SANDVIK MACHINING SOLUTIONS CAPITAL MARKETS DAY 2017
KLAS FORSSTRÖM PRESIDENT SANDVIK MACHINING SOLUTIONS Master of Science in Materials Physics and a MBA in international business from Uppsala University, Sweden. President Sandvik Coromant 2011-2017 President Sandvik Hard Materials 2009-2011 President Precision Twist Drills and Dormer NA 2007-2009 Sr positions in Sales, R&D, Marketing and Business Development 4
FREDRIK VEJGÅRDEN HEAD OF STRATEGY & BUSINESS DEVELOPMENT Master of Science in Industrial Management and Engineering from the Institute of Technology at Linköping University, Sweden. McKinsey & Company 10 years at Luvata - Sr VP Operational Excellence (London, UK) - Head of Luvata HTS Asia (Shanghai, China) - Head of Luvata HTS Americas (Memphis, USA) 5
ADDITIVE MANUFACTURING POWDER & BLANKS TECHNOLOGY CENTER OF DIGITAL EXCELLENCE 6
55% 18% 12% 7% INSERTS ROUND TOOLS TOOLS TOOLING SYSTEMS POWDER & BLANKS ADDITIVE MANUFACTURING DIGITAL 7 Revenues YTD 2017
AUTOMOTIVE AEROSPACE OIL & GAS GENERAL ENGINEERING 14% 9% 30% 47% 8 Sandvik Annual Report 2016
NORTH AMERICA EUROPE ASIA 21% 20% 55% 9 Orders received 2016
100.000 DIRECT CUSTOMERS 85% 15% STANDARD VS. SPECIAL 60% 40% 30% 70% DIRECT VS. DISTRIBUTION MANUAL VS. WEB ORDER 10
CURRENT PERFORMANCE 11
SANDVIK MACHINING SOLUTIONS Q3 STRONG UNDERLYING GROWTH EARNINGS AND MARGIN IMPROVEMENT MSEK Q3 2016 Q3 2017 CHANGE ORDER INTAKE 7 776 8 450 +11%* REVENUES 7 859 8 488 +10%* OPERATING PROFIT 1 650 1 949 +18% % OF REVENUES 21.0% 23.0% MSEK Q1-Q3 2016 Q1-Q3 2017 CHANGE ORDER INTAKE 24 400 27 212 +9%* REVENUES 24 119 26 468 +7%* OPERATING PROFIT 5 087 6 130 +20% % OF REVENUES 21.0% 23.2% *At fixed exchange rates for comparable units *At fixed exchange rates for comparable units 12 SANDVIK: Interim Report on the third quarter 2017 Comments and numbers refer to continuing operations unless otherwise stated
35,0% 33,0% 31,0% 29,0% 27,0% 25,0% ROCE 23,0% 21,0% 19,0% 17,0% 15,0% 13
EBIT MARGIN 2 200 2 000 1 800 1 600 1 400 24% 23% 22% 21% 20% 19% 18% ROCE 1 200 1 000 17% 16% 15% 14
EBIT MARGIN 1,50 ROCE 1,45 1,40 1,35 CAPITAL TURNOVER 1,30 1,25 15
EBIT MARGIN REVENUE +10% P/V Q3 COST/ PRODUCTIVITY -10% FTE IN 3 YRS ROCE CAPITAL TURNOVER NET WORKING CAPITAL RATIO -5% PPTS 2015-2017 CAPEX vs DEP N -10% 2015-2017 16
KEY MARKET TRENDS & STRATEGIC DIRECTION 17
GLOBAL MANUFACTURING GROWTH SUPER- CYCLE 2002-2007 FINANCIAL CRISIS AND REBOUND 2008-2012 CURRENT MARKET ENVIRONMENT 2013» 18
Core Adjacent 20
TRENDS Core Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components 21
TRENDS Core Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components INDEXABLE 2014 2015 2016 2017 ROUND TOOLS SC 22
TRENDS Core Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components COMBUSTION HYBRID ELECTRICAL 23 NOW 5-10 YEARS OUT 30+ YEARS OUT Source: Morgan Stanley No OF INSERTS
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence 25
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence 27
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence 28
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence INSERTS 38% ROUND TOOLS 34% METAL CUTTING MARKET (160 BSEK) 29% 10% SMS MARKET SHARE 29
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence 30
Core TRENDS Round Tools gaining share Electrical Vehicles a long term trend Increase in complex material & components STRATEGIC DIRECTION New product launches Increased service and customized offerings Round tools Operational excellence 31
Core Adjacent 32
Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 33
SOLUTION DESIGN COMPONENT CONCEPT COMPONENT DESIGN & PROCESS PLANNING PROCESS DEFINITION PROCESS OPTIMIZATION MACHINING PREPARATION MACHINING OUTPUT VALIDATION R&D S/W CAD/CAE CAM CAM Optimization s/w Post-processing Tool life cycle mgmt (TDM) CNC CMM METAL CUTTING TOOL PLAYERS MACHINE TOOL MAKERS PRE-SETTERS CONTROL SYSTEMS CAD/ CAM SOFTWARE METROLOGY / MEASUREMENT AUTOMATION Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 34
OUTPUT VALIDATION SOLUTION DESIGN COMPONENT CONCEPT COMPONENT DESIGN & PROCESS PLANNING PROCESS DEFINITION PROCESS OPTIMIZATION Digitalization throughout the value chain MACHINING MACHINING PREPARATION Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 35
VERIFICATION & EVALUATION DESIGN & PLANNING Digitalization throughout the value chain MACHINING PREPARATION Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 36
Manufacturers today ask for strong, lightweight materials in complex designs, along with minimized waste and reduced carbon footprint Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 37
SELECTION CRITERIAS Complex shapes Expensive materials 22% CAGR Smaller series Low weight is essential Revolutionary designs Individual variations (tailored) +25% CAGR Spare-parts (to reduce lead-times and NWC) Potential to merge sub-parts into one component 2014 2015 2016 2017 2018 2019 2020 2025 Graph: total AM market size Source: Smart Tech 2017 Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing TRENDS 38
Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 39
VERIFICATION & EVALUATION DESIGN & PLANNING Digitalization throughout the value chain MACHINING PREPARATION Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 42
VERIFICATION & EVALUATION DESIGN & PLANNING Digitalization throughout the value chain MACHINING PREPARATION TDM Cloud Line Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 43
VERIFICATION & EVALUATION DESIGN & PLANNING Digitalization throughout the value chain MACHINING PREPARATION CoroPlus Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 44
MATERIALS ADDITIVE MANUFACTURING POST PROCESSING CUSTOMER REACH Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 45
ACCELERATE SANDVIK 01. AM-POWDER SALES 02. MANUFACTURING SERVICES 03. ADVISORY SERVICES Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 46
Adjacent Digital solutions making manufacturing chain integration possible Emerging technologies Additive Manufacturing Expanding SMS digital solutions Develop an additive manufacturing offering TRENDS STRATEGIC DIRECTION 48
CUSTOMER TECHNOLOGY M&A OPERATIONAL EXCELLENCE 49
SUMMARY 50
Core Adjacent 51
52 From a world leading player in the niche industry of metal cutting, to a leading solutions provider to the wider manufacturing industry delivering accelerated growth with maintained high profitability and returns