Dialogue with analysts

26 analysts cover Sandvik on a continuous basis. Below are some of the most frequent questions discussed in 2021, and our answers.

Q: Sandvik has made many acquisitions this year. Could you walk us through the strategic rationale behind and should we expect this acquisition pace going forward?

A: Our shift to growth strategy includes a number of important initiatives that will drive organic and acquisitive growth. The acquisitions made this year fill value gaps in our offering, enhance the core portfolio and regional exposure, and accelerate our digital shift, consequently strengthening our positions going forward. Taking a few examples: Deswik is a leading provider of mine planning software, which is a high-growth area. With Deswik, we fill a gap in our offering and also establish a foothold earlier in our customers’ value chain. It opens up new opportunities to provide end-to-end solutions to our customers and contributes to making their operations more sustainable and efficient. With the CNC Software and Cambrio acquisitions within Sandvik Manufacturing and Machining Solutions, we have established a leading position within Computer Aided Manufacturing (CAM). CAM is a vital part in the digital manufacturing process, enabling new and innovative solutions in automated design for manufacturing. This year, we have completed a larger share of acquisitions, and earlier than originally expected. We will continue to seek value-enhancing opportunities that will further strengthen our offering and contribute to profitable growth.

Q: You say you have established a leading position within CAM, how will Sandvik compete against other strong, established brands and how can you reach synergies between your cutting tool business and the software business?

A: CNC Software’s brand Mastercam is the most widely used CAM brand in the industry, with about 300,000 licenses installed around the world. Combined with our existing offering, we will be one of the leading companies in the overall CAM market. With our extensive know-how within component manufacturing, leading offering and strong customer relationships we are very well placed to play a leading role. We will compete, but also form partnerships with other players in this field. The synergies between cutting tools and software are about cross-selling, and further down the road, a go-to-market model with Sandvik as a full-solutions provider on the manufacturing shop floor.

Q: Your mining and rock solutions business continued to reach record-high order intake levels throughout the year. Where would you say we are in the mining cycle and what should we expect in terms of levels going forward?

A: We have seen a strong underlying demand this year, driven by high commodity prices. We expected the level of demand in the first quarter to somewhat tail off, but it didn’t. We believe we will continue to see solid underlying demand going forward, and on a more long-term horizon, we think demand for the metals that Sandvik has a high exposure to, for example electrification metals, will continue to be good, driven by society’s ambitions to reduce CO₂ emissions.

Q: The increased share of electrical vehicles is seen as a headwind for Sandvik Manufacturing and Machining Solutions. You claim you are partly mitigating this headwind already?

A: We made a lot of progress this year in terms of adding digital capabilities to our offering, especially within Sandvik Manufacturing Solutions. Their addressable market within design, planning and automation, additive manufacturing and metrology is expected to grow at least 10 percent CAGR. Assuming, on the conservative side, a high-single digit organic growth for this business, this will add a 1 percent CAGR growth to Sandvik Manufacturing and Machining Solutions, and thereby mitigate the estimated negative impact from BEVs. Furthermore, we aim to lead within round tools and gain market share in Asia and in the mid-market. We are confident that a shift to growth areas such as these will contribute positively, and more than offset this headwind.