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 gustav.sandstrom@dowjones.com
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