Sandvik Shares Jump Most Since 2008 on Orders: Stockholm Mover
Sandvik AB (SAND), the world’s biggest maker of metal-cutting tools, rose the most in more than three years after reporting first-quarter profit that beat analysts’ estimates as demand grew in the Americas.
Sandvik shares soared as much as 12 percent, the most in intraday trading since Nov. 24, 2008, and were up 11 percent at 102.4 kronor as of 12:13 p.m. in Stockholm. The stock has gained 21 percent this year, valuing the Sandviken, Sweden-based company at 128 billion kronor ($19 billion).
“It was really a marvelous performance across the businesses,” Martin Prozesky, an analyst at Sanford C. Bernstein & Co. in London who recommends buying the stock, said by phone. “Latin America is good for mining, which helps Sandvik,” and the tooling unit that sells equipment to customers such as carmakers “is the key thing that drives the U.S. business for them.”
Net income rose to 2.5 billion kronor from 2.03 billion kronor a year earlier, the company said today in a statement. Eleven analysts on average had estimated a profit of 1.94 billion kronor in a Bloomberg survey. Sales rose 13 percent to 24.8 billion kronor.
“We’ve had a strong positive trend in North America,” Chief Executive Officer Olof Faxander said in a phone interview. “The automotive industry looks totally OK, and the aerospace and energy sectors are very strong areas for us there.”
Sandvik began a review of its organization last year aimed at boosting profitability under Faxander, who joined from Swedish steelmaker SSAB AB (SSABA) a year ago. In September, Sandvik began reorganizing into five units from three, and said it may eventually sell the materials-technology business.
Sandvik’s order intake grew 16 percent in the quarter to 28.9 billion kronor, which the company said was its most ever. Orders rose 13 percent on a constant currency basis.
The manufacturer is scaling back the workforce to focus on more profitable operations. It is eliminating about 900 jobs, including some 500 in its materials technology unit, Faxander said.
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