Sandvik kicks off Nordic industrial earnings season with order beat
Swedish engineering group Sandvik reported a better than forecast quarterly order intake on Thursday and said demand remained strong across all its business areas, sending an upbeat signal for the Nordic industrial sector.
Sandvik’s metal-cutting tools are seen as a good indicator of industrial demand as they are shipped with short lead times to a wide range of customers in the engineering, automotive, aerospace and energy industries.
Investors have been worrying over industrial demand in Europe and China since last year following weaker purchasing manager indices and car sales in those markets.
“We continue to see strong demand across all our three business areas,” Sandvik CEO Bjorn Rosengren told a conference call, adding metal-cutting tools demand in the second quarter had also started well.
Sandvik’s shares closed up 3.6 percent, after falling nearly 3 percent in earlier trade.
First-quarter order intake at the metal-cutting tools, mining gear and speciality steel maker grew to 27.9 billion Swedish crowns ($3 billion), up 6 percent on an underlying basis, beating the 27.2 billion forecast in a Reuters poll of analysts.
Sandvik’s results also sent shares of companies such as mining gear rival Epiroc and industrial peer SKF higher, both up 1.6 percent.
Orders were higher than forecast in all Sandvik’s main business areas, up 8 percent year-on-year in Europe, up 6 percent in North America, but down 4 percent in Asia, with a weaker Chinese car market weighing.
“We are very happy that we still don’t see this recessionary development that has been widely discussed for a year now,” Rosengren said.
He said the only weakness seen in Europe was in Germany, which has suffered from slower car sales since last year.
Adjusted operating earnings rose to 4.57 billion Swedish crowns from 4.27 billion in the year-earlier quarter, narrowly missing the 4.63 billion mean poll forecast.
($1 = 9.3157 Swedish crowns)
(By Johannes Hellstrom; Editing by Mark Potter and David Evans)