Demand for Sandvik Mining’s products was weak during Q4 2012, according to the company’s interim report on the fourth quarter and full-year 2012. Demand for new equipment was particularly poor due to “business conditions unfavourable for mining systems”. Demand for rock tools, parts and services was stable. Order intake was down 5% to US$ 1.2 billion compared with Q4 2011, although invoiced sales increased by 10% US$ 1.53 billion. Operating profit and margin totaled US$ 214 million.
China and Australia drive demand down
Demand was low in most areas where Sandvik Mining operates due to the reduced investment ambitions of several customers. However, China and Australia noted the most significant fall-off in orders from coal and iron ore mines, while demand from Africa remained strong supported by high gold prices. Demand for rock tools, parts and services remained unchanged and was seasonally weaker towards the end of the quarter, while demand for new equipment was weak throughout the quarter and tendering activity was low for mining systems.
Sasol Mining order
During the quarter, Sandvik Mining secured a major order worth US$ 101.4 million from Sasol Mining (Pty) Ltd in South Africa. The number of order cancellations during the quarter was limited. However, a customer in South America cancelled a major mining systems order, which will negatively affect order intake in the first quarter of 2013 by approximately US$ 93.6 million. The exploration business noted a continued weak market, primarily in Australia.
*All currency figures approximate. Converted from Swedish Kronor (SEK).
Adapted from press release by Jonathan Rowland.
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