Sandvik outlines positive development for the years ahead at its Capital Markets Day

Growth and operational excellence were key themes at Sandvik’s Capital Markets
Day on Tuesday. CEO Olof Faxander outlined his plan for the next three to four
years, including the company’s shift toward fast-growing markets, higher returns
and reduced earnings volatility. People, products and innovation with a strong
customer focus are leading to a better Sandvik being built.
Sandvik, a world-leading, high-technology engineering group, held its fully
booked Capital Markets Day in Sandviken, Sweden, on Tuesday, September 24. The
company’s customer base is active in the mining, construction, automotive,
energy and general engineering sectors.

“Implementation of the new strategy has been carried out with speed and
determination since its launch in 2011. This has resulted in a more customer
-centric organization, operational excellence, restructuring and a turnaround
for the company – all of which are crucial to our growth ambitions,” said Olof
Faxander in his speech, and gave several examples from all areas. In focus going
forward, he underlined leading innovation, leading through attracting the best
talents and further emphasize on sustainable business as key competitive
factors.

However, Sandvik faces various types of challenges on a continuous basis.
Production levels are being adjusted in the Sandvik Mining business area in
response to the market slowdown observed during the first half of the year.
Further cost reductions of 500-700 million SEK are planned as part of the
adjustment to these market conditions. These measures will be implemented by mid
-year 2014, resulting in nonrecurring charges of 300-400 million SEK.

To enhance supply-chain efficiency, Sandvik intends to reduce the number of its
sites from the current 150 to approximately 125 within the next three to four
years.

“These actions will result in increased capital efficiency, improved delivery
performance, reduced complexity and simplified ways of working, thereby enabling
us to improve service to our customers from the current level,” said Olof
Faxander, explaining that the supply-chain measures will be carried out during
the next three to four years at a cost of approximately 3-4 billion SEK. Because
of the multi-year time frame, it is currently not possible to be more specific
regarding the units that will be affected.

In terms of investments, Sandvik will base its allocation of capital to its
business areas on their size, growth and return. Sandvik believes that growth
will mainly take place in the developing markets and in North America, whereas
Europe is likely to play a less prominent role the years to come.

At the Capital Market Day, Sandvik emphasized acquisitions as an integral part
of its growth strategy.

The target for return on capital employed (ROCE) is set at 25% long-term. In an
updated guidance, Sandvik stated that, given currency rates at the end of
August, it is estimated that operating profit for the third quarter of 2013 will
be negatively affected by about 300 million SEK. The guidance for net financial
items (below 2.0 billion SEK for 2013), capex (below 5 billion SEK for 2013),
tax rate (about 25-27% for 2013) and metal price effects (about -125 million SEK
for the third quarter) remains valid.

“The short-term challenges are well under control. They are not diverting focus
from our positive approach in the longer perspective, and I am convinced that we
are building an even stronger Sandvik for the years ahead,” said Olof Faxander.

Stockholm, 24 September 2013

Sandvik AB

Sandvik AB discloses the information provided herein pursuant to the Securities
Markets Act and/or the Financial Instruments Trading Act. The information was
submitted for publication at 10:20 CET on 24 September, 2013.

For further information, contact Pär Altan, Head of External Communication +46
8 456 12 37 or Magnus Larsson, VP Investor Relations, +46 26 456 12 40.

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The Sandvik Group
Sandvik is a global industrial group with advanced products and world-leading
positions in selected areas – tools for metal cutting, equipment and tools for
the mining and construction industries, stainless materials, special alloys,
metallic and ceramic resistance materials as well as process systems. In 2012
the Group had about 49,000 employees and representation in 130 countries with
annual sales of about 99,000 Million SEK.