Hello, everyone. A warm welcome to Sandvik's Capital Markets Day. We are indeed delighted to see so many of you here, that you have taken the time and efforts to join us here in Tampere, Finland. And despite the early hour, we hope that you are awake and energized because we have a full-packed agenda today. And we will start with the exciting stuff. We will start with the tours. At the tours, Sandvik will demonstrate our leading innovations, our leading offering in sustainability solutions, automation, and digitalization. Between the tours and after the tours, we have breaks, so coffee breaks and lunch break. At that time, you have the possibility to visit the exhibition area, and I think you saw that when you came in.
Here, you have the possibility to listen more and learn more about our solutions in the aforementioned fields: automation, digitalization, and sustainable solutions. And even more so, you have the opportunity to ask all your questions to our great Sandvik experts. After, in the afternoon, we will meet here again for presentations by our CEO, CFO, our business area heads, and other Sandvik employees. So now, let's get started. You all have received badges, I hope. Yeah, start looking. And on the badges, you have a number. It's actually a capital letter and a number. And behind you, you have the tour guides waiting with a sign with the respective number. So now, have fun, and we meet together again at lunch. Thank you.
Hello, everyone, also from my side, a warm welcome to our underground test mine here in Tampere. It's really great to see so many of you here, that you have made the effort and joined us here. I know it was a long journey for some of you, but we wanted to make this not just about PowerPoint presentations. We wanted you to see and experience our world-leading solutions. And I really hope you enjoyed the tour here in the first half of the day. I certainly did, and I hope you learned a lot. You saw in the tour, and you will see in the presentations coming up here, the future of mining and the future of component manufacturing, and what we as Sandvik are doing step by step to reach those visions. But again, a warm welcome.
Looking ahead, there are a number of global trends that will impact our business, and they are in Sandvik's favor. We have a growing middle class with a rapid urbanization that will drive the need for more metals and minerals. It will drive the need for more infrastructure investments. I read the other day, and I haven't fact-checked this, but that 75% of the infrastructure that we need in 2050 has not been built yet. It will drive the need for consumer goods and industrial goods, driving the need for industrial production and manufacturing.
Then we have the green transition and the electrification of the world as we move away from fossil fuels. This will drive the need for an increased number of minerals, electrification minerals. It provides us a business opportunity in our own journey of electrifying the mine, as you have seen here today.
It also gives us new opportunities when it comes to, for example, machining of lightweight materials, which will increase as we go towards electrification. And then we have the perpetual demand for more productivity, more efficiency, and more sustainability that will be driven and enabled by new technologies, new innovation, and automation. And this strikes at the very heart of Sandvik's purpose and our strategy. We launched our updated strategy in the beginning of 2021. It's built around our purpose, our company purpose, that we launched at the same time. We make the shift, advancing the world through engineering. I think it's a powerful purpose that speaks a lot to who we are as a company. It's also built around our four core values: customer focus, innovation, fair play, and my personal favorite, a passion to win.
We have three transformational strategic objectives: our shift to growth, our digital shift, and our sustainability shift. They are being supported by our three supporting objectives: being an employer of choice, to be our customer's first choice, and to be agile through the cycle. For each of these six strategic objectives, we have defined key results of where we want to be in 2025. Each year, we define where we want to be that year on the journey towards the 2025 targets, and we break it down by quarter. This is how we drive strategy execution, to transform this strategy into action. You will see throughout this day that we are delivering on our strategy and achieving our key results. We have, at Sandvik today, a strong platform to build on.
We have market-leading positions and strong brands in the market segments where we operate.
We have a winning culture where we are number one or number two in the market segments where we compete. We have innovation at the core of our culture and our strategy, something we have had during our more than 160-year-old history. Today, we also have a leading digital and software platform, both in the manufacturing and the mining industry. We have, for decades, had a business model built around helping our customers become more productive, more efficient, and more sustainable, both in manufacturing and in mining.
We really have sustainability embedded into our business model. Today, we also have strong financial strength. We have a strong balance sheet, good cash flow generation, a strong margin that is resilient throughout the economic cycles. This is something that Cecilia will talk more about in her presentation. Sandvik is well-positioned to capture the future growth opportunities.
In manufacturing, we are, for example, leaders in CAM software, cutting tools, and additive manufacturing powder. We are step by step working towards more optimization end-to-end for our customers, optimization and automation. We have agnostic offerings through a portfolio of strong world-leading brands that can go to market independently to maximize the total market potential, but we are increasingly also working with them to create bundled offerings and synergies, so we can leverage the combined strength of the group. We work every day towards realizing what we believe is the vision of manufacturing, which is digitized and automated from design to finished product, and you saw some of it out in the factory today.
Of course, this is something that Nadine and Mattias will talk more about as they present both the combined manufacturing and machining solutions business, as well as their independent machining and manufacturing business segments. In mining, we also are equally well-placed to capture growth opportunities. We are today, for example, world-leading in mine planning software, underground mining equipment, and mine automation. Here we are already working on offering to our customers full end-to-end solutions, digitizing, automating their full value chain, and you saw some of it here today in the demo of our digital mining solutions. We also have a leading technology when it comes to rock processing, a technology that will help solve one of the major challenges in mining, which is energy use and water consumption.
We work every day to realize the future of mining, which will be electrified, digitized, and automated in a sustainable way. So how are we doing on strategy execution? Let's start talking about growth. We have today—we have, as you know, a baseline of 2019 for our key results. This is to make sure we don't have disturbance from the sort of COVID years in terms of compares. Starting from 2019, we have a CAGR of 9% total growth, excluding any currency effects, up until Q3 of this year. This means that we are well ahead of our growth target, which is to grow a CAGR of 7%. We are also proud that we have an organic CAGR growth of 5%, and we are very proud that we can show 11 consecutive quarters of organic growth.
We have also added SEK 19 billion of inorganic growth during this period. As those companies have come in, the first year, as you know, it's reported that structural growth, after year one, they go into the organic growth as well. And what we can see is that the average organic growth of these companies are higher than the existing Sandvik business. So it shows that gradually, we are shifting the company to be more exposed to structural organic growth, which is part of the strategy. I mentioned innovation, something we continue to focus a lot about, and, and today, 25% of our products that we sell have been launched in the past five years. This is what we call a new sales ratio, which is one of our key results. And our target for 2025 is to increase this number further.
This is really important for us to be able to maintain our leadership positions, support our organic growth, and as we have seen, especially in the past years, this is how we make sure we can work with value-based pricing, ensuring that we get the price we deserve for our productivity and sustainability improvements that we deliver to our customers. And also here, we have made a shift. You can see on this graph how we have accelerated our investments into R&D and innovation in the past couple of years.
And this is also why I always highlight one innovation, during the interim report, because this is so important for our long-term future. We have highlighted innovations such as our electric jaw crusher, a new generation of batteries for our BEV equipment, new grades or products within our cutting tools, and of course, continuous release of new digital solutions.
Today, we are, as Sandvik, leading in digital in our businesses. We have today SEK 4.8 billion of sales coming from software and digital solutions. We are on track to reach our target of having SEK 6.5 billion of sales coming from software and digital by 2025. In manufacturing, we are one of the leaders with over 400,000 installed seats using our software solutions. In underground mining automation, we have our AutoMine solution that you have seen demonstrated here today with over 50% market share. When it comes to mine planning software, I know I have to update this number. I said we have 600 connected sites. I saw today that we had 900, so we will update this. We also have, of course, a market share, which is clearly ahead of the closest competitor.
Then, of course, we also work with making our business more sustainable, to have a sustainable business. Our sustainability targets are approved by the Science Based Targets initiative. They include a Net Zero commitment for 2050, including all scopes. By 2040, we will reduce greenhouse gas emissions by 90%, by 2030 by 50%, and by 2025 by 25%. And I'm happy to say that we are already well ahead of that target. But it's not only about that, it's also about, for example, circularity, where we have a target in 2030 to have 90% waste circularity from our operations. We also work with responsible business, of course, trade compliance, anti-bribery and corruption, something that is really important in today's world. We work with people in communities, making sure that we create local jobs where we are operating.
We have a focus also now on ecosystems, which is really important in mining, especially when it comes to water stewardship, which is one of the key challenges that the mining industry face. But what I am the most excited about is our sustainable solutions. This is where we help our customers become more sustainable and solve their challenges. Of course, here we have our electrified mining equipment, where we today are leading in the world. We were far ahead of the industry when it comes to recycling. We have a buyback program within our cutting tool business, that today means that more than 50% of the material in the products we sell, cutting tools and drill bits, are made out of material that we have recycled ourselves. And we buy back our products as well as competitor products.
And then, as I mentioned already, we have a leading technology in rock processing when it comes to solving the energy and water consumption challenge in that part of the industry, and this is something that the rock processing team will talk more about in their presentation. So what we're showing here is that we have a solid execution on our strategy. We're delivering strong organic growth and good inorganic growth. We're leading in digital. We are making the sustainability shifts ourselves and for our customers. And we have also increased the sales from software services and consumables in a material way. This creates more top-line resilience for us, helping us through the economic cycles. And we have delivered a strong margin that is also proven, and resilient through the cycles.
So I'm really proud about the transformation that Sandvik has gone through in the past couple of years, and this is a massive team effort from a lot of the people that you will see here on stage today, and of course, throughout the whole organization. We completed the portfolio optimization last year with a spin out of Allleima. We have evolved our management culture. We work even more with performance management, and we have set a high bar for what we consider to be great performance. We work with our agility, taking more calculated risks when called for to speed up our decision-making and allow us to take more opportunities when they arise. And we have also worked with the how. It's not only about what we achieve, it's also how we achieve it.
I believe that a modern and sound leadership culture is key to attract and retain the best talents in the future. We have strengthened the Sandvik platform. We have strengthened, for example, our round tools offering, but we have also added new strong positions within, for example, ground support, mining screens, and our digital solutions. And today, we are an enabler in our customers' journey with our leading digital and sustainable solutions. We have done this transformation through a strong strategy execution, where we have delivered strong growth and high, strong, resilient margins each and every quarter. And this is something that we in Sandvik are really proud about.
When it comes to our financial performance, Cecilia will talk more about that. So I will now invite Cecilia up on stage, and I will, of course, be back for a Q&A later. Welcome, Cecilia.
All right. Thank you, Stefan. So what we'll do now is to have a look at our financial targets that we announced last year, and how we have delivered on those. And as you know, it's been challenging times, with high inflation, spiking interest rates, supply chain and logistics challenges, et cetera. But we have delivered well on our targets. So let's have a look at that together. But first, a recap of our targets. As Stefan mentioned, we have a total growth target of 7% through a business cycle, and that's both organic growth and inorganic growth, but excluding any effects from currency. We also have a target margin corridor of 20%-22%, and this is not an absolute peak-to-trough margin corridor. This is where we are happy with our performance.
That means that if we fall below 20%, we will activate our contingency plans and take action to get back into range again. And if we're above 22%, it should not be seen as sustainable in the long run. We then also have a balance sheet target, financial net debt over EBITDA below 1.5, and a dividend payout ratio of 50%. So how have we performed then? Let's start with looking at the growth execution, and Stefan already mentioned some of the highlights here. But if you look in the graph, you can see that we came from a period of growth back in 2018. Then halfway through 2019, we saw a softening in demand in our short cycle segments, and then the downturn was further accelerated with the outbreak of COVID.
We then launched our Shift to Growth strategy towards the end of 2020. As Stefan mentioned, we have since then had 11 quarters of growth, but we have also had double-digit growth for 9 consecutive quarters. During this period, we also made 24 acquisitions, and in total, they bring SEK 19 billion of revenue to the group. All in all, our total growth CAGR versus 2019 then currently sits at 9%. This number is, of course, impacted by the higher-than-normal inflation rates that we have faced over the last couple of years. But during this time, we have also exited Russia. Here we are very pleased with our performance. Over the last couple of years, we've also worked hard with building a more agile and flexible business model. As you all know, this starts with having a more resilient top line.
We now have a higher share of aftermarket and software revenue in the group. We've also demonstrated good pricing power, and we've been able to mitigate the inflationary pressure that we face with price. We also took a conscious decision when ramping up after the COVID downturn to do so with a higher share of flexible costs. We are continuously working with improving and optimizing our footprint. As you know, our current structural savings program is expected to generate SEK 785 million of run rate synergies. During the afternoon today, you will hear from the BA presidents a lot more details around the focused work and efforts that they have made in this area, and also the impact that that work has had on their leverage.
But to summarize, we demonstrated good margin resilience, both during the COVID-19 downturn and also in the third quarter of this year. And both last year and year to date, 2023, we are within our margin corridor. We also have a strong balance sheet for growth. Financial net debt over EBITDA is currently at 1.3, and we have an A-minus rating with a negative outlook, and here we plan to maintain a strong investment grade rating. And as you can see in the graph, if you go back to 2020, back then, we were in a net cash position, but then we kicked off our Shift to Growth strategy.
We have invested the excess cash that we had on our balance sheet, and we've also taken on some debt, as you can see here. What that means now is that we have quite a limited headroom to our balance sheet target. So going forward, we will fund future investments, both organic and inorganic, with the cash flow that we generate, as opposed to taking on additional debt. If we then look at capital allocation in a bit more detail, you can see here that during the stabilization period leading up to 2020, we focused a lot on stability and profitability. During this time, most of the capital or cash that we generated was allocated to debt repayments, dividends, and CapEx. Only quite a small proportion was allocated to acquisitions.
But then from 2021 onwards, once we launched the Shift strategy, you can see that we've allocated a much larger proportion to acquisitions and M&A activities. You can also see that, it's a fairly even split in terms of capital allocated to the SMR and SRP business areas and the SMM business area. As Stefan mentioned, we have a strong cash flow generation that will support future growth initiatives across the group. In terms of capital allocation priorities, we give organic growth the highest priority, so CapEx investments. We need to invest and maintain in the businesses that we have. It's typically also a cheaper and less risky way of growing your business. We then have the dividend payment, and we need to adhere to our balance sheet target.
After that, we see how much capital that we can allocate to either M&A activities or any potential share buyback programs. Finally, EPS and dividend development. Over the last 5 years, adjusted EPS has grown by 20%, and during the same time period, our dividend payout ratio has been 39%. A bit lower than our target of 50%, impacted by the fact that we did not have a dividend during COVID. But as you know, we have also distributed Alleima as a dividend during this time period or last year, providing good shareholder return. So to summarize, we are delivering well on our targets. We are exceeding our current growth target, we are delivering on our margin corridor, we are managing our balance sheet target, and we have a dividend payout ratio of 39%.
We are proud of how we have delivered on our financial targets, and also how we have executed on our Shift strategy over the last couple of years. With that, I will invite Louise back to the stage.
Thank you, Cecilia. Just a reminder that we do have the Q&A session at the end, if you missed that on the agenda. So note down your most crucial questions so you can ask that to management later. Now, we will move on to the business areas, and the first one we will welcome is our President of Sandvik Mining and Rock Solutions, Mats Eriksson.
What do you think about Sandvik? I tell you, we are a worldwide leader in mining solutions. So it's quite easy to explain things when you have seen what we already have during your tours here. But let me tell you a bit more about mining solutions. I will start with the market that we are in. As already mentioned by Stefan, we are having a growing middle class. That is very good for us because they consume more, and what do they consume? They buy a lot of electric stuff, for example, so electrification is a must to serve the consumers in the middle class. But naturally, there are a lot of other things as well. The electrification metals, as you can see from the chart, is growing a lot, and it's the most growing or best growing commodities in the mining industry.
Gold is another one that is pretty high on the, on the list and is also growing well. At the same time, the mining industry is having an issue. There are lower ore grades. There is a growing demand, and you have lower ore grades. You need a solution. If you look at copper, for example, you can see from the graph to the right, or to the left, actually, sorry, to the left, you can see that the copper demand is growing, and the existing mines will not be able to support that growth. There will be need for more mines, more productivity, more efficient ways of getting the copper out from the mines. The black line tells the predicted demand, and you can see already by 2025, we are starting to get issues of having enough copper for the demand.
In the gray area, you see possible projects. It could be extension, but it's a lot of green fields as well. The lead time to establish a new mine is growing as well. There are several reasons for that. But a lot is coming from regulations, a lot is coming from being more sustainable. There is a lot of demands on how to establish a mine today. And the mining companies, they need solutions that are sustainable and fulfilling the requirements in the market. Naturally, there are technologies evolving because of these demands, and some of the key ones that you have here is automation. You can actually go deeper, and you can get ore from areas that was not possible before.
You need to be very efficient when you plan your mine because you don't want to add more cost when you need to get the commodities out or the ore body, well mined. So you are very cautious about doing the right things all the time. So the software importance is growing clearly through the mine planning. And then to be sustainable, and again, when you go into areas that are difficult to arrange, for example, ventilation, or it's too hot, or it's difficult because of security and or safety and others, you are using automation with battery electric equipments. So the battery electric is actually providing you a possibility to get into areas that wasn't possible before. If you then look at how we are positioned, first, if you look at the market, this is divided now into underground and surface.
You can first see that if you take electrification and gold, they are both growing a bit more than what you see on the right-hand side, the 2% that is the, the general growth of mining. Electrification and gold is growing more, and they are growing more, especially underground, where we are placed. So if you look at the Sandvik, the commodities that we are exposed to is electrification commodities as well as gold. That stands for 70% of our sales today. Those are the ones growing faster than the mining industry in general, and they are growing underground, where we are really strong and a main player. So we're very well positioned for the growth.
I told you already that the ore grade is a problem, and there is a problem that the mining industry need to take care of. They need solutions.
We have those solutions. You can see here the value chain that we are offering. We have the solutions which is matching the problems the mining industry is facing today. We have what we could call a standard, the Deswik for Mine Planning. It's very well adopted in the underground, but it's also on surface. We are drilling and blasting. We are not doing blasting, but we do drill optimization for the blasting. Very important when you go into the mine, underground, is the ground support. We have world-leading position there as well, and we are very, very strong in load and haul. And as a natural continues to what we do underground in the mine is, of course, crushing and screening that you will hear about later on, from us. But I think optimization here is one of the keywords.
So if I shortly show a picture of the future of mining, I'm a bit smiling when I say future of mining because I think we are there already in Sandvik. We are already having the solutions for what the future of mining is gonna be. Electrification, of course, very important. As said, you can go to areas that was not possible before, and it makes more productivity and efficiency to the mine operation. Automation is, of course. We have had that for two decades. It's not a new thing to us, and we are continuing to serve our customers on the automation side. We have unique solutions there that nobody else has. Data analytics, well, mine planning is one area, but of course, you also heard today about remote monitoring services and so on, and we have a lot of AI in that area.
I think AI is important for the future in general, but we have that already implemented in our solutions. And it's clear that the future of mining is Net Zero, circular, and efficient. So we are providing the solutions for the mining industry to get towards the future, and they are all investing in that. We'll talk now about electrification, automation, and digitization, which are all three areas crucial to be successful in mining. And now I'm talking about the mining companies. They need all of these areas to be successful, and they need somebody to provide them to them, and we are doing that. But let's start with electrification, and for that, I'm inviting Vice President for New Technologies, Mr. Brian Huff. Welcome, Brian.
Thank you, Mats. I think it's kind of interesting. My title is New Technologies, but in talking about electrification, this really isn't anything new. We've now been operating battery electric equipment underground for the last 12 years. That's 12 years of learning and development and improvement of the product, and we've really got solutions that are working for our customers. So this is no longer a really new technology. But what is new is how we provide these solutions to our customers. Bringing it from just a product, just the equipment, to a full package. From preparation of the site, using our Trans4Mine team to understand the application value, to understand the business case, and to get these feasibility studies over the hump, to get them funded.
For simulations, using our MineGame software to strategically locate charge bays and swap bays locations within the mine to optimize the operation, and then providing other case study benefits, helping contractors and helping consultants to really understand what the value proposition is. And then on the support side, we are making sure we've got good site readiness, right? Making sure that our customers know what technicians they need, what spare parts they need. Providing assistance to service people through digital solutions that give them the technology and all the information they need for troubleshooting right in the palm of their hand, rather than having to spend so much time in training to learn the troubleshooting procedures. And then enabling these diagnostics and troubleshooting through remote monitoring. That really kind of brings the aftermarket side to the equation. And then circularity.
We've now had batteries in service for over 12 years. They've reached end of life. We've had to deal with the recycling of batteries, and we've got partners that help us to accomplish that. And another kind of key element of our products is that because they're modular, because the same modules that work in our trucks also work in our loaders, you can repurpose batteries that are aging out from a truck application, which has higher power and energy demands, and reuse them in a loader operation, where there isn't as much energy requirement. And all of this together has really led to quite a bit of success that we're finally seeing in this year. We've now seen that we've won 75% of the BEV tenders that we've been a part of, and that's a really kind of remarkable stat.
It really comes not just from our sales process; it comes from what our product is, and it's pretty compelling. The lack of infrastructure requirement. You saw downstairs, underground, that the demonstration that we can swap batteries almost anywhere. We don't need cranes. We have. We offer flexible solutions that don't require such a massive investment in infrastructure to accomplish. And beyond that, our equipment does more than its diesel counterpart. Battery and electrification isn't just about sustainability. You got to provide more value to multiple parts of the operation in order to win these deals. And our equipment provides value to the operator, value to the service person, and value to the site management in terms of productivity. And then it also provides value on the environmental, social side of things and the decarbonization aspect.
You can also see this in kind of a share of revenue. Our new share of order intake so far this year for load and haul has been more than 15%, and you can see how that's starting to become a real significant part of the business as a whole. Then how are we kind of expanding to supply that new need? The chart on the right shows our production capability in BEV space. We've been making battery-operated drills here in Tampere since 2016. With the acquisition of Artisan in Camarillo, California, since 2019, we're making batteries and battery-operated equipment there. We also expanded into Winnipeg, Canada, to meet the needs of the Canadian market, making our 50-ton trucks.
Now in Turku, Finland, we've increased the capacity of the site there to manufacture the loader that you saw today. Then we're also expanding now into Seremban, Malaysia, with a factory building battery-operated equipment and batteries. So we're really kind of expanding to meet this increase in demand. Not only are we expanding our production capability, but we're expanding our product offering. We're taking the technology of our battery-operated drills, loaders, and trucks, and expanding that with diesel-electric, using the same motors, inverters, componentry, and a modular approach that allows us to offer diesel solutions with the same electrified driveline from our battery-operated equipment. Then beyond that, we have an entirely new revenue stream in the form of batteries, chargers, and coolers.
This is really a rare opportunity to have a business that is good for our customers as well as good for us. We're able to increase our revenue, earn more from our customers, but they actually spend less. And the way we do that is we're taking the money from the oil companies. And the way this works is, if you look at the chart on the left, the operating and capital expenditures for a piece of battery equipment is pretty comparable. There's a little higher capital expenditure for battery equipment, but less on the operating expense. But above that 2 gold lines there is the other expenses. There's carbon taxes, cost of ventilation, cost of cooling, all of these other expenses that end up with a decrease in cost for the customer.
Whereas on our side, the chart on the right shows how much more Sandvik makes for each machine sale. A, a win-win. But enough about hearing it from me. We've got a video where you can hear our customers talk about the value they see in Sandvik BEV equipment.
Our deliverable was to bring new technology to the mine site to replace diesel engines. Our first priority was to improve the air, the atmosphere underground for our mining team. So trialing the Z50 truck for us was really the first step towards battery electrification of our fleet. The opportunity to partner with Sandvik became paramount for us to push through the trial, and then ultimately move through with the Z50 procurement plan.
Here in New Afton, we've had really good results with Sandvik battery equipment. We've always had a very good relationship with Sandvik. For a long time, we've been using Sandvik drills and bolters underground, and to continue our relationship and move into automation and now battery electric vehicles has been just a natural progression. Every mine has a capital purchase or a maintenance replacement coming up in the next few years, and they would be missing out if they decided not to investigate or pursue battery electric technology.
Battery electric is our main track right now because that's where the whole market is heading. The most important thing is that it's sustainable and CO2 and fossil-free. Sandvik is a great, reliable, big partner that we need to collaborate with.
For companies that are interested in battery electric technology, I highly recommend that they reach out to Sandvik and start the discussion now to get in line and start their own battery electric journey. Sandvik, for us, has been a great partner to work with and help us along the design, implementation, and execution of the battery electric project at the Brucejack Mine.
Thank you, Brian. It's easy to smile when you see videos like this. Seeing happy customers that have adopted our new technology is key for our future success. A good customer telling another how well our equipment is working, how much more productivity and efficiency they achieved by using it, helps us. You could see that from the sales features that we have had a great order intake on BEVs this year. And that, of course, generates revenue. So I'm really pleased to follow this and see how the revenue will grow, thanks to good customers adopting our technologies. I will jump into automation next. Another success story, story of ours. We have the largest autonomous fleet underground in the world. And we didn't put up the numbers that are average from what we get from the customers-
In general or what we think about when we do our own calculation. We put kind of testimonies up there. It's what the customer have told us, how well the autonomous fleet has helped them in their productivity goals. So 55% productivity increase is fantastic. Or as we have Boliden, almost 100% of their production goes fully autonomous. Great numbers, great things. To me, what this shows is, of course, that the technology works, naturally, but the other thing is that we have two decades of knowledge, which our customers are now benefiting from. Similar thing as we talk about the BEVs, more than 10 years of knowledge in that area as well. You cannot really shortcut the learnings that you need with new technologies. You need the experience, you need the know-how. We have that.
We are pretty unique with our automation, and this is not something that you can jump into overnight. It's something that is a evolution. You have to start somewhere. We started as well as what we call level one, with tele-remote. You actually, on a distance, you remotely steer the equipment. It's still a human interface. A human makes the decisions and control what is happening with the equipment. So we don't really call that automation. When we get to level two, that we hear say mid-scale autonomous systems, 3-5 units, then we already are into something where the machines and the system has to decide on its own how to operate, not to collide with each other or. We cannot have a human interface actually controlling all of that at the same time. And large scale, then it's impossible.
Then you have to have superior navigation system, and that is what we are having. We are having a really good navigation system in our automation, which can direct and help the units. Also, the traffic management is crucial. It's easy if you have one isolated area and one machine moving back and forth. What about, take a simple thing, you have a tunnel, you have two trucks, they're meeting each other, and they're both automated, there are no operators there. They have to decide which one goes aside, which one passes, and then the other one comes back on track. Those are things that we have in our system, and those are unique. Another thing is that our equipment, talking about loaders and trucks and drill rigs, they are from the start optimized for automation, so they are designed to work for automation.
The full benefit our customer get with automation is by using our equipment. You see the values, the deal size, and what we have on a rolling 12, received as orders. Those are bigger values than selling only a automation system, because they include the equipment as the customer see that then they get the most out of it. They don't have a reason to buy a, another brand for their loader if they can buy the same loader from us, and they know that it's fit for the purpose: automation. When we talk about automation deals, they are usually bigger scale, more valued than our competitors' deals. Moving to what I already mentioned, AI, or software in general. When you find a new ore body, you need to plan how to extract it. Deswik has that capability.
So already when we see a greenfield, Deswik is getting involved. So from the start, we are there. Then, of course, you need to do a project around it, how you're gonna extract it, when, what, how, and so on. And when you get into the real operations, you need to plan it, continuously monitor what you are doing there, adjust it a bit, and so on, and of course, execute through different means. In monitoring, we have Newtrax . In execution, we can use AutoMine for automation as examples. And we have the whole chain. Then we have it all up and running. And remember, we started already with a greenfield, the ore body, and we have had the software, and we have system solutions all the way through when it's operate, in operation. You need to optimize it. You need to continue to optimize it.
A mine is not a static environment. If you start thinking about a factory and optimizing a factory, I'm not claiming it's easier, but I'm claiming it's different. Because a factory is having walls and ceiling, and it's a static place. You can change the flow and things in it, I understand. But a mine, it's expanding, so it's a continuous changing environment, and you need to optimize that continuously. We can do that. With the acquisition of Polymathian, we added a lot of optimization, simulation, and AI to the solutions. So it suggests when something goes wrong or something need to be changed, the system suggest, "Should we do it this way or that way?" And then it has analyzed all the options.
A human being has done it before, and a human being can still be the one making the final decision, but getting a lot of help from the software. So with these three things, electrification, automation, and digitalization, where are we? We are number one. What they say about future mining, these are the things that are needed. We are there already. We have a great growth potential in these areas as we already have the references and knowledge. We will grow in these areas. We have no intention to let go. We will continue to grow where we are strong, and this is where you need to be strong. I talked about a couple of acquisitions, and let's not forget key acquisitions like the DSI Underground. Ground support. A world-leading ground support that is needed in all underground mines, tunnels in general.
You need to support it to make it safe. Even though human beings are not there, the equipment still need to move around there, so you, you have to be sure that the environment is safe and no hazard. You have a very stable revenue growth that comes from combining the customer relationships we have in Sandvik with the customer relationship that DSI had. We are helping each other expanding our sales in both areas, both what Sandvik has and what DSI has. So it's a good combination. It's fulfilling one part of the value chain. Then we have Deswik and Polymathian. You heard already, Deswik is kind of a standard in the market, industry standard. 900 sites, it's big, and it's agnostic. So it's really a key element for our growth.
Combining then the AI from Polymathian, a lot of knowledge about how to optimize things, it really has all the values that the mining companies are looking for to make their production more optimized, more efficient, more productive. And that's what they have to do to stay competitive in the market. It has grown, the revenue has grown above our business case that we saw when we looked at it, and it gives a continuous revenue stream through the subscriptions. So it's what Stefan said, we are moving to software business as well. Very important for us, and it gives a stable flow of revenue. Then I got the question a few times: What about surface then? You talk about underground, you show a lot of good things there, and we have, of course, surface, too.
One example is, we have been saying that we are focusing on surface, I think that was 3 or 4 years back. In 2019 until 2022, we have doubled the order intake on rotary drills, which shows that we are really growing in this area. We have doubled it. What that means is that we are also tripling the possibility of aftermarket in surface. Because as you see here, one rotary costs a certain amount of money, but its lifespan is much longer than an underground equipment. It has up to 15 years lifespan, and during those 15 years, it consumes 3 times the CapEx of a rotary drill in aftermarket. So it's very important for us to have these rotary drills in the market, and we get the stable flow of aftermarket.
Today, you saw a new era, the first of its kind. The first surface boom drill in its size class, battery electric. We will, by 2030, of course, have a, a full set of surface drill rigs also electrified. And we are working on that. But this one you saw already, it was out there in the yard. Battery electric, also cable connected when needed. It's really showing that what technology can do today. And as said, we are taking the technology and know-how that we have underground to the surface. So we are bringing a lot of expertise that we have in-house already to the surface. That's why with confidence can say that by 2030, we have the machines electrified on surface as well.
Then what could be a thing that you have been wondering about with Sandvik, that how do we take downturns, and how do we really manage changes in the market? Well, one way of managing it is, of course, having a strong aftermarket. The typical thing is that if you have a bit of a slowdown in the mining industry, is that the customer might not buy a new equipment, but they continue to use the old ones. And when they continue to use the old ones, they need aftermarket. They need the spare parts, they need the service, they need to keep them up and running. So aftermarket is always there. And your aftermarket also in different areas. You have the ground support is still continuing to be there. The rock tools, they're still consumables, kind of. They are still there.
We have the software with subscriptions. They're all there. So when we have a growth of 17%, as you can see on the chart, the 2023 number, by the way, is rolling twelve months up to end of third quarter, so it's not the full year. But this is how we see that we can be more resilient during the different cycles of the market. We also know that with aftermarket, we have more loyal customers, and we keep on to the customers with remote monitoring service and so on. So when we have an upturn, the customer turns to us easily to continue the business. And naturally, we have built our capacity in our factories very agile. We have a lot of it outsourced, so we can adjust the capacity and not be stuck with excess capacity if something happens in the market.
If you look at the profitable journey of SMR, Sandvik Mining and Rock Solutions, we have been quite stable. The ground support DSI acquisition diluted our EBITDA a little bit, as you can see from the text, but we are on a stable level. And with the increased portion of aftermarket, it will continue to be stable. We have a leverage target of about 30% on incremental volume, and that is where we need to be. So I think we have already proven that we can handle the mining cycles in a very good way. And of course, we are staying on top of our toes to continue to monitor what is happening and react in time if something happens.
But we are fortunate also to be a very big player in the mining industry, so we have a lot of information and knowledge, and a lot of things that helps us not to be surprised about the development. But there are growth areas always. The mines still need to optimize. You remember, the ore grade is a problem, so we are going to optimize it for the customer. We have targets going forward as well. Revenue CAGR 10%, BEV share of underground more than 50%, and the surface revenue by 2028, we are doubling it again or more. To summarize very fast what I've been talking about, we are in a strong, nice market. I like the mining industry. It's good. It's still growing. We need electrification metals. We need gold. We are making the shift.
We are making the possibilities for the customers to move into the future of mine. We have a long-term growth, and it's coming from sustainability, from electrification, from all the elements that we have, all the trends. Just to show a little bit about how mining and sustainability joins together as a good combination, I'm showing you the next video.
This little treasure is one of the most important things for the future of this planet. It's tellurium, which is absolutely essential for solar panels. We also need more cobalt for batteries, and gallium for semiconductors, and neodymium iron for wind turbines, and many more. That's why mining is necessary to help building a more sustainable world. But we need to mine responsibly, keep reducing water consumption, and make as little impact as possible on the surface. We are moving over to electric equipment with zero CO₂ emissions. We are using automation to have the machines do the hard work underground, supervised and run by skilled people overground. This creates safer and healthier working conditions and makes mining more efficient with less environmental impact. That's why we have to attract the smartest young minds of tomorrow.
Mining is all about using the latest innovations to find the best possible ways to bring up stuff like this and use it wisely. The planet needs it. Future generations deserve it. We're mining for the future. Do you want to join?
Thank you, Mats and Brian. I think they deserve a warm applause. Indeed, a lot of interesting things happening in the mining space, and clearly so that Sandvik has a very strong position with our digital solutions and BEVs to capture the demand trends that we are seeing. We will now move on further down the customer value chain, listen to a bit more on the mining trends, but also the infrastructure and sustainability trends in our favor. We will also listen to fantastic opportunities that Sandvik has to address the challenges with energy and water consumption. Please welcome me. Oh, please welcome me. Please join me in welcoming Richard Harris, President of Sandvik Rock Processing Solutions.
Thank you, Louise. We will share with you today our growth journey in eco-efficient rock processing. I'll start with describing what drives our business, and our offer, where we're located, and I will be helped by my colleagues, Martin Nyström, Head of Stationary Crushing and Screening, to describe how we are leveraging growth in mining. Then Jonas Olsson, who's Head of Strategy for Stationary Crushing and Screening, will share us how we are expanding downstream in mining. We have two verticals that drive our business. First of all, mining and the demand for minerals. As Mats said, growing middle class has an impact and, makes an opportunity for us, the demand in goods, that link back to gold, copper, and iron ore.
We also have a growth in electrification and energy. And here, of course, gold and copper are very high on the agenda when it comes to growth. Extremely importantly for us is the deterioration in ore grades. There were questions when we walked around about this, and I don't think it's anything new, but it is very important, and it will drive the need for productivity, optimization, automation, digitalization, and also great aftermarket support, which is extremely important for our business. And last but not least, we then see that we will have much more demand for equipment as well as ore grades deteriorate going forward. The second vertical is infrastructure, which includes aggregates, demolition, and recycling, and this is around 50% of our business.
Growing urbanization will mean that we will need to invest more in renewing existing infrastructure, and also, we will need specialized equipment because where we act in those environments mean we need to be quieter, we need to be smaller, agile, and so on. And we also see that going forward, the construction segment will start to grow again after a softer period, and that will be backed very much by a stabilization in GDP, also after a dip. Sustainability, of course, is at the heart of everything that we do, the green transition towards electrification and renewable energy. In all the operations that we serve, the need to reduce the amount of water consumed, the energy consumed, and CO₂ produced will certainly drive the need for technology, automation, and digitalization.
This is how we will deliver an eco-efficient future in rock processing. So today, you had the chance to walk around, and we showcased our offer, and you saw outside in the wonderful weather there, our range of attachments. We have market-leading offer there for breaking and also recycling applications. You also may have seen on our booth down to the bottom left there, where we talk about our mobile offer, very powerful, agile, safe in operation, and here we will be electrifying our offer up to 90% by 2025. We have for a long time been at the forefront when it comes to crushing technology, but recently, with the acquisitions of Kwatani and Schenck, and high-capacity screening into our portfolio, now we can pretty much size and categorize within any challenge we now receive.
And you'll hear a little bit more from Martin about that, how we are leveraging our great position in mining. So as we have grown, we have increased our geographic reach quite significantly. You will see in black the legacy operations we had around the world, and before the acquisitions, we're very much focused on the Northern Hemisphere. With the acquisitions, now we are global. We are 50%-50% northern to southern hemisphere in our business split. We are much more even when it comes to mining and construction also. And importantly, and you don't see it here, we have a fantastic network of sales and service all around the world. In other words, maintaining, replacing, repairing equipment for our customers, either through our own employees or through a great network of dealers, which is more applicable to the infrastructure segment.
In the end then, it's not just about, you know, the great offer that we have, where we are located, and what we can offer. We have to share our know-how and create value with customers. I think then it's better for Martin Nyström to explain actually how we, how we achieve that. Martin?
All right. Thank you, Richard. I thought we're in Tampere today, and it's pretty cold, so we'll start with a very sunny picture from Australia. And in this site, we are processing 10,000 tons an hour, which is the reality of our customers, and of course, also a reality for us. And I think this underlines very much the shift along the lines, so we make the shift that we have across the group, and also the shift that we're making in our business. The way we do that is by expanding and leveraging on our strength and position in mining. I'll come back to that. That's really about existing customers growing with them, but also with the wider offering, bringing new customers into our revenue base. The second part of driving profitable growth is really about growing the aftermarket business.
We have been growing the aftermarket business organically. We have also acquired more aftermarket business. This is key for us when it comes to driving profitable growth, and it's equally important to be resilient through the cycle. Thirdly, we are going to drive the shift towards more sustainable rock processing, and Jonas, who will come after me, will go through into that in more detail. But we have a unique opportunity to work with our superior crushing technology, expanding the application window. It's not only good for us, but it's certainly also good for the planet. More to come in a few minutes. We looked a few years back at what we are, where we are, and also where we wanna be. We used to be a crushing specialist, specifically focusing on cone crushing. Very strong in crushing.
Roughly one-third of our revenues came from mining, and almost half of our business was aftermarket. And we looked at, "Okay, is this the positioning we want to have? No, we want to drive more mining." Why so? Well, mining is growing faster generally than infrastructure. The equipment in mining runs more hours, consumes more aftermarket parts, so it's, generally speaking, a good business to be in, growing faster at over average profitability. So as Richard mentioned, in 2021, we acquired the African leader, Kwatani, which is the leader in Africa for screening solutions. And in 2022, we acquired Schenck Process Mining, headquartered in Australia. And these two form a really strong foundation to build screening leadership to complement the position we have in crushing.
This has also made us more of a mining player, so going from 33%, we're almost close to 60% by now. And we've also added aftermarket to our portfolio, making us more resilience, more resilient and more profitable. This also makes us a lot more relevant together with our customers, and I'll come back to that in the next page. But having crushing and screening tightly combined makes us a lot more relevant for our customers. That being said, being the recognized leader, already today, 100% of our stationary equipment is electrified, and they're all supported and powered by digital solutions, such as the one you looked at and we showcased in our booth. So being more relevant and having a more, having a broader, wider portfolio, what does that mean in the context of our customers?
So we will look at this, this picture, which is a very high-level conceptual picture of what happens in our part of the value chain. It starts to the left, where the material from the mining process comes in. So after it's been, we have done the drilling, the blasting, and, and the loading and hauling, it comes into the process. Here the material is, there are large rocks, small rocks, and it's all mixed, and step by step, we're bringing that size down, through crushing, screening, grinding, in some cases, separation, and then we get to the final product. Products we, we know as iron ore or copper, gold, et cetera.
Before the acquisitions and what we used to be, we used to be very strong in the primary crushing and the secondary crushing stages, but those were really the key touch points that we had with the customers. If we then look at where we are now after these two acquisitions, we've added large screens or high-capacity screens. We've added a lot, a big chunk of aftermarket. But more importantly, we've also added a lot more touch points with the customers, making us more relevant in the value chain. That's great, because we can optimize this for the customer, but it's, and we can also optimize not only the equipment itself, but really the whole process. And of course, that gives us a lot of opportunity for sales synergies as well.
So becoming more relevant, having a wider offering, what does that mean, and how do we drive growth from that? Well, already in the acquisition processes, we looked at prior experience for how do we make this a success? And we've developed three different principles for how we do this. The first essential area is about one face to the customer. So all around the globe, we have now combined our sales and service teams. They're there to drive the customer experience, they're there to drive service and support for our customers, and they're there to look after all the sales opportunities that we have naturally in the process. We've done very good progress with this since we acquired both companies. Secondly, it's about strengthening the portfolio. In other words, make the most out of the combined offering.
Here we have started to standardize and harmonize the offering to maximize customer value. But we have also started to do a couple of new development projects in areas where there is big potential, but we have wide spots from a sales point of view. This will naturally take a few years before it's finalized, but in a few years' time, we'll certainly have the absolutely most competitive compelling offer in this area. Last but not least is what we call eyes on the ball. Making these acquisitions, bringing people and bringing companies together is all about bringing people together to work on the execution plan. Focus on the most important things, don't try to fix what's not broken, and be very quick on our feet, getting things done in a quick and efficient manner.
I think also here, we have done great progress in the last year. So that all sounds fantastic. What does that mean in terms of driving profitable growth? Well, first of all, we have acquired revenue at a non-dilutive profit level, in itself, really good and not that easy to do in our business. Secondly, we now have more organic growth opportunities in line with our long-term plan. Here, I'd say we're targeting between 2019 and 2025 to 4-fold the revenues from screening. So it's a, it's a big shift in itself. Thirdly, we have identified to date more than EUR 150 million of sales synergies that our frontline teams have started to identify. This is not something that will materialize next month or next quarter. This is a multi-year journey.
But really good work done by the teams, and when we look for synergies, we talk about them in three different buckets. The first bucket is where we have a relationship with a crushing customer, where we can sell screens. Roughly 40% of the synergies come from this. Second area is around selling crushing equipment to existing screening customers, so coming back to the value chain. And the third bucket, roughly also 30%, is we now have a combined offer, which means that we can compete in more deals and be more relevant in more deals, deals that we couldn't make before. So we're very, very, very happy and very pleased with the great opportunity. We've done a good start, and there is certainly more to come in the next years from this journey.
Speaking about the future journey, I'd like to invite Jonas up on stage here to tell you a little bit more about how we see the development of sustainable rock processing going forward.
Thank you, Martin. Did you know that 6% of the world's energy is consumed in the mining industry? In absolute numbers, this will grow over time with the fundamentals that we've heard here earlier. It's the green transition requiring more minerals and the larger population and, and urbanization, and then the decline of ore grades. Looking at the distribution of the total energy in, in mining, from rock extraction through rock processing and the separation of the minerals, we see a large chunk being consumed in the materials handling section, dominantly diesel powered load and haul equipment, and this is being addressed by SMR, where the innovative electrified offering that we've just seen. But the larger chunk is the consumption of energy in grinding operations, 40%, and that is 2.4% of the world's energy. It's a huge number.
And to get some perspective of that, that is, the aviation consumed 2% of the world's energy in 2022. So 2.4% of world's energy is consumed in the grinding operations. It's a big number. Unfortunately, most of the volume is processed in conventional tumbling mills with very low energy efficiency, less than 5%. That means 95% is not contributing to the size reduction that we want. Crushing, on the other hand, consumes only 4%, but has a significantly higher energy efficiency, 50%. So Sandvik, we're committed to reduce the energy in mining, and by shifting from endless grinding into more crushing, making that shift, we can save substantial amounts of energy in our industry. And knowing also that crushing is a dry process, so at the same time, we are saving water.
This is a very common flow sheet in the mining industry, where the ore is processed through three stages of crushing and screening, followed by conventional tumbling mills in several stages. Most of the time, we see the mill feed coming from the crushers to the mills being quite coarse. 12.5 millimeter, what's in the industry called as half inch. Half inch can be larger than half inch sometimes, I can tell you. An optimized Sandvik crushing and screening circuit can provide continuously 6 millimeters mill feed. This enables the shift to crush more and grind less. And when doing so, we can also increase the downstream throughput through the mill circuits. We increase the energy efficiency per produced ton, and very linked to that, the operations cost is also reduced.
A great example of this is our plant upgrade done at Agnew Gold goldfields in Western Australia. The operation was set up like you saw just before, the three-stage crushing and screening circuit, providing a coarser feed to the grinding circuit, and then there was gravity concentration for the gold thereafter. In 2020, there was an upgrade of the crushing operations. This was enabled by Sandvik primary crusher, second and tertiary CH 800i cone crushers, followed by the Schenck screening solutions. Following the upgrade, the finer mill feed of 6 mm increased the throughput by roughly 10%, and the energy saving between 10% and 15%. Again, very linked to the operational savings of $1.5 million per year, giving them a three-year return on investment.
So not only did the upgrade eliminate the earlier challenges, it also made Agnew an effective and profitable operation. So Agnew is a great example of what we can provide to our customers today. And the efficiency upgrades can be applied to over 600 mines around the world, with installed inefficiency and low efficiency grinding mills. But our ambitions goes beyond that. As our pending research and innovation is extending our application window downstream, with the ambition to replace ineffective grinding with eco-efficient rock processing. Over to you, Richard.
So I think you can hear that we are extremely strongly committed to addressing this energy challenge within the mining industry, and it's very much in focus for us. Another area where we see great opportunities is in demolition and recycling. Much of the material generated today is not recycled. Society, regulation, and general views in the world will drive us more and more to recycle more. I think this is very clear, and we have a very well-developed offer for this space. To put this into context, 4 billion tons of aggregates used in Europe and only 7%, a staggeringly small amount, form part of the circular economy. If we turn to our biggest market, which is the US, 600 million tons of construction-related debris.
85% of that is concrete-based, and we have a great offer to recycle concrete-based material, which not only reduces landfill, which is environmentally sound, but also in using recycled material, the cost can go down, and it can be very effective for use in, in urban areas. We're very well positioned for this. We have a great mobile offer. Our offer was designed for quarrying, but also with recycling in mind, so we have the right size units for the right size application. I said earlier that we will be electrifying that offer to 90% by 2025. That's also really important, so we can connect to grid in the right location, and we're not using noisy diesel engines as well in those kind of applications. What's also great for us is we have a one-stop shop for attachments.
So you saw the attachments outside. That's the best in quality, the best in performance, and the best in overall cost of ownership for our customers. And we will seek also to expand that portfolio through strategic merger and acquisition plans going forward. If I then take a look at our profitability journey, we have grown significantly since 2017, and more steeply recently. Our EBIT margin has grown from 11% in 2017 to an average of 16% from 2019 to 2022. Going forward, we need to demonstrate and will demonstrate resilience in our margins, and there are many levers that we could pull to make that happen. The biggest of which is recurring revenue in the form of aftermarket.
That's significantly grown from 50% to around 60% in the first 3 quarters of this year, which of course helps a lot. The second thing is supply chain. We have the ability to insource and outsource, depending on cycles and dual sourcing more and more on major components and assemblies in our operations. And thirdly, we have more and more made use of flexible hours and flexible contracts within our factories and operations. And I said many more levers we can pull there. And we expect a normalized leverage going forward on incremental volume of around 25%. Looking forward then, we have targets for growth, aftermarket penetration, and for electrification, and how are we doing? Well, on the first one, on growth, we're slightly ahead of where we thought we would be.
In aftermarket penetration, we're around 75% there already, and we are two-thirds of the way there when it comes to electrifying our offer. So we are showing good progress on our strategy execution to put us into our future position. So then if I, if I summarize then, first of all, our journey is very much customer-centric. We're very much focused on the value we can add to our customers, and we are leveraging and will continue to leverage the acquisitions we made in screening. We will continue to electrify our offer and deliver on that, that commitment, that will allow our customers to make their transition as they are able to connect to green energy sources as they transition away from fossil fuels.
We will continue to capture a larger proportion of aftermarket as we focus in that area, particularly in the mining space, and we will continue to expand downstream with the great technology we have, which is not only sustainable, but of course, very attractive for our customers because into the bargain, we save them money and make them more efficient. Productivity and performance will continue to be supported by digital solutions, and earlier on, I hope you got the chance to see our booth showcasing SAM, where we bring information and people together as a basis for a seamless, controlled future in rock processing. And in the end, driving sustainability in every way we do our business is our way to deliver an eco-efficient future in rock processing. And if you don't remember anything other than one thing that was said today, crush more and grind less.
Thank you.
Welcome back. Now it's time to listen to how Sandvik has strengthened its positions and abilities towards the manufacturing industry. Please welcome Nadine Crauwels and Mattias Nilsson, President of Sandvik Machining Solutions and Manufacturing Solutions.
This is our view on the future of manufacturing. Ah, come on. Now it comes.
Yes.
Perfect. Let's start over. Manufacturing of the future is digitalized and automated from design to finished product, supporting the transition to a sustainable world. We think this is a really inspiring world to be in, and through these presentations we have for you this afternoon, we will show you how we progress towards it.
Already today, we have a strong position in this value chain of our customers, and this leading to a broad offering that we can provide them from delivering efficiency and sustainability. Our position is strong in every single part of this value chain, but to really connect everything together, it will take time, and we will take it in a stepwise approach by connecting the different parts in a stepwise manner. Another part that is really important to look at is that we will look at portfolios, strong brands, a lot of product names, that are forming multi-brand opportunities, at the same time remaining agnostic. So it will also increase our ability and enable further growth. Sandvik Manufacturing Solutions will address the customer value chain from the design to the verification in an overarching solution manner, but also in very concrete point solutions.
Sandvik Machining Solutions will focus on the machining part of the value chain through strong positions, knowledge, but also the strong brand names. At the same time, we know that those phases just prior to machining are so much linked and impacted by machining and the right choices. We also are engaged in the shop floor solutions and the product engineering.
Since the establishment of our two business area segments, SMS and SMF, we have captured a lot of opportunities, sometimes delivering separately, sometimes together, towards our different parts of the customer value chain in discrete manufacturing. We have started to realize synergies, such as product integrations or aligning on priorities for joint development, and with our combined know-how that we have across our organization about customer needs, about how we can improve products, about feasible go-to-market models, synergies, opportunities, and capabilities needed, it's time to build further on this to add more customer value together. Since the recent years, Sandvik has acquired a number of companies that are leading in computer-aided manufacturing and industrial metrology. Now, we have also moved CGTech and ICAM into the SMF portfolio, where they can leverage synergies from being together with other software brands in terms of common business models, product integrations, new technology development.
But in SMF, they are also able to leverage cross-selling opportunities that we have explored with other divisions within SMS, and also to maintain their brand neutrality towards other cutting tool suppliers.
Another area that is important is, for instance, tool management. Tool management is part of this shop floor solutions and logistics, and is a great business opportunity to growth in the coming years. TDM Systems and Cribwise, being part of this, have very established positions. At the same time, are they strategic gateways into this market. Continuously, these two brands have been working on increasing customer experience, either to make it easier to adapt, have access to much stronger and more quality tool data, and the connection, the possibility to link to the strong tooling divisions and brands gives, of course, extra synergies from a customer perspective on efficiency, and of course, a business perspective towards Sandvik.
Here, we also need to say that we continue to invest, and the investment is really focusing on taking another level with the new operating model, and at the same time, working on an end-to-end solution that is modular and scalable on a cloud-based solution. All of this together make it very natural that both Cribwise and TDM Systems has a strong link to the tooling divisions, adding value, synergies, also from a customer perspective. So from that point, both of them have been moving under the tool flow solution umbrella from Sandvik Manufacturing Solutions to Sandvik Machining Solutions. Another review we have been doing is around additive manufacturing. Additive manufacturing is focusing on powder. Powder, but at the same time, also giving strategic guidance.
Here, when we have already Wolfram with the powder in Sandvik Machining Solutions, the links and closeness and synergies and opportunity to take both of them to the next growth level is bigger being part of Sandvik Machining Solutions than the Sandvik Manufacturing Solutions that is more focusing on software solutions. So from first of October, additive manufacturing belongs to Sandvik Machining Solutions, and from the first of January, we will create a new division that we will call Powder Solutions. This Powder Solutions will contain the three elements: the existing Wolfram, together with additive manufacturing, and also Buffalo Tungsten. And Buffalo Tungsten is an acquisition that has been signed recently, and, according to the legal procedures, planning closing before end of Q4.
So we have strengthened our portfolio and our position through a combination of in-house development and acquisitions. And, with these assets, we have taken yet another step towards closing the loop of manufacturing. In component design, we have a SigmaNEST and Cimatron with CAD capabilities, and through DCS, we have also expanded into tolerance simulation and quality data management. In computer-aided manufacturing, we have a leading position in terms of number of installed seats in the market, and we did a bolt-on acquisition to Mastercam when acquiring Postability earlier this year. TDM Systems and Cribwise, they are key assets for us to digitalize the tool room for our customer, automating it, but also leverage, leveraging the sales channels and the customer relations on the shop floor that we have across the different tooling divisions in SMS.
Of course, in machining and additive manufacturing, we have leading positions with our cutting tools, our powder, and the machining and printing knowledge. In verification, our three companies are really enabling the automation of industrial metrology, moving that more in line into the production. We have a portfolio of strong brands with leading point solutions, while now also combining our joint knowledge, identifying new use cases where we can use these capabilities to create additional customer value.
Indeed, a very, very strong product portfolio. However, to really close the loop in the manufacturing industry, in component manufacturing, we also need to secure we can truly deliver on this end-to-end closing the loop. This end-to-end closing the loop will demand from us that we continue to work hard on further automation and also to digitalize further the full value chain. As you can see on this picture, there are many data flows. Data flows between each part of this sequence, and we are identifying new data flows almost every day.
Because the richness of everything delivered through each different step is huge, and we need to capture that in a good way, first of all, on the quality, and then how to really work with it and give synergies and added value. These parts are very critical to us, and we identified a few very concrete one already.
This means, for instance, that we know that the Computer-Aided Design and the Computer-Aided Manufacturing need to be fully integrated to bring fully leverage. On the other hand, we also know that all tool information, and then I don't only mean the nominal data, needs to be part of the CAM systems. Then, if we think around this verification, the quality data management is critical, and the inspection or the Computer-Aided Inspection needs to be very close to the monitoring in the machine, as you have also seen this morning on the demonstration. These are examples that connect one point to the next in this very logical order. But as you can see also on this picture, there are other arrows that are looking like jumping different stages.
But these are, of course, these extra flows that, for instance, if we monitor the machining parts, we learn a lot on what to optimize and how to improve the CAM part. At the same time, those monitoring on the machining can also give us a lot of information on how does this component need to look in the next generation design. At the end, it is all about capturing that knowledge and data to be able to be proactive. Proactive, preventive, and ultimately create self-learning systems. With that said, we also see that we are having a strong position, and we are positioned very well among our peers to succeed in this closing the loop in component manufacturing.
Together with Sandvik Manufacturing Solutions, who have 400,000 installed seats, and Sandvik Machining Solutions, with a reach of more than 100,000 customers, we can create truly many synergies to enable cross-selling. Not only that, you can see on this slide on the bottom, the wealth we have on brands, brands with strong products and strong positioning, and in a multi-brand setup. We offer our customers the choice to combine those things that bring added value, what they need for their value chain.
And our product integrations, for instance, the recent integrations we have done with the tool library from Sandvik Coromant into our different CAM software, that gives the user of the software full access to a lot of the different product data models that they use from our different tooling divisions, helping us also to sell more cutting tools. So the combinations of our offering and what that delivers really creates customer loyalty and stickiness. And we will hear more about that now, because now it's time to invite colleagues from Sandvik Coromant, Mastercam, and CGTech. I would like to invite Helen Blomqvist, Gene Voakes, and Alexander Moffat, together with Louise, up on stage.
Hello, welcome. One of many acquisitions that Sandvik has done throughout this shift to growth strategy period is CGTech, a market leader in software for numerical control, simulation, verification, and optimization. Helen, can you tell us a bit how CGTech has supported Sandvik Coromant?
Absolutely. In many different ways, and I think, Matthias mentioned it already. Actually, CGTech helps Sandvik Coromant to sell more tools, as we are exposed earlier in the manufacturing value chain, where the decisions on which tool to use is actually made. And then also, our tooling data is fully integrated into the CGTech software, so Vericut and Vericut Force, and that is also helping us to jointly also improve the performance and efficiency with our customers. Then, of course, for our yellow coats and our sales force at Sandvik Coromant, to have CGTech software in their portfolio, that is a true benefit because they can realize values, and they can also prove efficiencies and return on investments then at the customer site.
But then last but not least, we are also a happy customer, of course, of CGTech, as we use the VERICUT software and the VERICUT Force in our own production. And together, we work on improving both ways then to deliver more value to our customers.
A lot of interesting things going on at CGTech. Gene, can you tell us a little bit what's in the works?
Sure
in terms of the technology roadmap, and how that could benefit other Sandvik businesses?
Sure, absolutely. So really central to CGTech is optimization and performance for us. We actually feel that with our VERICUT platform and its modules, we can make our customers over 30% more efficient by verifying and simulating our customers' data regardless of whatever type of industry or application and machining strategies that they may have. So what we're embarking on right now with our VERICUT platform is very transformative for us, in taking the VERICUT platform and building a SaaS offering on top of it, so we can extend our reach to a variety of different industries and customer sizes. And we also feel like we can work very, very closely with the other Sandvik sister businesses in executing on that commercial reality.
Even though the CGTech and the VERICUT platform is product agnostic and an open offering, what are some of the benefits to be part of Sandvik?
Sure. Yes, that's true. So today we work with over 60 machine tool manufacturers. We work with over 20 CAM providers, including Mastercam, GibbsCAM, and Cimatron, and over 15 tooling partners. As you heard, Sandvik Coromant, Walter, Seco, and TDM, have all been longtime partners of CGTech. But I think one of the things that's very unique for us is we can share our technology roadmaps, we can share integration opportunities, new value-add solutions for our customers, but really what might be the most exciting opportunity is being able to share the opportunities on customers, and cross-selling and synergies.
Just within this last month, we've been involved at CGTech with a few different customer events with some of those sister businesses that I just mentioned, where we've been able to interact with a much higher level of leadership from those customers, and that's a really unique and new thing for us at CGTech. We're very excited about that.
Another acquisition that, Sandvik has done during 2021 is Mastercam, actually the most widely used CAM brand in the manufacturing industry. Sandy, can you tell us a little bit about how the strategy has evolved since acquired by Sandvik?
Okay. Yeah, we've seen a couple of sort of strategic developments. The first is that we've now actually started work on developing the next generation of Mastercam's machining algorithms, which is obviously very exciting for us and very important for our future. The second thing is that we're now able to look to grow inorganically, and this year we've seen our very first acquisition, a company called Postability. This company manufactures post processors exclusively for the Mastercam customer base.
One thing I think the audience is curious about is performance. Can you tell us a little bit about that, and how has Mastercam performed?
Sure. Well, Mastercam's got a very long history of, of consistently strong growth. And that's carried over really into our post-acquisition period. And in 2022, I think, which was our very first full year with Sandvik, we once again recorded record results. So we're very pleased with that.
Finally, Helen, CGTech, Mastercam is just a few examples of the acquisitions that Sandvik has done, but we have quite some value-add software assets in-house now. And how has Sandvik Coromant in general taken advantage of this broad-based software asset?
Mm-hmm. Well, the basics of the Sandvik Coromant offering in general is very much about high-end knowledge, it's about solution, and it's also about our tools, of course. And we really see a huge benefit, of course, with this really broad portfolio of softwares that we have now, and combining that technology that we have in SMS, but also in Sandvik Coromant in that sense. And our customers, they are navigating in a quite complex sys- ecosystem, and we help to guide them, of course, by this combination of the, of the software and the hardware. And I think today, during the tour, you have seen some fantastic examples, of course, about this integration. You probably saw Cribwise very close to the machining station when you were walking around, so that's one example.
But also TDM Systems and Metrologic is a very good example where we combine our technology. But then for Sandvik Coromant, of course, to have access to the 400,000 seats that are installed, that gives us a great exposure. And as we have integrated the Sandvik Coromant, CoroPlus Tool Library into the CAM softwares, and today you saw an example of GibbsCAM integration, but we have also integrated into Mastercam and also Cimatron. And this is, yeah, it's a truly value add for our customers and also for Sandvik Coromant, of course.
Indeed. Great stuff, and exciting times ahead. All right, thank you, Sandy, Shin, and Helen, and we will welcome back Nadine to the stage.
Thank you. Efficiency, sustainability, growth, and resilience, all words that I will come back to now in this presentation around results and plans when we talk about Sandvik Machining Solutions. But let's start with some trends that we see that is happening in the market, that is impacting our industry and also Sandvik Machining Solutions. These mega trends, they don't change overnight, so we have seen them also on the previous Capital Markets Day. We have presented a similar slide, but there are some kind of small changes that I would like to highlight, and also how it affects us today. The first one, for instance, it's mentioning clearly now, slowing globalization, or we can also rephrase that and talk about increased regionalization. This, of course, partly due to the trade and regulatory restrictions, or also the supply chain disruptions we have seen.
We see that there is a much stronger focus on how to secure the business and the industries in a more regional approach. Then, the second part, around urbanization and growing wealth. Here it is clear that quality infrastructure, transportation, energy, it is boosted. It will get, by growing wealth, more demands, and also, of course, more goods and more component manufacturing. These growth are not the same in all areas, and here, Asia is sticking out, and especially from Asia, we can say 50% of that, market or region size is on China. At the same time, an opportunity, on the other hand, of course, comes with challenges. Then, we talk about the changing demography. We all know that we have an aging work population and workforce.
At the same time, we work hard on upskilling, war of talent, so we, as Sandvik, also have a very important task to be the employer of choice. At the same time, it gives us the opportunity in the industry, through automation and also digitalization, to increase productivity and also get tasks more automated. The last two ones you see here on the screen, sustainability and digitalization, they both have been accelerating in the past period. Sustainability, more from a demand from all our customers as they see the need, and first of all, the push towards us as a supplier to be on top of what we need to deliver to them. On the other hand, they also are on the journey to become themselves, in their operations, more sustainable.
As we are part of the industry we serve, we are in a good position to show, and we will come back to that later as well. The main thing in their focus is, of course, Net Zero. Digitalization, here we have been talking a while already around Industry 4.0. That remains, of course, but here there is a slight shift on not anymore talking why is it important or what, but it's a lot on the how. There is a lot more focus on new technologies and how to apply them, like how to work with big data, how to work really with artificial intelligence. That, of course, is also a benefit for us, as in part of manufacturing industry, we have access to a lot of data, and the better the quality, the more benefit we can get out of that.
Bringing these trends now a bit closer to our industry and to our machining industry, we always talk about slicing it in a few different ways, so let's start with segments. The segments on this slide, you see the four biggest segments we have in the machining part, and you see clearly the size of them in the number. In the circle, you see our market share, and then the bars, they are reflecting the growth rates in the coming years. Here you can see that all big four segments are growing. So there is all a growth, but in different, different rates. When you take automotive, automotive has the slowest CAGR in the coming years up to 2028, 2.4%.
Even though that the amount of vehicles in production, on the light vehicles, will increase from 85 million to 101 million pieces, still, also electrification is ongoing, and we will come back to that. On the other hand, aerospace is sticking out very clearly. They have a huge CAGR, 8.4% in the coming period. Here, of course, we know that until now, aerospace has not reached back the level of 2019, so it's still recovering from pre-pandemic period. That said, there is also an enormous pull effect and growth in Asia, increasing on the fleet. Not only the big segments are important, we also concentrate in Sandvik Machining Solutions on very smaller but faster-growing and also very attractive segments.
Like, for instance, you see here on the screen with medical, electronics, die and mold, and under the other umbrella, a few ones to highlight is, of course, machine tool builders is one, chip, and railway or others that are part of that other box, where you see a very good market share and also growth opportunity. Here on these ones, medical is an area with above-market growth rates, you can clearly see, for the coming years, and we have a great opportunity to gain market share. We have been adding acquisitions in the past years around that so that we can build on a more organic growth in the future, and that, of course, is also part of our plans moving ahead. Leaving the segments a little bit behind and now moving into the regions, the other way how we often slice our business.
Especially with this growing regionalization, it is really important to take a bit closer look on how these are positioned to each other. All of them growing, even though you can see that Europe is still on this picture here and now, the biggest region, but has the slowest CAGR for the coming period, 1.9%, versus Americas and Asia, who have above 5% CAGR for the coming period with a strong growth opportunity. Here, Asia, you can see in size, with that CAGR, by 2028, will be the biggest region. And knowing that 50% of that region is related also to China, again, a very important market. When we summarize this picture and we take all the segments together and the regions together, then we come to a 210 billion SEK total cutting tool potential in the world.
You can see that by end of 2022, we have been really catching up from a cutting tool potential in the market back to the 2019 levels, a 0% CAGR on the cutting tool potential, where SMS has been growing 1.1, so we have been outperforming the market during this year period. On the other hand, we all know that volume growth has been affected in the past years, really through all these different phases and happening in the different segments and the different regions. So it has been a challenging period from 2019 until 2022. When we look then ahead, we can clearly see that the upcoming period has a higher growth pace now than the past years we have behind us, up to a 4% CAGR, with really opportunities in the different regions and in the different segments I highlighted.
And on top of that, as I didn't show those numbers, but it is still the same trend, that the round tools are developing faster than the inserts, but both of them have growth opportunities, both on volume and on total growth. If we then go back now towards us and Sandvik Machining Solutions, how well are we prepared, and how is our foundation to really capture these growth opportunities moving ahead? We can clearly say Sandvik Machining Solutions is the global market leader, so we have a very strong position in the market, but also a very high degree of innovation. That high degree of innovation is very visible in these numbers you see up here. We have a lot of patent families, at the same time as continuously introducing new products that improve the productivity for our customers.
During the past few years, we have seen that it's not only product and new innovation that is really driving the potential to grow, but also the fact of having a really efficient logistic system. During the whole supply disruptive period, we could really differentiate ourselves with a strong delivery opportunity wherever in the world. The other part, what is a differentiator, is how many touchpoint and how quality touchpoints we have with our customers in the world. We have around 5,000 sales engineers physically meeting customers and really taking the value-added level up for them in their shop floors. But not only there physically, we also are increasing all the digital touchpoints, what, of course, is an added value to have those combined.
We are continuously investing in research and development, so we can secure that this high degree of innovation and these really great opportunities to capture this added value for the future is remaining on a strong level. If we talk about global leadership, we also, in the context of what I previously said, with increasing regionalization, it's important to say, yes, global leadership overall umbrella, but also a very strong position in each region separately. Europe is our home market, so here we are really strong, both in sales, in production footprint, R&D centers, logistics, and also powder supply. Everything that we need to secure our own production and our deliveries to our customers, but also to service to create added value towards them.
In both areas, America and Asia, we have also leading position and continue to work to strengthen our presence in these markets, both in sales and in footprint, and also in our powder supply, as we will come back to in the presentation. So we are well positioned to capture the growth, and last time, we also, in the same strategic context of Sandvik, we have the three shifts. We have the shift to growth, the digital and sustainability shift. The last Capital Markets Day, we emphasized the fact that for us it is important, in a slower growing market, to focus really where to gain market share and where to capture the growth momentum. Those six areas that we highlighted last time, they are still valid.
Taking in consideration, though, all the trends I've been talking about, we can say that the first two related to the insert position and the round tools, we have been refocusing them as well on saying like, "Yes, these are valid in the regions, in the premium segments." We are really going to take market share in certain growth segments, like medical. Aerospace is growing fast, so here we are really taking a combination of the products, strength, and of course, the growing segments. The third and the fourth, when we are looking into strengthening mid-market and growing outside of Europe, those are really fitting well in the context of this global presence in all regions, supporting and capturing the regionalization growth in the different areas, but also the local premium positions we can have in the different parts of the world.
I will come back to where we are on the automotive shift, as well as explaining how much we are, as a Sandvik Machining Solutions, also having on our radar regarding digital products and services. Starting first with these innovations and new products, let's start with giving a few highlights on our new inserts and new round tools we introduced in the last period. On the top left corner, you see a milling cutter introduced by Seco. This milling cutter has increased efficiency for our customers, less energy consumption, and at the same time, you see, when you look very carefully to the insert, it has four cutting edges instead of two.
So a lot of added value, and also our innovation is also here secured as it is with two patterns on the design and one more on the ornament for the diamond pattern you can see on the milling cutter. On the bottom right, you see CoroCut 2. Those are a versatile parting and grooving inserts. The most important portfolio, almost from Sandvik Coromant. This is the next generation of parting and grooving inserts that are more versatile, more secure, more reliable, and usable in a broad segment in automotive, aerospace, and general engineering. These inserts are around 10% of the Sandvik Coromant turnover, so this is a really great contributor, and it is introduced as we speak and growing in sales and a great added value for our customers, as well as a market share gain for us.
On the top right corner, you see a milling cutters that has been introduced with Walter, and those end mills are, have, at least in the last past years, have been doubling, their turnover. These milling cutters are also not only increasing the possibility of using higher speeds and feeds, but also, again, focusing on sustainability and less energy consumption. The very specific thing with these ones as well is time to market. The trends are changing fast: new materials, new demands from customers. It's all about the reaction time we can bring innovations to the market, and this has been working in a new agile way of working, so we can answer those needs in a faster way. And that brings me to the topic of round tools. Last Capital Markets Day, we talked about leading position in round tools. Where are we?
Well, we said we want to become top three. We are top three. End of 2022, we reached the third position in the Round Tools ranking on the global market. That is resulted out of a growth that is over four times market growth and has been giving us the opportunity or the possibility to increase our market share with more than two percentage points. This has been part of a growth journey that is built on own organic growth through the innovations you just saw on the previous page. But on top of that, very good additional acquisitions we have done in all different regions: in Americas with GWS, with Sphinx in Europe, but also different segments. Sphinx is, for instance, in medical. Remember, the fast-growing segment as well micro tools.
So the combination of acquisition, organic innovations, has been brought us to this third position. At current, we are trading more into a second position, so we are even surpassing this third in line. Shifting from those two that I saw on the growth side, like inserts and Round Tools, we also talked about regionalization and really take a global position, and taking growth momentum of what I showed Americas and Asia previously on the slides. We have regional plans because we cannot really use the same plans for all regions. If we think around Americas, we are focusing a lot on the U.S. We have a very strong market share and position with all our premium brands, but they are working majority-wise towards the standard inserts and standard products. We have acquired GWS, what is a complement on really working towards specials and customized solutions.
They have been acquiring additional elements to grow into their footprint in the U.S. We also work in a more fast-growing market, Mexico. There is a lot of nearshoring in Mexico, and we're well positioned there with sales organizations, but also production of footprint. When we think around Europe, it needs a different approach. With, again, a good market share in Europe and a strong position, we are increasing share of wallet through added value and also working on these combinations that we will talk around, and we have seen with SMF and SMS. Here on top, we are focusing on really growth markets: medical, automotive, aluminum, and also aerospace. When we look at Asia, Asia is growing fast, and here we split it again. In China, we are also working on two roads.
We are working and increasing and continue to work on an international brand, so all our premium brands in China are focusing on the right adding value segments there. At the same time, we also acquired Yongpu, a local premium brand, so that we can really complement and gain from that combination. In the rest of Asia, we have a strong footprint and business in India, in Japan, and are working as well within Vietnam, Indonesia, and Thailand as great market and growing opportunities. Looking a little bit more deeply on what was then the results and change we have done in North America. You can see here in 2019, we had 20% market share.
Now, we are at 25% market share, and that through organic growth, again, with our premium and our good market position, but we added on this complementary business with GWS and then as well, Balax and Peterson, to have a full portfolio of customized solutions together with standard solutions in the US market. At the same time, the regionalization also brings for us an opportunity and a strength to have our full offer there in the sense of a full supply, so that we can secure that our products can be continuously delivered to our customers. So we have signed for an acquisition with Buffalo Tungsten, what gives us then also a powder footprint into the North America and the US market. Moving on then to the fifth area that we talked about, and that was automotive shift.
Electrification is continuing, and we know it has been accelerating each time that we talk and if we meet, it is an acceleration of the move to electric vehicles. Here, we have been doing a deep dive, and that deep dive really emphasizes the fact that for us, the total cutting tool potential is remaining stable in the long run, and I will explain why. What we see here on these numbers, you see the different categories of vehicles. You have the light vehicles, and you have the medium heavy vehicles. You can see that the medium heavy vehicles are growing with a CAGR of 3%, so it's higher than the 2% of the light vehicles. On the other hand, with a higher growth on the medium heavy vehicles, they have a slower electrification, only 13% versus the 47% of the light vehicles.
So a slower electrification, but a higher growth rate. One important factor to take in consideration is the machine intensity. How many inserts and tools we need to produce one medium or heavy vehicle is 5 times as high as a light vehicle. So even if it's only 4% of the total production volume, that makes it almost 20% of the cutting tool potential. Knowing that, and knowing how we in SMS are having our sales and our business, 60% comes from the light vehicles and 40% comes from the medium and heavy vehicles, where we have a 25% market share and a strong position. If we take all that data and put it maybe in a more clear overview, I would like to introduce you to this graph.
Here, you can see the journey from 2022 to 2030, where you can see the full cutting tool potential and also the mix change of vehicles. And this here, you can see that the mix of the vehicles in 2022 looks totally different when you look in 2030, because of course, combustion goes down, electric goes up, hybrid goes up, and all these machine intensity factors in consideration, you can see that by 2022. First of all, it will be a growth on the cutting tool potential until 2025, as we have more vehicles in the growth rates, and also supporting from the hybrids, as you know.
But then, of course, further down to 2030, it will slightly decrease, but at 2030, we are still at a 0.2% CAGR, so slightly above the level of 2022. So the market, in this case, developing from a cutting tool potential in a flat way. It creates, though, a really good opportunity in the area of aluminum. Aluminum is a material that, within the electrification, gets a lot more attention because the weight is so lower, and for that reason, also very much wanted and needed in these electric vehicles. And not only in the electric motors, but also in the battery housings, but also in the carrying surrounding components to reduce the weight. So overall, it is a strong growth. As you can see that within the cutting tool area, related to aluminum, we see a growth from 19%-28%.
So this gives a great opportunity for us to grow as SMS organically, but also through acquisitions, as we have been showing, like with Preziss and Frezite. If we put that all together, what does it mean then for us in Sandvik Machining Solutions regarding the automotive segment? Here in the automotive segment, we see that we are going to grow based on this flat market share, our aluminum opportunity, the strength in the heavy vehicles, and our position potential in the light vehicles. We see that we will reach here by 2030, almost a SEK 9 billion line. And you can see that 90% of that growth and that achievement in 2030 is based on organic growth and only 10% on acquisitive additional bolts on that we will do to grow in that market.
Moving into the last part, then, of the growth, the sixth area, we talked about digital products and services. There is an increasing demand for our customers that comes and ask us to support them on their journey to productivity, sustainability, and also profitability. Here, we work a lot within Sandvik Machining Solutions to offer them, through projects and consulting services, additional knowledge and additional abilities to improve their workshop floors and their work procedures. And that can go, when you start from the left, it can go from the right tool recommendations, the tool path you have seen also in the demonstration earlier this morning. It can go through the tool management, also, like the Cribwise vending machines you could see on the demonstration, but also on new business models and machine monitoring in the later phase of this chain.
Through the move of the TDM Systems and also Cribwise, that we highlighted earlier in the presentation, we create an opportunity to really address strong pain points from the customer that they are facing on the shop floor. On the shop floor, with all these very expensive machines that need to be utilized in the most optimal way, at customers, they don't like to see failure of tools because it is idle time on the machine, it is not efficiently use of the total productivity opportunity. Also, the inventory can be much more optimized if we have the right data available. That we can do when we work with TDM Systems and Cribwise and link that together with the tooling divisions.
We can work around a much more optimum setup and do that, as you can see on this picture, in the phase before you get activity on the machines. So you can use really your machine time and your machine park in the most optimal way. But instead of me talking more around this, it is great to listen here a bit to a customer who has this example, running.
I think the things that prompted us to get Walter in here was, mostly to help with our setups. We found our setups were taking an extremely long time.
The benefits for Apollo's customers would be that there's a reduction in the number of NCRs, non-conforming parts, and also if the efficiency on the machine is better, the lead time for delivery would be better as well. So you get better lead time, better quality, better parts, faster.
Part of what we offer with tool management services is a digitization of the processes on the shop floor, and this is where the biggest value is at the moment in using tool management services in your processes, in your manufacturing facility. We come in, and we take old school processes or existing processes that might not be as efficient as possible, and we come in with our suite of tools and our experience in using our tools, and we help digitize your processes on the shop floor so that you can achieve, or you can realize the most advantages from Industry 4.0 implementation in a manufacturing facility.
The immediate benefits that Apollo has recognized in the early days of implementing this process is that we have centralized their entire inventory, and we have taken all of the individual piles of tooling and necessary items for creating components here at Apollo, and we've centralized them in one location and digitized it so that you can immediately find what you're looking for. Well, I think, if someone approached me, I would tell them that it's it's a long process, but in the long run, it's definitely worth it.
and, you know, it's been a real eye-opener for sure.
So this was a great way on seeing how everything can be combined in one offer that really provides productivity in the full solutions. With this, I will end the presentation around the six focus areas that we have been talking about before, and I just want to highlight that these growth areas are really built on two legs. One is the organic growth, and the other one is the acquisitive part. And here you see a really total picture on how this total acquisitive part has been contributing to our overall results. And this overview doesn't only highlight the overall contribution, both on a growth momentum, but also on EBITDA, as the growth of these acquisitions that we have recently done has been having a higher growth level than SMS overall, and the EBITDA improvement has been higher than the revenue improvement.
So here, a really truly value creation. But as we said, we also work with these acquisitions in a very focused way. So with all of them, if you see them on this map, all 12 of these acquisitions have been really focusing on all the six areas we explained, and that is around growing outside of Europe, supporting the round tools, but also when we think and look at the European part, it is a lot around the growing segments like medical or also in the automotive aluminum shift. Here also on Asia, and we also want to get into this local premium. We have Miranda Tools in India and Yongpu in China. So highlighting and supporting our overall growth journey is very visible in this total overview and picture.
When we are done moving away from the growth shift, we talked about two other transitions, like the digital shift and also sustainability shift. The digital shift we highlighted just in our presentation before with the digital products and services, and I want now to have a, a short attention as well to the sustainability shift. As we said, sustainability is high on the agenda from our customers and really focusing on net zero. It's all about reduce, reuse, recycle, really on how can we help to create circularity, reduction of CO2 emission, and energy efficiency. As we are part of the industry we serve, of course, here we have a really great opportunity to show the way and also invite customers to see how we work with it ourselves. We are introducing new products that continuously innovate, but also become more productive and less energy consumption.
At the same time, we also have more reconditioning of tools in our round tool offer. We recycle, as we heard already from Stefan as well in the introduction this morning, more than 50% of the tools is recycled. Here we have, of course, a continued ambition to add other services to this portfolio, and here we put it under the umbrella of sustainability services. But I would like to invite Helen Blomqvist again from Sandvik Coromant on stage, to let you listen first as well to a customer who has been working with round tools in this context as well, but then also to really dive into one of the services that we call Sustainability Analyzer.
Our core competence is the extensive experience we have in machining and processing of titanium, superalloys, aluminum, steel, magnesium, and copper alloys. To stay competitive in the industry, AIP embraces changes and new manufacturing technologies. We stay up-to-date with evolving technologies, making significant investments on the flexible manufacturing systems, automated solutions, and digitalization for the continued success and continued growth. And of course, Sandvik Coromant covers all of these expectations with a reputable proven track record in the industry. We engaged very good with Sandvik Coromant within the last 10 years. Sandvik Coromant is 95% tool supplier to our automation lines. They have good assessments, where they come and work with us to understand our needs, and they provide us the best customized tooling solutions.
After the global raw price and the COVID, we see that the aviation industry is recovering today with the increased demand in the important programs that it works to. We are looking at a significant growth with the long-term programs we already signed. We kept a stable trend within the last three years, but beginning with the next year, we expect higher production than we had in 2019, and we look for an average of 10% annual growth within the following years. We already have a very good relation with Sandvik Coromant on the tool lengths, and we can focus more on the new digital applications solutions in the future.
Well, it's always fantastic to listen to the customer voice. I would really like to build further on the sustainability shift. We would like to be part of the solution, and I would like to introduce a new sales tool that we are introducing now to our sales force, and that's the Sustainability Analyzer, where we can minimize emissions and also the climate impact.
Sandvik Coromant has been helping customers to unlock potential in CNC machining for many, many, many years, and it's really part of our core, and we have been proving productivity increases and also been able to dollarize them, also for many, many years. But what we are doing now is to really enhancing our value message to our customers, where we can also quantify and also identify energy savings. This will help us to support our customers, not only with cost savings and efficiency gains, but also at the same time, decreasing the environmental impact. Our customers are on the same journey as we are towards Net Zero, and we also know through studies that it's only 20%-25% of the energy that is consumed by the machine that is in actual value-adding operations, meaning metal cutting.
With the Sustainability Analyzer module, we can support the customers, and through a data-driven approach, where we use our product data, our tooling information, and also how we are running the tools and how the tool's performing. We are doing that through a data-driven approach and increasing the tool efficiency. We can reduce the waste and also save energy. And, this Sustainability Analyzer, it's not something that we have developed solely by ourselves. We have been developing that together with some of our key customers, and so far the response has been very, very positive, and we have many success cases that we could share today, but I would really like to share two of them, and the first one is where we have introduced our new steel turning grade, the GC4415.
Through optimizing the tool performance and also the machining settings, we have, with a customer then producing more than 215,000 components every year, we have been able to save energy, the corresponding to 20% of the tool total consumption with that customer. And another example is how we have been optimizing the milling operation through a new tool path and also the machine settings, and this with a customer producing more than 80,000 components every year. Here, we were able to save energy, then corresponding to 23% of the total consumption. And in this case, we didn't only identify the energy savings, but here also additional cost savings, as we always do. But in this case, we could also help the customer to avoid investing in additional machines.
As I said, this is a sales tool that we are rolling out. We have been piloting until now, but now we will roll it out completely, and we are now looking forward to continue supporting our customers and also practice manufacturing wellness. Thank you. Then I will invite Nadine back on stage.
Yes.
Thank you.
Thank you, Helen. Thank you. Continuing with one last subject that I talked about, the word resilience, in the beginning of the presentation. So I would like to show you on the where we are in our trajectory over the last few years. You can here see that we have had a growth journey above market, when we look on the past few years. But of course, with all the pandemic, COVID-19, and, and other disruptions, of course, has been a turbulent period in the growth journey. But above market is a really strong performance that we are not only proud of on the top line, but especially on how we have been changing our flexibility and our agility on the way.
You can see here on the EBITDA, it has been a very strong performance and a very stable performance through this whole period. And this is a very, of course, from an SMS perspective, a strong performance to be able to say that it also contributed to a very stable leverage of around 40% for Sandvik Machining Solutions. And that in the contradictory to what may be in the past, you could say that sometimes in the really high growth phases, we could deliver a leverage up to 60%, but then in the downturns, we were really negative. So here we have increased our agility, and we have re-increased our resilience. At the same time, as we also heard from Cecilia this morning, we are working for the mid and the long term, of course, with some structural measures.
These are more to secure that we are really ready on a long-term journey to be able to take also improvements there. But this flexibility and agility, really in the context of what we show here, of course, needs a lot of effort and work, and here are a few examples on what we have been doing to secure that we are becoming more flexible and agile. First of all, short cycle business means that, of course, we need to act fast, and the trends and changes are happening fast. So what is really critical for us is to really have a good planning system, and here we are using new technologies, and based on also the support of artificial intelligence, we can capture a lot of data from the past and really predict and make our forecasts and planning in the best possible way.
On the other hand, we are continuously working also on our fixed assets and our footprint optimization. We are also working continuously with our procurement optimization, as well as workforce flexibility. And workforce flexibility in the broader context, of course, understanding where do we need to have our own Sandvik employees, and what to outsource, and where to have third parties, but also workforce flexibility in focusing on the right growth opportunities and the right regions. So have a flexible workforce also with the right changing focuses where opportunities are. And then, of course, also a journey into new revenue streams. We talk about these performance-based business models, what is really related to the projects, the consultancy, and also relating to the work we are doing in the offers together from a Sandvik Machining Solutions and a Sandvik Manufacturing Solutions opportunity.
So all of this is creating for us an opportunity in the last few years to demonstrate a stronger resilience. Then summarizing, this is the slide where we can say that we are reconfirming the targets that we have mentioned before, with a growth CAGR of 5% from 2019 to 2025, with almost half of the growth from M&As, and organically, we are growing faster than the market. And by this, I want to conclude the Sandvik Machining Solutions presentation and invite Mattias Nilsson on stage for the Sandvik Manufacturing Solutions part.
Thank you. Yes. By simplifying manufacturing, we will meet our targets. Let's talk about how. Sandvik Manufacturing Solutions is well set up to really leverage the industry trends and the customer needs that we see. We see changing customer behaviors and demands on components and assemblies, enabled by technology in an ever-evolving industrial landscape. Ever since software was introduced to our industry, we have seen that decisions on how to machine a component in the most optimal way is moved up the value chain, sometimes as early as up in the design phase. We're also observing a skills gap in the market, with an industry becoming more tech-centric, where it's rather costly to upskill your existing workforce or find new talent, and with operators and machinists being a bit older and about to retire.
These skills gaps can be filled by applying digital manufacturing solutions. On the component and assembly side, we have also a higher degree of complexity and lighter materials, not the least as an effect from more and higher ambitions on the sustainability area, requiring less energy consumption in the workshop. On the technology side, machine tools are becoming more complex, and we see, as we saw earlier in the demo today, that metrology is moving into the production line. But maybe the biggest change is yet ahead of us. With the evolution of generative AI and machine learning, that will be the key definer and what will drive the fully autonomous manufacturing process.
With those changes, we will see that the point solutions that we have across the value chain today will become more developed into turnkey solutions, helping the customers in a more simple way to really leverage their digital shift and drive, drive that. It will also drive consolidation in our market. So what is our response to this? Our response is to simplify manufacturing. We will offer software and its enabling hardware to help our customers automate and optimize their manufacturing processes, closing the loop from design to finished component. We have a strong portfolio of leading brands with really strong point solutions, where they invest continuously in developing new features for the customers, but also becoming part of Sandvik, together find ways of how to leverage joint development, addressing new use cases and technologies at customers.
With this strong portfolio of companies, we have moved to a portfolio of software companies, generating 70% of our revenues coming from software business. This is an increase towards the target that we set before by 2025, which was 60%. The rest would be hardware related to automation and metrology. We have, in our software business, 400,000 installed seats, and in the last two fiscal years, we had a growth of 7% per year from the software business. Out of these revenues, 60% were recurring, and we delivered an EBITDA margin of 29% on average in software in the last year. And besides the software business, yeah, we do have a turnaround case in the hardware side. We have a bit of spend into governance, securing facilitation of synergy realization, exploration of new technologies and new products.
That is also one of the reasons why we have as many as 30% of our employees connected to R&D activities. So we have a strong position across the customer's workshop, addressing design, computer-aided manufacturing, verification, where the market potential only in computer-aided manufacturing and verification is as much as SEK 50 billion, in markets that we expect to grow with 7%-8% in the coming 5 years. And from there, we have the opportunity to venture into other verticals of discrete manufacturing. In production and operation engineering, we use CAM software to connect the digital world with the physical world, using digital twins for components, machine tools, and for cutting tools to help the customers find the optimal tool path and the right tool to do the job. This is a real machine tool or machining booster, productivity booster.
In verification, our solutions are not just helping customers to determine whether the specification or the finished component meets the specification from the drawing, it's also a manufacturing efficiency booster, giving shorter design cycles and shorter measurement cycles. We can do that through an agnostic offering that connects to any software and hardware device across the customer's workshop. Indeed, we have a strong platform to build from, and our competitive advantage, as we see it, is that by combining hardware and software, we can leverage from the legacy we have from being a leading cutting tool supplier, having deep knowledge about how to machine a component in the best way, adding software products into our portfolio that can make use of this knowledge, make our combined offering unique in the market. We're also part of the industry that we serve.
We're having the same pain points and gain points in our own production units as our customers do. And by using these production units as pilot customers, we can make sure that we develop the products having the right features that customers really need, so we can scale. But we can also leverage the global footprint of Sandvik, opening new doors for new business opportunities for our newly acquired companies. Having agnostic solutions is a strategic choice. By being brand neutral, being able to connect into any hardware and software that the customer has, we provide flexibility and customization for the customer. It's the customer who decides which platform to use. We provide the solution for their daily tasks.
By being new into Sandvik as a software or hardware business, we provide the opportunity to gain collective intelligence, where we gather people to learn throughout development from the idea to the release of a product to improve our total offer. With our internal tech community, we gather expertise from 18 different brands, from SMS and SMF, where we benchmark best practices for software development, where we follow the industry trends, and where we generate ideas together. Within our customer lighthouse program, we innovate together with a selected group of customers, where we apply our recent software at an early stage, making sure we get direct feedback in the early stage of the launch, making us able to scale, but also improvement of existing offerings. And I would like to invite our CTO, Magnus Malmström, who will tell you more about what we're doing in this area.
Thank you, Mattias. Thank you, Mattias. Is it on? Oh, thank you, Mattias. Very good. Yes, we are here to simplify manufacturing, as Mattias shared. The product teams in FM-SMF are continuously to deliver value to our customers so they can achieve more. To bring Industry 4.0 to life, you first of all need to harness data, then you need to move from disconnected to connected user experience. All right. Yeah, thank you. And then you also need to empower the people. So let's see what the tech community have been up to the last year and what we continue to work on. So this map is very important for us because it represents some areas of focus areas for us.
One is that in each area that is represented here, we can further optimize in a decentralized way of working in the product teams and the brands we have. But we can also add more simulation, and we can also add more algorithms to verify the outcome. Then we also work with innovation. So, for instance, Shin shared recently about business model for CGTech. Alexander showed some examples of the new tool path platform we are building that will enable a lot of new innovation areas around CAM automation. Then we also, in the metrology area, are building something called, we call X5, which is a new metrology platform. So those two things are super important for us.
But then thirdly, through the collective intelligence community, we meet up and have a customer-driven roadmap for the areas of integration between the products that we believe have the best business outcome for us. And that can bring this to life, what you saw in the factory demo. By building a digital thread and the combination of the products, as you saw, we can make this happen. And we'll go back to that soon, but I want to deep dive in this area. Here we have GibbsCAM, which is a very advanced CAM software for Swiss machining and MTMs. You have Cimatron, that is focused on die and mold, and you have Mastercam, that is for general engineering. But you also have a seamless experience with those three products, with VERICUT, that can perform simulation and also optimization.
So that's moving more and more to a turnkey solution from Sandvik. But finally, and very unique for us, is that we added this year through collaboration with SMS and the engineering team there, Coromant's tool library and also tool path. And if you look at this component that you saw before, it's using a method from a tool path called Prime Turning. So you turn it like this, and that's a unique proprietary technology from Coromant that we embed in the CAM software. And then we're also moving from an offline situation to an online situation with all the cutting data and the tool information. So the SMS brands are very good to come out with new innovation and bringing more quality tools out that increase productivity.
It can be hard sometimes for the customers to keep up with all that, but when in an online scenario, you, just with a few clicks away in the CAM software, you get access to all this information, and that is updated constantly. So we feel that is really making allow more creativity in the business and also improving for a customer experience. And it's also building on the reason why we exist as an organization, and we can simplify manufacturing. So to conclude, I want to show Nyr, which is a customer voice of us, that have all this, Mastercam, VERICUT, and also the Coromant suite there, and they will share a little of their expectations and also how we have worked with them to create a seamless experience.
So the integration of the Sandvik products is extremely easy because they all intertwine and make it very easy to push along all of our platforms and the different softwares we use. Using these products, which all work together in a very seamless way, allows us to be more efficient. It saves us time when we are developing solutions for our customers because of the ease of use of these products. This allows a very user-friendly approach to manufacturing. We want digital solutions to enhance our business. We want to use these solutions to further push manufacturing technologies, to make sure we are always on the leading edge of these technologies, to always get the best solutions out there.
Thank you, Magnus, for sharing those examples. Now I would like to invite another colleague on the team to talk about verification. Laurent Monge, President, Metrologic Group, welcome on stage.
Thank you, Mattias. So as mentioned by, by Mattias, earlier, connecting our software solution from Dimensional Control Systems and Metrologic Group, as well as integrating them into our DWF ritz zero touch verification machine, help our customers to simplify their manufacturing. They can now access to a full digital twin. Taking the example of an inline application, they can really improve their manufacturing efficiency and sustainability with some automated programming, and the ability to simulate their full verification setup so that they can further optimize and reach the best possible efficiency. And finally, also access to certain functionalities, such as collision avoidance, also verification of continuous line of sight for measurement sensors, because the verification machine sensors will move around the measured component.
All of this is happening without using the actual verification equipment, so that it remains fully utilized for manufacturing. Finally, while the verification will happen on the shop floor, our software solutions are going to make the collected data available in the digital thread. This in order to enable an end-to-end automation and optimization. So these solutions are being increasingly adopted by a number of markets, such as electric vehicle manufacturing, but also micro mechanical applications. We also see adoption of these solutions in markets using robot-based verification, and this thanks to the fact that our software platform are agnostic, meaning they can accommodate most of these existing verification hardware. So to illustrate this, I'd like to share a quote of a customer in the name of Figeac Aero, which is a leader in aeronautic subcontracting.
And as you know, this market is quite demanding in terms of quality assurance, but not only, it's also a very demanding market in terms of manufacturing efficiency. So here, one of their programming expert shares the value he sees for his company while using Sigma. Sigma being the verification, simulation, and digital twin solution of Metrologic Group. So quoting this customer, "One advantage to highlight is the capability of virtually reproducing the whole inspection environment. Then programming from A to Z of highly complex parts with collision avoidance brings us considerable machine time saving, and allows to measure more exactly." And let me elaborate a bit more on machine time saving. For this particular customer, they are now able to have an 88% use rate of their verification equipment. This on a 24/7 market basis, I'm sorry.
We are so proud to enable that for these customers and for our customers. Back to you, Mattias.
Thank you very much, Laurent. Thank you for your examples. So as part of our strategic direction, we have established a leading position in key markets. I'm really proud to see how we have progressed and where we are, and excited about the future. We simplify manufacturing design, component or computer-aided manufacturing and verification. And by investing in new technology, and by looking at further possible acquisitions in the current verticals where we are, we intend to strengthen our position even further. We're currently focusing a lot on accelerating growth on our current assets, by both a combination of looking at geographical expansion to capture market share, but also on bolt-on acquisitions. In addition to that, we are striving to generate synergies and creating value through integrating products, as you have heard, but also to cross-sell our solutions between the different brands.
By being together and the collective intelligence we now have, we have also realized that we can address other pain points and use cases by combining the capabilities of the current offering with other offerings in other verticals of the discrete manufacturing industry, coming up with new solutions. This could, for instance, be in manufacturing execution systems or MES, or design automation, or quality data management. Expanding our offering into these areas would also increase the addressable market substantially beyond the 50 billion SEK that we address today. With this, we have increased our ambitions when it comes to driving our software business, setting a new target by 2025 at 4 billion SEK in software revenue, and generating an EBITDA margin of 22% for the full SMF portfolio.
We can accomplish this by having a leading position in key markets already established, by progressing continuously with leveraging our synergies, and by going into new verticals and looking for new opportunities together. By simplifying manufacturing, we will meet our targets. With that said, I think it's time to summarize SMM. I would like to invite Nadine back up on stage. I think, Nadine, we can say that by being together, we have an exciting road ahead. We have businesses in a different business area segment that has individual plans for how to grow organically, how to grow inorganically, but also they find opportunities to collaborate and join forces on technology development and coming up with new use cases for product development. I think that is really a strength to build on.
Additionally, we have seen that through an agnostic approach, we can both leverage quickly the internal ecosystem that we have, but of course, also towards the external ecosystem, partnering up with others in our industry.
Then we use the word product integration a lot during this presentation. I think here, the two words are really important in the summary as well, because products, we have been highlighting several times the really broad portfolio that we talk about combining SMF and SMS with all these agnostic brands, multiple choices, multi-brand opportunities, linking to external vendors, and so on. But the key to it, it's all about the product integration, really connecting all the dots, starting with small steps, doing one step at a time, but then really connecting all elements together, and that with the ultimate goal to really create a seamless experience for our customers. So if we summarize all of that, we really are looking forward, and we are on the way of closing the loop in component manufacturing.
We believe it is an extremely inspiring journey to take that step by step together with Sandvik Manufacturing Solutions and Sandvik Machining Solutions. Thank you for your attention.
Thank you very much. With that, we invite Louise back up on stage.
Yes. Thank you, and not only me, because we have the precious 15-minute Q&A now. So welcome Stefan, Cecilia, Mats, and Richard up on stage. And I'm supposed to go here. Oi, oi. Okay, I see eager hands raised already, and we can start with Andreas Koski here.
Hello. Yeah, now it works. Andreas Koski from BNPP. A question on or two questions, actually, on SMM growth opportunities, because today we have heard a lot about productivity improvements. GibbsCAM, is it GibbsCAM? Talked about 50% productivity improvements. CGTech talked about 30% productivity improvements, and then Helen mentioned the GC4415, and I read that it increased the product lifetime by 25%. So it sounds like the productivity improvement is very strong, but that also means that we need fewer cutting tools. So how are you thinking about that?
It is when I explained on the growth and the continued growth ahead of us, we have had the CAGR, when we take on 2025 or 2028, either it's below 4% or above 4%, so around 4%, that has still a volume component and a price component in it. So even if we continue introducing more productive solutions, there is a growth both on the inserts and on the round tools side. At the same time, the other productivity increases, for us, it is mainly the tool, so to say, to gain market share. So from that perspective, we see still a growth overall, a growth on volume, but as well, taking market share, moving ahead with the combination of opportunities.
And hello? Now, yeah, I'm back. Mm. And guess my follow-up on that: so when we talked about the segments growth, automotive, general engineering, aerospace, et cetera, what have you assumed in terms of cutting volumes, productivity improvements, and pricing?
As we continue in, in with our each time introducing new products, we always take in consideration that those products are increasing productivity. Of course, by increasing productivity, we also introduce our new products with a higher price, as we talked as well, that we are taking then, of course, our share of improvements in the market. When we talk about all the numbers you have seen here, it is, totally volume and price numbers that you have seen on the increases.
Thank you. Klas at Citi here. So, my question is on the margin in SMF increasing from 20 to 2022. What is the overall margin today versus the 10% you talked about previously? Given the software margin of 29% on 70% of revenues. I would assume that that means that the hardware margin is still very low, but if we could get that. And then, the further growth step up to SEK 6.5 billion from where we are today, I mean, obviously, the group is not gonna focus on M&A that much going forward, but I assume maybe there is some bolt-ons in that as well, if we could just get some clarification there.
Yeah, I can start. I think if you look at the margin we have, you we have, as I said, a turnaround case on the hardware side, and, and they are continuing to progress and showing improved the EBITDA, but we have still a long way to go. The journey has been more cumbersome than we thought. So that's a dilutor in that sense. I think also we have seen changes in the portfolio fairly recently that is also meaning that the software share is now at 70%, which will pull up the SMF margin as well. So, all in all, it's progressing in the right way, improving from last year, but we continue then, of course, to report in, in the way we do through SMM at this point, at this point.
Yeah, and in terms of acquisitions, I mean, as Cecilia mentioned, we will continue to have an acquisitive agenda. The ambition level will be sort of aligned with the cash flow we generate. That should be definitely sufficient for us to reach our targets. And on the software side, it also means that we'll continue to do acquisitions. But I do think, and as you have seen here today, that we have in the
really taken the positions we originally planned to take when we sort of started with this strategy. We'll continue to do bolt-ons. Eventually, as Mattias mentioned, I think we'll come to expanding our positions in other areas as well, but that's not the imminent focus. Now, it's more bolt-ons, do the synergies, organic growth, and then we'll come to the next steps a little bit more ahead.
Okay, thank you. My second one is on SMR, and thinking about the dilution from DSI still. Like, is there a possibility for DSI to catch up, so to speak, so that dilution eventually goes away? 'Cause if that happens, your margin becomes very comparable with some other peers.
Do you want to?
Yeah. All right. Well, naturally, I think that was communicated already during the acquisition of DSI, that it, it will have a diluting effect. But if you look at how they have improved and how they have been growing, they have come closer to the other margins in the, in the other divisions. So I think they have improved a lot. If they really will reach that stage, that is still not clear, but they are improving, and they are getting better. I think their business is a bit different from, equipment business or software business. They are very, let's say, dependent on the steel price and how that develop. And they are getting. They already got a lot more smarter in how to purchase steel, how to react to steel price, and so on. So I do see that they are going to still improve.
How much? I don't know.
We can say that when we announced the acquisition, we said that the midterm sort of target was to get them up to 15%. So I think that's the first milestone. And if you look at the sort of rock tools, we have a peer that is reporting sort of rock tools in a separate segment. You can see where that margin is hovering around. I think, personally, we should not expect them to be at the 20%+ margin, because that's not really what that business is supporting. I might be wrong, I hope I'm wrong, but that's not the ambition we have had for them. If we get there, that would be fantastic. But they have a strong position in the value chain for our customers, so we felt it has a good strategic value for us.
Financially, from a returns point of view, it's been a fantastic acquisition. We are sort of pleased with this, sort of as it is. For margins, I think we're getting close anyway, so.
Super quick final one for Nadine on the cutting tool index in automotive. So obviously, so when I look back from last year, the HEV, so the hybrid have come down, the combustion have come down for light vehicle, I think. But when you think about sort of the mix now, you're talking about electric on medium-duty trucks, for example. Did you say that that has a higher content, and that is really sort of what is changing the overall tooling forecast? Because hybrids traditionally had a higher content, and that is coming down. So just want to sort of clarify the mix a little bit in that assumption.
Right. Yeah, so all the factors we have been using before are still valid, so we haven't changed. So the hybrid, the 1.1 versus the combustion level one, and so on. So all the factors we kept as it's the same. And the hybrids are still increasing, and if you look to the graph, it is like a more steeper growth now the first years, and that's why there is this increase by 2025, because that, of course, adds on. At the same time, it is the medium vehicles that has this really high level of intensity, and that is growing because that pace was with the 3% CAGR. So if you add those elements up, that makes the bubble on 2025, and then still tapering out on a similar level by 2030.
And can I add also, the reason we thought it was good to show this split is because I've said this in many investor meetings, we don't understand why some people are so scared about this, because we don't see it ourselves. And I think one of the explanations is what you saw here. 40% of the business is medium-heavy trucks, completely different development. And you factor that in, it changes maybe. If you do the modeling, thinking all is lightweight vehicles, you get to a different conclusion maybe.
Yeah. Sebastian Kuenne from RBC. My first question is for Mats and regarding the opportunity that you see for battery-powered mining vehicles. I recall that last year you mentioned that battery powered gives you 60% more revenue opportunity than diesel powered, and at the time, I thought that's quite a bold assumption. And now you say it's could be 65%, so even higher, and it's all driven by this battery as a service portion. And I was wondering what your margin assumption would be. Is that more linked to equipment, or would it be more comparable to aftermarket? That would be my first question.
Well, we see a strong growth in battery electric, as you saw on the chart. We have had a very strong order intake during the year, and we do see that we are still in the early phase, though. So the volumes are not there, so the margins are not there yet either. If you look at BEV as a whole, we have not been in the business, as explained, selling diesel fuels. Now we are selling the energy actually through the battery to the BEVs, which increases our revenue. At the same time, it makes it more profitable for us. So we are really seeing the aftermarket to take a big share in the BEV business.
It doesn't really matter if the customer do battery as a service or buy the battery, we still see that portion to grow for us. The revenue stream will be higher, and when the technology matures and we get into volume production, the margins will come. We are getting there, naturally, with both equipments and the aftermarket, but of course, it will be aftermarket driven pretty much through the battery.
Okay. And then one question for Nadine and, Mattias. And regarding your marketing approach, you mentioned that you want to grow in the mid-market segment, you want to become a, a leader there. And, I was wondering what your marketing approach is, because, I recall three years ago, you were at the EMO Trade Fair, and you had. and Sandvik had two big stands, one for Coromant, one for the software. It was really amazing. When I went this year, Sandvik was not at that benchmark trade fair in Germany, and, maybe it has to do with costs, sure, but at the same time, if you want to grow in the mid segment, you-- so I was just wondering what your marketing focus is.
If you go to key accounts, if you go to the tool machine makers, maybe, and try to get your software in there. Maybe you can elaborate a bit on that.
I like it.
Yeah, I think here, when we talk about growing mid-market and also local premium, those are really sitting together because those are in a combined bucket, so to say. Yes, we are growing that market, and we are growing with Dormer Pramet as the brand that we, that we already have had in the mid-market and is growing in different countries, and they are establishing and exploring more countries and markets than they, what they have today. So they are growing that. They also have been acquiring, so they have been, for instance, adding Miranda Tools on top of that. Then if you look on the local premium, there we have had a long list of, of additional acquisitions we have been doing.
Then on how we market it, exactly because of the reason that we see also local premium, the way on how to reach customers is they are different, and that goes more on the one-to-one and the connections they have. On the premium side, it is more related to account management and machine tool builders. So there is a different way of, on approaching those customers. And in the mid-market and local premium, there is also an increased usage of distribution in the middle, so we use much more channels there. And also that, of course, is getting another marketing needs.
So, for us, it is important to reach our customers in the best way and to be able to give them the offer and marketing or, offer our new products and our new technologies in the best possible way, and that's differentiating, depending where we are.
All right. We will take one last question, actually. Oops.
Sure. Hi, Elliot from Bank of America here. It's actually a question for Mats, on the electric vehicles. So I was just wondering if you could give us a bit of information about how you see the adoption rate developing over the next few years, and then what factors do you think will impact that adoption rate?
Well, we have stated that 50% by 2030, so we are on that track. It's going fast. What is actually delaying the adoption a bit is that, first of all, we don't really have an even competition. It sounds a bit funny, but I think if every OEM could offer a battery solution, it would be easier also for the market to adopt them, because then everybody would talk about it a bit more than what they do today. But okay, put that aside. The capacity or the volumes, the manufacturing capacity is still limited, and that comes from all the pieces in the battery equipment. So we need the.
The battery cells are not a limitation factor, but we need proven technology, and we need the full portfolio of products with trucks and loaders in all size classes. They are not all there yet. And then the production capacity has to be there as well. So what you saw today is that a very strong order intake and more than 50% of our load and haul is already generated from BEVs. So that tells that there is a strong need for it, but some customer can't wait a year on the equipment, and some are ordering a bit earlier just to be sure to get them. So there's nothing stopping the BEV, actually. It's the question about having all the products, having the full product portfolio, and having the capacity to build them all for the need in the market.
It will, it will come, and fast.
Perfect. Thank you.
All right. Time is out. Thank you very much, and applaud for our executive management team.
Thank you.
Just talk for her. Just the mask can do.
Can we have the slides up? There we go. We'd just like to wrap up before we send you off in the buses. Again, thanks for spending the day with us today. I hope you have learned a lot. I hope you have gained new insights onto what kind of company Sandvik is today. I am super proud of the transformation that we have done of the group in the past couple of years. As I said, it's been a massive team effort, and I'm super proud of the team for achieving that. We have completed the portfolio optimization, we have evolved our management culture, we have strengthened the Sandvik platform, we have taken new positions in the value chain. We are today an enabler in our customers' journey when it comes to digitalization and sustainable solutions.
We're executing well on our strategy. We have delivered strong growth and strong margins each and every quarter. So we are super proud of the Sandvik we have today. Thanks again for coming here today, and safe travels home.