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Investing.com -- Sandvik AB (ST:SAND) reported a larger-than-expected decline in second-quarter operating profit on Wednesday but said it had managed to fully offset the impact of tariffs during the period.
The company’s shares rose 3% in Stockholm following the report.
The Swedish maker of mining and metal-cutting equipment posted an 8% year-on-year drop in adjusted operating profit, which came in at 5.63 billion crowns ($577 million). That was below the 5.86 billion forecast in a poll of analysts compiled by LSEG.
The earnings figure excludes 643 million crowns in items affecting comparability, primarily related to previously disclosed restructuring charges.
Despite the earnings miss, Sandvik said it had taken steps to counter the effect of tariffs, including adjusting trade flows and introducing tariff surcharges.
“We will continue to take mitigating actions to limit the impact of new trade policies if and when they become reality,” said CEO Stefan Widing.
The company added that it could expand production at its U.S. facilities if needed. The U.S. accounted for more than 14% of Sandvik’s total revenue last year.
Order intake rose 10% organically in the quarter, reaching 32.2 billion crowns, 4% ahead of estimates.
"Sandvik kicked off Q2 results season with better than expected demand," Jefferies analysts commented.
The strong demand was particularly notable in its Mining division, which recorded 18% organic order growth, including a 50% surge in new equipment. Demand in the Machining segment also exceeded expectations by approximately 3 percentage points.
While Sandvik does not issue formal guidance, the company commented that SMM daily orders in its Sandvik Manufacturing and Machining Solutions (SMM) unit in the first half of July were stable relative to the second quarter, adjusting for typical seasonal trends.
“Assuming demand remains stable throughout Q2, it would imply 2% yoy organic order growth in Q2," Jefferies noted, compared to a consensus estimate of -2.5%. The broker highlighted that the second quarter is usually around 9% softer than the first, making the early Q3 order trend noteworthy.