Sandvik

Earnings Release • Jan 29, 2015

PRESS RELEASE 29 JANUARY 2015

INTERIM REPORT ON THE FOURTH QUARTER AND FULL YEAR 2014

EARNINGS GROWTH AND STRONG CASH FLOW - MIXED DEMAND

CEO'S COMMENT: "Looking back at 2014, we noted

favorable performance and strong earnings growth for Sandvik Machining Solutions, Sandvik Materials Technology and Sandvik Venture. The performance of Sandvik Mining and Sandvik Construction was adversely impacted by weak markets, however, demand stabilized and we are currently implementing structural effi ciency measures to improve performance in

Olof Faxander

1. During 2014, we took actions to further optimize the Sandvik business portfolio in an eff ort to reduce earnings volatility, develop more towards fast-growing markets and yield higher returns. According to plan, we completed fi ve out of 11 unit closures within the fi rst phase of the ongoing supply chain optimization program. The program generated savings at an annual run-rate of 260 million SEK at year-end 2014, and targets a total of 800 million SEK by year-end 2015. The actions taken

will lead to a more effi cient and focused Sandvik," says Sandvik's President and CEO Olof Faxander.

"Strong cash fl ow from operations totaling 4.1 billion SEK, supported by the successful reduction in net working capital, particularly in terms of inventories. This contributed to driving the net debt to equity ratio to 0.75 in the fourth quarter, below our long-term target of 0.8. The continued focus to reduce net working capital will contribute to cash fl ow in Sandvik, thereby supporting the dividend of 3.50 SEK (3.50) per share, as proposed by the Board of Directors."

"Looking at the fourth quarter in isolation, we noted a mixed demand pattern. The underlying business activity remained largely unchanged compared with the preceding quarter, except for a slight increase in the level of caution being exercised by customers in the energy segment. In the long term, we believe in the viability of our strategy to further grow our position in the energy segment, however short-term demand is likely to be hampered by a low and volatile oil price. Global demand from the mining industry remained stable and on par with the preceding quarter."

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q1-4 2014	Q1-4 2013	CHANGE %
Order intake1)	21 286	20 794	-6	85 957	84 072	-2
Invoiced sales 1)	23 394	21 770	-1	88 821	87 328	-2
Gross profi t	8 100	6 056	+34	31 603	28 480	+11
% of invoiced sales	34.6	27.8		35.6	32.6
Operating profi t	2 623	590	+345	10 120	8 638	+17
% of invoiced sales	11.2	2.7		11.4	9.9
Adjusted operating profi t 2)	2 552	2 390	+7	10 128	10 778	-6
% of invoiced sales 2)	10.9	11.0		11.4	12.3
Profi t after fi nancial items	2 121	66	N/M	8 264	6 753	+22
% of invoiced sales	9.1	0.3		9.3	7.7
Profi t for the period	1 504	46	N/M	5 992	5 008	+20
% of invoiced sales	6.4	0.2		6.7	5.7
of which shareholders' interest	1 518	48	N/M	6 011	5 013	+20
Earnings per share, SEK 3)	1.21	0.04	N/M	4.79	4.00	+20
Return on capital employed, % 4)	13.4	12.6		13.4	12.6
Cash fl ow from operations	+4 104	+2 857	+44	+9 515	+5 133	+85
Net working capital, %	28	27		28	27

1) Change from the preceding year at fixed exchange rates for comparable units.

2) Operating profit adjusted by 2,140 million SEK for the full year 2013 and by 8 million SEK for the full year of 2014.

3) Calculated on the basis of the shareholders' share of profit for the period. No dilutive impact during the period.

4) Rolling 12 months.

Tables and calculations do not always agree exactly with the totals due to rounding.

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

N/M = non-meaningful

MARKET DEVELOPMENT AND EARNINGS

Underlying market conditions remained largely unchanged compared with the third quarter, with the exception of the energy segment, where customer lead times are longer for their investment decisions due to a low and volatile oil price. Demand from the mining industry remained stable at a low level. Sandvik Machining Solutions still benefi ted from a high activity level in the aerospace industry and robust demand in automotive. Book-to-bill was 0.91 in the fourth quarter, primarily adversly impacted by Mining Systems. The adjusted operating profi t of 2,552 million SEK grew by +7% year-on-year, and 10.9% in relation to sales (11.0%). The adjusted operating profi t was positively impacted by changed exchange rates in the amount of 270 million SEK and by 71 million SEK from two divestments in Sandvik Materials Technology. Changed metal prices had an adverse impact of -71 million SEK.

Market demand was largely on par with the preceding quarter, with the exception of the energy segment, which recorded lower demand from oil & gas customers. However, a large order valued at about 280 million SEK was received from the nuclear segment. The mining industry did not show any tangible signs of recovery for equipment and remained generally stable. The North American market remained favorable, and this was particularly notable in the automotive and aerospace segments. Europe was largely stable, albeit with regional variations, with demand in Russia remaining weak due to trade sanctions from the EU. Business activity in Asia remained consistent at a high level. Mining-related markets were persistently weak.

On a year-on-year basis, acquisitions and divestments had a positive eff ect of 2% on order intake and invoiced sales, driven by the acquisition of Varel International Energy Services Inc. (Varel). Changes in exchange rates were signifi cant, contributing 7% to order intake and invoiced sales.

Earnings amounted to 2.6 billion SEK for the quarter, or 11.2% of invoiced sales. Changed metal prices aff ected operating profi t in the amount of -71 million SEK. This was off set by a positive eff ect from divestments at Sandvik Materials Technology, the combined eff ect of 71 million SEK. Changed exchange rates contributed approximately 270 million SEK to earnings as the SEK depreciated against several major trading currencies. While administrative expenses decreased year-on-year, selling expenses increased, mainly due to changed exchange rates and the acquisition of Varel. Additionally, Sandvik Machining Solutions increased its sales and marketing eff orts compared with the year-earlier period. The savings generated by the supply chain optimization program were 65 million SEK in the fourth quarter.

Net fi nancial items amounted to -502 million SEK (-524) and earnings per share totaled 1.21 SEK (0.04) for the quarter. The guidance for net fi nancial items for 2015 is about -2.0 billion SEK.

The tax rate for the fourth quarter was 29.1% (30.0%) and the tax guidance for 2015 is 26-28% versus a full-year tax rate of 27.5% in 2014.

OPERATING PROFIT AND RETURN

EARNINGS PER SHARE

CASH FLOW AND BALANCE SHEET

Reduced working capital, primarily as a result of lower inventory levels, resulted in strong cash fl ow and a strengthened balance sheet. Consequently, the net debt/equity ratio decreased to 0.75. Capital expenditure (capex) amounted to 1.5 billion SEK in the fourth quarter and is expected to be below 5 billion SEK in 2015.

Total assets increased compared with the preceding quarter. The reason for this was the weakening of the SEK against several other trading currencies. This was partly off set by reduced inventory levels.

Working capital was reduced by about 2.0 billion SEK, while the net reduction was 1.9 billion SEK adjusted for changes in metal prices. This was the result of a planned decrease in stock levels in mainly Sandvik Materials Technology, Sandvik Mining and Sandvik Construction. All business areas curtailed purchasing activities, thereby resulting in reduced accounts payable. Accounts receivable declined, which was partly off set by lower advance payments from customers. Working capital as a percentage of invoiced sales was 28%, down on the preceding quarter primarily due to lower inventories.

Capital expenditure (capex) for the fourth quarter amounted to 1.5 billion SEK and 4.7 billion SEK for full-year 2014. Investments were higher in the fourth quarter due to normal seasonality.

Net debt declined to 31 billion SEK compared with 33 billion SEK in the preceding quarter. The decline was mainly attributable to reduced working capital and consistent earnings. Consequently, the net debt/equity ratio decreased to 0.75 compared with 0.87 in the preceding quarter. Interest-bearing debt with short-term maturity was a low 7% of total debt.

The decrease in working capital combined with earnings contributed signifi cantly to cash fl ow. Cash fl ow from operations thus amounted to 4,104 million SEK (2,857).

NET WORKING CAPITAL

CASH FLOW FROM OPERATIONS

Cash flow Q3 2013 and Rolling 12 months adjusted for tax payment related to Intellectual Property rights, about -5,800 million SEK.

NET DEBT

SANDVIK MINING

OVERALL STABLE DEMAND ALBEIT AT LOW LEVEL

CONTINUED REDUCTION IN NET WORKING CAPITAL

UNIT CLOSURE - SUPPLY CHAIN OPTIMIZATION

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-17	-9
Structure, %	0	0
Currency, %	+5	+5
TOTAL, %	-13	-4

Business conditions in the fourth quarter remained largely unchanged for Sandvik Mining. Demand from mining customers for equipment, mining systems and aftermarket remained stable and was similar to previous quarters in 2014. During the quarter, the crushing production unit in Bergneustadt, Germany, was closed as part of the supply chain optimization program.

Market demand remained relatively unchanged in the fourth quarter for much of Sandvik Mining's business. The low investment levels in the global mining industry persisted, particularly for coal and iron ore. Nevertheless, demand for mining equipment has remained stable over the past four quarters, albeit far below the peak levels of 2012. Demand in the aftermarket business and for mining systems remained stable compared with the preceding quarter. Order intake amounted to 5,695 million SEK (6,514), up 1% compared with the preceding quarter at fi xed exchange rates for comparable units. Book-to-bill was 0.81 in the fourth quarter, primarily adversly impacted by Mining Systems. Invoiced sales amounted to 7,039 million SEK (7,334), with mining systems making a strong contribution.

Earnings adjusted for nonrecurring charges amounted to 644 million SEK (770), or 9.2% of invoiced sales (10.5%).

Changed exchange rates made a positive contribution to operating profi t of about 20 million SEK compared with the year-earlier period and had a negligible impact compared with the preceding quarter. Low sales and production rates continued to impact operating profi t as a result of the underutilization of fi xed assets. Inventories were signifi cantly reduced by nearly 400 million SEK, resulting in strong cash fl ow. Provisions for stock obsolescence and bad debt losses were negligible. Return on capital employed for the most recent 12-month period was 16.7% (18.5).

The workforce was reduced by a further 92 from the preceding quarter due to the ongoing supply chain optimization program and the business area's continued eff orts to reduce costs. The cost saving actions will be balanced to effi ciently address a weak business climate without negatively aff ecting the long-term growth ambitions of Sandvik Mining.

The activities to optimize the global supply chain progressed according to plan with the closure of one unit, Bergneustadt in Germany. In total, Sandvik Mining closed two units during 2014, generating savings of about 15 million SEK in the fourth quarter, with an annual run-rate of 60 million SEK at the end of 2014. Additional closures are planned for 2015.

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q3 2014	CHANGE %	Q1-4 2014	CHANGE %
Order intake	5 695	6 514	-17 *	5 566	+1 *	23 533	-15 *
Invoiced sales	7 039	7 334	-9 *	6 806	+2 *	26 831	-12 *
Operating profit	644	-480	NA	614	+5	2 398	-13
% of invoiced sales	9.2	-6.5		9.0		8.9
Adjusted operating profit**	644	770	-16	614	+5	2 398	-40
% of invoiced sales**	9.2	10.5		9.0		8.9
Return on capital employed, %***	16.7	18.5		8.8		16.7
Number of employees	11 815	12 965	-9	11 907	-1	11 815	-9

* At fixed exchange rates for comparable units

** Operating profit adjusted for nonrecurring charges by about 1,250 million SEK for Q4 2013

SANDVIK MACHINING SOLUTIONS

RECORD-HIGH INVOICING IN UNCHANGED MARKET TREND

STRONG CASH FLOW

PROGRESS ON SUPPLY CHAIN OPTIMIZATION

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	+3	+3
Structure, %	+0	+0
Currency, %	+7	+7
TOTAL, %	+11	+10

and Brazil in particular. The number of working days had a negligible eff ect on order intake and invoiced sales.

Demand for Sandvik Machining Solutions' products improved year-on-year. In North America, demand remained favorable, while business activity in Asia remained constant at a healthy level and demand in Europe was generally stable, although Russia continued to have a negative impact. On a sequential basis, business conditions remained largely unchanged, adjusted for normal seasonal variations. Order intake amounted to 8.1 billion SEK, up 3% compared with the year-earlier period at fi xed exchange rates for comparable units. Operating profi t amounted to 1,622 million SEK (1,084), or 20.0% (14.7) of invoiced sales.

Market demand in the automotive segment remained strong in North America and Asia, while Europe was stable at lower growth rates. Customer activity in the aerospace segment remained favorable. From a geographical perspective, Russian demand continued to be negatively impacted by trade sanctions in Europe, and the weak trend of the Russian Ruble (RUB). In contrast, the UK and Italian markets were strong, and Germany was stable on a sequential basis. The market situation remained robust in North America, with continued strong demand from the automotive and aerospace industries. Asian demand remained fi rm, with China noting a high demand level albeit with lower growth rates. As observed earlier in the year, adverse macroeconomic conditions were evident in South America

Earnings adjusted for nonrecurring charges amounted to 1,622 million SEK (1,434) and the adjusted operating profi t margin increased to 20.0% (19.5%). Changed exchange rates made a positive contribution of about 130 million SEK compared with the year-earlier period. Production rates were largely unchanged from the preceding quarter, and inventory levels remain in line with current demand. Net working capital in relation to invoiced sales was 24% (24) and cash fl ow was strong. Compared with the year-earlier period, sales activities and R&D investments increased, however, they remained fl at sequentially, positioning the business area for future profi table growth. These strategic investments have now reached the targeted level. Return on capital employed for the most recent 12-month period was 29.5% (26.3).

Activities to optimize the global supply chain progressed according to plan with the closure of two units fi nalized in the quarter: Piacenza in Italy and Featherstone in the UK. The total supply chain optimization program generated savings of about 30 million SEK in the fourth quarter, with an annual run-rate of 120 million SEK at the end of 2014. Additional closures are planned for 2015.

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q3 2014	CHANGE %	Q1-4 2014	CHANGE %
Order intake	8 129	7 354	+3 *	7 711	+3 *	31 328	+4 *
Invoiced sales	8 122	7 363	+3 *	7 658	+4 *	30 856	+4 *
Operating profit	1 622	1 084	+50	1 496	+8	6 159	+18
% of invoiced sales	20.0	14.7		19.5		20.0
Adjusted operating profit**	1 622	1 434	+13	1 496	+8	6 159	+8
% of invoiced sales**	20.0	19.5		19.5		20.0
Return on capital employed, %***	29.5	26.3		27.7		29.5
Number of employees	18 927	19 055	-1	18 906	+0	18 927	-1

* At fixed exchange rates for comparable units

** Operating profit adjusted for nonrecurring charges by about 350 million SEK for Q4 2013

SANDVIK MATERIALS TECHNOLOGY

REDUCED NET WORKING CAPITAL DRIVES CASH FLOW

MAJOR ORDER IN NUCLEAR POWER

INCREASED UNCERTAINTY IN OIL & GAS SEGMENT

GROWTH

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-9	+12
Structure, %	-6	-6
Currency, %	+5	+5
TOTAL, %	-10	+12
Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine

Business conditions for Sandvik Materials Technology were largely on a par with the preceding quarter, except for the adoption of a more tentative approach by customers in the energy segment. Changed metal prices negatively aff ected earnings by -71 million SEK. Adjusted for metal price eff ects and the capital gain from divestments of 71 million SEK, operating profi t amounted to 330 million SEK (430), or 8.8% (12.8) of invoiced sales in the fourth quarter. The operating margin was negatively aff ected by the under-absorption of fi xed costs due to inventory reductions. The reported operating margin was 8.8% (10.4).

Market demand for Sandvik Materials Technology was in line with the levels noted in the preceding quarter for most industry segments. However, the lead times for investment decisions of customers in the energy segment are longer due to a low and volatile oil price. Nevertheless, no order book cancellations were received. During the quarter, a major order was secured for steam generator tubes for the nuclear industry from a customer in Asia. The value of the order was about 280 million SEK. Demand for the standard product range remained challenging, particularly in Europe. Order intake increased signifi cantly in North America versus a low level in the third quarter due to the timing of orders and favorable business conditions. Demand in Asia remained unchanged. Order intake amounted to 3,296 million SEK (3,672) and invoiced sales to 3,758 million SEK (3,360).

Earnings were signifi cantly negatively aff ected by the under-absorption of fi xed cost resulting from low production rates as inventories were reduced from an excessively high level at the beginning of the fourth quarter. In addition, metal price changes, predominately for nickel, adversely aff ected results by -71 million SEK, while the capital gain from divestments had a positive impact of 71 million SEK. The reported operating margin was 8.8% in the fourth quarter. Adjusted for metal-price eff ects and the capital gain from divestments, earnings amounted to 330 million SEK (430), or 8.8% (12.8) of invoiced sales. Changed exchange rates had a positive impact on earnings of about 90 million SEK compared with the year-earlier period and about 30 million SEK compared with the preceding quarter. Return on capital employed for the most recent 12-month period was 13.7% (9.8), or 11.5% adjusted for metal-price eff ects.

the total effect.

In line with the strategic direction to focus on core business and attractive growth segments, such as energy and energy effi ciency, the process to exit non-core operations continued. During the fourth quarter, divestments of the distribution business in Australia and New Zealand and the power spring business in the US and Mexico were fi nalized. The total positive contribution to cash fl ow from the divestments amounted to about 460 million SEK, the majority of which was recognized in the fourth quarter. The combined capital gain from the divestments amounted to 71 million SEK. In December, a decision was also made to close down the die cutting operations in China, which reported sales of 75 million SEK in 2013 and manufactures cutting rules for the packaging industry. The closure is expected to be fi nalized during the second quarter of 2015.

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q3 2014	CHANGE %	Q1-4 2014	CHANGE %
Order intake	3 296	3 672	-9 *	3 335	-3 *	14 713	+10 *
Invoiced sales	3 758	3 360	+12 *	3 735	-1 *	14 907	+6 *
Operating profit	330	350	-6	482	-32	1 880	+48
% of invoiced sales	8.8	10.4		12.9		12.6
Adjusted operating profit**	259	350	-26	482	-46	1 809	+42
% of invoiced sales**	6.9	10.4		12.9		12.1
Return on capital employed, %***	13.7	9.8		14.1		13.7
Number of employees	6 914	7 113	-3	7 132	-3	6 914	-3

* At fixed exchange rates for comparable units

** Operating profit adjusted for capital gain from divestments by about -71 million SEK for Q4 2014

SANDVIK CONSTRUCTION

CHALLENGING MARKET CONDITIONS

CONTINUED INVENTORY REDUCTION

EFFICIENCY MEASURES ONGOING

GROWTH
Q4	ORDER
	INTAKE

	INTAKE	SALES
Price/volume, %	+6	-7
Structure, %	0	0
Currency, %	+7	+8
TOTAL, %	+14	-0
Change compared to same quarter last year.

INVOICED

The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.

The overall level of demand remained depressed for Sandvik Construction. Order intake growth in the fourth quarter was supported by an order cancellation in the year-earlier period. Asia, and particularly China, remained challenging in terms of equipment demand. Production levels were low – not least due to structural inventory reductions underpinning cash fl ow generation – and adversely impacting earnings in the fourth quarter. Adjusted operating profi t amounted to 4 million SEK (-23), or 0.2% (-1.0). Strategic initiatives to fundamentally improve the long term performance are progressing according to plan, with the closure of one large unit to be fi nalized during the fi rst quarter of 2015.

Market demand generally remained stable at a low level for Sandvik Construction. Reported order intake grew by 6% year-on-year, although when adjusted for the order cancellation noted in the fourth quarter of 2013, order intake was -1% year-on-year. The earlier noted pattern persisted with relatively higher underlying market activity for surface drilling and tunneling, while the climate was particularly harsh within mobile crushing, notably so in China. Europe remained stable at a low level, with Northern regions outpacing their Southern counterparts, where smaller customers continue to face fi nancing diffi culties and investment decisions are being postponed. Some signs of increased market activity were noted in North America. Demand for rock tools, consumables and services was largely unchanged as customer production rates remained intact.

Earnings recovered fromthe loss recorded in the year-earlier period. However, profi tability suff ered from production rates being lower than sales, predominantly in mobile crushing, due to inventory reductions, weak volumes in China and adverse geographical and product mixes. Changed exchange rates impacted operating profi t positively by 15 million SEK. The intense focus on reducing inventories resulted in a net working capital to sales ratio of 26%, down sequentially from 28%. Cash fl ow from operations amounted to 408 million SEK.

To improve long term profi tability Sandvik Construction is progressing according to plan with the closure of the mobile crushing unit in Swadlincote, UK. The majority of actions have been implemented by end of fourth quarter, with the fi nal closure to be realized during the fi rst quarter. The supply chain optimization program generated savings of about 20 million SEK in the fourth quarter, with an annual run-rate of 80 million SEK at the end of 2014.

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q3 2014	CHANGE %	Q1-4 2014	CHANGE %
Order intake	2 038	1 792	+6 *	2 184	-9 *	8 571	-2 *
Invoiced sales	2 169	2 174	-7 *	2 232	-5 *	8 553	-4 *
Operating profit	4	-223	NA	1	300	45	-59
% of invoiced sales	0.2	-10.2		0.0		0.5
Adjusted operating profit**	4	-23	NA	1	300	45	-85
% of invoiced sales**	0.2	-1.0		0.0		0.5
Return on capital employed, %***	0.8	1.9		-3.1		0.8
Number of employees	2 815	3 147	-11	2 967	-5	2 815	-11

* At fixed exchange rates for comparable units

** Operating profit adjusted for nonrecurring charges by about 200 million SEK for Q4 2013

SANDVIK VENTURE

GENERALLY STABLE MARKET ENVIRONMENT

STRONG CASH FLOW

ADVERSE IMPACT ON DEMAND FROM LOW OIL PRICE

GROWTH

Q4	ORDER	INVOICED
	INTAKE	SALES
Price/volume, %	-7	-1
Structure, %	+44	+42
Currency, %	+9	+9
TOTAL, %	+46	+50
Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.

The overall market situation was stable for Sandvik Venture's products and services in the fourth quarter, with the exception of Varel International Energy Services Inc. (Varel), for which demand was somewhat adversely impacted by lower oil prices. Order intake increased year-on-year and amounted to 2.1 billion SEK (1.5). The reported fi nancial outcome was signifi cantly aff ected by the acquisition of Varel in May. Invoiced sales amounted to 2.3 billion SEK (1.5). Operating profi t amounted to 335 million SEK (309) or 14.6% (20.1) of invoiced sales.

Market demand was mixed for Sandvik Venture's product areas, with a generally stable market sentiment noted, except for slightly weaker demand in the energy segment. Demand from the oil and gas sector was aff ected by the lower oil price, which mainly impacted Varel, but also Hyperion to some extent. Sandvik Process Systems' order intake decreased sequentially following a strong third quarter. Sandvik Hyperion reported strong demand, especially in North America and Asia. Demand for products from Wolfram was stable, although the price of tungsten continued to decline during the quarter. Order intake for Sandvik Venture amounted to 2,123 million SEK (1,456), and invoiced sales to 2,301 million SEK (1,538). The signifi cant increases are attributable to the acquisition of Varel. Order intake and invoiced sales decreased by 7% and 1%, respectively, at fi xed exchange rates for comparable units.

Earnings amounted to 335 million SEK (309) or 14.6% (20.1) of invoiced sales, including purchase price allocations from the Varel acquisition, which impacted the operating margin by about 3%. Further details about this acquisition are provided on page 10. Operating profi t for Sandvik Process Systems declined somewhat year-on-year, partly due to an unfavorable product mix. Sandvik Hyperion and Varel made a signifi cant contribution to earnings. Wolfram maintained production rates below the level of sales to reduce inventory levels. Although this adversely aff ected earnings, it contributed to a strong cash fl ow for the business area. Changes in exchange rates had a positive eff ect of 15 million SEK on earnings compared with the year-earlier period and were insignifi cant compared with the preceding quarter. Return on capital employed for the most recent 12-month period was 7.4% (9.6).

To protect profi tability, Varel is already in the process of implementing cost-cutting measures given the reduced demand resulting from lower oil prices. This is being carried out in a balanced manner while maintaining the fl exibility to capture growth when demand rebounds.

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2013	CHANGE %	Q3 2014	CHANGE %	Q1-4 2014	CHANGE %
Order intake	2 123	1 456	-7 *	2 182	-4 *	7 795	+4 *
Invoiced sales	2 301	1 538	-1 *	2 155	+5 *	7 658	+5 *
Operating profit	335	309	+8	133	+153	888	+47
% of invoiced sales	14.6	20.1		6.2		11.6
Adjusted operating profit**	335	309	+8	137	+146	967	+20
% of invoiced sales**	14.6	20.1		6.3		12.6
Return on capital employed, %***	7.4	9.6		7.8		7.4
Number of employees	4 074	2 635	+4 *	4 149	-2	4 074	+4 *

* At fixed exchange rates for comparable units.

**Operating profit adjusted by 75 million SEK for costs related to the Varel acqusition in Q2 2014 and by 4 million SEK in Q3 2014.

PARENT COMPANY

For full-year 2014, invoiced sales amounted to 16,475 million SEK (15,873) and the operating result was -1,165 million SEK (-687).

Income from shares in Group companies consists primarily of dividends and Group contributions from these and

amounted 8,224 million SEK (14,158) for full-year 2014. Interest-bearing liabilities, less cash and cash equivalents and interest-bearing assets, amounted to 9,561 million SEK (19,462). Investments in property, plant and machinery amounted to 1,227 million SEK (1,257).

ACQUISITIONS AND DIVESTMENTS

On 21 May 2014, Sandvik acquired 100% of the shares in Varel International Energy Services Inc. (Varel). The final consideration, following adjustments under the agreement, included settlements of loans totaling 2,265 million SEK and a cash payment of 2,834 million SEK, net of cash.

Varel is a global supplier of drilling solutions focusing on drill bits and downhole products for well construction and well completion. The key customer segment can be found in the unconventional oil and gas sector, with some exposure to the mining and construction industries.

During the period 21 May - 31 December 2014, Varel contributed invoiced sales of 1,547 million SEK and operating profit of 240 million SEK to Sandvik's results, excluding acquisition-related costs of 79 million SEK and amortization on fair-value adjustments of 261 million SEK. If the acquisition had taken place 1 January 2014, sales are estimated to have amounted to 2,457 million SEK and operating profit to 347 million SEK, or about 14% of invoiced sales, excluding acquisition-related costs and amortization on fair value adjustments.

The following summarizes the recognized amounts of assets acquired and liabilities assumed at the acquisition date.

Intangible Assets	1,929
Property, Plant and Equipment	291
Financial assets	242
Inventories	725
Current receivables	568
Cash and cash equivalents	118
Non-current interest bearing liabilities	-2,279
Non-current non-interest bearing liabilities	-734
Current non-interest bearing liabilities	-347
Identifiable assets and liabilities	513
Goodwill	2,439
Consideration	2,952

The goodwill is supported by Varel's growth and profitability prospects. Varel offers Sandvik a strong brand, reputation and extensive presence in the oil and gas sector. Sandvik will be able to increase the competitiveness of Varel through the introduction to new geographical markets, while providing financial strength. Additionally, Varel will benefit from Sandvik's extensive R&D capabilities and technical know-how, which will further develop the existing product offering as well as product development and the introduction of new products and service offering

The fair value of assets and liabilities was updated during the quarter and has now been finalized.

ACQUISITIONS DURING THE MOST RECENT 12-MONTH PERIOD

	COMPANY/UNIT	CLOSING DATE	ANNUAL REVENUE MSEK	NO OF EMPLOYEES
SANDVIK VENTURE	Varel Intl Energy Services Inc.	21 May 2014	2,300	1,300

DIVESTMENTS DURING THE MOST RECENT 12-MONTH PERIOD

The divestment of Sandvik Materials Technology's distribution business in Australia and New Zealand was fi nalized on 1 October 2014 and recorded in the fourth quarter.

The divestment of Sandvik Materials Technology's power spring business in the US and Mexico was on 31 December 2014 and recorded in the fourth quarter.

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER

• In line with the strategic direction to focus on core business and attractive growth segments, such as energy and energy effi ciency, Sandvik Materials Technology continued to exit non-core operations. In the fourth quarter, Sandvik Materials Technology closed the divestment of the distribution business in Australia and New Zealand as well as the power spring business in the US and Mexico. The total positive contribution to cash fl ow from the divestments amounted to about 460 million SEK, most of which was recognized in the fourth quarter. The combined capital gain from the divestments amounted to 71 million SEK.

On 1 October, Sandvik Materials Technology closed the divestment of its distribution business in Australia and New Zealand to Vulcan Steel Ltd. The divested operations comprise leading processors and distributors of stainless steel products and other corrosion and wear-resistant products. Annual invoiced sales for the business concerned amount to about 930 million SEK, with an operating margin of about 7%. The total number of employees in the business is 190, of which 125 in Australia and 65 in New Zealand. The divested operations have only a limited connection to the remainder of the business area, with a minor portion of the total sales being derived from Sandvik's own production system. The divestment has no impact on other Sandvik business areas in these countries. As part of the transaction, a distribution agreement has been put in place between Sandvik and the new owner to enable continued deliveries of Sandvik Materials Technology products to the region.

On 31 December, Sandvik Materials Technology closed the divestment of its power spring business in the US and Mexico to Lesjöfors AB. The divested business was earlier part of the Strip, Wire & Heating Technology product area at Sandvik Materials Technology. The divested operations have only limited connection to the remainder of the business area and the raw materials are sourced externally. Invoiced sales for the business concerned amounted to about 15 million USD in 2013 and the total number of employees encompassed is approximately 60.

On 1 December, Sandvik Materials Technology announced its decision to close down the die cutting operations in China, which reported sales of 75 million SEK in 2013 and manufactures cutting rules for the packaging industry. The closure is expected to be fi nalized during the second quarter of 2015.

SIGNIFICANT EVENTS AFTER THE FOURTH QUARTER

• January 2015, the Board of Directors of Sandvik AB proposed that the Annual General Meeting resolve on a longterm incentive program for 2015 in the form of a performance share program on substantially the same terms and conditions as the 2014 long-term incentive program. The proposal will be included in the notice convening the Annual General Meeting.

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 2014.

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

FULL YEAR 2014

During 2014, the fi rst phase of the supply chain optimization program progressed according to plan, with actions taken to optimize the operational structure of Sandvik. Some 11 unit closures were initiated, of which the closure of fi ve was completed. The strategy of active portfolio management continued with the acquisition of Varel, a manufacturer of drill bits primarily for the oil and gas industry. The divestment took place of the distribution business in Australia and New Zealand as well as the power spring business in the US and Mexico, both within Sandvik Materials Technology. The global market situation in 2014 remained largely unchanged compared with 2013. The positive demand trend continued throughout the year in North America, while it was stable in Asia and Europe. Demand in the southern hemisphere was characterized by subdued investment levels in the mining industry. Sandvik's order intake amounted to 85,957 million SEK (84,072), a decrease of 2% at fi xed exchange rates for

RFR 2 Reporting by a legal entity, issued by the Swedish Financial Reporting Board.

IASB has published new standards that are eff ective as of 2014 or later. The new standards eff ective as of 2014 are IFRS 10, Consolidated Financial Statements, IFRS 11, Joint arrangements and IFRS 12, Disclosure of Interests in Other Entities. The standards have not had any material impact on the consolidated accounts.

comparable units. Invoiced sales were 88,821 million SEK (87,328), down 2% at fi xed exchange rates for comparable units. The decline was attributable to higher invoicing in the year-earlier period due to a stronger order backlog for mining equipment in particular. Operating profi t was negatively impacted by lower invoiced sales and production rates, and thus amounted to 10,120 million SEK (8,638) for full-year 2014. In 2013, profi tability was signifi cantly negatively impacted by non-recurring charges. The operating margin was 11.4% (9.9) of invoiced sales. Changed exchange rates had a negative impact of 40 million SEK on earnings during the year, compared with the year-earlier period, while changed metal prices made a positive contribution of 302 million SEK, mostly resulting from increased nickel prices. Profi t after fi nancial items was 8,264 million SEK (6,753) and profi t for the period amounted to 5,992 million SEK (5,008). Cash fl ow from operations was +9,515 million SEK (+5,133).

GUIDANCE

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 outcomes is provided in the table below:

CAPEX	Estimated at below 5 billion SEK for 2015.
CURRENCY EFFECTS	In view of currency rates at mid-January, it is estimated that operating profi t for the fi rst quarter of 2015 will be positively aff ected by about 600 million SEK compared with the fi rst quarter of 2014.
METAL PRICE EFFECTS	In view of currency rates, stock levels and metal prices at the end of December, it is estimated that operating profi t for the fi rst quarter of 2015 will be marginally aff ected.
NET FINANCIAL ITEMS	Estimated at about -2.0 billion SEK in 2015.
TAX RATE	Estimated at about 26-28% for 2015.

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

Sandvik is a global group represented in 130 countries and as such is exposed to a number of commercial and fi nancial risks. Accordingly, risk management is an important process for Sandvik in its work to achieve established targets. Effi cient risk management forms part of the ongoing review

of the business and forward-looking assessment of operations. Sandvik's long-term risk exposure is assumed not to deviate from the inherent exposure associated with Sandvik's ongoing business operations. For a more in-depth analysis of risks, refer to Sandvik's Annual Report for 2013.

FINANCIAL REPORTS SUMMARY

THE GROUP

INCOME STATEMENT

MSEK	Q4 2014	Q4 2013	CHANGE %	Q1-4 2014	Q1-4 2013	CHANGE %
Revenue	23 394	21 770	+7	88 821	87 328	+2
Cost of sales and services	-15 294	-15 714	-3	-57 218	-58 848	-3
Gross profit	8 100	6 056	+34	31 603	28 480	+11
% of revenues	34.6	27.8		35.6	32.6
Selling expenses	-3 144	-2 925	+7	-11 867	-11 184	+6
Administrative expenses	-1 672	-1 772	-6	-6 719	-6 290	+7
Research and development costs	-723	-782	-8	-2 629	-2 661	-1
Other operating income and expenses	62	13	+390	-268	293	NA
Operating profit	2 623	590	+345	10 120	8 638	+17
% of revenues	11.2	2.7		11.4	9.9
Net financial items	-502	-524	-4	-1 856	-1 885	-2
Profit after financial items	2 121	66	N/M	8 264	6 753	+22
% of revenues	9.1	0.3		9.3	7.7
Income tax	-617	-20	N/M	-2 272	-1 745	+30
Profit for the period	1 504	46	N/M	5 992	5 008	+20
% of revenues	6.4	0.2		6.7	5.7
Items that will not be reclassified to profit or loss
Actuarial gains/(losses) on defined benefit pension plans	-712	379		-1 847	1 039
Tax relating to items that will not be reclassified	171	-120		452	-361
	-541	259		-1 395	678
Items that will be reclassified subsequently to profit or loss
Foreign currency translation differences	1 403	760		3 120	142
Cash flow hedges	-95	-70		-381	-205
Tax relating to items that may be reclassified	16	16		78	45
		706			-18
	1 324			2 817
		965			660
Total other comprehensive income	783			1 422
Total comprehensive income	2 286	1 011		7 414	5 668
Profit for the period attributable to
Owners of the Parent	1 518	48		6 011	5 013
Non-controlling interests	-14	-2		-19	-5
Total comprehensive income attributable to
Owners of the Parent	2 305	1 012		7 432	5 671
Non-controlling interests	-18	-1		-17	-3
Earnings per share, SEK *	1.21	0.04		4.79	4.00

* No dilution effects during the period

THE GROUP

BALANCE SHEET

MSEK	31 DEC 2014	31 DEC 2013	CHANGE %
Intangible assets	18 323	11 947	+53
Property, plant and equipment	27 609	25 255	+9
Financial assets	8 279	8 150	+2
Inventories	24 056	23 318	+3
Current receivables	21 725	20 136	+8
Cash and cash equivalents	6 327	5 076	+25
Total assets	106 319	93 882	+13
Total equity	36 672	33 610	+9
Non-current interest-bearing liabilities	41 426	28 377	+46
Non-current non-interest-bearing liabilities	3 584	3 263	+10
Current interest-bearing liabilities	2 679	7 047	-62
Current non-interest-bearing liabilities	21 958	21 585	+2
Total equity and liabilities	106 319	93 882	+13
Net working capital *	25 250	23 281	+8
Loans	36 907	30 099	+23
Net debt **	30 742	25 184	+22
Net debt to equity ratio***	0.7	0.7	-
Non-controlling interests in total equity	134	100	+35

* Inventories plus trade receivables excl. prepaid income taxes, reduced by non-interest-bearing liabilities excl. tax liabilities. ** Current and non-current interest-bearing liabilities excluding net provisions for pensions, less cash and cash equivalents.

*** Equity excluding accumulated actuarial gains/losses on defined benefit pension plans after tax.

CHANGE IN TOTAL EQUITY

MSEK	EQUITY RELATED TO OWNERS OF THE PARENT	NON-CONTROLLING INTEREST	TOTAL EQUITY
Opening equity, 1 January 2013	32 429	107	32 536
Total comprehensive income for the period	5 671	-3	5 668
Personnel options program	-15	-	-15
Hedge of personnel options program	-185	-	-185
Dividends	-4 390	-4	-4 394
Closing equity, 31 December 2013	33 510	100	33 610
Opening equity, 1 January 2014	33 510	100	33 610
Total comprehensive income for the period	7 432	-17	7 415
Non-controlling interest in acquired companies	-	33	33
Non-controlling interest new stock issue	-	23	23
Personnel options program	-80	-	-80
Hedge of personnel options program and other	66	-	66
Dividends	-4 390	-5	-4 395
Closing equity, 31 December 2014	36 538	134	36 672

THE GROUP

CASH FLOW STATEMENT

MSEK	Q4 2014	Q4 2013	Q1-4 2014	Q1-4 2013
Cash flow from operating activities
Income after financial income and expenses	2 121	66	8 264	6 753
Adjustment for depreciation, amortization and impairment losses	1 068	1 427	4 145	4 690
Adjustment for items that do not require the use of cash etc.	-431	587	-1 114	109
Income tax paid	-531	-469	-1 899	-7 816
Cash flow from operations before changes in working capital	2 227	1 611	9 396	3 736
Changes in working capital
Change in inventories	1 418	1 063	1 464	1 908
Change in operating receivables	1 593	58	778	1 109
Change in operating liabilities	-1 010	260	-1 755	-1 345
Cash flow from changes in working capital	2 001	1 381	487	1 672
Investments in rental equipment	-179	-165	-561	-499
Divestments of rental equipment	55	30	193	224
Cash flow from operations	4 104	2 857	9 515	5 133
Cash flow from investing activities
Acquisitions of companies and shares, net of cash	0	-222	-2 834	-489
Disposal of discontinued operations	460	-	460	-
Investments in tangible assets	-1 278	-1 202	-3 820	-3 627
Proceeds from sale of tangible assets	6	93	230	141
Investments in intangible assets	-269	-340	-839	-796
Proceeds from sale of intangible assets	0	0	8	9
Other investments, net	-12	69	-44	238
Cash flow from investing activities	-1 093	-1 602	-6 839	-4 524
Net cash flow after investing activities	3 011	1 255	2 676	609
Cash flow from financing activities
Change in interest-bearing debt	-1 748	789	2 758	-4 871
Dividends paid	-5	-4	-4 395	-4 394
Cash flow from financing activities	-1 753	785	-1 637	-9 265
Cash flow for the period	1 258	2 040	1 039	-8 656
Cash and cash equivalents at beginning of the period	4 988	3 023	5 076	13 829
Exchange-rate differences in cash and cash equivalents	81	13	212	-97
Cash and cash equivalents at the end of the period	6 327	5 076	6 327	5 076

FINANCIAL INSTRUMENTS, MSEK	CARRYING AMOUNT		FAIR VALUE
	31 DEC 2014	31 DEC 2013	31 DEC 2014	31 DEC 2013
Assets measured at fair value*	963	911	963	911
Assets measured at amortized cost	21 883	19 346	21 883	19 346
Liabilities measured at fair value*	1 577	721	1 577	721
Liabilities measured at amortized cost**	43 951	37 012	46 926	38 287

* Relates to derivatives

** The diff erence between carrying amount and fair value refers to borrowings.

Sandvik measures fi nancial instruments at fair value or amortized cost in the balance sheet depending on their classifi cation. In addition to net debt, fi nancial instruments include accounts receivable and accounts payable. Financial instruments measured at fair value in the balance sheet are measured using valuation techniques that are only using observable market data and thus belong to level 2 in the fair-value hierarchy. A description of the applied valuation techniques and the inputs used in the fair value measurement is described in the last published Annual Report.

THE PARENT COMPANY

INCOME STATEMENT

MSEK	Q1-4 2014	Q1-4 2013
Revenue	16 475	15 873
Cost of sales and services	-12 042	-12 137
Gross profit	4 433	3 736
Selling expenses	-662	-514
Administrative expenses	-3 174	-2 863
Research and development costs	-1 335	-1 343
Other operating income and expenses	-427	297
Operating profit	-1 165	-687
Income from shares in Group companies	8 224	14 158
Income from shares in associated companies	10	10
Interest income/expenses and similar items	-980	-1 594
Profit after financial items	6 089	11 887
Appropriations	-	-1
Income tax expense	-237	-5 310
Profit for the period	5 852	6 576

BALANCE SHEET

MSEK	31 DEC 2014	31 DEC 2013	CHANGE %
Intangible assets	8	4	+100
Property, plant and equipment	7 740	7 429	+4
Financial assets	46 370	40 080	+16
Inventories	3 591	3 638	-1
Current receivables	17 279	17 668	-2
Cash and cash equivalents	1	0	-
Total assets	74 989	68 819	+9
Total equity	28 196	26 761	+5
Untaxed reserves	4	4	0
Provisions	600	533	+13
Non-current interest-bearing liabilities	25 761	15 759	+63
Non-current non-interest-bearing liabilities	47	75	-37
Current interest-bearing liabilities	8 478	19 744	-57
Current non-interest-bearing liabilities	11 903	5 943	+100
Total equity and liabilities	74 989	68 819	+9
Pledged assets	-	-	-
Contingent liabilities	15 938	13 339	+19
Interest-bearing liabilities and provisions minus cash and
cash equivalents and interest-bearing assets	9 561	19 462	-51
Investments in fixed assets	1 227	1 257	-2

MARKET OVERVIEW, THE GROUP

ORDER INTAKE AND INVOICED SALES PER MARKET AREA FOURTH QUARTER 2014

	ORDER INTAKE		CHANGE *	SHARE	INVOICED SALES	CHANGE *	SHARE
MARKET AREA	MSEK	%	%1)	%	MSEK	%	%
THE GROUP
Europe	8 312	-3	+2	38	8 673	+0	38
North America	4 374	+4	+4	21	4 733	+5	20
South America	1 429	-24	+26	7	1 971	+1	8
Africa/Middle East	1 927	-9	-9	9	2 335	+1	10
Asia	4 245	-2	-9	20	4 526	-7	19
Australia	999	-28	-28	5	1 156	-14	5
Total	21 286	-6	-2	100	23 394	-1	100
SANDVIK MINING
Europe	775	+46	+46	14	724	-18	11
North America	839	-7	-7	15	877	-11	12
South America	786	-37	+45	14	1 336	+1	19
Africa/Middle East	1 380	-14	-14	24	1 648	-4	23
Asia	1 051	-19	-19	18	1 450	-13	21
Australia	864	-33	-33	15	1 004	-15	14
Total	5 695	-17	-7	100	7 039	-9	100
SANDVIK MACHINING SOLUTIONS
Europe	4 353	+2	+2	53	4 310	+1	52
North America	1 821	+11	+11	22	1 843	+12	23
South America	236	-7	-7	3	223	-9	3
Africa/Middle East	56	-18	-18	1	48	-26	1
Asia	1 609	+2	+2	20	1 645	+3	20
Australia	54	+0	+0	1	53	-3	1
Total	8 129	+3	+3	100	8 122	+3	100
SANDVIK MATERIALS TECHNOLOGY
Europe	1 521	-32	-15	46	1 931	+14	52
North America	813	+11	+11	25	1 063	+11	28
South America	59	+17	+17	2	60	-7	2
Africa/Middle East	74	+91	+91	2	92	+68	2
Asia	819	+49	-1	25	594	+7	16
Australia	10	+4	+4	0	18	+6	0
Total	3 296	-9	-6	100	3 758	+12	100
SANDVIK CONSTRUCTION
Europe	834	+41	+41	41	802	-9	38
North America	346	-3	-3	17	376	+10	17
South America	214	-7	-7	10	230	+9	11
Africa/Middle East	224	+24	+24	11	330	+22	15
Asia	402	-25	-25	20	399	-29	18
Australia	18	-53	-53	1	32	-55	1
Total	2 038	+6	+6	100	2 169	-7	100
SANDVIK VENTURE
Europe	817	-12	-12	39	894	-4	40
North America	564	-6	-6	27	583	+8	25
South America	135	+160	+160	6	122	+28	5
Africa/Middle East	193	-43	-43	9	218	+3	9
Asia	363	-5	-5	17	438	-3	19
Australia	51	+52	+52	2	46	+16	2
Total	2 123	-7	-7	100	2 301	-1	100

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

1) Excluding major orders.

THE GROUP

ORDER INTAKE BY BUSINESS AREA

	Q4	Q1-4	Q1	Q2	Q3	Q4		CHANGE Q4	Q1-4
MSEK	2013	2013	2014	2014	2014	2014	%	% 1)	2014
Sandvik Mining	6 514	27 882	6 055	6 217	5 566	5 695	-13	-17	23 533
Sandvik Machining Solutions	7 354	28 715	7 719	7 768	7 711	8 129	+11	+3	31 328
Sandvik Materials Technology	3 672	13 415	4 633	3 449	3 335	3 296	-10	-9	14 713
Sandvik Construction	1 792	8 521	2 336	2 013	2 184	2 038	+14	+6	8 571
Sandvik Venture	1 456	5 535	1 749	1 741	2 182	2 123	+46	-7	7 795
Group activities	6	4	4	6	3	5			17
Group total	20 794	84 072	22 496	21 194	20 981	21 286	+2	-6	85 957

INVOICED SALES BY BUSINESS AREA

	Q4	Q1-4	Q1	Q2	Q3	Q4		CHANGE Q4	Q1-4
MSEK	2013	2013	2014	2014	2014	2014	%	% 1)	2014
Sandvik Mining	7 334	30 744	6 601	6 385	6 806	7 039	-4	-9	26 831
Sandvik Machining Solutions	7 363	28 543	7 400	7 676	7 658	8 122	+10	+3	30 856
Sandvik Materials Technology	3 360	14 035	3 547	3 866	3 735	3 758	+12	+12	14 907
Sandvik Construction	2 174	8 601	1 871	2 281	2 232	2 169	-0	-7	8 553
Sandvik Venture	1 538	5 394	1 362	1 841	2 155	2 301	+50	-1	7 658
Group activities	1	11	2	2	7	5			16
Group total	21 770	87 328	20 783	22 051	22 593	23 394	+7	-1	88 821

OPERATING PROFIT BY BUSINESS AREA

	Q4	Q1-4	Q1	Q2	Q3	Q4	CHANGE Q4	Q1-4
MSEK	2013	2013	2014	2014	2014	2014	%	2014
Sandvik Mining	-480	2 743	688	452	614	644	N/A	2 398
Sandvik Machining Solutions	1 084	5 205	1 480	1 561	1 496	1 622	+50	6 159
Sandvik Materials Technology	350	1 270	421	647	482	330	-6	1 880
Sandvik Construction	-223	110	-11	51	1	4	N/A	45
Sandvik Venture	309	606	233	187	133	335	+8	888
Group activities	-450	-1 296	-333	-342	-264	-312		-1 250
Group total 2)	590	8 638	2 478	2 556	2 462	2 623	+345	10 120

OPERATING MARGIN BY BUSINESS AREA

	Q4	Q1-4	Q1	Q2	Q3	Q4	Q1-4
MSEK	2013	2013	2014	2014	2014	2014	2014
Sandvik Mining	-6.5	8.9	10.4	7.1	9.0	9.2	8.9
Sandvik Machining Solutions	14.7	18.2	20.0	20.3	19.5	20.0	20.0
Sandvik Materials Technology	10.4	9.0	11.9	16.7	12.9	8.8	12.6
Sandvik Construction	-10.2	1.3	-0.6	2.3	0.0	0.2	0.5
Sandvik Venture	20.1	11.2	17.1	10.2	6.2	14.6	11.6
Group total	2.7	9.9	11.9	11.6	10.9	11.2	11.4

1) Change compared with preceding year at fixed exchange rates for comparable units.

2) Internal transactions had negligible effect on business area profits.

KEY FIGURES	Q4 2014	Q4 2013	Q1-4 2014
No. of shares outstanding at end of period ('000) 1)	1 254 386	1 254 386	1 254 386
Average no. of shares('000) 1)	1 254 386	1 254 386	1 254 386
Tax rate, %	29.1	30.0	27.5
Return on capital employed, % 2)	13.4	12.6	13.4
Return on total equity, % 2)	17.4	15.3	17.4
Return on total capital, % 2)	10.3	9.0	10.3
Shareholders' equity per share, SEK	29.1	26.7	29.1
Net debt/equity ratio	0.7	0.7	0.8
Equity/assets ratio, %	34	36	34
Net working capital, %	28	27	28
Earnings per share, SEK	1.21	0.04	4.79
Cash flow from operations, MSEK	+4 104	+2 857	+9 515
Number of employees	47 318	47 338	47 318

1) No dilution effect during the period. 2) Rolling 12 months.

DISCLAIMER STATEMENT

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

DIVIDEND PROPOSAL FOR THE 2015 AGM

The Annual General Meeting will be held in Sandviken, Sweden, on 7 May 2015 at 17:00 CET. The Board of Directors proposes a dividend of 3.50 per share (3.50), or a total of 4,390 million SEK (4,390) for 2014. The proposal corresponds to 73% of reported earnings per share and 73% of adjusted earnings per share. The proposed record date to receive dividends is 11 May 2015.

Stockholm, 29 January 2015 Sandvik Aktiebolag (publ)

The Board of Directors

AUDIT

The Company's Auditor has not carried out any review of the report for the fourth quarter of 2014.

Sandvik AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information is submitted for publication on 29 January 2015 at 8:00 CET. The report for the fi rst-quarter 2015 will be published on 27 April 2015.

Additional information may be obtained from Sandvik Investor Relations at tel +46 8 456 14 94 (Ann-Sofie Nordh), +46 8 456 12 30 (Oskar Lindberg), +46 8 456 11 94 (Anna Vilogorac) or by e-mailing info.ir@sandvik.com.

A presentation and teleconference will be held on 29 January 2015 at 10:00 CET at the World Trade Center in Stockholm.

Sandvik AB, Corp. Reg. No.: 556000-3468 Box 510 SE-101 30 Stockholm +46 8 456 11 00

Information is available at www.sandvik.com/ir.

CALENDAR 2015:

27 April	First-quarter report 2015
7 May	Annual General Meeting
11 May	Record day for dividend
17 July	Second-quarter report 2015
23 October	Third-quarter report 2015