Sandvik AB Q3 2021 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've just got 2. I'll start with one on the mining side. I'm interested in what seems to be a different message on the supply challenges and the invoicing between SMR and SRP. It clearly seems a lot more difficult in SRP appreciating the businesses are different. But just, I guess, how concerned we need to be that we might see an impact in SMR in terms of the Q4? Are things getting a little bit harder from an invoicing perspective? Or do you think that that's under control? Stefan Widing - Sandvik AB (publ) - President, CEO, Director and President of Sandvik Manufacturing & Machining Solutions I think the main difference between SMR and SRP and that we talk a little bit more about the impact in SRP is simply a matter of size. SMR is a bigger business. They have -- yes, they are present in more locations. They have more factories, et cetera, et cetera, which means if they have challenges in 1 area, they can try to offset it in another in a different way. SRP, if stationary crushers have an issue to deliver a few crushers at the end of the month, there is really no -- they have no way to really offset it. So I don't think the situation is worse or better for anyone. I just think SMR has a little bit more opportunities to manage the situation due to scale and size. So I think that's more of the reason. As for going forward, we don't think that the situation will get worse. But we think we will have to live with the situation we have also for the rest of the year. And then exactly when it will improve, I guess, your information is as good as mine on that.

Question: Mattias Holmberg - DNB Markets, Research Division - Analyst : You've had a pretty interesting lineup of acquisitions in SMM recently. And I'm curious as to how far along you would say that you've come in better positioning SMM towards the structural shift away from internal combustion engines? Sort of will the acquisitions that you've made so far be enough to offset that headwind or perhaps rather how dependent will SMM be for further acquisitions in metrology and CAM in order to have a business that overall will be able to grow faster than, say, underlying industrial production in the coming years? Stefan Widing - Sandvik AB (publ) - President, CEO, Director and President of Sandvik Manufacturing & Machining Solutions I would -- there are really 3 parts to the answer, I would say. First of all, it's actually the acquisitions done in round tools, which is part of the strategy to offset this. But that was not really your question, but I want to emphasize that there is an important part in the core business as well to offset that headwind, which we are very happy with the progress made in the quarter. Then to your question, I would split the answer in 2. We have a target in SMF as we have said now to be at SEK 6 billion by 2025. And we are -- since we upgraded the target after these acquisitions already in a good position to achieve that, we are clearly already seeing that we will be above the SEK 4 billion without further acquisitions really. Up until 2025, just the growth up until the SEK 6 billion organic and through acquisitions will be by far offsetting the headwind from this transition because we have an acquisitive component that's fairly aggressive. If we look at the state in 2025, and SMF being at SEK 6 billion, growing at high single digits organically because that's where we should be with this in these markets. The growth from SMF will more than offset the headwind we will see from that transition in the latter half of the decade. This is, of course, part of the strategy to exactly get into this position. We haven't delivered on all of it yet, but we are in, I would say, very good progress. So from our point of view -- I know not all of you are convinced yet, but from our point of view, we are now in a very good position in terms of managing this headwind. So we feel quite confident.