Operating profit jumps at Sandvik Construction

By Helen Wright19 July 2012

Swedish equipment manufacturer Sandvik reported a 103% year-on-year jump in operating profit in its construction division for the first six months of 2012 to SEK435 million (€51 million).

Construction revenues were also up 7% compared to the first half of last year to SEK5 billion (€593 million). Order intake at the division was stable year-on-year at fixed exchange rates for comparable units at SEK5.1 billion (€601 million).

Sandvik Construction was established at the end of last year, as the company split-out its mining and construction equipment divisions into two separate businesses. It is also the first half year report that has included results from Chinese crusher manufacturer Shanbao, which Sandvik acquired in November last year.

Sandvik said the integration of Shanbao was progressing well, and its internal operational efficiency had improved despite continued weak conditions in the Chinese construction industry. Overall in Asia, Sandvik said that mixed demand continued, with Japan and India improving while China remained weak.

Sandvik also reported deteriorating market sentiment in Southern Europe, thanks to the region's troubled economies. It said demand in Europe was largely divided, with countries within the Eurozone more negatively impacted than countries outside it.

Demand for construction equipment also fell in South America, while Sandvik reported improving demand in South Africa.

Sandvik CEO Olof Faxander said the company would enter the seasonally weaker third quarter "with an elevated amount of caution".

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