Sandvik (1K) | Hold (vs Buy) | Strong Q2 likely, but limited upside

研报英文原文证据摘录

Sandvik (1K) | Hold (vs Buy) | Strong Q2 likely, but limited upside

r term, but normalisation lies ahead

In line with Q1, we expect tungsten scarcity to remain a key driver of Machining in Q2,

supporting pre-buying, price effects and continued strength in Powder Solutions. This should

inflate orders, revenues and margins near term, but we would be cautious on extrapolating the

full benefit. The key question into Q2 is therefore how much of Machining’s strength reflects real

underlying recovery, and how much is driven by tungsten, pre-buying, pricing and price-cost

timing.

The most mechanical margin benefit is in powder. Historically, powder has been margin dilutive

to Machining, but the current pricing environment changes the near-term equation. Powder

selling prices typically follow APT prices with around a one-month lag, while higher raw-

material costs are recognized in COGS with around a three-month lag. In a rising tungsten

market, this creates a temporary positive price-cost spread, making powder accretive rather

than dilutive. Sandvik also benefits from its own tungsten supply through Wolfram and Buffalo

Tungsten, which is a clear competitive advantage in an environment where Chinese export

restrictions have tightened availability.

Cutting tools should also benefit, but with a longer lag. Higher tungsten costs first pass through

powder and then through cutting-tool inventories, adding roughly another six months before

the full cost impact is reflected in COGS. This can create temporary margin support as price

increases and surcharges are implemented before the higher-cost inventory fully rolls through.

However, as 2026 progresses, more of the higher tungsten cost should start to come through the

cutting-tools P&L.