Sandvik implements initial phase of supply chain optimization

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| Source: Sandvik AB
As communicated at the Capital Markets Day in September, the Group’s supply
chain is to be optimized, reducing the number of production units from the
current 150 to 125 over the next three to four years. The initial phase aimed at
optimizing the supply chain affects about ten production units, predominantly in
Europe. Information concerning individual units will be announced on a case-by
-case basis. The move targets annual structural savings of approximately 800
million SEK by the end of 2015 at a cost of 900 million SEK to be charged to the
fourth quarter. The next phase is expected to be announced and a provision
posted in the accounts at the beginning of 2015.

Additionally, Sandvik Mining is implementing actions to further adjust costs to
current demand, as communicated earlier. These actions are expected to yield an
annual saving of 500 million SEK and will entail nonrecurring charges of about
400 million SEK in the fourth quarter. A total of 500 million SEK will also be
charged to the fourth quarter pertaining to costs resulting from reviews of
mining systems projects, impairment losses arising from the very low demand for
exploration equipment and other non-cash items.

Consequently, the fourth quarter of 2013 will be impacted by nonrecurring
charges totaling about 1.8 billion SEK, half of which will impact cash flow.

Sandvik Mining will realign its supply chain footprint to improve the business
area’s cost structure and gain a competitive advantage by improving its ability
to offer better service to its customers. The scope of the plan involves the
closure of units, including the discontinuation and transfer of operations to
other sites. It also implies investments in new sites located in fast-growing
markets and the expansion of existing facilities. Nonrecurring charges of 1.2
billion SEK will be booked in the fourth quarter, including charges for
adjusting the cost base to current demand, reviews of mining systems projects
and impairments. These activities are expected to generate savings of
approximately 1 billion SEK, taking full effect by year-end 2015. Half of this
figure relates to the adjustment of costs to prevailing demand.

For Sandvik Machining Solutions, the closure and downsizing of production units
represent key steps in addressing current overcapacity and reducing production
costs. The closures also aim to better align the business area’s production
footprint to global demand. The fourth quarter will include 350 million SEK in
nonrecurring charges, resulting in annualized savings of about 200 million SEK.
It is estimated that the full effect will be realized by the end of 2015.

Sandvik Construction aims to increase the share of products sourced from best
-cost countries. Consequently, the business area’s production footprint will be
realigned. Nonrecurring charges of 200 million SEK will be booked in the fourth
quarter. These initiatives are expected to yield annual savings of 100 million
SEK, with full effect by the end of 2015.

+------------------+-------+---------+----------+------------+-------+-------+
|Million SEK       |Sandvik|  Sandvik|   Sandvik|     Sandvik|Sandvik|Sandvik|
|                  | Mining|Machining| Materials|Construction|Venture|  Group|
|                  |       |Solutions|Technology|            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Nonrecurring      |    350|      350|         -|         200|      -|    900|
|charges Q4, 2013  |       |         |          |            |       |       |
|Supply chain      |       |         |          |            |       |       |
|optimization      |       |         |          |            |       |       |
|first phase       |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Nonrecurring      |    900|        -|         -|           -|      -|    900|
|charges Q4, 2013  |       |         |          |            |       |       |
|Other             |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Total nonrecurring|  1,250|      350|         -|         200|      -|  1,800|
|charges           |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|   of which,      |       |         |          |            |       |    900|
|impacting cash    |       |         |          |            |       |       |
|flow              |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Estimated cost    |    500|      200|         -|         100|      -|    800|
|savings           |       |         |          |            |       |       |
|Supply chain      |       |         |          |            |       |       |
|optimization first|       |         |          |            |       |       |
|phase             |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Estimated cost    |    500|        -|         -|           -|      -|    500|
|savings           |       |         |          |            |       |       |
|Other             |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Total estimated   |  1,000|      200|         -|         100|      -|  1,300|
|savings           |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+
|Investments       |    650|        -|         -|           -|      -|    650|
|related to        |       |         |          |            |       |       |
|supply chain      |       |         |          |            |       |       |
|optimization      |       |         |          |            |       |       |
+------------------+-------+---------+----------+------------+-------+-------+


 “Optimizing our supply chain brings several significant benefits. Notably, by
reducing the number of production units, we will achieve significant
productivity enhancements as a result of a reduction in the cost base over time.
However, just as importantly, by better aligning our production footprint to the
many fast-growing markets worldwide, we strengthen our ability to service our
customers in these developing markets and increase our capital efficiency. It is
essential that we adapt to a rapidly changing global market, where the ability
to act and react quickly is crucial for long-term success,” says Olof Faxander,
Sandvik’s President and CEO.


Stockholm, 17 December 2013

Sandvik Aktiebolag

Sandvik AB discloses the information provided herein pursuant to the Securities
Markets Act and/or the Financial Instruments Trading Act. The information was
submitted for publication at 08:30 CET on 17 December 2013.

For further information, please contact Magnus Larsson, Vice President Investor
Relations, Sandvik AB,
tel: +46 8 456 12 40, or Conny Rask, Press and PR Manager Group External
Communications, Sandvik AB,
tel: +46 26 265149.

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The Sandvik Group
Sandvik is a global industrial group with advanced products and world-leading
positions in selected areas – tools for metal cutting, equipment and tools for
the mining and construction industries, stainless materials, special alloys,
metallic and ceramic resistance materials as well as process systems. In 2012,
the Group had about 49,000 employees and representation in 130 countries, with
annual sales of about 99,000 million SEK.