Sandvik Machining Solutions

The stars were aligned for global market leader Sandvik Machining Solutions in 2017. Profit increased 21 percent compared to 2016, a number of innovative products were launched, and there was growth in all regions.

2017 in figures

Revenues: 35,778 million SEK (32,852) with 8% organic growth
Operating profit: 8,413 million SEK (6,970)
Operating margin: 23.5% (21.2)
Return on capital employed: 35% (28.9)
Employees: 18,187 (18,043)
Gender balance: Men 80%, Women 20%
President: Klas Forsström, as of 1 April 2017
Lost time injury frequency rate (LTIFR): 1.8
Share of recovered metallic raw material: 52%
Estimated market size: 175 billion SEK

REVENUES BY customer segment

  • Engineering 47
  • Automotive 28
  • Aerospace 13
  • Energy 9
  • Other 3


  • Europe 55
  • North America 21
  • Asia 20
  • South America 2
  • Africa/Middle East 1
  • Australia 1

Business area Sandvik Machining Solutions manufactures metal cutting tools and tooling systems for advanced industrial machining operations. Inserts (55%), round tools (18%) and tools (12%) account for the majority of revenues, while a smaller portion comes from tooling systems (7%). Products and solutions are sold under a number of world-leading brands, including Sandvik Coromant, Seco, Walter and Dormer Pramet.

Market situation

Our customer segments strengthened in all regions. The customer segment aerospace, for example, continued to grow globally and the automotive sector was particularly strong in Asia. Sandvik Machining Solutions is in a strong position, with hundreds of thousands of customers spread around the world. However, competition and consolidation continue to increase in the global cutting tool industry.

Being no 1 or 2

2017 was a strong year for Sandvik Machining Solutions, with growth in all regions and product areas and we maintained our number one position in the market for machining products and solutions.

Focus on core

During the year, we focused on our Value Selling Concept, which continued to support positive price effects. The Value Selling Concept enables us to offer our customers added value, with tools and solutions that improve performance and increase customers’ competitiveness. This meets a growing demand for higher production efficiency in, for example China, where operational efficiency and productivity have become major business drivers.

Efficiency and continuous improvements

Operational and efficiency improvements, such as lean methodology, benchmarking internal best practices and other efforts, helped lower production costs. Restructuring and factory closures within the business area also contri­buted to the year’s positive results.

Sustainable business

Within our own operations, Sandvik Machining Solutions’ energy use increased by 20 GWh in 2017, which was 3 percent higher than the year before. In relation to a 8 percent organic growth, this corresponds to a relative reduction in energy usage. Waste volumes remained unchanged compared to 2016, an improvement in relation to growth. We pay customers for their worn inserts and solid carbide tools through local buy-back programs. The recycled material is subsequently re-used in our production.

In addition to actively working with recycling of inserts and solid carbide products, we successfully help our customers improve their operational efficiency. We also support customers to lower their energy consumption through improvements in tool speed and tool life. Sandvik Machining Solutions advises customers on how to reduce costs and increase efficiency through our productivity improvement programs.


Product portfolio

Multi-brand strategy: Sandvik Coromant, Seco, Walter and Dormer Pramet. Metal-cutting tools: majority of revenues are derived through inserts and round tools (consumables). Smaller part from tool holders.

Market characteristics

High barriers of entry due to capital intensive business model and intellectual property throughout the value chain (high degree of vertical integration). Cutting tools represent a small share of total manufacturing cost for the customers, however they are significant for the productivity. Service levels and product solutions are the main differentiator for premium offering. Lower service degree for mid-market which is more price sensitive.

Demand drivers

  • Global industrial production
  • Primary metals consumption
  • Materials evolution: aluminum, titanium, composites
  • New technologies: additive manufacturing, near-net shaping, 5-axis machining

Competitive landscape/Major competitors

  • Consolidated in the premium segment: IMC group (Iscar brand), Kennametal (Kennametal brand)
  • Fragmented in mid-market including global premium players present with their mid-market brands: Mitsubishi, IMC group (Taegutec brand), Kennametal (Widia brand), Zhuzhou

Go-to-­market model

Direct sales ~55-60 percent. Distribution sales is predominant in North America whereas direct sales is predominant in Europe. In Asia, mainly distribution sales with limited service offering in the mid-market segment and direct sales, with high service level, in the premium segment.

Growth strategy

Expansion through organic growth, innovation and niche acquisitions in the core (round tools). Complementary expansion into pre-machining, post-machining and additive manufacturing.

Strategic risk management

Various forms of business environment risks with an impact on the metal cutting market in general, mainly changes in customer behavior, increased competition, brand positioning and the development of new products and services.

Technology leadership and innovation

Sandvik Machining Solutions has a high ratio of new products and solutions sold to the market. Products that are less than five years old generate 30% of our sales. In 2014, that figure was 23%, which gives an indication of what we have achieved in a very short time.

We are expanding our capabilities in additive manufacturing through research and development and on January 1, 2017, we started a new product area to define a commercial model for an additive manufacturing offering. We are a leader in driving technological change in our industry and are confident that Sandvik will add value in additive manufacturing, as we do in traditional, subtractive manufacturing.

During the year we released a number of innovative new products and solutions including the ones below.

Profitable growth

We are working to expand our market position through organic growth, innovation and niche acquisitions in the core business. Certain areas, such as round tools, are particularly in focus as the growth potential is interesting. Another part of our strategy is to expand into pre-machining, post-machining and additive manufacturing. These areas have their own growth potential, but are also critical to master as these steps will be integrated more and more in the manufacturing process in the future.

Our overall ambition is profitable growth, driven by step-by-step continuous improvements, while we expand our business through acquisitions and innovation. We want to develop from a world-leading player in the “niche” industry of metal cutting, to a leading solutions provider to the wider manufacturing industry and deliver accelerated growth with maintained high profitability and returns.

There’s no turning back after using PrimeTurning™

2017 product highlights


PrimeTurning™ is a completely new methodology that enables turning in all directions. It allows customers to double the speed and feed rates, providing faster metal removal, which means more parts per run. The productivity increase is substantial, >50 percent, as compared to conventional turning.

Y-axis parting

While conventional parting uses feed motion along the X-axis, the Y-axis parting blade CoroCut® QD is designed with the insert pocket rotated 90 degrees, which allows for feeding along the Y-axis. Machining along the Y-axis gives a more beneficial direction of the cutting force and more than six times higher blade stiffness. Customers can run the machine with considerably higher feed rates and longer overhangs without losing stability.

PerfoMax® Indexable Insert drill

This drill provides more stable, accurate, reliable and durable drilling in all materials, including long chipping materials. The drill body has been optimized to be stronger for even better hole tolerance and has a new flute design including a polished wave pattern for improved chip evacuation. The laser-hardened front of the flute is designed to avoid the common chip erosion of the body, for extra durability.