Strong order intake but one-off items impacted earnings
"With the exception of certain segments, the business climate was positive in the third quarter and favorable development was reported for order intake and invoiced sales. While both Sandvik Mining and Construction and Sandvik Tooling registered high demand, the trend for some of Sandvik Materials Technology's product groups weakened. The North American market developed positively during the quarter as did South America and Australia, while demand in Europe and Asia leveled off in certain segments. Seasonally, the third quarter is normally the year's weakest, with a somewhat lower rate of invoicing and higher level of tied-up capital in relative terms. This is expected to return to a more normal level over the next few quarters. In light of the increasing sense of uncertainty as regards the macroeconomic conditions in the market, we are increasing the level of readiness to manage any weakening of the economy in forthcoming quarters," says Sandvik's President and CEO Olof Faxander.
"Efforts aimed at introducing the new strategy and shaping the new organization are proceeding well and according to schedule. At fixed exchange rates, order intake and invoiced sales rose by slightly more than 20%, amounting to 24.8 billion SEK and 23.5 billion SEK, respectively. Adjusted for impairment of goodwill and other one-off costs totaling approximately 1.7 billion SEK, operating profit amounted to about 3.4 billion SEK, or 14% of invoiced sales. The reported operating profit was 1.7 billion SEK, or 7.1% of invoiced sales."