Since May 2002 Lars Pettersson is the President and CEO of Sandvik. Clas Åke Hedström is the Chairman of the Board.

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1 Sandvik OH presentation Updated February IN BRIEF Sandvik is a high-technology engineering group with operations in 130 countries, 37,000 employees and annual sales of approximately SEK 49 billion. Sandvik develops, manufactures and markets high value-added products with a large R&D content. Operations are concentrated in areas in which Sandvik is or has the potential to become a world leader. Since May 2002 Lars Pettersson is the President and CEO of Sandvik. Clas Åke Hedström is the Chairman of the Board. Sandvik s shares have been listed on the Stockholm Exchange since At year-end 2003 the total market capitalization was SEK 61 billion. 2 SANDVIK Göran Fredrik Göransson founded Sandvik in He was the first in the world to succeed in producing steel on an industrial scale using the Bessemer method. Since it was founded, Sandvik has developed from a provincial Swedish steelworks into an international high-technology engineering enterprise. The head office and the largest plant facilities are still in Sandviken, Sweden SANDVIK S BUSINESS PHILOSOPHY SINCE 1868 An important element in Sandvik s strategy has been continuous investments in research and development of new products and production methods. Today, more than 96% of sales and almost two thirds of the production are derived from activities outside Sweden. One essential factor greatly contributing to this development is the persistent focus on marketing in close cooperation with customers worldwide. Wherever the customers are located they will find Sandvik, with operations in 130 countries and 37,000 employees. 3 THREE CORE AREAS Sandvik Tooling specializes in cemented-carbide and high speed tools for metalworking. Sandvik Mining and Construction concentrates on machinery, tools and service for rock excavation and processing. Sandvik Materials Technology focuses on products in high technology special alloy materials and advanced value-added materials and heat resistance materials for a number of various applications for customers with high demands on reliability and performance.

2 Seco Tools, an independent, publicly listed company, is also included in the Sandvik Group. All business areas hold world-leading positions. 4 SANDVIK TOOLING Sandvik Tooling s operations comprise tools and tooling systems for chipforming metalworking. The business area is working with tools for metal cutting applications and hard materials components. The product areas Sandvik Coromant, Walter, Valenite and Safety is operating in the field of tools in cemented carbide, ceramics and extremely hard materials such as diamond and cubic boron nitride. Walter AG also produces software for tool handling and numerically controlled grinding machines. Sandvik Hard Materials is active in the full spectrum of its field, ranging from cemented carbide to diamond. Dormer, Prototyp, Titex and Precision are operating in the field of metal cutting tools based on high-speed steel. All in all Sandvik Tooling have about employees generating a total invoicing of around SEK 18 bn. The main customer areas are General Engineering, Automotive and Aerospace but also other segments where high performance and cost efficient metal cutting are important. 5 TOOLING PRIORITIES The success of Sandvik Tooling is based on a broad range of brands, each with their specific profile, that are able to supply every customer with the most value-added solution for metal cutting operations. The ability to offer high performance solutions rests upon a strong strategy for R&D with the focus to develop better and better solutions for different applications. During the last couple of years Sandvik has also acquired the German company Walter and the American company Valenite which will further strengthen the ability of Tooling. One of the main priorities is of course to get these companies fully integrated into the Tooling Business Area. The Financial objectives for Tooling are over a business cycle: - to grow organically more than 6% per year - to generate 20% EBIT margin - to generate ROCE (Return On Capital Employed) more than 20%

3 6 SANDVIK MINING AND CONSTRUCTION Sandvik Mining and Construction supplies rock-excavation machinery, equipment, tools and service to the world s mining and civil engineering industries. The various Product Areas represents different application areas and includes the Joint Venture Sandvik Smith, formed together with the American company Smith International. The product offering includes drilling rigs, loaders, trucks, hydraulic hammers, crushers, screeners, feeders, cemented-carbide tools and wear parts and also a comprehensive offering for service and maintenance. Sandvik Mining and Construction is a world-leading supplier for surface mining as well as underground mining, for hard rock as well as soft-rock excavation. Sandvik Mining and Construction employees people and the total invoiced sales 2003 were SEK 14,3 bn. 7 SMC PRIORITIES For the benefit of Mining and Construction as well as their customers it s essential to offer a broad range of products and have a good balance between customer segments as well as application areas but also between equipment related sales and after market sales. This balance ensures a healthy growth of the business area but also certain resilience to variations in the global business climate. As all Sandvik business areas Mining and Construction spend a lot of efforts in developing new efficient solutions for the various customers. Consequently R&D is an important priority and a significant pre-condition to ensure continued profitable growth. SMC has been the fastest growing business area the recent years and the financial objectives are: - to grow organically 6% per year - to generate 10-15% EBIT margin - to generate 20% ROCE 8 SANDVIK MATERIALS TECHNOLOGY Sandvik Materials Technology consists of Product Areas Tube, Strip, Wire, Kanthal and Sandvik Process Systems. Materials Technology develops and manufactures high technology special alloy materials and advanced value-added products for various applications. The development work is often conducted in close relationship with the customer and the main customer areas are general engineering, automotive, oil & gas industry, food-processing, fertilizer and chemical industry, aerospace, electronics industry, medical technology and various consumer related areas.

4 Materials Technology employ about people and the annual sales was SEK 12,5 bn in SMT PRIORITIES During the last few years Materials Technology has undergone a comprehensive change in order to lift profitability and re-position the business area to a more competitive setup. The actions taken has meant consolidation of manufacturing, reduction of employees, development of new products, entering new application areas and exiting from areas with no long-term profitability. The priorities now are to continue to improve the internal efficiency with lead-times, delivery performance and sales and logistics but also to continue to improve the product mix and via the new Sandvik Nova organization make sure that new products are efficiently introduced to the market. The financial objectives are: - to grow organically by 4-5% per year - to generate 12-15% EBIT margin - to generate 15-20% ROCE This means significant improvement vs. the results in 2003 and there is a strong conviction that on-going actions together with a slow improvement in business climate will contribute to reaching these targets. 10 GLOBAL SANDVIK More than 95% of sales and two thirds of production is conducted outside Sweden. Wherever the customers are located they will find Sandvik, with operations in 130 countries and 37,000 employees. Split of invoiced sales by market region 2003: Europe 48% (of which Sweden about 5%) NAFTA 20% (the US, Canada and Mexico) South America 4% Africa/Middle East 6% Asia/Australia 22% The Group s long-term ambition is to achieve a more evenly spread of sales and production between the Americas, Europe and Asia. Sandvik s customers are active in many areas, including the automotive and aerospace industries, mining and construction operations, chemical, oil and gas, power, pulp and paper, household appliances, electronics, medical technology, pharmaceuticals and other

5 engineering industries. About two thirds of the products are industrial consumption goods and one third investment goods. 11 SALES THE LAST 20 YEARS The graph illustrates the trend of invoiced sales during the past 20 years. Invoiced sales in 2003 was flat vs but increased 5% at fixed exchange rates and for comparable units, to SEK 48,810 M in The graph also shows a flat development the last years despite a weak business climate and a negative impact from a weaker USD. This certainly confirms the strength in the Sandvik organization to capture market shares. 12 OPERATING PROFIT AND RETURN The development of Operating profit has been very strong over the last decade with a slight drop during 2001 and 2002 due to the recession but mainly related to negative currency impact. The main financial objective is to generate 20% ROCE (Return On Capital Employed). This has not been the case the recent years, mainly due to the impact from the two acquired companies, Walter and Valenite. However, we are convinced that our strategy and the on-going activities will contribute to Sandvik reaching this target within a near future. Still, despite the somewhat weaker performance Sandvik has a significantly better performance than the average of European Engineering industry. 13 INVOICING, EARNINGS AND NUMBER OF EMPLOYEES BY BUSINESS AREA 2003 Sandvik Tooling is the largest business area, with invoiced sales exceeding SEK 18 billion and an operating margin of 13% in Excluding the one-off of 600 millions for goodwill write-downs and re-structuring of Precision in US the margin would be 16%, still diluted from the acquired Walter and Valenite. Sandvik Mining and Construction s invoicing amounted to SEK 14.3 billion and earnings were stable on 10% of invoicing. Sales for Sandvik Materials Technology was 12.5 billions and earnings amounted to 6% of invoicing summarizing a quite rough year in the history of the business area. Group activities include operating expenses for central administration and finance operations and other activities in Group units worldwide not linked to the business areas. The Group s operating profit amounted to SEK 4,967 M, 10% of invoicing. Profit before taxes was SEK 4,187 M, including a charge of SEK 600 M for goodwill writedowns and re-structuring in Sandvik Tooling (Precision). The decline from 2002 is also related to SEK 700 M in negative currency effect compared to The number of employees in the Group at year-end was , a decline of 458 employees from 2002.

6 14 THE PRODUCTIVITY GAP Most organizations and companies recognize this picture, when costs increase at a higher pace than can be compensated with price increases. Long term this will lead to bankruptcy unless the gap is closed by increased productivity. This is where Sandvik plays a vital role. 15 YOUR PRODUCTIVITY PARTNER Sandvik s business concept is to contribute actively to improving the productivity and profitability of our customers. Products and services offered by the Group shall provide customers with maximum value in terms of performance, quality, speed, safety, flexibility and total economy. Sandvik shall be the obvious first choice for its customers. 16 RESEARCH AND DEVELOPMENT One of the major factors that have contributed greatly to Sandvik s business development is a goal-oriented investment in research and development based continuous product renewal, with focus on advanced materials and technology. For many years the investment in R&D has been 4% of invoiced sales. In 2003, Group investments in research and development of new products and production methods amounted to SEK 1.8 billion, corresponding to 4% of sales. R&D activities employ about 1,400 persons, many with graduate university degrees in specialized areas. One way of measuring the success of our investment in R&D is the number of patents granted - today, totally about 4,500. Another benchmark is the measurement of the age of our product portfolio - within product area Sandvik Coromant about half of the invoiced sales comes from products less than five years old. 17 ACQUISITIONS Sandvik has an ambition to expand the business through organic growth as well as by acquisitions. Since 1992 the number of acquisitions amount to close to 40 companies. Seven had an annual turnover of more than SEK 1 billion at the time of the acquisition and the 40 acquisitions represent together, including Walter and Valenite, annual sales of approximately SEK 20 billions. The acquired companies shall be active in areas within our present operations and shall strengthen our three business areas and our market position. We can also consider acquisitions in near-by areas, however within our areas of competence. One criterion is that the acquisition shall add to the Group s earnings within 1-2 years.

7 18 THE GROUP S FINANCIAL OBJECTIVES During the autumn 2000, new higher growth objectives were communicated. Organic sales growth shall average 6% annually over a business cycle compared with the earlier 4% growth. In addition, there could be company acquisitions. We shall grow in all geographic areas but higher than average on our prioritized areas, Asia, NAFTA and Eastern Europe. The goal on Return On Capital Employed (ROCE) of 20% is retained as well as the high dividend payout ratio of at least 50% of earnings per share. Sandvik s high level of earnings and strong cash flow allows for a more efficient capital structure. The objective is to increase the net debt/equity ratio to the interval 0.6 and 0.8. This is to be attained through organic growth, acquisitions, continuing high dividends and share buy-back. Finally, the total return on the Sandvik-share should exceed the average for our industry defined as the European engineering industry. 19 SANDVIK S STRENGTH FACTORS AND BUSINESS PHILOSOPHY The Sandvik Group s strategy is based on a unique business model based on the interaction between a number of different strength factors. Learn more about Sandvik in the annual report! 20 SANDVIK S OPPORTUNITIES To achieve the objectives going forward it is important to explore the opportunities given to generate profitable growth and a maintained position as the world leader. There are various factors that will ensure further growth of Sandvik. 21 SANDVIK S OPPORTUNITIES Growth is the main driver for Sandvik but it has also always been linked with a maintained or increased profitability. Actually, growth is often a pre-condition for profitability but also without growth it is important to focus on opportunities for improvement. 22 ROCE All three business areas have normally always been outperforming its competitors regarding growth and profit margin. An area that has not been that successful is capital efficiency where there is a significant potential for improvement. Increased capital

8 efficiency together with a high operating profit will further increase the main financial target, ROCE = Return On Capital Employed. 23 KEY FOCUS 2004 For this year, 2004, the management of Sandvik has defined the following key areas: