Epiroc says demand for mining equipment to remain high

Swedish mining equipment maker Epiroc said on Tuesday it expected demand would remain at a high level in the near term while reporting a fourth-quarter operating profit in line with forecasts.

Operating profit for the October-December period rose to 3.24 billion Swedish crowns ($309.63 million) from 2.59 billion crowns a year earlier, in line with the 3.25 billion crowns expected by analysts polled by Refinitiv.

Order intake rose 18% to 13.71 billion crowns but fell 4% when excluding acquisitions, which JP Morgan called “disappointing”.

“Demand remained high in the fourth quarter. That said, large equipment orders are often lumpy and we did not receive as many large orders as in previous quarters,” Epiroc chief executive Helena Hedblom said in a statement.

Pareto Securities analyst Anders Roslund said the higher order intake was not as good as it might initially seem.

“Epiroc acquired more companies which lifted the order intake, but for its equipment unit the order intake was actually down 10% organically, he said, calling Eprioc’s outlook for continuing high demand “bullish”.

The mining industry, while contending with the surge in inflation, has also benefitted from rising raw materials prices, although these are now stabilising.

Analysts have suggested that a softening of metal prices could prompt miners to scale back investment, squeezing orders at manufacturers such as Epiroc in the coming quarters.

Epiroc proposed a 2022 dividend of 3.40 crowns per share, up from 3.00 crowns a year earlier and again in-line with the 3.40 crowns seen by analysts.

(By Marie Mannes and Marta Frackowiak; Editing by Terje Solsvik and Kirsten Donovan)