UPDATE: Sandvik Takes SEK500 Million Charge As Jobs Go In Restructuring

Swedish engineering company Sandvik AB (SAND.SK) Wednesday said it will book a SEK500 million ($73 million) charge in the fourth quarter as it reduces the workforce in its mining and construction business by 400 people. The firm will also shut down one of its production units in Sweden, resulting in 100 job cuts in its materials technology division.

Sandvik, which makes stainless steel and titanium products and other high-performance materials, made the cuts as part of a broad reorganization of its business first announced last September. The Swedish company said it would split its mining and construction division in two which would involve job cuts.

"This is nothing to do with the economic climate, this is just part of a larger re-organization," Sandvik spokesman Anders Wallin said.

In its latest outlook, Sandvik said it would increase "the level of readiness to manage any weakening of the economy in the coming quarters" when it announced third-quarter earnings in November. Sandvik is due to announce fourth-quarter earnings Feb. 1.

Sandvik said it is cutting jobs worldwide in its mining and construction business.

In a separate announcement, Sandvik said it would shut down its wire and resistance-strip operations in the Swedish town Hallstahammar over the next 18 months which would lead to a loss of 100 jobs there. The move is part of a previously announced cost-cutting programme for the materials-technology unit that will reduce costs by around SEK500 million over a two to three year period.

"Our product portfolio is very consumer related... We're now moving more toward industrial applications, preferably towards energy; oil, gas and nuclear power," said Jonas Gustavsson, president of Sandvik's materials technology unit.

Sandvik said it is transferring some of its wire production to operations in Sandviken, where the company is headquartered, and to facilities in India and China. Late last year, Sandvik decided to stop production of die-cutting products in England and production of industrial springs in China.

At 1453 GMT shares traded 0.6% higher at SE96.45.

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