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Investing.com -- Shares in Sandvik traded lower on Wednesday after the Swedish engineering group reported a weaker-than-expected revenue performance for the first quarter, despite a strong profit margin and solid order intake from its mining division.
Total (EPA:TTEF) revenues rose just 1% year-on-year to SEK 29.3 billion, falling short of market expectations and below UBS’s forecast of 1.5% organic growth.
Organic revenue growth landed at just 1%, versus a consensus of 4.2%. The shortfall came as demand remained muted in Sandvik’s manufacturing and machining business, which continues to face pressure from softer industrial activity and ongoing weakness in automotive.
Order intake increased by 2% to SEK 32.8 billion, slightly below UBS’s projected 3.4% but still above market consensus. At fixed exchange rates, organic order growth came in at 2%. The book-to-bill ratio stood at a healthy 112%.
Despite top-line softness, Sandvik delivered a 9% rise in adjusted EBITA to SEK 5.77 billion, with the margin improving to 19.7% from 18.2% last year. Free operating cash flow was stable at SEK 3.81 billion.
The results reflect a mixed performance across Sandvik’s core divisions. The mining unit, which accounts for over half of group revenues, posted a strong quarter with 10% organic order growth and 4% revenue growth. Three major equipment orders totaling SEK 977 million were booked during the period.
Sandvik, one of the first major Nordic industrials to report this earnings season, is widely seen as a bellwether for global manufacturing demand.
The rock processing division reported a 2% decline in orders but grew revenues by 8%. Margins improved to 15.1%, outperforming expectations.
The manufacturing and machining unit saw a 6% drop in orders and a 4% revenue decline, although margins held up at 20.9%.
Commenting on the results, chief executive Stefan Widing in a statement said, “Now we are once again facing a new set of challenges with tariffs and barriers to global trade. We have prepared for scenarios like this,” adding that the mining division continued to see long-term investments despite macro uncertainty.
UBS had flagged ahead of the results that short-cycle headwinds and a slow start in the manufacturing segment could weigh on performance.
The company reaffirmed full-year guidance for capex and expects a tax rate of 23–25%. However, it warned that currency effects could reduce EBITA by SEK 600 million in Q2 compared to a year earlier.