Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on SANDVIK AB. We currently have 6 research reports from 1 professional analysts.
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Efficiency plans begin to bear fruit
25 Oct 16
Main facts of the Q3 16 release: The order intake was flat yoy at SEK19.7bn, confirming the stabilisation of the business. Notably, order intake excluding major orders also remained stable. Revenue decreased 5% organically, and corresponded more or less to the overall performance in each division. Despite this decrease in revenue, the company managed to deliver a 13.3% operating margin (versus 11.2% in Q3 15), the improvement resulted directly from efficiencies and 0.4% from exchange rates. As a result, the EPS grew 28% yoy to SEK1.29 versus SEK1.01, and the cash flow from operations increased by 15% to SEK4,527m (versus SEK3,953m).
Improvement in Mining coupled with resilient margins
19 Jul 16
Sandvik reported its Q2 16 figures. Main facts: > Order intake reached SEK19,869m, a 4% decline yoy at CER (-9% in reported figures), including -8% for Materials technology, -2% for Mining and stable demand for Machining Solutions. > Q2 16 revenue was SEK20,321m, also showing a 4% decline at CER, mainly resulting from a 6% decline in Materials Solutions amid the challenging market environment due to increased competition and price pressure, as companies active in the tubular area sought to replace lost volumes in the oil and gas industry with volumes in adjacent segments. > The adj. EBIT was SEK2,705m, corresponding to 13.3% margin, stable yoy (13.4% in Q2 15). > The operating cash flow was SEK2,050m, below last year (SEK2,766m) but at a satisfactory level.
Margins stand firm despite weak demand and FX
26 Apr 16
Main facts Q1 16: Orders were 7% lower yoy at SEK20,299m (vs SEK22,574m in Q1 15) with Machining Solutions at -6%, Mining at -8%, Materials Technology at -6%, Construction at -9% and Sandvik Venture at -13%. Q1 16 revenue also decreased 7% yoy led by Materials (-13% yoy), Mining (-10%) while Solutions posted an 8% decrease. However, the gross margin reached 38.6% this quarter vs 33.4% in Q1 15 and the adj. operating profit was SEK2,413m, a 19% yoy decline and corresponding to 12.2% versus 13.6% last year. The cash flow from operations reached SEK1,602m, -40% versus last year, leading to a net debt of SEK27.2bn (versus SEK30.4bn last year).
More pain ahead
03 Feb 16
Main facts of Q415 results: Order intake was SEK19.5bn below market expectations, revenue reached SEK20.9bn and adj. operating profit was at SEK2.3bn roughly in line with consensus. Sandvik reported that demand in China and in US is declining, and the energy market is still challenging with spillover effects in the engineering segment. SEK1.4b non-recurring cost booked mostly for Machining Solutions and Machining Technology: SEK250m for the supply chain optimization and SEK220m cost in SMS, and SEK1bn impairment mainly in the Chinese market. Cash flow was fairly strong in Q415 (+SEK3.4bn) driven by a decrease in working capital. Company targets to decrease its working capital, that has already started and seems efficient, and is also focusing on its Saving programme. During the conference call, the Q&A mainly focused on mining aftermarket momentum after weaker performance in Q415. Proposed dividend of SEK2.50 (vs. 3.50) below expectations (SEK3.0)
Weak demand translates progressively into margins
23 Oct 15
Sandvik reported Q315 results pointing to lower visibility and margin erosion. Due to the ongoing disposal process, the company has booked the mining systems activity as discontinued. Q315 order intake reached SEK 19726m, a -8% organic decrease with the decline across all geographies and divisions. By divisions, Machining Solutions orders decreased by 6% organically due to lower demand in the automotive segment in Asia, while low oil prices negatively impacted demand for Materials Technology (-12 %yoy). Mining sector demand decreased by 3% organically as equipment remained largely stable coupled with a slight softening in customer activity for consumables and rock tools in the aftermarket business. The construction segment decreased by 6% yoy while Sandvik Ventures orders decreased by 21%. Sales decreased by 6% yoy to SEK 20742m, while the operating margin reached 11.2%, 70 bp lower than last year (11.9%), led by Sandvik Materials (operating margin fall from 12.9% to 1.5%) due to manufacturing under-utilization and price pressure, while the operating margin improved in Mining (continued operations) from 12.5% to 14.8%. This led to a yoy decrease in EPS for Q315 at SEK 1.01 versus 1.19 last year. However, cash-flow generation was strong at SEK3953 (vs. 3538m in Q314) reflecting the focus on WC management.
Q2 results showed strong execution amid weak demand
17 Jul 15
Q2 15 orders at SEK22,743m, a -4% yoy organic change (-2% sequentially), were impacted by a low order intake in mining systems and the challenging oil & gas segment (negative impact on Sandvik Materials). Stable demand for Construction and a performance improvement (the EBIT margin reached 6.6%) helped by ongoing efficiency measures. The Mining segment saw a neutral book-to-bill in Q2 15 for Equipment and aftermarket combined (one large order but continued low demand for mining systems), with an upbeat EBIT margin of 11.4%. Soft general demand for Sandvik's machining solutions (with stable demand in Europe and signs of improvement in western regions), however stable margins for this pillar division. By regions: • Stable market in Europe with signs of improvement in western regions • North America at a lower level but stable • Weak and volatile market in Asia Net sales at SEK23,398m corresponding to -5% yoy, while the EBIT margin was 12.4% (SEK2,903m) supported by currency (+SEK775m) and saving actions (+SEK162m yoy). Strong cash flow from operations at SEK2,723m confirmed the good execution during the quarter, while further efficiency/ savings measures are being taken.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
12 Jan 17
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
N+1 Singer - Morning Song 12-01-2017
12 Jan 17
As anticipated, the second half has again been stronger than H1 and results will be broadly in line with expectations. In line with this, the order book has continued to grow and is at record levels. This confirms that significant progress has been made in the Group’s shift towards its Technology Products division which, as targeted, contributed c.60% of group revenue in FY16. The small acquisition of Cable Power also gives a complementary boost to the product range. It is also worth noting the significant reduction in net debt, £1.0m ahead of our forecast. We remain supportive of the Group’s strategy and continue to see a bright future as this transition towards a design led technology solutions business continues. We look forward to more detail in March at the final results.
Upgrade on positive year-end trading update
10 Jan 17
The group has announced a positive year end update, with a stronger finish to the year delivering sales slightly better than expectations. Operational gearing results in a 7.5% increase in EPS. Cash generation is significantly better than expected. As a result, we increase our price target from 205p to 254p, based on a fair value P/E of 12.0x for 2017. With healthy growth set to carry on, the shares should continue to show robust momentum, with the potential for a special dividend an additional positive.