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Sandvik AB ADR SDVKY Stock Quote

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Morningstar‘s Stock Analysis SDVKY

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Is it the right time to buy or sell?

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Sandvik’s Top Line Still Healthy but Inflation, Withdrawal from Russia Dent Q2 Profitability

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

Narrow-moat Sandvik managed to report decent second-quarter results despite growing concerns about an impeding recession from investors and the subsequent impact on the short-cycle nature of Sandvik’s business. Sandvik’s decision to pause and subsequently wind down its business in Russia had a significant impact on its second-quarter results. However, underlying demand remains healthy. Organic order intake and revenue grew by 4% and 6%, respectively but both order intake and revenues grew organically by 10% if we exclude Russia. Second-quarter revenue growth of 25% includes a 19% contribution from acquisitions. Adjusted operating profit growth of 23% grew at a slower rate than revenue due to a combination of cost inflation and a shift to more expensive air freight in order to service customers, as well as the impact of lower-margin acquisitions. Performance is broadly tracking in line with our expectations and thus we reiterate our SEK 193 fair value estimate and view shares as fairly valued.

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Key Statistics SDVKY

Company Profile SDVKY

Business Description

Sandvik is a manufacturer of specialized tools and mining equipment used predominantly by global mining, engineering, and automotive customers. The company’s core operations are in metal cutting and mining equipment. The company has a well-documented history, having been founded in 1862 and listed on the Nordic Exchange in Stockholm in 1901.Europe is the largest contributor to group sales at 35%, followed by North America 22%, Asia 20%, Africa/Middle East 9%, Australia 9%, and South America 5%.

Kungsbron 1, Section G, Floor 6
Stockholm, 111 22, Sweden
T +46 84561100
Industry Specialty Industrial Machinery
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 44,768