Sandvik May 2006 CEO Lars Pettersson, Munich page 1

New Solutions For A New Environment

Lars Pettersson

President and CEO

Sandvik May 2006 CEO Lars Pettersson, Munich page 2

eat

PAST

Sandvik May 2006 CEO Lars Pettersson, Munich page 3

PRESENT

Sandvik May 2006 CEO Lars Pettersson, Munich page 4

FUTURE

Sandvik May 2006 CEO Lars Pettersson, Munich page 5

Industrial production12-month rate of change

-10%

-5%

0%

5%

10%

15%

20%

CANM

EXUSA

JPN

KOR

AUTBEL

DNKFIN

FRADEU

GRC

HUNIR

LIT

ALUX

NLDNO

RPO

LPRT

SVKESP

SWE

TURG

BR

Jan 06 OECD-Total

Sandvik May 2006 CEO Lars Pettersson, Munich page 6

Youth unemployment rate

Sandvik May 2006 CEO Lars Pettersson, Munich page 7

Total factor productivity growth

-1,5%

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

US UK Germany France EU-15 Italy

1995-2000 2000-2004

Sandvik May 2006 CEO Lars Pettersson, Munich page 8

0

2

4

6

8

NorthAmerica

Japan WesternEurope

EasternEurope

ASEAN China India

%

GDP Growth per Capitaaverage annual percentage changes 1970-2002

Sandvik May 2006 CEO Lars Pettersson, Munich page 9

Growth in Industrial productionProjected production growth 2005, %

Source: Economist Intelligence Unit

0%

2%

4%

6%

8%

10%

12%

14%

16%

China India EasternEurope

Brazil

Sandvik May 2006 CEO Lars Pettersson, Munich page 10

Importance to Sandvik

Sandvik sales 2005

Europe 35 44

NAFTA 34 20

Asia/Australia 24 23

Africa/South America 8 13

World GDP 2003 1997

53

24

15

8

Sandvik May 2006 CEO Lars Pettersson, Munich page 11

New solutions for a new environment

We are coming from:

local economies

trade barriers

limited communications

local labour markets

but facing:

global economies

free trade

unlimited communication

global markets

Sandvik May 2006 CEO Lars Pettersson, Munich page 12

New solutions for a new environment

What we have:

systems and relations which inhibits change

subsidies rather than incitament

collective rather than individual solutions

obstacles for immigrants

too low spending on research, development and education

Sandvik May 2006 CEO Lars Pettersson, Munich page 13

New solutions for a new environment

What we need to achieve:

promote change in a proactive way, act rather than react!

provide a reasonable safety net to encourage change and

development

clarify the responsibility of the individual to make sure he/she

is employable

encourage education, research and entrepreneurship

reduce unemployment of immigrants