Sandvik implements the final phase of the supply chain optimization program and makes further right-sizing as well as impairments
Sandvik has identified additional structural efficiency measures which will generate annual savings of about 600 million SEK, including the third and final phase of the supply chain optimization program.
Results for the fourth quarter of 2015 will be impacted by non-recurring charges totaling 1,550 million SEK, out of which 552 million SEK impact cash flow.
“The total supply chain optimization program will reduce the number of production units by 23, in line with the original target for continuing operations. We will achieve significant efficiency improvements as a result of the reduction in the cost base over time,” says Björn Rosengren, Sandvik’s President and CEO.
“The additional right sizing measures are structural and taken to improve internal efficiency long term, hence do not reflect any recent change in the market environment. Impairment losses are primarily related to weaker than expected performance in parts of Sandvik’s operations in China.”
Due to a review of Sandvik Mining’s supply chain optimization program phase two, Sandvik releases cost provisions of 169 million SEK. The targeted savings for the total supply chain optimization program are 1.3 billion SEK for continuing operations.
| MSEK | SUPPLY CHAIN OPTIMIZATION |
RIGHT-SIZING SANDVIK MACHINING SOLUTIONS & GROUP |
IMPAIRMENTS | GROUP TOTAL |
| ESTIMATED SAVINGS RUN-RATE AT YEAR-END 2017 |
323 |
282 | - | 605 |
| NON-RECURRING ITEMS Q4 2015 | 254 | 321 | 975 | 1,550 |
| CASH FLOW IMPACT | 231 | 321 | - | 552 |
Information concerning individual units will be announced locally on a case-by-case basis, pending union consultations.
For further information, please contact Ann-Sofie Nordh, Vice President Investor Relations, tel: +46 8 456 1494, Anna Vilogorac, Investor Relations, tel: +46 8 456 1194 or Oskar Lindberg, Investor Relations, tel +46 8 456 1230.
Stockholm, 10 December 2015