Capital Goods: Q2 so far: strong grid, better short cycle, mining disappointing

Research evidence excerpt

Capital Goods: Q2 so far: strong grid, better short cycle, mining disappointing

ing power across much of the electrical equipment market. The strength in MV and Tore Fangmann >> Research Analyst

grid-related demand should be supportive of upcoming Q2 results from Prysmian (Buy) Merrill Lynch (DIFC)

and Siemens Energy (Buy), given their exposure to grid infrastructure, while the strong +971tore.fangmann@bofa.com4 425 8210

traction in MV UPS further supports our negative view on Legrand (Underperform). Lorenzo Di Patrizi >>

Research Analyst

Short cycle & construction improve, mining disappointing MLI+44 (UK)20 7995 7626

Our takeaway from Atlas Copco, SKF, Trelleborg, Volvo, Fastenal and Traton’s Q2 results lorenzo.dipatrizi@bofa.com

is that short-cycle demand was generally better than expected, with Volvo, SKF and

Trelleborg delivering organic orders/sales growth ahead of expectations. While both

DCs = data centerspointed to limited pre-buying, however, we remain cautious, recognizing the risks of

customer destocking (confirmed by PMIs & other companies). Trelleborg highlighted 800V DC = 800 volt, direct current

improving trends across Aero, Auto, General Industrial and Construction, while Fastenal

reported robust June sales momentum. SKF also noted strong price/mix and increasing MV UPS = medium voltage UPS

activity levels, especially from OEM customers in the Americas. Within construction,

Assa Abloy beat consensus on both sales (+1%) and EBIT (+1.3%), supported by modest

growth in US resi, while European resi demand saw some sequential improvement,

driven by renovation activity. We view these trends as a positive read-across for Rexel

(Buy) and Nibe (Buy), given the early signs of recovery in resi end markets. Mining