Sandvik

Quarterly Report • Feb 3, 2016

INTERIM REPORT FOURTH QUARTER

2015: RECORD HIGH CASH FLOW IN CHALLENGING MARKETS

CEO'S COMMENT: "The year of 2015 was eventful, characterized by increasingly challenging market environment but also progress in our eff orts to structurally improve operations," says Björn Rosengren, President and CEO of Sandvik.

"Order intake was hampered by weakened business activity, particularly in Asia and North America, as well as generally in the energy segment. In China, an overall slowdown across most segments was noted. In the US, the low oil price adversely impacted demand in the energy segment, with a negative indirect eff ect on demand in the general engineering segment. Sandvik Mining order intake was in line with the previous year. However, during the latter part of the year we noted a slight decline in the aftermarket business."

"In a sluggish market environment, we pushed to implement structural improvements as the cost base was reduced, as well as initiated additional effi ciency measures. Conscious and focused eff orts to structurally reduce the net working capital resulted in an all-time-high cash fl ow for the year. In Sandvik Machining Solutions we launched a record number of new products, which are important for future competitive advantage. We made progress in the portfolio optimization, announcing the intention to divest the Mining Systems operations. This will ensure further focus on our core capabilities."

"I look forward to 2016 when accountability will be transferred closer to operations for improved transparency and speed, for a stronger performance."

"The Board of Directors proposes a dividend of 2.50 SEK (3.50) per share. This would imply a reduction in absolute terms, in an eff ort to support the balance sheet in the long term. It represents 140% of reported earnings per share and 57% of adjusted earnings per share for the Sandvik group total."

"In the fourth quarter of 2015, demand weakened compared with the corresponding period in 2014. Order intake declined signifi cantly in both North America and Asia, in fi xed currency for comparable units. Not least due to tough comparables, given the strong growth in both the US and China in the year-earlier-period. Europe remained largely stable. Overall, continued weak demand in the energy segment had an adverse impact on the general engineering segment, particularly in North America. Demand in the automotive segment softened slightly, although still at a high level. The decline in order intake in Asia was driven by a deterioration in China due to a general weakening in most segments. Uncertainty persisted in the mining segment, however order intake remained largely stable year-over-year, hampered by slightly softer demand in the aftermarket business."

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Continuing operations
Order intake1)	20 485	19 531	-7	82 057	83 597	-6
Invoiced sales 1)	21 704	20 940	-6	82 533	85 845	-5
Gross profi t	8 026	7 112	-11	31 204	30 606	-2
% of invoiced sales	37.0	34.0		37.8	35.7
Operating profi t	2 684	770	-71	10 205	7 271	-29
% of invoiced sales	12.4	3.7		12.4	8.5
Adjusted operating profi t 2)	2 613	2 315	-11	10 213	10 593	+4
% of invoiced sales 2)	12.0	11.1		12.4	12.3
Profi t after fi nancial items	2 187	266	-88	8 369	5 308	-37
% of invoiced sales	10.1	1.3		10.1	6.2
Profi t for the period	1 570	-178	N/M	6 097	3 443	-44
% of invoiced sales	7.2	-0.9		7.4	4.0
of which shareholders' interest	1 585	-147	N/M	6 116	3 496	-43
Earnings per share, SEK 3)	1.26	-0.12		4.88	2.79
Return on capital employed, % 4)	14.0	9.5		14.0	9.5
Cash fl ow from operations	+4 025	+3 404	-15	+9 898	+12 793	+29
Net working capital, %	30	27		30	27
Discontinued operations
Profi t for the period	-66	7	N/M	-105	-1 249	N/M
Earnings per share, SEK 3)	-0.05	0.01		-0.09	-1.00
Group Total
Profi t for the period	1 504	-171	N/M	5 992	2 194	-63
Earnings per share, SEK 3)	1.21	-0.11		4.79	1.79

1) Change from the preceding year at fixed exchange rates for comparable units 2) Operating profit adjusted for nonrecurring charges of 1.5 billion SEK for the fourth quarter 2015, 1.8 billion SEK for the first quarter 2015, and by -71 million SEK for the fourth quarter 2014, 4 million SEK for the third quarter 2014 and 75 million SEK for the second quarter 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

MARKET DEVELOPMENT AND EARNINGS

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-7	-6
Structure, %	-0	-0
Currency, %	+3	+3
TOTAL, %	-5	-4

components must be multiplied to determine the total effect.

In the fourth quarter, order intake declined organically by 7%, compared with the year-earlier-period. Europe, Sandvik's largest region in terms of invoicing, remained stable. However, Asia declined by 23% and North America by 18%, at fi xed exchange rates for comparable units. In Asia, China weighed on overall growth as a general slow-down across most segments was reported. Business activity in North America weakened as the low oil price adversely impacted demand in the energy segment, with a negative indirect eff ect on demand in the general engineering segment. The energy segment generally weakened across all regions and business areas.

Order intake for Sandvik Machining Solutions declined by 7% at fi xed exchange rates for comparable units, primarily due to weak demand in energy, with a spill-over eff ect on general engineering. The business area also noted slightly softer demand in the automotive segment, from the high levels recorded in the year-earlier period. Sandvik Mining remained largely stable at -1%, adversely impacted by a slight softening of business activity in the mining aftermarket business. Sandvik Materials Technology reported an organic order decline of 11%, related to weak development for the more standardized tubular off ering as well as oil and gas related products. Sandvik Construction organic order intake declined by 3%, despite strong order intake in Australia. Order intake in Sandvik Venture was adversely impacted by weak demand in the energy segment, as primarily noted by Drilling & Completions and Hyperion.

The contribution from changed exchange rates was +3% for both order intake and invoiced sales.

Adjusted operating earnings declined by 11% year-on-year on the back of lower volumes. Mitigating actions are on-going, but the negative impact from lower production volumes was greater than the positive impact from changed exchange rates and savings measures. Phase I of the supply chain optimization program was completed and generated annual savings of 600 million SEK. As part of the overall ongoing program, three additional units were closed in the quarter. In total, the program generated savings of 172 million SEK in the quarter, for an annual run-rate of 697 million SEK. In parallel, the ongoing program for cost base adjustments generated savings of 97 million SEK in the quarter, yielding an annual run-rate of 394 million SEK.

Changed exchange rates contributed approximately 70 million SEK to earnings as the SEK depreciated against several major trading currencies year-on-year. Changed metal prices impacted results by -118 million SEK (-71). Net fi nancial items amounted to -504 million SEK, slightly above the average for the previous quarters in the year, primarily due to changed exchange rates. The tax rate in the fourth quarter was high due to non-deductible nonrecurring charges mostly related to China.

INVOICED SALES AND BOOK-TO-BILL

OPERATING PROFIT & RETURN

EARNINGS PER SHARE

CASH FLOW AND BALANCE SHEET

Total assets for the Group declined slightly compared with the preceding quarter. Inventories and receivables decreased, resulting in a higher cash balance.

Net working capital in relation to sales was reduced to 27.1%, which is the lowest level since the second quarter of 2011. It was down signifi cantly both year-on-year (29.6) and versus the previous quarter (29.6) due to a persistent focus on net working capital management. All business areas contributed to the net working capital reduction. Net working capital for continuing operations decreased by about 1.9 billion SEK compared with the preceding quarter, to a total of 21.7 billion SEK. The sequential change was driven by volume reduction, primarily in inventory and accounts receivable, but also by the impact of changed exchange rates.

Capital expenditure in the fourth quarter amounted to 1.3 billion SEK (1.5). For full-year of 2015, capital expenditure totaled to 4.1 billion SEK (4.6), in line with the guidance of about 4 billion SEK.

The guidance for 2016 is for capital expenditure to be below the 4.1 billion SEK reported for 2015.

Net debt for the Group total decreased to 28.2 billion SEK compared with 30.2 billion SEK in the preceding quarter. The decrease was attributable to continued strong cash fl ow in the quarter. Consequently, the net debt to equity ratio decreased to 0.74, meeting the long term target of below 0.8, and down from 0.77 in the preceding quarter. Interest-bearing debt with short-term maturity accounted for 15% of total debt.

Net pension liability was 5.9 billion SEK (6.0). Since the adoption of IAS 19R, including the initial impact, the accumulated actuarial losses have reduced equity by approximately 4 billion SEK, net of tax.

Cash fl ow from operations amounted to 3.4 billion SEK (4.0), supported by quarterly earnings and a continued focused decrease of the net working capital.

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.

SANDVIK MACHINING SOLUTIONS

CHALLENGING MARKET CONDITIONS

SAVINGS SUPPORT EARNINGS

RECORD-HIGH CASH FLOW

GROWTH

Q4	ORDER	INVOICED
	INTAKE	SALES
Price/volume, %	-7	-5
Structure, %	+0	+0
Currency, %	+4	+4
TOTAL, %	-3	-1
Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.

Overall, demand in Europe remained stable, while North America and Asia declined by 15% and 13% respectively, at fi xed exchange rates for comparable units.

Key diff erences in the market situation compared with the year-earlier-period included lower demand in Asia, predominantly in China where a general slow-down across most segments was noted. Weak demand was reported in the energy segment, which indirectly negatively impacted demand in the general engineering segment. Additionally, slightly lower demand in the automotive segment was reported. This was most notable in Asia, but to some extent also in North America, as both regions softened from the high levels and strong growth reported in the year-earlier period.

In total, organic order intake declined by 7% and organic invoiced sales by 5%. The deviation between order intake and invoiced sales was larger than normal, mainly due to the timing of deliveries of previous orders. The number of working days had a positive impact of 1% on organic growth.

Despite negative organic growth of 5% in invoiced sales the adjusted operating profi t and adjusted operating margin remained stable supported by ongoing effi ciency measures. During the quarter savings totalling 99 million SEK were achieved, representing an annual run-rate of 394 million SEK. This includes the completion of phase I of the supply chain optimization program as well as the cost base adjustments announced earlier. The net proceeds from the divestment of a property essentially off -set the negative impact on the operating margin from further inventory reductions. The consistent eff orts to reduce net working capital, primarily inventories, resulted in record high cash fl ow for the quarter, and the full-year of 2015. Changed exchange rates had a positive impact on operating profi t of about 90 million SEK.

As announced earlier nonrecurring charges of 630 million SEK impacted results in the fourth quarter. Of this amount, 352 million SEK related to the third and fi nal phase of the supply chain optimization program. 278 million SEK related to additional right sizing to achieve further effi ciency in sales and administration. Targeted annual savings from actions are 207 million SEK and 263 million SEK respectively, end of 2017.

ORDER INTAKE, INVOICED SALES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	8 129	7 890	-7 *	31 328	32 682	-5 *
Invoiced sales	8 122	8 039	-5 *	30 856	32 652	-3 *
Operating profit	1 622	981	-40	6 159	5 269	-14
% of invoiced sales	20.0	12.2		20.0	16.1
Adjusted operating profit**	1 622	1 611	-1	6 159	6 579	+7
% of invoiced sales**	20.0	20.0		20.0	20.1
Return on capital employed, %***	29.5	24.1		29.5	24.1
Number of employees	18 927	18 120	-4	18 927	18 120	-4

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 630 million SEK in Q4 2015 and 680 million SEK in Q1 2015. *** Rolling 12 months

SANDVIK MINING

SLIGHT SOFTENING OF DEMAND IN THE AFTERMARKET BUSINESS

IMPROVED PERFORMANCE

NEW HEAD OF BUSINESS AREA

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-1	+3
Structure, %	+0	+0
Currency, %	-1	+0
TOTAL, %	-2	+3
Change compared to same quarter last year. The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.

While invoicing was strong in the quarter, the underlying mining market was characterized by uncertainty. Invoiced sales improved organically by 3%, supported by good growth in order intake for equipment during the fi rst half of 2015. Positive development for mining equipment was reported in the fourth quarter - mainly in loading & hauling as well as underground drill rigs - supporting the total order intake. In relative terms, Africa & Middle East was the stronger region. However, a slight softening in the aftermarket business, parts & service and consumables, was noted. Furthermore, order cancellations of about 100 million SEK were reported, predominantly related to the discontinuation of cooperation with a distributor. Cancellations primarily related to crushing and screening equipment in China.

Adjusted operating profi t improved by 6% year-on-year.

Structural cost reductions attributable to unit closures and other effi ciency measures supported the improvement. Earnings in the quarter were adversely impacted by unfavorable mix due to a higher share of equipment sales, somewhat higher-than-normal obsolescence as well as a provision for a VAT issue in Asia. Changed exchange rates positively aff ected earnings by about 20 million SEK.

Phase I of the supply chain optimization program was completed and annual savings of 276 million SEK have been achieved. As announced earlier nonrecurring charges of 86 million SEK adversely impacted results in the fourth quarter. Charges for impairments relate to dissolution of a joint venture targeting the coal market in China and capitalized product development projects.

As announced on 1 October, Sandvik intends to divest the Mining Systems operations. For additional details, see page 12.

On 15 December, Lars Engström was appointed the new President of the business area Sandvik Mining.

ORDER INTAKE, INVOICED SALES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Continuing operations
Order intake	4 894	4 819	-1 *	19 633	21 247	+1 *
Invoiced sales	5 349	5 509	+3 *	20 543	22 421	+1 *
Operating profit	705	663	-6	2 483	2 585	+4
% of invoiced sales	13.2	12.0		12.1	11.5
Adjusted operating profit**	705	749	+6	2 483	3 296	+33
% of invoiced sales**	13.2	13.6		12.1	14.7
Return on capital employed, %***	18.1	20.0		18.1	20.0
Number of employees	10 541	10 507	-0	10 541	10 507	-0

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 86 million SEK in Q4 2015 and 626 million SEK in Q1 2015. *** Rolling 12 months.

SANDVIK MINING

CONTINUING OPERATIONS

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	4 894	4 819	-1 *	19 633	21 247	+1 *
Invoiced sales	5 349	5 509	+3 *	20 543	22 421	+1 *
Operating profit	705	663	-6	2 483	2 585	+4
% of invoiced sales	13.2	12.0		12.1	11.5
Adjusted operating profit**	705	749	+6	2 483	3 296	+33
% of invoiced sales**	13.2	13.6		12.1	14.7

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 86 million SEK in Q4 2015 and 626 million SEK in Q1 2015.

DISCONTINUED OPERATIONS

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	802	745	-7 *	3 900	2 781	-32 *
Invoiced sales	1 689	1 058	-32 *	6 288	4 977	-20 *
Operating profit	-61	16	N/M	-85	-1 209	N/M
% of invoiced sales	-3.6	1.5		-1.3	-24.3
Adjusted operating profit**	-61	16	N/M	-85	-108	-27
% of invoiced sales**	-3.6	1.5		-1.3	-2.2

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 998 million SEK in Q3 2015 and 104 million SEK in Q1 2015.

The underlying market for Mining Systems (discontinued operations) remained weak as customers continued to postpone projects, and, consequently, price pressure remained tangible. No major orders were received in the fourth quarter. Organic order intake declined by 7% and organic invoicing declined by 32% year-on-year.

Mining Systems reported an operating profi t of 16 million SEK and an operating margin of 1.5%. Changed exchange rates negatively impacted earnings by about 70 million SEK.

SANDVIK MINING TOTAL

Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
5 695	5 564	-2 *	23 533	24 028	-5 *
7 039	6 567	-5 *	26 831	27 398	-4 *
644	678	+5	2 398	1 375	-43
9.2	10.3		8.9	5.0
644	764	+19	2 398	3 188	+33
9.2	11.6		8.9	11.6

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 86 million SEK in Q4 2015, 998 million SEK in Q3 2015 and 730 million SEK in Q1 2015.

SANDVIK MATERIALS TECHNOLOGY

CHALLENGING MARKET CONDITIONS PERSIST

COST SAVING ACTIONS ONGOING

NET WORKING CAPITAL AT ALL-TIME-LOW LEVEL

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-11	-12
Structure, %	-1	-1
Currency, %	+3	+4
TOTAL, %	-9	-10
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 oil price has deteriorated further, adding to the uncertainty in the market. In the energy segment, low oil price resulted in customers postponing placing orders for the oil and gas related products. The decline in order intake was primarily related to increased competition for the more standardized tubular off ering, as companies active in the tubular area sought to replace lost volumes in the oil and gas industry with volumes in adjacent segments. Growth in order intake varied between the major geographical regions. Europe remained largely stable at 1% while North America and Asia declined by 34% and 15% respectively, excluding major orders at fi xed exchange rates for comparable units.

Impact from mitigating activities, reducing Sandvik and non-Sandvik personnel by 500, were off -set by the negative impact from lower production volumes. Underabsorption of the cost base due to lower volumes as well as focused inventory reductions had a greater adverse impact on the result than the positive impact from effi ciency measures. The operating margin, excluding one-off items and eff ects from changed metal prices, amounted to 7.0% in the quarter. Raw material price changes impacted operating profi t by -118 million SEK (-71), primarily related to nickel.

One unit was closed in the UK within the scope of the ongoing supply chain optimization program. The annual runrate savings reached 120 million SEK as a result of the supply chain optimization and cost adjustment programs. Net working capital reached an all-time low in the quarter, supported by a focused reduction of inventories. For the fi rst time ever, the net working capital to sales ratio was below 25%.

As announced earlier nonrecurring charges of 545 million SEK adversely impacted results. 50 million SEK related to the third and fi nal phase of the supply chain optimization program, with targeted annual savings of 90 million SEK, at the end of 2017. 495 million SEK related mainly to impairments and the restructuring of a production plant in China.

ORDER INTAKE, INVOICED SALES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	3 296	2 999	-11 *	14 713	12 625	-15 *
Invoiced sales	3 758	3 398	-12 *	14 907	13 909	-8 *
Operating profit	330	-427	N/M	1 880	8	-100
% of invoiced sales	8.8	-12.6		12.6	0.1
Adjusted operating profit**	259	118	-54	1 809	818	-55
% of invoiced sales**	6.9	3.5		12.1	5.9
Return on capital employed, %***	13.7	0.1		13.7	0.1
Number of employees	6 914	6 533	-6	6 914	6 533	-6

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 545 million SEK in Q4 2015, 265 million SEK in Q1 2015 and -71 million in Q4 2014. *** Rolling 12 months

SANDVIK CONSTRUCTION

CHALLENGING MARKETS

MARGIN RECOVERY

NET WORKING CAPITAL AT ALL-TIME-LOW LEVEL

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-3	-7
Structure, %	+0	+0
Currency, %	+2	+3
TOTAL, %	-1	-4
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 demand situation in underlying markets remained challenging. The book-to-bill ratio was reported at 0.97. Order intake was supported by good development in Australia, where two large equipment orders for tunneling were received, totaling about 270 million SEK. The received orders more than off -set order cancellations totaling about 90 million SEK, largely related to mobile equipment, as a consequence of a quality review of the order book.

Overall, Asia was weak, as demand in China deteriorated from an already low level. In Europe, demand was relatively stronger in the Scandinavian markets. In North America, a healthy demand for mobile crushing equipment was reported, however order intake overall declined by 4%, at fi xed exchange rates for comparable units.

Despite negative organic growth of 7% in invoiced sales, adjusted operating profi t and adjusted operating margin improved from the low levels recorded in the year-

earlier-period. Key driver for the earnings recovery is better absorption of fi xed costs in mobile crushers, as capacity has been reduced. Additional support was yielded by the ongoing effi ciency measures in the sales organization. Changed exchange rates had an adverse eff ect on operating profi t of about 10 million SEK.

Persistent eff orts to further sustainably reduce net working capital resulted in an all-time-low level in the fourth quarter, primarily related to a focused reduction of inventories. For the fi rst time ever, the net working capital to sales ratio was reported at close to 22%.

As announced earlier, nonrecurring charges of 193 million SEK adversely impacted results in the fourth quarter. Charges relate to impairment of crushing and screening operations in China.

ORDER INTAKE, INVOICED SALES AND BOOK-TO-BILL

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	2 038	2 026	-3 *	8 571	8 928	-4 *
Invoiced sales	2 169	2 087	-7 *	8 553	8 551	-9 *
Operating profit	4	-128	N/M	45	28	-39
% of invoiced sales	0.2	-6.1		0.5	0.3
Adjusted operating profit**	4	65	N/M	45	381	N/M
% of invoiced sales**	0.2	3.1		0.5	4.5
Return on capital employed, %***	0.8	0.5		0.8	0.5
Number of employees	2 815	2 927	+4	2 815	2 927	+4

* At fixed exchange rates for comparable units, ** Operating profit adjusted for nonrecurring charges of 193 million SEK in Q4 2015 and 160 million SEK in Q1 2015, *** Rolling 12 months

SANDVIK VENTURE

WEAK OVERALL DEMAND

UNDERUTILIZATION IMPACTS EARNINGS

ADDITIONAL COST SAVING

Q4	ORDER INTAKE	INVOICED SALES
Price/volume, %	-20	-22
Structure, %	+1	+1
Currency, %	+4	+4
TOTAL, %	-16	-17
The table is multiplicative, i.e. the different components must be multiplied to determine the total effect.

Demand weakened signifi cantly across most product areas and geographies, compared with the year-earlier period. Low business activity in the energy segment, due to the depressed oil price, had a direct adverse impact on demand in Drilling & Completions. Also, the low oil price had a negative indirect impact on customer activity in the general engineering segment, which adversely aff ected demand for Hyperion. Within Process Systems postponement of projects for large systems were noted, where in relative terms wood based panels - used in areas such as commercial building construction - noted a stronger trend. In Wolfram, volume (tonnage) remained at a high level, although the persistent decline in raw material prices had an adverse impact on total growth, in fi xed currency for comparable units. In total for Sandvik Venture, organic order intake declined by 20% and organic invoiced sales by 22%.

Operating profi t and margin declined signifi cantly compared with a strong quarter in the year-earlier period. Lower production volumes in most product areas implied underabsorption of fi xed costs. Despite a sharp organic decline in invoicing, Process Systems reported only a slight decrease in operating margin. For the remaining product areas, operating margins were materially adversly impacted by the decline in organic growth. Changed exchange rates had a negative impact on operating profi t of about 10 million SEK.

As announced earlier nonrecurring charges of 40 million SEK adversely impacted results in the fourth quarter. Charges relate to the third and fi nal phase of the supply

chain optimization program. Targeted annual savings from these actions are 27 million SEK, by the end of 2017.

OPERATING PROFIT AND RETURN

FINANCIAL OVERVIEW, MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Order intake	2 123	1 792	-20 *	7 795	8 097	-17 *
Invoiced sales	2 301	1 901	-22 *	7 658	8 292	-13 *
Operating profit	335	36	-89	888	529	-40
% of invoiced sales	14.6	1.9		11.6	6.4
Adjusted operating profit**	335	76	-77	967	579	-40
% of invoiced sales**	14.6	4.0		12.6	7.0
Return on capital employed, %***	7.4	3.8		7.4	3.8
Number of employees	4 074	3 829	-6	4 074	3 829	-6

* At fixed exchange rates for comparable units. ** Operating profit adjusted for nonrecurring charges of 40 million SEK in Q4 2015, 10 million SEK in Q1 2015, 75 million SEK in Q2 2014 and 4 million SEK in Q3 2014. *** Rolling 12 months.

PARENT COMPANY

For full year 2015, invoiced sales amounted to 15,667 million SEK (16,475) and the operating result was -761 million SEK (-1,165). Income from shares in Group companies consists primarily of dividends and Group contributions from these and amounted to 9,346 million SEK (8,224) for full year 2015.

Interest-bearing liabilities, less cash and cash equivalents and interest-bearing assets, amounted to 11,132 million SEK (9,561). Investments in property, plant and machinery amounted to 907 million SEK (1,227).

ACQUISITIONS AND DIVESTMENTS

ACQUISITIONS DURING THE MOST RECENT 12-MONTH PERIOD

	COMPANY/UNIT	CLOSING DATE	ANNUAL REVENUE, MSEK	NO. OF EMPLOYEES
SANDVIK VENTURE	SGL Technology B.V. (SGL)	15 September 2015	60	20

DIVESTMENTS DURING THE MOST RECENT 12-MONTH PERIOD

No divestments in the period.

FULL YEAR 2015

Demand for Sandvik's products during the full year 2015 declined compared with the year-earlier-period. Order intake declined organically by 6%, primarily adversely impacted by lower business activity in the oil & gas segment, which also somewhat indirectly impacted the general engineering segment, as well as a general slowdown in industrial activity in the second half of the year. However, the impact from changed exchange rates implied overall positive growth in order intake of 2%. Total invoicing grew by 4%, supported by changed exchange rates, while organic growth declined by 5%. Sandvik's order intake amounted to 83,597 million SEK (82,057), and invoiced sales were 85,845 million SEK (82,533).

Adjusted operating profi t was 10,593 million SEK (10,213), excluding non-recurring charges of 3.3 billion SEK related to the launch of the second and third phases of the ongoing supply chain optimization program, other cost base adjustments and impairments related to businesses in China. Changed exchange rates had a positive impact on results of about 2.0 billion SEK, while changed metal prices had a negative impact of about 340 million SEK. Net fi nancial items amounted to

-1,963 million SEK (-1,836) and the profi t after fi nancial items was 5,308 million SEK (8,369).

The tax rate was 35.1% (27.2) and profi t for the period amounted to 3,443 million SEK (6,097). Earnings per share were 2.79 SEK (4.88) for continuing operations and 1.79 (4.79) for the Group in total. Cash fl ow from operations totaled 12,793 million SEK (9,898).

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 outcomes is provided in the table below:

CAPEX	Estimated at below 4.1 billion SEK for 2016
CURRENCY EFFECTS	Based on currency rates at end-December 2015, it is estimated that operating profi t for the fi rst quarter of 2016 will be impacted by about -300 million SEK compared with the year-earlier period
METAL PRICE EFFECTS	In view of currency rates, stock levels and metal prices at the end of December 2015, it is estimated that operating profi t for the fi rst quarter of 2016 will be impacted by about -130 million SEK
NET FINANCIAL ITEMS	Estimated at between -1.7 to -1.9 billion SEK in 2016
TAX RATE	Estimated at about 26-28% for 2016

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER

– The new President and CEO, Björn Rosengren, joined Sandvik on 1 November.

– On 1 October, Sandvik announced its intention to divest the Mining Systems product area, which is a separate product area at Sandvik Mining and a supplier of design and engineering solutions for material handling systems for the mining industry. In 2015 the Mining Systems operations, with about 1,150 employees, had annual sales of 5 billion SEK representing 5.5% of Sandvik Group invoicing, and reported an adjusted operating loss at a low single digit adjusted margin level.

The Mining Systems operations are reported as discontinued operations in the Sandvik Group fi nancial statements.

– On 23 October Sandvik signed an agreement to divest its interest in the commercial business jet company, Bromma Business Jet AB.

– On 15 December, Lars Engström was appointed the new President of the business area Sandvik Mining.

– On 10 December, Sandvik announced the third and fi nal phase of the ongoing supply chain optimization program, further right-sizing as well as impairments. Effi ciency measures will generate annual savings of about 600 million SEK, and non-recurring charges of 1,545 million SEK impacted the fourth quarter of 2015. The fi nal phase of the supply chain optimization program involves the closure of fi ve units, to complete the targeted 23 units in total.

For details, see tables below.

SUPPLY CHAIN	OPTIMIZATION PROGRAM	SANDVIK MACHINING SOLUTIONS	SANDVIK MATERIALS TECHNOLOGY		SANDVIK TOTAL PHASE III VENTURE				PROVISION RELEASE SANDVIK MINING	GROUP TOTAL
	ESTIMATED SAVINGS RUN-RATE AT YEAR-END 2017	207	89		27	323		-	323
Q4 2015	NONRECURRING ITEMS	-352	-50		-40	-442		+169	-273
	CASH FLOW IMPACT	-332	-35		-13	-380		-	-380
						IMPAIRMENTS		GROUP TOTAL
OTHER ACTIONS		SANDVIK MACHINING SOLUTIONS	RIGHT-SIZING GROUP SANDVIK COMMON MINING 19 - -26 -255		SANDVIK MATERIALS TECHNOLOGY	SANDVIK CONSTRUCTION		GROUP COMMON
	ESTIMATED SAVINGS RUN-RATE AT YEAR-END 2017	263			-		-	-	282
Q4 2015	NONRECURRING ITEMS	-278			-495		-193	-25	-1 272
	CASH FLOW IMPACT	-278	-25	-	-		-	-	-303

Tables related to the earlier announcement of third and final phase of the supply chain optimization program

SIGNIFICANT EVENTS AFTER THE FOURTH QUARTER

– On 22 January 2016 Tomas Eliasson was appointed Executive Vice President and CFO of Sandvik and member of the Group Executive Management, eff ective no later than July 2016.

Tomas Eliasson, 53 years of age, is currently Chief Financial Offi cer for the global household appliance maker Electrolux, a position he has held since 2012. Previously, he was CFO for ASSA ABLOY during 2006-2012 and Seco Tools between 2002-2006. His professional career started at ABB in 1987. He holds a bachelor of science in business administration and economics from Uppsala University, Sweden.

Tomas Eliasson will succeed Mats Backman, who has decided to pursue other opportunities outside Sandvik as announced November 25, 2015.

– In February 2016, the Board of Directors of Sandvik AB proposed that the Annual General Meeting resolve on a long-term incentive program for 2016 in the form of a performance share program on substantially the same terms and conditions as the 2015 long-term incentive program. The proposal will be included in the notice convening the Annual General Meeting.

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 150 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 longterm 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 2014.

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 2015.

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 2015 or later. The standards have not had any material impact on the consolidated accounts.

The Mining Systems operations, which the Group intends to divest, have been classifi ed as discontinued operations in accordance with IFRS 5. Comparative fi gures have been adjusted where necessary. In connection with the ongoing divestment, a write-down of assets has been made to a value that corresponds to the estimated sale price less selling costs. The divestment is expected to be completed during 2016.

FINANCIAL REPORTS SUMMARY THE GROUP

INCOME STATEMENT

MSEK	Q4 2014	Q4 2015	CHANGE %	Q1-4 2014	Q1-4 2015	CHANGE %
Continuing operations
Invoiced sales	21 704	20 940	-4	82 533	85 845	+4
Cost of sales and services	-13 678	-13 828	+1	-51 329	-55 239	+8
Gross profit	8 026	7 112	-11	31 204	30 606	-2
% of revenues	37.0	34.0		37.8	35.7
Selling expenses	-3 085	-3 482	+13	-11 639	-13 116	+13
Administrative expenses	-1 597	-1 894	+19	-6 459	-7 079	+10
Research and development costs	-717	-904	+26	-2 609	-3 001	+15
Other operating income and expenses	57	-62	N/M	-292	-139	-52
Operating profit	2 684	770	-71	10 205	7 271	-29
% of revenues	12.4	3.7		12.4	8.5
Net financial items	-497	-504	+1	-1 836	-1 963	+7
Profit after financial items	2 187	266	-88	8 369	5 308	-37
% of revenues	10.1	1.3		10.1	6.2
Income tax	-617	-444	-28	-2 272	-1 865	-18
Profit for the period, continuing operations	1 570	-178	N/M	6 097	3 443	-44
% of revenues	7.2	-0.9		7.4	4.0
Discontinued operations
Invoiced sales	1 689	1 058	-37	6 288	4 977	-21
Operating profit	-61	16	N/M	-85	-1 209	N/M
Profit after financial items	-66	7	N/M	-105	-1 249	N/M
Profit for the period, discontinued operations	-66	7	N/M	-105	-1 249	N/M
Group total
Invoiced sales	23 394	21 998	-6	88 821	90 822	+2
Operating profit	2 623	786	-70	10 120	6 062	-40
Profit after financial items	2 121	272	-87	8 264	4 059	-51
Profit for the period, Group total	1 504	-171	N/M	5 992	2 194	-63
Items that will not be reclassified to profit or loss
Actuarial gains/(losses) on defined benefit pension plans	-712	97		-1 847	589
Tax relating to items that will not be reclassified	171	-18		452	-139
	-541	79		-1 395	450
Items that will be reclassified subsequently to profit or loss
Foreign currency translation differences	1 403	-976		3 120	-972
Cash flow hedges	-95	47		-381	55
Tax relating to items that may be reclassified	16	-6		78	-7
	1 324	-935		2 817	-924
Total other comprehensive income	783	-856		1 422	-474
Total comprehensive income	2 286	-1 028		7 414	1 720
Profit for the period attributable to
Owners of the Parent	1 518	-141		6 011	2 247
Non-controlling interests	-14	-30		-19	-53
Total comprehensive income attributable to
Owners of the Parent	2 305	-977		7 432	1 770
Non-controlling interests	-18	-51		-17	-50
Earnings per share, SEK *
Continuing operations	1.26	-0.12		4.88	2.79
Discontinued operations	-0.05	0.01		-0.09	-1.00
Group Total	1.21	-0.11		4.79	1.79

* No dilution effects during the period

N/M = non-meaningful

THE GROUP

BALANCE SHEET

CONTINUING AND DISCONTINUED OPERATIONS

MSEK	31 DEC 2014	31 DEC 2015
Intangible assets	18 323	18 313
Property, plant and equipment	27 609	26 331
Financial assets	8 279	7 814
Inventories	24 056	21 522
Current receivables	21 725	18 767
Cash and cash equivalents	6 327	6 376
Assets held for sale	-	2 119
Total assets	106 319	101 242
Total equity	36 672	34 060
Non-current interest-bearing liabilities	41 426	35 610
Non-current non-interest-bearing liabilities	3 584	4 262
Current interest-bearing liabilities	2 679	5 190
Current non-interest-bearing liabilities	21 958	20 231
Liabilities held for sale	-	1 889
Total equity and liabilities	106 319	101 242
Group total
Net working capital*	25 250	21 726
Loans	36 907	34 439
Net debt **	30 742	28 173
Net debt to equity ratio***	0.75	0.74
Non-controlling interests in total equity	134	81

* 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 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	66	-	66
Dividends	-4 390	-5	-4 395
Closing equity, 31 December 2014	36 538	134	36 672
Opening equity, 1 January 2015	36 538	134	36 672
Total comprehensive income for the period	1 770	-50	1 720
Personnel options program	17	-	17
Hedge of personnel options program	44	-	44
Dividends	-4 390	-3	-4 393
Closing equity, 31 December 2015	33 979	81	34 060

THE GROUP

CASH FLOW STATEMENT

MSEK	Q4 2014	Q4 2015	Q1-4 2014	Q1-4 2015
Continuing operations
Cash flow from operating activities
Income after financial income and expenses	2 187	266	8 369	5 308
Adjustment for depreciation, amortization and impairment losses	1 053	1 846	4 099	5 321
Adjustment for items that do not require the use of cash etc.	-452	443	-1 142	1 389
Income tax paid	-531	-581	-1 899	-1 939
Cash flow from operations before changes in working capital, continuing operations	2 257	1 974	9 427	10 079
Changes in working capital
Change in inventories	1 439	1 110	1 441	2 108
Change in operating receivables	761	811	107	845
Change in operating liabilities	-309	-382	-707	188
Cash flow from changes in working capital, continuing operations	1 891	1 539	841	3 141
Investments in rental equipment	-179	-153	-561	-625
Divestments of rental equipment	56	44	191	198
Cash flow from operations, continuing operations	4 025	3 404	9 898	12 793
Cash flow from investing activities
Acquisitions of companies and shares, net of cash	0	0	-2 834	-7
Disposal of discontinued operations	460	0	460	0
Investments in tangible assets	-1 273	-1 077	-3 802	-3 152
Proceeds from sale of tangible assets	22	134	248	245
Investments in intangible assets	-266	-255	-835	-942
Proceeds from sale of intangible assets	-16	4	-10	7
Other investments, net	32	11	-7	-16
Cash flow from investing activities, continuing operations	-1 041	-1 183	-6 780	-3 865
Net cash flow after investing activities	2 984	2 221	3 118	8 928
Cash flow from financing activities
Change in interest-bearing debt	-1 741	-1 453	2 756	-3 570
Dividends paid	-5	0	-4 395	-4 393
Cash flow from financing activities, continuing operations	-1 746	-1 453	-1 639	-7 963
Cash flow from continuing operations	1 238	768	1 479	965
Cash flow from discontinued operations	20	-235	-440	-886
Cash flow for the period, Group total	1 258	533	1 039	79
Cash and cash equivalents at beginning of the period	4 988	5 890	5 076	6 327
Exchange-rate differences in cash and cash equivalents	81	-47	212	-30
Cash and cash equivalents at the end of the period	6 327	6 376	6 327	6 376
Discontinued operations	79		-383
Cash flow from operations		-174		-841
Cash flow from investing activities	-52	-63	-58	-45
Cash flow from financing activities	-7	2	2	0
Group Total
Cash flow from operations	4 104	3 230	9 515	11 952
Cash flow from investing activities	-1 093	-1 246	-6 839	-3 910
Cash flow from financing activities	-1 753	-1 451	-1 637	-7 963
Group total cash flow	1 258	533	1 039	79

THE PARENT COMPANY

INCOME STATEMENT

MSEK	Q1-4 2014	Q1-4 2015
Revenue	16 475	15 667
Cost of sales and services	-12 042	-10 154
Gross profit	4 433	5 513
Selling expenses	-662	-551
Administrative expenses	-2 160	-2 864
Research and development costs	-1 335	-1 521
Other operating income and expenses	-1 441	-1 338
Operating profit	-1 165	-761
Income from shares in Group companies	8 224	9 346
Income from shares in associated companies	10	10
Interest income/expenses and similar items	-980	-330
Profit after financial items	6 089	8 265
Appropriations	-	-6
Income tax expense	-237	-137
Profit for the period	5 852	8 122

The classification of certain profit and loss items has changed as from 2015 affecting administrative expenses and other operating income and expenses. Comparative figures have been adjusted accordingly.

BALANCE SHEET

MSEK	31 DEC 2014	31 DEC 2015
Intangible assets	8	20
Property, plant and equipment	7 740	7 725
Financial assets	46 370	47 139
Inventories	3 591	3 186
Current receivables	17 279	15 727
Cash and cash equivalents	1	1
Total assets	74 989	73 798
Total equity	28 196	31 997
Untaxed reserves	4	11
Provisions	600	748
Non-current interest-bearing liabilities	25 761	21 002
Non-current non-interest-bearing liabilities	47	59
Current interest-bearing liabilities	8 478	14 112
Current non-interest-bearing liabilities	11 903	5 869
Total equity and liabilities	74 989	73 798
Pledged assets	-	-
Contingent liabilities	15 938	15 583
Interest-bearing liabilities and provisions minus cash and cash equivalents and interest-bearing assets	9 561	11 132
Investments in fixed assets	1 227	907

MARKET OVERVIEW, THE GROUP

ORDER INTAKE AND INVOICED SALES PER MARKET AREA - FOURTH QUARTER 2015

MARKET AREA MSEK % %1) % MSEK % % THE GROUP Europe 8 135 +0 -3 42 8 319 -3 39 North America 3 865 -18 -18 20 4 393 -12 21 South America 1 177 +6 +6 6 1 226 -0 6 Africa/Middle East 1 840 -3 -3 9 1 675 -25 8 Asia 3 359 -23 -18 17 4 334 -1 21 Australia 1 155 +34 +34 6 993 +8 5 Total continuing operations 19 531 -7 -7 100 20 940 -6 100 Discontinued operations 745 -7 -7 - 1 058 -32 - Group total 20 275 -7 -7 - 21 998 -8 - SANDVIK MACHINING SOLUTIONS Europe 4 346 -1 -1 55 4 341 -0 53 North America 1 736 -15 -15 22 1 750 -15 22 South America 160 -20 -20 2 156 -19 2 Africa/Middle East 72 +29 +29 1 81 +69 1 Asia 1 520 -13 -13 19 1 655 -7 21 Australia 56 +8 +8 1 56 +9 1 Total 7 890 -7 -7 100 8 039 -5 100 SANDVIK MINING Europe 499 -2 -2 12 879 +60 16 North America 741 -11 -11 15 881 +12 16 South America 733 +39 +39 15 780 +19 14 Africa/Middle East 1 372 +2 +2 28 1 112 -27 20 Asia 738 -20 -20 15 1 055 -2 19 Australia 736 +1 +1 15 802 +4 15 Total continuing operations 4 819 -1 -1 100 5 509 +3 100 Discontinued operations 745 -7 -7 - 1 058 -32 - Sandvik Mining total 5 564 -2 -2 - 6 567 -5 - SANDVIK MATERIALS TECHNOLOGY Europe 1 768 +15 +1 59 1 517 -22 45 North America 571 -34 -34 19 955 -15 28 South America 70 +53 +53 2 69 +47 2 Africa/Middle East 79 +3 +3 3 48 -48 1 Asia 497 -44 -15 17 791 +26 23 Australia 14 +38 +38 0 18 -1 1 Total 2 999 -11 -10 100 3 398 -12 100 SANDVIK CONSTRUCTION Europe 768 -8 -8 38 773 -4 37 North America 360 -4 -4 18 374 -9 18 South America 136 -33 -33 7 133 -38 6 Africa/Middle East 143 -40 -40 7 247 -29 12 Asia 309 -28 -28 15 479 +13 23 Australia 310 N/M N/M 15 81 +157 4 Total 2 026 -3 -3 100 2 087 -7 100 SANDVIK VENTURE Europe 752 -11 -11 43 811 -13 41 North America 454 -28 -28 25 429 -32 23 South America 79 -39 -39 4 86 -28 5 Africa/Middle East 174 -12 -12 10 186 -16 10 Asia 295 -25 -25 16 353 -26 19 Australia 38 -24 -24 2 36 -20 2 Total 1 792 -20 -20 100 1 901 -22 100	ORDER INTAKE	CHANGE *		INVOICED SALES	CHANGE *	SHARE

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

1) Excluding major orders

THE GROUP

ORDER INTAKE BY BUSINESS AREA

	Q1	Q2	Q3	Q4	Q1-4	Q1	Q2	Q3	Q4	CHANGE		Q1-4
MSEK	2014	2014	2014	2014	2014	2015	2015	2015	2015	%	% 1)	2015
Continuing operations
Sandvik Machining Solutions	7 719	7 768	7 711	8 129	31 328	8 596	8 355	7 841	7 890	-3	-7	32 682
Sandvik Mining	4 840	4 968	4 931	4 894	19 633	5 610	5 840	4 977	4 819	-2	-1	21 247
Sandvik Materials Technology	4 633	3 449	3 335	3 296	14 713	3 725	3 054	2 847	2 999	-9	-11	12 625
Sandvik Construction	2 336	2 013	2 184	2 038	8 571	2 376	2 348	2 179	2 026	-1	-3	8 928
Sandvik Venture	1 749	1 741	2 182	2 123	7 795	2 263	2 165	1 878	1 792	-16	-20	8 097
Group activities	4	6	3	5	17	4	4	4	5			18
Continuing operations	21 281	19 945	20 346	20 485	82 057	22 574	21 766		19 726 19 531	-5	-7	83 597
Discontinued operations	1 215	1 248	635	802	3 900	592	977	466	745	-7	-7	2 781
Group total	22 496	21 194	20 981	21 286	85 957	23 167	22 743		20 192 20 275	-5	-7	86 378

INVOICED SALES BY BUSINESS AREA

MSEK	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1-4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	CHANGE %	% 1)	Q1-4 2015
Continuing operations
Sandvik Machining Solutions	7 400	7 676	7 658	8 122	30 856	8 438	8 339	7 836	8 039	-1	-5	32 652
Sandvik Mining	5 104	4 969	5 121	5 349	20 543	5 489	5 710	5 712	5 509	+3	+3	22 421
Sandvik Materials Technology	3 547	3 866	3 735	3 758	14 907	3 712	3 639	3 161	3 398	-10	-12	13 909
Sandvik Construction	1 871	2 281	2 232	2 169	8 553	2 144	2 283	2 037	2 087	-4	-7	8 551
Sandvik Venture	1 362	1 841	2 155	2 301	7 658	2 172	2 226	1 994	1 901	-17	-22	8 292
Group activities	2	2	7	5	16	5	3	5	6			20
Continuing operations	19 286	20 635	20 908	21 704	82 533	21 960	22 200		20 745 20 940	-4	-6	85 845
Discontinued operations	1 497	1 416	1 685	1 689	6 288	1 374	1 198	1 347	1 058	-37	-32	4 977
Group total	20 783	22 051	22 593	23 394	88 821	23 334	23 398		22 092 21 998	-6	-8	90 822

OPERATING PROFIT BY BUSINESS AREA

MSEK	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1-4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	CHANGE %	Q1-4 2015
Continuing operations
Sandvik Machining Solutions	1 480	1 561	1 496	1 622	6 159	1 129	1 701	1 459	981	-40	5 269
Sandvik Mining	657	481	640	705	2 483	215	860	847	663	-6	2 585
Sandvik Materials Technology	421	647	482	330	1 880	100	286	49	-427	N/M	8
Sandvik Construction	-11	51	1	4	45	-95	151	99	-128	N/M	28
Sandvik Venture	233	187	133	335	888	192	210	91	36	-89	529
Group activities	-333	-342	-264	-312	-1 250	-342	-231	-220	-355		-1 148
Continuing operations	2 447	2 585	2 488	2 684	10 205	1 199	2 977	2 325	770	-71	7 271
Discontinued operations	31	-29	-26	-61	-85	-147	-74	-1 004	16	N/M	-1 209
Group total 2)	2 478	2 556	2 462	2 623	10 120	1 052	2 903	1 321	786	-70	6 062

OPERATING MARGIN BY BUSINESS AREA

%	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1-4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	Q1-4 2015
Continuing operations
Sandvik Machining Solutions	20.0	20.3	19.5	20.0	20.0	13.4	20.4	18.6	12.2	16.1
Sandvik Mining	12.9	9.7	12.5	13.2	12.1	3.9	15.1	14.8	12.0	11.5
Sandvik Materials Technology	11.9	16.7	12.9	8.8	12.6	2.7	7.9	1.5	-12.6	0.1
Sandvik Construction	-0.6	2.3	0.0	0.2	0.5	-4.4	6.6	4.9	-6.1	0.3
Sandvik Venture	17.1	10.2	6.2	14.6	11.6	8.8	9.5	4.6	1.9	6.4
Continuing operations	12.7	12.5	11.9	12.4	12.4	5.5	13.4	11.2	3.7	8.5
Discontinued operations	2.1	-2.0	-1.6	-3.6	-1.3	-10.7	-6.2	-74.6	1.5	-24.3
Group total	11.9	11.6	10.9	11.2	11.4	4.5	12.4	6.0	3.6	6.7

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

2) Internal transactions had negligible effect on business area profits

N/M = non-meaningful

THE GROUP

ADJUSTED OPERATING PROFIT BY BUSINESS AREA

MSEK	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1-4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	CHANGE %	Q1-4 2015
Continuing operations
Sandvik Machining Solutions	1 480	1 561	1 496	1 622	6 159	1 809	1 701	1 459	1 611	-1	6 579
Sandvik Mining	657	481	640	705	2 483	841	860	847	749	+6	3 296
Sandvik Materials Technology	421	647	482	259	1 809	365	286	49	118	-54	818
Sandvik Construction	-11	51	1	4	45	65	151	99	65	N/M	381
Sandvik Venture	233	262	137	335	967	202	210	91	76	-77	579
Group activities	-333	-342	-264	-312	-1 250	-306	-231	-220	-304		-1 061
Continuing operations	2 447	2 660	2 492	2 613	10 213	2 977	2 977	2 325	2 315	-11	10 593
Discontinued operations	31	-29	-26	-61	-85	-43	-74	-6	16	N/M	-108
Group total 2)	2 478	2 631	2 466	2 552	10 128	2 934	2 903	2 319	2 331	-9	10 485

ADJUSTED OPERATING MARGIN BY BUSINESS AREA

%	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1-4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	Q1-4 2015
Continuing operations
Sandvik Machining Solutions	20.0	20.3	19.5	20.0	20.0	21.4	20.4	18.6	20.0	20.1
Sandvik Mining	12.9	9.7	12.5	13.2	12.1	15.3	15.1	14.8	13.6	14.7
Sandvik Materials Technology	11.9	16.7	12.9	6.9	12.1	9.8	7.9	1.5	3.5	5.9
Sandvik Construction	-0.6	2.3	0.0	0.2	0.5	3.0	6.6	4.9	3.1	4.5
Sandvik Venture	17.1	14.2	6.4	14.6	12.6	9.3	9.5	4.6	4.0	7.0
Continuing operations	12.7	12.9	11.9	12.0	12.4	13.6	13.4	11.2	11.1	12.3
Discontinued operations	2.1	-2.0	-1.6	-3.6	-1.3	-3.1	-6.2	-0.5	1.5	-2.2
Group total	11.9	11.9	10.9	10.9	11.4	12.6	12.4	10.5	10.6	11.5

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

2) Internal transactions had negligible effect on business area profits

N/M = non-meaningful

KEY FIGURES

	Q4 2014	Q4 2015	Q1-4 2015
Continuing operations
Tax rate, %	28.2	167.0	35.1
Return on capital employed, % 2)	14.0	9.5	9.5
Return on total equity, % 2)	17.7	9.7	9.7
Return on total capital, % 2)	10.7	7.2	7.2
Shareholders' equity per share, SEK	29.1	27.1	27.1
Net debt/equity ratio	0.75	0.74	0.74
Equity/assets ratio, %	35	34	34
Net working capital, %	30	27	27
Earnings per share, SEK	1.26	-0.12	2.79
Cash flow from operations, MSEK	+4 025	+3 404	+12 793
Number of employees	46 044	44 663	44 663

	Q4 2014	Q4 2015	Q1-4 2015
Group total
Tax rate, %	29.1	163.0	45.9
Return on capital employed, % 2)	13.4	7.9	7.9
Return on total equity, % 2)	17.4	6.2	6.2
Return on total capital, % 2)	10.3	5.9	5.9
Shareholders' equity per share, SEK	29.1	27.1	27.1
Net debt/equity ratio	0.75	0.74	0.74
Equity/assets ratio, %	34	34	34
Net working capital, %	28	26	26
Earnings per share, SEK	1.21	-0.11	1.79
Cash flow from operations, MSEK	+4 104	+3 230	+11 952
Number of employees	47 318	45 808	45 808
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

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 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.

DIVIDEND PROPOSAL FOR THE 2016 AGM

The Annual General Meeting will be held in Sandviken, Sweden, on 28 April 2016 at 17:00 CET. The Board of Directors proposes a dividend of 2.50 per share (3.50), or a total of 3,136 million SEK (4,390) for 2015. The proposal

corresponds to 140% of Sandvik Group reported earnings per share and 57% of Sandvik Group adjusted earnings per share. The proposed record date to receive dividends is 2 May 2016.

Stockholm, 3 February 2016 Sandvik Aktiebolag (publ)

The Board of Directors and Björn Rosengren, President and CEO

AUDIT

The Company's Auditor has not carried out any review of the report for the fourth quarter of 2015.

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 3 February 2016 at 08:00 CET.

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

A presentation and teleconference will be held on 3 February 2016 at 10:00 CET at the World Trade Center in Stockholm.

Information is available at www.sandvik.com/ir

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

CALENDAR 2016:

25 April Report, fi rst quarter 2016 28 April Annual General Meeting in Sandviken 18 March, preliminary Publish Annual Report 2015 2 May Proposed record date for dividend 24 May Capital Markets Day in Sandviken, Sweden 18 July Report, second quarter 2016 24 October Report, third quarter 2016