Shifting to growth
During 2020, Sandvik updated its strategy for an increased focus on growth. In recent years we have divested underperforming businesses, decentralized the organization and become a much more resilient company. From this stable platform we will further increase the focus on growth, digitalization, sustainability and agility. In 2021, we introduced six strategic objectives, defining achievements up until 2025. We are continuing with the financial targets set in 2019.
We shift to growth
We have set a growth target of at least 5 percent (CAGR) through a business cycle. We need to increase our acquisition pace and we will add products and technology as well as services and digital solutions to our existing offerings. This growth target means that we aim to become a SEK 115 billion company by 2025. We will also focus on improving our New Sales Ratio (sales of new products).
We make the digital shift
Our objective is to be a leader in digital solutions in our industry and we will grow our digital customer offering. Internally, we will ensure efficiency through a eamless flow, supported by standardized business systems across our sites.
We make the sustainability shift
We have long-term 2030 sustainability goals in the areas of climate, circularity, people and fair play. All business areas and divisions have plans and actions to deliver on the goals and we will transparently report on the progress. By 2025, we should be halfway to reaching the targets.
We are our customer’s first choice
Across the organization we want to advance the way we measure and improve customer value and customer satisfaction. By 2025, our divisions will be able to track their customer satisfaction improvements through structured methods and show continuous measurable progress.
We are agile through cycle
Our financial targets include a trough EBIT margin, adjusted for items affecting comparability and metal prices, of 16 percent on a rolling twelve-month basis. In our different industries, our cost structure should be flexible enough to manage economic downturns. Well-prepared contingency planning will enable quick responses to changing market conditions. Continuous improvements on fixed costs and operational efficiency are other key factors.
We are the employer of choice
We aim to be the employer of choice within our industries and attract the top talents. We will ensure a diverse workforce with regards to factors such as age, gender, nationality and ways of thinking. 25 percent of our managers will be women by 2025.
Achievements in 2020
- We acquired Allied Construction Products, CGTech, Summerill Tube Corporation, Quimmico Centro Technológico and Miranda Tools. We signed an agreement to acquire DSI Underground. A decision was made to proceed towards a separate listing of Sandvik Materials Technology. Reorganizations were made within Sandvik Manufacturing and Machining Solutions and Sandvik Mining and Rock Technology for increased growth. We completed the divestment of the oil and gas operations of Sandvik Drilling and Completions (Varel) and signed an agreement to divest the mineral exploration business.
- A new business area segment focusing on digital solutions, Sandvik Manufacturing Solutions, was established. The CGTech acquisition will strenghten our digital offering with software for numerical control (NC/CNC) simulation, verification and optimization. We acquired a minority stake in Oqton, a leading provider of AI-powered manufacturing solutions. We established partnerships with Microsoft to drive the digitalization of the manufacturing industry and with Exyn, an expert on autonomous aerial robot systems for the mining industry.
- We began reporting key sustainability KPIs in our interim reports. Sandvik was once again selected as a member of the Dow Jones Sustainability Index.
- Focusing on increased customer value, we launched a number of innovations and new products (see Sandvik Mining and Rock Technology – Innovations 2020, Sandvik Manufacturing and Machining Solutions – Innovations 2020, Sandvik Materials Technology – Innovations 2020). This strengthens our core offerings and positions in automation, electrification and digitalization.
- We surpassed the 16 percent trough EBIT margin, despite the sharply decreased demand due to the Covid-19 pandemic. Short-term actions, such as reduced spend and reduced work hours, generated savings of SEK 1.5 billion in 2020. We also initiated long-term structural measures that will result in savings of SEK 1.3 billion with a full annual run rate by the end of 2021. The efficiency program initiated in 2019 resulted in savings of SEK 1.7 billion.
- In the Sandvik all-employee survey the engagement index amounted to 80 percent. The share of female managers increased to 18.5 percent (18.2) and 19 percent (19) of the members in division management were non-Europeans.
Customer Focus, Innovation, Fair Play and Passion to Win are our core values. Our core values represent the culture of the company and they guide us in our actions and daily business decisions.
Customer Focus: We constantly strive to exceed our customers’ expectations and enable them to excel in their business. We are decentralized and decisions are taken close to customers.
Innovation: We always strive for technology leadership and successful partnerships. We work to ensure everyday advancements and innovative shifts.
Fair Play: We put health and safety first. We are ethical and compliant and conduct our business sustainably.
Passion to Win: We establish our market leadership through strong performance management, continuous improvements and empowered people. We are passionate about making our company number one.