Sandvik Construction CAPITAL MARKETS DAY Thomas Schulz President as of January

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1 CAPITAL MARKETS DAY 2011 Thomas Schulz President as of January

2 Environment, Health & Safety First Our EHS Vision is to achieve Zero Harm to our people, the environment we work in, our customers and our suppliers Lost Time Injury LTIFR Frequency Rate (Sandvik Mining and Construction)

3 Thomas Schulz Construction President as of January years old, married, 2 children Doctor s degree in Quarrying & Surface Mining Positions Construction customer segment president Regional manager, SMC Central Europe Business line manager Sandvik Rock Processing, SMC Central Europe Business area manager for crushing and screening, Svedala Germany Scientific engineer at University Expert for Quarry & Surface Mining Industry Re-locating from Singapore to Stockholm 3

4 My Impressions Strong value-driven, passionate people within a great company Reliable and engaged customers High level of competences and customer knowledge World class products and applications Challenging and dynamic business environment with long-term profitable growth outlook New Sandvik Strategy favorable for construction, with a clear turnaround mandate 4

5 Customers > customers in niche applications Surface Drill & Blast Breaking, Crushing & Agg. & Cement Underground Civil Contracting Screening Contracting Quarrying Engineering Contracting 5

6 Competitive Offering Surface Drill & Blast Breaking, Crushing & Agg. & Cement Underground Civil Contracting Screening Contracting Quarrying Engineering Contracting Surface Drills Breakers Crushers & Screens Underground Drills & Bolters Rock Tools Mobile Crushers & Surface Drills Breakers Screens Systems for Mechanical Cutting crushing & screening Loading and Hauling Consumables, Wears, Parts and Services ~20% ~30% ~30% ~20% % of total construction segment sales 6

7 Construction business drivers POPULATION WEALTH URBANISATION INFRASTRUCTURE Photo by Pablo Lopez Luz 7

8 Construction Equipment Market - Geographical Breakdown by Value - 100% RoW India China Japan North America Europe * Growth from 2010 to 2015 of average 6 % p.a.* Sandvik accessible construction market: 140 B SEK (2010) Ongoing increase of the mid-market Significant dependency on China Long-term growth outlook with near term financial unrest need for agility 8 Sources: Off-Highway Research (September 2011), RoW: Rest of the World, * Forecast

9 Construction market - targets Growth areas - a multi-speed world GDP Growth High Medium Low 9 Source: IMF

10 Sandvik world leading in our construction applications global peers 10

11 Industry trends Environment, Health and Safety Mobile solutions and flexibility Increased productivity Advances in technology Emergence of mid-market Importance of and competition from Asia Importance of service 11

12 Sales Distribution 2010 Sales Distribution 2010 Projects & Systems Aftermarket South America Equipment Africa Middle East Full year 2010 (Pro-forma) Sales MSEK 8,000 EBIT Margin 8% ROCE 13% Employees 2,600 12

13 Mid-term: Turnaround Priority Actions Focus BA, January 1 st 2012 Differentiated go to market approach Reduce complexity Organizational delayering Product portfolio rationalization Cut costs Reduce costs to competitive levels Move operations to best cost countries Improve efficiency Business system agility Supply closer to markets NWC improvement 13

14 Long-term: Sustainable Profitable Growth Priority Actions Servicing Be global, act local in targeted markets Strengthen customer knowledge Strengthen applications competencies Offering Improve core premium offering Improve mid-market offering Multi-brand approach Costs Sustainable lean cost structure Design to cost Modularization Talent Strengthen local talent Strengthen gender diversity 14

15 Ambition 15

16 SJL Shanghai Jianshe Luqiao Major crushing and screening supplier Target China mid-market Current JV ownership: Shanghai Electric (75%) and China Road & Bridge (25%) 2010 sales: ca. 1 B SEK Number of employees : 1, Low profit level

17 Risks and Challenges External Continued L-shape in construction market Worsening economic crisis China demand instability Acceleration of competition from emerging markets globally Internal Distraction of teams during times of change Ability to implement needed changes fast enough Develop local talent and gender diversity Managing Premium and Midmarket together 17

18 Benefits of business area Stronger customer focus Faster speed in decision making Clearer goals and accountability for the dedicated team Promoted to be a core area within Sandvik 18

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