Sandvik AB, headquartered in Stockholm, Sweden, has reported record results for the second quarter of 2018. In the period, both order intake and revenues were said to have increased by 12% year-on-year, and strong positive development was reported in all three business areas, with book-to-bill amounting to 104%.
Björn Rosengren, President and CEO of Sandvik, stated, ”On the back of increased demand in all three major geographical regions stemming from positive development in all customer segments, we reported record-high orders and revenues for the second quarter of 2018. The high activity level in combination with a sustained focus on efficiency resulted in both adjusted operating profit and the operating margin of 19.4%, reaching all-time-high levels. I am pleased with the development in the period.”
Adjusted operating profit was said to have risen by 36% year-on-year to SEK 5,067 million (Q2 2017: 3,718 million), which Sandvik stated was supported primarily by strong organic growth. Across the Sandvik Group, orders increased significantly in all three major global regions, with Asia showing 17% growth, Europe 16% and North America 8%. Underlying customer activity was said to be high in all customer segments and regions.
All three of the company’s business areas reported more than a 20% increase in operating profit, underpinned by organic revenue growth. Sandvik Materials Technology reported an adjusted operating profit of SEK 558 million (Q2 2017: 189 million) and a 17% increase in order intake including the impact of large orders. Excluding the impact of these large orders, order growth amounted to 37%. Revenues grew organically by 8%, with higher alloy prices supporting both order intake and revenues by 4%, primarily related to nickel.
Sandvik Materials Technology also saw a positive impact on its Q2 operating profit of + SEK 72 million from changes to currency exchange rates and + SEK 201 million from changes to metal prices. This helped to offset a capital loss of SEK 24 million sustained due to the company’s exit from the Fagersta Stainless joint venture.
Sandvik Machining Solutions saw order intake and revenues reach record-high levels, with order intake increasing by 8% and revenues by 10% year-on-year, respectively. Operating profit was reported at a record SEK 2,761 million (Q2 2017: 2,110), an increase of 31% year-on-year, with the division increasing its workforce from 18,527 to 18,912 in Q2 2018.
In Sandvik Mining and Rock Technology, orders improved organically by 15% year-on-year and revenues by 16%, supported by strong order intake and favourable demand in the aftermarket business. Operating profit improved by 24%, amounting to SEK 1,865 million (Q2 2017: 1,508 million). Mining and Rock Technology also increased its staff from 15,009 to 15,498.
“Sandvik Machining Solutions reported high customer activity in all segments. Like in the earlier-year period, Sandvik Materials Technology received a major order related to the energy segment, supporting long-term deliveries for the business area,” continued Rosengren. “I am also pleased to note strong progress in demand for our technology-leading automation offering in Sandvik Mining and Rock Technology, exemplified by a strategic framework agreement in place with Resolute Mining to fully automate a large-scale gold mine in Africa.”
For the first six months 2018, demand for Sandvik’s products was said to have improved year-on-year, with order intake noting organic growth of 9% compared to the first six months 2017. Excluding the impact from large orders, the growth amounted to 11%. Revenues increased by 13%, thought to be attributable to a broad-based improvement in customer activity in all business areas and in most customer segments. Demand for Sandvik’s products improved or remained stable in all regions. The six month operating profit was SEK 9,314 million (2017: 6,763 million) and the operating margin was 18.7% (2017: 14.9%), negatively impacted in the amount of – SEK 110 million due to changed exchange rates. Changed metal prices had a positive impact of SEK 302 million (2017: 75 million).