Epiroc misses Q3 profit estimates on weak construction demand
Adds CEO quotes in paragraphs 2, 5, analyst comments in paragraphs 10, 12, shares in paragraph 11
Oct 25 (Reuters) -Swedish mining and construction equipment maker Epiroc EPIRa.ST reported third-quarter earnings below market expectations on Friday, weighed down by subdued demand from the construction sector.
"The construction segment remains weak and we don't expect it to pick up in the near term," CEO Helena Hedblom told Reuters, adding that demand in the U.S. had softened further in the quarter.
Epiroc reported a slight rise in its quarterly operating profit to 3.28 billion Swedish crowns ($310.2 million), but missed analysts' mean forecast of 3.39 billion in an LSEG poll.
The recent China stimulus package, aimed at boosting construction activity, proved vaguer than expected, but Hedblom said she saw healthy market trends regardless of that.
"Mines are moving underground and becoming more complex, with mining companies more keen on technology shifts," Hedblom said.
Epiroc, which makes drill rigs, rock excavation and construction equipment among others, reiterated that it expected the strong underlying mining demand to persist in the near term.
That echoed comments from Swedish peer Sandvik SAND.ST, which on Monday said demand for its mining equipment had remained solid in the third quarter, even as weaker demand in its other businesses hit earnings.
Supply chain bottlenecks and high costs have weighed on the mining and construction sectors for many quarters, but Epiroc's order levels have remained solid.
Its third-quarter order intake rose 8% to 15.52 billion crowns, above market expectations.
"For the stock today, having underperformed over the last month post a strong China-driven bounce, the downside may be more limited on an inline release and guide," J.P.Morgan analysts said in a note.
Epiroc's shares were up 3% by 1008 GMT.
"For 2025, consensus orders and sales need to see an acceleration on the Q3 and implied Q4 order levels," J.P.Morgan added, noting the uncertain demand picture as construction remains weak and mining, while solid, is not accelerating.
($1 = 10.5742 Swedish crowns)
Reporting by Tilla Sjaavaag and Elviira Luoma in Gdansk; editing by Milla Nissi
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