By Dominic Chopping
STOCKHOLM--Swedish engineer Sandvik AB (SAND.SK) said Wednesday
it will adjust capacity and order backlog in its Material
Technology unit to reflect conditions in the nuclear power
industry, but said the overall net effect of these actions on
operating profit will be slightly positive.
MAIN FACTS:
-Sandvik Materials Technology will adjust capacity and order
backlog for steam generator tubing.
-Order backlog will be written down by SEK1.1 billion,
negatively affecting the order intake in 2Q.
-Overall net effect on 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.
-To phase out older installed steam generator tubing mill in
Sandviken, Sweden, to concentrate all production to the new steam
generator tubing mill in Sandviken, which commenced commercial
production in 2012.
-Older steam generator tubing mill will be mothballed.
-The capacity adjustment will take place during 2Q 2014.
-Adjustment of steam generator tubing capacity will see
redundancies of 110 full time Sandviken employees.
-Redundancies handled through reducing third party workforce,
natural turnover and voluntary agreements.
-Sandvik will still be able to fulfill its present contractual
obligations to 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.
-Sandvik will close currency and nickel contracts relating to
existing hedges of the orders that will be written down. This will
generate a positive effect on operating profit of SEK300
million.
-Shares closed Tuesday at SEK88.80, valuing the company at
SEK111.39 billion.
-Write to Dominic Chopping at dominic.chopping@dowjones.com;
Twitter: @WSJNordics
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