STOCKHOLM (Reuters) - Sweden's Sandvik SAND.ST, the world's biggest maker of metal-cutting tools, said on Monday it was ready to cut more costs if needed to weather the COVID-19 pandemic as it reported quarterly order intake ahead of market forecasts.
Sandvik, one of the first European manufacturing blue chips to deliver first-quarter results, is seen as a good gauge of industrial demand due to high shipping volumes of its cutting tools, which have a wide customer base and short lead times.
The company said order bookings in the quarter fell to 25.4 billion Swedish crowns ($2.55 billion), down 11% from a year ago on an organic or like-for-like basis, but well ahead of the 24.1 billion mean forecast in a Refinitiv poll of analysts.
Adjusted operating profit at the group dipped to 3.73 billion crowns, down from 4.57 billion in the year-ago quarter, and just below the 3.86 billion seen by analysts, it said in a statement.
“In the near term, we expect very low business activity in our short-cycle operations as several customer segments are impacted by production stoppages,” new Sandvik CEO Stefan Widing said. “We continue to evaluate the market development and will not hesitate to take further actions if necessary.”
The outbreak of the novel coronavirus will test the resilience of the new Sandvik, which has previously struggled to adapt to large demand drops but has gone through a wide-ranging restructuring under Widing’s two predecessors.
In a possible sign of tougher times ahead, the manufacturer said it had seen a 25% year-on-year decline in demand in its key metal-cutting tools unit in the final week of March alone.
Sandvik shares, which traded 0.7% higher shortly ahead of the results, were up 3.3% at 0955 GMT following the earnings release.
Reporting by Johannes Hellstrom; editing by Niklas Pollard
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