On 31 August 2022, Sandvik Materials Technology (SMT) was listed as a standalone company on Nasdaq Stockholm and renamed Alleima, after being part of Sandvik. The new name Alleima is a combination of the words ‘alloy’ and ‘material’. Recently, Alleima’s Bernardo Siza Vieira, Technical Marketing EMEA South, gave a presentation of the company’s new super-austenitic structurally stable stainless steel alloy Sanicro® 35, highlights of which are given below, together with the company’s recently released 2022 results.
Based on long-term customer partnerships, Alleima advances processes and applications in the most demanding industries through unique materials that are lightweight, durable, corrosion resistant, and able to withstand extremely high temperatures and pressures.
A key factor for the success of Alleima is its ability to develop new innovative products that serve the customers’ needs and increase their productivity. The company maintains a portfolio of over 900 active alloy grades for further processing into different niche applications.
Recently, the super-austenitic structurally stable stainless steel alloy Sanicro® 35, which offers extreme localized corrosion resistance and outperforms conventional grades, with only moderate nickel content, was introduced. The alloy won the materials design category in the Materials Performance Corrosion Innovation of the Year Awards in 2021 hosted by AMPP.
Designed for service in aggressive corrosive environments, the material bridges the gaps between standard duplex or austenitic grades and nickel alloys. It offers the desirable corrosion resistance of high nickel grades as demonstrated by its extreme critical pitting and crevice temperatures combined with excellent mechanical properties.
At Stainless Steel World (SSW) last September, Bernardo Siza Vieira – Technical Marketing EMEA South, held a presentation on “Sanicro® 35 Bridging the gap between Stainless Steels and Nickel Alloys”. There was a lot of interest from users in the industry.
Sanicro is the trademark name for the Alleima family of high-alloy, multi-purpose stainless steels. Vieira explained the advantages of using this alloy versus other super austenitic alloys and high nickel alloys. “With the launch of this new alloy Sanicro® 35 we open a market of new possibilities in material advice and selection for our customers; that brings much higher cost-effective solutions for their demanding projects, in terms of a corrosion resistance environment.”
Strong finish to the year, and several major orders
Commenting on Alleima’s recently released results, President and CEO Göran Björkman, said: “As we conclude 2022, I am proud of what we have achieved as an organization. The year has been full of both challenges and opportunities, and we have written a new page in our history with the listing on the Nasdaq Stockholm Stock Exchange. Our new life as a listed company is truly exciting. We are sharing our story as Alleima, a world-leading advanced materials company and although we have 160 years of experience behind us, our journey has just begun.
“We finished the year strongly and noted several major orders, of which three for Oil and Gas products and one in the Medical segment. The subdued demand we noted for low-refined products in the Industrial and Consumer segments in the third quarter, persisted in the fourth quarter, mainly in Europe and North America, while demand was flat on a sequential basis. Customer activity in our other segments remained high in general, and underlying demand remained healthy. In total, this translates to a year-on-year organic order intake growth for the quarter of 17%, and -7% excluding major orders.
“Revenues in the fourth quarter increased organically by 14%. We improved the adjusted EBIT margin to 10.8%, compared to 9.0% for the corresponding quarter last year and we successfully offset significant cost inflation through strong price execution. Free operating cash flow improved to Skr801m but decreased for the full year compared with 2021. This is normal in our business when we have an environment characterized by high raw material prices and strong topline growth. Our performance during the year is well in line with our financial targets, with organic revenue growth of 13%, and an adjusted EBIT margin of 9.1%. We have a solid financial position and we are almost debt free.
“We have ambitious sustainability targets, and we are aiming for industry leadership both through our operations and our offering, not least by growing our portfolio of products to enable the green transition. During the quarter we received a breakthrough order for OCTG (Oil Country Tubular Goods) tubes for use in carbon capture and storage. This is a great example of how our existing products also fit in a more sustainable world. Although we already have one of the lowest CO2 footprints in the industry, our ambition is to halve our emissions by 2030, and I am proud that we have committed to the Science Based Targets initiative (SBTi).
“One of our focus areas is the profitable medical segment. During the quarter, we received our very first major order for ultra-fine medical wire, the result of the commercialization of a new product used for remote monitoring of patients. We also acquired Endosmart, a nitinol expert for medical devices. This further expands our capabilities and increases our current addressable market.
“However, we cannot escape the challenges of the current macro-economic environment: the war in Ukraine, inflationary pressures, and energy supply restraints. This means that we will continue to work proactively to mitigate increased costs. We have proven that we can adapt quickly to changing market conditions and we are ready to take swift actions should market conditions deteriorate.
“Despite these challenges, several long-term trends work in our favour, and we will continue our focus on profitable and less cyclical segments to reduce earnings volatility. Our view of an underinvested energy sector remains intact and the prospect list for oil & gas projects remains solid, at the same time as we are seeing an increasing number of prospects within renewable energy. We have a strong backlog that improved significantly in the quarter and gives us confidence going into 2023.
“I would like to sincerely thank all our employees for their dedicated work during the year and to thank all our customers. I would also like to welcome our new shareholders. I am looking forward to a new year of great opportunities together.”
Tenaris and Petrobras agreement
After the end of the final quarter of last year, on January 18, it was announced that Alleima will be the supplier of OCTG tubes with Corrosion Resistant Alloys (CRA) material in a new long-term frame agreement between Tenaris and Petrobras. The agreement includes the three-year supply for offshore Brazil.
The frame agreement entails the provision of pipes produced by Alleima with CRA materials and finished with TenarisHydril Blue® premium connections and Dopeless® technology. The products will be manufactured by Alleima in Sandviken, Sweden, and threaded at Tenaris’s threading facility in Aberdeen, Scotland. The frame agreement for the three-year supply of plain end tubes from Alleima has an estimated value of up to Skr1.3 billion, with the first order expected during the first half of 2023.
Market development
Several customer segments continued on a stable or positive trajectory compared with the corresponding period last year, with long-term trends offsetting uncertainties in the market environment. Demand weakened year on year for the short-cycle business in Europe and North America due to an underlying slow-down, and was flat on a sequential basis. A positive development was noted in Asia.
In the industrial segment, a decrease in demand was noted for low-refined products compared with the corresponding period last year, mainly in Europe and North America. Demand was stable on a sequential basis, and is expected to remain subdued in the near term.
In the oil and gas segment, offshore investments materialized with several major orders booked for umbilicals. Demand for OCTG and control lines was also up year on year. The strong development was the result of a combination of order catch-up effects resulting from delays in the previous quarter and increased activity in the underinvested energy sector, while the project list for umbilicals remains solid.
Development of demand in the chemical and petrochemical segment was positive, mainly in Asia. Activity related to application tubing products remained high.
The industrial heating segment noted increased demand driven by semiconductor, solar, glass, and steel end-customer segments, mainly in Asia. Gas-to-electric conversion inquiries remain at a high level in all regions.
In the consumer segment, demand for compressor valve steel and appliance wire, both used in white goods products, as well as knife steel, weakened year on year and sequentially. Demand is expected to remain subdued in the near term.
Demand in the mining and construction segment declined year on year as a result of last year’s restocking in the wake of the pandemic. Underlying demand remains solid and is expected to re-cover in the medium term.
In the power generation segment, activity levels remain high. Discussions progressed well in relation to future power projects and a first commercial order for a prototype of “heat pipes” for a novel modular reactor design was received.
In the transportation segment, demand increased strongly year on year, driven mainly by precision tubing for hydraulic systems for aerospace as well as titanium tubing.
Demand in the medical segment showed continued strong underlying momentum and one major order was received.
The hydrogen and renewable energy segment noted continued momentum and a new market was entered with the receipt of a breakthrough order for carbon capture and storage.
Sustainability
Alleima’s strategy includes to be leading in the market from a sustainability perspective, contribute to increased circularity and support general health and well-being, both through its product offering and its operations. Developing a sustainable product offering, combined with several initiatives to reduce the overall environmental impact of the production process, is considered one of the most important success factors.
Capitalizing on global megatrends, including the green transition, is one of the key pillars in the strategy for profitable growth. During the quarter, Alleima continued to grow the hydrogen and renewable energy segment, receiving an order for duplex tubes from a customer in the geothermal industry in Europe. The tubes are used in the final sections of a well at a depth of 2,500 metres and high-quality materials are therefore crucial, with the tubes designed to last for up to 30 years. This is a corrosive environment with high levels of chlorides combined with high levels of CO2, in addition to temperatures of around 90° Celsius, making the duplex material a good choice. This is one of many examples of how Alleima’s offering contributes positively to sustainability.
Full year 2022
The positive trend in market demand continued across most customer segments compared with the corresponding year-earlier period, supported by long-term industry trends. However, demand in the short-cycle business, mainly related to low-refined products for the industrial customer segment as well as demand in the consumer segment, softened toward the second half of the year. The year was impacted by supply chain issues, longer than normal freight lead times, and uncertainties related to energy supply issues and prices in Europe, as well as raw material price inflation, especially related to nickel prices.