Corrected Transcript

19-Jul-2024

Sandvik Aktiebolag (SAND.SE)
Q2 2024 Earnings Call

Total Pages: 20
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Corrected Transcript

Q2 2024 Earnings Call

19-Jul-2024

CORPORATE PARTICIPANTS
Louise Tjeder

Cecilia Felton

Vice President & Head-Investor Relations, Sandvik Aktiebolag

Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag......................................................................................................................................................................................................................................................

OTHER PARTICIPANTS
Sebastian Kuenne

Vladimir Sergievskiy

Analyst, RBC Europe Ltd.

Analyst, Barclays Capital Securities Ltd.

Klas H. Bergelind

Benjamin Heelan

Analyst, Citigroup Global Markets Ltd.

Analyst, Bank of America

Max Yates

Andreas Koski

Analyst, Morgan Stanley & Co. International Plc

Analyst, Exane BNP Paribas SA (Sweden)

Andrew Wilson

Daniela Costa

Analyst, JPMorgan Securities Plc

Analyst, Goldman Sachs International

John Kim
Analyst, Deutsche Bank AG (UK)......................................................................................................................................................................................................................................................

MANAGEMENT DISCUSSION SECTION
Operator: Ladies and gentlemen, welcome to the Sandvik Interim Report Second Quarter 2024 Conference
Call. I am Vassilios, the Chorus Call operator. I would like to remind you that all participants will be in listen-onlymode and the conference is being recorded. The presentation will be followed by a question-and-answer session.
[Operator Instructions] The conference must not be recorded for publication or broadcast. You will now be joined
into the conference room.
......................................................................................................................................................................................................................................................

Louise Tjeder
Vice President & Head-Investor Relations, Sandvik Aktiebolag

Hello, everyone, and a warm welcome to Sandvik's presentation of the second quarter results 2024. My name isLouise Tjeder, Head of Investor Relations here at Sandvik. And beside me, I have our CEO, Stefan Widing; andCFO, Cecilia Felton. We will start with the presentation. Stefan and Cecilia will take you through the highlights of
the quarter. And after that, we will move on to the Q&A session.
And with a short introduction, I will hand over the word to Stefan.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

Thank you, Louise, and also from my side, welcome to the second quarter report for Sandvik in 2024. If wesummarize the quarter, we saw a stable development in the quarter, but the demand picture was mixed. We saw
robust demand in mining and aerospace, while general engineering and automotive declined, and also
infrastructure remained weak, but with some regional variations that I will come back to.
Order intake growth was 2% in total, or that we have 3% positive organic growth. Revenues declined by 3% in
total, and of that, organic was a negative 2%. The margin, we believe, is resilient on the current challenging
volumes that we have in some parts of our business. Adjusted EBITA decreased by 7% versus last year,
corresponding to a margin of 19.6%. This puts our rolling 12 months at 19.4%. Savings from our restructuring
programs is starting to come through. They amounted to SEK 275 million in the quarter. And from a bridge pointof view versus same period of last year, they were increasing by SEK 243 million. Adjusted profit for the period
came in at SEK 3.9 billion.
We also continued to see a very good strategic progress and we expanded in the local premium market in China
with an acquisition of Suzhou Ahno, I will come back to that, and also the acquisitions in the US with PDQ thatstrengthens our offering in the important North American market. We also see good momentum with double-digit
growth in our software businesses, and this applies both on the mining side as well as in manufacturing solutions.
And we have also launched several new solutions that is linked to our strategic focus on both digital andsustainability shifts.
One of these solutions is something I want to highlight. That's the innovation this quarter. We have collaborated
with Microsoft to incorporate the latest AI technologies into several of our software solutions. This is a solution
called the Manufacturing Copilot. It's been trained on our proprietary knowledge and is unique also for each of thebrands. And we have pre-launched this, and it will be available on the market in September for three of oursoftware brands: Cimatron, GibbsCAM and SigmaNEST. And this will help our customers further increase theirproductivity and efficiency in component manufacturing.
Going then to the overall market development. Starting with a regional view, we saw a flat growth in Europe, 0%in the quarter. Looking at SMM specifically, we saw plus 1%. Of that, cutting tools were down in the mid-single
digits, but that was offset by a strong growth in powder in particular and also some support from software. In
North America, we were at minus 4%. SMM were at plus 2%. Here, cutting tools were down in the low-single
digits, and this was offset by strong growth then in the software businesses. Asia up 25% in SMM, China up 14%.
But this was partly driven then by pre-buying effects in one of our Chinese brands that increased prices in the – at
the end of the quarter. And if we neutralize for that effect, the cutting tool business in China was more in the midsingle digits. So still a positive growth in the country.
Then we have the mining regions, which, as you know, can vary quite a lot between the quarters. I will notcomment specifically on them. Overall, mining demand remained stable at a high level, as you could see also in
the numbers. Comment – we'll comment more when we get to that. Looking at general engineering, we saw
continued weakness. We had a low-single digit decline overall in SMM here. This was driven by a particularly
weak Europe with high-single digit declines. A bit strong in North America, but still weaker with a low-single digit
decline, but offset by strong performance in China, double-digit growth. Although part of that then is again related
to this pre-buy effect that I talked about.
Infrastructure remains weak. Europe is down. North America a bit more stable. We started to see some green
shoots there. I'll come back to that. And then if we look at Asia, Asia overall is down. We saw good growth inIndia, but it was offset by a negative China.

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Corrected Transcript
19-Jul-2024

Automotive, weak in the quarter, down high-single digits. Here in particular, Europe was weak, down high-single
digits. North America a bit better, but down mid-single, offset a bit by growth in Asia with China up low-single
digits.
Aerospace continued strong momentum, mid-single digit growth. Strong Europe with double-digit growth.
However, North America in our quarter was down mid-single digit. But as you can see here, we still consider themarket momentum to be strong. This was related to timing of larger orders, and that we can get in the aerospacesector. Asia flattish here, but aerospace China SMM down low-single digits.
If you look at the other segments, we have a flattish development. Europe down mid-single digits, offset by highsingle digit growth in both North America and China. And then Asia overall more on the stable side. This sums toan order intake of SEK 32.4 billion. As you can see on the graph, the second highest order intake we have had asa group in the quarter. Revenues, SEK 31.4 billion, giving us a book-to-bill of 103%, which of course we see as apositive in this time of the year. If you look at this from a different angle, we can see that after three quarters in a
row with negative organic order intake, we now turn positive. And we do, however, still have now two quarters in a
row with a negative organic revenue decline, even though we improved in this quarter versus Q1.
This also leads to an adjusted EBITA of 19.6%, SEK 6.1 billion approximately, down 7% versus the same period
last year. Here we have lower volumes in our businesses, partly offset by savings and good cost control. We also
have an effect where, from a year-over-year point of view, we have some dilution from cost inflation versus
pricing. Overall, we are offsetting and continue to offset inflation, but we were accretive last year. So, from abridge effect, this becomes a negative in this quarter. And then we have a slight support also from currency of 20
basis points.
Going into the business areas, Mining and Rock Solutions, continued solid demand. Here, quarter again, thesecond highest order intake we have had in SMR, which speaks to a good demand situation. We have good
momentum in automation, double-digit growth in our Digital Mining Technologies division. We also see strong
growth in parts and services, underground drilling and surface drilling. If you look at orders, they grew organically
by 4%. Here we saw very good performance again in the service business, up double digits. That was a bit offset
by less growth than in the consumable side. So overall aftermarket up in the high-single digits. Equipment down
4%, but some really good, major orders in the quarter of in total SEK 1.5 billion.
If you look at the margin, came in at 20.8%. Overall, I would say a solid performance, but a little bit impacted by
the lower volumes in the quarter. We do see savings coming in, SEK 64 million in the quarter as a bridge effectand also a bit of support here with 48 basis points from the currencies. We have launched two new importantfeatures for our AutoMine solutions in this quarter that will further strengthen our position here.
We have also started the collaboration with a large customer, and this has been press released, so I can mention
it's Glencore, which relate to deploying our second life – deploying our batteries that we have in our BEVs in asecond-life application where they are being used as energy storage and a backup energy for the mines. So thisis part of our circularity ambitions, and we're looking forward to seeing this collaboration take shape.
An important innovation launch in the quarter is also our launch of our first electric rotary blasthole drill rig. This ispart of our ambition to grow our market share on the surface. This is a product offering we have not had. It's only
been one supplier for these type of solutions in the market. So this fills the gap for us and allows us to compete in
the part of the market that we have not been able to compete in in the past. So a really important product launch.

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

Rock Processing Solutions, and also here continued stable demand in mining. Infrastructure, as I mentioned,
remain weak, but with some regional variations. Overall organic decline of 8%. But here we saw growth in North
America, up 3%. It's a mixed picture, though. We do see dealers continue to have high inventory levels, and that's
impacting the business. But we have seen the OEM customers with lower inventory levels and have started toplace more orders, especially for attachment tools in the quarter. So a bit more positive in North America here.
Continued decrease in Europe. Here we see inventory levels have come down, but customers are satisfied withthat and have not used that as an opportunity to put more orders, yet at least, considering the general uncertaintyof the economy. Asia down 4%. We saw really good and strong growth in India, but it was offset then by also adecline in China. Good margin, 15.1% versus 13.7% last year, considering they get no support from the market asof yet. Strong cost control savings coming in, SEK 41 million in the quarter. And also they had, of course, someextra costs last year that you are aware of that they did not have this year. Also, some headwinds from currencies
here of 10 basis points.
As part of our sustainability ambitions here as well, a new solution, a magnetic drum separator for mobile screens,means we can extract metals from demolition materials that is both valuable and helps us reduce our wear andtear of the equipment. So a good launch as well here.
Coming then into Manufacturing and Machining Solutions. A highlight was, of course, strong momentum in thesoftware business that grew double digits in the quarter. Same, we can say, for the powder business, which had astrong development, of course, partly on the back of low comparison to prior year, while cutting tools thendeclined by 1% in the quarter. We see solid demand in aerospace, as I mentioned, while automotive and generalengineering were on the weaker side. Total order intake increased 5%. On – of that, the organic increase was4%, and as mentioned, minus 1% for cutting tools offset by good growth in software and powder.
We can say, if we look at the quarter overall, that the demand picture has been stable throughout the quartermonth over month and at the same level, if we look at daily orders as we saw in Q1. So the first half of the year
has been stable from a daily order intake point of view, and we see the same thing continuing so far into July.
The margin was weaker than last year, 20.5% versus 22.3%. Here we have, of course, lower volumes impacting
the margin negatively, and then the dynamic I mentioned around cost inflation and pricing in the quarter, where
we do offset in the quarter, but we had a negative bridge effects from being accretive last year due to the timing ofwhen price increases have occurred. Good effects from restructuring and savings programs here with SEK 139
million as a bridge effect on the positive side in the quarter. And then some headwind from currency as well, down
– diluting by 20 basis points.
Very important strategic progress here in the quarter with the acquisition of Suzhou Ahno. This is one of theleading players in the Chinese local premium market segment. We have had a strong position in China, or have astrong position in the international premium segment. But the bulk of the growth in the Chinese market in the past
years has been in what we define as the local premium segment. And we really have not had to play in thatsegment. We have had Yongpu since a few years, but that's a smaller company. Now we take a really important
step with this acquisition. Gives us a play in the local premium segment in China. So super happy with that
acquisition.
Then we also have a decent acquisition in terms of size in the US with PDQ, which is a fixtures and workholding
and tool company. Strengthens our position in terms of offering a total product range on the important US market
and also strengthens our partnership with the machine tool builders that is working a lot with this company. So
good progress here on that front.

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Corrected Transcript

Q2 2024 Earnings Call

19-Jul-2024

Now I will hand over to Cecilia and will come back for conclusions and Q&A.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

Thank you, Stefan. All right. So let's take a closer look at the numbers then together. And as usual, let's start withthe growth bridge here on this slide. You can see that organically, order intake grew by 3% while revenues were
down by 2%. Structure did not have a material impact in the quarter, whilst currency had a negative impact of 1%
on orders. And that brings total order intake growth to 2% while revenues were down 3%. And as Stefan
mentioned, adjusted EBITA came in at SEK 6.1 billion, corresponding then to a margin of 19.6%. Net financial
items improved year-over-year. And I will show you a more detailed table in a few minutes, showing thedevelopments there.
Tax rate, excluding items affecting comparability and also on a normalized basis, was in line with guidance,
23.9%. Net working capital on a 12-month rolling basis came in at 30.2%. Free operating cash flow, SEK 4.2
billion in the quarter, corresponding to a cash conversion of 74%. Returns at 14.1% and adjusted EPS came
down year-over-year, driven by the lower earnings.
If we continue with the bridge then and starting with the organic column, here you can see that revenues came
down by SEK 775 million, which resulted in a reduction of EBITA by SEK 485 million. And that gives a leverage ofminus 63% and a year-over-year dilution of the margin of 1 percentage point. Currency was slightly accretive, 0.2
percentage points and structure was neutral to the margin. And that brings us from a margin last year of 20.5% to19.6% this year.
We see good progress on the execution of the restructuring programs. For the 2022 program, we have now
realized savings of SEK 139 million. The year-over-year bridge effect is a little bit smaller as we also had somesavings last year. And for this year's program, we have now realized SEK 136 million of savings, and thiscorresponds to annualized run rates of 71% and 44%.
If we continue down in the P&L with the finance net, starting with the interest net. Here, you can see that it came
down slightly year-over-year, and this is despite the higher yield costs and is driven by lower borrow volumes.
Then at the bottom you see here in FX and other asset classes, we had a big negative impact last year. And as I
think most of you remember, this is due to temporary revaluations on orders, currency hedges, and orders not yet
invoiced. But from 1st of January this year, these temporary revaluations are now booked in equity, and that's themain driver of the year-over-year improvements here.
The reported tax rate in the quarter was high at 30.6%, and this was impacted by a provision for a tax audit
related to transfer pricing for the years 2018 and 2019. This is an impact – a one-off impact in this quarter, and weare not expecting any further charges here going forward. Adjusting for this, the tax rate was in line with guidance.
Net working capital. If we start with the graph on the left, you can see that in absolute terms, it's increased
sequentially. This is driven by higher accounts receivables, and also a little bit less prepayments from customers.
Inventory volumes in the quarter came down a little bit as opposed to the normal seasonal buildup that we have inthe second quarter normally. And on a relative basis, you can see on a 12-month rolling basis, we are increased
sequentially to a little bit just above 30%, whereas on a quarterly basis, we came down slightly versus the firstquarter.

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Corrected Transcript

Q2 2024 Earnings Call

19-Jul-2024

Free operating cash flow was SEK 4.2 billion in the quarter and corresponding to a cash conversion of 74%. On a
12-month rolling basis, cash conversion was 84%. And if we then look at the year-over-year development, you
can see here that EBITDA adjusted for non-cash and other items was largely in line, slightly lower. CapEx was alittle bit lower, but the net working capital buildup in volume was higher, and as I mentioned, mainly driven byhigher accounts receivables.
Financial net debt increased sequentially, driven by the dividend payment and reached SEK 41 billion. Capitalized
leases and the pension liability was largely unchanged, which brought net debt to SEK 49 billion. And also ourbalance sheet target financial net debt over EBITDA increased to 1.5. And normally, we see a seasonal increasein the second quarter, as I mentioned, as a result of the dividend payments.
Looking then at outcome versus guidance, the currency effect came in at SEK 22 million for the second quarter.
And then for the items where we provide annual guidance, you can see that CapEx is now at SEK 2.3 billion,interest net at SEK 0.8 billion and the normalized tax rate is right in the middle of the guided range.
And then looking ahead at the third quarter and the full year, here you can see that the currency effect for the third
quarter is expected to land at SEK 250 million. We have left CapEx and tax rates unchanged, but we increased
the interest net a little bit to SEK 1.5 billion.
And with that, I will hand over to Stefan for summary and conclusion.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thank you, Cecilia. Yeah. So if we conclude, again, it was a good quarter with a stable financial performance. We
do have a mixed demand picture, though, in the quarter that we have to manage. And that's why we do see, we
think we have a solid performance despite the volume challenges that exist in some parts of our business.
We have a good momentum when it comes to driving our strategic agenda as exemplified many times during thispresentation. So we make good progress in the repositioning of Sandvik, launched several important innovations
and partnerships linked to both our digital and our sustainability ambitions. We do this in close collaboration withour customers to make sure that we provide value to them and that our innovations are relevant in the market. We
have also seen this quarter further expansion into faster growing regions and segments through the threeacquisitions we have made.
If we look forward, we continue to have strong focus on execution. We do have an uncertain macroeconomic andgeopolitical backdrop to manage. But we have a solid financial platform, we have strong market positions, and wewill be persistent in focusing on delivering our strategic agenda and our financial performance and the targets wehave set.
Thank you for listening, and let's go into Q&A.
......................................................................................................................................................................................................................................................

Louise Tjeder
Vice President & Head-Investor Relations, Sandvik Aktiebolag

Yes, indeed. Thank you, Stefan, and thank you, Cecilia. It's time for the Q&A session, and operator, please, we
can have the first question.

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Corrected Transcript

Q2 2024 Earnings Call

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QUESTION AND ANSWER SECTION
Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comesfrom the line of Kuenne Sebastian with RBC. Please go ahead.
......................................................................................................................................................................................................................................................

Sebastian KuenneQ

Analyst, RBC Europe Ltd.

Yeah. Hi. Thank you for taking my questions. I have two. The first is regarding the operating leverage, which you
show very nicely in your bridge analysis of minus 63%. I recall that in Q1, it was also a fairly high number and the
explanation was that SMR is running at full capacity, but the revenue recognition will happen later this year. It now
appears that this revenue recognition for equipment is not happening, or hasn't happened in Q2. And I waswondering if you could give us an update when those sales will be made. That would be my first question. Thankyou.
......................................................................................................................................................................................................................................................

Cecilia FeltonA

Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

Do you want to talk about the revenue recognition? I can talk a bit about leverage.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. When it comes to sales and revenues for SMR in the quarter, I think they were solid. They were up
sequentially by SEK 1.8 billion or 13% versus Q1. And it's true, they are organically slightly down, but I don't think
there is any drama in that. We had record high deliveries in the same quarter of last year. And with the solid orderintake as well, we will gradually see – continue to see deliveries to be at a good level. So I – the leverage we aretalking about here is not driven by the same dynamics as we saw in Q1 in that regard.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Yeah.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Go ahead. You comment on that, Cecilia.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Yes. Of course. So the main reason for the low leverage in the quarter is the dynamics around pricenormalization. Last year, as Stefan mentioned, price versus inflation was accretive. And this is driven by thetiming of the price increases versus the pace of inflation. So in Q2 of last year, price was overcompensating forthe current inflation in the quarter. Whereas this year, what we see now is that price offsets inflation. But in the
year-over-year bridge, this is a dilutive impact, and also the main reason for why leverage is so low in the quarter.
......................................................................................................................................................................................................................................................

Sebastian Kuenne
Analyst, RBC Europe Ltd.

Q
8

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Q2 2024 Earnings Call

19-Jul-2024

Okay, understood. Second question would be on the issue in Asia and the high growth in China, 40%, due to thepre-buying of some of your distributors, I assume. Could you just give us a number in Swedish krona, how big that
impact is? It seems to really change the growth dynamics for the tooling business and whether you expect areversal of that effect in Q3? Thank you.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yeah. So I mentioned from an organic point of view, it was 14%, one-four...
......................................................................................................................................................................................................................................................

Sebastian KuenneQ

Analyst, RBC Europe Ltd.

14%. Okay.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag...in China. Yeah. And more underlying, more mid-single. So talking about an impact of maybe 10 percentage
points in the quarter. I don't honestly have that translated into SEK, but Louise can maybe come back to you onthat after the call. Some – we will, of course, gradually see a reversal. It should not come all in Q3. That we don't
expect. But throughout the rest of the year, of course, if it's a pre-buy, we will have to give that gradually back.
That's clear.
......................................................................................................................................................................................................................................................

Sebastian KuenneQ

Analyst, RBC Europe Ltd.

Okay. Yeah. I understood it was 40%, four-zero.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Oh, no.
......................................................................................................................................................................................................................................................

Sebastian KuenneQ

Analyst, RBC Europe Ltd.

So, it's my mistake.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

No, then it would have been a much more severe impact there. Yeah.
......................................................................................................................................................................................................................................................

Sebastian Kuenne
Analyst, RBC Europe Ltd.

Q

Yeah. Perfect. Thank you so much.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

All right. Thank you.
......................................................................................................................................................................................................................................................

9
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Corrected Transcript

Q2 2024 Earnings Call

19-Jul-2024

Operator: The next question comes from the line of Bergelind Klas with Citi. Please go ahead.
......................................................................................................................................................................................................................................................

Klas H. Bergelind
Analyst, Citigroup Global Markets Ltd.

Q

Yes. Hi. Hi, Stefan and Cecilia. Klas at Citi, not Bergelind Klas. But there you go. And my first one is on SMM,
Stefan, on powder and software. You said that powder was strong. I'm not sure if I heard the impact there on thegrowth. Was it perhaps 1% after COVID? It was 2%, but probably because of more restocking at the time, if 1%
was the right number.
And then on the double-digit growth in the software business, it seems to be accelerating, which is good to see.
Can we see – can we say sort of what verticals, end markets and how much is software now of orders and sales
in both in SMM, if any difference between each? Thank you.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Let's see. I'll try to remember all the questions here. On powder, I don't know, Louise if we have given a specificcontribution in terms of percentage on the growth. So cutting tool, minus 1%; SMM, plus 4%; and I will split it out
further.
......................................................................................................................................................................................................................................................

Louise Tjeder
Vice President & Head-Investor Relations, Sandvik Aktiebolag

A

Not really.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

No. So – but again, what we can say is double-digit growth in software and then you can say the rest is powder,
and powder is more than normal double-digits. It's, as I would say, probably – I'm guessing now, we will – a little
bit. Three quarters of that is on the powder side and maybe one quarter on the software side. Something along
those lines.
......................................................................................................................................................................................................................................................

Klas H. Bergelind
Analyst, Citigroup Global Markets Ltd.

Q

Okay. No...
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah.
......................................................................................................................................................................................................................................................

Klas H. Bergelind
Analyst, Citigroup Global Markets Ltd.

Q

Okay. Then – yeah. Okay, sorry [indiscernible] (00:33:03).
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. It gives a little bit as well on that. Yeah. On the software growth, it was a strong quarter. I wouldn't say – Imean, we are not counting on that this is going to happen every quarter. We have said we think this is a high-101-877-FACTSET www.callstreet.com

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Corrected Transcript
19-Jul-2024

single digit growth business over time. Then, of course, some quarters might be stronger than others. So, yeah, I
wouldn't count on continued double-digits every quarter just because we see it now. But a strong performance inthis quarter. When it comes to percentage, I mean we have a target by the end of next year, this should be a SEK
4 billion business. And yeah. And then we have some growth that needs to happen to get there, both organicallyand through some additional M&A. So it is – it's not yet shifting the 10% of – high-single digit 10% that we aim forwith that target. So lower than that. More around the 5%, 6% currently.
......................................................................................................................................................................................................................................................

Klas H. Bergelind

Q

Analyst, Citigroup Global Markets Ltd.

Okay. No. Yeah, that's helpful. My second one is on your stable comment on daily sales into July. And obviously,
we had this China pre-buy, which was 10% due to China growth roughly. And do you sort of adjust for that, or isthere anything else getting stronger here offsetting that hangover, if you see what I mean?
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

No. I would say, we – I mean, there are always a little bit of puts and takes in a quarter. So when we say it's
stable, it doesn't mean that you should think that that was the China effect and otherwise it was weakening. That's
in the – in this context, I would say that's in the noise of that comment. So we...
......................................................................................................................................................................................................................................................

Klas H. Bergelind

Q

Analyst, Citigroup Global Markets Ltd.

Okay.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag...we saw a stable – I mean, when we say stable, it's not that it's on the – a tenth of a percent the same because
there are always some type of variations. But overall, same daily pace on average [indiscernible] (00:35:25).
......................................................................................................................................................................................................................................................

Klas H. Bergelind

Q

Analyst, Citigroup Global Markets Ltd.

Yeah, yeah. All right. Thank you, Stefan.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thank you.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of Max Yates with Morgan Stanley. Please go ahead.
......................................................................................................................................................................................................................................................

Max Yates
Analyst, Morgan Stanley & Co. International Plc

Q

Thank you very much. Good afternoon. I just wanted to ask on the mining business. And I guess sort of it's been avery good quarter of equipment orders. So I just wanted to understand kind of is there anywhere particularly you'dcall out that you think you're taking market share?
And then the extension of that question, I guess the aftermarket, I was quite sort of pleasantly surprised with 8%
order growth. That's quite a bit better than I think what others are generating. So could you just talk a little bit

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Corrected Transcript
19-Jul-2024

about kind of what's driven that? Are you seeing an acceleration? Was it any kind of specific rebuild or mid-life
projects that were happening this quarter? Just talk about those two items, please, would be helpful. Thank you.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yeah. On the equipment order side, I would not, based on this quarter, call our sort of market share gains in a
specific area. I think this is within the margin of, let's call it, the normal lumpiness we can see on equipment
orders. We were happy with a strong intake and SEK 1.5 billion of major orders. But it was not – I can't say it
wasn't in any new areas that we were not expecting in that sense, so – but one big order in automation, in
surface, also underground. So it was across the board, and more, I think, an indication of a solid demand picturethat we have strong product offers out there.
On the aftermarket side, I think there are some specific drivers. First of all, we see high activity with our customers
because of high metal prices. So they are running the machines as much as they can. Machines are on averageolder than they have been in the past. And we can see that that the older machines, of course, have a need formore service or spare parts. So that helps aftermarket business. On top of this, we are seeing that the
improvements in fleet size and market share that we have gained on surface in the past years, those machines
are now getting a little bit older and we can now see that that's generating increased aftermarket sales on thesurface side as a consequence of a bigger fleet, which is very positive, of course. So those will be the things I
would call out.
......................................................................................................................................................................................................................................................

Max Yates

Q

Analyst, Morgan Stanley & Co. International Plc

Okay. So – but I mean, if I was to summarize it, it's much more kind of underlying kind of market trends and workthat's been done in the past rather than anything specific to this quarter or a large rebuild order or anything likethat?
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yes. I would say so, yes.
......................................................................................................................................................................................................................................................

Max Yates

Q

Analyst, Morgan Stanley & Co. International Plc

Yeah. Okay. Thank you very much.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thank you.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of Andrew Wilson with JPMorgan. Please go ahead.
......................................................................................................................................................................................................................................................

Andrew Wilson
Analyst, JPMorgan Securities Plc

Q

Hi. Good afternoon. Thanks for taking my question. Just around the powder development, and maybe just picking
up on where Klas was, is there anything we need to think about in terms of the timing of those orders? I might bemisremembering, but I know that there are certain periods where the powder orders tend to be pretty good, and I

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19-Jul-2024

know you've talked about kind of comp effects. Is there anything in the second half to be aware of on powder, justso we kind of – we don't get in the wrong place on that?
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yeah. Of course, the high growth of this quarter is partly driven by good underlying orders demand, but also to a
big extent by very low comps in the same – in Q2 of last year. And I don't remember the exact figures, but we hadpoor – we will have low comps also in Q3. And you can – I think we've mentioned something around that in the
Q3 report. So you can probably go back to that and you will – yeah, you can probably sort of normalize for thatversus Q3 of this year.
......................................................................................................................................................................................................................................................

Andrew Wilson

Q

Analyst, JPMorgan Securities Plc

That's helpful. And then maybe just two super quick clarification ones. None of the comment you've made aroundpricing seem to me that you're worried about pricing dynamics in the market. But I just wanted to confirm that. And
I guess very simply, in terms of the daily order intake comments, and I know there's obviously lots of moving
parts. If we just look at the typical seasonality in the business in terms of SMM, Q3 versus Q2, given what you aresaying, it would seem to me that that was – would be a pretty good starting point, all else equal for where weshould see Q3 orders. Maybe if we just confirm those two that I'm not making a mistake in how I'm interpreting thecomments.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yeah. If I start with the latter one, it's of course a little bit, let's say, complicated in the sense that what we can see
now in July, we're saying we are seeing a stable daily order intake. How – and there is seasonality over thevacation or holiday periods here. How that will be impacted with – by what we see now is of course very difficult tosay. But I guess what we are saying is that the underlying market sentiment, from what we can see, is so far
stable. It should imply, let's call it, normal seasonality for the rest of the quarter as well that – if nothing elsechanges, which, of course, it might. Did that answer your question?
......................................................................................................................................................................................................................................................

Andrew Wilson

Q

Analyst, JPMorgan Securities Plc

Yeah. No, no. That's very clear. And just on the pricing, just to check that I'm right that there's no change of...
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah.
......................................................................................................................................................................................................................................................

Andrew Wilson
Analyst, JPMorgan Securities Plc

Q...of market conditions there?
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. No. I mean in – what – so Cecilia explained the dynamics in this quarter and so on. This is more sort ofresidual effects of the dynamic pricing situation we have gone through in the past years. We are seeing that we

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19-Jul-2024

are converging sort of towards that. When we go into next year, pricing, cost inflation should be, I would say,normal again. And now we have some quarters with some bridge effects that we have to manage through. But weare going towards a more normal or normal price situation. That's what I would say we see right now.
Then there are some pockets where there might be some challenge, driven by current inventory levels and so on.
We have seen that on wear parts on the infrastructure side where too high inventory levels has been discounting
and campaigns and so on. We have, on ground support, driven by lower Chinese steel prices. There are somepricing challenges because of companies selling at trying – or trying to take business at lower prices and so on,
but – so there is plenty to manage. But our philosophy is quite clear that we stick to our value-based pricing, andin some cases would rather sacrifice a few deals, if we have to, to maintain a good pricing level.
......................................................................................................................................................................................................................................................

Andrew Wilson

Q

Analyst, JPMorgan Securities Plc

Very helpful, as always, Stefan. Appreciate it. Thank you.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thanks.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of John Kim with Deutsche Bank. Please go ahead.
......................................................................................................................................................................................................................................................

John Kim
Analyst, Deutsche Bank AG (UK)Q

Hi. Good afternoon, everybody. Just wanted to check whether the discussion or the guidance you gave previously
in Q1 about seasonality and sequencing is tracking, i.e., did Q2 deliver the way you thought it would, given yourequipment pipeline? I know you are value-based pricing, but given stronger copper prices and tight production, isthere not an opportunity to make more here? Or maybe I'm missing something. Thank you.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. Yeah, on the first point, yes. We are tracking in that sense. Sales in SMR have continued to develop in linewith what we saw at the beginning of the year. Value-based – higher copper price on – yeah, short term, you
might be able to capture more. But on the other hand, we are in this for the long term and we have in general built
a lot of trust with our customers, many of them being the larger mining companies, and taking advantage of ashort, potentially fluctuating, let's say, commodity prices in our own pricing strategy. I don't think that is wise. Thensuddenly if things turn south, we will have to give things back, and potentially more, if we start to tie pricing tocommodity prices. So, I'll say we stick to our value-based pricing approach. That's served us well long term in thepast and I think it will continue to do so.
......................................................................................................................................................................................................................................................

John Kim
Analyst, Deutsche Bank AG (UK)Q

Okay. Thank you.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Thank you.

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

Operator: The next question comes from the line of Vlad Sergievskiy with Barclays. Please go ahead.
......................................................................................................................................................................................................................................................

Vladimir Sergievskiy
Analyst, Barclays Capital Securities Ltd.

Q

Yeah, good afternoon. Thank you very much for the opportunity. Two questions, please. First one, how do you
see demand momentum for your battery electric machines offering developing in perhaps come – next come –next few years? Any changes in the outlook here at all?
And second one is more nuanced and related to the inventory position. Could you comment of how close do you
think your inventory position to level which you will consider optimal for this part of the cycle and maybe discuss if
there are any differences in inventory positions across different business lines? Thank you.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

You'll take the second one?
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Yeah.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Start with BEVs then in mining. I would say so far this year it's been a fairly muted, let's say, deal or orders interms of the BEVs. We have not had any of the bigger fleet orders, but we saw some last year. I would say theinterest is still very high, the interest is there, but it's – I would call it a little bit of a wait and see in the industry
where there are a number of these larger fleet orders being delivered right now. And I think the industry is a little
bit waiting to see how that will go, how it will perform. We know we can improve performance on individualmachines, on three, four machines. Now it's the first time where you have more or less Greenfield mines or large
brownfield expansions that will go fully electric. And I think that's in a way the next proof point on the journey
towards a more scaled up – more fully scaled up electrified mines. So, yeah, a little bit of a plateau right now interms of the demand picture.
On the other hand, I want to say, we set the target a few years ago that we thought around 50% will be electric or
non-diesel by 2030. And that target we set before the significant uptick we saw in the past years. So in that sense,
I think it may be the growth in the past two years that's sticking out a bit, and we are maybe coming back to amore sensible sort of growth path here now. So, yeah, that's where we are right now. If you take the inventories?
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik AktiebolagA

Yeah, sure. So on the inventory side, we are still at elevated levels. Last year from June onwards, sequentially,
we started to be able to bring inventory levels down. Now in the first half of this year, it's been largely flat. A small
reduction in volume in the second quarter. I would say that typically during the first half of the year, we build
inventory and particularly in the second quarter ahead of the summer period. In terms the different businessareas, I would say that SMM is at a good level. Where we have more work to do is particular in the SMR businessarea, but also still in some divisions in Rock Processing. And before we've had an informal net working capitaltarget or ambition of around 25%, and we will see inventory and net working capital levels gradually start to come

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

down. We will not reach the 25% this year. That work will continue into next year, but we should see a gradualimprovement.
......................................................................................................................................................................................................................................................

Vladimir Sergievskiy

Q

Analyst, Barclays Capital Securities Ltd.

Understood. Thank you very much for the color.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thank you.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of Ben Heelan with Bank of America. Please go ahead.
......................................................................................................................................................................................................................................................

Benjamin Heelan
Analyst, Bank of AmericaQ

Yeah. Thank you for the questions. I just wanted to ask one around your aerospace exposure. And we've seen acouple of warnings at some of the large OEMs, and whether you'd seen any impact from that through the supply
chain so far. And then you've pointed to some weakness in automotive. Can you also help us understand just alittle bit about how auto's been performing through Q2 and how you see that in the second half of the year? Thankyou.
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. So look, the aerospace, you have noted us well, there's been some – there are challenges in production
ramp-up in particular in some areas. We haven't really seen that in the momentum in our business, at least not sofar. I think it's worth [ph] noting (00:49:59) that it's still a very positive mid to long-term demand picture in theforecast also from these OEMs. And this more relates to the next year or two and how they think they can ramp
up their supply chain to manage an increased demand. So I think it's still fundamentally positive and it's more
about how – what kind of growth momentum that we can see rather than, I think, a risk of a decline. As I said, we
did see timing of orders in the North America in Q2 turning us negative, but we don't believe that has to do with
underlying momentum. We tend to get larger orders – frame orders in this space, and they can shift between
quarters. So, yeah, I wouldn't call out any negative signs for us at this point in time at least.
On automotive, yeah, as mentioned, I think Europe was weak. It was down high-single digits. And overall, if welook geographically, we see a weak Germany, we see weakness in the surrounding industrial regions as well,
Northern Italy and also a bit into Central Europe and automotive supply chain there. So clearly that is – there are– so there is an impact there. North America was a little bit better, but also down in the quarter, but China a little
bit more positive then with some growth.
If we look at the forecast going forward, I guess we can read the same reports. It points to decent demand picture,
but that also production levels will be slightly down this year versus prior – previous year and even more down if
we take out China from the equation. So it is a bit of softness around auto right now, I think is the view we have.
......................................................................................................................................................................................................................................................

Benjamin Heelan
Analyst, Bank of America

Q

Very clear. Thank you.

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Thank you.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of Andreas Koski with BNP Paribas. Please go ahead.
......................................................................................................................................................................................................................................................

Andreas Koski
Analyst, Exane BNP Paribas SA (Sweden)

Q

Thank you. Can you hear me?
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yes.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Yes.
......................................................................................................................................................................................................................................................

Andreas Koski
Analyst, Exane BNP Paribas SA (Sweden)

Q

Well, perfect. So firstly, on aftermarket in SMR, it was very strong organic growth of 8%. And I think this shouldhave been a record high quarter for aftermarket orders. So did you have any large orders or similar driving that, or
was it driven by the underlying business?
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

Yeah. You are – I haven't looked at that specifically, actually, but you're – I think you're right that it was a record
high, if I look at some of the numbers there. No, no specific larger things to call out. It is the driver, as I mentioned
earlier, high utilization of the equipment, older equipment, starting to gain benefits from a larger fleet on thesurface. Those are the three things I would call out.
......................................................................................................................................................................................................................................................

Andreas Koski
Analyst, Exane BNP Paribas SA (Sweden)Q

Yeah. Understood. And then on cutting tools, I don't know if you have done the exercise, but if I look at growth inQ2 last year, you – the cutting tools business grew, while in Q3 it was down mid-single digit levels. So if daily
sales rates are unchanged during the third quarter compared to the second quarter, this year, I would guess thattranslates into quite solid growth year-over-year in the third quarter. Would you agree with that?
......................................................................................................................................................................................................................................................

Stefan Widing
President, Chief Executive Officer & Director, Sandvik Aktiebolag

A

I think you can do the math yourself.
......................................................................................................................................................................................................................................................

Andreas Koski
Analyst, Exane BNP Paribas SA (Sweden)

Q

Okay.

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Q2 2024 Earnings Call

Corrected Transcript
19-Jul-2024

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Because – yeah. I don't want to guide further than what we have. I mean, we don't guide, so I cannot comment onthat. But I mean you can do the math if you assume stable demand, which, of course, and I want to emphasizethat again, a stable start of the quarter does not mean it will not change throughout the quarter. But that's the data
point we have at the moment.
......................................................................................................................................................................................................................................................

Andreas Koski

Q

Analyst, Exane BNP Paribas SA (Sweden)

Yeah. And then lastly, I just want to better understand your comments about price increases and cost inflation andhow that dilutes the margin year-over-year. Does it mean that cost inflation has now been stronger than your priceincreases over the past 12 months, and because of that, we see this dilution? And how long will this dilution
continue? Is it for the next three quarters or how to think about that?
......................................................................................................................................................................................................................................................

Cecilia FeltonA

Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

I would say that, of course, when we make the price increases, we take into consideration how we think the
inflation will develop going forward. And last year we had the impact from the normal price increases in the
beginning of the year, but we also still carried with us some of the impact from the price increases, the extra priceincreases that we did in 2022. So that means that in Q2 of last year, price was running a little bit ahead of theinflation. And we also mentioned on the call – on the Q2 call last year that price versus inflation was accretive.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Yeah.
......................................................................................................................................................................................................................................................

Cecilia FeltonA

Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

This year it offsets, but year-over-year, then it's a dilutive impact. When we look at Q3, price versus inflation was
also accretive last year for the same reasons. It's the same dynamics. And then over time, this will gradually comedown. And as Stefan said, there should be pretty much normalized beginning of next year.
......................................................................................................................................................................................................................................................

Andreas Koski

Q

Analyst, Exane BNP Paribas SA (Sweden)

Okay.
......................................................................................................................................................................................................................................................

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

Another way of saying it in the words used here is that we were running ahead with price increases in Q1 lastyear and now inflation has caught up.
......................................................................................................................................................................................................................................................

Andreas Koski
Analyst, Exane BNP Paribas SA (Sweden)Q

Yeah. Yeah.
......................................................................................................................................................................................................................................................

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Corrected Transcript

Q2 2024 Earnings Call

19-Jul-2024

Stefan WidingA

President, Chief Executive Officer & Director, Sandvik Aktiebolag

So we believe we are now in balance, but we get the bridge effect that's still out there.
......................................................................................................................................................................................................................................................

Andreas Koski

Q

Analyst, Exane BNP Paribas SA (Sweden)

Yes. Understood. Thank you very much.
......................................................................................................................................................................................................................................................

Cecilia FeltonA

Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

Thank you.
......................................................................................................................................................................................................................................................

Operator: The next question comes from the line of Daniela Costa with Goldman Sachs. Please go ahead.
......................................................................................................................................................................................................................................................

Daniela Costa
Analyst, Goldman Sachs International

Q

Hi. Good afternoon. Thank you so much for taking my question. It relates to both the return on capital employed
and the free cash flow conversion. I think if we look back at just before pandemic, you were running return on
capital employed above 20%, cash conversion around 100%. We're now obviously seeing these at low teens andaround 80% for the cash conversion. So how sort of do you plan to get there? Is it possible to get back to thoselevels? Or do you think the business has sort of structurally changed? What are the normalized figures that you
view over the medium term for these metrics?
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

I would say if we start with growth, I think what's changed in particular are all the acquisitions that we've madeover the last few years, impacting, of course, building of goodwill in the balance sheet. Then on the BA level,
when you look at returns, it's impacted by the net working capital buildup. At a group level, that's largely offset bydecreasing excess cash in the balance sheet. So, I think, the main driver is the acquisitions that we've been
making over the last few years. Cash conversion, it tends to be over 100% in drastic downturns. Normally, we are
between 80% to 90% over time.
......................................................................................................................................................................................................................................................

Daniela Costa
Analyst, Goldman Sachs InternationalQ

And then just following up on the point on the acquisitions. I guess over time, sort of you do expect to generate
the returns from those acquisitions, or do you think the business configuration changed then and 20% plus in themedium term is not – is it possible or not?
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Over time, yes. But in the first few years, it has a negative impact on ROCE. And we also said for when we makeacquisitions, we want the return higher than WACC, at least five years out. But it means the – there's a negative
impact in the first few years when we make these acquisitions.
......................................................................................................................................................................................................................................................

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Q2 2024 Earnings Call

Daniela Costa
Analyst, Goldman Sachs International

Corrected Transcript
19-Jul-2024

Q

Got it. Thank you very much.
......................................................................................................................................................................................................................................................

Cecilia Felton
Chief Financial Officer & Executive Vice President, Sandvik Aktiebolag

A

Thank you.
......................................................................................................................................................................................................................................................

Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I would now
like to turn the conference back over to management for any closing remarks. Thank you.
......................................................................................................................................................................................................................................................

Louise Tjeder
Vice President & Head-Investor Relations, Sandvik Aktiebolag

Thank you, and thank you, Stefan and Cecilia. It seems that we are finished earlier than usual. Summer is calling,
and indeed we are looking forward to it. And before we say goodbye, we want to wish you all a good summer, andof course, thank you for calling in. Good-bye.
......................................................................................................................................................................................................................................................

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thankyou for participating in the conference. You may now disconnect your lines. Good-bye.

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