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Trends and tendencies Mats Backman, CFO

How would you describe Sandvik’s strong first quarter of 2015?

While demand remained generally stable, we noted earnings growth and margin expansion as well as strong cash flow. Successful focus on managing net working capital continued, supporting cash flow. Key drivers to earnings growth were the positive impact of exchange rates as well as delivery on savings from structural improvements.

Which are your key priorities in finance to support Sandvik’s growth targets?

Our key priorities are a balance sheet for growth, excellence in business control, including a focused performance management process, and a global finance function with common processes throughout the group and solid financial control, risk management and internal control.

How will you secure a balance sheet for growth?

We have restored net debt to equity to target level through a good cash flow supported by reductions in Net working capital and lower capital expenditure. Inventory reductions amounted to some 3 BSEK for the preceding three quarters. Going forward and to finance our growth, we aim to secure an effective capital allocation based on size, growth and profitability and further reductions of Net working capital. Cash generation will continue to be in focus. At the same time, we maintain our active portfolio management and our strategy to divest non-core businesses.

Can you elaborate on your portfolio management strategy going forward?

We will actively evaluate further divestments within the business areas – as well as investigate acquisitions, all as part of our continuous strategy to strengthen our core activities and profitable growth.

Read the Q1 report