Summary, Group Total

In 2017, demand for Sandvik’s products improved. This was the result of a broad-based improvement from all business areas and all main customer segments. The strongest growth was reported in the mining segment due to a significant improvement in demand for replacement equipment as well as higher demand in the aftermarket business. Demand for Sandvik’s products improved in all regions and Sandvik’s order intake and revenue for continuing operations increased by 15 percent (1) and 10 percent (6), respectively at fixed rates for comparable units.

Financial targets1

Sandvik’s financial targets are based on assessments of the company’s strength and how it is positioned for the future. The Group’s targets and target fulfillment are presented in the table below.

Target fulfillment

The financial targets are set for 2016-2018. In 2017, growth was 16 percent and return on capital employed improved 4.6 percentage points. At the end of 2017, the net debt to equity ratio was 0.3. The proposed dividend for 2017 corresponds to a payout ratio of 33 percent of reported earnings per share.

Earnings and returns

Sandvik’s order intake amounted to 96,743 million SEK in 2017 (84,233), and revenue totaled 93,985 million SEK (84,430). The operating profit was 18,037 million SEK (9,657), corresponding to 19 percent (11) of revenue. Movements in metal prices for Sandvik Materials Technology made a positive contribution to the operating profit of 112 million SEK (64). Changes in foreign exchange rates since the beginning of the year affected earnings favorably by about 128 million SEK (-300) compared with the preceding year.

Net financial items amounted to 1,071 million SEK (1,661). Result after financial income and expenses for the Group was 16,966 million SEK (7,996), and 17,018 million SEK (9,366) for continuing operations. Income tax had a total impact of 3,783 million SEK (2,528) on earnings, corresponding to 22 percent (32) of profit before taxes. Profit for the year attributable to equity holders of the Parent Company was 13,197 million SEK (5,508). Earnings per share for the Group amounted to 10.52 SEK (4.39) and 10.56 SEK (5.48) for continuing operations. Return on capital employed was 24 percent (13) and return on equity was 31 percent (15).

Financial position

Cash flow from operating activities increased to 14,286 million SEK (12,032). Net cash flow after investing activities was 15,734 million SEK (8,601). At the end of the year, cash and cash equivalents amounted to 12,724 million SEK (8,818).

Interest-bearing liabilities, minus cash and cash equivalents, yielded a net debt of 16,040 million SEK (28,579). Sandvik's credit facility of 9,000 million SEK was unutilized at year-end. Under the Swedish bond program, totaling 15,000 million SEK, bonds corresponding to a nominal amount of 6,218 million SEK were outstanding at year-end. Under the European bond program, totaling 3,000 million EUR, a nominal amount of 1,103 million EUR was outstanding at year-end. In addition, there were bonds outstanding in the US for a nominal amount of 555 million USD.

The remaining maturity of bonds averaged 3 years for Swedish bonds, 8.5 years for European bonds and 2.8 years for US bonds. At year-end, the international credit-rating agency Standard & Poor’s had a rating of BBB+ for Sandvik’s long-term borrowings, and A-2 for short-term borrowings.

Financial targets1 and target fulfillment

Target 2016-2018Outcome 2017
EBIT growth (CAGR), % ≥7 16
Return on capital employed improvement, % pts ≥3 4.6
Net debt/equity ratio <0.8 0.3
Dividend payout ratio, % 50 442

1) See Financial targets for definition of targets.
2) Proposed adjusted dividend payout ratio

Working capital

Relative net working capital for the year was 23 percent (26) of revenue, a year-on-year improvement of three percentage points. In terms of volume, net working capital increased by 748 million SEK (–2,009) compared with the preceding year, driven primarily by higher levels of inventory. Changed currency rates decreased net working capital by 463 million SEK (1,084) compared with the preceding year. The structural effect from acquisitions and divestments decreased working capital by 296 million SEK (10).

Net working capital amounted to 20,809 million SEK (20,801) at the end of the year.


Equity at year-end amounted to 48,771 million SEK (39,290), or 38.9 SEK per share (31.2). The equity ratio was 46 percent (38).

Investing activities

Investments in tangible and intangible assets for the full year 2017 reached 3,578 million SEK (3,691) corresponding to 83 percent of scheduled depreciation. Proceeds from sale of companies and shares, net of cash amounted to 4,786 million SEK (53). Investments in internally generated intangible assets were 658 million SEK (855).

Portfolio management

On 30 October an agreement was signed to divest the welding wire operations to ESAB, part of the Colfax Corporation. Revenues for the welding wire business amounted to 490 million SEK in 2017.

On 2 November the completion of the divestment of the Sandvik Mining Systems business was announced. The Mining Systems' conveyor components business, including the closely related specialist conveyor systems business in Hollola (Finland), was divested to NEPEAN.

Mining Systems' project business was divested to FLSmidth.

As of 2 November the Mining Systems business was deconsolidated from Sandvik’s financial statements. The projects to be finalized during 2018–2019 by Sandvik, through an operational agreement with FL­Smidth, will however remain reported in discontinued operations.

On 1 December the divestment of Sandvik Process Systems to FAM AB was completed. The divestiture resulted in a capital gain of 3.9 billion SEK which positively impacted the operating profit in the quarter. Sandvik Process Systems has been reported in Other Operations and the divested business was deconsolidated from Sandvik’s financial statements as of 1 December.

On 8 December, Sandvik announced that it had signed an agreement to divest Hyperion to the US-listed investment firm KKR at a price of 4 billion SEK. Hyperion, with approximately 1,400 employees, has in 2017 reported revenues of 3.3 billion SEK.

Hyperion will remain reported in Other Operations in the Sandvik financial statements until closure of the deal. The closing of the transaction is expected during the first half of 2018 and is subject to the approval of relevant authorities. Upon closing, the transaction will generate a capital gain to be reported in Sandvik’s financial statements.

Earnings and return

Operating profit, MSEK 9,657 18,037
as a % of revenue 11.4 19.2
Profit after financial income and expenses, MSEK 7,996 16,966
as a % of revenue 9.5 18.1
Return on capital employed, % 12.9 23.9
Return on equity, % 15.2 31.4
Basic earnings per share, SEK 4.39 10.52
Diluted earnings per share, SEK 4.39 10.50
Whereof continuing operations
Operating profit, MSEK 11,018 18,098
as a % of revenue 13.5 19.9
Profit after financial income and expenses, MSEK 9,366 17,018
as a % of revenue 11.5 18.7
Basic earnings per share, SEK 5.48 10.56

Capital expenditure

Investments in non-current assets, MSEK 3,691 3,578
as a % of revenue 4.4 3.7
as a % of scheduled depreciation 88 83

Financial position

Cash flow from operating activities, MSEK 12,032 14,286
Cash flow after investing activities, MSEK 8,601 15,734
Cash and cash equivalents and short-term
investments as of 31 December, MSEK 8,818 12,724
Net debt as of 31 December, MSEK 28,579 16,040
Net financial items, MSEK -1,661 -1,071
Equity ratio, % 38 46
Net debt/equity ratio, times 0.7 0.3
Equity as of 31 December, MSEK 39,290 48,771
Equity per share as of 31 December, SEK 31.2 38.9

Quarterly trend of Revenue and profit after financial items

MSEKRevenueProfit after financial itemsNet margin,%
2016 Q1 20,420 1,939 9
Q2 21,036 2,231 11
Q3 20,439 1,221 6
Q4 22,535 2,605 12
2017 Q1 22,436 3,109 14
Q2 24,446 3,064 13
Q3 22,612 3,192 14
Q4 24,492 7,601 31

Going forward

The market conditions improved during 2017 with increased customer activity level in all customer segments and geographies. This supported our profitability. Our operating decisions are based on the priorities of stability and profitability before growth. Given our improved operational performance, the next phase of our journey will include a higher focus on growth, in particular for business area Sandvik Machining Solutions.

Parent Company1

The Parent Company’s revenues for 2017 amounted to 16,627 million SEK (15,146) and the operating result was 1,260 million SEK (722).

Expense of shares in Group companies consists primarily of dividends and Group contributions to and from these and profit from the divestment of Sandvik Process Systems and amounted to -706 million SEK (202). Interest-bearing liabilities, minus cash and cash equivalents and interest-bearing assets, amounted to 11,180 million SEK (14,478).

The Parent Company’s total assets decreased by 5,473 million SEK (from 66,692 million SEK to 61,219 million SEK). Investments in non-current assets amounted to 875 million SEK (975). The number of employees in the Parent Company and the subsidiaries operating on commission for Sandvik AB as of 31 December 2017 was 7,204 (7,451).

The Board of Directors proposes a dividend of 3.50 SEK (2.75) per share to the 2018 Annual General Meeting, corresponding to approximately 4.4 billion SEK (3.4).

Total, SEK 24,062,756,1102
Dividend, 3.50 SEK per share
number of shares 1,254,385,923 =

Profits carried forward 19,672,405,379


The average number of employees amounted to 43,376 (44,769), of which 19 percent (19) are women. The employee turnover rate was 9 percent (11). Wages, salaries and other remunerations for the year totaled 21,354 (20,008) million SEK.

Safety First

During the year, Sandvik worked towards achieving a total recordable injury frequency rate (TRIFR) target of 4.5. Sandvik's TRIFR improved 9 percent and was 4.6 at year-end, compared to 5.1 the year before. For lost time injury frequency rate (LTIFR) the target was 1.4. Sandvik’s LTIFR improved by 6 percent in 2017 and was 1.6 at year-end, compared to 1.7 at year-end 2016.

Proposal regarding guide­lines for the remuneration of senior executives

The Board of Directors proposes that the Annual General Meeting resolve to adopt the following guidelines for the remuneration of senior executives for the period extending until the 2019 Annual General Meeting, which guidelines correspond to those adopted by the 2017 Annual General Meeting.

The remuneration of the Group Executive Management is to comprise fixed salary, variable salary, pension and other benefits. The total remuneration package should be based on market terms, be competitive and reflect the individual’s performance and responsibilities as well as the Group’s earnings trend.

The variable salary may comprise short-term incentives in cash, and long-term incentives in cash, shares and/or share-based instruments in Sandvik AB. Variable salary in cash is conditional upon the fulfillment of defined and measurable goals and should be maximized in relation to the fixed salary. Long-term incentives in the form of shares and/or share-based instruments in Sandvik AB may be provided through participation in long-term incentive programs approved by the General Meeting. Terms and conditions for variable salary should be designed so that the Board of Directors, if exceptional economic circumstances prevail, has the option of limiting or refraining from payment of variable salary if such a measure is considered reasonable.

In specific cases, agreements may be reached regarding one-off remuneration amounts provided that such remuneration does not exceed an amount corresponding to the individual’s annual fixed salary and maximum variable salary in cash, and is not paid more than once per year and individual.

Pension benefits should be defined contribution.

Normally, severance pay is paid when employment is terminated by Sandvik. Members of the Group Executive Management generally have a period of notice of not more than 12 months in combination with severance pay corresponding to 6–12 months fixed salary. An alternative solution may be applied to the President comprising a period of notice of 24 months and no severance pay. No severance pay will be paid when employment is terminated by the employee.

The Board of Directors is to have the right to depart from the guidelines resolved on by the Annual General Meeting if, in an individual case, there are special reasons for this.

The sphere of senior executives encompassed by the guidelines comprises the President and other members of the Group Executive Management.

For information concerning the current remuneration of senior executives, including ongoing long-term incentive programs, refer to Note 3.5.

The guidelines adopted by the 2017 Annual General Meeting are presented in Note 3.5.

Research and development (R&D)

Each product area/business area is responsible for its own R&D activities that focus on product development, technology platforms and new innovations.

Sandvik has a portfolio of approximately 7,300 active patents and other intellectual property rights. In 2017, 1,050 (1,150) new patents and other intellectual property rights were granted. Investments in R&D were 3,498 million SEK (3,483) in 2017, corresponding to 4 percent (4) of the Group's revenues. The number of employees in R&D, including Quality Assurance, was 2,612 (2,850).


Sandvik is a multinational group with many intercompany transactions. The OECD has issued guidelines for transfer pricing of cross-border transactions in multinational groups. Sandvik adheres to these guidelines and also to the local legislation of each country to ensure that a correct pricing model is deployed and that a correct amount of tax is paid in each country. Sandvik monitors the OECD's tax reform work (BEPS project) and the EU initiatives on Tax transparency carefully and prepares to adopt these standards when enacted. Sandvik strives to have good relations with our stakeholders, such as tax authorities, non-governmental organizations and investors.

Sandvik has initiated cooperation with tax authorities in several countries. We are convinced that an open discussion and cooperation with tax authorities around the globe will help us to reduce uncertainty about the taxes we are obliged to pay. We contribute to the local communities and countries in which we operate in the form of, for example, taxes and employment opportunities. In 2017, the Group paid 2,466 million SEK (1,650) in income taxes globally. Income tax comprises just a portion of all taxes paid by Sandvik worldwide. In addition, we pay social security contributions, environmental and energy taxes, property taxes etc. Furthermore, Sandvik collects and pays taxes at the request of governments and authorities, including indirect taxes and payroll taxes.


Sandvik respects and complies with environmental legislation in all countries where it operates. The most significant aspects of environmental impact are:

  • Energy use
  • Climate change
  • Water management
  • Waste management

Environmental permits

Sandvik has approximately 120 sites worldwide that hold environmental permits. Sandvik is dependent on the environmental permits granted for these sites.

In Sweden, Sandvik conducts licensed operations at 11 plants and notifiable operations in one location. All these hold the requisite environmental permits. No breaches of the permits occurred during the year. A number of guideline values were exceeded for noise and emissions to air and water. Actions are taken to comply with these target values.

In other countries where Sandvik operates, some target values were exceeded and acted upon in co­operation with relevant environmental authorities.

Investigations and remediation activities have been performed at production sites with ground pollution. These activities are always performed in close co­operation with environmental authorities.

During the year, a lawsuit for alleged violations of the wastewater discharge limits at our US site in Kennewick, Washington was settled and completed. Mitigation payments and attorneys fees amounted to approximately 7.5 million SEK. In addition, improved wastewater treatment measures were fully implemented.

Statutory sustainability report

Sandvik has, in accordance with the Annual Accounts Act, prepared the statutory sustainability report as a separate report which was approved for issue by the Board of Directors and the President and CEO. The scope of the Statutory Sustainability report and Sustainable Business Report, is defined on About this report.

1) The Parent Company includes subsidiaries operating on commission for Sandvik AB. These are presented in Note 14.