Sandvik's Profit Slumps As Mining Activity Remains Subdued

By Christina Zander 

STOCKHOLM--Swedish industrial group Sandvik AB reported Monday a weaker-than-expected fourth-quarter performance as global market conditions remained largely unchanged from the previous three-month period.

The metal-cutting and mining-tools maker said its net profit was 46 million Swedish kronor ($7 million), down from 762 million kronor in the fourth quarter of 2012, as currency effects and metal-price changes took their toll.

Sandvik's board proposed a dividend of 3.50 kronor a share for 2013, unchanged from the previous year.

"In the fourth quarter, the global market situation remained largely on par with the preceding quarter and the dramatic falloff in demand appears to have been halted," Chief Executive Ola Faxander said in a statement.

Total order intake from Sandvik's customers in the mining, construction, automotive, energy and general engineering sectors fell 1% in the fourth quarter to 20.79 billion kronor as activity in the global mining industry remained subdued. The mining division accounts for about one third of Sandvik's total business.

Sales dropped 8% to 21.77 billion kronor from 24.33 billion kronor in the year-earlier quarter. Analysts polled by Reuters had expected sales of 21.90 billion kronor.

Operating profit adjusted for nonrecurring charges dropped to 2.39 billion kronor from 3.06 billion kronor and was below analysts' expectations of 2.74 billion kronor.

Sandvik's fourth-quarter results were affected by nonrecurring charges of 1.80 billion kronor as the company optimizes its supply chain. In September, it said it would cut costs by $78 million to $110 million by the middle of 2014 and reduce the number of its sites to improve efficiency.

The company is also adjusting production in its mining business in response to the recent market slowdown.

Write to Christina Zander at [e-mail]

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