Sandvik : Annual Report

ANNUAL REPORT 2022

CONTENTS

Year in brief	1
About Sandvik	2
Letter from the CEO	4
Targets and target fulfillment	6
Trends and driving forces	8
Our strategy	10
Alleima listing	18
Our operations
Sandvik Mining and Rock Solutions	20
Sandvik Rock Processing Solutions	26
Sandvik Manufacturing and	32
Machining Solutions
Our share	38
Directors' Report
Group total	42
Development in business areas	47
Corporate governance report	49
Board of Directors	56
Group Executive Management	58
Risk management	60
Sustainability governance	63
Consolidated financial statements	69
Consolidated financial notes	73
Financial statements Parent Company	110
Financial notes Parent Company	114
Board statement on dividend proposal	132
Proposed appropriation of profits	133
Auditors' report	134
Non-financial notes	139
Assurance report	153
Annual General Meeting	154
Definitions	155
Key financial figures	156

Cover photo: Sandvik offers additive manufacturing and metal powder solutions.

The formal Annual Report comprises pages 42-133. The Statutory Sustainability Report and Sustainable Business Report include pages 2-3, 7, 13-14,63-67 and 139-153.

IMPORTANT EVENTS

• Strong demand despite a challenging macroeconomic situation. Order intake grew by 27 percent to SEK 119,196 million (93,665) and revenues by 31 percent to SEK 112,332 million (85,700)
• Organic sales growth amounted to 8 percent, fueled by successful innovations in areas such as digitalization, electrification and automation
• We acquired eight companies in strategic areas, including solid round tools, mine planning and battery diagnostics
• New financial targets were introduced. Adjusted EBITA increased by 26 percent to SEK 22,486 million (17,816) and the adjusted EBITA margin was 20.0 percent (20.8), which is within our new margin target range
• We continued to strengthen our resilience with new cost efficiency measures
• Sandvik Materials Technology was successfully distributed and listed as an independent company, Alleima, on Nasdaq Stockholm
• As a consequence of Russia's war in Ukraine, we decided to wind down our operations in Russia
• We submitted targets for validation to the Science Based Targets initiative

INDICES

Sandvik is included in several prestigious sustainability indices and is a signatory of the UN Global Compact (UNGC).

2022

IN BRIEF

Overview, continuing operations	20211)	2022
Order intake, MSEK	93,665	119,196
Revenues, MSEK	85,700	112,332
EBITA, MSEK	18,088	20,145
EBITA margin, %	21.1	17.9
Adjusted EBITA2), MSEK	17,816	22,486
Adjusted EBITA2) margin, %	20.8	20.0
Free operating cash flow, MSEK	14,007	12,103
Return on capital employed, %	19.5	15.8
Earnings per share, diluted SEK	10.40	10.24
Adjusted earnings per share, diluted, SEK2)	10.26	11.98
Lost Time Injury Frequency Rate, LTIFR3)	1.2	1.3
Total Recordable Injury Frequency Rate, TRIFR4)	3.0	3.1
Number of employees5)	38,669	40,489
Share of women, %	20.2	20.2

1. Comparative figures for the income statement and cash flow statement have been updated as Sandvik Materials Technology/Alleima was distributed on August 31, 2022. Key figures based on income statement and balance sheet numbers have not been updated in the comparative period.
2. Adjusted for items affecting comparability, see page 47. For definitions of alternative performance measures, see page 155.
3. Injuries resulting in lost time per million hours worked.
4. Total number of recordable injuries per million hours worked.
5. Full-timeequivalent.

Revenues by customer segment

Revenues by market area

Mining, 48%		Europe, 27%
Engineering, 22%		North America, 25%
Infrastructure, 11%		Asia, 19%
Automotive, 7%		Australia, 12%
Aerospace, 3%		Africa/Middle East, 11%
Energy, 2%		South America, 6%
Other, 7%

2022 IN BRIEF

Order intake and revenues, MSEK

120,000
100,000
80,000
60,000
40,000	2018	2019	2020	2021	2022
Order intake	Revenues

EBITA, MSEK

and EBITA margin, %

25,000						22
20,000						21
15,000						20
10,000						19
5,000						18
0	2018	2019	2020	2021	2022	17

Adjusted EBITA

Adjusted EBITA margin

LTIFR and TRIFR

4
3
2
1
0	2018	2019	2020	2021	2022
	TRIFR		LTIFR

ABOUT SANDVIK

VALUE-CREATING OFFERINGS

BUSINESS AREAS			DIVISIONS
SANDVIK MINING AND ROCK SOLUTIONS
A global leading supplier of equip-	•	Underground Drilling
ment and tools, parts, service, digital	•	Load and Haul
solutions and sustainability-driving	•	Surface Drilling
technologies for the mining and	•	Rotary Drilling
infrastructure industries.	•	Mechanical Cutting
		•	Rock Tools
		•	Ground Support
		•	Digital Mining Technologies
SHARE OF	SHARE OF ­	•	Parts and Services
REVENUES	ADJUSTED EBITA
51%	50%

SANDVIK ROCK PROCESSING SOLUTIONS
A leading supplier of equipment,	•	Stationary Crushing and Screening
service and technical solutions for	•	Mobile Crushing and Screening
processing rock and minerals in the	•	Attachment Tools
mining and infrastructure industries.	•	Shanbao

SHARE OF	SHARE OF
REVENUES	ADJUSTED EBITA
8%	7%

SANDVIK MANUFACTURING AND MACHINING SOLUTIONS

A market-leading manufacturer	Sandvik Machining Solutions1)
of tools and tooling systems for	•	Sandvik Coromant
advanced metal cutting, expanding	•	Seco
into digital manufacturing and soft-	•	Walter
ware solutions, as well as technolo-	•	Dormer Pramet
gies such as additive manufacturing	•	Wolfram
and in-line metrology.	Sandvik Manufacturing Solutions1)
		• Design and Planning Automation
SHARE OF	SHARE OF ­	•	Additive Manufacturing
REVENUES	ADJUSTED EBITA
41%	43%

1) Business area segments

Adjusted EBITA is excluding Group activities and items affecting comparability.

2 SANDVIK | ANNUAL REPORT 2022

ABOUT SANDVIK

Sandvik is a global, high-tech engineering group with approximately 40,000 employees and sales in about 150 countries. We have a strong focus on enhancing customer productivity, profitability and ­sustainability.

KEY CUSTOMER SEGMENTS/SHARE OF REVENUES

Mining	Engineering
		48%				22%

We deliver drill rigs, rock-drilling tools and systems, load and haul machines, tunneling equipment, continuous mining and mechanical cutting equipment, crushing and screening, service and sustainability-driving technologies to increase digitalization, automation, safety and customer productivity.

Our tools and tooling systems for metal cutting and manufacturing software are used in

engineering­industries worldwide, improving

­productivity, profitability, quality and safety as well as reducing environmental impact. We are also a global leader in high-alloy metal powder.

Infrastructure

11%

We offer solutions that increase safety and customer productivity in breaking, drilling, cutting, crushing and screening. Application areas include tunneling, quarrying, demolition and recycling.

Aerospace

3%

We work closely with the world's aerospace companies. As they apply new materials to manufacture airplanes that are lighter, safer and more fuel efficient, advanced tooling solutions and end-to-end optimization are critical.

Other

7%

'Other' includes mainly die and mould, electron- ics, medical, pump and valve, rail and defense.

Automotive

7%

Our software solutions, tools and tooling systems for turning, milling and drilling in metals, as well as our industrial metrology offering, increase productivity when manufacturing, for example, engines and transmissions. Metal powders are used in Metal Injection Moulding.

Energy

2%

We supply tools and tooling systems for the energy industry, including clean and renewable energy.

• Sandvik Mining and Rock Solutions ■ Sandvik Rock Processing Solutions ■ Sandvik Manufacturing and Machining Solutions

ANNUAL REPORT 2022 | SANDVIK

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