Sandvik Hit By Lower Production, Currency Headwinds

    By Johana Rossi 
 

STOCKHOLM--Swedish engineering group Sandvik AB (SAND.SK) Tuesday posted a 41% fall in first-quarter net profit as lower production rates, adverse currency effects and non-recurring charges all weighed.

 
    MAIN FACTS: 

-Earnings were impacted by SEK350 million due to changed exchange rates, the bulk of which was attributable to the SEK strengthening against the EUR, USD and ZAR.

-An unfavorable metal price trend and non-recurring items had an impact on operating profit of SEK36 million and SEK140 million respectively.

-Production rates were maintained at a subdued level in order to further reduce inventories.

-"Sandvik's business areas generally reported stable or slightly improved market conditions, apart from Sandvik Mining, which continued to be affected by weaker demand and uncertainty from the mining industry," Chief Executive Olof Faxander said in a statement.

-Mr. Faxander said Sandvik would closely manage its production rates and staffing and investment levels.

-Sees 2013 capex at around SEK5 billion.

-Sees 2Q operating profit negatively affected by about SEK350 million compared to 2Q 2012.

-Given currency rates, stock levels and metal prices at the end of March, it is estimated that 2Q operating profit will be affected by about SEK50 million.

-Revenue was SEK22.1 billion, from SEK24.84 billion a year ago and lower than the SEK22.73 billion that was the average forecast in a FactSet survey of 16 analysts.

-Ebit was SEK2.56 billion, compared with SEK3.82 billion a year ago.

-Net profit was SEK1.48 billion, versus SEK2.5 billion last year and below the SEK1.8 billion forecast.

-Order intake was SEK22.34 billion, compared with SEK28.89 billion a year earlier.

-Mining unit order intake fell 30% to SEK7.68 billion from SEK11.79 billion.

-Shares closed Monday at SEK91.85, valuing the company at SEK115.22 billion.

-Write to Juhana Rossi at [e-mail]; Twitter: @DowJonesNordics

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