Sandvik orders beat forecasts as mining demand remains strong

STOCKHOLM, Jan 20 (Reuters) – Sweden’s Sandvik (SAND.ST) reported earnings and order intake above market expectations on Thursday, boosted by continued strong demand for mining equipment.

One of the first major Nordic industrial firms to report on the fourth quarter, Sandvik is considered a good gauge of industrial demand due to high shipping volumes of its cutting tools, which have short lead times from order booking to delivery and a wide customer base.

The metal-cutting tools and mining gear maker said like-for-like order bookings grew 23% to 30.90 billion crowns ($3.40 billion), helped by a 30% rise at its mining unit, beating analysts’ expectations of 27.76 billion.

It said its Machining Solutions division also had a solid order intake, with the first weeks of January “continuing on a positive trajectory”.

Sandvik CEO Stefan Widing said there was a good recovery within the aerospace and energy sectors, although challenges such as logistics constraints and the pandemic remained.

“So far we see a very strong demand, which indicates a very limited impact from a business point of view,” he told a news conference, referring to the Omicron coronavirus variant.

Jefferies said Sandvik had kicked off the reporting season with a solid quarter, while dividends were “a touch weak.”

The mining sector accounts for almost 40% of Sandvik’s sales. Engineering and automotive industries make up roughly a third.

The company’s adjusted operating profit rose to 5.11 billion crowns in the quarter from 4.51 billion a year earlier, above a 5.09 billion mean forecast, according to a Refinitiv poll of analysts.

Sandvik proposed a dividend of 4.75 crowns per share for 2021 versus 4.50 crowns in 2020, below a mean forecast of 5.30 crowns in the poll.

Shares in the firm, which competes with the likes of Epiroc (EPIRa.ST) and Kennametal , rose 2.0% in early trade.

($1 = 9.1006 Swedish crowns)

Reporting by Helena Soderpalm
Editing by Johan Ahlander and Mark Potter

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