Sandvik Sees Negative Currency Effects Of SEK800 Million In Quarter

Swedish engineering company Sandvik AB (SAND.SK) Tuesday said it sees unfavorable foreign-exchange rates cutting 800 million Swedish kronor ($133 million) from operating profit in the second quarter.

Sandvik told analysts it saw currency movements cutting between SEK1.5 billion and SEK2 billion from its operating profit before interest and tax in 2011, given the prevailing currency rates at end of April.

Sandvik reports earnings in Swedish kronor and has a large proportion of its production in Sweden, while sales overseas are denominated in a variety of currencies, and consequently are affected by currency movements.

During the first quarter, the Swedish krona strengthened against the dollar and the euro. The krona also strengthened against the Japanese yen, South Africa's rand and the Australian dollar, and other currencies that have an impact on the company.

Sandvik said that metal prices would have no material effect on its operating profit in the second quarter, given currency rates, stock levels and metal prices in the end of March.

Sandvik is hosting a conference call at 1200 GMT, but neither its recently appointed chief executive nor its chief financial officer will participate, due to a board meeting and Sandvik's annual general meeting Tuesday.

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