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. Last Updated: 07/27/2016

Sandvik Ups Its Stake in MKTS

STOCKHOLM -- Swedish hard metals and tools group Sandvik AB announced that it has acquired more than half the shares in leading the Russian hard metal firm MKTS.

"Sandvik now has over half of the shares, a stake which will be increased in future," it said in a statement Wednesday.

Sandvik has worked with Moskovski Kombinat Tevrdih Splavov, which makes and sells hard metals for industrial tools, for about 20 years. Since privatization of the Moscow-based group in 1993, it has gradually increased its stake.

"This is an important part of Sandvik's expansion into Eastern Europe," Svante Lindholm, head of Sandvik International, was quoted as saying.

"When the Russian economy's recovery takes off, this will be an important base to provide its industry with hard metals products."

Sandvik described MKTS as a well-established trademark in Russia with sales across the country and in other CIS republics. With 1,200 employees, it estimated MKTS sales in 1993 were worth 200 million crowns ($26 million).

Sandvik's policy is to play a role in the long-term revitalization of East European industry to gain a strong market position in the region. But Eastern Europe was not a significant factor in the surge in Sandvik's first-half profits.

"Demand for the group's products rose sharply and a positive business climate appears to prevail or be imminent in all markets expect Japan and Russia and parts of Eastern Europe," it said.

Demand in the Americas and Asia remained strong, while the European recovery, led by Germany, was spreading.

Sharply rising demand in most markets helped Sandvik report a jump of more than 50 percent in profit after net financial items and Sandvik said the trend was set to continue and spread. Profit surged to 1.48 billion crowns from 969 million crowns a year earlier.

Sales rose by 12 percent to nearly 12 billion crowns from 10.7 billion last year. About 3 percent was attributable to depreciation of the Swedish crown.

The sales recovery was not uniform across all industrial sectors and Sandvik said the market had been tough for products used in mining and construction, unlike the situation with the engineering and automotive industries.

Operating profit rose a little more slowly than overall profit, gaining 40 percent to 1.82 billion crowns.