Sandvik Hit by Falling Nickel and Fewer Orders; ENGINEERING
Swedish engineering group Sandvik has missed expectations for second-quarter pre-tax earnings and order bookings.
Hit by lower nickel prices and unfavourable currency rates, the speciality tool and machinery maker said pre-tax profit fell to pounds 277 million from pounds 320 million a year ago.
The fall in nickel lowered the value of Sandvik's inventories of the metal by pounds 14.7 million.
Unfavourable currency rates compared with last year shaved off another pounds 28.6 million.
"Looking at the earnings, I think they should have come out a little bit better, even considering the currency effects, because if you look to the sales there were still volumes to work with," said Evli Bank analyst Magnus Axen.
"But the real weakness is the order bookings.
The earnings would not have been a problem if the order intake had come in stronger. That is what looks most troubling," he added.
Sandvik confirmed order bookings edged up to pounds 2.08 billion from pounds 2.06 billion, but below analysts' expectations of pounds 2.13 billion.
In Europe, the group's biggest market, order intake fell 10 per cent, hit by lower metal prices, which are reflected in the price taken out by Sandvik for its products, as well as fewer project orders compared with last year. …