Sandvik AB Q1 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joel Adam Spungin - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes. Actually just continuation of Rizk's question actually. Just coming back on this point about what you were saying on rock processing and about whether there's been a catch up effect and the preordering. Could you maybe just elaborate about catch-up effect is that you need to rock processing on the aftermarket side? Or do you see it in SMR as well? And is it something that you would expect to continue as we go into Q2? And then again, on the preordering, I think you said it was on the mobile side specifically. Could you just elaborate about why it affected that business specifically? Stefan Widing - Sandvik AB (publ) - President, CEO, Director and President of Sandvik Manufacturing & Machining Solutions Yes. We call it out for Rock Processing because they had an aftermarket growth of over 20%, and that is not sustainable. There, we want to call out that there is a catch-up effect. We see a high mix of spare parts, which typically indicates that they have been running the equipment for longer last year. And now they need to replace some spare parts. In Mining and Rock Solutions, maybe there is some catch-up on the -- but more marginal and the aftermarket growth there of 9%. It's not as uncommon in the situation that we are in. So I think it's primarily a comment for Rock Processing Solutions. There might be some in mining and rock as well. Then I forgot your last question, what was that?

Question: Joel Adam Spungin - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. And then just one more very quickly. I was just wondering if you could not there some comments on the why it's about price increase. I was just wondering if you could elaborate a bit about what's going on with pricing and whether you're successfully offsetting the impact of any raw materials inflation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 20, 2021 / 11:00AM, SAND.ST - Q1 2021 Sandvik AB Earnings Call Stefan Widing - Sandvik AB (publ) - President, CEO, Director and President of Sandvik Manufacturing & Machining Solutions Yes. SMT, of course, has pricing built into their surcharge, I mean, it's built into the system, so to say. So that's not a big factor when raw material prices change. SMS, I mean, we have our own powder business, not very much impacted. To the extent they are, they can offset it with price. They had a price realization in the quarter of 1.2% for the cutting tools, which I think is good under these circumstances. Both Mining and Rock processing have done price adjustments. In some divisions, they are going back now to do a second round, simply because they see cost inflation and they want to secure that we don't fill up the order backlog with sort of the wrong pricing. So at this point, we feel it's being managed in a good way. There might be some timing effect. Sometimes it works against you, sometimes it works for you in terms of when you can realize price versus when you get the price increases in through your supply chain, it depends on lead times and so on. But overall, I would say, over time, at this point, it is being offset in a reasonably good way.