STOCKHOLM (Reuters) - Shares in Swedish mining and smelting company Boliden (BOL.ST) fell as much as 8 percent on Friday after its second-quarter adjusted operating profit missed expectations due to rising costs and lower production across its mines.
Boliden habitually takes on additional costs in the second quarter to hire “summer extras” and had flagged maintenance work would affect its smelters, but costs climbed unexpectedly for energy products such as oil and fuel, electricity and chemicals.
This meant that although operating profit, excluding revaluation of process inventory, grew to 2.33 billion Swedish crowns ($261.72 million) from 2.20 billion a year ago, it undershot the 2.44 billion expected by analysts in a Reuters poll.
Boliden CEO Mikael Staffas said cost inflation in 2018 had been 4 percent versus last year but declined to forecast how much costs would rise over the remainder of the year.
“The level that we have right now is probably a level that we’re going to have to stick with and any further increases is up to the market to decide for these sort of commodities,” he told analysts.
Boliden’s shares fell 8 percent after the results before recovering somewhat to trade down 3.6 percent at 262.70 crowns by 0950 GMT, making the stock the third biggest loser in Stockholm’s blue-chip index .PL.OMXS30.
The company, which supplies base and precious metals from its own mines and smelters in Sweden, Finland, Norway and Ireland, has in recent years undershot its long-term guidance of annual capital spending of slightly above 6 billion crowns, but it reiterated the target for 2018 on Friday.
Staffas said he was “more confident” this year than in previous years of reaching the target, after some analysts flagged that they were running below expected levels.
The company also increased its provision for its Aitik mine to 2.9 billion crowns from 1.8 billion, after a court ruling in May that would impact future reclamations at the mine.
The ruling was being appealed, Boliden said.
Reporting by Esha Vaish in Stockholm; Editing by Jacob Gronholt-Pedersen and Emelia Sithole-Matarise