Relevant GRI Indicators
Strategic focus areas and outcome
Focus on core operations and to be number one or two in chosen segments and markets
Sandvik actively worked on its business portfolio in 2019. In October, we signed an agreement to divest the majority of Sandvik Drilling and Completions (Varel). We announced nine strategic acquisitions, including digital mining technology company Newtrax, battery electric solutions provider Artisan, round tools companies OSK, Wetmore Tool & Engineering and Melin Tool Company, high precision tube company Summerill Tube Corporation and a 30 percent stake in additive manufacturing service provider Beam IT. Sandvik also initiated an internal separation of the Sandvik Materials Technology business area.
Technology leadership and innovation
Sandvik focuses on innovations that help our customers increase their productivity and energy efficiency, improve safety and leverage the opportunities that are arising with digitalization and automation. A number of new products and solutions that are keeping us at the forefront of technological innovation were launched during the year, such as CoroDrill® DS20, an indexable drill and Prism™, a computer-aided manufacturing app for machining (Sandvik Machining Solutions), three new modules for the OptiMine® platform and DT1132i, a tunneling jumbo (Sandvik Mining and Rock Technology), a Kanthal Additive Manufacturing customization service and Sanicro® 35, an austenitic stainless steel grade (Sandvik Materials Technology). Read more about innovations and product launches in the business area sections.
Accountability and decisions close to customers
Sandvik has been on a journey to decentralize its structure since 2016. The new structure enables quicker decision-making that is closer to customers, with greater product ownership and accountability for better performance and results. The model, pending on strong performance management, has proven efficient for rapid adjustments to changing market conditions.
Stability and profitability before growth
Sandvik introduced new, long-term financial goals, focusing on growth and improved economic performance throughout a business cycle, including a trough EBIT margin of 16 percent.
During the year, Sandvik saw signs of a declining market in some business segments and initiated a number of efficiency measures. We announced activities that will result in estimated savings of 1.7 billion SEK, effective mid–2020, including a reduction in personnel of about 2,500. The latter was in addition to the 450 staff redundencies in Sandvik Machining Solutions during the first half of 2019. The efficiency program improved the 2019 result by approximately 400 million SEK.
Efficiency and continuous improvements
Sandvik has a target to improve productivity (revenues per employee in fixed exchange rates) by at least 3 percent annually. In 2019, productivity improved by 5 percent. Sandvik strengthened the free operating cashflow by 18 percent to 17,960 million SEK (15,246). Adjusted return on capital employed (ROCE) was 21.3 percent (22.6). Reported ROCE was 15.2 percent (22.7). Relative net working capital, calculated with 12-month average, was 25 percent (24), in line with the ambition not to exceed 25 percent.
Culture of doing things right
Our commitment to Fair Play and doing things right is long standing. Total work related injuries (TRIFR) were reduced to 3.8 (3.9) and injuries leading to lost working time (LTIFR) to 1.5 (1.7). An online self-assessment compliance tool was introduced. The internal audit function was strengthed. 96 percent (94) of Sandvik employees and long-term contractors had completed Code of Conduct training. About 3,800 employees participated in some type of compliance training.
We continued programs to promote leadership and develop key competences. About 550 (600) people participated in Sandvik leadership training programs in 2019. About 2,700 (2,900) new employees were hired and a majority of the positions were posted on the open internal job market. 67 percent of top management positions were sourced internally (target 80). The new hire stay rate amounted to 89 percent (target 90). Sandvik launched a diversity and inclusion online training pilot. Brand-building activities strengthened our employer brand, resulting in several brand awards.
In addition to the seven focus areas, sustainability is integrated into all aspects of our strategy. In 2019, Sandvik introduced new long-term 2030 sustainability goals, addressing climate change, circularity, safety and fair play, to integrate sustainability even further into our business operations. Further information in Sustainable business at heart, Sustainability goals 2030, Sustainability governance and Non-financial notes.