Mining gear maker Epiroc flags high near-term demand

STOCKHOLM (Reuters) - Mining gear maker Epiroc expects high demand in the near term but supply chain bottlenecks remain, it said on Friday, as it reported a rise in first-quarter profit.

Adjusted operating profit at the Swedish group rose to 3.19 billion crowns ($308 million) from 2.59 billion crowns a year earlier, slightly higher than the 3.09 billion crowns forecast by analysts in a Refinitiv poll.

"In the near term we expect that the underlying demand, both for equipment and aftermarket, will remain at a high level," CEO Helena Hedblom said in a statement, though adding that "supply chain challenges remain a constraint".

Lower metal prices have raised concerns that the mining industry would reduce investments. Both Epiroc and domestic rival Sandvik, however, registered record orders in the first quarter.

Epiroc's shares were down 4% at 1202 GMT.

Order intake rose 10% to 15.1 billion in the quarter.

"We won several large equipment orders, indicating a continued high investment willingness among customers," Hedblom said in a statement.

The CEO told Reuters the supply chain problems were mainly on the outbound side, after products and equipment had been produced in its factories.

"The challenge as it is right now is on the outbound side and very much related to the rough cut capacity on sea freight," Hedblom said, adding supplies coming into its factories had improved, leading to a rise in inventory levels.

"We have a high output in the factories now, which is great. But of course, these machines need to reach their end markets in different parts of the world," the CEO said.

In a call to analysts, Hedblom said she saw an shortening of lead times, and an easing of the outbound supply chain constraints, in the second half of the year.

($1 = 10.3486 Swedish crowns)

(Reporting by Marie Mannes; Editing by David Goodman and Mark Potter)