Sandvik Construction

Sandvik Construction1

Sandvik Construction

CAPITAL MARKETS DAY 2011

Thomas Schulz President as of January 1 2012


Environment, Health & Safety First

Our EHS Vision is to achieve Zero Harm to our people, the environment we work in, our customers and our suppliers

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2005 2006 2007 2008 2009 2010 2011

LTIFRLost Time Injury Frequency Rate(Sandvik Mining and Construction)

Sandvik Capital Markets Day September 2011


Thomas Schulz Construction President as of January 1 2012

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46 years old, married, 2 children

Doctor’s degree in Quarrying & Surface Mining

PositionsConstruction customer segment presidentRegional manager, SMC Central EuropeBusiness line manager Sandvik Rock Processing, SMC Central EuropeBusiness area manager for crushing and screening, Svedala GermanyScientific engineer at UniversityExpert for Quarry & Surface Mining Industry

Re-locating from Singapore to Stockholm



My Impressions

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Strong value-driven, passionate people within a great company

Reliable and engaged customers

High level of competences and customer knowledge

World class products and applications

Challenging and dynamic business environment with long-term profitable growth outlook

New Sandvik Strategy favorable for construction, with a clear turnaround mandate



Sandvik Construction Customers

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Surface Drill & Blast Contracting

Breaking, Crushing &Screening Contracting

Agg. & Cement Quarrying

Underground Civil Engineering Contracting

>20.000 customers in niche applications>20.000 customers in niche applications



Competitive Sandvik Construction Offering

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Surface Drill & Blast Surface Drill & Blast ContractingContracting

Breaking, Crushing &Breaking, Crushing &Screening ContractingScreening Contracting

Agg. & Cement Agg. & Cement QuarryingQuarrying

Underground Civil Underground Civil Engineering ContractingEngineering Contracting

~20%~20% ~30%~30% ~30%~30% ~20%~20%

% of total construction segment sales

Surface DrillsRock Tools

Breakers Mobile Crushers & Screens

Crushers & ScreensSurface DrillsSystems forcrushing & screening

Consumables, Wears, Parts and Services

Underground Drills & BoltersBreakersMechanical CuttingLoading and Hauling



Construction business driversPOPULATION – WEALTH – URBANISATION – INFRASTRUCTURE

Photo by Pablo Lopez Luz


Sandvik Construction8Sources: Off-Highway Research (September 2011), RoW: Rest of the World, * Forecast

Construction Equipment Market

Growth from 2010 to 2015 of average 6 % p.a.*

Sandvik accessible construction market: 140 B SEK (2010)

Ongoing increase of the “mid-market”

Significant dependency on China

Long-term growth outlook with near term financial unrest need for agility

-- Geographical Breakdown by Geographical Breakdown by Value Value --

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20

40

60

80

100%

2006 2010 2015*

RoW

India

China

Japan

NorthAmerica

Europe


Construction market - targets

HighMediumLow

GDPGrowth 10-15

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Growth areas - a multi-speed world

Source: IMF


Sandvik world leading in our construction applications

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global peersglobal peers



Industry trends

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Environment, Health and Safety

Mobile solutions and flexibility

Increased productivity

Advances in technology

Emergence of “mid-market”

Importance of and competition from Asia

Importance of service




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Projects & Systems

Equipment

Aftermarket

AfricaMiddle East

South America

Sales MSEK 8,000 EBIT Margin 8%

ROCE 13% Employees 2,600

Full year 2010 (Pro-forma)

Sales Distribution 2010Sales Distribution 2010 Sales Distribution 2010Sales Distribution 2010



Mid-term: Turnaround

Focus Sandvik Construction BA, January 1st 2012

Differentiated go to market approach

Organizational delayering

Product portfolio rationalization

Reduce costs to competitive levels

Move operations to best cost countries

Business system agility

Supply closer to markets

NWC improvement

PriorityPriority ActionsActions

Reduce complexity

Cut costs

Improve efficiency



Long-term: Sustainable Profitable Growth

Servicing Be global, act local in targeted markets

Strengthen customer knowledge

Strengthen applications competencies

Improve core premium offering

Improve “mid-market” offering

Multi-brand approach

Sustainable lean cost structure

Design to cost – Modularization

Strengthen local talent

Strengthen gender diversity

PriorityPriority ActionsActions

Offering

Costs

Talent



Ambition

15Sandvik Capital Markets Day September 2011


Sandvik ConstructionSJL – Shanghai Jianshe Luqiao

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Major crushing and screening supplier

Target China mid-market

Current JV ownership: Shanghai Electric (75%) andChina Road & Bridge (25%)

2010 sales: ca. 1 B SEK

Number of employees : 1,200

Low profit levelSandvik Capital Markets Day September 2011


Risks and Challenges

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Distraction of teams during times of change

Ability to implement needed changes fast enough

Develop local talent and gender diversity

Managing Premium and Mid-market together

Continued L-shape in construction market

Worsening economic crisis

China demand instability

Acceleration of competition from emerging markets globally

InternalExternal



Benefits of business area Sandvik Construction

Stronger customer focus

Faster speed in decision making

Clearer goals and accountability for the dedicated team

Promoted to be a core area within Sandvik

18Sandvik Capital Markets Day September 2011

Sandvik Construction19Sandvik Capital Markets Day September 2011

Documents

Sandvik Construction