Sandvik Outlines Positive Development for the Years Ahead at Its Capital
SANDVIKEN, Sweden -- September 24, 2013
Growth and operational excellence were key themes at Sandvik’s (STO:SAND)
Capital Markets Day on Tuesday. CEO Olof Faxander outlined his plan for the
next three to four years, including the company’s shift toward fast-growing
markets, higher returns and reduced earnings volatility. People, products and
innovation with a strong customer focus are leading to a better Sandvik being
Sandvik, a world-leading, high-technology engineering group, held its fully
booked Capital Markets Day in Sandviken, Sweden, on Tuesday, September 24. The
company’s customer base is active in the mining, construction, automotive,
energy and general engineering sectors.
“Implementation of the new strategy has been carried out with speed and
determination since its launch in 2011. This has resulted in a more
customer-centric organization, operational excellence, restructuring and a
turnaround for the company – all of which are crucial to our growth
ambitions,” said Olof Faxander in his speech, and gave several examples from
all areas. In focus going forward, he underlined leading innovation, leading
through attracting the best talents and further emphasize on sustainable
business as key competitive factors.
However, Sandvik faces various types of challenges on a continuous basis.
Production levels are being adjusted in the Sandvik Mining business area in
response to the market slowdown observed during the first half of the year.
Further cost reductions of 500-700 million SEK are planned as part of the
adjustment to these market conditions. These measures will be implemented by
mid-year 2014, resulting in nonrecurring charges of 300-400 million SEK.
To enhance supply-chain efficiency, Sandvik intends to reduce the number of
its sites from the current 150 to approximately 125 within the next three to
“These actions will result in increased capital efficiency, improved delivery
performance, reduced complexity and simplified ways of working, thereby
enabling us to improve service to our customers from the current level,” said
Olof Faxander, explaining that the supply-chain measures will be carried out
during the next three to four years at a cost of approximately 3-4 billion
SEK. Because of the multi-year time frame, it is currently not possible to be
more specific regarding the units that will be affected.
In terms of investments, Sandvik will base its allocation of capital to its
business areas on their size, growth and return. Sandvik believes that growth
will mainly take place in the developing markets and in North America, whereas
Europe is likely to play a less prominent role the years to come.
At the Capital Market Day, Sandvik emphasized acquisitions as an integral part
of its growth strategy.
The target for return on capital employed (ROCE) is set at 25% long-term. In
an updated guidance, Sandvik stated that, given currency rates at the end of
August, it is estimated that operating profit for the third quarter of 2013
will be negatively affected by about 300 million SEK. The guidance for net
financial items (below 2.0 billion SEK for 2013), capex (below 5 billion SEK
for 2013), tax rate (about 25-27% for 2013) and metal price effects (about
-125 million SEK for the third quarter) remains valid.
“The short-term challenges are well under control. They are not diverting
focus from our positive approach in the longer perspective, and I am convinced
that we are building an even stronger Sandvik for the years ahead,” said Olof
Stockholm, 24 September 2013
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 10:20 CET on 24 September, 2013.
The 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 Million SEK.
This information was brought to you by Cision http://news.cision.com
Pär Altan, Head of External Communication
+46 8456 12 37
Magnus Larsson, VP Investor Relations
+46 26456 12 40.
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