Sandvik CEO: Prepared to Cut Costs to Adapt to Falling Oil Price

   By Christina Zander 
 

STOCKHOLM--Sandvik AB (SAND.SK) Chief Executive Olof Faxander said Thursday the impact of lower oil prices on the company's business is "difficult to asses," but he is prepared to cut costs if order volumes fall.

The company, which makes tools for the mining, construction and energy sectors, has seen a higher level of caution among customers in the energy segment, Mr. Faxander said in reference to the company's fourth-quarter earnings.

The oil and gas industry accounts for about 8% of Sandvik's total sales.

"Lower investments in the oil and gas sector would naturally have a negative effect on Sandvik," Mr. Faxander said in a conference call.

He said customers in the energy sector haven't canceled any orders yet, but Sandvik's Varel Energy Services unit has already started to cut costs because of lower demand in the wake of lower oil prices.

Sandvik reported Thursday a fourth-quarter net profit of 1.50 billion Swedish kronor ($183 million), up from SEK46 million in the same period a year earlier. Sales rose to SEK23.39 billion from SEK21.77 billion. Operating profit rose to SEK2.62 billion from SEK590 million.

Shares closed at SEK79.95 Wednesday.

Write to Christina Zander at [e-mail]

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