Sandvik hit by higher costs

Swedish equipment manufacturer Sandvik reported a 36% year-on-year drop in operating profit for its mining and construction division in the fourth quarter to SEK964 million (€109 million). The result came despite a 13% increase in invoiced sales to SEK11.6 billion (€1.3 billion) for the period.

Sandvik, which celebrated its 150th anniversary on 31 January, said the operating result was hit by exchange rate impairments totalling SEK70 million (€7.9 million), and one-off costs of SEK500 million (€56 million) relating to restructuring.

Effective 1 January, Sandvik split its mining and construction division into two separate business areas, Sandvik Mining and Sandvik Construction. The shake-up resulted in the loss of 400 jobs.

The consolidated mining and construction fourth quarter operating performance was also hit by weak demand in the construction industry, particularly in China and Europe, with order intake for major projects significantly reduced compared to the fourth quarter of 2010.

Nevertheless, Sandvik said that activity in the mining industry, both underground and surface mining, remained high during the quarter.

Overall, the division's order intake slipped 19% year-on-year to SEK10.6 billion (€1.2 billion) in the fourth quarter.