Swedish engineering group Sandvik on Tuesday set in place new measures to cut costs and raised its long-term financial targets as uncertainty continued amid the conflict in Ukraine.
Among its new measures, the maker of metal-cutting tools and mining gear said it would consolidate production units and close sites in a bid to save an annual 600 million Swedish crowns ($60 million).
Sandvik said it was targeting higher revenue growth of at least 7% through a business cycle, organically and through acquisitions, and adjusted operating margin (EBITA) of 20-22%.
Its previous targets had been for at least 5% revenue growth and 16% in operating margin (EBIT). Sandvik reached both targets in 2021.
“We had goals previously that we have reached and we proved that we can deliver on those. So we now think it is time to raise the ambition level,” Chief Executive Stefan Widing told a news briefing ahead of a capital markets day.
Sandvik said it would take a total charge of 1.7 billion crowns, as around 580 of its 44,000 employees would be made redundant.
The company in February paused its operations in Russia, which accounted for 3.5% of sales in 2021. It had no production in the country but employed some 900 people in sales and service roles.
“We are continuing to work on how to handle this ahead. We have come quite far in that work,” Widing said, adding it was too early to give more details.
Sandvik said last month that demand for its products was still high, while the biggest risk from the war was its indirect impact on the world economy.
Sandvik, whose competitors include Epiroc and Kennametal, is planning to distribute and list its specialty steel business on the Nasdaq Stockholm exchange on Aug. 31, and rename it Alleima.
($1 = 9.9850 Swedish crowns)
(By Helena Soderpalm; Editing by Niklas Pollard and Bernadette Baum)
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