Sandvik reports record-high operating profit for 2017
February 8, 2018
Sandvik AB, Stockholm, Sweden, has published its Annual Report for 2017. The company stated that 2017 had been a strong year, in which the group saw a significant increase in customer activity as well as delivery on internal efficiencies. This was reported to have resulted in record-high adjusted operating profit of 14.6 billion SEK (2016: 11.0 billion SEK), a significant improvement in adjusted operating margin to 16.1% (2016: 13.5%) and a record high operating cash flow of 14.7 billion SEK (2016: 12.5 billion SEK).
According to the report, Sandvik saw improved demand in all customer segments and in all geographical regions in 2017, with order intake noting organic growth of 15%. Björn Rosengren, Sandvik President and CEO, stated, “I am very pleased with our diligent focus on cost efficiency in this period of high business activity, as well as our product innovations that create value for our customers by offering increased sustainable productivity.”
He stated that the group saw particularly good performance over the year in Sandvik Machining Solutions and Sandvik Mining and Rock Technology; the strongest growth was reported in the mining segment, due to a significant improvement in demand for replacement equipment as well as higher demand in the aftermarket business.
Across the group, changed exchange rates were said to have had a positive impact of 1% on both order intake and revenues. Sandvik’s order intake for the full year amounted to 95,444 million SEK (2016: 81,861 million SEK), and revenues were 90,905 million SEK (2016: 81,553 million SEK), implying a book-to-bill ratio of 105%. Changed metal prices had a positive impact of 113 million SEK (64). Net financial items amounted to -1,080 million SEK (2017: -1,652 million SEK) and the profit after financial items was 17,018 million SEK (2016: 9,366 million SEK).
During the year, Sandvik received several recognitions for sustainability. Most recently, the company was listed No. 65 out of the Global 100 most sustainable companies by Corporate Knights, presented at the World Economic Forum in Davos. “This was a great achievement and confirmation that sustainability is truly an integral part of our business,” stated Rosengren.
In 2017, the company concluded the divestments of Sandvik Process Systems and Mining Systems (discontinued operations) and announced a new owner for Hyperion, and completed the divestment of the welding wire business to ESAB in early 2018. These businesses were said to account for some 10% of group revenues, and their divestments were expected to create additional balance sheet capacity to grow the core business of Sandvik.