Letter from the CEO
Sandvik provides proof of quality
Sandvik performed well in 2023 and we made important strategic progress. Our strong performance contributed to favorable growth in many of our strategic focus areas and generated good profitability, despite a challenging external operating environment.
We have a clear strategy and growth focus where the solutions we offer contribute to making our customers more productive and more sustainable. Through our leading market positions, a growing share of parts, services and consumables, and a targeted expansion within our customersʼ value chains, we have become a more agile and resilient business with a strengthened platform for long-term growth.
Our performance in 2023 is clear evidence of that transformation. Revenues, at fixed exchange rate, grew by a strong 9 percent and we delivered an all-time high adjusted operating profit (EBITA) of SEK 25.2 billion, an increase of 12 percent.
The world is changing and Sandvik is changing with it. We have a strong platform to build on with world-leading market positions, strong brands and a winning culture. Based on this foundation, we are well positioned to capture future growth opportunities and drive digital and sustainability shifts in the industries in which we operate.
We continued to see good progress in many strategic focus areas during the year. There continues to be strong customer demand for our battery-electric and automated mining solutions and we won several major orders as well as a large number of repeat orders, underscoring the quality and strength of our offering. We have increased our focus on surface drilling and in 2023 we made good progress, including several product launches and a record order in the fourth quarter.
Our machining solutions business is building a stronger position to meet external trends, such as the increasing demand for aluminium machining for electric vehicles, as well as increasing interest in automation and digital solutions. Productivity, sustainability and safe operations are at the core of Sandvik. With our unique offering that combines world-leading equipment, tools and software solutions, we have great potential to create value for our customers.
A new face
Sandvik has in many aspects become a new company in recent years. To reflect this, we launched a new, modern brand identity and logotype that represents our purpose, our world-leading positions and our strategic direction. The new face of Sandvik means that we are even better equipped to live up to our purpose: We make the shift – advancing the world through engineering.
An agile company
Our efforts over the past few years to strengthen the resilience, flexibility and speed of our decentralized structure continue to pay off. We actively work with maintaining resilient revenue streams and have a constant cost focus to make Sandvik even more competitive, more efficient and less complex. All parts of our business have contingency plans in place, enabling quick responses to different scenarios. In a multifaceted demand environment, with geopolitical tension, lingering inflation pressure and supply chain disruptions, I am proud that we managed to keep our adjusted EBITA margin at 20.0 percent, within our target range.
Building on innovation
Sandvik is built on world-leading research and development (R&D), and this continues to be essential to ensure our future success. Our R&D investments amounted to SEK 4.8 billion in 2023, corresponding to 3.8 percent of the Group’s revenue. Organic revenue growth was 6 percent, with continuing strong momentum in highly strategic areas such as manufacturing software, parts, services and consumables, automation and battery-electric vehicles. Some of the innovations introduced were the first of their kind in the industries we serve, and it is clear from the developments in strategic focus areas that our innovative product portfolio is stronger than ever.
Platform for growth
We aim to grow both organically and through acquisitions, and in recent years we have been very active in establishing a strong acquisition agenda. The seven acquisitions made in 2023 further enhance our strong positions in the marketplace and strengthened our position in areas such as mine optimization, CAM solutions, electrification, powder solutions and medical.
Previously acquired companies have added great value to the Sandvik Group. The acquisition of SP Mining within Sandvik Rock Processing Solutions in 2022, for example, increased our exposure towards the mining industry and also increased the share of parts, services and consumables sales, adding positively to the 2023 results. The acquisition of Deswik in 2022, the world’s leading mine planning software company, made it possible for us to provide a unique end-to-end customer offering.
We are making continued progress in our work to leverage the world-class assets we have within Sandvik and to gradually realize our goal of helping our customers in component manufacturing automate the entire production cycle – from design and planning to manufacturing and verification.
“The world is changing and Sandvik is changing with it.”
Sustainable development
In September, our targets to reduce greenhouse gas emissions were validated by the Science Based Targets initiative. This third-party validation of our emission targets is essential as we set the strategic direction of Sandvik. We also see that we have a big opportunity to drive sustainability through our customer offerings.
The total recordable injury frequency rate was 3.0 (3.1). We have a zero harm vision for accidents in the workplace and have intensified our focus on this area to continue our long-term positive trend. Sandvik continues to support the principles of the United Nations Global Compact and contributes to the UN Sustainable Development Goals.
A stronger company
In 2023, we continued to build a stronger Sandvik and it is clear that we are making good progress. With the performance this year we have again proven our ability to navigate challenges that come our way, and we look forward with confidence to the opportunities ahead of us. I would like to thank our fantastic employees, whose continued outstanding efforts are the main reason that we can look back at another strong year. I would also like to extend a big thank you to our shareholders and customers for your continued trust.
Stefan Widing
President and CEO