Reuters | January 25, 2024 |
Sandvik’s Toro LH518iB. Credit: Sandvik.
Sandvik plans to cut around 1,100 jobs as part of a cost-saving drive, the Swedish mining equipment maker said on Thursday, as it reported adjusted fourth-quarter profits just below expectations.
The company said orders with major mining companies were at a good level, but that it had seen a slowdown from smaller miners and softness in infrastructure markets.
It also said shipping disruption in the Red Sea was leading to some delays in larger mining equipment, but that it was manageable.
“But the longer it goes on the more troublesome it might become … it will also contribute to a new uncertainty on the logistics front just when we thought things had normalized,” CEO Stefan Widing told reporters, adding the company was not hiking prices due to any extra costs.
Sandvik said it planned to reduce annual costs by around 1.2 billion Swedish crowns ($115 million), including cutting nearly 3% of its workforce.
“The new measures include consolidation of productions units and optimizing the structure of the organization. The measures are group-wide and global,” it said, adding restructuring costs would total around 2.4 billion crowns.
Fourth-quarter operating profit before items affecting comparability fell to 5.74 billion crowns from 5.98 billion a year-earlier, below the 5.87 billion expected by analysts polled by LSEG.
The miss was due mainly to adverse currency moves and weak volumes, Jefferies analysts said.
The company proposed a 2023 dividend of 5.50 crowns per share, up from 5.00 crowns a year earlier and roughly in line with the 5.59 crowns expected by analysts.
Its shares were up almost 1% at 1043 GMT.
Widing said the slower demand from smaller mining companies was “mainly due to higher interest rates, so it takes a little bit longer for them to get financing”.
Sandvik’s overall order intake came to 30.1 billion crowns, roughly in line with the consensus estimate, according to Jefferies.
Excluding acquisitions and at fixed exchange rates, orders fell 4%.
($1 = 10.4351 Swedish crowns)
(By Marie Mannes; Editing by Emelia Sithole-Matarise and Mark Potter)
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