Sandvik splits mining and construction

IN a bid to achieve “world-class performance”, Sandvik AB, the company that owns what was Sandvik Mining & Construction, is splitting its existing three divisions into five business areas.
Sandvik splits mining and construction Sandvik splits mining and construction Sandvik splits mining and construction Sandvik splits mining and construction Sandvik splits mining and construction

A Sandvik TH660 underground haul truck

Noel Dyson

The restructure means the company will remain in mining but will hive off the construction part of that division to its own separate area.

This, the company believes, will allow it to concentrate its attention more fully on each segment.

“Sandvik has a strong offering and a market-leading position in many fast-growing and developing markets as well as in more mature markets,” Sandvik president and CEO Olof Faxander said.

“We need to strengthen this position and also improve in some areas to be world class in all our businesses. Sandvik will always have ambitious targets but there also has to be strong commitment to reaching these targets.

“It is essential that we adopt strategies and organisation to a rapidly changing global market where the ability to act and react fast is crucial for long-term success.

“The new organisation means a clear and strong focus on four core business areas where our targets are both market leadership and world-class profitability.

“We also need to enable development of adjacent businesses and in the fifth business area ensure that smaller operations with high potential have the opportunity to develop in the best way.”

So what are these five business areas of which Faxander speaks?

The first is Sandvik Mining and its medium-term targets are to maintain a strong growth rate, maintain and strengthen a leading market position and increase profitability relative to key peers.

This is an area where Sandvik will face some strong challenges. Its key competitor Atlas Copco has continued to improve its offering, which provides it with opposition enough.

However, a much larger mining player in the form of the expanded Caterpillar will be pushing into more of the areas Sandvik operates in, such as drills and coal equipment.

Sandvik Construction will be another business area. Its medium-term targets are to turn around the business area to a clearly higher profitability and subsequently evaluate different alternatives for growth and expansion.

However, unless a credible path for “acceptable profitability” is visible in the medium-term this business area could be spun off.

Sandvik Machining Solutions already holds a strong position in the advanced industrial metal cutting space.

The aims for this area are to continue to grow its strengths in this area and look for opportunities to expand into adjacent areas.

Sandvik Materials Technology offers value-added metal products for demanding applications in selected niches and, unless it can meet its goals, may also be spun off.

Its medium-term targets are to turn around to a “clearly higher profitability” and evaluate opportunities for growth and expansion. Some parts of it will be moved to the newly-created Sandvik Venture.

Sandvik Venture is aimed at creating the best possible environment for growth and profitability in “attractive and fast-growing” operations.