Investing.com -- Shares of Sandvik (ST:SAND) rose more than 3% on Thursday following a stronger-than-expected fourth-quarter results, as the company reported a 3% beat on order intake, driven primarily by strong growth in its Sandvik Rock Processing (SRP) division.
Analysts at Jefferies noted that improved sentiment in infrastructure and solid demand in mining contributed to the upbeat results.
The Swedish engineering group posted a 4% organic increase in order intake, reaching SEK 31.6 billion, which surpassed consensus estimates by 3%.
SRP led the gains with a 14% outperformance, supported by a 51% organic increase in equipment orders and a 7% rise in aftermarket demand.
Underground mining demand remained stable, while infrastructure sentiment showed marked improvement.
Sandvik Mining and Rock Solutions (SMR) also delivered solid numbers, with orders 3% ahead of expectations.
Demand in the mining sector remained strong, particularly for aftermarket services, which saw 10% year-over-year growth. However, equipment orders declined slightly by 1% organically.
“Given the strength of the mining business, we would continue to prefer playing this theme through Mining pure-plays, namely Weir, as we argue that the debate remains the shape of the recovery,” said analysts at Morgan Stanley (NYSE:MS) in a note.
The Sandvik Manufacturing and Machining Solutions (SMM) division saw mixed results. While demand in the aerospace sector remained steady, the division faced weaker demand for cutting tools in Europe and the automotive sector.
Analysts pointed out that daily order intake in the first two weeks of January was stable compared to the fourth quarter, signaling potential resilience despite ongoing challenges.
Revenue for the quarter came in flat on an organic basis at SEK 32.2 billion, slightly ahead of consensus by 1%.
The SMR division outperformed, coming in 2% above expectations, while SRP and SMM both narrowly missed projections by 1%.
Adjusted EBITA stood at SEK 6.3 billion, exceeding estimates by 2%. This translated to an EBITA margin of 19.6%, 20 basis points higher than consensus forecasts.
The margin expansion was driven by strength in the SMR division, though SRP and SMM fell short of margin expectations.
While Sandvik does not provide explicit guidance, Jefferies analysts highlighted that stable daily order intake in SMM during early January, combined with typical seasonality trends, suggests a potential modest upgrade to first-quarter order expectations.
If current demand levels persist, SMM orders could see low-to-mid single-digit growth in the upcoming quarter.