Sandvik implements further structural measures and adjusts capacity and costs

  Sandvik implements further structural measures and adjusts capacity and
  costs

Business Wire

SANDVIKEN, Sweden -- November 28, 2012

Regulatory News:

The new Sandvik (STO:SAND) strategy presented in September 2011 laid out the
path toward a strengthened market leadership position based on four
cornerstones: AMBITION, SPEED, FOCUS and GLOBAL/LOCAL. The strategy has
subsequently been implemented successfully and according to plan. Recent
strategic reviews have revealed additional potential for structural
improvements in several business areas. At the same time, a number of measures
are being proactively implemented to adjust costs due to the weaker market
demand that was experienced during the third quarter and that has persisted
thus far into the fourth quarter.

In addition to the ongoing improvement efforts at Sandvik Mining, a reduction
of 650 employees globally has been deemed necessary, including the closure of
the units in North Bay, Canada, and Rocklea, Australia. Third-party contracts
with more than 350 individuals will be terminated. Charges of a nonrecurring
nature are estimated at 175 million SEK and will be recognized in the fourth
quarter 2012, with a further 175 million SEK recognized in 2013.

At Sandvik Machining Solutions, opportunities to generate economies of scale
have been identified. The distribution center in Kentucky, US, will
incorporate Seco Tools products. Consequently, the Seco Tools US distribution
center in Troy will be closed. Combined with other initiatives across the
business area, including a headcount reduction in Fagersta, Sweden, this is
expected to result in a structural reduction in costs of 150 million SEK. The
nonrecurring charges associated with these initiatives are expected to impact
earnings by just under 100 million SEK in the fourth quarter 2012 and by 200
million SEK in 2013.

As communicated earlier, the Step Change turnaround program is being expanded
with the aim of further strengthening Sandvik Materials Technology as a
long-term value-creating business area. The primary focus is on consolidations
and sustainable cost savings of more than 300 million SEK. As part of the
ongoing review of the wire business, Sandvik Materials Technology will
restructure the wire operations at Sandvik Española in Barcelona, Spain. Parts
of the product program will be transferred to other units. The work to
simplify the organization will continue to support the ongoing strategic shift
of the product mix toward more advanced products. In total, the changes will
lead to a further structural redundancy of approximately 220 positions
globally. The fourth quarter 2012 will be impacted by nonrecurring charges
estimated at 650 million SEK, of which 400 million SEK relates to impairments
and write-downs of predominately fixed assets.

Sandvik Construction has implemented further actions aimed at optimizing the
overall cost structure at the business area and addressing the continued
subdued market activity. The number of employees is being reduced by 80, in
addition to a further 180 employed by third parties. This will lead to minor
nonrecurring charges in the fourth quarter 2012. It is estimated that total
costs will be reduced by more than 100 million SEK by year-end 2013.

On the basis of these adjustments, targeted cost savings will amount to more
than 1 billion SEK by the end of 2013. Charges of a nonrecurring nature
amounting to approximately 1,300 million SEK are estimated to impact earnings,
of which 900 million SEK will be recognized in the fourth quarter 2012. The
total cash flow impact of the charges is estimated to amount to approximately
750 million SEK, mostly impacting 2013.

Million SEK   SandvikMining  SandvikMachining  SandvikMaterials  SandvikConstruction  SandvikVenture  Sandvik
                               Solutions          Technology                                                Group
Nonrecurring
charges Q4,    175                                650                >0                    -                ~900
2012
Nonrecurring   175             200                -                  -                     -                375
charges 2013
Total
nonrecurring   350                                650                >0                    -                ~1,300
charges
of which,
impacting                                                                                                   750
cash flow
Estimated      >500            150                >300               >100                  -                >1,000
cost savings

“A year has soon passed since we began the implementation of the new strategy.
A great deal of hard work has been done and much has been achieved. In our
drive to continuously improve our company, we have identified several
additional opportunities. Consequently, decisions have been taken on a number
of actions to adjust costs and capacity. None of these measures affect our
ability to grow our business in the long term,” says Olof Faxander, President
and CEO of Sandvik.

A conference call with Sandvik’s CEO Olof Faxander will be held on 28 November
at 15:30 CET for media and the financial market. To participate in the
conference, call please call +46 8505629 59 and enter PIN CODE 198671#.

Stockholm, 28 November 2012

Sandvik Aktiebolag

Sandvik AB discloses the information provided herein pursuant to the
Securities Markets Act and/or the Financial Instruments Trading Act. The
information was submitted for publication at 14:00 CET on 28 November 2012.

For further information, please contact Magnus Larsson, Vice President
Investor Relations, Sandvik AB, tel: +46 8456 12 40, or Pär Altan, Vice
President Group External Communications, Sandvik AB, tel: +46 8456 12 37.

Sandvik Group

Sandvik is a global industrial group with advanced products and world-leading
positions in selected areas – tools for metal cutting, equipment and tools for
the mining and construction industries, stainless materials, special alloys,
metallic and ceramic resistance materials as well as process systems. In 2011
the Group had about 50,000 employees and representation in 130 countries, with
annual sales of more than 94,000 MSEK.

This information was brought to you by Cision http://www.cisionwire.com

Contact:

Magnus Larsson, Vice President Investor Relations
Sandvik AB
tel: +46 8456 12 40
or
Pär Altan, Vice President Group External Communications
Sandvik AB
tel: +46 8456 12 37.
 
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