Sandvik Shares Jump On Chairman Proposal

By Christina Zander

STOCKHOLM--Shares in Swedish engineering company Sandvik rose after the company said it had proposed Johan Molin, the current chief executive officer of lock maker Assa Abloy, as chairman, as investors hope he will help boost the company's profits.

The move is seen as signal that change is coming to Sandvik, a maker of industrial tools, which has developed largely sideways in the last decade. Sandvik's profitability has been hit by low demand in the mining sector, and cost saving measures have so far done little to lift margins.

"Johan Molin is the CEO in Sweden who instills the greatest confidence in investors," said Daniel Schmidt, an analyst at SEB. "With him Sandvik gets a real doer."

Mr. Molin has been CEO of Assa Abloy, since 2005 and during that time operating profit has more than doubled from 4.08 billion Swedish Kronor in 2005 to SEK9.23 billion in 2014.

Meanwhile, Sandvik's operating profit was SEK10.12 billion in 2014, compared with SEK9.53 billion in 2005. In the same period, Sandvik's main competitor, Atlas Copco, managed to lift its operating profit to SEK17.00 billion from SEK9.40 billion.

At 1039 GMt shares traded up 5.8% at SEK104.40.

Write to Christina Zander at [e-mail]