Sandvik AB (publ)

Sandvik reported Q2 order intake of SEK 37.8 billion and revenue of SEK 36.8 billion, with both up 17% organically and revenue up 24% total / 23% organically. Adjusted EBITA was SEK 8.3 billion, up from SEK 5.6 billion a year ago, and the adjusted EBITA margin was 22.6% versus 19% last year; rolling 12-month EBITA margin was 20.4%. Adjusted profit for the period was SEK 5.8 billion versus SEK 3.7 billion, and free operating cash flow was SEK 3.6 billion with 46% cash conversion. Management said Q3 should see a positive currency effect of around SEK 0.2 billion and a positive tungsten timing effect of around SEK 0.2 billion; full-year guidance for CapEx, interest net, and tax rate was left unchanged.

Stefan Widing described the quarter as very strong, citing record revenues and profits, strong momentum across regions and segments, and good price realization. He emphasized that Sandvik is executing its strategy through both organic launches and acquisitions, highlighting Diemme Filtration as a strategic step into filtration and dewatering in mining. His tone was upbeat but measured, noting that the macro and political backdrop remains uncertain even though Sandvik has not yet seen an impact.

Cecilia Felton focused on the financial bridge behind the quarter: adjusted EBITA of SEK 8.3 billion, margin of 22.6%, net financial items down year over year to SEK 254 million, and normalized tax rate of 24.2%. She said net working capital continued to improve, reaching 27.5% of revenue on a rolling 12-month basis, while net debt was SEK 37 billion and net debt/EBITDA was around 1 after the May dividend. She also explained that cash conversion was 46% in the quarter but 80% on a 12-month rolling basis, and reiterated that the Q2 margin benefited from a SEK 550 million tungsten-related timing effect and from strong powder business absorption.

Analysts pressed management on whether machining margins excluding tungsten should be thought of as the new run rate, and management said the underlying cutting tools business is still strong but the quarter also benefited from a temporary powder/tungsten timing effect that will fade in Q3. Questions also focused on the 17% mining aftermarket growth; management said the drivers were parts and services, digital mining, an expanding and aging fleet, and more advanced equipment, with no material pricing contribution. On tungsten modeling, management said the quarter was hard to predict because of sharp price moves and timing lags, and pointed investors to Rotterdam prices for the non-China powder business while saying they would not split the powder versus cutting-tools impact.