Relevant GRI Indicators
Overview
Sandvik Manufacturing and Machining Solutions
Sandvik Manufacturing and Machining Solutions experienced a turbulent year, due largely to the Covid-19 pandemic which hit the aerospace and automotive segments particularly hard, but still managed to deliver favorable margins. A reorganization of the business area will help create more business opportunities and strengthen our position in future digital solutions.
Sandvik Manufacturing and Machining Solutions manufactures tools and tooling systems for engineering industries worldwide. The business area also offers digital technology for metal cutting, and advanced materials and solutions for additive manufacturing (3D printing). The majority of the business area’s customers are in the general engineering sector, followed by the automotive, aerospace and energy sectors.
In 2020, we announced a decision to restructure our organization into two business area segments: Sandvik Machining Solutions and Sandvik Manufacturing Solutions. As of January 1, 2021, the business area changed its name from Sandvik Machining Solutions into Sandvik Manufacturing and Machining Solutions.
Our traditional tool business and brands, Sandvik Coromant, Walter, Wolfram, Seco and Dormer Pramet, are gathered in the new Sandvik Machining Solutions business area segment. The Sandvik Manufacturing Solutions business area segment focuses on related technologies and digital solutions and includes the divisions for Metrology, Additive Manufacturing and Design and Planning Automation.
Market 2020
All sectors were heavily affected by the Covid-19 pandemic, and especially the aerospace and automotive sectors, where the demand for cutting tools decreased. The automotive segment started to recover in the third and fourth quarter. Our general engineering sector performed somewhat better during the year. The Asian markets began their recovery in the second quarter, particularly in the mid-market tool segment. In the beginning of the pandemic we were forced to temporarily shut down some factories but our global footprint gave us the flexibility to continue delivering products to customers all over the world.
Despite the downturn, we proved our resilience to market shifts. We adapted quicker than in the past to changing market situations and have become more proactive, with a culture of continuous improvement to increase efficiency, secure recovery and continue to tap into market opportunities moving ahead.
2020 in figures
Revenues by customer segment
Revenues by market area
MSEK |
2019 |
2020 |
||||
|---|---|---|---|---|---|---|
|
||||||
Order intake |
41,163 |
32,677 |
||||
Revenue |
41,123 |
32,477 |
||||
Operating profit |
8,380 |
4,606 |
||||
Operating margin, % |
20.4 |
14.2 |
||||
Adjusted operating profit1) |
9,310 |
6,100 |
||||
Adjusted operating margin, % |
22.6 |
18.8 |
||||
Return on capital employed, % |
25.9 |
14.6 |
||||
Number of employees2) |
18,453 |
17,301 |
||||
Gender balance (men/women), % |
79/21 |
79/21 |
||||
Women in managerial positions, % |
17.8 |
17.7 |
||||
Lost time injury frequency rate (LTIFR) |
1.5 |
1.3 |
||||
Total recordable injury frequency rate (TRIFR) |
3.3 |
2.5 |
||||
Overview
Product portfolio
Providing customers with a leading and sustainable offer within metal cutting delivered via multi divisions and brands in the form of metal cutting tools, additive manufacturing, know-how and digital solutions.
Market characteristics
Cutting tools represent a small share of the total manufacturing cost for customers, however they are significant for the productivity. Service levels and product solutions are the main differentiators for the premium offering. Lower degree of service for mid-market which is more price sensitive.
Demand drivers
- Global manufacturing
- Material evolution
- New manufacturing technologies
- Complex component designs and functionalities
Competitive landscape/Major competitors
Consolidated in the premium segment: IMC group (Iscar brand), Kennametal (Kennametal brand)
Fragmented in mid-market including global premium players present with their mid-market brands: Mitsubishi, IMC group (Taegutec brand), Kennametal (Widia brand), Zhuzhou
Go-to-market model
Direct sales ~55–60 percent. Distribution sales are predominant in North America whereas direct sales are predominant in Europe. In Asia, mainly distribution sales with limited service offering in the mid-market segment and direct sales, with high service level, in the premium segment.
Growth strategy
Expansion through organic growth, innovation and niche acquisitions in the core. Expansion into digital solutions and additive manufacturing supporting customer value chains.
Strategic risk management
Various forms of business environment risks with an impact on the metal cutting market in general, mainly changes in customers behavior, acquisition-related risks, structural changes in our industry, information security risks and compliance-related risks.