Sandvik AB Q2 2022 Earnings Call Transcript

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

Question: Andrew J. Wilson - JPMorgan Chase & Co, Research Division - Analyst : I just wanted to start with -- and I appreciate you may or may not want to help us on this, but I just wanted to try and understand, in terms of customer indications, I guess, in SMM, but I'm just as well, if you're seeing anything across any of the their market segments in terms of indications of a slowing whether that be, I guess, order numbers starting or being deferred, being delayed. I guess anything -- anything that you've seen that can kind of help us, and I'm thinking across kind of auto, aerospace, energy and general industrial just because I expect there's perhaps some different trends across the segment. So I guess (inaudible) , please? Stefan Widing - Sandvik AB (publ) - President, CEO, Pres. of Sandvik Manu & Mach Sol, Int Pres. of Sandvik Min & Rock Sol and Director I'll start -- SMM. No, not really. But on the other hand, of course, we -- so we get an order we deliver in 24 hours. So it's a very -- that's why it's so much of a real-time business in that sense. So we're not expecting to give -- be given sort of a heads up in that regard. But as we have said so far, up until now, I would say that the demand is -- it's, I mean, solid. As we said, automotive has been weaker, but it's primarily been driven by the slowdown in China. Auto production, I think the forecast going forward is about 4% year-over-year. That might be revised, but that's the current forecast. And we maybe expect the tooling demand to be slightly below that because we were overshooting a bit end of last year. But yes, that's what we -- that's the view we have there right now. Energy relatively comfortable with what Europe and U.S. is facing that investment level feels fairly well underbuilt by demand and needs. Aerospace, it's still below pre-COVID levels. So we continue to see good growth. And of course, we have seen good growth for a number of quarters now, as you know. So just the waterfall effect means we are already at higher level than upcoming quarters. So I guess what we will see first is where general engineering goes. But as we said in Q2, high single-digit growth in general engineering, actually across all regions. So yes, I understand your question. We are also, of course, very -- tried to have the sensors out there, driven by all the news we see. But currently, the demand picture looks okay. On the mining side. Sometimes, we get comments that yes, maybe some projects or decisions are dragging out a bit. But we also know there are price increases coming through. We have long lead times. So it might also be our ability to deliver that impacts those decisions. So I don't really read too much into it from a demand picture point of view. Yes, I think I'll stop there.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : My first question is on the order book order intake. You mentioned organic order growth 4%, but if you include Russia, it would have been 10%. Could you just explain what you mean by that? Is it that you had Russian orders during this quarter, and they account for like 6% of the total order intake? Or is it an adjustment of the order book that relates to Russia, that does take out of these orders? Stefan Widing - Sandvik AB (publ) - President, CEO, Pres. of Sandvik Manu & Mach Sol, Int Pres. of Sandvik Min & Rock Sol and Director No. I mean, we can basically say orders in Q2 this year was 0. But if we also take out the orders we had in Q2 of last year, so we take that out. So we get a lower compare then it was 10%. So if you exclude Russia from the equation last year versus this year, the rest of the world at 10% organic.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : And then for the order book, the existing order book in SMR, can you give us an indication of the backlog that you currently have, how many months or what's the volume? If I assume 9 months backlog for equipment, it would be like SEK 15 billion. Would that be a fair number? Stefan Widing - Sandvik AB (publ) - President, CEO, Pres. of Sandvik Manu & Mach Sol, Int Pres. of Sandvik Min & Rock Sol and Director Overall, you mean? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2022 / 11:00AM, SAND.ST - Q2 2022 Sandvik AB Earnings Call

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : But it would help us to understand the cost price mismatch, timing missing that we've talked about the last 6 months. Stefan Widing - Sandvik AB (publ) - President, CEO, Pres. of Sandvik Manu & Mach Sol, Int Pres. of Sandvik Min & Rock Sol and Director From a timing perspective, you can assume May takes, on average, 9 months. I mean it's different on different types of equipment. But on average, the order backlog, you can assume around 9 months.