Positioned for higher structural growth

Sandvik has actively optimized its portfolio by divesting non-core and lower margin businesses, representing approximately SEK 30 billion in annual revenues. At the same time, we have invested in assets with stronger structural growth potential, adding around SEK 22 billion. This allows us to leverage important shifts towards digitalization, automation and sustainability, which has been and remains an integral part of our strategy for driving growth.

Higher share of aftermarket

The share of aftermarket and other recurring revenues has increased significantly, from 31 percent of total revenues in 2019 to 44 percent in 2024. This shift has not only strengthened topline resilience but also improved margin stability. It has also increased Sandvik’s addressable market in segments with high structural growth.

Leading digital offering

Through solid strategy execution we have developed leading digital and software solutions to further leverage on our product and service offering. We are uniquely positioned to create value from our hardware and software solutions.

Sandvik has over 20 years of experience in mining automation and the leading end-to-end platform from mine planning to processing of the rock that comes out of the mine. We have also built the leading CAM platform and solution for machining simulation and optimization.

Sandvik’s digital offering revenues increased from less than SEK 1 billion in 2019 to more than SEK 5 billion in 2024.

Delivered on our growth target

Sandvik has successfully delivered on our target to achieve 7 percent compound annual growth organically and via acquisitions during the previous strategy period. The previous financial targets have also been reconfirmed for the 2025-2030 strategy period.

Sandvik’s financial targets stretching to 2030:

• A growth of 7 percent through a business cycle, organically and through acquisitions.
• An adjusted EBITA margin range through a business cycle of 20–22 percent.
• A financial net debt/EBITDA ratio below 1.5.

Market leader

Each of Sandvik’s divisions is a leader in industrial technology, whether specializing in component manufacturing, automation, electrification or digitalization. With number 1 or 2 market positions in their respective segments, these divisions capitalize on value-based pricing.

Close customer relationships

Strategic and long-term relationships with our customers enable us to faster adapt to changing market dynamics and customer needs, creating strong customer loyalty and agile businesses.

Decentralized and agile mindset

Our decentralized organization enables us to respond faster to market trends, economic fluctuations and customer needs. The portfolio of 23 world-leading businesses (divisions) is steered through a decentralized operating model, where each divisional head is a true business leader with full P&L and balance sheet accountability. Furthermore, the divisions are incentivized based on targets for growth, profitability and capital efficiency.

These divisions are grouped into our four business areas, which coordinate collaboration between them to drive synergies.

The Sandvik group provides a strong platform for our divisions to grow and scale their businesses globally through our well-established brand, financial strength and exceptional talent pool.

Industry leading margins and proven resilience

As industrial technology leaders, Sandvik’s divisions can maintain value-based pricing, which translates into industry-leading margins.

Sandvik has significantly improved its margin resilience via a higher share of recurring software revenues and aftermarket sales, i.e. a more resilient topline as well as a greater proportion of variable costs, leading to greater cost flexibility.

Sandvik has a strong track record of executing cost optimization efforts, generating SEK 2 billion of annualized run rate savings through its 2022 and 2024 programs. Sandvik remains committed to optimizing its cost base and initiated a new optimization initiative in 2025 that will generate SEK 1 billion additional run rate savings.

Our value-creating strategy as we advance to 2030 consists of the following objectives:

• Drive growth
• Empower high-performing teams
• Accelerate digital
• Deliver profitability and efficiency
• Lead industry innovation

R&D at core

Leading industry innovation is one of our five strategic objectives that will ensure that Sandvik delivers on our financial targets. For us, innovation is key to maintaining our leadership positions, driving organic growth and enabling value-based pricing on the efficiency, productivity and sustainability improvements that we deliver to our customers.

About 4 percent of annual revenues are spent on R&D to ensure a leading product and service offering. Sandvik’s New Innovation Sales Ratio, which is the share of revenues from products launched within the last five years, reached 24 percent in 2024.

Digital platform

By leveraging on our established digital platform, we continue to expand our digital offering, with the ambition to reach to SEK 6.5 billion in revenue by 2025 and SEK 13 billion by 2030. The majority of the growth will be organic, complimented with additional acquisitions.

In-organic growth

Sandvik will use its strong financial position and cash generation to complement our organic growth ambitions with value creating bolt-on acquisitions in selected areas:

• We continue to expand our geographical footprint in markets with high structural growth, such as India, China and USA.
• In Machining, we intend to become the clear market leaders for round tools and expand in faster growing segments such as aerospace, medical, defense and consumer electronics.
• In Rock Processing, Sandvik sees potential for further expansion in downstream mining, demolition and recycling.
• Finally, Sandvik will continue to grow our digital offering across Mining and Intelligent Manufacturing through selective acquisitions.

Our acquisition pipeline is solid and Sandvik takes a balanced approach to allocating capital between the business areas, meaning that each investment or acquisition is evaluated on its own merits and returns.

Solid financial position & strong cash generation

Our solid financial position and strong cash flow generation enable us to finance growth initiatives via the cashflows we generate.

Over time Sandvik will keep a financial net debt/EBITDA ratio at around 1 to allow for some flexibility to do larger mid-sized bolt-on acquisitions without overshooting our financial target of 1.5.

Capital allocation

The long-term principle is for capital to be allocated with priority to invest into sustainable organic growth, followed by meeting dividend commitments and finally pursuing value-creating M&A. We also have a mandate from the Annual General Meeting to carry out share buy-backs; however, our primary focus remains on driving value creation through growth investments.

Sandvik has guided for capex at approximately SEK 4.5 billion for 2025.

Sandvik is committed to generating maximum shareholder value and practicing responsible and value-creating capital allocation.

We target a dividend pay-out ratio of 50% of adjusted earnings per share, through the cycle.

Outcome:

• Pay-out ratio for 2024 was 48%
• Three-year average payout ratio amounted to 44 percent and for a five-year period to 49 percent

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