Sandvik Adjusts Production as Markets Slow

   By Katarina Gustafsson 
 

STOCKHOLM--Swedish engineering group Sandvik AB (SAND.SK) said Thursday it is adjusting production levels in response to a slower market as it posted a lower-than-expected third-quarter net profit. The company added it has taken a 250 million euro ($324.9 million) loan from the European Investment Bank for research and development investments.

 
   MAIN FACTS: 

-Sandvik made a net profit of SEK2.10 billion ($315 million) for the third quarter 2012, compared with a net profit of SEK626 million for the same period 2011 when its earnings were hit by one-off costs.

-The average forecast in a Dow Jones Newswires/Factset poll of analysts was for a net profit of SEK2.20 billion.

-Revenue was SEK23.42 billion, compared with SEK23.53 billon a year ago and expectations for SEK23.60 billion.

-Order intake was SEK21.80 billion, compared with SEK24.83 billion a year earlier.

-Operating profit was SEK3.33 billion, compared with the SEK3.54 billion analysts had expected, but up from SEK1.67 billion a year earlier when its profit was hit by goodwill writedown and restructuring costs.

-Changed exchange rates had a negative impact of around SEK120 million on earnings while changed metal prices had a negative impact of SEK96 million.

-Sandvik said it is reducing production levels at varying levels in its business areas in response to weakening demand and announced its turnaround programs in the units Sandvik Materials Technology and Sandvik Construction will be adjusted.

-It said the biggest downward shift in demand is in mining where the decline gathered momentum as the quarter passed, while the aerospace industry remained strong.

-In a separate release, Sandvik announced it has taken a EUR250 million ($324.9 million) loan from the European Investment Bank for research and development investments in Europe 2012-2015. A similar loan was signed in 2007 for activities carried out during the years 2007 to 2011.

-Shares Wednesday closed at SEK88.90.

-Write to Katarina Gustafsson at [e-mail]; Twitter: @DowJonesNordics

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