Sandvik

Quarterly Report • Apr 20, 2020

INTERIM REPORT FIRST QUARTER 2020

ADJUSTING TO INCREASED MARKET UNCERTAINTY

CEO'S COMMENT: "I am proud to have assumed the role as CEO of Sandvik. Focus during my initial time has been to meet the teams, see our operations and visit customers. As expected, I have gotten to know a very committed and driven team who takes pride in representing Sandvik in the market. Of course, gradually my focus became centered around the escalating corona situation. While we experienced some disruptions in our production resulting from local restrictions, our operations and logistics teams did a great job to ensure that we could continue to supply and service our customers without any major issues throughout the quarter. That said, Sandvik Machining Solutions noted a sharp drop in demand of about -25% year-on-year in the last week of March. In the near term, we expect very low busi- bus ness activity in our short-cycle operations as several customer segments are impacted by production stoppages," says Stefan Widing, CEO and President of Sandvik.

"In this challenging environment, I am pleased to see that our ongoing effi ciency initiatives are progressing according to plan with 1.4 billion SEK achieved, out of the expected total of 1.7 billion SEK. I am also satisfi ed with the speed with which we have been able to identify and start implementing new savings initiatives to protect profi tability going forward. Short-term activities that have quick impact, will generate temporary savings of about 1.5 billion SEK in 2020. We have also identifi ed additional long-term structural effi ciency measures with estimated savings of about 1 billion SEK, with a full annual run-rate by the end of 2021. We continue to evaluate the market development and will not hesitate to take further actions if necessary."

"Each of the three business areas faced high comparables in the form of all-time-high order levels in the year-earlier period. Hence all three business areas noted declines in organic order intake and our overall order intake declined organically by -11% yearon-year. I am pleased to note that Sandvik Materials Technology's strong product off ering to the energy segment resulted in large orders amounting to 0.7 billion SEK in the period, supporting deliveries from this high value-added segment into next year. Organic revenues declined by -7% year-on-year, with the shortcycle business impacted by weak demand across all customer segments toward the end of the period. All three main geographic regions declined, however China noted a positive development driven by Sandvik Mining and Rock Technology. For Sandvik in total, the book-to-bill was positive at 107%."

"The impact of negative organic revenue growth put pressure on adjusted operating profi t, which declined by -18%, and the adjusted operating margin fell to 15.8% (18.3). Notably, metal price eff ects had a signifi cant negative impact in the quarter. Free cash fl ow decreased to 3.1 billion SEK (3.4) however, we noted a fi nancial net cash position of 1.4 billion SEK. In total, we have accessible cash and unutilized credit lines of more than 30 billion SEK. The net debt to equity ratio was further reduced to 0.17 (0.21)."

"Although we have a strong fi nancial position, we currently face a high level of uncertainty in the market. Consequently, as a precautionary measure, the Board of Directors has withdrawn its dividend proposal to the 2020 Annual General Meeting. When the market has stabilized and the fi nancial position of the company so permits, it is the Board of Directors' intention to re-evaluate the situation."

FINANCIAL OVERVIEW, MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Continuing operations
Order intake 1)	27 873	25 356	-11	104 075
Revenues 1)	25 025	23 620	-7	103 238
Gross Profi t	10 451	9 186	-12	41 576
% of revenues	41.8	38.9		40.3
Operating profi t	4 567	2 762	-40	13 386
% of revenues	18.3	11.7		13.0
Adjusted operating profi t 2)	4 567	3 728	-18	19 219
% of revenues	18.3	15.8		18.6
Profi t after fi nancial items	4 189	2 346	-44	12 150
% of revenues	16.7	9.9		11.8
Adjusted profi t after fi nancial items	4 189	3 311	-21	17 982
% of revenues	16.7	14.0		17.4
Profi t for the period	3 141	1 835	-42	8 728
% of revenues	12.6	7.8		8.5
Earnings per share basic, SEK	2.50	1.47	-41	6.97
Earnings per share diluted, SEK	2.50	1.46	-42	6.96
Adjusted earnings per share, SEK	2.50	2.14	-15	11.12
Return on capital employed, % 3)	20.3	12.5		15.2
Cash fl ow from operations	2 943	2 815	-4	17 807
Net working capital % 3)	24.4	26.8		25.2
Discontinued operations
Profi t for the period	-44	-12	-73	-205
Earnings per share, SEK	-0.04	-0.01	-73	-0.16
Group Total
Profi t for the period	3 097	1 823	-41	8 523
Earnings per share basic, SEK	2.47	1.46	-41	6.81
Earnings per share diluted, SEK	2.46	1.46	-41	6.79
Adjusted earnings per share, SEK	2.47	2.13	-14	10.96
1) Change from the preceding year at fi xed exchange rates for comparable units.	Tables and calculations in the report do not always agree exactly with the totals due to rounding.

2) Profi t adjusted for items aff ecting comparability of -1bn SEK in Q1 2020 (0) related to a divestment, effi ciency measures and the internal SMT separation. For FY 2019 it is -5.8 billion SEK primarily related to effi ciency measures, impairment and divestment of Varel. See page 21.

3) Quarter is quarterly annualized and year-to-date numbers are based on a four quarter average.

Comparisons refer to the year-earlier period, unless stated otherwise.

For defi nitions see home.sandvik

N/M = not meaningful

MARKET DEVELOPMENT

Q1	ORDER INTAKE	REVENUES
Price/volume, %	-11	-7
Structure, %	0	-0
Currency, %	2	2
TOTAL, %	-9	-6

Change compared to same quarter last year. The table is multiplicative, i.e. the diff erent components must be multiplied to determine the total eff ect.

Order intake in the fi rst quarter declined organically by -11%, year-onyear. The decline in revenues was slightly more modest at -7%, supported by previously received orders with longer delivery schedules.

Customer activity developed in line with expectations during January and February, with the exception of an extended shutdown period of about one week in China after the Chinese New Year linked to the outbreak of the corona virus. In March, the corona situation escalated globally and Sandvik Machining Solutions noted a sharp drop in demand at the very end of the period, as several customers shut down production on account of safety precautions and local regulatory restrictions. Order intake decreased organically by -12% year-on-year in Sandvik Machining Solutions. Sandvik Mining and Rock Technology declined by -8%. Total organic orders for Sandvik Materials Technology decreased by -14%, including large orders secured with a combined value of 660 million SEK (1,000) for advanced tubular products for the energy segment. Excluding the impact of large orders, the decline was more moderate at -9%.

Europe and North America noted the largest drop in orders at -14% year-on year, or -15% and -9% respectively, when excluding the impact of large orders. The decline in Asia was -6%, including a double-digit positive growth rate in China, driven by Sandvik Mining and Rock Technology.

Underlying customer activity declined in most customer segments, with the negative development most tangible in the short-cycle business, while decision-making processes related to orders were somewhat protracted among customers in the mining industry, toward the end of the quarter.

Changed exchange rates had a positive impact of 2% on both order intake and revenues.

Q1 UNDERLYING MARKET DEVELOPMENT MINING GENERAL ENGINEERING AUTOMOTIVE ENERGY CONSTR. AERO % of 2019 Group revenue Order intake Y/Y (excl. large orders) Europe 37% -14% (-15%) North America 23% -14% (-9%) Asia 19% -6% (-6%) Africa/ Middle East 9% -8% (-8%) Australia 7% +0% (+0%) South America 5% -4% (-4%) 37% of 2019 revenues 22% 12% 10% 8% 7%

ORDER INTAKE

REVENUES AND BOOK-TO-BILL

EARNINGS

Gross profi t declined by -12% to 9,186 million SEK (10,451) and gross margin declined to 38.9% (41.8), impacted by the organic decline of -7% in revenues as well as items aff ecting comparability of -364 million SEK.

Sales and administration costs declined by -5% year-on-year, with the largest decline noted in sales costs. The organic decline of sales and administration costs was -6%, including items aff ecting comparability of -75 million SEK. The overall ratio to revenues remained stable at 20% (20). Research and development costs remained overall stable.

Adjusted operating profi t declined by -18% and amounted to 3,728 million SEK (4,567) and the adjusted operating margin declined to 15.8% (18.3). While cost measures are being executed according to plan, they were not suffi cient to off set the adverse impact of the negative year-on-year organic growth of -7%. Savings from the cost-reduction activities announced in July 2019 amounted to 360 million SEK in the quarter, meaning that about 1,400 million SEK of the expected full run-rate savings of 1,700 million SEK has been achieved. Metal price eff ects in Sandvik Materials Technology impacted negatively by -201 million SEK in the period (-85). The impact from changed exchange rates was marginally positive at 12 million SEK, including a signifi cant negative impact of -210 million SEK related to revaluation of balance sheet items, mainly in Sandvik Mining and Rock Technology.

Reported operating profi t was adversely impacted by costs of -364 million SEK related to the earlier announced effi ciency measures in Sandvik Machining Solutions through the closure of a manufacturing plant in Germany. Additionally, the operating profi t in Other Operations included a negative impact of -526 million SEK related to the realized eff ect from the reversal of the accumulated currency translation in Other Comprehensive Income, due to the divestment of Sandvik Drilling and Completions (Varel). Earnings were adversely impacted in an amount of -75 million SEK for costs related to the internal separation of Sandvik Materials Technology from the remainder of the Sandvik Group, of which -45 million SEK related to Sandvik Materials Technology and -30 million SEK to Group activities.

Interest net was reduced to -126 million SEK (-168). The total fi nance net amounted to -416 million SEK (-378), with the increase driven by changed exchange rates and other asset class eff ects. Loan repayment of 1.4bn SEK was completed.

The normalized tax rate for continuing operations was 23.1% (25.0) excluding the adverse impact related to the items aff ecting comparability in operating profi t as well as tax items with positive impact. The reported tax rate for continuing operations was 21.8% (25.0) and 21.9% (25.3) for the Group in total.

The net result amounted to 1,835 million SEK (3,141), corresponding to earnings per share of 1.47 SEK (2.50) and adjusted earnings per share of 2.14 SEK (2.50).

GROSS PROFIT AND MARGIN

OPERATING PROFIT & RETURN

Reported operating margin impacted by items aff ecting comparability: 0.1 billion SEK in 2018 and -5.8 billion SEK in 2019 and -1 billion SEK in 2020.

EARNINGS PER SHARE

CASH FLOW AND BALANCE SHEET

Capital employed decreased year-on-year to 93.6 billion SEK (96.7) and increased sequentially (90.4). Adjusted return on capital employed, excluding items aff ecting comparability, was noted at 16.1% and declined both year-onyear (20.3) and sequentially (22.0), mainly due to lower reported earnings.

Net working capital amounted to 25.7 billion SEK, remaining stable year-onyear (25.6) and increasing sequentially (24.9). The sequential increase in inventory volumes of 1.1 billion SEK was primarily driven by Sandvik Mining and Rock Technology, while a small reduction was noted in Sandvik Machining Solutions. In addition, a slight increase was reported due to changed exchange rates. Net working capital in relation to revenues increased to 27% (24) for the quarter.

Investments in tangible and intangible assets in the fi rst quarter amounted to 0.7 billion SEK (0.8), corresponding to 66% of scheduled depreciation. Investments are seasonally higher in the second half of the year.

A fi nancial net cash position of 1.4 billion SEK was noted, which compares to a negative net cash position of -0.5 billion SEK in the previous quarter and -4.4 billion SEK in the year-earlier period. The net pension liability increased year-on-year to 9.1 billion SEK (5.5), due primarily to changed discount rates. Net debt amounted to 11.1 billion SEK at the end of the fi rst quarter, declining year-on-year from 13.2 billion SEK. Sequentially, it remained in line with the fi gure of 11.1 billion SEK reported in the previous quarter. The net debt to equity ratio declined year-on-year to 0.17 (0.21). Interest-bearing debt with short-term maturity accounted for 19% of total debt.

Free operating cash fl ow decreased year-on-year to 3.1 billion SEK (3.4). Cash fl ow from operations was 2.8 billion SEK and decreased year-on-year (2.9).

CASH FLOW, MSEK	Q1 2019	Q1 2020
EBITDA + non-cash items*	5 815	4 505
Net Working Capital change	-1 577	-697
Capex**	-887	-680
FREE OPERATING CASH FLOW**	3 352	3 128

* Including investments and disposals of rental equipment of -94 million SEK (-171) and tangible and intangible assets of -587 million SEK (-716).

** Free operating cash fl ow before acquisitions and disposals of companies, fi nancial items and paid taxes.

CASH FLOW FROM OPERATIONS

NET WORKING CAPITAL

NET DEBT, GROUP TOTAL

SANDVIK MINING AND ROCK TECHNOLOGY

NEGATIVE DEVELOPMENT IN EQUIPMENT ORDER INTAKE

LARGELY STABLE AFTERMARKET BUSINESS

INCREASED MARKET UNCERTAINTY

GROWTH
Q1	ORDER	INTAKE REVENUES
Price/volume, %	-8	-5
Structure, %	0	0
Currency, %	1	1
TOTAL, %	-7	-3
Change compared to same quarter last year. The table is multiplicative, i.e. the diff erent components must be multiplied to determine the total eff ect.

Total order intake declined organically by -8% from the alltime-high level reported in the preceding year. Increased hesitancy in customer decision-making processes was noted toward the end of the quarter as the corona situation escalated.

Key items impacting order intake and revenues compared with the year-earlier period:

• Total equipment orders declined at a high-teen rate. The downturn was particularly notable in the Mechanical Cutting and Crushing and Screening divisions, which both faced record-high order levels in the year-earlier period. Orders for underground mining equipment also declined somewhat.
• Orders in the aftermarket business remained largely stable year-on-year.
• The aftermarket business accounted for 65% of revenues while the equipment business accounted for 35%.

Operating profi t decreased by -9% year-on-year, primarily due to the negative impact from changed exchange rates, but also due to lower organic revenues. The operating margin declined to 17.0% (18.0).

Key items impacting operating profi t and operating margin:

• Savings of 100 million SEK from previously announced cost measures.
• Changed exchange rates impacted operating profi t negatively by -78 million SEK, primarily due to the revaluation of balance sheet items in the amount of -180 million SEK and the impact of high currency volatility in March.

Corona update

During the quarter, production was impacted only to a minor extent, and both supply and distribution proceeded as planned. The majority of the business area's production footprint is Europe-based. That said, as the spread of the coronavirus escalates globally, market uncertainty is increasing and both the business area's and customers' operations and value chains may be impacted due to safety precautions and local restrictions.

Both short-term temporary actions and long-term structural effi ciency measures are being implemented to protect profi tability.

ORDER INTAKE, REVENUES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Order intake *	11 369	10 570	-8	44 379
Revenues *	10 103	9 775	-5	44 777
Operating profi t	1 817	1 661	-9	8 602
% of revenues	18.0	17.0		19.2
Adjusted operating profi t 1)	1 817	1 661	-9	8 911
% of revenues	18.0	17.0		19.9
Return on capital employed, % 2)	29.3	24.2		32.3
Number of employees	14 531	14 236	-2	14 229

* Change at fi xed exchange rates for comparable units.

1) Operating profi t adjusted for items aff ecting comparability in FY 2019 was -309 million SEK related to effi ciency measures and provision reversal.

2) Quarter is quarterly annualized and the year-to-date numbers are based on a four quarter average

SANDVIK MACHINING SOLUTIONS

DECLINING DEMAND

MARGIN PRESSURE DUE TO UNDERABSORPTION

INCREASED MARKET UNCERTAINTY WITH A SHARP DROP IN DEMAND TOWARD THE END OF THE QUARTER

Order intake and revenues deteriorated year-on-year, with an escalating negative development in demand noted in the last week of March as the corona situation intensifi ed. A decline was noted in all major regions and all customer segments during the quarter.

Key items impacting order intake and revenues compared with the year-earlier period:

• Organic revenues declined in the range of 11%-12% in all of the three major geographical regions. Notably, customer activity in China improved toward the end of the quarter.
• Weakness in the automotive segment intensifi ed as the quarter progressed and customers announced production stoppages in the wake of the corona situation. Toward the end of the period all major customer segments noted declines.
• The number of working days had a positive impact of about 1% on both orders and revenues.

Adjusted operating profi t amounted to 2,054 million SEK (2,654), decreasing -23% year-on-year. The adjusted operating margin declined to 21.0% (24.9).

Key items impacting operating profi t and operating margin:

• Underabsorption of fi xed costs due to lower production volumes as a result of declining customer activity adversely impacted the adjusted operating margin by -5.2%-points yearon-year.
• Lower production rate to reduce inventory levels impacted the adjusted operating margin by -0.7%-points year-on-year.
• Savings of 220 million SEK related to previously announced cost measures.
• Costs of -364 million SEK related the announced intention to close a manufacturing plant in Germany to support long-term profi tability.

GROWTH
Q1	ORDER	INTAKE REVENUES
Price/volume, %	-12	-12
Structure, %	1	1
Currency, %	3	3
TOTAL, %	-9	-9
Change compared to same quarter last year. The table is multiplicative, i.e. the diff erent components must be multiplied to determine the total eff ect.

• Changed exchange rates had a positive impact of +76 million SEK on operating profi t year-on-year.

Corona update

In January and February, production was unaff ected by the corona situation, apart from the extended stoppage of about one week in China. While there was an escalation of the global corona situation in March, this only resulted in smaller disruptions to the business area's production, which is largely European-based. Supply and distribution chains remained largely intact throughout the quarter. However, a sharper drop in demand was recorded in the last week of March, with large customer segments impacted by production stoppages. We anticipate a low business activity near term, should the current corona situation persist. Short-term temporary actions and long-term structural effi ciency measures are being implemented to protect profi tability.

ORDER INTAKE, REVENUES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Order intake *	11 105	10 124	-12	41 163
Revenues *	10 679	9 766	-12	41 123
Operating profi t	2 654	1 690	-36	8 380
% of revenues	24.9	17.3		20.4
Adjusted operating profi t 1)	2 654	2 054	-23	9 310
% of revenues	24.9	21.0		22.6
Return on capital employed, % 2)	34.1	20.6		25.9
Number of employees	19 492	18 291	-6	18 453

* Change at fi xed exchange rates for comparable units.

1) Operating profi t adjusted for items aff ecting comparability of -364 million SEK (0) in Q1 2020 and -930 million SEK in FY 2019 related to effi ciency measures.

2) Quarter is quarterly annualized and the year-to-date numbers are based on a four quarter average

For defi nitions see home.sandvik

FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK 7

SANDVIK MATERIALS TECHNOLOGY

LARGE ORDERS RECEIVED

LOWER DEMAND IN THE SHORT-CYCLE BUSINESS

INCREASED MARKET UNCERTAINTY

GROWTH
Q1	ORDER	INTAKE REVENUES
Price/volume, %	-14	-3
Structure, %	1	1
Currency, %	2	2
TOTAL, %	-11	0
Change compared to same quarter last year. The table is multiplicative, i.e. the diff erent components must be multiplied to determine the total eff ect.

Organic orders declined by -14%, on record-high comparables in the year-on-year period. Excluding the impact of large orders, order intake declined by -9%. Alloy prices had a positive impact of 1% on order intake and of 2% on revenues.

Key items impacting order intake and revenues compared with the year-earlier period:

• Demand for the capex-related tubular off ering remained robust, albeit with increased market uncertainty as oil prices came under pressure. Large orders totaling 660 million SEK (1,000) related to the energy segment were received.
• Demand declined across the board for standardized application tubing.
• In the Kanthal division, demand declined for both heating materials and heating systems.
• Positive development in the Strip division.

Adjusted operating profi t excluding metal price eff ects totaled 340 million SEK (392), yielding an underlying margin of 9.0% (10.4). Including negative metal price eff ects, adjusted operating profi t decreased to 139 million SEK (307) and the adjusted operating margin decreased to 3.7% (8.1).

Key items impacting operating profi t and operating margin:

• A positive mix due to increased deliveries and improved profi tability for advanced tubular products off set the adverse impact from lower volumes for standardized application tubing.
• Lower profi tability in Kanthal due to lower production volumes.
• Savings of 20 million SEK from previously announced cost measures.
• Costs of -45 million SEK related to the internal separation of the business area from the remainder of Sandvik.
• Changed exchange rates had a slight positive impact of +4 million SEK on operating profi t.

• Changed metal prices had a negative impact of -201 million SEK (-85) in the quarter.

Corona update

The majority of the manufacturing footprint is concentrated in Sweden, and production in the fi rst quarter was largely unaff ected by the corona situation. Market uncertainty is increasing and, should the current corona situation persist, both the business areas' and customers' operations and value chains may be impacted due to safety precautions and local restrictions. Shortterm temporary actions and long-term structural effi ciency measures are being implemented to protect profi tability.

ORDER INTAKE, REVENUES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Order intake *	4 930	4 365	-14	16 475
Revenues *	3 773	3 782	-3	15 279
Operating profi t	307	94	-69	1 444
% of revenues	8.1	2.5		9.4
Adjusted operating profi t 1)	307	139	-55	1 787
% of revenues	8.1	3.7		11.7
Return on capital employed, % 2)	9.6	2.8		11.0
Number of employees	5 910	5 774	-2	5 726

* Change at fi xed exchange rates for comparable units.

1) Operating profi t adjusted for Items Aff ecting Comparability of -45 million SEK in Q1 2020 (0) related to separation costs. For FY 2019 it is -343 million SEK related to effi ciency measures and separation costs.

2) Quarterly number is annualized and the year-to-date number is based on four quarter average

FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK 8

OTHER OPERATIONS

Early March, the divestment of Sandvik Drilling and Completions (Varel) was completed, meaning the operations related to the oil and gas industry. Sandvik will remain a minority owner of 30% of the company and this holding will be incorporated in Group Activities. Consequently, as of the second quarter of 2020, Other Operations will not include any active operations.

Orders and revenues of 297 million SEK relate fully to Varel. The adjusted operating margin for Varel was 3.8%.

Operating profi t for Other Operations was impacted by the realized eff ect from the reversal of the accumulated currency translation in Other Comprehensive Income of -526 million SEK, related to the divestment of Varel. The divestment generated a positive cash fl ow impact of 767 million SEK. Changed exchange rates had a largely neutral impact on operating profi t of 1 million SEK.

FINANCIAL OVERVIEW, MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Order intake *	471	297	-5	2 059
Revenues *	471	297	-5	2 059
Operating profi t	-45	-515	N/M	-4 263
% of revenues	-9.5	N/M		-207.0
Adjusted operating profi t 1)	-45	11	N/M	-140
% of revenues	-9.5	3.8		-6.8
Return on capital employed, % 2)	-3.7	N/M		-100.1
Number of employees	1 061	-	-100	1 081

* Change at fi xed exchange rates for comparable units.

1) Operating profi t adjusted for items aff ecting comparability of -526 million SEK in Q1 2020 (0) related to the divestment of Varel. For FY 2019 it is -4,123 million SEK related to impairment and divestment of Varel.

2) Quarter is quarterly annualized and the year-to-date numbers are based on a four quarter average.

N/M = not meaningful

SUSTAINABLE BUSINESS

IMPACT FROM TRANSITION TO BIOFUEL IN SANDVIK MATERIALS TECHNOLOGY

REDUCED NUMBER OF INJURIES

INAUGURATION OF THE SIGRID GÖRANSSON MEDAL

In order to drive transparancy and facilitate the external monitoring of the development also toward the sustainability targets a quarterly update has commenced. Sandvik is committed to using engineering and innovation to make the shift that will drive more sustainable business. The aim is to lead this shift in our industry and be the innovative business partner for our customers by making sustainability part of every aspect of business, delivering value for all parties.

First quarter 2020

• The waste recovery rate amounted to 62%, excluding the mine in Austria and Sandvik Materials Technology's production unit in Sandviken, which together constitutes 82% of the total waste. •
• Reduced CO2 due to reduction and transfer of production. •
• Last year's transition to biofuel for Sandvik Materials Technology's vehicles in Sandviken contributed to reduced emissions. •
• Even though the number of injuries were reduced, the frequency rates remained largely unchanged due to reduced number of worked hours. •
• Reduced share of female managers mainly driven by downsizing of operations.

Case of the quarter

One of the enablers for reaching our goals for sustainable business is a new, annual sustainability award that will celebrate the best innovations within Sandvik: The Sandvik Sustainability Award in Memory of Sigrid Göransson.

Sigrid Göransson was born in 1872 in Sandviken and was the granddaughter of Göran Fredrik Göransson, the founder of Sandvik, and the daughter of Anders Henrik Göransson, CEO of Sandvik. Early on, Sigrid joined her father on his inspections of the ironworks and the workers' housing, during which she gained insights into the living and working conditions of the employees. Sigrid was appointed member of the company's management team and an inspector of the company's social institutions. She made Sandvik focus on social conditions at a time when this rarely happened.

The Sustainability Award in her memory will go to an employee or group of employees that the jury believes has made a contribution in the form of an important and innovative solution - a solution that has had a measurable and lasting impact on environmental, economic or social sustainability at Sandvik or in local communities.

CIRCULARITY - WASTE

CLIMATE - CO2 EMISSIONS

PEOPLE - ZERO HARM

	SUSTAINABILITY OVERVIEW	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Circularity	Total waste, thousand tonnes*	63	62	-0	333
Circularity	Waste recovered, % of total	24	17	-32	19
Climate	Total CO2, thousand tonnes*	91	81	-10	333
People	Total recordable injury frequency rate, R12M frequency / million working hours	3.7	3.8	+2	3.9
People	Lost time injury frequency rate, R12M frequency / million working hours	1.6	1.5	-7	1.6
Fair play	Share of female managers, %	17.8	17.9	+1	18.2

* Period is December 2019 to February 2020

PARENT COMPANY

The parent company's revenues after the fi rst three months of 2020 amounted to 3,014 million SEK (5,414) and the operating result was 1,501 million SEK (610). Expense of shares in Group companies consists primarily of dividends, Group contributions and loss related to the internal separation of Sandvik Materials Technology from the commissionary structure and amounted

after the fi rst quarter to -1 753 million SEK (451). Interest-bearing liabilities, less cash and cash equivalents and interest-bearing assets, amounted to 8,126 million SEK (12,831). Investments in property, plant and machinery amounted to 71 million SEK (177).

ACQUISITIONS AND DIVESTMENTS

ACQUISITIONS DURING THE MOST RECENT 12-MONTH PERIOD

	COMPANY/UNIT	CLOSING DATE	REVENUES	NO. OF EMPLOYEES
2019
Sandvik Machining Solutions	OSK	10 April 2019	120 MSEK in 2017	90
Sandvik Mining and Rock Technology	Newtrax	17 June 2019	26 MCAD in 2018	120
Sandvik Machining Solutions	Beam IT, 30% stake	12 July 2019	70 MSEK in 2018	38
Sandvik Materials Technology	Thermaltek	31 December 2019	13 MUSD in 2019	30
Sandvik Machining Solutions	Melin Tool Company	31 December 2019	22 MUSD in 2019	100
2020
Sandvik Materials Technology	Summerill Tube Corporation	14 January 2020	100 MSEK in 2018	45

	Purchase price on cash and debt free basis	Preliminary goodwill and other intangible assets
Acquisitions 2020	90 million SEK	0 million SEK

DIVESTMENTS DURING THE MOST RECENT 12-MONTH PERIOD

	COMPANY/UNIT	CLOSING DATE	REVENUES	NO. OF EMPLOYEES
2020
Other Operations	Sandvik Drilling & Completions (Varel) *	12 March 2020	2,100 MSEK in 2019	1,100

* Sandvik divested 70% of Varel and remains a minority owner of 30% of the company.

SIGNIFICANT EVENTS

DURING THE FIRST QUARTER

• On 20 January, Sandvik Machining Solutions announced its decision to examine the conditions for a closure of a production plant in Germany. The closure is expected to be fi nalized by mid-2021, with a full run-rate of net savings of about 110 million SEK. Costs related to the restructuring, amounting to -364 million SEK impacted Sandvik Machining Solutions' operating profi t in the fi rst quarter of 2020, with the majority impacting future cash fl ow.

• On 1 February, Stefan Widing assumed the position as CEO and President of Sandvik.

• On 12 March, the divestment of Sandvik Drilling and Completions (Varel) was completed.

• On 26 March Sandvik announced cost measures to mitigate future eff ects on its businesses from the rapid spread of the coronavirus. Temporary short-term actions primarily related to reduced working hours, will generate savings of about 1.5 billion SEK in 2020. Actions to reduce worktime will mean a temporary negative eff ect on the compensation for many employees. The members of the Sandvik Group Executive Management have therefore also decided to reduce their salary by 10 percent during this period.

In addition, long-term structural measures have been initiated, entailing costs of about 1.4 billion SEK to be reported as items aff ecting comparability in operating profi t for the second quarter of 2020, with the majority impacting cash fl ow. Savings of about 0.9 billion SEK from these long-term structural measures will reach full annual run-rate by the end of 2021.

AFTER THE FIRST QUARTER

• On 7 April, the Board of Directors of Sandvik announced it had decided to withdraw its previous dividend proposal and instead propose that the Annual General Meeting on 28 April resolve that no dividend be paid for the 2019 fi scal year. When the market has stabilized and the fi nancial position of the company so permits, it is the Board of Directors' intention to re-evaluate the situation. The original proposal was to resolve on a dividend of SEK 4.50 per share.

GUIDANCE

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 fi gures considered useful when modeling fi nancial outcome is provided in the table below:

CAPEX (CASH)	Estimated at <4 billion SEK for 2020 (previous guidance: about 4 billion SEK)
CURRENCY EFFECTS	Based on currency rates at the end of March 2020, it is estimated that transaction and translation currency eff ects will have an impact of about +100 million SEK on operating profi t for the second quarter of 2020, compared with the year-earlier period.
METAL PRICE EFFECTS	In view of currency rates, inventory levels and metal prices at the end of March 2020 it is estimated that there will be an impact of about -150 million SEK on operating profi t in Sandvik Materials Technology for the second quarter of 2020.
INTEREST NET	Estimated at about -0.5 billion SEK in 2020.
NORMALIZED TAX RATE	Estimated at 23% - 25% for 2020

ACCOUNTING POLICIES

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 eff ective from 1 January 2020.

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 eff ective as of 1 January 2020 or later. The standards have not had any material impact on the fi nancial reports.

IBOR transition

Where interest rate hedge accounting is applied Sandvik is exposed to the STIBOR reference rate for hedged instruments together with their hedging instruments. The change of reference rate due to the upcoming IBOR transition will, when implemented, aff ect future cash-fl ows on interest income and interest expense but Sandvik expects continued 100% eff ectiveness of the hedges and no net interest impact. The nominal value of outstanding exposures is SEK 1.5 Billion. Sandvik will

continue to monitor any changes to STIBOR as a reference rate and update, together with counterparties, the relevant fi nancial contracts accordingly as and when these occur.

Items aff ecting comparability

Sandvik reports an adjusted EBIT for comparison reasons. The result is adjusted for larger acquisitions and divestments, restructuring initiatives and impairments.

Loss of control of a wholly owned subsidiary with an interest retained

When the group disposes of a signifi cant part of its interest, and therefore loses control, of a subsidiary, the group de-consolidates the subsidiary. If the retained interest in the entity fulfi lls the criteria of being an associate, it is accounted for at fair value at the disposal date, and subsequently accounted for using the equity method. The gain or loss of the transaction is the diff erence between the fair value of the consideration received as well as the fair value of the retained interest, and the carrying value of the former subsidiary's net assets (including any related goodwill), and is recorded in the income statement. Any portion of the gain or loss related to the re-measurement of the retained interest to fair value is disclosed separately.

TRANSACTIONS WITH RELATED PARTIES

No transactions between Sandvik and related parties that signifi cantly aff ected the company's position and results took place.

RISK ASSESSMENT

As an international Group with a wide geographic spread, Sandvik is exposed to several strategic, business and fi nancial risks. Strategic risk at Sandvik is defi ned as emerging risks aff ecting 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 fi nancial 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 as Sandvik begins with an assessment in operational management teams where the material risks for their operations are fi rst identifi ed, followed by an evaluation of the probability of the risks occurring and their potential impact on the Group. Once the key risks have been identifi ed 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 2019.

FINANCIAL REPORTS SUMMARY

THE GROUP

INCOME STATEMENT

MSEK	Q1 2019	Q1 2020	CHANGE %	Q1-Q4 2019
Continuing operations
Revenues	25 025	23 620	-6	103 238
Cost of sales and services	-14 574	-14 434	-1	-61 662
Gross profi t	10 451	9 186	-12	41 576
% of revenues	41.8	38.9		40.3
Selling expenses	-3 419	-3 199	-6	-14 946
Administrative expenses	-1 626	-1 593	-2	-6 643
Research and development cost	-903	-915	1	-3 674
Other operating income and expenses	64	-717	N/M	-2 926
Operating profi t	4 567	2 762	-40	13 386
% of revenues	18.3	11.7		13.0
Financial income	137	104	-24	492
Financial expenses	-515	-520	1	-1 729
Net fi nancial items	-378	-416	10	-1 237
Profi t after fi nancial items	4 189	2 346	-44	12 150
% of revenues	16.7	9.9		11.8
Income tax	-1 048	-511	-51	-3 421
Profi t for the period, continuing operations	3 141	1 835	-42	8 728
% of revenues	12.6	7.8		8.5
Discontinued operations
Revenues	155	2	-98	295
Operating result	-43	-12	-73	-204
Profi t after fi nancial items	-44	-12	-73	-205
Profi t for the period, discontinued operations	-44	-12	-73	-205
Group total
Revenues	25 180	23 623	-6	103 533
Operating profi t	4 524	2 750	-39	13 182
Profi t after fi nancial items	4 145	2 334	-44	11 945
Profi t for the period, Group total	3 097	1 823	-41	8 523
OTHER COMPREHENSIVE INCOME
Items that will not be reclassifi ed to profi t or loss
Actuarial gains/losses on defi ned benefi t pension plans	349	-1 518		-1 638
Tax relating to items that will not be reclassifi ed	-78	332		323
	271	-1 185		-1 315
Items that will be reclassifi ed subsequently to profi t or loss
Foreign currency translation diff erences	1 713	2 062		1 880
Cash fl ow hedges	0	1		20
Tax relating to items that may be reclassifi ed	0	0		0
	1 713	2 063		1 900
Total other comprehensive income	1 984	878		585
Total comprehensive income	5 081	2 701		9 108
Profi t for the period attributable to
Owners of the parent	3 096	1 829		8 539
Non-controlling interest	1	-6		-16
Total comprehensive income attributable to
Owners of the parent	5 080	2 706		9 124
Non-controlling interest	1	-6		-16
Earnings per share, SEK
Continuing operations, basic	2.50	1.47	-41	6.97
Continuing operations, diluted	2.50	1.46	-42	6.96
Group total, basic	2.47	1.46	-41	6.81
Group total, diluted	2.46	1.46	-41	6.79

N/M = not meaningful. For defi nitions see home.sandvik

THE GROUP

BALANCE SHEET CONTINUING AND DISCONTINUED OPERATIONS

MSEK	31 DEC 2019	31 MAR 2019	31 MAR 2020
Intangible assets	20 074	23 243	20 791
Property, plant and equipment	25 643	25 648	26 086
Right-of-use assets	3 172	3 305	3 336
Financial assets	6 562	5 891	7 514
Inventories	24 243	26 257	26 392
Contract Assets	77	90	123
Current receivables	21 885	23 363	22 409
Cash and cash equivalents	16 9531)	19 845	17 469
Assets held for sale	1 815	635	195
Total assets	120 423	128 277	124 317
Total equity	61 858	63 220	64 579
Non-current interest-bearing liabilities	25 383	28 176	25 153
Non-current non-interest-bearing liabilities	3 790	4 333	3 871
Current interest bearing liabilities	3 026	5 330	3 802
Current non-interest-bearing liabilities	25 486	26 652	26 641
Liabilities related to assets held for sale	880	566	270
Total equity and liabilities	120 423	128 277	124 317
Group total
Net working capital 2)	25 027	25 867	25 774
Loans	17 434	24 199	16 056
Non-controlling interests in total equity	14	40	17

1) Not including Asset held for sale of 34 million SEK

2) Total inventories, trade receivables, accounts payable and other current non-interest bearing receivables and liabilities, excluding tax assets and liabilities

NET DEBT

MSEK	31 DEC 2019	31 MAR 2019	31 MAR 2020
Interest-bearing liabilities excluding pension liabilities	20 770	27 581	19 492
Net pensions liabilities	7 348	5 495	9 109
cash and cash equivalents	-16 987	-19 845	-17 469
Net debt	11 131	13 231	11 131
Net debt to equity ratio	0.18	0.21	0.17

CHANGES IN EQUITY

MSEK	EQUITY RELATED TO OWNERS OF THE PARENT	NON-CONTROLLING INTEREST	TOTAL EQUITY
Opening equity, 1 January 2019	58 120	42	58 162
Changes in non-controlling interest	3	-3	0
Total comprehensive income for the period	9 124	-16	9 108
Personnel options program	-72	–	-72
Dividends	-5 331	-9	-5 340
Closing equity, 31 December 2019	61 844	14	61 858
Opening equity, 1 January 2020	61 844	14	61 858
Changes in non-controlling interest	-7	7	0
Total comprehensive income for the period	2 706	-6	2 701
Personnel options program	20	–	20
Closing equity, 31 March 2020	64 562	17	64 579

THE GROUP

CASH FLOW STATEMENT

MSEK	Q1 2019	Q1 2020	Q1-Q4 2019
Continuing operations
Cash fl ow from operating activities
Income after fi nancial income and expenses	4 189	2 346	12 150
Adjustment for depreciation, amortization and impairment loss	1 415	1 470	10 067
Other adjustments for non-cash items	-144	816	499
Income tax paid	-769	-1 027	-3 598
Cash fl ow from operations before changes in working capital	4 690	3 605	19 119
Changes in working capital
Change in inventories	-1 182	-1 130	400
Change in operating receivables	-1 241	-1 223	873
Change in operating liabilities	847	1 656	-1 821
Cash fl ow from changes in working capital	-1 577	-697	-548
Investments in rental equipment	-209	-129	-911
Proceeds from sales of rental equipment	38	35	147
Cash fl ow from operations	2 943	2 815	17 807
Cash fl ow from investing activities
Acquisitions of companies and shares, net of cash acquired	-614	-90	-1 870
Proceeds from sale of companies and shares, net of cash divested	7	767	95
Investments in tangible assets	-670	-597	-3 472
Proceeds from sale of tangible assets	58	125	386
Investments in intangible assets	-126	-114	-664
Proceeds from sale of intangible assets	22	0	42
Other investments, net	0	-1	-16
Cash fl ow from investing activities	-1 322	90	-5 500
Net cash fl ow after investing activities	1 620	2 905	12 307
Cash fl ow from fi nancing activities
Change in interest-bearing debt	94	-2 372	-8 016
Dividends paid	–	–	-5 340
Cash fl ow from fi nancing activities	94	-2 372	-13 356
Total cash fl ow from continuing operations	1 714	533	-1 050
Discontinued operations
Cash fl ow from discontinued operations	-55	-6	-138
Cash fl ow for the period, Group total	1 659	526	-1 188
Cash and cash equivalents at beginning of the period	18 089	16 987	18 089
Exchange rate diff erences in cash and cash equivalents	98	-44	86
Cash and cash equivalents at the end of the period	19 845	17 469	16 9871)
Discontinued operations
Cash fl ow from operations	-56	-7	-152
Cash fl ow from investing activities	0	1	16
Cash fl ow from fi nancing activities	1	0	-2
Total cash fl ow discontinued operations	-55	-6	-138
Group Total
Cash fl ow from operations	2 886	2 808	17 654
Cash fl ow from investing activities	-1 322	90	-5 484
Cash fl ow from fi nancing activities	94	-2 372	-13 358
Group total cash fl ow	1 659	526	-1 188

1) Including asset held for sale of 34 million SEK.

THE PARENT COMPANY

INCOME STATEMENT

MSEK	Q1 2019	Q1 2020
Revenues	5 414	3 014
Cost of sales and services	-3 228	-349
Gross profi t	2 186	2 665
Selling expenses	-294	-272
Administrative expenses	-633	-463
Research and development costs	-389	-321
Other operating income and expenses	-260	-108
Operating profi t	610	1 501
Income/expenses from shares in Group companies	451	-1 753
Interest income/expenses and similar items	-107	-40
Profi t after fi nancial items	954	-292
Appropriations	-206	2 161
Income tax expenses	386	-338
Profi t for the period	1 134	1 531

BALANCE SHEET

MSEK	31 DEC 2019	31 MAR 2019	31 MAR 2020
Intangible assets	85	107	66
Property, plant and equipment	7 089	7 009	3 232
Financial assets	54 338	43 856	53 992
Inventories	3 229	3 150	830
Current receivables	12 056	6 786	4 338
Cash and cash equivalents	–	–	274
Total assets	76 797	60 908	62 732
Total equity	34 565	26 013	36 116
Untaxed reserves	3 222	3 346	1 061
Provisions	770	596	593
Non-current interest-bearing liabilities	15 124	15 097	13 079
Non-current non-interest-bearing liabilities	245	236	137
Current interest-bearing liabilities	15 238	9 547	7 532
Current non-interest-bearing liabilities	7 633	6 073	4 214
Total equity and liabilities	76 797	60 908	62 732
Interest-bearing liabilities and provisions
minus cash and cash equivalents and interest-bearing assets Investments in fi xed assets	15 601 976	12 831 177	8 126 71

MARKET OVERVIEW, THE GROUP

ORDER INTAKE BY REGION

			CHANGE *	SHARE
MSEK	Q1 2020	%	% )	%
THE GROUP
Europe	9 587	-14	-15	38
North America	5 734	-14	-9	23
South America	1 321	-4	-4	5
Africa/Middle East	2 271	-8	-8	9
Asia	4 843	-6	-6	19
Australia	1 600	0	0	6
Total Continuing Operations 2)	25 356	-11	-10	100
Discontinued Operations	0	-100	-100
Group total	25 356	-11	-10
SANDVIK MINING AND ROCK TECHNOLOGY
Europe	1 485	-25	-25	14
North America	2 356	-3	-3	22
South America	945	-16	-16	9
Africa/Middle East	2 022	-9	-9	19
Asia	2 249	-1	-1	21
Australia	1 515	-0	-0	14
Total	10 570	-8	-8	100
SANDVIK MACHINING SOLUTIONS
Europe	5 515	-12	-12	54
North America	2 334	-14	-14	23
South America	173	-5	-5	2
Africa/Middle East	91	8	8	1
Asia	1 949	-10	-10	19
Australia	62	-0	-0	1
Total	10 124	-12	-12	100
SANDVIK MATERIALS TECHNOLOGY
Europe	2 545	-13	-17	58
North America	928	-34	-6	21
South America	196	281	281	4
Africa/Middle East	48	-9	-9	1
Asia	629	-7	-7	14
Australia	19	22	22	0
Total	4 365	-14	-9	100

1) Excluding major orders which is defi ned as above 400 million SEK in Sandvik Mining and Rock Technology and above 200 million SEK in Sandvik Materials Technology.

2) Includes rental fl eet order intake in Q1 of 175 million SEK recognized according to IFRS 16.

N/M = not meaningful

*At fi xed exchange rates for comparable units compared with the year-earlier period.

Q1 SANDVIK INTERIM REPORT 2020

REVENUES BY REGION

		CHANGE *	SHARE
MSEK	Q1 2020	%	%
THE GROUP
Europe	8 729	-13	37
North America	5 628	-6	24
South America	1 157	2	5
Africa/Middle East	2 081	-2	9
Asia	4 291	-12	18
Australia	1 735	30	7
Total Continuing Operations 1)	23 620	-7	100
Discontinued Operations	2	-99
Group total	23 623	-8
SANDVIK MINING AND ROCK TECHNOLOGY
Europe	1 503	-13	15
North America	1 998	-14	20
South America	898	0	9
Africa/Middle East	1 816	-1	19
Asia	1 905	-14	19
Australia	1 656	32	17
Total	9 775	-5	100
SANDVIK MACHINING SOLUTIONS
Europe	5 303	-12	54
North America	2 300	-12	24
South America	188	-0	2
Africa/Middle East	86	-6	1
Asia	1 831	-11	19
Australia	60	-8	1
Total	9 766	-12	100
SANDVIK MATERIALS TECHNOLOGY
Europe	1 881	-15	50
North America	1 215	34	32
South America	64	80	2
Africa/Middle East	69	-9	2
Asia	538	-13	14
Australia	15	12	0
Total	3 782	-3	100

* At fi xed exchange rates for comparable units compared with the year-earlier period.

1) Includes rental fl eet revenues in Q1 of 241 million SEK recognized according to IFRS 16.

THE GROUP

ORDER INTAKE BY BUSINESS AREA

	Q1	Q2	Q3	Q4	Q1-Q4	Q1		CHANGE
MSEK	2019	2019	2019	2019	2019	2020	%	% *
Sandvik Mining and Rock Technology	11 369	11 318	11 006	10 685	44 379	10 570	-7	-8
Sandvik Machining Solutions	11 105	10 629	9 609	9 820	41 163	10 124	-9	-12
Sandvik Materials Technology	4 930	3 535	3 867	4 144	16 475	4 365	-11	-14
Other Operations	471	549	510	529	2 059	297	-37	-5
Continuing operations	27 873	26 031	24 992	25 179	104 075	25 356	-9	-11
Discontinued operations	39	27	5	1	71	0	N/M	N/M
Group Total 1)	27 912	26 058	24 997	25 179	104 147	25 356	-9	-11

REVENUES BY BUSINESS AREA

	Q1	Q2	Q3	Q4	Q1-Q4	Q1		CHANGE
MSEK	2019	2019	2019	2019	2019	2020	%	% *
Sandvik Mining and Rock Technology	10 103	11 233	11 244	12 197	44 777	9 775	-3	-5
Sandvik Machining Solutions	10 679	10 674	9 927	9 844	41 123	9 766	-9	-12
Sandvik Materials Technology	3 773	4 011	3 482	4 013	15 279	3 782	0	-3
Other Operations	471	549	510	529	2 059	297	-37	-5
Continuing operations	25 025	26 467	25 163	26 583	103 238	23 620	-6	-7
Discontinued operations	155	100	25	15	295	2	-98	N/M
Group Total 1)	25 180	26 567	25 188	26 598	103 533	23 623	-6	-8

OPERATING PROFIT BY BUSINESS AREA

MSEK	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1-Q4 2019	Q1 2020	CHANGE %
Sandvik Mining and Rock Technology	1 817	2 126	2 014	2 645	8 602	1 661	-9
Sandvik Machining Solutions	2 654	2 483	1 244	2 000	8 380	1 690	-36
Sandvik Materials Technology	307	585	-52	604	1 444	94	-69
Other Operations	-45	85	-8	-4 295	-4 263	-515	N/M
Group activities	-166	-200	-202	-209	-776	-168	1
Continuing operations	4 567	5 078	2 996	744	13 386	2 762	-40
Discontinued operations	-43	-67	-33	-61	-204	-12	-73
Group Total 1)	4 524	5 012	2 963	684	13 182	2 750	-39

OPERATING MARGIN BY BUSINESS AREA

	Q1	Q2	Q3	Q4	Q1-Q4	Q1
%	2019	2019	2019	2019	2019	2020
Sandvik Mining and Rock Technology	18.0	18.9	17.9	21.7	19.2	17.0
Sandvik Machining Solutions	24.9	23.3	12.5	20.3	20.4	17.3
Sandvik Materials Technology	8.1	14.6	-1.5	15.0	9.4	2.5
Other Operations	-9.5	15.4	-1.6	N/M	N/M	N/M
Continuing operations	18.3	19.2	11.9	2.8	13.0	11.7
Discontinued operations	-28.1	-66.6	N/M	N/M	-69.1	N/M
Group Total 1)	18.0	18.9	11.8	2.6	12.7	11.6

* Change at fi xed exchange rates for comparable units compared with the year-earlier period.

1) Internal transactions had negligible eff ect on business area profi ts.

N/M = Non-meaningful.

THE GROUP

ADJUSTED OPERATING PROFIT BY BUSINESS AREA

MSEK	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1-Q4 2019	Q1 2020	CHANGE %
Sandvik Mining and Rock Technology	1 817	2 126	2 338	2 630	8 911	1 661	-9
Sandvik Machining Solutions	2 654	2 483	2 173	2 000	9 310	2 054	-23
Sandvik Materials Technology	307	585	236	659	1 787	139	-55
Other Operations	-45	-26	-8	-62	-140	11	-125
Group activities	-166	-200	-122	-161	-649	-138	-17
Continuing operations	4 567	4 968	4 617	5 066	19 219	3 728	-18
Discontinued operations	-43	-67	-33	-61	-204	-12	-73
Group Total 1)	4 524	4 901	4 584	5 005	19 015	3 716	-18

ADJUSTED OPERATING MARGIN BY BUSINESS AREA

%	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1-Q4 2019	Q1 2020
Sandvik Mining and Rock Technology	18.0	18.9	20.8	21.6	19.9	17.0
Sandvik Machining Solutions	24.9	23.3	21.9	20.3	22.6	21.0
Sandvik Materials Technology	8.1	14.6	6.8	16.4	11.7	3.7
Other Operations	-9.5	-4.7	-1.6	-11.6	-6.8	3.8
Continuing operations	18.3	18.8	18.3	19.1	18.6	15.8
Discontinued operations	-28.1	-66.6	N/M	N/M	-69.1	N/M
Group Total 1)	18.0	18.4	18.2	18.8	18.4	15.7

ITEMS AFFECTING COMPARABILITY

Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1-Q4 2019	Q1 2020
0	0	-323	14	-309	0
0	0	-930	-0	-930	-364
0	0	-288	-56	-343	-45
0	110	0	-4 233	-4 123	-526
0	0	-80	-47	-127	-30
0	110	-1 621	-4 322	-5 832	-965
0	0	-0	0	0	0
0	110	-1 621	-4 322	-5 832	-965

1) Internal transactions had negligible eff ect on business area profi ts. N/M = Non-meaningful.

Q2 2019 - Other Operations reported a capital gain of 110 million SEK related to the fi nal settlement for the divestment of Hyperion.

Q3 2019 - Sandvik reported items aff ecting comparability of -1,621 million SEK related to cost measures to mitigate a slower demand environment as well as to ensure optimized effi ciency (-1,571) and costs related to the internal separation of Sandvik Materials Technology (-50). All business areas announced activities included in the cost measures.

Q4 2019 - Sandvik reported items aff ecting comparability of in total -4,322 million SEK. This comprises -4,233 million SEK of goodwill impairment related to the divestment of Sandvik Drilling and Completions, out of which -3,966 million SEK impacted the operating profi t and +267 million SEK in positive tax impact. In addition a total of -103 million SEK in

separation costs, out which -56 million SEK in Sandvik Materials Technology and -47 million SEK in Group activities. Sandvik Mining and Rock Technology was impacted by +14 million SEK in a reversal of a provision.

Q1 2020 - Sandvik reported items aff ecting comparability of in total -965 million SEK, comprising of costs of -364 million SEK related to Sandvik Machining Solutions and the closure of a manufacturing plant in Germany. Other Operations included a negative impact of -526 million SEK related to the realized eff ect from reversal of the accumulated currency translation in Other Comprehensive Income due to the divestment of Varel. An additional -75 million SEK of costs related to the internal separation of Sandvik Materials Technology from the remainder of Sandvik, out of which -45 million SEK in Sandvik Materials Technology and -30 million SEK in Group activities.

KEY FIGURES

Continuing Operations	Q1 2019	Q1 2020	Q1-Q4 2019
Tax rate, %	25.0	21.8	28.2
Return on capital employed, % 1)	20.3	12.5	15.2
Return on total equity, % 1)	20.7	11.6	14.2
Return on total capital, % 1)	15.4	9.4	11.4
Shareholders' equity per share, SEK	50.4	51.5	49.3
Net debt/equity ratio	0.21	0.17	0.18
Net debt/EBITDA	0.62	0.66	0.62
Equity/assets ratio, %	50	52	51
Net working capital, % 1)	24.4	26.8	25.2
Earnings per share, basic, SEK	2.50	1.47	6.97
Earnings per share diluted, SEK	2.50	1.46	6.96
EBITDA, MSEK	5 982	4 232	23 454
Cash fl ow from operations, MSEK	+2 943	+2 815	+17 807
Funds from operations (FFO), MSEK	+4 690	+3 605	+19 119
Interest coverage ratio, %	910	693	1 106
Number of employees	41 804	38 996	40 235

1) Quarter is quarterly annualized and the annual number is based on a four quarter average

Group total	Q1 2019	Q1 2020	Q1-Q4 2019
Tax rate, %	25.3	21.9	28.6
Return on capital employed, % 1)	20.1	12.4	15.0
Return on total equity, % 1)	20.4	11.5	13.9
Return on total capital, % 1)	15.1	9.3	11.2
Shareholders' equity per share, SEK	50.4	51.5	49.3
Net debt/equity ratio	0.21	0.17	0.18
Net debt/EBITDA	0.63	0.67	0.62
Equity/assets ratio, %	49	52	51
Net working capital, % 1)	24.5	26.9	25.3
Earnings per share, basic, SEK	2.47	1.46	6.81
Earnings per share diluted, SEK	2.46	1.46	6.79
EBITDA, MSEK	5 940	4 221	23 260
Cash fl ow from operations, MSEK	+2 886	+2 808	+17 654
Funds from operations (FFO), MSEK	+4 638	+3 571	+18 865
Interest coverage ratio, %	899	686	1 091
Number of employees	41 823	39 004	40 246
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

1) Quarter is quarterly annualized and the annual number is based on a four quarter average

Sandvik presents certain fi nancial measures that are not defi ned in the interim report in accordance with IFRS. Sandvik believes that these measures provide 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 fi nancial measures in the

same way, these are not always comparable to measures used by other companies. These fi nancial measures should not be seen as a substitute for measures defi ned under IFRS. For defi nitions of key fi gures that Sandvik uses see website home.sandvik.

DISCLAIMER STATEMENT

Some statements herein are forward-looking and the actual outcome could be materially diff erent. In addition to the factors explicitly commented upon, the actual outcome could be materially aff ected by other factors, for example the eff ect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialization and technological diffi culties, supply disturbances, and major customer credit losses.

Stockholm 20 April 2020 Sandvik Aktiebolag (publ)

Stefan Widing President and CEO

The Company's Auditor has not reviewed the report for the fi rst quarter of 2020.

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 20 April 2020.

Additional information may be obtained from Sandvik Investor Relations on tel +46 8 456 14 94 (Ann-Sofi e Nordh) and +46 70 616 5019 (Anna Vilogorac).

A teleconference will be held on 20 April 2020 at 13.00 CET.

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

CALENDAR

28 April 2020 Annual General Meeting in Sandviken, Sweden 16 July 2020 Report, second quarter 2020 16 October 2020 Report, third quarter 2020 3 November 2020 Capital Markets Day in Austria