Relevant GRI Indicators
Overview
Sandvik Mining and Rock Technology
2020 proved to be a solid year for Sandvik Mining and Rock Technology, despite the challenging market environment due to Covid-19. The lower demand in the aftermarket was offset by strong increases in equipment orders.
Sandvik Mining and Rock Technology manufactures equipment and tools for the mining and construction industries and offers service and digital solutions that help customers maximize their productivity and profitability. The vast majority (83 percent) of our sales are in the mining segment. The business area provides equipment, rock tools, wear and spare parts for rock drilling, rock cutting, crushing and screening, loading and hauling, tunneling, quarrying and breaking, and demolition. Sandvik Mining and Rock Technology is leading the mining industry when it comes to automated loading and hauling systems in underground mines.
As of January 1, 2021, the Crushing and Screening division formed a new business area – Sandvik Rock Processing Solutions, to further accelerate profitable growth within rock processing. The Crushing and Screening division mainly addresses separate parts of the value chain and faces different competition than the other Sandvik Mining and Rock Technology divisions. Sandvik Mining and Rock Technology also changed its name to Sandvik Mining and Rock Solutions.
Market 2020
Despite hesitancy in customer decision-making due to Covid-19, the underlying mining market sentiment remained robust during the year. Commodity prices held up, despite a decline earlier in the year and metal prices recovered well in the latter part of the year. The big driver was gold, which reached a record high and is where the business area has its biggest exposure. Strong commodity prices, combined with a low oil price, meant that many mining companies were very profitable. Australia, in particular, had excellent growth during the year and is, along with South Africa, our largest markets with large orders booked in the second quarter. Equipment orders stayed healthy during the year but due to Covid-19 and access issues, there was less maintenance performed and this had a negative impact on the aftermarket.
2020 in figures
Commodity exposure
Revenues by market area
MSEK |
2019 |
2020 |
||||
|---|---|---|---|---|---|---|
|
||||||
Order intake |
44,379 |
41,403 |
||||
Revenue |
44,777 |
40,032 |
||||
Operating profit |
8,602 |
7,389 |
||||
Operating margin, % |
19.2 |
18.5 |
||||
Adjusted operating profit1) |
8,911 |
7,923 |
||||
Adjusted operating margin, % |
19.9 |
19.8 |
||||
Return on capital employed, % |
32.3 |
28.0 |
||||
Number of employees2) |
14,229 |
14,178 |
||||
Gender balance (men/women), % |
84/16 |
84/16 |
||||
Women in managerial positions, % |
17.0 |
17.8 |
||||
Lost time injury frequency rate (LTIFR) |
0.6 |
0.8 |
||||
Total recordable injury frequency rate (TRIFR) |
3.4 |
3.0 |
||||
Overview
Product portfolio
Equipment for drilling, cutting, breaking, crushing, loading and hauling. Drilling consumables (rock tools), service, spare and wear parts.
Market characteristics
Mining:
Consolidated customer base of some 200 global major and junior miners. Remote locations, decreasing ore grades as well as safety requirements drive volume output and need for semi- to fully automated solutions. Significant aftermarket business.
Construction:
Sandvik is active in the niche areas of rock excavation and comminution. The customer base is fragmented with more than 25,000 individual customers. Localized offering and local competition.
Demand drivers
Mining:
- GDP growth rate and resource-intensive industry development
- Metal and mineral prices
- Production levels in existing mines and expansion projects (greenfield and brownfield)
- Productivity improvements and new technology, for example automation and electrification
- Demand in the areas of environment, health and safety
Construction:
- GDP growth/urbanization
- Infrastructure investments and spending
- Government stimulus programs
- Aggregates production
- Cement consumption
Competitive landscape/Major competitors
Mining:
Consolidated in certain segments, i.e. underground hard-rock mining: Epiroc, Metso Minerals, Caterpillar and Komatsu Mining.
Construction:
Some global competitors present in several niches: Epiroc, Terex, Metso Minerals, Caterpillar and Furukawa. Many local players.
Go-to-market model
Mining:
Direct sales ~95 percent with worldwide service network.
Construction:
Due to a fragmented customer base, 50 percent of sales is via distributors. Global sales and service organization.
Growth strategy
Grow aftermarket business on the installed base. Expand market share in surface drilling. Climb the service ladder by data-driven productivity and advanced services. Automation, electrification and exploring complementary technologies and offerings through mergers and acquisitions.
Strategic risk management
Various forms of business environment risks with an impact on the mining and construction market in general, such as increased market competition with new technological developments and the emergence of new competitors, fluctuations in commodity prices and compliance-related risks. Political uncertainty in some parts of the world.