capital markets day 2010 sandvik materials · pdf filenet working capital reduced from 40% to...
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CAPITAL MARKETS DAY 2010
Sandvik Materials Technology
Prepared for the future
Peter Gossas President
Agenda Sandvik Materials Technology
• Safety first!
• Business update and downturn management
• Business concept
• Prepared for the future
Page 2
Agenda Sandvik Materials Technology
• Safety first!
• Business update and downturn management
• Business concept
• Prepared for the future
Page 4
Sandvik Materials Technology
A leading developer of advanced metallic and ceramic materials, serving the most demanding industries with products and system solutions
Highly integrated production platform and extensive R&D
Five product areas: Tube, Strip, Wire and Heating Technology, Process Systems and MedTech
2010 Q1-2:Sales 8,638 MSEK 8,600 employees
Page 5
Business update Sandvik Materials Technology, Q2-2010
MSEK, Quarter
Sales
EBIT margin
ROCE 12-months
Continued improved demand
Favorable development in energy
Invoicing increased 23%
Alloy surcharges contributed 9%
Operating profit, 699 MSEK, 15.1%
Metal price effect +340 MSEK
Underlying margin 8%
Net Working Capital reduced to 28% of invoicing
Page 6
Downturn management Cash flow focus and margin recovery
Structural changes• Consolidation of Wire and Kanthal into “Wire and Heating Technology• Consolidation of production units within MedTech and back-offices
in the sales organization• Exit of non-core business
Baseline Q3-2008
Margin recovery• Product mix optimization and price management • Sustainable cost reductions of 800 MSEK of which ~50% comes
from reduced manning
Value chain efficiency• Net Working Capital reduced from 40% to 28% of sales
Inventory reduction: 25%, Invoicing drop: 14% • Production lead-times reduced by 30%
Page 7
Agenda Sandvik Materials Technology
• Safety first!
• Business update and downturn management
• Business concept
• Prepared for the future
Page 8
Sandvik materials evolution 1930 - 2015
Carbon steel
Super alloys
Hardened steels
Stainless steels
Advanced stainless
19702008
2015
1930
Page 9
Sandvik materials evolution Example: Oil and gas industry
Page 10
A-products = Extreme niche withunique position
B-products = Niche products
C-products = Filler products
Product mix development 2003 - 2009
2003 2008
A
B
C
12,5 BSEK
21,5 BSEK
43%
25%
32%
43%
25%
32%
40%
35%
25%
40%
35%
25%
42%
38%
21%
16 BSEK
2009
Page 11
High degree of unique and specialized materials
Example grades
Sales 2009 A B C D E
Local Chinese/ Indian
Competitor comparison:
Safurex®
SAF 2707 Hd®
SAF 2906®
Sanicro 68®
…
SAF 2507®
SAF 2205®
…
316 L304…
70%
Specialty grades
Unique SMT-grades
Standard grades
43%
25%
32%
Page 12
Delivering superior value to customers throughown development and
manufacturing of the market’s most advanced metallic and ceramic materials long-term customer
relationships
Global leadership in selected niches innovation leadernumber one in
market positioncost leadership
SMT Core Business
Materials Semifinishedproducts
Applications Integratedsolutions
High alloy/advancedmaterials
Lower alloymaterials
Sandvik
Core business definition Sandvik Materials Technology
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Highly integrated production building on world leading metallurgy
Melting Hot rolling/extrusion
Finishing
R&
D
VALUE ADDED 1%
18%
18%
81%
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ConsumablesRecycled steelSpecial alloys
Highly integrated production
Energy
Automotive
Consumer
Electronics
Chemical
Mining
Construction
Medical
Metallurgy• Precision wire• Profiles
• Heating systems• Heating elements• Gas furnaces
• Process systems• Rotoform systems
• Hip implants• Knee implants• Shoulder implants• Surgical instruments
(spine, hip, knee)
• Surface technology prod.• Flapper valve steel• Razor blade steel
Strip
Wire
Resistance materials
Tube
Belts
Semi-finished medical implants and instruments
• Coiled tubes• Steam generator tubes• Finned tubes• Umbilical tubes• Composite tubes etc.
Rawmaterials
Special metallurgy
Commonfinishing
Specificfinishing
Customersegments
Page 15
From steel melt to finished product Case: Umbilical tubing for
the oil/gas-industry
>35 process steps
Page 16
Nuclear
Mining
SMT
posi
tion
Market attractiveness
Size based on revenue 2009
Con-struc-tion
Strong niche position in attractive segments
EnergyChemical
Construction
General engineering
MedicalConsumer
and Electronics
Automotive
Page 17
Agenda Sandvik Materials Technology
• Safety first!
• Business update and downturn management
• Business concept
• Prepared for the future
Page 18
Prepared for the future
Growth in emerging markets• Development in emerging markets drives growth in key segments• Further investments in production platform and sales organization
Growth in energy• Extensive investments in capacity for nuclear products• Long-term nuclear delivery agreements signed worth >10 BSEK • Next generation of materials launched within oil/gas• Extensive R&D-investments in technology for new energy sources
Continued materials evolution• Next generation of materials ready to be launched in key areas • New Sales Ratio has developed from 5% (2006) to 20% (Q1+Q2, 2010)
Page 19
Prepared for the future
Medical technology partnerships• Leverage Sandvik capabilities to strengthen strategic
partnerships with OEM’s• Consolidation and specialization
Continued performance improvements • Continue to leverage SMT Business System (including
navigators) to improve performance further • Continue the work to improve capital efficiency and reduce lead-times• Product mix optimization and price management
Continued structural changes• Further consolidation and specializations of operations• Continued exit of non-core business
Page 20
Summary Sandvik Materials Technology
Page 21
• Still recovering from the downturn when it comes to volumes and margin
• Uniquely positioned within advanced metallic and ceramic materials, with a highly integrated value chain
• Focus areas includes:• Energy• Emerging markets• Medical• Continued performance improvements
• Continued contingency planning to protect obtained improvements – and to be able to handle future downturns
Sandvik Capital Markets Day September 2009 page 21
Q&A session
Sandvik Capital Markets Day September 2010 page 22
Cautionary 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 effected by other factors like for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialisation and technological difficulties, supply disturbances, and the major customer credit losses.”