Sandvik sees patchy demand

By Helen Wright01 November 2011

Sandvik president and CEO Olof Faxander

Sandvik president and CEO Olof Faxander

Sandvik's mining and construction division reported a 23% year-on-year increase in third quarter operating profit to SEK1.5 billion (€171 million), while sales surged 32% to SEK10.8 billion (€1.2 billion).

The figures were boosted by strong global demand for mining equipment - a factor which offset fragmented demand from the construction industry.

"Demand in the construction industry was weaker than in the mining industry, which was mainly due to a continued weak trend in Europe and China, where financial uncertainty and austerity measures have resulted in the deferral of many projects," Sandvik said.

Long lead times also continued to impact the mining and construction division during the third quarter. Invoiced sales were SEK1.6 billion (€180 million) below third quarter order intake, which stood at SEK12.4 billion (€1.4 billion).

"Large portions of the supply chain are being utilised to maximum capacity, giving rise to long lead times," Sandvik said. "The high level of demand has also lengthened the lead times of many sub-suppliers, which has made production and stock control more difficult."

Uncertainty

Sandvik's president and CEO Olof Faxander highlighted wider concerns over the global economy, commenting, "In light of the increasing sense of uncertainty as regards the macroeconomic conditions in the market, we are increasing the level of readiness to manage any weakening of the economy in forthcoming quarters."

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