Sandvik (SAND) Q2 2024 earnings summary

Executive summary

• Stable financial performance in Q2 2024 with mixed demand; mining and aerospace robust, while general engineering, automotive, and infrastructure were weak with regional variations.

• Order intake grew 2% year-over-year (3% organic), while revenues declined 3% (-2% organic); adjusted EBITA margin at 19.6%, down 7% from last year.

• Strategic progress included acquisitions in China (Suzhou Ahno), Germany (Almü Präzisions-Werkzeug), and the US (PDQ Workholding), and double-digit growth in software businesses.

• Several innovations launched, including AI-powered manufacturing software in partnership with Microsoft, automation, and sustainability-focused solutions.

• Four major orders and divestment of Russian entity finalized in Q4 2023.

Financial highlights

• Adjusted EBITA: SEK 6,149 million, margin 19.6% (down from 20.5% last year).

• Adjusted profit for the period: SEK 3.9 billion; adjusted EPS diluted at 3.10.

• Free operating cash flow: SEK 4,198 million, cash conversion 74%.

• Net working capital (12-month rolling): 30.2% of revenues, up from 27.8%.

• Net debt: SEK 49 billion; net debt/EBITDA: 1.5x.

Outlook and guidance

• Q3 2024 currency effect on EBITA estimated at SEK -250 million; CapEx for 2024 expected at SEK 5.0 billion; interest net at SEK -1.5 billion.

• Normalized tax rate for 2024 guided at 23–25%.

• Stable daily order intake into July; underlying market sentiment remains steady, with normal seasonality expected barring unforeseen changes.

• Price vs. inflation expected to normalize by early next year; current margin dilution is a bridge effect from prior price/inflation dynamics.

• Long-term targets: 7% growth through cycle, adjusted EBITA margin 20–22%, dividend payout ratio 50% of adjusted EPS, net debt/EBITDA <1.5.