November 21, 2017 / 11:29 AM / 25 days ago

Sandvik says needs to restore SMT margins before deciding on unit's future

STOCKHOLM, Nov 21 (Reuters) - Engineering group Sandvik said on Tuesday it first needed to restore profitability in its specialty steels unit (SMT) before deciding on the future of the business that has long been speculated to be headed for a listing or a sale.

* “We need to get the profitability back to where it needs to be, and we have said that it is 10 percent (margin) that is the target,” Sandvik CEO Bjorn Rosengren told reporters regarding SMT

* “We need to see that the business is in order before we can decide whether to either sell the business or keep it,” Rosengren said ahead of group capital market day

* SMT is Sandvik’s smallest business area, it has long been lagging the rest of the group in terms of profitability, and it made a surprise loss in Q3

* Rosengren said Sandvik has laid out an aggressive growth plan for its additive manufacturing business, which was established as a separate product area earlier this year, but is still a tiny part of Sandvik’s total business

* Sandvik has earlier identified additive manufacturing, the measurement technology and software as three key growth areas for the future within its metal cutting tools business (SMS), the biggest profit contributor in the group

* Rosengren said SMS is investing heavily new technologies, around 100 million Swedish crowns ($11.8 million) in operational costs currently, will be 150-200 million in 2018

* Rosengren said the company is looking at acquisitions of software and metrology assets, but also in standardized assortment such as in round tools ($1 = 8.4981 Swedish crowns) (Reporting by Johannes Hellstrom; editing by Niklas Pollard)

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