STOCKHOLM, July 18 (Reuters) – Engineering group Atlas Copco announced more job losses on Thursday as spending cuts across the mining industry hit demand for its trademark drill rigs and loaders and raised worries the sector’s downturn may have further to run.
Robust activity in services and industrial equipment stemmed a fall in group profit and orders but the company forecast that demand for mining gear would slip further in the near term.
Mining is suffering a hangover from years of booming expansion and has slashed capital spending as softer prices for commodities such as coal, copper and gold have raise doubts about future investment returns.
The likes of BHP Billiton and Rio Tinto have cut billions of dollars from outlays. For Atlas Copco and its cross-town rival Sandvik, which together supply more than half the global market for underground mining gear, this has brought a sharp drop-off in equipment orders though a thriving services business has cushioned the blows.
Unlike Sandvik, which is due to report on Friday, Atlas’s single biggest mining exposure – around one third – is to gold whose price has slid more than 20 percent since year-end.
“It’s a pity but we will reduce the work force all over in the organisation for mining,” Atlas Copco’s CEO Ronnie Leten told Reuters, declining to specify the size of cuts beyond saying sales and R&D staff would be shielded.
“We adjust as we go. I don’t like revolutionary, one-off adjustments,” he added in a news conference.
Atlas Copco said order intake for its mining and excavation business fell 21 percent year-on-year and were also down compared with the initial months of 2013.
Some 200 million crowns ($30 million) of mining orders were cancelled in the quarter.
SHARES DROP
Atlas’s shares were down 3.7 percent by 1456 GMT while shares in Sandvik, whose earnings have historically been less resilient to cyclical downturns, fell 1.8 percent.
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