* Mining gear orders fall in Q2 vs Q1
* Weakness in mining partly offset by services
* Sees mining gear demand down slightly near term
* Overall group demand seen stable in Q3 vs Q2
* Q2 EBIT 4.5 bln SEK vs forecast 4.4 bln
By Niklas Pollard and Helena Soderpalm
STOCKHOLM, July 18 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
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
"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.
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.
Among other stocks in the Nordic cluster of mining
suppliers, Denmark's FLSmidth fell 1.7 percent and
Finland's Metso 2.6 percent.
"People are really worried about mining," Handelsbanken
analyst Peder Frolen said, noting Atlas had not delivered a beat
on order intake in line with that reported earlier in the day by
engineering sector peer Alfa Laval.
"So the concerns about mining quite simply get a boost from
Atlas's compressor and industrial business, which like
mining and rock excavation accounts for roughly a third of
sales, fared better and tempered the fall in group order
bookings to 9 percent for the group, roughly in line with
Leten said in a conference call that mining equipment alone
only accounted for 7-8 percent of its business.
The company also said overall demand for the group's
products and services, which include construction gear,
industrial tools as well as compressors and mining equipment,
was expected to be unchanged in the near term.
Operating profit at Atlas fell to 4.53 billion Swedish
crowns ($687.94 million) from a year-ago 5.03 billion to top a
mean forecast 4.43 billion in a Reuters poll of analysts.