PRESS RELEASE 21 JANUARY 2021
INTERIM REPORT
FOURTH QUARTER 2020
AND FULL YEAR 2020
Q4 SANDVIK INTERIM REPORT 2020 | Comments and numbers in the report relate to |
continuing operations, unless otherwise stated | |
SHIFTING TO GROWTH WITH MARGIN AT A RECORD LEVEL
CEO'S COMMENT: The pace of recovery that was noted at the beginning of October continued throughout the fourth quarter. Demand in our long-cycle mining business was strong and we saw a sequential uptick in our short-cycle business. Consequently, organic order intake (excluding major orders) for the Group grew by 3% year on year. Despite lower revenues in the wake of Covid-19, we delivered strong and improved adjusted margin of 20.1% (19.1) in the quarter, supported by our short and long term savings initiatives, which is a confirmation of our tight cost control and our agility during this year's challenging market conditions. During the quarter, we delivered approximately SEK 920 million in savings and lower discretionary spend for the Group compared with the preceding year. However, the headwind from currency had an impact on both reported revenues and reported operating profit. Organic order intake and revenues for full year 2020 declined by -12% and -11% respectively, heavily impacted by the Covid-19 pandemic. At the same time, Sandvik has been able to maintain resilient adjusted margins of 16.9% (18.6).
A record order intake was noted for Sandvik Mining and Rock Technology, increasing by 15% year on year, with a continued strong momentum in equipment and improved performance in the aftermarket business. During the quarter, we announced the deal to acquire the market-leading safety solutions company DSI Underground, which will become part of Sandvik Mining and Rock Solutions business area. DSI Underground's consumables business adds stability to our earnings profile, strengthens Sandvik's underground mining offering and is an important step in our overall growth ambition.
Sandvik Manufacturing and Machining Solution's organic order intake declined by -7% year on year, albeit with a sig- nificant sequential improvement driven by automotive and increased activity in Asia, in particular China. Daily order intake in December was in the negative mid-single-digits year on
year, and this trend has improved in the first weeks of Janu- ary, with order intake in the negative low single digit range. In December, we completed the acquisitions of Miranda Tools, a supplier of high-speed steel and solid carbide round tools and US based CGTech, the global leader in software for numerical control, simulation, verification and optimization.
Sandvik Materials Technology's order intake declined by
-31%. Excluding major orders of SEK 1.1 billion for advanced tubular products in the year earlier period, order intake declined by -7%, attributable to the continued low demand within oil and gas, which was partially offset by increased demand within industrial heating and the consumer-related segments.
While the quarter was characterized by increased optimism and a higher degree of activity, we nonetheless find ourselves in the midst of the second wave of Covid-19. It remains difficult to predict the short-term consequences, and in the long-term, the handling of the pandemic and economic policy decisions will determine the speed and strength of the re- covery. Meanwhile, our priorities are to continue with pre-cautionary measures to keep our employees and customers safe and to stay focused on executing our savings initiatives while capturing the interesting growth opportunities that lie ahead of us.
The Board of Directors proposes an ordinary dividend of SEK
4.50 per share (0). In addition, the Board proposes an extra dividend of SEK 2.00. This total level takes into consideration current market conditions and a prioritization of a continued solid balance sheet to support our growth ambitions. The dividend proposal represents 75% (0) of adjusted EPS for the Sandvik Group in total.
Stefan Widing
President and CEO
FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK | 2 |
Q4 SANDVIK INTERIM REPORT 2020
FINANCIAL OVERVIEW, MSEK | Q4 2019 | Q4 2020 | CHANGE % | Q1-Q4 2019 | Q1-Q4 2020 | CHANGE % |
Continuing operations | 25,179 | 22,051 | -2 | 104,075 | 86,287 | -12 |
Order intake 1) | ||||||
Revenues 1) | 26,583 | 22,408 | -6 | 103,238 | 86,404 | -11 |
Gross Profit | 10,380 | 8,644 | -17 | 41,576 | 32,237 | -22 |
% of revenues | 39.0 | 38.6 | N/M | 40.3 | 37.3 | -16 |
Operating profit | 744 | 3,487 | 13,386 | 11,216 | ||
% of revenues | 2.8 | 15.6 | -11 | 13.0 | 13.0 | -24 |
Adjusted operating proƮt 2) | 5,066 | 4,505 | 19,219 | 14,563 | ||
% of revenues | 19.1 | 20.1 | N/M | 18.6 | 16.9 | -7 |
Profit after net financial items | 471 | 3,407 | 12,150 | 11,270 | ||
% of revenues | 1.8 | 15.2 | -8 | 11.8 | 13.0 | -22 |
Adjusted proƮt after net Ʈnancial items 3) | 4,792 | 4,424 | 17,982 | 14,029 | ||
% of revenues | 18.0 | 19.7 | N/M | 17.4 | 16.2 | 0 |
Profit for the period | -87 | 2,633 | 8,728 | 8,753 | ||
% of revenues | -0.3 | 11.8 | N/M | 8.5 | 10.1 | 0 |
Earnings per share, basic, SEK | -0.06 | 2.10 | 6.97 | 6.99 | ||
Earnings per share, diluted, SEK | -0.06 | 2.10 | N/M | 6.96 | 6.98 | 0 |
Adjusted earnings per share, basic, SEK 2, 3) | 3.21 | 2.68 | -16 | 11.12 | 8.64 | -22 |
Return on capital employed, % 4) | 3.9 | 15.6 | -6 | 15.2 | 13.3 | -10 |
Cash flow from operations | 5,581 | 5,228 | 17,046 | 15,414 | ||
Net working capital % 4) | 24.8 | 24.3 | 25.2 | 27.5 | ||
Discontinued operations | -62 | -13 | -80 | -205 | -32 | -85 |
Profit for the period | ||||||
Earnings per share, basic, SEK | -0.05 | -0.01 | N/M | -0.16 | -0.03 | N/M |
Group Total | -149 | 2,621 | N/M | 8,523 | 8,721 | 2 |
Profit for the period | ||||||
Earnings per share, basic, SEK | -0.11 | 2.09 | N/M | 6.81 | 6.96 | 2 |
Earnings per share, diluted, SEK | -0.11 | 2.09 | N/M | 6.79 | 6.95 | 2 |
Adjusted earnings per share, SEK 2, 3) | 3.16 | 2.67 | -15 | 10.96 | 8.61 | -21 |
- Change from the preceding year at Ʈxed exchange rates for comparable units. 2) ProƮt adjusted for items aƬecting comparability of SEK -1.0 billion in Q4 2020 (-4.3) and to SEK -3.3 billion YTD 2020 (-5.8). For Q4 2020 these are primarily related to savings measures, the FY 2020 is also primarily impacted by costs related to Varel Oil & Gas disposal in Q1. FY 2019 is primarily related to ef- Ʈciency measures, impairment and divestment of Hyperion. See page 23. 3) Net Ʈnancial items includes items aƬecting comparability of SEK 0.6 billion for FY 2020 (0). There are no items aƬecting comparability in net Ʈnancial items for Q4 2020 (0), see page 23. 4) Quarter is quarterly annualized and year-to-date numbers are based on a four quarter average.
Tables and calculations in the report do not always agree exactly with the totals due to rounding.
Comparisons refer to the year-earlier period, unless stated otherwise.
For deƮnitions see home.sandvik
N/M = not meaningful
FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK | 3 |
Q4 SANDVIK INTERIM REPORT 2020
MARKET DEVELOPMENT
ORDER INTAKE
GROWTH
Q4 | ORDER INTAKE | REVENUES |
Price/volume, % | -2 | -6 |
Structure, % | -2 | -2 |
Currency, % | -9 | -9 |
TOTAL, % | -12 | -16 |
Change compared to same quarter last year. The table is multiplicative, i.e.. the diƬerent components must be multiplied to determine the total eƬect.
MSEK
- 000
- 000
- 000
- 000
- 000
During the quarter, order intake declined organically by -2% year on year. Ex- | 0 | |||||||||||||||||||||||
cluding major orders in Sandvik Materials Technology received in the year earlier | 2018 | 2019 | 2020 | |||||||||||||||||||||
period, order intake grew by 3%. Revenues declined organically by -6%. | Q1 | Q2 | Q3 | Q4 | ||||||||||||||||||||
In the midst of a second wave of Covid-19, a gradual recovery was seen in specific | ||||||||||||||||||||||||
end-markets and segments in the fourth quarter. Organic order intake for the Group | ||||||||||||||||||||||||
was slightly negative, but excluding major orders, showed a positive development | REVENUES AND BOOK TO BILL | |||||||||||||||||||||||
year on year for the first time since the first quarter of 2019, fueled by strong de- | ||||||||||||||||||||||||
mand in the mining business. While demand in aerospace and oil & gas remained | MSEK | PERCENT | ||||||||||||||||||||||
subdued, customer activity in engineering and, in particular, automotive intensified in | 120 000 | 120 | ||||||||||||||||||||||
the period. | 100 000 | |||||||||||||||||||||||
The sentiment in mining remained solid with high demand and favorable development | 80 000 | |||||||||||||||||||||||
60 000 | 100 | |||||||||||||||||||||||
for mineral prices, resulting in organic order intake growth of 15% for Sandvik Mining | ||||||||||||||||||||||||
and Rock Technology. Sandvik Manufacturing and Machining Solutions reported a | 40 000 | |||||||||||||||||||||||
year on year decline in organic order intake of -7%. Organic order intake improved | 20 000 | |||||||||||||||||||||||
sequentially for Sandvik Materials Technology, but compared to the corresponding | 0 | 80 | ||||||||||||||||||||||
period in the preceding year declined by -31%. Excluding major orders received in | ||||||||||||||||||||||||
2018 | 2019 | 2020 | ||||||||||||||||||||||
the year earlier period of SEK 1.1 billion within advanced tubular products for the en- | ||||||||||||||||||||||||
ergy segment, Sandvik Materials Technology's organic order intake declined by -7%. | Q1 | Q2 | Q3 | Q4 | Book-to-bill (YTD) |
Demand in parts of Europe improved sequentially driven by automotive and mining activity, and overall organic order intake declined year on year by -2%. North America declined with -23% while order intake in Asia increased by 4%, reflecting the continued economic recovery in the region.
Changed exchange rates had a negative impact of -9% on both order intake and on
revenues. | MINING | GENERAL | AUTOMOTIVE | ENERGY | CONSTR. | AERO | ||||||||||||||||||||||||
Q4 | ENGINEERING | |||||||||||||||||||||||||||||
40% | 23% | 11% | 10% | 8% | 5% | |||||||||||||||||||||||||
UNDERLYING MARKET DEVELOPMENT | of 2020 revenues | |||||||||||||||||||||||||||||
% of 2020 | Order intake Y/Y | |||||||||||||||||||||||||||||
Group revenue | (excl. large orders) | |||||||||||||||||||||||||||||
Europe | 35% | -2% | ||||||||||||||||||||||||||||
(-2%) | ||||||||||||||||||||||||||||||
North | 22% | -23% | ||||||||||||||||||||||||||||
America | (-6%) | |||||||||||||||||||||||||||||
Asia | 20% | +4% | ||||||||||||||||||||||||||||
(+4%) | ||||||||||||||||||||||||||||||
Africa/ | 9% | +26% | ||||||||||||||||||||||||||||
Middle East | (+26%) | |||||||||||||||||||||||||||||
Australia | 9% | +4% | ||||||||||||||||||||||||||||
(+4%) | ||||||||||||||||||||||||||||||
South | 5% | +24% | ||||||||||||||||||||||||||||
America | (+24%) | |||||||||||||||||||||||||||||
FOR ADDITIONAL INFORMATION, PLEASE CALL SANDVIK INVESTOR RELATIONS +46 8 456 11 00 OR VISIT HOME.SANDVIK | 4 |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Sandvik AB published this content on 21 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 January 2021 07:03:03 UTC