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Introduction & Market Context
Sandvik AB (STO:SAND) reported its second quarter 2025 results on July 16, showing a mixed performance with record-high order intake volumes but significant currency headwinds. The Swedish engineering group’s shares rose 1.88% to SEK 233.4 following the announcement, suggesting investors were encouraged by the company’s underlying operational performance despite the headline revenue decline.
The company faced a challenging macroeconomic environment with divergent market conditions across segments and regions. While mining, powder solutions, software, and aerospace showed strong momentum, general engineering, automotive, and infrastructure demand remained soft.
Quarterly Performance Highlights
Sandvik reported stable total order intake year-on-year, with impressive organic order intake growth of 10%. However, total revenue decreased by 5% to SEK 29.7 billion, though it increased organically by 3%. The divergence between reported and organic figures highlights the significant impact of currency effects during the quarter.
As shown in the following financial summary chart, adjusted EBITA decreased to SEK 5,629 million from SEK 6,149 million in Q2 2024, resulting in a margin of 19.0%, down from 19.6%:
The company’s profitability remained resilient despite currency headwinds and tariffs, with restructuring programs contributing a positive effect of SEK 206 million. Adjusted profit for the period was SEK 3.7 billion compared to SEK 3.9 billion in the same period last year.
Free operating cash flow improved significantly to SEK 5.1 billion from SEK 4.2 billion, demonstrating strong cash generation capabilities. The financial net debt/EBITDA ratio stood at 1.3, indicating a solid balance sheet position.
Detailed Financial Analysis
A closer examination of Sandvik’s performance reveals the substantial impact of currency effects on both revenues and profitability. The following bridge analysis illustrates how organic growth was offset by currency headwinds:
Currency effects reduced revenues by SEK 3,065 million and adjusted EBITA by SEK 702 million. Despite these challenges, organic growth contributed positively to both revenues (SEK 1,053 million) and adjusted EBITA (SEK 159 million).
The company’s order intake and revenue trends over recent quarters show the volatility in performance, with a book-to-bill ratio of 108% indicating potential future revenue growth:
Sandvik’s adjusted EBITA development demonstrates relatively stable margins despite the challenging environment:
Segment Performance
Sandvik’s Mining segment, which accounted for 52% of revenues in 2024, delivered particularly strong results with solid momentum and broad-based demand contributing to record-high order intake:
Total (EPA:TTEF) order intake in the Mining segment increased by 5%, or 18% at fixed exchange rates. The segment received five major orders totaling SEK 2.1 billion compared to SEK 1.5 billion in Q2 2024. Excluding these major orders, organic order intake still increased by 14%. The adjusted EBITA margin was 20.3%, slightly down from 20.8% in the previous year.
The Machining and Intelligent Manufacturing segment, representing 39% of revenues in 2024, faced more challenging conditions:
Demand for cutting tools declined year-on-year, though the powder business and software orders showed growth. Total order intake decreased by 7%, remaining stable at fixed exchange rates, with organic order intake declining by 1%. The adjusted EBITA margin was 19.6%, down from 20.5% previously.
The Rock Processing segment, accounting for 9% of revenues, saw solid momentum in mining, although infrastructure activity remained low:
Total order intake decreased by 3% but increased 8% at fixed exchange rates. The adjusted EBITA margin was 14.6%, down from 15.1% in Q2 2024.
Geographic and Market Analysis
Sandvik’s performance varied significantly by region, as illustrated in the year-over-year market development analysis:
North America showed exceptional strength with 32% order intake growth, while Australia (+19%) and South America (+14%) also performed well. In contrast, Europe (-4%) and Asia (-5%) experienced declines. By industry segment, mining showed the strongest performance, while general engineering, infrastructure, and automotive faced challenges.
Strategic Initiatives
Despite the challenging environment, Sandvik continued to make progress on strategic priorities. The company reported strong revenue growth in software, surface mining, and parts and services. Notably, Sandvik secured its largest ever battery-electric vehicle order, underscoring its commitment to electrification.
The company also strengthened its software capabilities through the acquisition of Verisurf Software (ETR:SOWGn) Inc. and expanded its demolition equipment portfolio with the acquisition of OSA Demolition Equipment. These strategic moves align with Sandvik’s focus on high-growth segments and digital solutions.
The company highlighted its Vericut Optimizer, which received a sustainability award in 2025:
Forward-Looking Statements
Looking ahead to Q3 2025, Sandvik expects currency effects to continue impacting results, with an estimated negative effect of SEK 800 million. For the full year 2025, the company forecasts:
- Capital expenditure of approximately SEK 4.5 billion
- Interest net of approximately SEK -0.8 billion
- Tax rate of 23-25%
Management emphasized that high uncertainty and challenging geopolitical and macroeconomic conditions are expected to continue. However, they expressed confidence in Sandvik’s ability to take mitigating actions to limit the impact of new trade policies and deliver consistently on strategy and targets.
Conclusion
Sandvik’s Q2 2025 results demonstrate the company’s resilience in a challenging environment, with strong organic growth offset by significant currency headwinds. The mining segment continues to be the standout performer, while other segments face varying market conditions. The company’s focus on strategic initiatives in software, electrification, and acquisitions positions it well for future growth, despite ongoing macroeconomic uncertainties.
With a solid financial position, strong cash flow generation, and continued investment in innovation, Sandvik appears well-equipped to navigate the current challenges while pursuing its long-term strategic objectives.
Full presentation:
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