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Sandvik, the world’s biggest maker of metal-cutting tools, posted quarterly earnings just below expectations on Friday and said demand from the automotive industry in China had slowed, while mining sector demand remained strong.
Sandvik, which provides a reliable gauge of industrial demand given its broad customer base, said daily order intake in its Manufacturing and Machining Solutions division grew roughly 20% year-on-year in the first two weeks of July.
Having risen 14% this year by Thursday’s close, shares in the Swedish engineering group – one of the first major Nordic industrial firms to report second-quarter earnings – were down 5% on the day at 1148 GMT.
“No surprise to see the stock off despite the stronger orders, with the income statement miss and lack of upside on SMM the disappointments,” investment bank JP Morgan said in a note.
In the second quarter, Sandvik’s like-for-like order intake grew 43% to 25.9 billion Swedish crowns ($2.98 billion), helped by a 31% rise in its mining products unit, versus analysts’ expectations of 24.4 billion crowns.
The company said its mining products business had grown to well above pre-pandemic levels with order intake topping 10 billion crowns for the second consecutive quarter, while a global component shortage kept pressuring the automotive sector.
“On a sequential basis we have seen a bit of a slowdown in particular in automotive in China. It’s primarily due to the component shortages in the industry,” Chief Executive Stefan Widing told a news conference.
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The Swedish company, which competes with the likes of Epiroc and Kennametal, said adjusted operating profit rose to 4.47 billion crowns in the quarter from 2.84 billion, just below a 4.52 billion mean forecast according to a Refinitiv poll of analysts.
Quarterly revenues at Sandvik rose 22% to 23.5 billion crowns, versus 23.2 billion expected by analysts.
($1 = 8.6620 Swedish crowns)
(By Helena Soderpalm; Editing by Niklas Pollard, Anna Ringstrom and Steve Orlofsky)
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