This strategy could include evaluating Sandvik Materials Technology “for full or partial divestment [...] unless a credible path to acceptable profitability is visible in the medium term,” the company said.
Sandvik wants to increase profitability, strengthen its position in attractive markets and segments, and create a more active portfolio management. It will focus more on growth in strategically important, fast-growing and profitable markets, and shorten decision making in order to faster adapt to changing market conditions. Capital allocation will be more strictly directed towards areas of high returns and value creation, and alternative structural solutions will be evaluated on a regular basis for units that are of lower strategic importance or do not reach acceptable returns, the company explains.
To do this, Sandvik will be split in five business areas instead of the current three, and a stronger platform for utilizing common resources will be developed. These are:
- Sandvik Mining, focused on global leadership on products, solutions and services for high-performing hard rock and soft rock underground and surface mining operations
- Sandvik Machining Solutions, offering products and solutions for advanced industrial metal cutting
- Sandvik Materials Technology, which offers advanced metal products for demanding applications in selected niches.
- Sandvik Construction, which offers products, solutions and services within selected niches of the global construction industry
- Sandvik Venture, a business area aiming to create the best possible environment for growth and profitability in attractive and fast-growing operations. Process Systems and the parts of MedTech comprising medical devices (implants and instruments) will be moved to Sandvik Venture along with, potentially, Sandvik Materials Technology. Also included in Sandvik Venture will be Sandvik Process Systems, Sandvik Hard Materials, Diamond Innovations, Wolfram and Dormer. Due to limited strategic fit and poor financial results a process has been initiated to divest the parts of Sandvik MedTech comprising implants and instruments.
The new organisation will be effective from 1 January 2012. The group’s financial targets over a business cycle are, for the time being, kept unchanged.