Swedish metal-cutting and mining equipment maker Sandvik missed quarterly earnings estimates on Wednesday but said US tariffs had not yet impacted demand for its products, as the industrial sector braces for their effects.
Sandvik, which kicks off the earnings season for Nordic industrial companies, is considered a reliable indicator of demand given its broad customer base and short lead times for orders.
Orders in Sandvik’s Manufacturing and Machining Solutions business, which makes up around 40% of its revenue, had been stable so far in April, CEO Stefan Widing said.
“We were also nervous waiting for these numbers to come in during these first two weeks, but the only thing we can say is we don’t see any abnormal activity,” Widing told analysts in a call.
The value of orders Sandvik received in the first quarter rose by 2% to 32.76 billion Swedish crowns ($3.33 billion), compared to the same period last year.
“The recent escalated global tariff announcements will impact the macroeconomic environment going forward,” Widing however warned in the earnings statement.
He also told reporters that one big risk to future profitability would be a global recession.
An escalating trade war has spurred fears among investors of a recession in the US, while manufacturing in the country contracted in March after growing for two straight months.
Based on current tariff rates and mitigating actions taken by Sandvik, which include re-routing trade flows and informing customers about potential surcharges, it expects the impact of the levies on its margins to be limited.
Sandvik also said it was preparing for increased production capacity in its US facilities if tariff rates “increase materially from current levels”. It made more than 14% of its revenue in the US last year.
Its operating profit before amortization and items affecting comparability rose 9% to 5.77 billion crowns in the first quarter, but missed a mean forecast of 5.91 billion crowns from analysts polled by LSEG.
The miss was driven by weak cutting tools orders for general engineering and automotive industries, Jefferies analysts said in a note.
Sandvik’s shares were 1% lower at 1200 GMT.
($1 = 9.8252 Swedish crowns)
(By Greta Rosen Fondahn; Editing by Milla Nissi)
