Sandvik, Swedish manufacturer of tools for metal cutting and mining and construction-related tools and equipment, last week said its order intake rate declined in April and May to a level 40 to 50 percent lower than the same period in 2008. The company’s production rate has fallen below the order-intake rate by about 10 percent during the second quarter.
The company has let go of about 6,000 people and more than 12,000 people have agreed to decrease work and salary 15 to 20 percent. The company has closed 10 production facilities. Total cost reductions for the full year will total about SEK 6 billion (about U.S. $760 million).
“The current market situation is very weak, which has a substantial effect on a business like Sandvik’s,” said Lars Pettersson, president and CEO. “Implemented and approved actions will have a gradual effect, but the weak volume trend in the second quarter and probably also the third quarter will have a significantly negative effect on earnings. At the same time, it is satisfying that the favorable trend in cash flow, inventory reductions and demand in parts of the energy sector that we observed in the first quarter are continuing.”
