Sandvik Plans to Cut Costs, Reduce Number of Sites

   By Gustav Sandstrom 
 

STOCKHOLM--Swedish engineering group Sandvik AB (SAND.SK) said Tuesday it plans to cut costs by 500 million-700 million Swedish kronor ($78 million-$110 million) by the middle of next year and reduce the number of its sites to improve efficiency.

The company is also adjusting production in its mining business in response to a market slowdown in the first half of the current year, it said in a statement from its Capital Markets Day in Sandviken, Sweden. The company's customer base is active in the mining, construction, automotive, energy and general engineering sectors.

It said it will book SEK300 million-SEK400 million in one-off charges for the cost-reduction measures.

Sandvik will cut the number of its sites to around 125 from 150 over the next three to four years at a cost of around SEK3 billion-SEK4 billion to boost supply-chain efficiency, it said.

The company said it expects operating profit for the third quarter of 2013 to be negatively affected by about SEK300 million given foreign-exchange rates at the end of August.

Sandvik aims for a 25% return on capital employed in the long term, it added.

It expects to grow mainly in developing markets and in North America while Europe "is likely to play a less prominent role" in coming years, the company said, adding acquisitions will be an integral part of its growth strategy.

At 0846 GMT, Sandvik's shares were down 1.6% at SEK91.20 against a 0.2% rise in the wider Stockholm market.

Write to Gustav Sandstrom at [e-mail]

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