Sandvik says it mitigated tariffs in second quarter as orders beat expectations

By Greta Rosen Fondahn

STOCKHOLM (Reuters) -Swedish metal-cutting and mining equipment company Sandvik said on Wednesday it can manage current tariff levels and that it had fully mitigated the impact of trade levies in the second quarter, as its orders beat expectations.

Sandvik said it had taken actions such as re-routing trade flows and implementing tariff surcharges in the quarter to offset the impact of tariffs while it braced for higher duties.

"It would be a very manageable outcome if we can maintain the 10% tariffs versus going up to, say, 30% which is on the table," CEO Stefan Widing told reporters.

U.S. President Donald Trump has threatened to impose a 30% tariff on imports from the European Union from August 1.

"We will continue to take mitigating actions to limit the impact of new trade policies if and when they become reality," Widing said in an earlier statement.

The company has said it would be able to increase production capacity at its U.S. facilities, but Widing told reporters that it had not needed to do so under current tariff levels.

The United States accounted for more than 14% of group revenue last year.

Sandvik, one of the first major Nordic industrial companies to report second-quarter results, is widely considered a reliable indicator of demand given its broad customer base and short lead times for orders.

Shares in the company were trading 3% higher at 1205 GMT, taking a year-to-date rise to 19%, with analysts pointing to better-than-expected orders driven by the mining business.

The value of orders received in the quarter rose 10% on an organic basis to 32.2 billion crowns.

Sandvik said orders were stable so far in the third quarter at its Machining and Intelligent Manufacturing business, which makes up around 40% of group revenue.

Operating profit before amortisation and items affecting comparability, however, fell 8% from a year earlier to 5.63 billion crowns ($577 million), below a mean forecast of 5.86 billion in an LSEG poll of analysts.

Items affecting comparability, mainly previously announced restructuring costs, totalled a negative 643 million crowns.

($1 = 9.7499 Swedish crowns)

(Reporting by Greta Rosen Fondahn; Editing by Anna Ringstrom, Kirsten Donovan)