First publishedon www.AggBusiness.com
Mining and Rock Technology has reported strong order growth driven by equipment replacement orders, and increased activity in its after-market business.
The encouraging trading picture for the Swedish mining and quarrying equipment manufacturing giant is revealed in the Sandvik 2017 first-quarter interim report.
“We noted good momentum in our businesses in the first quarter. Improved customer activity resulted in positive order growth in all three business areas and in other operations,” says Björn Rosengren, President and CEO of Sandvik, in the report.
“All geographical regions reported positive organic development and we achieved a book-to-bill of 114%. On the back of increased customer activity and the efficiency measures we have implemented, we delivered both earnings growth and improved margins.
“Cash flow reached a record-high level for a first quarter and we strengthened the balance sheet. I am very pleased with the development.
“Organic growth in order intake was 16% compared with the year-earlier period, supported by all business areas, thus laying the foundation for future revenue generation.
“Growth was particularly strong in Sandvik Mining and Rock Technology, driven primarily by equipment replacement orders, with also Sandvik Machining Solutions achieving a double digit increase in orders. Despite persistently low oil and gas prices, Sandvik Materials Technology received one major order from the oil and gas industry.”
“We increased operating profit by 45% year-on-year and the operating margin improved to 16.1% (12.2). The improvement was primarily due to higher revenues and the efficiency measures that we have pushed through over some time, but also to the positive impact from changed exchange rates. Excluding the impact from changed exchange rates, operating profit improved by 29%.”
Sandvik Mining and Rock Technology’s order intake improved by 30% year-on-year, yielding a book-to-bill of 122%. The business area’s revenues increased by 6% due to the time required to convert the recent positive order growth into deliveries, and one large order totalling about 280 million SEK was received in North America.
Product categories for underground drilling, loading and hauling, as well as surface drilling reported the strongest order increase.
Changed exchange rates positively impacted operating profit by 183 million SEK.
Sandvik Mining and Rock Technology’s financial overview within the report showed that the order intake in Q1 2016 was SEK 7.266 billion (€759 million), while in Q1 2017 the figure is SEK10.247 billion (€1.07 billion).