Sandvik AB

Sandvik's SEK 123 billion in 2024 revenue with 19.2% EBITA margin masks the strategic shift from selling equipment to capturing lifecycle value. Mining & Rock Solutions generates 51% of revenue and 54% of adjusted EBITA, but the growth driver is parts, services, and consumables—recurring revenue that turns one-time equipment sales into continuous metabolic exchange. This is mutualism through designed dependency: Sandvik sells the mining drill, then becomes essential for keeping it operational through proprietary parts, predictive maintenance software, and automation systems. Digital offerings exceeded SEK 5 billion in 2024, approaching the SEK 6.5 billion 2025 target, representing software and sensors embedded in physical equipment that generate data Sandvik then sells back as optimization insights.

The biological parallel is cleaner than it appears. Sandvik isn't just selling tools; it's providing resource extraction capabilities as a service. The company's major orders—underground fleets for South32's Arizona critical minerals project, equipment for Zimplats' Zimbabwe platinum mines—aren't transactions; they're long-term symbiotic relationships where Sandvik's profitability depends on mine productivity, and mine productivity depends on Sandvik's uptime and efficiency improvements. When parts and services grow faster than equipment sales, Sandvik becomes less sensitive to mining capital expenditure cycles and more correlated with production volumes. This is the shift from r-selection (many offspring, low parental investment) to k-selection (few offspring, high ongoing investment).

The R&D allocation—SEK 5.1 billion, representing 4% of revenue—funds the transition from mechanical to digital competitive advantage. Sandvik's automation offerings and software platforms create switching costs that pure equipment providers can't match. A mining company can theoretically buy drills from Caterpillar or Komatsu, but if Sandvik's fleet management system, automation protocols, and predictive maintenance algorithms are integrated into mine operations, replacement requires not just equipment substitution but operational retraining and data migration.

But the 2025 challenge exposes the constraint: automotive and general engineering weakness in Q1 2025 caused revenue to miss expectations despite 26% growth in mining equipment orders. Sandvik's machining division—40% of revenue—remains exposed to cyclical manufacturing demand. The strategic question isn't whether recurring revenue models work (they do), but whether mining growth can offset manufacturing cyclicality before the next industrial downturn tests whether 19% margins are durable or just lucky timing in a commodity supercycle.