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Sandvik shows its financial strength in record year
Höganäs income up 10% despite weak markets OPERATING income went up 10 per cent for Swedish iron powder giant Höganäs last year to SEK 455 million. Net sales for the year totalled SEK 4.6 billion, a 16 per cent increase excluding the SCM copper operation, and currency effects had a positive effect on turnover, boosting it by 2 per cent. Volumes, excluding the copper operation, were down 2 per cent on the previous year. Volume growth reflected weaker global market progress than in 2004, said a company statement. Sales volumes were affected by customers reducing inventory levels in 2005, itself the consequence of bringing forward
deliveries in late 2004 to mitigate the increased price surcharges of early 2005. North American car sales for 2005 were consistent with the previous year. After a weak start to the year, a temporary rally occurred through the summer months due to a discounting programme on car purchases introduced in the US. Production was also consistent with the previous year. Increased sales of smaller and more fuel-efficient vehicles, and US automakers losing market share, has resulted in the US powder market representing 50 per cent in global volumes - contracting in 2005, although there was some recovery in the fourth
quarter. Markets in Western Europe also remained weak, with growth in Asia and South America unable to offset these downturns, which meant that overall, global powder market volumes declined. Nevertheless, Höganäs' volumes on the American market were healthy. Progress in Western Europe remained negative. Volumes in Eastern Europe and South America remained robust and in Asia, progress varied, with positive performance in Japan and Southeast Asia. The Iron Powder business area's net sales grew by 14 per cent to SEK 3.3 billion, the turnover increase largely due
to increased prices from surcharges. The business area's volumes were consistent with the previous year. Volume growth was highest in Eastern Europe, North America, South America and some Asian countries. Operating income was adversely affected by SEK 6 million of bad debt in the UK in the fourth quarter, and by previously reported writedowns, bad debt and the revaluation of raw materials. With overall margins at 11.5 per cent, down slightly from 12.3 per cent in 2004, return on capital employed was 12.0 per cent (17.8) and return on equity was 12.2 per cent (21.0).
Sandvik shows its financial strength in record year THE FINANCIAL headlines for Sandvik are all good as managers look back at 2005. Profit after financial items rose 28 per cent to SEK 8.8 billion; order intake increased 15 per cent to SEK 66 billion; net profit increased 25 per cent to SEK 6.3 billion; and earnings per share rose 28 per cent to SEK 24.70. A proposal for a dividend increase from SEK 11 to SEK 13.50 will be considered by the annual general meeting early in May along with a proposal for a 5:1 share split. The last quarter showed a very strong performance. "Demand during the quarter remained strong", said CEO Lars Pettersson. "Profit after
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MPR March 2006
financial items increased by 34 per cent to SEK 2,566 million and earnings per share rose by 39 per cent. It is pleasing that we increased the profit margin in all business areas and that Sandvik Materials Technology is now achieving its margin goal through increased efficiency and an improved product mix. “This means that 2005 was another very strong year for Sandvik. Invoiced sales amounted to SEK 63 billion and profit after financial items increased by 28per cent to SEK 8.8 billion." said Mr Pettersson. • It was decided in March to consolidate the four product areas Valenite, Safety, Titex
and Prototyp within Sandvik Tooling into two for the purpose of strengthening growth potentials and increasing efficiency. • In September, Sandvik acquired 10 per cent of the share capital in the Chinese tungsten carbide powder producer Gesac. Gesac has annual sales of about SEK 500 M. • Sandvik Mining and Construction acquired the American company Smith International Inc's 50per cent interest in Sandvik Smith AB. At the same time, the name was changed to Sandvik Rotary Tools AB. • Sandvik Mining and Construction and the South African mining company
Lonmin signed an agreement covering long-term co-operation in the mechanised mining of platinum. • In the third quarter, Sandvik Materials Technology received the largest order to date for seamless production tubes to the oil/gas industry. The order value totals more than SEK 1 billion and is reported on a current basis. Deliveries will be made over the next three years. • In December, the redemption of the remaining shares in Walter AG was completed, which meant that Sandvik attained 100 per cent ownership of the company. Walter was delisted from the German stock exchange.
metal-powder.net
deliveries in late 2004 to mitigate the increased price surcharges of early 2005. North American car sales for 2005 were consistent with the previous year. After a weak start to the year, a temporary rally occurred through the summer months due to a discounting programme on car purchases introduced in the US. Production was also consistent with the previous year. Increased sales of smaller and more fuel-efficient vehicles, and US automakers losing market share, has resulted in the US powder market representing 50 per cent in global volumes - contracting in 2005, although there was some recovery in the fourth
quarter. Markets in Western Europe also remained weak, with growth in Asia and South America unable to offset these downturns, which meant that overall, global powder market volumes declined. Nevertheless, Höganäs' volumes on the American market were healthy. Progress in Western Europe remained negative. Volumes in Eastern Europe and South America remained robust and in Asia, progress varied, with positive performance in Japan and Southeast Asia. The Iron Powder business area's net sales grew by 14 per cent to SEK 3.3 billion, the turnover increase largely due
to increased prices from surcharges. The business area's volumes were consistent with the previous year. Volume growth was highest in Eastern Europe, North America, South America and some Asian countries. Operating income was adversely affected by SEK 6 million of bad debt in the UK in the fourth quarter, and by previously reported writedowns, bad debt and the revaluation of raw materials. With overall margins at 11.5 per cent, down slightly from 12.3 per cent in 2004, return on capital employed was 12.0 per cent (17.8) and return on equity was 12.2 per cent (21.0).
Sandvik shows its financial strength in record year THE FINANCIAL headlines for Sandvik are all good as managers look back at 2005. Profit after financial items rose 28 per cent to SEK 8.8 billion; order intake increased 15 per cent to SEK 66 billion; net profit increased 25 per cent to SEK 6.3 billion; and earnings per share rose 28 per cent to SEK 24.70. A proposal for a dividend increase from SEK 11 to SEK 13.50 will be considered by the annual general meeting early in May along with a proposal for a 5:1 share split. The last quarter showed a very strong performance. "Demand during the quarter remained strong", said CEO Lars Pettersson. "Profit after
8
MPR March 2006
financial items increased by 34 per cent to SEK 2,566 million and earnings per share rose by 39 per cent. It is pleasing that we increased the profit margin in all business areas and that Sandvik Materials Technology is now achieving its margin goal through increased efficiency and an improved product mix. “This means that 2005 was another very strong year for Sandvik. Invoiced sales amounted to SEK 63 billion and profit after financial items increased by 28per cent to SEK 8.8 billion." said Mr Pettersson. • It was decided in March to consolidate the four product areas Valenite, Safety, Titex
and Prototyp within Sandvik Tooling into two for the purpose of strengthening growth potentials and increasing efficiency. • In September, Sandvik acquired 10 per cent of the share capital in the Chinese tungsten carbide powder producer Gesac. Gesac has annual sales of about SEK 500 M. • Sandvik Mining and Construction acquired the American company Smith International Inc's 50per cent interest in Sandvik Smith AB. At the same time, the name was changed to Sandvik Rotary Tools AB. • Sandvik Mining and Construction and the South African mining company
Lonmin signed an agreement covering long-term co-operation in the mechanised mining of platinum. • In the third quarter, Sandvik Materials Technology received the largest order to date for seamless production tubes to the oil/gas industry. The order value totals more than SEK 1 billion and is reported on a current basis. Deliveries will be made over the next three years. • In December, the redemption of the remaining shares in Walter AG was completed, which meant that Sandvik attained 100 per cent ownership of the company. Walter was delisted from the German stock exchange.
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