U.S. stocks steady; investors focus on quarterly earnings deluge
Investing.com -- Shares of Alfa Laval AB (ST:ALFA) fell over 4% on Tuesday after the company reported second-quarter results that missed analyst expectations on orders, sales and earnings, but showed stronger margins driven by its Marine division.
The Swedish engineering group, traded as ALFA on the Stockholm exchange, said orders declined 8% organically year-over-year, compared with a 6% drop expected by analysts.
Group revenue decreased 4% and came in 4% below consensus. The company reported a book-to-bill ratio of 0.97, slightly higher than the 0.95 forecast.
Currency effects weighed on both orders and sales, reducing orders by 5.6% and revenues by 7.2%.
Earnings before interest and taxes rose 5% from a year earlier. The EBIT margin was 17.8%, beating the consensus by 50 basis points.
Adjusted EBITA came in 1% below Morgan Stanley’s forecast, but was offset by the better-than-expected group margin.
“We think these are the clearest comments we have seen so far about slower decision making in larger projects, even if outside of this Alfa’s orders and margins have not been affected by tariffs,” analysts at Morgan Stanley (NYSE:MS) said in a note.
By division, Marine posted the strongest profitability. Orders in the Marine segment were down 27% organically and 7% below consensus, but revenue rose 14% organically.
EBIT margin in the Marine business reached 23.0%, ahead of the 19.9% forecast. EBIT for the unit exceeded estimates by 13%.
Energy segment orders rose 2% organically from a year ago but missed consensus by 7%.
Revenue was 6% below consensus and the division’s EBIT margin stood at 17.1%, 100 basis points below expectations.
Food & Water orders grew 10% organically and exceeded consensus by 6%, but revenue was 5% below forecasts.
The EBIT margin for the segment was 13.7%, which was 60 basis points lower than expected, with EBIT missing consensus by 9%.
The company said third-quarter demand is expected to be “somewhat higher than in Q2.”
This includes a contribution of about SEK 400 million in orders from its recently acquired cryogenic business.
Excluding the acquisition, demand is expected to remain in line with the second quarter. Consensus currently anticipates 2% order growth quarter-over-quarter for Q3 2025.
Morgan Stanley projects third-quarter orders will land at SEK 16 billion, lower than the current consensus of SEK 16.6 billion.
The brokerage also noted that excluding the Fives acquisition, the company’s guidance implies flat underlying demand.