Sandvik AB

Strong quarter results (beats on growth + profitability) - Order intake: SEK 37.8bn, +17% YoY (organically +17%), book-to-bill 1.03. - Revenues: SEK 36.8bn, +24% YoY (organically +23%); company emphasized successful conversion of orders to revenues and still a positive order build. - Profitability: Adjusted EBITA SEK 8.3bn, margin 22.6% (vs 19% prior year); rolling 12-month margin 20.4%. - Earnings: Adjusted profit SEK 5.8bn (+~56% YoY); unadjusted EPS +63% and adjusted EPS >50% YoY. - Cash flow: Free operating cash flow SEK 3.6bn, cash conversion 46% (management said the lower conversion is mainly due to much higher invoicing timing). 12-month cash conversion ~80%.

Market momentum is broad-based, led by Mining + aftermarket - Mining remains very strong with record order intake (management noted it was the first quarter above SEK 20bn in mining orders). - Aftermarket up strongly: mining aftermarket +17% YoY (driven by parts & services plus digital mining technologies). - Parts & services drivers: high utilization/production, expanding and aging fleets → more replacement/maintenance demand, and increased “stickiness” from more advanced machines. - Digital drivers: automation and Deswik mine planning. - Construction/infrastructure recovery ongoing (Europe + North America improving; Asia flattish with China muted). - Industrial manufacturing: positive sentiment especially aerospace/defense; light vehicles weaker; China down, India up.

Key segment details: Machining (cutting tools + powder) very strong but has tungsten timing effects - Machining (cutting tools): - Order intake +29% YoY, revenues +19% (cutting tools organic growth ~20%; revenue side ~19%). - Machining margin extremely high: Adjusted EBITA SEK 4.2bn, margin 28.7%. - Surprising/important driver: tungsten price timing effect contributed +SEK 550m (≈ +380 bps margin impact) in the quarter; management expects this to normalize in coming quarters (Q3 guided to a smaller timing benefit). - Underlying “more sustainable” margin guidance from management: ~25% if you strip out the tungsten effect. - Bad/negative within machining: cutting tools price vs inflation still dilutive because price actions lag raw material cost increases; company framed this as a net effect that improves at group level due to powder profitability. - Mining operating leverage weaker than normal: mining organic leverage ~25%, management said it was below their ~30% normal leverage due to two one-offs: - Litigation settlement costs - Diamond mine closure in South Africa (restructuring-related cost) - Also mentioned currency headwind (~60 bps impact).