STOCKHOLM – Deep spending cuts across the mining industry pushed machinery and tool maker Sandvik to a deeper than expected fall in order bookings in the second quarter, putting pressure on it to cut costs.
Sandvik and fellow Swedish rival Atlas Copco, which together supply more than half the world market of underground mining equipment, have faced slumping order intake in recent quarters as mining companies cut capital investment.
Order bookings at Sandvik's mining business fell 36% year-on-year in the second quarter compared to an 21% decline posted this week by Atlas, and Sandvik said orders had slid by double digits also since the first quarter.
"This only emphasizes the importance to continue to adjust our costs in accordance with the changing market conditions," CEO Olof Faxander said in a statement.
The sombre picture of demand for mining gear painted by Atlas Copco earlier this week weighed on shares in the Nordic region's suppliers to the industry on Thursday, including those of Sandvik and Finland's Metso.
The mining industry, facing softer metals prices and pressure by their owners to boost returns, is pulling back from a decade of expansion with the likes of BHP Billiton and Rio Tinto slashing billions of dollars in spending.
Sandvik also makes a wide range of metal-cutting tools and speciality steels, but the mining slowdown weighed heavily as group order intake fell 21% on the year to 20.7-billion crowns, below the 21.5-billion seen by analysts.
Sandvik, a top supplier of mining gear such as drill rigs and loaders, said operating earnings fell to 2.96-billion Swedish crowns ($448.57-million) from a year-ago 4.21-billion to marginally top a mean forecast of 2.94-billion in a Reuters poll of analysts.
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