Business in 2019
Stability, profitability, growth
Sandvik Machining Solutions continued to focus on profitable growth both organically and through acquisitions. We strengthened our position in round tools and the aerospace industry through the purchases of OSK in China, US-based Wetmore Tool & Engineering and US-based Melin Tool Company. In December, we reached an agreement to acquire the cutting tools division of Quimmco Centro Technológico (QCT), a privately owned Mexican company offering integral machining solutions. In line with our expansion within digital solutions, Sandvik acquired a 30 percent stake in the Italian company Beam-IT, a leading provider of metal additive manufacturing services and advanced components. We also completed the acquisition announced in 2018 of US-based Dura-Mill, a manufacturer of precision solid carbide end mills.
In October, a state-of-the-art, highly automated plant was inaugurated in Sandviken, Sweden, to supply titanium powder to the fast-growing additive manufacturing industry. With this investment, Sandvik can offer one of the widest alloy programs for additive manufacturing on the market.
Efficiency and continuous improvements
Our continuous efforts over the years with efficiency and cost measures, such as operational excellence, have proven to be invaluable for maintaining stability even in times of economic uncertainty. The business area is well-positioned to meet the economic challenges facing the global economy. In 2019, we continued to work with efficiency programs, including staff reductions. Sandvik Machining Solutions closed its insert manufacturing facility in Fondettes, France, relocating the production to other facilities to achieve cost savings. It also announced a consolidation of its distribution centers in Europe, merging the centers in Belgium and the Netherlands into a new, highly automized facility in Schiedam, the Netherlands.
2019 in figures
Revenues by customer segment
Revenues by market area
MSEK |
2018 |
2019 |
||||
|---|---|---|---|---|---|---|
|
||||||
Order intake |
41,094 |
41,163 |
||||
Revenue |
40,757 |
41,123 |
||||
Operating profit |
9,922 |
8,380 |
||||
Operating margin, % |
24.3 |
20.4 |
||||
Adjusted operating profit1) |
10,361 |
9,310 |
||||
Adjusted operating margin, % |
25.4 |
22.6 |
||||
Return on capital employed, % |
36.8 |
25.9 |
||||
Number of employees2) |
19,473 |
18,453 |
||||
Gender balance (Men/Women), % |
79/21 |
79/21 |
||||
Women in managerial positions, % |
17.5 |
17.8 |
||||
Lost time injury frequency rate (LTIFR) |
1.7 |
1.5 |
||||
Total recordable injury frequency rate (TRIFR) |
3.0 |
3.3 |
||||
Sustainable business
Every time we develop a new customer tool or solution we raise the bar on sustainability, aiming to be even more efficient than in the previous generation. This means that with a new product, customers can cut even faster or use the tool even longer than in the past. We also continue to improve circularity for customers through recycling and buy-back programs for used tools. Sandvik Machining Solutions is a world leader at recycling cemented carbide. Going forward, we will continue to focus on raw materials and our packaging to help reduce CO2 emissions and increase circularity.
In our own operations, continuous efforts are made to identify opportunities to increase circularity and reduce the CO2 footprint, for example with our green factory concept. Almost half of the tungsten used in production comes from reused material such as used products from customers. Such efforts contribute to reductions in cost, energy and CO2 emissions as well as reducing the risks associated with sourcing tungsten and cobalt. We are also reducing energy consumption and CO2 emissions through energy reduction activities, solar panels, LED technology and manufacturing processes that offer better efficiency and less waste. Through such efforts, Sandvik Machining Solutions has reduced its energy usage by 15 percent and CO2 emissions, in relation to sales, by 16 percent over the last three years.
Another focus area is compliance, which was on the agenda of the quarterly performance reviews of the main divisions, including target setting and follow-up on progress. Activities in 2019 included competition law training for employees in high-risk jurisdictions through a train-the-trainer concept and screening of commercial intermediaries.
Looking ahead
Sandvik Machining Solutions is well positioned to maintain its industry leadership in the future. This will be done by continuing to focus on our strong product core, while at the same time rapidly building up a solutions portfolio, particularly within our digital offering, advisory services and advanced metal powders for additive manufacturing. Sandvik Machining Solutions will continue to look for new growth opportunities by developing sustainable solutions that help customers with productivity improvements.