Sandvik earnings up 18% year-on-year in Q2 on strong mining activity

Swedish special steel and tool producer Sandvik reported a rise in operating profit of 18% year-on-year in April-June 2012, but warned of a weaker third quarter in a group statement on Monday July 23.

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Second quarter operating profits jumped to Skr4.212 billion ($606.2 million), up from Skr3.562 billion in April-June, 2011.

A strong performance in Sandvik’s mining and machining solutions businesses, combined with an positive exchange rate effect worth Skr150 million, drove profits to a quarterly record.

Despite the strong quarterly results, the group noted diverging trends across geographic regions, with Sandvik’s construction business noting a sharp drop in European demand on the back of eurozone weakness.

“Europe weakened slightly while the scenario in North and South America remained strong,” Sandvik ceo Olof Faxander said.

Demand in Asia also remained strong, he added.

Orders for the second quarter remained flat year-on-year at Skr26.19 billion and the company forecasts a more cautious outlook for the third quarter.

“As the quarter progressed, the macro-economic conditions became increasingly uncertain, predominantly in Europe. We therefore enter the seasonally weaker third quarter with an elevated amount of caution,” Faxander added.