Focus on growth
2020 was a year of special circumstances as a pandemic with far-reaching consequences impacted the entire world. At the same time we made several strategic decisions that will strengthen and shape the future of Sandvik. We stand strong and are ready to shift towards growth.
I took office as President and CEO of Sandvik on February 1, 2020. Shortly thereafter, it became clear that the pandemic the whole world was facing would also impose stringent demands on Sandvik – as an employer, as a partner to our customers, and as a member of the communities where we operate. We acted swiftly and decisively to secure our employees’ workplaces so we could continue to serve our customers despite the challenging circumstances. Our employees also took numerous impressive initiatives to assist with equipment and other aid in local communities during the most critical phase of the pandemic.
A more flexible company
At the same time, we had to take the measures necessary to ensure that Sandvik remains competitive over the long term, with a strong performance regardless of the market situation. In 2019, we were already adapting to a weaker business cycle, and in the spring of 2020 we initiated further actions to counter the effects of the pandemic that included activities both temporary and structural in nature.
“We are ready to shift towards growth.“
One of our financial targets is to have an adjusted EBIT margin, rolling 12 months, of at least 16 percent. We delivered on this, even during this turbulent period. I see this as clear proof that Sandvik today is a far more flexible company, with greater resilience, than in the past. We could implement these adaptations so rapidly due to our decentralized business model, in which decisions are largely taken among our various divisions, which are close to the market and our customers.
Sandvik is ambitious in terms of sustainability. During the year, we continued to work intensely in order to achieve our long-term goals for 2030. For us as an engineering company with a strong base in research and development, sustainability is a major business opportunity. When we develop more efficient, safer and more environmentally sound solutions, we take an important step alongside our partners towards a more sustainable future. Our focus on sustainability also increases our attractiveness among current and future employees.
Sandvik continues to support the principles of the UN Global Compact and to contribute towards fulfilling the UN’s Sustainable Development Goals.
Structural changes for the future
During the year, Sandvik’s Board of Directors made the decision to continue preparations for the distribution of the Sandvik Materials Technology business area to our shareholders. The Board’s intent is to propose the distribution and listing of Sandvik Materials Technology on Nasdaq Stockholm at a shareholders’ meeting in 2022, provided that the circumstances at the time are deemed to be right.
I am convinced that this is the correct way forward, both for Sandvik Materials Technology and for Sandvik as a whole.
In our other business areas, organizational changes were initiated in 2020 to drive further growth in our various operations. We see potential for growth through an increased degree of digitalization, automation and electrification, as well as through an active acquisitions agenda. In December, we signed an agreement to acquire the underground safety company DSI Underground, one of the biggest acquisitions in the history of Sandvik.
An example of how we are advancing our positions and expanding our offering with digital solutions is the acquisition of the software company CGTech, which will help our customers become even more efficient in their manufacturing chains. We have also chosen to relinquish or reduce our ownership in operations where we believe that others would be better owners.
Our financial position is very strong. We have continued to generate a healthy cash flow, and at year-end we had a financial net cash position. This provides us with greater resilience if market conditions deteriorate, and it provides us with the conditions for pursuing value-creating growth.
In many ways, 2020 has been a challenging year, but I am convinced that at the same time it has made Sandvik even stronger and more flexible. I would like to extend my warmest thanks to our employees for their fantastic efforts under conditions that at times have been difficult, and to our shareholders and customers for their continued confidence. We are standing on stable ground. Now we must make use of all the interesting growth opportunities we see before us.
Stockholm, March 2021
President and CEO