Sandvik sales up but profits down

Sandvik Mining and Construction recorded a +17% rise (excluding currency effects) in fourth quarter sales to SEK 11 billion (€ 1 billion) compared to SEK 9 billion (€ 861 million) during the same period a year ago. Full year sales grew by +15% to SEK 39 billion (€ 3,6 billion) from SEK 33 billion (€ 3 billion).

Operating profit, however, fell by -18% in the fourth quarter from SEK 1,3 billion (€ 127 million) in 2007 to SEK 1,1 billion (€ 104 million). Operating profit for the full year was unchanged at SEK 5 billion (€ 470 million).

Sandvik said that the increase in sales was mainly due to a high level of project invoicing and a favourable trend in service and aftermarkets. But the company added orders declined in all markets with the exception of South America and in the soft minerals underground mining sector.

"The slowdown, which was most severe in Europe and Australia, started in the exploration and construction industries but spread into the mining industry during the quarter. The weakening trend was especially noticeable for equipment," the company added.

Sandvik's combined businesses saw full year sales increase by +7% to SEK 93 billion (€ 8,7 billion) from SEK 86 billion (€ 8 billion) in 2007. The company also saw a +6% growth in fourth quarter sales to SEK 24,2 billion (€ 2,3 billion) from SEK 23 billion (€ 2 billion) during the same period a year ago.

However, taking into account fixed exchange rates the figures show a +5% increase for full year sales and a -1% decrease for sales in the fourth quarter.

Operating profits for the full year decreased by -11% to SEK 12,8 billion (€ 1,2 billion) from SEK 14,4 billion (€ 1,4 billion) in 2007 and by -30% for the fourth quarter to SEK 2,2 billion (€ 210 million) from SEK 3,2 billion (€ 300 million) during the same period in 2007.

Sandvik's president and CEO, Lars Pettersson said, "The global economic decline that occurred in the fourth quarter 2008 was one of the most dramatic experienced by Sandvik. The slowdown impacted all business areas and most markets."

The company cut 900 permanent jobs during the fourth quarter and a further 1000 consultants and contracted staff were made redundant.

Mr Pettersson added a number of measures to adapt to "a less favourable market situation" had been implemented and the effect of such activities will impact earnings gradually during 2009. He said the company is alert and prepared to act at short notice.