Invest in Sandvik

Sandvik has world-leading positions and brands in the market segments where we operate. Sustainability is embedded in our business model and our solutions support mines to run safer and more efficient; rock processing to achieve maximum output with less energy consumption; and the manufacturing industry to be more productive and resource efficient.

Through solid strategy execution we have built leading digital and software solutions to further leverage on our product and service offering. With our expertise, innovative offerings and close customer relationships, we continue to support our customers' transition to a more digital, automated and sustainable business. Innovation is at the core of our culture and strategy and a lever to maintaining our leading positions. It supports organic growth and value-based pricing.

Strategic pillars for sustainable growth and market leadership

• By focusing on improving customers’ productivity and sustainability we secure market-leading positions and can maintain value-based pricing
• Strategic and long-term relationships with our customers, combined with a decentralized decision model, enable us to adapt faster to current and future needs
• About 4 percent of our annual revenues are spent on R&D to ensure a leading product and service offering
• High barriers to entry, resulting from leading technology positions, capital intensity, materials know-how and customer relationships

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How we create value in our industries

Our solutions offering

Industries of the future

Our growth target of 7 percent will come from organic growth and acquisitions. To reach our target, we will continue to expand and strengthen our positions in fast-growing regions and segments and in our customers' value chain.

Today's important shifts towards digitalization, automation and sustainability, are an integral part of our strategy for growth. We will continue to be at the forefront of these areas by offering our customers market-leading solutions. We have set out to expand our digital offering to SEK 6.5 billion in revenue by 2025.

Sustainability drives growth

Sustainability is integrated into the whole value chain of our business. We have a holistic approach that includes customers, suppliers and our own operations. The largest impact is through our products and solutions, which enable our customers to be more sustainable.

During 2023, Sandvik’s targets for reducing greenhouse gas (GHG) emissions were validated by the Science Based Targets initiative (SBTi), as aligned with the latest climate science and consistent with the goals of the Paris Agreement.

Trends

We see several global trends in our favor. The growing middle class and rapid urbanization drives the need for metals, minerals and infrastructure investments. The need for infrastructure in turn, drives the demand for industrial production and manufacturing. The green transition requires a massive increase of electrification minerals and of machining of lightweight materials.

Demand for increased productivity, efficiency and sustainability through new technology, digitalization and automation is in line with our purpose and strategy.

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Strategy for growth

• Growth target of at least 7 percent through a business cycle to come from organic and acquired growth
• A solid balance sheet, good cash-flow generation
• Capex at approximately SEK 5.0 billion for 2024
• Investments in product development
• Acquisitions to broaden our value-creating offering, lead digitalization and automation and expand geographically in fast-growing markets

Our ambition is to deliver profitable growth by staying agile throughout the cycle and executing on our shift to growth priorities. Our decentralized organization enables us to respond faster to market trends, economic fluctuations and customer needs.

We work continuously with improving our own operational efficiency and have increased the share of variable costs to reduce earnings volatility. With a solid balance sheet, good cash flow generation and margin resilience, Sandvik has a strong platform to build from and is well positioned to capture future growth opportunities.

Strategies for financial stability and operational efficiency

• Strengthened margin resilience and reduced sales cyclicity by growing our parts, services and consumable businesses, including software offerings
• Flexible cost structures to ensure resilience in downturns
• Continuous work to improve cost structures and operational efficiency

Our dividend payout policy is 50 percent of adjusted earnings per share through a business cycle. Sandvik is committed to generating maximum shareholder value and practice responsible and value-creating capital allocation. The long-term principle is for capital to be allocated to invest into sustainable organic growth, meet dividend commitments and value-creating M&A.

Principles for capital allocation and shareholder value

• Responsible and value-creating capital allocation
• Dividend payout policy of 50 percent of adjusted earnings per share through a business cycle
• An average payout ratio for a three-year period amounting to 42 percent and for a five-year period to 39 percent
• Adjusted earnings per share growth of 6 percent over one year, 14 percent over three years and 5 percent over five years

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