Sandvik reports improved performance in second quarter 2017
July 17, 2017
Sweden’s Sandvik AB has announced the results for its second quarter and the first six months of 2017. According to the company, it has seen overall improved performance for the quarter with order intake and revenues increasing across all business areas.
“The second quarter was another three months of positive development as we achieved improvements in order intake, revenues, adjusted earnings and adjusted margins. I am very pleased with the overall development in the quarter, although there are areas in which we need to improve performance going forward,” stated Björn Rosengren, President and CEO of Sandvik.
In the second quarter, order intake improved organically by 17% year-on-year reaching SEK 24,533 million overall. Order intake improved in all three business areas and all geographical regions. For Sandvik Materials Technology, order intake improved by 40%, including large orders amounting to a value of about SEK 1 billion.
Sandvik’s adjusted operating profit rose by 38% year-on-year to SEK 3,721 million, with an adjusted operating margin of 15.8%. Excluding the positive impact of changed exchange rates, adjusted operating profit rose by 28%. This improvement in adjusted operating profit was reportedly driven by strong development in Sandvik Mining and Rock Technology and Sandvik Machining Solutions at 117% and 18% respectively, due to increased demand and the implementation of efficiency measures.
In Sandvik Materials Technology, adjusted operating profit decreased by -37%, primarily due to an adverse impact from changed metal prices, negative mix in deliveries and lower profitability in the standardised tubular business. Total costs for sales and administration increased by 7%, primarily due to the impact from changed exchange rates. The increase was related to sales costs as administrative costs remained stable. However, the ratio to revenues declined to 20.5%.
Commenting on recent divestments, Rosengren added, “I am pleased that we took several steps to further focus Sandvik on its core business with the announcement of the divestment of Sandvik Process Systems and, ﬁnally, the exit from Mining Systems. In addition, we announced the intention to divest the welding and stainless wire business in Sandvik Materials Technology. These are all important actions in consolidating Sandvik, making it more focused and transparent, as well as creating the ﬁnancial strength to grasp growth opportunities.”