Sandvik's SMT Division To Cut Costs By About SEK500 Million
13 September 2011 - 5:28PM
Dow Jones News
Swedish industrial group Sandvik AB (SAND.SK) Tuesday launched a
cost-cutting program aimed at turning around its Sandvik Materials
Technology, or SMT, business area within two to three years.
Sandvik wants the division to reach "significantly higher and
sustainable profitability" and it hopes to do so by cutting
approximately SEK500 million in costs over a two-year period.
The cost reductions will be implemented through reduction of
staff and administration costs, cost optimization of the sales
organization and increased cost efficiency in production support
and purchasing, Sandvik said.
"We will face tough challenges and will need to take some hard
decisions but I'm fully convinced that we will create a really
strong and attractive Sandvik Materials Technology for the future,"
Jonas Gustavsson, president of SMT, said.
Sandvik also wants SMT to take "a more aggressive approach to
shift the product mix towards more advanced and profitable
products," and pursue "selective growth to ensure leadership in
profitable key segments," the company said in a statement.
The program is expected to increase return on capital employed,
or ROCE, by at least 10 percentage points, Sandvik said. It
estimates one-off costs of SEK800 million-SEK900 million as a
consequence of the program, of which SEK300 million-SEK400 million
will affect cash flow.
-By Niclas Rolander, Dow Jones Newswires; +46-8-5451-3102;
niclas.rolander@dowjones.com
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