Relevant GRI Indicators

Overview

Sandvik Materials Technology

2020 was a challenging year for Sandvik Materials Technology, yet we made progress on our strategic journey. Mitigating actions were introduced in time to enable healthy margins despite a severe drop in orders, especially within the oil and gas and aerospace segments, due to the Covid-19 pandemic.

Sandvik Materials Technology manufactures advanced stainless steels and special alloys for industries with high demand on material quality and material knowledge. These materials are light, strong, corrosion-resistant, and can withstand high temperatures and pressures. Our expertise in metallurgy and industrial processes and applications increases customer efficiency and sustainability.

In 2020, the Sandvik Board of Directors decided to proceed with the preparations to distribute Sandvik Materials Technology to Sandvik’s shareholders and list the company’s shares on the Nasdaq Stockholm Exchange, pending approval by a shareholder’s meeting in 2022 and that the circumstances are deemed right at the time. The decision gives us a clear direction for the journey ahead as a technology leader and partner to our customers.

The health and safety of employees was prioritized during the year, with early and dedicated crisis and safety management at our sites. Consequently, the spread of Covid-19 within our operations was prevented to a large extent.

Market 2020

The first quarter of 2020 was mixed, with some large project orders coming in but also a slowdown in the short-cycle business as market uncertainty increased. Order intake was further affected in the second quarter with increasing market uncertainty and lockdowns in many countries. The segments most heavily affected were the energy segment, mainly oil and gas, as well as the aerospace segment with most airlines grounded. This negatively affected the demand for our stainless steel tubes and other products. At the end of the year there was an improvement in the order intake for the short-cycle business, however the severe drop in order intake, primarily within the oil and gas segment, remained challenging throughout the year.

2020 in figures

Revenues by customer segment

Sandvik Materials Technology: Revenues by customer segment (pie chart)

Revenues by market area

Sandvik Materials Technology: Revenues by market area (pie chart)
Overview

MSEK

2019

2020

1)

Operating profit adjusted for items affecting comparability of SEK –540 million in 2020 and SEK 1,513 million in 2019.

2)

Full-time equivalent.

Order intake

16,475

11,910

Revenue

15,279

13,598

Operating profit

1,444

492

Operating margin, %

9.4

3.6

Adjusted operating profit1)

1,787

1,032

Adjusted operating margin, %

11.7

7.6

Return on capital employed, %

11.0

3.9

Number of employees2)

5,726

5,084

Gender balance (men/women), %

81/19

81/19

Women in managerial positions, %

19.1

19.4

Lost time injury frequency rate (LTIFR)

4.7

3.9

Total recordable injury frequency rate (TRIFR)

7.5

6.7

Overview

Product portfolio

Tubular products, bars, billets, strip, rock drill steel, resistance material, ultra-fine medical wire and wire-based components, and metal powder.

Market characteristics

Selected niches in demanding industries where material requirements, as well as product quality and reliability, are extremely high. High entry barriers.

Demand drivers

  • The global demand for energy and hence the demand for energy production
  • The shift towards fossil-free energy and energy efficiency
  • A growing and aging population with new demands on healthcare combined with technological developments in the medical sector

Competitive landscape/Major competitors

Nippon Steel and Sumitomo Metal (tube), Tubacex (tube), Jiuli (tube), VoestAlpine (strip), Aperam (heating elements and systems), Fort Wayne Metals (medical) smaller niche players.

Go-to-market model

About 80 percent direct sales.

Growth strategy

Materials technology is needed in many growth segments, improving efficiency, productivity and sustainability in our customers’ processes and applications. The oil and gas industry will remain a profitable segment and we have identified several other key growth segments, such as industrial heating, medical and renewable energy.

Strategic risk management

Fluctuating oil and gas prices. Increased competition of high-tech material from China. Local protectionism in the steel industry.