Sandvik CEO Stefan Widing maintains the group’s circa-US$6.2 billion-a-year mining equipment, service and technology business is putting more distance between itself and leading rivals, including Swedish counterpart Epiroc.
Widing said on this week’s quarterly results call he was confident Sandvik’s mining and rock solutions (SMR) business, which now accounted for more than 50% of the US$25 billion Stockholm-listed group’s turnover, was winning market share from competitors in key areas, including the aftermarket segment.
June-quarter SMR revenues (US$1631m) were at record levels, Widing said, while the period saw the second best order intake level (US$1621m) in the division’s history. Aftermarket business was said to account for 66% of Q2 revenues; equipment 34%.
“Aftermarket is ultimately driven by your installed fleet and we have been growing the equipment [base] significantly,” Widing said.
“I think also it is quite evident by now, after a number of quarters, where we can see the figures … that we have been taking market share on the equipment, which of course also gives you a bigger installed base to drive your aftermarket business.”
Widing said the company was also winning “a slightly higher share” of available aftermarket on its own installed global fleet of mining equipment.
“One thing driving this is automation. With automation there is materially more aftermarket on each machine, and it’s also more difficult for others to take the aftermarket of those machines. They are more complicated … there is more electronics, software, etc, embedded in the equipment.”
SMR booked more than US$20m of automation orders in Q2.
Widing said miners were also spending more on parts and service to maintain high equipment utilisation, and production, rates.
Sandvik’s SMR order intake was up 9% year-on-year in the first half of 2023 at US$3326 million; revenues grew 25% yoy to US$3127m.
Adjusted EBITA climbed 38% yoy in Q2 to US$352m and 33% in the half to US$652m.
SMR saw the “strongest growth in Australia, with positive development also in Europe and South America”.
Reported group EBITA rose 31% yoy to US$1155m for an EBITA margin of 18.8% (17.5% in the same period last year). Group revenue for H1 was US$6.15 billion, up 22% yoy.
Net debt was at US$4.91 billion at the end of June, putting Sandvik on its 1.50 financial net debt/EBITDA threshold.
CFO Cecilia Felton said the company wouldn’t be taking on additional debt to fund M&A.
“It will be the cash flow that we generate that will determine how much headroom we have … for acquisitions,” she said.