SMC in NAFTA

A Growth Opportunity
Sandvik Capital Markets Days in NAFTA May 14-16, 2001
Sandvik Mining and Construction in NAFTA by
Anders Ilstam and Jean-Guy Coulombe
Sandvik Mining and Construction
Machinery, equipment and tools for rock excavation
2000: Sales SEK 10 B (USD 1 B)
Sandvik Tamrock
VA-Eimco
Driltech Mission
Sandvik Materials
Handling
Sandvik in NAFTA, May 14-16, 2001, page 2
Sandvik Mining and Construction
2000: Sales SEK 10 B (USD 1 B)
Asia,
Australia
Africa,
Middle
East
Europe
Equipment
NAFTA
South
America
Sandvik in NAFTA, May 14-16, 2001, page 3
Tools,
spares,
service
Sandvik Mining and Construction
World-wide Manufacturing
Haparanda
Sandviken
Köping,
Sweden
Burlington,
Canada
Gateshead, UK
Schöppenstedt,
Germany
Lyon and Viriat, France
Zeltweg, Austria
Hollola
Lahti
Tampere
Turku,
Finland
Bluefield
Bristol
Dallas
Alachua, US
Mexico City,
Mexico
Pune,
India
Harare,
Zimbabwe
Sao Paolo,
Brazil
Johannesburg,
South Africa
Sandvik in NAFTA, May 14-16, 2001, page 4
Jawa Barat,
Indonesia
Mackay
Newcastle
Perth
Tomago,
Australia
Year
Year2000
2000 SEK
SEKMM
Sales
10
Sales
10184
184
EBIT
EBIT
ROCE
ROCE
11073
073
16%
16%
vs
vsLY
LY
12%
12%
Sandvik Mining and
Construction
59%
59%
Invoiced sales
SEK M
SEK M
12 000
9 000
Operating profit
%
1 500
15
1 200
12
900
9
600
6
300
3
0
0
6 000
3 000
0
96
97
98
99
Rolling 12 months
Pro forma 96-97
Sandvik in NAFTA, May 14-16, 2001, page 5
00
96
97
SEK M
98
99
00
% of sales
Sandvik Mining and Construction
Mining and
Construction
Key issues
l
Growth
ü Product mix (75/25)
ü Customer offering (R&D)
l
Structure
ü Production units
ü Acquisitions / alliances
l
Profitability
ü Product mix
Top-line growth and
continued profitability
improvement
Sandvik in NAFTA, May 14-16, 2001, page 6
ü Purchase costs, common platform
ü Inventory
Sandvik Mining and Construction’s vision is to become the
leading supplier in all core areas with the mission to
provide high customer value by offering innovative
technology, products and solutions.
• Niche player
• To be number one
• Develop the Brand Names
• Selected distribution and sales
• Differentiation
Sandvik in NAFTA, May 14-16, 2001, page 7
SMC in NAFTA
Vital statistics
l
23% of total NAFTA sales
l
1 300 employees
l
5 manufacturing locations
l
3 re-manufacturing locations
Sandvik in NAFTA, May 14-16, 2001, page 8
SMC in NAFTA
Sales by Country
Mexico
Canada
USA
Total sales 2000 SEK 2.6 billion, USD 260 M
Sandvik in NAFTA, May 14-16, 2001, page 9
SMC in NAFTA
Sales by Customer Group
Materials
Handling
Coal mining
and soft rock
Civil
engineering
and
construction
Hard rock
mining
Total sales 2000 SEK 2.6 billion, USD 260 M
Sandvik in NAFTA, May 14-16, 2001, page 10
SMC in NAFTA
Volume by Division
Driltech
EIMCO/VA
/MGT
Sandvik
Materials
Handling
Sandvik
Tamrock
Total sales 2000 SEK 2.6 billion, USD 260 M
Sandvik in NAFTA, May 14-16, 2001, page 11
SMC in NAFTA
Sales by Channel
Direct
3rd Party
(Dealers,
Agents,
Distributors)
Sandvik in NAFTA, May 14-16, 2001, page 12
SMC in NAFTA
Locations
Sandvik in NAFTA, May 14-16, 2001, page 13
SMC in NAFTA
Number of Employees
(ST)
(ST)
(SMH)
(VA-EIMCO)
(VA-EIMCO)
(D/M)
(D/M)
(ST)
(ST)
(ST)
(ST)
(ST)
(D/M)
Lively, ON & Country Branches
Burlington, ON
Vancouver, BC
Bluefield, WVA
Bristol, VA
Alachua, FA
Mansfield, TX
Denver, CD
Elko, NEV
Atlanta, GA
Guadalajara, MEX
La Paz, MEX
Mexico City, MEX
TOTAL
Sandvik in NAFTA, May 14-16, 2001, page 14
145
133
3
276
170
229
102
5
19
85
76
3
68
1314
Tamrock Loaders Inc.
EJC Loaders and
Trucks
Manufactured in Burlington, Ontario, Canada
Sandvik in NAFTA, May 14-16, 2001, page 15
Driltech Mission
Mission Hammers
Manufactured in Mansfield, Texas, US
Sandvik in NAFTA, May 14-16, 2001, page 16
Voest-Alpine EIMCO
Sandvik MGT
Manufactured in Bristol, Virginia, US
Sandvik in NAFTA, May 14-16, 2001, page 17
Driltech Mission LLC
Blasthole and Waterwell Drills
D90KS
D55SP
Manufactured in Alachua, Florida, US
Sandvik in NAFTA, May 14-16, 2001, page 18
Voest-Alpine Eimco
Coal Mining
Equipment
Manufactured Bluefield, West Virginia, US
Sandvik in NAFTA, May 14-16, 2001, page 19
SMC in NAFTA
Remanufacturing Center in Canada
Before
17,000 square foot
facility
Staffed with a highly
experienced team of 55
Clark Hurth Authorized
Service Center
Genuine OEM parts
Factory trained technicians
All products are supported by
the sales and service networks
located in each of our branches
After
Sandvik in NAFTA, May 14-16, 2001, page 20
SMC in NAFTA
Growth Areas
l
After market focus (75/25)
l
Civil construction (energy, environment)
l
Coal and changing legislation
l
Development of a Mexican middle class
l
Infrastructure development (Tea 21)
l
Environment / recycling focus
l
Underground limestone
l
Acquisitions
Sandvik in NAFTA, May 14-16, 2001, page 21
SMC in NAFTA
Strengths
l
Strong distribution channels
l
Process know how
l
Complete product line
l
Strong commitment to research and development
l
Current IT and automation offering
l
Key customer alliances
l
Skilled, trained and committed people
l
Exceptional product performance
l
Evolving after market offering
l
Strong Brands
l
Speed
Sandvik in NAFTA, May 14-16, 2001, page 22
SMC in NAFTA
Mine Automation Project in Canada
Process control
“Make the mine visible”
l
Centralized data collection
l
Analyzing data
l
Showing and reporting
the data
l
Giving the work information
to equipment
Sandvik in NAFTA, May 14-16, 2001, page 23
SMC in NAFTA
Competition
Voest Alpine /
Eimco / MGT
Driltech / Mission
Joy
Stammler
Long Airdox(DBT)
Dupont
Kennemetal
Ingersol-Rand
Svedala (Reedrill)
B-E
Secoroc (Atlas-Copco)
Halco
Versadrill
Sandvik Tamrock
Atlas Copco
Ingersol-Rand
Boart
Elphinstone
Oldenburg – Lakeshore
MTI
Svedala
Sandvik Materials
Handling
Continental
Krupp
Sandvik in NAFTA, May 14-16, 2001, page 24
SMC in NAFTA
Market Position by Sector
Coal and Soft Rock
Joy
VA-EIMCO
Long Airdox (DBT)
Hard Rock Mining
Sandvik Tamrock
Atlas Copco
Oldenburg – Lakeshore
Civil Engineering /
Construction
Sandvik Materials
Handling
Ingersoll-Rand
Sandvik Tamrock / Driltech/Mission
Atlas Copco
Sandvik in NAFTA, May 14-16, 2001, page 25
Continental
Krupp
Sandvik Materials Handling
SMC in NAFTA
Canada Key Issues
l
Low inflation
l
Weakening of CAD dollar positive
for exports
l
Resource sector (Minerals) still strong
ü Good backlog
ü Mining cycle lags general
economic cycle
ü New projects
ü SMC strong market position (Number 1)
l
Small exposure to the construction sector
Sandvik in NAFTA, May 14-16, 2001, page 26
SMC in NAFTA
USA Key Issues
l
Coal strong positive
l
Government support of
mining and construction
l
TEA 21
l
Low cost gold producers
l
Further development and
evolution of marketing channels
l
Large untapped after market sector
l
Collapse of rental business
l
US Economic outlook
Sandvik in NAFTA, May 14-16, 2001, page 27
SMC in NAFTA
Mexico Key Issues
l
Re-awakening of construction market
l
Strong peso good for economic
development poor for mining sector
l
Significant growth opportunities in
the after market sector
l
Strong inflationary pressure
l
Export volumes down
l
Trending towards a recession
Sandvik in NAFTA, May 14-16, 2001, page 28
SMC in NAFTA
Summary
l
Industry Consolidations
l
Environmental Regulations
l
Development of After-Market
l
Personnel Development
l
Adoption of Internet Technologies
l
US Economic downturn
l
Limited forecasting visibility
Sandvik in NAFTA, May 14-16, 2001, page 29
SMC in NAFTA
Current and Planned Growth Initiatives
l
E-Commerce (@ Your Service)
l
Mine Automation
l
Quarry Process
l
Further Development of Distribution Network
l
Focus on After Market Volume Development
l
Development of Key Alliances
Sandvik in NAFTA, May 14-16, 2001, page 30
SMC - Actions
Top-line growth and continued profitability improvement
l
l
Growth
Profitability
ü Product mix
ü Product mix
ü Customer offering (R&D)
ü Purchase costs
ü Common platform
l
Structure
ü Restructure VA-Eimco
ü Production capacity
ü Acquisition / alliances
Sandvik in NAFTA, May 14-16, 2001, page 31
ICACUTROC => ICUTROC
Sandvik in NAFTA, May 14-16, 2001, page 32
Underground Mining and Tunneling
Sandvik in NAFTA, May 14-16, 2001, page 33
SMC - Reduction of Inventory
l
Reduce lead time
l
Central Warehouse
l
Better logistic
l
Reduced frontline inventory
=> 0.5 BSEK LESS INVENTORY
Sandvik in NAFTA, May 14-16, 2001, page 34
SMC - Supply and Purchasing
l
Reduction of Suppliers
l
Reduction of Article numbers
l
Re-engineering of our products
l
Form supplying units within our factories
=> SAVE 500 MSEK
Sandvik in NAFTA, May 14-16, 2001, page 35
SMC - Acquisitions
l
Beltreco Ltd. (Australia) - 2000
ü Annual sales approx. SEK 450 M
ü 400 employees
ü Leading service company
l
Brøyt (Norway) - 99
ü Annual sales approx. SEK 50 M
ü Hydraulic loaders
l
BPI, Neuson (Austria) - 2000
ü Annual sales approx. SEK 120 M
ü 25-30 key employees
ü Drill rigs
l
Sales & Marketing
ü Suh Jun Trading (S.Korea)
ü Former agent in Ghana
Sandvik in NAFTA, May 14-16, 2001, page 36