Engineering company Sandvik Materials Technology intends to divest its welding and stainless steel wire cutting businesses in order to consolidate its product portfolio and improve its long-term performance.

The company explains that the businesses are subject to intense market competition and Sandvik does not hold a prominent market position in both these businesses. Last year, the wire business generated total annual revenue of about 700-million Swedish krona (SKr).

The welding and stainless steel wire cutting businesses will be included in product development consultancy Kanthal’s product area and are regarded as core businesses, owing to the potentially strong market positions and growth for Kanthal. Sandvik explains that, last year, the operations relocated to the Kanthal product area and had annual revenues of about SKr800-million.

“The divestment of the welding and stainless wire businesses will enable Sandvik Materials Technology to focus more on its core operations – advanced stainless steels and special alloys for the most demanding industries,” explains Sandvik Materials Technology business president Petra Einarsson.

She explains that a charge of SKr450-million related to the transaction will impact on results for the second quarter of this year. This primarily involves impairments related to fixed assets; however, the cash flow impact from the transaction is expected to be positive.

“We will continue to develop our core businesses to ensure long-term value creation. A new organisational structure is being created, effective from last month, whereby each product area will be responsible and accountable for the entire value chain and its results. “The four new product areas will be Tube, Kanthal, Powder and Strip,” highlights Einarsson.

She points out that Sandvik Materials Technology is a business area within the larger Sandvik Group. It is a manufacturer of high value added products in stainless steels and special alloys, as well as products for industrial heating. Its expertise is based on an integrated production platform and industry-leading metallurgy and research and development. Last year, the company’s sales were SKr13-billion and it has about 6 500 employees globally.

“We hold world-leading positions in selected areas – tools and tooling systems for metal cutting; equipment and tools, service and technical solutions for the mining and construction industries; and products in advanced stainless steels and special alloys, as well as products for industrial heating,” she concludes.