Sandvik sees downturn in first half results
August 9, 2016
Sandvik AB, based in Sandviken, Sweden, has reported a 5% decline in order intake and revenues in the first half of 2016. The high-tech global engineering group producing tools and tooling systems for industrial metal cutting, equipment and tools for the mining and construction industries and advanced stainless steels and special alloys as well as products for industrial heating.
Sandvik’s order intake amounted to SEK 40,168 million and revenues were SEK 40,021 million. Gross profit was down 3% at SEK 5.562 million. The decline in revenue was mainly due to lower business activity in the oil and gas segment, which to some extent also indirectly impacted the general engineering segment. There was also the adverse impact of exchange rates.
The company reported that its largest division, Sandvik Machining Solutions, saw order intake in the first half of 2016 decline by 2% at SEK 16,105 million. Demand in Europe improved by 4% year on year, while North America and Asia declined by -7% and -4%, respectively.
Sandvik Mining division revenues were largely stable with order intake down 4% at SEK 11.374, whilst Sandvik Materials Technologies division’s order intake declined 7% to SEK 6.242 million due to a challenging market environment and adverse impact of -7% from lower alloy surcharges, primarily related to nickel.
The Sandvik Construction division reported that order intake declined organically by 11% to SEK 4.038, and the Sandvik Venture division reported order intake and revenues declining by 12 and 18% to SEK 3.837 and SEK 3.531 million respectively in the first half of 2016.
In May 2016 Sandvik announced that it would consolidate to three business areas by reorganizing its operations in the Sandvik Venture division. This includes:
- Moving Wolfram (Wolfram Bergbau und Hütten) and two selected production sites from Sandvik Hyperion into Sandvik Machining Solutions;
- Moving Sandvik Drilling and Completions (Varel) into Sandvik Mining and Rock Technology;
- Sandvik Process Systems and Sandvik Hyperion, excluding the two sites to be merged into Sandvik Machining Solutions, are identified as non-strategic operations and will remain in Sandvik Venture, now to be labelled ‘other operations’. The new structure took effect from 1 July 2016.
