Sandvik to adjust capacity and order backlog for nuclear steamgenerator tubing

  Sandvik to adjust capacity and order backlog for nuclear steamgenerator
  tubing

Business Wire

SANDVIKEN, Sweden -- June 12, 2013

Regulatory News:

Sandvik (STO:SAND):

Sandvik Materials Technology will adjust capacity and order backlog for steam
generator tubing to reflect the current market conditions in the nuclear power
industry. The order backlog will be written down by 1.1 billion SEK,
negatively affecting the order intake in the second quarter by the
corresponding amount. The overall net effect on the operating profit due to
closure of related currency hedges, as well as impairment and restructuring
charges as a result of the capacity adjustment, is estimated to be slightly
positive.

The capacity adjustment of steam generator tubing will be implemented by
phasing out the older installed steam generator tubing mill in Sandviken,
Sweden, and concentrating all the production to the new steam generator tubing
mill in Sandviken, which commenced commercial production in 2012. The older
steam generator tubing mill will be mothballed, thus minimizing costs while
creating the option to restart production if demand recovers. The capacity
adjustment will take place during the second quarter of 2014, by the time all
production of steam generator tubing will be transferred to the new mill.

The adjustment of steam generator tubing capacity will result in redundancies
affecting around 110 full time employees in Sandviken. The redundancy is
expected to be handled through reducing third party workforce, natural
employee turnover and voluntary agreements. Despite this capacity adjustment,
Sandvik will still be able to fulfill its present contractual obligations to
its customers. While there remains continued uncertainty in the global nuclear
power industry, the current assessment is that the need for further
adjustments to order backlog is limited.

In conjunction with the capacity adjustment, Sandvik Materials Technology will
close currency and nickel contracts relating to existing hedges of the orders
that will be written down. This is estimated to generate a positive effect on
the operating profit of approximately 300 million SEK, of which about 200
million SEK will impact cash flow. Impairment testing of total steam generator
tubing capacity will be carried out and finalized in June 2013. The net effect
on the operating profit from closed hedges, impairment charges and
restructuring costs is estimated to be slightly positive and will affect the
financial statements for the second quarter.

“The nuclear power industry is a key segment for Sandvik, and we will retain
our strong position despite this capacity adjustment. Mothballing the older
mill minimizes costs, but it also gives us the option to restart production
when the market is ready,” says Petra Einarsson, President of Sandvik
Materials Technology.

Stockholm, 12 June 2013

Sandvik AB

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 08.30 CET on 12 June 2013.

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 2012
the Group had about 49,000 employees and representation in 130 countries, with
annual sales of about 99,000 MSEK.

Sandvik Materials Technology

Sandvik Materials Technology is a business area within the Sandvik Group and a
world-leading manufacturer of high value-added products in advanced stainless
steels, special alloys, as well as metallic and ceramic resistance materials
for the most demanding industries. Its cutting-edge expertise is based on an
integrated production platform and world-leading metallurgy and R&D.
Operations are divided into four product areas: Tube, Strip, Wire and Heating
Technology - and Primary Products. In 2012 sales were about SEK 15,400 M with
7,300 employees.

This information was brought to you by Cision http://news.cision.com

Contact:

Sandvik Materials Technology
Petra Einarsson, President
+46 26 26 36 36
or
Sandvik AB
Magnus Larsson
Vice President Investor Relations
tel +46 8 456 12 40
 
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