Sandvik AB, Sandviken, Sweden, reported further harsh business conditions in 2013 which saw group sales decline by 7% to SEK 87.328 billion ($13.579 billion), combined with an 18% decline in profits to SEK 28.240 billion ($4.391 billion). Olof Faxander, CEO, commenting on the full year results said that in the fourth quarter of 2013 the global market situation remained largely on par with the preceding quarter but that the dramatic fall-off in demand appears to have been halted. However, currency effects and changed metal prices negatively impacted earnings.
He stated that efforts have been made to reduce costs, focused efforts have resulted in inventories declining for six consecutive quarters, and there were several breakthrough product launches during 2013.
However, despite declining group sales the company’s Machining Solutions division, a global market leader in advanced solutions for metal cutting tools with brands such as Sandvik Coromant, Seco Tools, Walter and Safety, reported improved conditions in the fourth quarter compared with the same period the preceding year. Invoiced sales for the quarter increased by 4% at fixed exchange rates amounting to SEK 7.4 billion. Strong demand was noted in the aerospace industry, and the automotive industry improved, predominately in Asia. The energy segment was stable at a high level, while business conditions in general engineering were largely unchanged.
The first phase of the initiative to optimise the supply chain in the cutting tool segment was announced in December involving the closure and downsizing of production units in efforts to address the current overcapacity and reduce production costs. The closure of the tool holder unit in Sandviken and the round tools unit in Norrköping, Sweden, was initiated in January 2014.
Sandvik Venture division, which includes Sandvik Hard Materials, Diamond Innovations, Wolfram and Sandvik Process Systems, also saw sales increase in the 4th quarter, up by 18% to SEK 1.5 billion compared with the preceding quarter. In January 2014 Sandvik Venture announced the acquisition of Varel International Energy Inc., a global supplier of drilling solutions focusing on drill bits, downhole products for well construction and well completion.
On February 5 2014 a ceremony was held to prepare for the new Sandvik Group Research and Development Centre in Pune, India. Pune is an important Sandvik site in terms of production, R&D, design and engineering. During the period 2014 and 2017 an organisation employing around 100 people will be gradually developed, including a research team specialising in modelling and simulation which is already in place.