Sandvik AB Capital Market Day 2020 (virtual) Transcript

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

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Several questions on growth today, but I would like to ask one as well. So you expect market growth of 2% to 3% for your businesses, and you aim to grow by at least twice that pace, including acquisitions, which gets me to around 5%. And that implies to me that your growth target is not really dependent on SMT being or not being part of the Sandvik group. Is that correct? And what kind of market growth do you expect for SMT?

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : So that wouldn't change if SMT was spun out today. [I mean...]

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Sorry, I was on mute. Now you can hear me, I guess.

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Perfect. So I'm coming back to the question I was about to ask earlier today. And that was on your SEK 5 billion sales target from adjacent and these digital businesses. How much of that should we expect to come from acquisitions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 03, 2020 / 12:00PM, SAND.ST - Sandvik AB Capital Market Day 2020 (virtual)

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Okay. Yes. And then maybe a question for Nadine and Henrik. It is the same kind of question, but 2% expected market growth for Sandvik Machining Solutions. I think historically, you and the industry have had good pricing power. And I think price increases have been up by maybe 1% to 2% per annum in the past. Do you think you and the industry will have equally good pricing power in the coming 5 years? And does that mean that you expect limited volume growth?

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Yes. A similar question for Henrik. 3% market growth, I am a bit surprised about that. I think it sounds a bit low because we are now seeing a lot of automation and digitalization, which should mean that the industry will have both strong pricing power and benefit from the mix. But what have you assumed in terms of pure volume growth in that market growth assumption?

Question: Andreas Juhani Koski - Nordea Markets, Research Division - Analyst : Okay. Great. And then just lastly, if I could ask, Stefan. On the slide, when you talked about automotive headwind, and you said that you expect a CAGR in cutting tools over the next 5 years around flat, the 5 years after that. Can I just ask what you have used for your calculation? If you're saying that ICE is a baseline or 1, have you given the hybrids 1.1 and battery electric 0.3 to calculate this? Just for us to be able to elaborate about the car production numbers ourselves.

Question: Anders Roslund - Pareto Securities AS, Research Division - Analyst : Yes. I just wonder, you had some comments this morning when you talked to journalists. Were there something else talking about the market demand, et cetera, that had an impact on the share price today?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Two questions from my side. So the growth areas, the organic growth areas that you identified, to me, that's -- in SMR, it would be service drilling; in SMM, it would be round tools as you explained just a minute ago again. Wouldn't that be more competitive feels with potentially lower-margin potential? Because it seems to be that you're moving out of your core high-return businesses. That will be question number one. Question number two, on the additive manufacturing business, I think there are some lessons to be learned from companies like Oerlikon, who tried 3 to 4 years ago to push very aggressively into additive, because of the boom in aerospace and the need from the engine manufacturers. But that has completely faltered. So all the growth expectations have not materialized, and now aerospace is in a structurally difficult situation. So the question is, why do you think now is the time to push into additive? And where is the growth? Where is the market growth coming from in additive?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Seems like margin dilution, basically.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Understood. Do you have cooperations with the machine makers like GE or Hewlett Packard, that are the kind of the leaders, or [Tuum] from Germany?