Sandvik 2Q Net Profit Up 11%, Currency Weighs On Result

Sandvik AB (SAND.SK), the Swedish engineering company, Tuesday reported a 11% rise in second quarter net profit, which came in at SEK2.11B, compared with SEK1.90B the same quarter last year, while warning that financial tightening in China and continued economic uncertainty in Europe my lead to lower industrial activity and investments in the second half of 2011.

 
   MAIN FACTS: 

-2Q order intake was SEK25.36B, from SEK23.18B in 2Q '10.

-2Q revenue was SEK23.42B, from SEK20.60B in 2Q '10.

-Currency effects impacted invoiced sales and order intake negatively by 9% respectively.

-2Q operating profit (Ebit) was SEK3.56B, from SEK3.47B in 2Q '10.

-2Q operating margin (Ebit) was 15.2%, from 16.8% in 2Q '10.

-2Q operating profit was helped by higher volumes, increased capacity utilization and greater efficiency, while changed metal prices impacted earnings by approximately SEK60M and changed exchange rates impacted earnings by about SEK720M.

-Demand for Sandvik's products remained high in most areas during the quarter, the company said.

-Demand was high from automotive, aerospace and mining industries but slowed slightly during the latter part of 2Q from the construction and consumer goods industries.

-In the energy segment, activity remained very high in the oil and gas area while safety reviews and political uncertainty surrounding the nuclear industry subdued activity levels.

-Order intake increased significantly in all markets for Sandvik Tooling and Sandvik Mining and Construction.

-The market scenario was more fragmented for Sandvik Materials Technology, whose order intake declined slightly compared with the second quarter of 2010.

-Monday, Sandvik shares closed at SEK102.

-By Sven Grundberg, Dow Jones Newswires; [phone]; [e-mail]