INTERVIEW: Sandvik Tooling Orders Strong, Says CEO

Engineering company Sandvik AB (SAND.SK) has seen continued strong demand for its tooling unit during January, Chief Executive Olof Faxander told Dow Jones Newswires Wednesday.

"Tooling order intake during the first weeks of January has continued the trend we saw in the fourth quarter. The first few weeks of this year, the market situation has been positive," he said.

Sandvik's tooling unit's order intake increased by 21% year-on-year in the fourth quarter to end-December. However, group total order intake was down 7% and earnings were hit by SEK1.6 billion ($237 million) in charges related to the company's ongoing restructuring and job cuts.

Net profit in the quarter fell sharply to SEK731 million, from SEK2.1 billion a year earlier. Operating profit dropped to SEK1.6 billion, from SEK3.1 billion a year earlier, although when adjusted for the charges, operating profit totaled SEK3.2 billion.

"The underlying result was very strong," Faxander said, adding that only minor restructuring charges will be booked in the coming quarters.

Faxander, who joined Sandvik from Swedish steel maker SSAB (SSAB-A.SK) last year, said he expects savings from the reduced costs to start to show gradually during 2012.

Sandvik's materials technology unit, for which the firm has launched a new strategy and replaced management, continued to struggle, with a 19% drop in order intake year-on year. Faxander said his main focus in the short- and middle-term is to lift its results.

"But in the middle- to long-run we can consider structural alternatives--which could mean a number of things, such as changing our ownership," he said.

At 0954GMT, Sandvik shares traded 4.3% lower at SEK96.15.

-By Katarina Gustafsson, Dow Jones Newswires [phone]; [e-mail]