SANDVIK AB S/ADR - SDVKY STOCK NEWS

Sandvik reports transaction costs of approximately SEK 180 million for Q3 2021 due to accelerated M&A activities, with eight total acquisitions this year. Of this, Sandvik Manufacturing and Machining Solutions accounts for SEK 160 million, while Sandvik Mining and Rock Solutions incurs SEK 20 million mainly from acquiring DSI Underground. The acquisitions will dilute SMR's EBIT margin by around 400 basis points in Q3 and 200 basis points in Q4 2021. These costs won't impact reported operating profit.

Sandvik has finalized its acquisition of CNC Software Inc., a top provider of CAD/CAM solutions, known for Mastercam, the industry's leading CAM brand. In 2020, CNC Software reported revenues of approximately USD 60 million with an EBIT margin of 25-30%, and about 60% of its revenue was recurring. This acquisition will enhance Sandvik's Design & Planning Automation division within its Manufacturing and Machining Solutions.

Sandvik projects that over half of its underground mining equipment sales will be electric by 2030, driven by increasing demand for sustainable solutions. The company highlights the advantages of electric equipment, including cost savings and an emission-free environment. Showcased at MINExpo International 2021, Sandvik launched new battery-electric products, including the TH550B truck, designed to enhance operational efficiency with innovations like battery-swapping technology. With plans to cover all underground applications by 2022, Sandvik solidifies its position as a leader in electric mining solutions.

Sandvik AB has established its Nomination Committee ahead of the 2022 Annual General Meeting scheduled for April 27, 2022. The committee comprises representatives from the four largest shareholders and the Chairman of the Board, Johan Molin. Key members include Fredrik Lundberg, Anna Magnusson, Marianne Nilsson, and Lars Pettersson. The committee will prepare proposals regarding board elections and auditor appointments. Shareholders can submit proposals to the committee's Secretary, Åsa Thunman, by January 14, 2022.

Sandvik has signed an agreement to acquire CNC Software Inc., the creator of Mastercam, a leading CAD/CAM software solution. This acquisition enhances Sandvik's digital manufacturing strategy and positions it as a leader in the CAM market with over 270,000 Mastercam licenses. CNC Software, founded in 1983, reported 2020 revenues of USD 60 million and a strong EBIT margin of 25-30%. While the acquisition is expected to have a slightly negative impact on Sandvik's earnings per share initially, it promises to boost productivity in manufacturing through enhanced tooling and automation solutions.

Sandvik has raised its revenue target for the Sandvik Manufacturing Solutions segment from SEK 4 billion to SEK 6 billion by 2025. This revision follows the announced acquisitions of Cambrio, DWFritz Automation, and CNC Software, which are expected to enhance organic growth. The EBITA margin target for the segment has also been set at 20% by 2025. Previously, this segment's revenue was approximately SEK 800 million in 2020, indicating significant growth plans. The overall target growth for Sandvik remains at ≥ 5% through organic and acquisition strategies.

On August 20, 2021, Sandvik announced the completion of its acquisition of 67% of Chuzhou Yongpu Carbide Tools Co., Ltd, a China-based premium solid round tools company. This transaction allows Sandvik to expand its market presence, with revenues of approximately SEK 400 million for the prior twelve months. The acquisition has an initial neutral impact on earnings per share and is expected to enhance Sandvik's manufacturing capabilities. A call option for the remaining shares exists after three years.

On August 3, 2021, Sandvik announced the acquisition of DSI Underground, a leader in underground mining and tunneling solutions, which closed on July 7, 2021. This acquisition includes DSI's stake in the Rocbolt Technologies joint ventures across China, South Africa, Mongolia, and Australia. For 2020, DSI reported revenues of approximately EUR 516 million, with Rocbolt Technologies contributing an additional EUR 80 million. However, the acquisition is expected to dilute the EBIT margin for Sandvik Mining and Rock Solutions by up to 300 basis points in the latter half of 2021 and about 170 basis points in 2022.

Sandvik has agreed to acquire 67% of Chuzhou Yongpu Carbide Tools Co., Ltd, a premium solid round tools manufacturer based in China, with plans to purchase the remaining shares in three years. This acquisition aligns with Sandvik's strategy to enhance its market share in solid round tools and expand within the Asian market. Chuzhou Yongpu, generating approximately SEK 400 million in revenue, will continue to operate independently. The deal is expected to close in Q3 2021, with an initial neutral impact on Sandvik's earnings per share.