Sandvik provides an update on total M&A cost impact for the third quarter
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.
- Accelerated M&A activities highlight strategic growth focus.
- Completed eight acquisitions in 2021, potentially enhancing market position.
- Transaction costs of SEK 180 million may raise concerns about financial implications.
- Dilution of SMR's EBIT margin by 400 basis points in Q3 could affect profitability.
SANDVIKEN, Sweden, Sept. 30, 2021 /PRNewswire/ -- Sandvik will report transaction costs of around SEK 180 million in total for the third quarter as a consequence of the accelerated M&A activities in recent quarters, which have resulted in eight announced acquisitions, signed or closed, during 2021.
Sandvik Manufacturing and Machining Solutions will report transaction costs of around SEK 160 million in total for the third quarter.
The transaction costs for Sandvik Mining and Rock Solutions (SMR) of approximately SEK 20 million are mainly related to the acquisition of DSI Underground. These are already included in the previously communicated dilution impact of 300 basis points on SMR's operating profit (EBIT) margin for the second half of 2021, of which the dilution impact is expected to be approximately 400 basis points in the third quarter and approximately 200 basis points dilution for the fourth quarter. See announcement dated August 3, 2021: Sandvik acquires DSI Underground Joint Ventures, Rocbolt Technologies
The M&A charges will not be reported as items affecting comparability and hence impact reported and adjusted operating profit in the business areas Sandvik Manufacturing and Machining Solutions and Sandvik Mining and Rock Solutions.
Sandvik has stepped up the pace of acquisitions this year as part of its strategy to increase focus on growth.Out of the total signed or closed acqusistions so far in 2021, five acquisitions is within Sandvik Manufacturing and Machining Solutions, two in Sandvik Mining and Rock Solutions and one in Sandvik Rock Processing Solutions.
Stockholm, September 30, 2021
Sandvik AB
For further information, contact Louise Tjeder, Vice President Investor Relations, phone: +46 70 782 6374 or Johannes Hellström, Press and Media Relations Manager, phone: +46 70 721 10 08.
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SOURCE Sandvik
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