The main financial goal of the Sandvik Group is to generate attractive return and value growth for those who invest in the Sandvik share. The dividend shall amount to at least 50% of the earnings per share over an extended period.
PROPOSAL FOR HIGHER DIVIDEND
With the proposed dividend of SEK 3.25 per share for 2006, a rise of 20% compared with a year earlier, the increase in dividends has averaged 10% annually from and including 1996. The dividend comprises 50% of earnings per share in 2006. Earnings per share increased by 30% to SEK 6.45 during the year. The average payout ratio during the past ten years has been 67%.
Sandvik’s Board of Directors also proposes that the Annual General Meeting decide on an extraordinary distribution of some SEK 3.6 billion, or SEK 3.00 per share through a mandatory redemption procedure. In total, this means that the Board is proposing a distribution of about SEK 7.4 billion to the shareholders for 2006.
SHAREHOLDER VALUE
In 2006, the Sandvik share price rose 34%, which was better than the increase on the Stockholm Stock Exchange of 24%, measured as the OMX Stockholm All-Share Index (OMXS). The share price at year-end was SEK 99.50, corresponding to a market capitalization of SEK 118 billion (88). In terms of market capitalization, the Group was ranked the twelfth (twelfth) largest company on the Nordic Exchange in Stockholm. During the year, Sandvik shares were traded at a total value of SEK 185 billion, making it the tenth most actively traded share.
The Sandvik share continued to generate a high total return. In 2006, the rise in the share price and dividends corresponded to a total return of 38%. In the most recent five-year period, Sandvik’s total return, that is, the share price including reinvested dividends, rose an average of 22% annually. The comparable index, OMX Stockholm Benchmark (OMXSB), rose 11% annually during the same period.
ONE SHARE BECAME FIVE
At the Annual General Meeting of Sandvik on 2 May 2006, a split of the Sandvik share was decided. The record date for the split was set at 12 June and the measure entailed that each share was replaced by five new shares and the share’s quota value was reduced from SEK 6.00 to SEK 1.20. Accordingly, the number of shares increased from 237 million to 1,186 million. Relevant amounts in this report are restated taking into account the implemented share split.
74,000 SHAREHOLDERS
Sandvik is listed on the Nordic Exchange in Stockholm and is one of the Stockholm Stock Exchange’s oldest companies, with a listing already back in 1901. Sandvik’s share price can also be followed on the Nordic exchanges in Helsinki and Copenhagen. The Sandvik share can be traded in the US in the form of ADRs (American Depositary Receipts).
In 2006, interest in the Sandvik share increased, both in and outside of Sweden, and the number of shareholders increased by more than 18,000 to some 74,000. Sandvik has shareholders in approximately 75 countries.
For further information, see Sandvik’s website
www.sandvik.com/ir
With the aim of increasing understanding of how Sandvik enhances its competitiveness, and accordingly, its attractiveness as an investment, the finance market is regularly invited to attend presentations. |  | |