2,706 | 7,267 | 3,077 | |
| Non-controlling interest | -6 | 5 | $-11$ | |
N/M = not meaningful. For definitions see home.sandvik
BALANCE SHEET
| MSEK | DEC 31, 2020 | MAR 31, 2020 | MAR 31, 2021 |
|---|---|---|---|
| Intangible assets | 21,004 | 20,791 | 21,556 |
| Property, plant and equipment | 23,975 | 26,086 | 24,299 |
| Right-of-use assets | 2,891 | 3,336 | 2,990 |
| Financial assets | 7,285 | 7,514 | 7,627 |
| Inventories | 21,473 | 26,392 | 23,574 |
| Current receivables | 18,387 | 22,532 | 21,165 |
| Cash and cash equivalents | 23,752 | 17,469 | 23,137 |
| Assets held for sale | 361 | 195 | 206 |
| Total assets | 119,128 | 124,317 | 124,556 |
| Total equity | 65,082 | 64,579 | 72,364 |
| Non-current interest-bearing liabilities | 22,358 | 25,153 | 19,595 |
| Non-current non-interest-bearing liabilities | 3,741 | 3,871 | 3,897 |
| Current interest bearing liabilities | 4,352 | 3,802 | 3,183 |
| Current non-interest-bearing liabilities | 23,424 | 26,641 | 25,347 |
| Liabilities related to assets held for sale | 171 | 270 | 170 |
| Total equity and liabilities | 119,128 | 124,317 | 124,556 |
| Group total | |||
| Net working capital | 20,096 | 25,706 | 22,402 |
| Loans | 14,900 | 16,056 | 12,391 |
| Non-controlling interests in total equity | 17 | 7 |
| MSEK | DEC 31, 2020 | MAR 31, 2020 | MAR 31, 2021 |
|---|---|---|---|
| Interest-bearing liabilities excluding pension liabilities and leases | 14,923 | 16,086 | 12,409 |
| Less cash and cash equivalents | $-23,752$ | $-17,469$ | $-23,137$ |
| Financial net debt/net cash | $-8,829$ | $-1,383$ | $-10,728$ |
| Net pensions liabilities | 8.509 | 9,109 | 6,504 |
| Leases | 2,965 | 3,405 | 3,072 |
| Net debt | 2,645 | 11,131 | $-1,152$ |
| Net debt to equity ratio | 0.04 | 0.17 | $-0.02$ |
| MSEK | EOUITY 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 | $-2$ | $\Omega$ |
| Total comprehensive income for the period | 3,077 | $-11$ | 3,066 |
| Personnel options program | 210 | 210 | |
| Closing equity December 31, 2020 | 65,081 | 65,082 | |
| Opening equity January 1, 2021 | 65,081 | 65,082 | |
| Changes in non-controlling interest | $-1$ | $\Omega$ | |
| Total comprehensive income for the period | 7,267 | 5 | 7,273 |
| Personnel options program | 9 | 0 | 9 |
| Closing equity March 31, 2021 | 72,357 | $\overline{7}$ | 72,364 |
For definitions see home.sandvik
| MSEK | Q1 2020 | Q1 2021 | Q1-Q4 2020 |
|---|---|---|---|
| Continuing operations | |||
| Cash flow from operating activities | |||
| Income after financial income and expenses | 2,346 | 3,986 | 11,270 |
| Adjustment for depreciation, amortization and impairment loss | 1,470 | 1,331 | 5,964 |
| Other adjustments for non-cash items | 908 | $-98$ | 1,022 |
| Payment to pension fund | $-192$ | $-109$ | $-674$ |
| Income tax paid | $-1,027$ | $-1,025$ | $-3,518$ |
| Cash flow from operating activities before changes in working capital | $3,505$ 1) | 4,085 | 14,063 |
| Changes in working capital | |||
| Change in inventories | $-1,130$ | $-1,331$ | 866 |
| Change in operating receivables | $-1,223$ | $-1,410$ | 1,440 |
| Change in operating liabilities | 1,656 | 1,584 | $-312$ |
| Cash flow from changes in working capital | $-697$ | $-1,156$ | 1,994 |
| Investments in rental equipment | $-129$ | $-185$ | $-935$ |
| Proceeds from sales of rental equipment | 35 | 43 | 292 |
| Cash flow from operating activities, net | $2,715$ 11 | 2,787 | 15,414 |
| Cash flow from investing activities | |||
| Acquisitions of companies and shares, net of cash acquired | -90 | 3 | $-3,274$ |
| Proceeds from sale of companies and shares, net of cash divested | 767 | 11 | 778 |
| Investments in tangible assets | $-597$ | $-534$ | $-2.684$ |
| Proceeds from sale of tangible assets | 125 | 23 | 269 |
| Investments in intangible assets | $-114$ | $-147$ | $-514$ |
| Investments in financial assets | 0 | 0 | $-74$ |
| Proceeds from sale of financial assets | 0 | 0 | 633 |
| Other investments, net | 8 | $-12$ | 87 |
| Cash flow from investing activities, net | 98 | -657 | $-4,777$ |
| Cash flow from financing activities | |||
| Repayment of borrowings | $-2,047$ | $-2,728$ | $-2,354$ |
| Proceeds from borrowings | 17 | 8 | 56 |
| Amortization, lease liabilities | $-250$ | $-252$ | $-1,012$ |
| Cash flow from financing activities, net | $-2,280$ 1) | $-2,971$ | $-3,310$ |
| Total cash flow from continuing operations | 533 | 841 | 7,327 |
| Total cash flow from discontinued operations | -6 | -4 | -66 |
| Cash flow for the period, Group total | 526 | -845 | 7,261 |
| Cash and cash equivalents at beginning of the period | 16,987 | 23,752 | 16,987 |
| Foreign exchange rate differences in cash and cash equivalents | -44 | 230 | -496 |
| Cash and cash equivalents at the end of the period | 17,469 | 23,137 | 23,752 |
| Group Total | |||
| Cash flow from operations | 2,708 | 2,784 | 15,347 |
| Cash flow from investing activities | 99 | $-657$ | $-4,775$ |
| Cash flow from financing activities | $-2,280$ | $-2,971$ | $-3,310$ |
| Group total cash flow | 526 | -845 | 7,261 |
1) Figures have been restated due to reclassification of payment to pension fund from financing activities to operating activities.
For definitions see home.sandvik
| MSEK | Q1 2020 | Q1 2021 |
|---|---|---|
| Revenues | 3,014 | 3,114 |
| Cost of sales and services | $-349$ | $-681$ |
| Gross profit | 2,665 | 2,433 |
| Selling expenses | $-272$ | $-206$ |
| Administrative expenses | $-463$ | $-340$ |
| Research and development costs | $-321$ | $-326$ |
| Other operating income and expenses | $-108$ | $-170$ |
| Operating profit | 1,501 | 1,391 |
| Result from shares in group companies | $-1,753$ | 42 |
| Interest income/expenses and similar items | -40 | 37 |
| Profit after net financial items | $-292$ | 1,470 |
| Appropriations | 2,161 | $-35$ |
| Income tax expenses | $-338$ | $-204$ |
| Profit for the period | 1,531 | 1,231 |
| MSEK | DEC 31, 2020 | MAR 31, 2020 | MAR 31, 2021 |
|---|---|---|---|
| Intangible assets | 39 | 66 | 30 |
| Property, plant and equipment | 3,219 | 3,232 | 3,230 |
| Financial assets | 54,107 | 53,992 | 52,503 |
| Inventories | 676 | 830 | 689 |
| Current receivables | 6,294 | 4,338 | 4,737 |
| Cash and cash equivalents | 274 | 0 | |
| Total assets | 64,335 | 62,732 | 61,189 |
| Total equity | 37,731 | 36,116 | 38,971 |
| Untaxed reserves | 937 | 1,061 | 972 |
| Provisions | 750 | 593 | 673 |
| Non-current interest-bearing liabilities | 11,346 | 13,079 | 10,013 |
| Non-current non-interest-bearing liabilities | 123 | 137 | 90 |
| Current interest-bearing liabilities | 10,466 | 7,532 | 7,935 |
| Current non-interest-bearing liabilities | 2,982 | 4,214 | 2,535 |
| Total equity and liabilities | 64,335 | 62,732 | 61,189 |
| Interest-bearing liabilities and provisions minus cash and cash equivalents and interest-bearing assets |
7,057 | 8,126 | 6,696 |
| Investments in fixed assets | 430 | 71 | 102 |
For definitions see home.sandvik
ORDER INTAKE BY REGION
| CHANGE * | SHARE | |||
|---|---|---|---|---|
| MSEK | Q1 2021 | $\%$ | %11 | % |
| THE GROUP | ||||
| Europe | 8,955 | $-1$ | 5 | 35 |
| North America | 5,324 | 5 | 7 | 21 |
| South America | 1,354 | 27 | 27 | 5 |
| Africa/Middle East | 2,488 | 29 | 29 | 10 |
| Asia | 5,500 | 26 | 21 | 21 |
| Australia | 2,226 | 38 | 11 | 9 |
| Total Continuing Operations 2) | 25,847 | 12 | 12 | 100 |
| SANDVIK MINING AND ROCK SOLUTIONS | ||||
| Europe | 1,122 | 29 | 29 | 11 |
| North America | 2,158 | 34 | 34 | 21 |
| South America | 900 | 39 | 39 | 9 |
| Africa/Middle East | 2,180 | 38 | 38 | 21 |
| Asia | 2,100 | 34 | 20 | 20 |
| Australia | 2,009 | 39 | 9 | 19 |
| Total 2) | 10,469 | 36 | 27 | 100 |
| SANDVIK ROCK PROCESSING SOLUTIONS | ||||
| Europe | 677 | 35 | 35 | 29 |
| North America | 557 | $\mathbf 0$ | $\mathbf 0$ | 24 |
| South America | 166 | 31 | 31 | 7 |
| Africa/Middle East | 189 | $-10$ | $-10$ | 8 |
| Asia | 634 | 73 | 73 | 27 |
| Australia | 136 | 43 | 43 | 6 |
| Total $2$ | 2,358 | 28 | 28 | 100 |
| SANDVIK MANUFACTURING AND MACHINING SOLUTIONS | ||||
| Europe | 5,195 | 0 | 0 | 55 |
| North America | 1,913 | -9 | -9 | 20 |
| South America | 175 | 39 | 39 | $\overline{2}$ |
| Africa/Middle East | 71 | $-15$ | $-15$ | 1 |
| Asia | 1,964 | 6 | 6 | 21 |
| Australia | 61 | $-4$ | $-4$ | $\mathbf{1}$ |
| Total | 9,379 | $\mathbf 0$ | $\bf{0}$ | 100 |
| SANDVIK MATERIALS TECHNOLOGY | ||||
| Europe | 1,961 | $-22$ | 0 | 54 |
| North America | 697 | $-17$ | $\mbox{-}8$ | 19 |
| South America | 113 | $-33$ | $-33$ | 3 |
| Africa/Middle East | 48 | $-2$ | $-2$ | $\mathbf{1}$ |
| Asia | 802 | 37 | 37 | 22 |
| Australia | $21$ | 18 | 18 | $\mathbf{1}$ |
| Total | 3,641 | $-13$ | $\mathbf{3}$ | 100 |
* At fixed exchange rates for comparable units compared with the year-earlier period.
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 f
$N/M = not meaningful$
| CHANGE * | SHARE | ||
|---|---|---|---|
| MSEK | Q1 2021 | $\%$ | % |
| THE GROUP | |||
| Europe | 7,758 | -6 | 36 |
| North America | 4,521 | -9 | 21 |
| South America | 1,066 | 13 | 5 |
| Africa/Middle East | 2,121 | 21 | 10 |
| Asia | 4,508 | 17 | 21 |
| Australia | 1,716 | $-2$ | 8 |
| Total Continuing Operations 11 | 21,691 | 1 | 100 |
| Discontinued Operations | $\overline{2}$ | $-1$ | $\mathbf 0$ |
| Group total | 21,693 | $\mathbf{1}$ | 100 |
| SANDVIK MINING AND ROCK SOLUTIONS | |||
| Europe | 751 | $-16$ | 9 |
| North America | 1,614 | 6 | 20 |
| South America | 692 | 13 | 9 |
| Africa/Middle East | 1,817 | 24 | 23 |
| Asia | 1,609 | 19 | 20 |
| Australia | 1,535 | $-5$ | 19 |
| Total 1) | 8,019 | 8 | 100 |
| SANDVIK ROCK PROCESSING SOLUTIONS | |||
| Europe | 560 | 11 | 32 |
| North America | 360 | 17 | 21 |
| South America | 136 | $-5$ | 8 |
| Africa/Middle East | 172 | 21 | 10 |
| Asia | 398 | 40 | 23 |
| Australia | 101 | 35 | 6 |
| Total 1) | 1,727 | 19 | 100 |
| SANDVIK MANUFACTURING AND MACHINING SOLUTIONS | |||
| Europe | 4,859 | $-2$ | 55 |
| North America | 1,766 | $-14$ | 20 |
| South America | 175 | 28 | $\overline{2}$ |
| Africa/Middle East | 68 | $-13$ | $\mathbf{1}$ |
| Asia | 1,855 | $\overline{7}$ | 21 |
| Australia | 59 | -4 | $\mathbf{1}$ |
| Total | 8,782 | $-3$ | 100 |
| SANDVIK MATERIALS TECHNOLOGY | |||
| Europe | 1,588 | $-16$ | 50 |
| North America | 781 | $-30$ | 25 |
| South America | 63 | 26 | $\overline{2}$ |
| Africa/Middle East | 64 | $-7$ | $\overline{2}$ |
| Asia | 647 | 29 | 20 |
| Australia | 20 | 52 | $\mathbf{1}$ |
| Total | 3,162 | $-13$ | 100 |
* At fixed exchange rates for comparable units compared with the year-earlier period.
1) Includes rental fleet revenues in Q1 of SEK 171 million recognized according to IFRS 16.
| MSEK | Q1 2020 |
Q 2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
% | CHANGE $%$ * |
|---|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions | 8,598 | 8,400 | 8,519 | 9,314 | 34,832 | 10,469 | 22 | 36 |
| Sandvik Rock Processing Solutions | 1,973 | 1,373 | 1,614 | 1,612 | 6,571 | 2,358 | 20 | 28 |
| Sandvik Manufacturing and Machining Solutions | 10,124 | 6,821 | 7,298 | 8,434 | 32,677 | 9,379 | $-7$ | $\mathbf 0$ |
| Sandvik Materials Technology | 4,365 | 2,377 | 2,477 | 2,691 | 11,910 | 3,641 | $-17$ | $-13$ |
| Other operations | 297 | 0 | 0 | 0 | 297 | $\mathbf 0$ | 0 | 0 |
| Continuing operations | 25,356 | 18,971 | 19,909 | 22,051 | 86,287 | 25,847 | $\overline{2}$ | 12 |
| Discontinued operations | 0 | 0 | $\pmb{0}$ | 1 | 1 | $\mathbf 0$ | $-21$ | 0 |
| Group total 1) | 25,356 | 18,971 | 19,909 | 22,052 | 86,288 | 25,847 | $\overline{2}$ | 12 |
| REVENUES BY BUSINESS AREA | ||||||||
| MSEK | Q1 2020 |
Q 2 2020 |
Q3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
$\%$ | CHANGE $%$ * |
| Sandvik Mining and Rock Solutions | 8,244 | 7,899 | 8,399 | 9,031 | 33,572 | 8,019 | $-3$ | 8 |
| Sandvik Rock Processing Solutions | 1,531 | 1,590 | 1,536 | 1,802 | 6,459 | 1,727 | 13 | 19 |
| Sandvik Manufacturing and Machining Solutions | 9,766 | 7,247 | 7,325 | 8,139 | 32,477 | 8,782 | $-10$ | $-3$ |
| Sandvik Materials Technology | 3,782 | 3,495 | 2,886 | 3,436 | 13,598 | 3,162 | $-16$ | $-13$ |
| Other operations | 297 | 0 | $\mathbf 0$ | 0 | 297 | $\mathbf 0$ | 0 | 0 |
| Continuing operations | 23,620 | 20,230 | 20,145 | 22,408 | 86,404 | 21,691 | -8 | $\mathbf{1}$ |
| Discontinued operations | $\overline{2}$ | $-1$ | $\mathbf 0$ | $\overline{4}$ | 6 | $\overline{2}$ | $-15$ | $-1$ |
| Group total $\mathbb{I}$ | 23,623 | 20,229 | 20,146 | 22,412 | 86,409 | 21,693 | -8 | $\mathbf{1}$ |
| OPERATING PROFIT BY BUSINESS AREA | ||||||||
| Q1 | Q 2 | Q 3 | Q4 | O1-04 | Q1 | CHANGE | ||
| MSEK | 2020 | 2020 | 2020 | 2020 | 2020 | 2021 | % | |
| Sandvik Mining and Rock Solutions | 1,453 | 934 | 1,820 | 2,192 | 6,400 | 1,644 | 13 | |
| Sandvik Rock Processing Solutions | 208 | 232 | 263 | 288 | 990 | 283 | 36 | |
| Sandvik Manufacturing and Machining Solutions | 1,690 | 645 | 1,377 | 894 | 4,606 | 2,012 | 19 | |
| Sandvik Materials Technology | 94 | $-83$ | 110 | 371 | 492 | 336 | 258 | |
| Group activities | $-168$ | $-178$ | -89 | $-258$ | $-694$ | $-19$ | $-88$ | |
| Other operations | $-515$ | $-42$ | $-22$ | 0 | $-578$ | $\mathbf 0$ | $-100$ | |
| Continuing operations | 2,762 | 1,508 | 3,459 | 3,487 | 11,216 | 4,256 | 54 | |
| Discontinued operations | $-12$ | -4 | $-3$ | $-13$ | -32 | $\overline{\mathbf{3}}$ | $-75$ | |
| Group total 1) | 2,750 | 1,504 | 3,456 | 3,474 | 11,184 | 4,253 | 55 | |
| OPERATING MARGIN BY BUSINESS AREA | ||||||||
| % | Q1 2020 |
Q 2 2020 |
Q 3 2020 |
Q4 2020 |
Q1-Q4 2020 |
Q1 2021 |
||
| Sandvik Mining and Rock Solutions | 17.6 | 11.8 | 21.7 | 24.3 | 19.1 | 20.5 | ||
| Sandvik Rock Processing Solutions | 13.6 | 14.6 | 17.1 | 16.0 | 15.3 | 16.4 | ||
| Sandvik Manufacturing and Machining Solutions | 17.3 | 8.9 | 18.8 | 11.0 | 14.2 | 22.9 |
$2.5$ 10.8 $10.6$ Sandvik Materials Technology $-2.4$ $3.8\,$ $3.6$ $N/M$ $N/M$ $N/M$ ${\sf N}/{\sf M}$ Other operations $0.0\,$ $0.0\,$ Continuing operations $\frac{1}{11.7}$ $7.5$ $17.2$ $15.6$ $13.0$ $19.6$ Discontinued operations $N/M$ $N/M$ $N/M$ $N/M$ ${\sf N}/{\sf M}$ $N/M$ Group total $\overline{1}$ 11.6 $7.4$ $17.2$ 15.5 12.9 19.6
* Change at fixed exchange rates for comparable units compared with the year-earlier period.
1) Internal transactions had negligible effect on business area profits.
$N/M = N$ on-meaningful.
| MSEK | Q1 2020 |
Q 2 2020 |
Q 3 2020 |
Q4 2020 |
O1-04 2020 |
Q1 2021 |
CHANGE $\%$ |
|---|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions | 1,453 | 1,601 | 1,820 | 2,011 | 6,885 | 1,644 | 13 |
| Sandvik Rock Processing Solutions | 208 | 232 | 263 | 335 | 1,038 | 283 | 36 |
| Sandvik Manufacturing and Machining Solutions | 2,054 | 927 | 1,377 | 1,742 | 6,100 | 2,013 | $-2$ |
| Sandvik Materials Technology | 139 | 248 | 116 | 528 | 1,032 | 355 | 155 |
| Group activities | $-138$ | $-129$ | $-82$ | $-112$ | -461 | $-124$ | $-10$ |
| Other operations | 11 | $-42$ | $\mathbf 0$ | $\mathbf 0$ | $-31$ | $\mathbf{0}$ | $-100$ |
| Continuing operations | 3,728 | 2,837 | 3,494 | 4,505 | 14,563 | 4,170 | 12 |
| Discontinued operations | $-12$ | $-4$ | $-3$ | $-13$ | $-32$ | $-3$ | -75 |
| Group total $\frac{1}{1}$ | 3,716 | 2,833 | 3,491 | 4,492 | 14,531 | 4,167 | 12 |
| O 1 | Q 2 | O 3 | O4 | O1-04 | Q 1 | |
|---|---|---|---|---|---|---|
| $\%$ | 2020 | 2020 | 2020 | 2020 | 2020 | 2021 |
| Sandvik Mining and Rock Solutions | 17.6 | 20.3 | 21.7 | 22.3 | 20.5 | 20.5 |
| Sandvik Rock Processing Solutions | 13.6 | 14.6 | 17.1 | 18.6 | 16.1 | 16.4 |
| Sandvik Manufacturing and Machining Solutions | 21.0 | 12.8 | 18.8 | 21.4 | 18.8 | 22.9 |
| Sandvik Materials Technology | 3.7 | 7.1 | 4.0 | 15.4 | 7.6 | 11.2 |
| Other operations | 3.8 | N/M | N/M | N/M | $-10.4$ | 0.0 |
| Continuing operations | 15.8 | 14.0 | 17.3 | 20.1 | 16.9 | 19.2 |
| Discontinued operations | N/M | N/M | N/M | N/M | N/M | N/M |
| Group total $\frac{1}{1}$ | 15.7 | 14.0 | 17.3 | 20.0 | 16.8 | 19.2 |
| MSEK | O 1 2020 |
O 2 2020 |
O 3 2020 |
O4 2020 |
01 04 2020 |
Q1 2021 |
|---|---|---|---|---|---|---|
| Sandvik Mining and Rock Solutions | - | $-667$ | $\qquad \qquad \blacksquare$ | 182 | -485 | |
| Sandvik Rock Processing Solutions | -48 | -48 | ||||
| Sandvik Manufacturing and Machining Solutions | $-364$ | $-282$ | - | $-848$ | $-1,494$ | |
| Sandvik Materials Technology | $-45$ | $-331$ | -6 | $-157$ | $-540$ | $-19$ |
| Other operations | $-526$ | $\overline{\phantom{0}}$ | $-21$ | $\overline{\phantom{0}}$ | $-547$ | |
| Group activities | $-30$ | -49 | $-7$ | $-146$ | $-233$ | 105 |
| Continuing operations | $-965$ | $-1.329$ | $-35$ | $-1.018$ | $-3.347$ | 86 |
| Discontinued operations | ||||||
| Group total | $-965$ | $-1.329$ | $-35$ | $-1.018$ | $-3.347$ | 86 |
1) Internal transactions had negligible effect on business area profits. N/M = Non-meaningful.
Items affecting comparability on operating profit
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 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, out of which SEK-45 million in Sandvik Materials Technology 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 Sandvik Materials Technology of SEK-24 million and a capital gain of SEK 29 million in Sandvik Materials Technology.
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 Sandvik Materials Technology 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 and costs related to the separation of Sandvik Materials Technology of SEK-7 million.
Q1 2021 - Sandvik reported items affecting comparability SEK 86 million, comprising of a net gain of a divested property SEK +115 million and costs related to the separation of Sandvik Materials Technology of SEK-29 million.
| MSEK | Q1 2020 |
Q2 2020 |
O3 2020 |
Q4 2020 |
O1-04 2020 |
Q1 2021 |
|---|---|---|---|---|---|---|
| Group activities | $\overline{\phantom{0}}$ | $\overline{\phantom{m}}$ | 588 | $\overline{\phantom{a}}$ | 588 | $\overline{\phantom{a}}$ |
| Group total | - | $\overline{\phantom{a}}$ | 588 | $\qquad \qquad \blacksquare$ | 588 | $\sim$ |
Items affecting comparability on net financial items
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).
| Q1 2020 | Reported tax, MSEK |
Reported tax, $%$ |
IAC, MSEK | AC, % | Tax excluding IAC, MSEK |
Tax excluding IAC, % |
|---|---|---|---|---|---|---|
| Continued operations | $-511$ | 21.8 | 126 | 13.0 | $-637$ | 19.2 |
| Discontinued operations | 0 | 0.0 | 0 | 0.0 | 0 | $0.0\,$ |
| Group total | $-511$ | 21.9 | 126 | 13.0 | $-637$ | 19.3 |
| O1 2021 | Reported tax, MSEK |
Reported tax, $%$ |
IAC, MSEK | IAC, % | Tax excluding IAC, MSEK |
Tax excluding IAC, % |
| Continued operations | $-800$ | 20.1 | 6 | $-7.0$ | $-806$ | 20.7 |
| Discontinued operations | $\mathbf 0$ | 0.0 | $\mathbf 0$ | 0.0 | $\mathbf 0$ | $\mathbf{0}$ |
| Group total | $-800$ | 20.1 | 6 | $-7.0$ | $-806$ | 20.7 |
| MSEK | 31 DEC 2020 | 31 MAR 2020 | 31 MAR 2021 |
|---|---|---|---|
| Inventories | 21,718 | 26,392 | 23,671 |
| Trade receivables | 12,369 | 15,679 | 14,148 |
| Account payables | $-7,024$ | $-8,124$ | $-7,773$ |
| Other receivables | 3,128 | 3,643 | 3,792 |
| Other liabilities | $-9,862$ | $-11,885$ | $-11,347$ |
| Net working capital | 20,330 | 25,706 | 22,491 |
| Tangible assets | 23,975 | 26,086 | 24,299 |
| Intangible assets | 21,006 | 20.791 | 21,559 |
| Other current assets (incl. cash and cash equivalents) | 74,032 | 77,244 | 78,591 |
| Other current liabilities | $-27,184$ | $-30.513$ | $-29,258$ |
| Capital employed | 91,830 | 93,609 | 95,191 |
| CONTINUING OPERATIONS | Q1 2020 | Q1 2021 | Q1-Q4 2020 |
|---|---|---|---|
| Tax rate, % | 21.8 | 20.1 | 22.3 |
| Return on capital employed, $%$ 1) | 12.5 | 18.6 | 13.3 |
| Return on total equity, $%$ 1) | 11.6 | 18.5 | 13.6 |
| Return on total capital, % 1) | 9.4 | 14.3 | 10.2 |
| Shareholders' equity per share, SEK | 51.5 | 57.7 | 51.9 |
| Net debt/equity ratio | 0.17 | $-0.02$ | 0.04 |
| Net debt/EBITDA | 0.66 | 0.25 | 0.41 |
| Equity/assets ratio, % | 52 | 58 | 55 |
| Net working capital, $%$ 1) | 26.8 | 24.7 | 27.5 |
| Earnings per share, basic, SEK | 1.47 | 2.54 | 6.99 |
| Earnings per share diluted, SEK | 1.46 | 2.53 | 6.98 |
| EBITDA, MSEK | 4,232 | 5,588 | 17,180 |
| Cash flow from operations, MSEK | 2,715 | 2,787 | 15,414 |
| Funds from operations (FFO), MSEK | 3,505 | 4,085 | 14,063 |
| Interest coverage ratio, % | 674 | 1,102 | 1,497 |
| Number of employees 3) | 38,996 | 38,418 | 37,122 |
1) Quarter is quarterly annualized and the annual number is based on a four quarter average. 2) 12-month rolling 1Q 2021 ROCE
reported at 14.8 % (13.0 ) and NWC reported at 27.5 % (26.0). 3) Full-time equivalent.
| GROUP TOTAL | Q1 2020 | Q1 2021 | Q1-Q4 2020 |
|---|---|---|---|
| Tax rate, % | 21.9 | 20.1 | 22.4 |
| Return on capital employed, % 1) | 12.4 | 18.6 | 13.3 |
| Return on total equity, $%$ 1) | 11.5 | 18.5 | 13.6 |
| Return on total capital, $%$ 1) | 9.3 | 14.3 | 10.1 |
| Shareholders' equity per share, SEK | 51.5 | 57.7 | 51.9 |
| Net debt/equity ratio | 0.17 | $-0.02$ | 0.04 |
| Net debt/EBITDA | 0.67 | 0.25 | 0.41 |
| Equity/assets ratio, % | 52 | 58 | 55 |
| Net working capital, % 1) | 26.9 | 24.7 | 27.5 |
| Earnings per share, basic, SEK | 1.46 | 2.53 | 6.96 |
| Earnings per share diluted, SEK | 1.46 | 2.53 | 6.95 |
| EBITDA, MSEK | 4,221 | 5,585 | 17,149 |
| Cash flow from operations, MSEK | 2,708 | 2,784 | 15,347 |
| Funds from operations (FFO), MSEK | 3,471 | 4,080 | 13,935 |
| Interest coverage ratio, % | 667 | 1,101 | 906 |
| Number of employees 3) | 39,004 | 38,421 | 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) | 1,256,718 | 1,255,733 | 1,256,055 |
1) Quarter is quarterly annualized and the annual number is based on a four quarter average. 2) 12-month rolling 1Q 2021 ROCE
reported at 14.7 % (12.8) and NWC reported at 27.6 % (26.1). 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 an adjusted operating profit after net financial items and earnings per share for comparison reasons. The operating profit is adjusted for capital gains and losses from divestments and larger restructuring initiatives and impairments. Net financial items are adjusted for capital gains and losses from divestments of financial assets.
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.
Stockholm 20 April 2021 Sandvik Aktiebolag (publ)
Stefan Widing President and CEO
The Company's Auditor has not reviewed the report for the first quarter of 2021.
This information is information that Sandvik AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publications, through the agency of the contact person set out below, at 11.30 CET on April 20, 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 April 20, 2021 at 13.00 CET.
Information is available at home.sandvik/in
Sandvik AB, Corp Reg. No: 556000-3468 Box 510 SE-101 30 Stockholm +46 8 456 11 00
CALENDAR
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.