The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst
: Gentlemen, just a bit more comments on SMRT. We see excellent copper price development, gold price on a record high. It's a big chunk of the
SMRT business. So would you guys be surprised if the new equipment orders have a complete turnaround this year and go positive towards the
end of the year? And at the same time, with the strong utilization of the equipment, would you think that service business is also strongly improving?
That would be my first question.
And secondly, on SMT, umbilical tubes, I think that's kind of a dying business at the moment because offshore is completely dead. Are you preparing
for kind of a restructuring effect? Or let's say, is SMT one of the businesses where you see more permanent restructuring, more permanent capacity
cuts in the coming months?
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JULY 16, 2020 / 11:00AM, SAND.ST - Q2 2020 Sandvik AB Earnings Call
Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst
: Yes. And that would mean that you also consider the divestment even if the high-margin offshore business is completely -- is disappearing for the
next years, would still consider the disposal or divestment, is that correct?
Question: Andrew J. Wilson - JPMorgan Chase & Co, Research Division - Analyst
: Just a couple from me. On the -- I guess, it's a group-wide question, but I'm particularly interested in SMS. What sort of indications are you getting
from your customers with regards to the usual summer shutdowns? I'm just trying to think, obviously, very unique profile as we've kind of gone
through the Q2 and this year more generally. And I'm just trying to think about how they might be adapting their plans and how that's impacting
how you think about the business this year.
Question: Andrew J. Wilson - JPMorgan Chase & Co, Research Division - Analyst
: Yes. And then just second question is probably for Tomas. Just thinking about inventories, Tomas, and clearly, there's a lot of moving parts, given
there's a sort of structural, I guess, desire to reduce inventory levels across the group or at least improve working capital but you've obviously got
falling sales. So some of these ratios move around quite quickly at the moment. Just trying to think about how you're thinking about inventories
in Q3 and any help you could give us in terms of, I guess, under production potentially in the Q3 bridge, and just how to think about that a bit more
generally.
Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst
: I would like to come back to the cost savings. You had temporary cost -- because I didn't really get you, Tomas, when you talked about the temporary
cost savings going forward. Because if I read your press release from July, you are saying that you expect temporary short-term actions to generate
savings of about SEK 1.5 billion. And I think that the temporary savings gave you SEK 1.1 billion in savings in this quarter. So there would only be
SEK 400 million left according to that. But it sounds like you are excluding the other temporary savings when you were talking about the SEK 600
million and the remaining SEK 900 million. So could you please explain that, and what we should expect in terms of total temporary savings in total
for the year?
Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst
: Yes. That's very clear. And then could I just follow up on the separation of Sandvik Materials Technology? Can you explain what the process will
look like from here?
Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst
: Okay. And when you joined as the new CEO of Sandvik, you said that you were going to form your own opinion on what you think about Sandvik
Materials Technology and if it belongs within Sandvik. Are you done with that? Or -- and are you going to communicate that? Or is that -- are we
-- do we have to wait for the Board decision or...
Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst
: Very clear. And then my last question is also on SMT because you said that you have had some cancellations and delays in your oil and gas business.
And to me, that is a bit concerning because I guess that the oil and gas business is the most profitable part of SMT. Would you say that if you would
exclude the oil and gas business, is SMT still profitable? Or are the other parts making a loss?
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