Sandvik sees slow demand recovery after Q2 profit beat, shares slump
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STOCKHOLM, July 16 (Reuters) - Sandvik SAND.ST, the world's biggest maker of metal-cutting tools, reported core profits ahead of market expectations on Thursday but warned of a sluggish rebound in demand that has been pummelled by the pandemic, sending its shares lower.
Sandvik, which is also a big supplier of mining gear, said like-for-like order intake fell 23% in the second quarter, slightly more than expected, with sharp falls in automotive and aerospace driving a 35% plunge in its metal-cutting tools unit.
"Unless there are new lockdowns, the worst should be behind us," CEO Stefan Widing said in a statement.
"But we expect the recovery to be slow given the low business activity in several of our key end-market segments, such as automotive, aerospace and energy
The Swedish company said order rates in its metal-cutting tools unit, Sandvik Machining Solutions, had started to stabilise but were still down 20-25% in the first two weeks of July versus a year earlier.
Sandvik shares extended declines after the results and traded 6.5% lower by 0956 GMT. The stock had risen some 60% from March lows ahead of Thursday's results.
Adjusted operating earnings at the group fell to 2.84 billion crowns ($312.6 million) in the second quarter from 4.97 billion a year ago to come in above the 2.41 billion mean analyst forecast in a Refinitiv poll.
($1 = 9.0860 Swedish crowns)
(Reporting by Johannes Hellstrom; editing by Niklas Pollard)
((johannes.hellstrom@thomsonreuters.com; +46850242388; Reuters Messaging: johannes.hellstrom.reuters.com@reuters.net))
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