Agile through cycle – strong financial performance
Our decentralized business model drives accountability and speed in operating decisions close to customers. We have well-prepared contingency planning that enable quick responses to changing market conditions and a continuous work to improve cost structures and operational efficiency.
Combined this will help us achieve further improved through-cycle performance and in 2020 we had solid adjusted EBIT margin, excluding metal price effects, of 17.1%, above our trough margin target of 16.0%, despite a significant drop in volumes.
Some examples as to why Sandvik’s financial performance has and will improve:
- In 2020 the margin was supported by approximately 4.2 billion SEK of permanent and temporary savings and another 1.3 billion SEK of savings was announced, with the majority impacting 2021. In 2020 the personnel reduction was about 3,000.
- 3% annual productivity improvement (revenues / full-time employee) is an internal KPI introduced in 2016.
- More than 30 production units closed since 2015 with continuous review of the manufacturing footprint.
- Targeting improved management of net working capital, to reach ~25% of revenues long-term.
- Increased adoption of value-based pricing.