Sandvik Materials Technology
Sandvik Materials Technology is a world-leading developer and manufacturer of advanced stainless steels, powder-based alloys and special alloys for the most demanding industries, as well as products for industrial heating. The focus is on making customers' processes safer and more efficient while reducing the environmental impact.
Selected niches in demanding industries where material requirements, as well as product quality and reliability, are extremely high. High entry barriers.
- Energy demand and oil and gas prices
- Industrial production
- Environmental demands and legislation e.g. reduced emissions and energy consumption
- Materials evolution i.e. advanced material requirements
- Increased demand for safety, reliability and more sustainable materials
Estimated market value2, billion SEK
Competitive landscape/Major competitors
Nippon Steel & Sumitomo Metal (tube), Tubacex (tube), VoestAlpine (strip), Aperam (heating elements and systems), smaller niche players.
Revenues, billion SEK
Direct sales ~80%
Increased focus on products for energy-, energy efficiency and emission-reducing solutions. Continued material evolution through focused R&D efforts and green technologies such as powder metallurgy.
Tubular products, bars, billets, strip. wire, rock drill steel, heating systems (Kanthal) – as well as metal powder to e.g. additive manufacturing as well as powder-based products.
Strategic risk management
Different risks with an impact on the advanced stainless steel- and special alloy-market in general, such as a recession in the oil and gas industry, increased market competition and alternative technologies.
Material sustainability aspects for 2017–2018
Based on the sustainable business strategy, Sandvik Materials Technology will focus on:
Innovation and productivity in ensuring safer customer processes, as well as reduced environmental impact.
Ensuring a sustainable supplier management and reduced carbon dioxide emissions. Our production is based on recovered stainless steel. Health and safety is a top priority.
1) Adjusted operating profit, excluding metal price effects totalling +64 million SEK, amounted to 1,051 million SEK (1,158), with an underlying operating margin of 8,1% (8,3).
2) Addressable market.
2016 in short
During the year, the oil price increased somewhat compared to 2015, but remained on a low level from a historical perspective. Customers continued postponing placing orders for the oil and gas-related products. Competition increased for the more standardized tubular offering, as companies active in the tubular area sought to replace lost volumes in the oil and gas industry with volumes in adjacent segments. However, several larger orders from the oil and gas industry were received, supported by geo-political drivers. Customer activity within the nuclear segment increased during the year – and one major order was received from Asia. Demand for fine-powder technology products, to applications such as additive manufacturing, continued to develop positively – as well as the Kanthal-products for industrial heating.
Despite the negative organic growth during 2016, the operating margin was stable year-on-year, supported by an extensive mitigation program – including flexibility solutions to manage volatility, general strict cost control and the ongoing cost adjustment-programs. To further strengthen the position in the oil and gas industry, a new state-of-the-art ultra-sonic testing line for OCTG-tubing (production tubing) was inaugurated in Sandviken, Sweden – and a new control line facility was taken into operation in Rio de Janeiro, Brazil. The capacity for fine powder used for e.g. additive manufacturing, was expanded in Neath, Wales. 142 new or modified alloys were added to the materials program and 161 patents were granted for new materials, applications or production processes.
Near term, focus is on managing the negative effects from the downturn in oil and gas. The work to improve capital efficiency will also continue, as well as the implementation of a lean business model for the more standardized product program. Key priorities also include a sustained strong focus on safety, continued materials evolution in close cooperation with key customers – and profitable growth in the energy segment as well as areas related to energy efficiency and reduced emissions, meeting the climate challenge.
Sandvik Materials Technology’s mission is to make customers' processes safer and more efficient while reducing the environmental impact. With its unique expertise in materials technology, the business area can contribute in solving some of the world's greatest challenges, especially the energy- and climate challenges, and can also enable important technology shifts in these areas.