Definitions
Financial targets
Sandvik has long-term financial targets focusing on growth, profitability, dividend and financial position.
Financial targets are excluding discontinued operations, unless otherwise stated.
Growth 7 percent
A growth of 7 percent through a business cycle, organically and through acquisitions, in fixed currency
Adjusted EBITA margin range: 20–22 percent
An EBITA margin range of 20–22 percent through a business cycle, adjusted for items affecting comparability
Dividend payout ratio: 50 percent
A dividend payout ratio of 50 percent of EPS through a business cycle, adjusted for items affecting comparability, (Group total)
Financial net debt / EBITDA: <1.5
A financial net debt / EBITDA <1.5, excluding transformational acquisitions (Group total)
Adjusted earnings per share*
Profit/loss for the year adjusted for items affecting comparability attributable to equity holders of the Parent Company divided by the average number of shares outstanding during the year.
Adjusted EBIT*
Earnings before interest and tax adjusted for items ffecting comparability.
Adjusted EBITA1)
Earnings before interest, tax and amortizations, adjusted for items affecting comparability, also excluding other accounting effects arising from business combinations.
Adjusted EBITA margin1)
Earnings before interest, tax and amortizations, adjusted for items affecting comparability, also excluding other accounting effects arising from business combinations, in relation to sales.
Cash conversion
Free operating cash flow, adjusted for items affecting comparability divided by adjusted EBITA.
Earnings per share
Profit/loss for the year attributable to equity holders of the Parent Company divided by the average number of shares outstanding during the year.
EBIT
Earnings before interest and tax.
EBITA
Earnings before interest, tax and amortizations, also excluding other accounting effects arising from business combinations
Financial net debt/EBITDA
Interest-bearing current and non-current liabilities, excluding net pension liabilities and leases, less cash and cash equivalents divided by rolling 12 month EBITDA.
Items affecting comparability (IAC)
Sandvik reports EBITA, EBIT, profit before tax and earnings per share adjusted for items affecting comparability. IAC includes capital gains and losses from divestments and larger restructuring initiatives, impairments, capital gains and losses from divestments of financial assets, M&A related costs as well as other material items having a significant impact on the comparability.
Lost Time Injury Frequency Rate (LTIFR)
Number of lost time injuries per million worked hours.
Net debt/equity ratio
Interest-bearing current and non-current debts, including net pension liabilities, less cash and cash equivalents divided by total equity.
Net working capital
Total of inventories, trade receivables, account payables and other current non-interest-bearing receivables and liabilities, including those classified as asset and liabilites held for sale/distribution, but excluding tax assets and liabilities and provisions.
Order intake
Order intake for a period refers to the value of all orders received for immediate delivery and those orders for future delivery for which delivery dates and quantities have been confirmed. General sales agreements are included only when they have been finally agreed upon and confirmed. Service contracts are included in the order intake with the full binding contract amount upon signing.
Rate of capital turnover
Rolling 12 months revenue divided by the average total assets in the five last quarters.
Return on capital employed (Roce)
Earnings before interest and tax plus financial income, as a percentage of a four quarter average capital employed. Capital employed is defined as total capital less current non-interest-bearing debt.
Return on total equity
Consolidated net profit/loss for the year as a percentage of average total equity during the year.
Total Recordable Injury Frequency Rate (TRIFR)
Total number of injuries per million worked hours.
1)Alternative Performance Measures: Sandvik presents certain financial measures that are not defined in accordance with IFRS. Sandvik believes that these measures have an important purpose of providing useful supplemental information to investors and the company’s management when they allow evaluation of trends and the company’s performance. As not all companies calculate the financial measures in the same way, these are not always comparable to measures used by other companies. These financial measures should not be seen as a substitute for measures defined under IFRS.