North America helps Sandvik to weather weaker Asia
STOCKHOLM – Swedish metal-cutting tools and mining gear maker Sandvik reported resilient fourth-quarter earnings on Monday as strong demand in North America outweighed a softening in Asia on the back of a weaker auto sector.
Engineering stocks have been hit hard since last summer due to worries about global growth, with China a particular concern due to a deep slump in car sales and data pointing to softening industrial activity.
"In Sandvik Machining Solutions growth was moderate at a low single digit pace, impacted primarily by a decline in Asia and slower activity in the automotive segment"
Also, macro data out of Europe is looking increasingly fragile with Euro zone industrial output in November posting its biggest fall in nearly three years.
Quarterly order intake at Sandvik, which competes with Sweden's Epiroc in mining equipment and U.S. firm Kennametal in metal-cutting, rose to 25.63 billion Swedish crowns, up 6 pct organically and beating the 25.36 billion crown mean forecast in a Reuters poll.
Sandvik, which also makes specialty steel products in its Materials Technology unit, said underlying customer activity had been stable in all customer segments except for a drop in automotive.
"For Sandvik Mining and Rock Technology as well as Sandvik Materials Technology the underlying orders increased at a double-digit pace with strong growth in most regions," Sandvik CEO Bjorn Rosengren said in a statement.
Fourth-quarter adjusted operating earnings at the firm rose to 4.70 billion crowns ($521.4 million) from 4.06 billion crowns a year earlier, beating a 4.65 billion crowns mean forecast in a poll of analysts.
Sandvik shares are down 13 percent since early August, roughly in line with a 12 percent drop for the European industrial sector.
($1 = 9.0140 Swedish crowns)
(By Johannes Hellstrom, Editing by Esha Vaish/Keith Weir)