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 weaker.

• Strategic progress with expansion and acquisitions in China, the US, and Germany, and double-digit growth in software businesses.

• Continued focus on innovation, digitalization, and sustainability, including new AI manufacturing software partnerships and automation launches.

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

Financial highlights

• Order intake grew 2% year-over-year (organic 3%) to SEK 32,354 million; revenues declined 3% (organic -2%) to SEK 31,419 million.

• Adjusted EBITA/EBITDA down 7% to SEK 6,149 million, margin at 19.6% (20.5% last year).

• Adjusted profit for the period was SEK 3.9 billion; adjusted EPS diluted at SEK 3.10 (Q2 2023: SEK 3.25).

• Free operating cash flow was SEK 4,198 million, down from SEK 4,578 million year-over-year; cash conversion at 74%.

• Net working capital as % of revenues increased to 30.2% from 27.8%; net debt at SEK 49 billion.

Outlook and guidance

• Q3 2024 currency effect on operating profit estimated at SEK -250 million; CapEx for 2024 expected at SEK 5.0 billion.

• Interest net for 2024 estimated at SEK -1.5 billion; normalized tax rate guidance at 23–25%.

• Stable daily order intake into July; normal seasonality expected for Q3 barring unforeseen changes.

• Price vs. inflation expected to normalize by early next year.

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