Sandvik as an investment

Sandvik has leading market positions in all its businesses. Our products and solutions stem from deep knowledge and expertise, high innovation pace and long-standing close customer relationships. As well as always striving to be the customer’s first choice, we have a passion to win, we play fair and we aim to be the most attractive employer. From this solid platform, our ambition is to deliver profitable growth by staying agile through the cycle and executing on our shift to growth priorities. Our strategic growth priorities are about leveraging on our core offering, expanding in our customers’ value chain and strengthening our position in fast-growing segments and regions. It is about expanding our digital offering and to be in the forefront of sustainable solutions.

Our growth target of 7 percent will come from organic and acquisitions. Providing increased productivity and sustainability gains into our customers’ operations is integral to our growth ambitions and our value proposition. To reach our target, the digital and sustainability shift is crucial. We have set out to expand our digital offering to SEK 6.5 billion by 2025 and during 2022 we committed to align our net zero targets to the Science Based Targets initiative.

During the last two years, we have made important progress in our shift to growth priorities. We have acquired more than 20 companies, eight of them in 2022, all with a strong strategic rationale. We have introduced ground-breaking innovations and made solid progress in important growth areas, such as expansion in CAM and in the ongoing electric shift in mining. Revenues grew by 31 percent in the year, of which 8 percent was organic. To achieve profitable growth we need to stay agile. Our decentralized organization enables us to respond faster to market trends, economic fluctuations and customer needs. We work continuously with improving our own operational efficiency and have increased the share of variable costs to reduce earnings volatility. Cash-flow generation is strong in the Group, and for the year 2022 free operating cash-flow amounted to SEK 12.1 billion. Our purpose is to advance the world through our engineering capabilities, creating benefits for all our stakeholders – our customers, our employees, our communities – ultimately leading to shareholder value. During 2022, we distributed the shares of Alleima. Furthermore, the Board of Directors suggested a dividend of SEK 5.00 per share, corresponding to a payout ratio of 42 percent, well aligned with our ambition to distribute 50 percent of adjusted EPS through a business cycle.

Market-leading positions – the customer’s first choice

  • By focusing on improving customers’ productivity and sustainability we secure market-leading positions and can maintain value-based pricing
  • Strategic and long-term relationships with our customers combined with a decentralized decision model enable us to adapt faster to current and future needs
  • About 4 percent of our annual revenues are spent on R&D to ensure a leading product offering
  • High barriers to entry, resulting from leading technology position, capital intensity, materials know-how and customer relationships

Strong platform supports shift to growth

  • A solid balance sheet, good cash-flow generation
  • Growth target of at least 7 percent through a business cycle to come from organic and acquired growth
  • Capex at <SEK 4.2 billion in 2022, for 2023 approximately SEK 4.5 billion
  • Investments in product development
  • Acquisitions to broaden our value-creating offering, lead digitalization and automation and expand geographically in faster growing markets

Agile through cycle – strong financial performance

  • Solid adjusted EBITA margin in 2022 of 20.0 percent, within our target range of 20–22 percent
  • Strengthened margin resilience and reduced sales cyclicality by growing our parts, services and consumable businesses including software offerings
  • Flexible cost structures to ensure resilience in downturns
  • Continuous work to improve cost structures and operational efficiency

Shareholders rewarded

  • Responsible and value-creating capital allocation
  • Dividend payout policy of 50 percent of adjusted earnings per share (EPS) through a business cycle
  • Average payout ratio at 42 percent over the year, 51 percent over three years and 39 percent over five years
  • Adjusted earnings per share growth of 4 percent over one year, 3 percent over three years and 8 percent over five years
  • Successful distribution of Alleima