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UPDATE 1-Lower metal prices dent Boliden Q2 profit
July 19, 2012 / 10:54 AM / in 5 years

UPDATE 1-Lower metal prices dent Boliden Q2 profit

* Q2 pretax profit 714 mln SEK vs forecast 923 mln

* Sales volumes up but profits stung by metal price fall (Adds detail, background)

STOCKHOLM, July 19 (Reuters) - Sweden’s Boliden posted lower-than-expected second-quarter earnings on Thursday as weaker metals prices hit profitability at both its mining and smelting business, eclipsing a firm rise in sales volumes.

Boliden’s pretax earnings fell to 714 million Swedish crowns ($102.82 million) from 1.08 billion a year earlier to come in below the mean forecast of 923 million seen in a Reuters poll of eight analysts.

The company, among the world’s ten biggest zinc producers and a top copper producer in Europe, said that while production rose at its mines and smelters and currency swings worked in its favour, lower metal prices and rising costs weighed heavier.

“The quarter was characterized by a relatively high production, especially in Mines, but also by lower metal prices,” it said in a statement.

“We have not seen any major changes among our industrial customers, mainly located in Northern Europe. Boliden’s sales remain strong, but we share the market’s concerns regarding the future development.”

The company, whose main products are copper, zinc and lead, as well as gold and silver, was boosted by robust metal prices at the start of the year but has seen a global slowdown stemming from the euro zone debt crisis eat away at prices since then.

Boliden, an operator of mines and smelters in Sweden, Finland, Norway and Ireland, said copper and zinc prices were down 14 percent in dollar terms in the second quarter compared to a year earlier while prices for lead had tumbled 23 percent.

Revenues at the group, which unveiled plans for an expansion of its flagship Aitik copper mine in northern Sweden in May, rose to 10.4 billion on the back of stronger volumes from a year-ago 9.9 billion to beat the average 9.5 billion forecast by analysts. ($1 = 6.9440 Swedish crowns) (Reporting by Niklas Pollard and Johan Ahlander)

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