(Updates with more detail, analyst comment, shares)
HELSINKI, Feb 3 (Reuters) - Finnish engineering group Metso on Friday reported fourth-quarter profit below market expectations, a sign that demand from its mining customers is not picking up despite a recovery in commodity prices.
The maker of grinding mills and crushers for miners as well as valves and pumps for the oil and gas industry has been battling tough market conditions resulting from miners’ spending cuts and uncertainty over growth in top metals consumer China.
Hurt by lower volumes and project overrun costs at its minerals business, Metso’s fourth-quarter profit slumped 30 percent from a year ago and net sales fell 10 percent to 676 million euros ($727 million), well below analyst estimates in a Reuters poll.
The company said it expected its overall market to improve slightly in 2017, but remain weak for mining equipment and satisfactory for mining services.
“The year has started in a relatively positive way, but it is still too early to announce a meaningful recovery,” Chief Executive Matti Kahkonen said in a statement.
The company’s shares were down 5.4 percent at 1015 GMT.
Metso’s cautious outlook contrasts with its Nordic rivals Atlas Copco and Sandvik, which reported strong fourth-quarter results on the back of rising orders from miners.
The Swedish mining gear makers both said they expected demand from the mining industry continue to improve in the near term.
“The companies involved in quarrying and ore finding are the first to benefit from the rising commodity prices, and Metso is further down the chain,” said Pekka Spolander, analyst at OP Equities, which has an “accumulate” rating on the stock. (Reporting by Tuomas Forsell and Boleslaw Lasocki. Editing by Jane Merriman)