Sandvik Outlines Positive Development for the Years Ahead at Its Capital Markets Day
September 24 2013 - 4:29AM
Business Wire
Regulatory News:
Growth and operational excellence were key themes at Sandvikâs
(STO:SAND) Capital Markets Day on Tuesday. CEO Olof Faxander
outlined his plan for the next three to four years, including the
companyâs 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
built.
Sandvik, a world-leading, high-technology engineering group,
held its fully booked Capital Markets Day in Sandviken, Sweden, on
Tuesday, September 24. The companyâs customer base is active in
the mining, construction, automotive, energy and general
engineering sectors.
âImplementation 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 â all of which are
crucial to our growth ambitions,â 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 four years.
âThese 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,â 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.
âThe 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,â said Olof Faxander.
Stockholm, 24 September 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 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 â
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
SandvikPär Altan, Head of External Communication+46 8 456
12 37orMagnus Larsson, VP Investor Relations+46 26Â 456 12
40.
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