Sandvik reports its best ever earnings in 2018

March 26, 2019

March 26, 2019

Sandvik AB, Stockholm, Sweden, has published its Annual Report for 2018. The company stated that 2018 had been a record year, in which it achieved the best earnings in its history and a record-high operating margin, with sales exceeding SEK 100 billion SEK for the first time ever. The group stated that this was partly influenced by a positive economic climate, with favourable demand in all of its segments and on all continents, as well as recent work to decentralise and streamline the company’s activities.

The group reported an order intake of SEK 102,440 million (2017: 95,444) with revenues totalling SEK 100,072 million (2017: 90,827). An operating profit of SEK 18,689 million was recorded (2017: SEK 18,073). The adjusted operating margin for 2018 was reported to be 18.6% (2017: 16.1%), with a free operating cash flow of SEK 15,281 million (2017: SEK 15,095 million).

According to the report, Sandvik saw strong development in all customer segments and in all geographical regions in 2018, with order intake showing overall growth of 9% from 2017. A breakdown of revenues by customer segment showed that 34% of the groups revenues came from the mining segment, 23% from engineering, 12% from automotive, 11% from energy, 9% from construction, and 6% from aerospace, with the remaining 5% of revenues coming from other, unspecified segments.

By region, 38% of Sandvik’s revenues came from Europe, 21% from North America, 20% from Asia, and a further 9% from Africa/Middle East, 7% from Australia and 5% from South America. Sandvik Machining Solutions represented 53% of the group’s total adjusted operating profit, with Sandvik Mining and Rock Technology representing 39% and Sandvik Materials Technology 7%.


Sandvik Machining Solutions

Sandvik Machining Solutions reported another strong year for 2018, with record-high order intake, revenues and operating profit within the division. Market growth was stated to have come from all geographical areas and industry segments served by the division, with its revenues coming from inserts (58%), round tools (20%), tool holders (13%) and tooling systems (8%).

Total revenues for Sandvik Machining Solutions were SEK 40,343 million (2017: SEK 35,777 million), representing 7.7% organic growth. The operating profit was reported at SEK 9,872 million (2017: SEK 8,413 million), with an operating margin of 24.5% (2017: 23.5%). Europe represented the largest market area for the division, at 55% of total revenues, with North America coming in second at 21%, followed by Asia (20%), South America (2%), Africa/Middle East (1%) and Australia (1%).

Some 46% of the division’s revenues came from customers in the engineering segment, with 27% coming from automotive, 14% from aerospace and 9% from energy. 4% of revenues came from customers in other segments.

In January 2018, Sandvik’s Powder division was moved to Sandvik Machining Solutions from Sandvik Materials Technology to enable further growth alongside the Additive Manufacturing business.


Sandvik Mining and Rock Technology

Sandvik Mining and Rock Technology reported that it had benefitted from a strong mining market and increased efficiencies in 2018. 61% of the division’s revenues were said to have come from the aftermarket business, which it reported it will continue to grow.

Total revenues for Sandvik Mining and Rock Technology were SEK 42,772 million (2017: SEK 36,495), representing 15.4% organic growth. An operating profit was reported of SEK 7,380 million (2017: SEK 5,724 million), with an operating margin of 17.3% (2017: 15.7%).

The division’s best performing commodities were gold and copper, making up 29% and 22% of its 2018 revenue, respectively. Coal represented 12% of revenues, while zinc represented 8%, platinum 6%, iron ore 4%, diamonds 2%. Other minerals made up 7%, other base metals 5% and other metals 5%.

By market area, 22% of the division’s revenues came from North America, 20% from Africa/Middle East, 19% from Asia, 16% from Europe, 14% from Australia and 9% from South America.


Sandvik Materials Technology

Sandvik Materials Technology reported improved revenues and operating margins in 2018, resulting from cost and efficiency measures, along with higher market demand for its metallurgy and application knowledge.

Total revenues for Sandvik Materials Technology were reported at SEK 15,111 million (2017: SEK 13,618 million) in 2018, representing 12.5% organic growth. Operating profit was reported at SEK 1,391 million (2017: SEK 277 million), with an operating margin of 9.2% (2017: 2%).

By market area, the majority of the division’s revenues came from Europe at 57%, with North America coming in second at 22%, followed by Asia (18%), Africa/Middle East (2%) and South America (1%).

By customer segment, 38% of the division’s revenues came from customers in energy, 24% engineering, 12% consumer and electronics, 7% automotive, 6% chemicals, 4% construction and 9% from other market segments.

In 2018, Sandvik Group concluded the divestment of Sandvik Hyperion and its wire operations (welding wire and stainless wire) and made a new investment in a manufacturing plant for titanium and nickel powder. It also completed several strategic acquisitions, including the metrology software company Metrologic Group, and industrial heating company Custom Electric Manufacturing.

March 26, 2019

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