EU CAPITAL GOODS: Sandvik (SANDSS NR/BBB+/NR): 1Q25 Results
It expects minimal direct tariff impact at current levels, helped by mitigations. It’s preparing for increased US production. It hasn’t seen macro impact on demand so far. Credit neutral.
- Sandvik reported revenue 4% below consensus. Organic order growth disappointed at 1% vs 3.5% expected.
- Adj. EBIT missed by 2% with margins beating by ~30bp.
- Reported FOCF of SEK3.8bn was ahead of SEK3.3bn expected (4 estimates). Capex was in line; the beat came from unchanged working capital with some drag anticipated there. Reported net leverage ticked down to 1.1x from 1.2x QoQ. It targets below 1.5x.
- Sandvik does not provide guidance. It sees SEK5bn capex for FY25, a marginal uptick YoY. It expects ~SEK600mn impact to 2Q25 EBITA due to currency headwinds; that’s around 10% for context.
- Webcast 12.00 BST https://sandvik.creomediamanager.com/5aca2152-c696-479b-9d34-79aaea09f300.
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MACRO OUTLOOK: OECD Revises '25 and '26 Global GDP Lower On Tariffs, Uncertainty
The OECD has revised its 2025 and 2026 world GDP forecasts down to 3.1% (vs 3.3% in December) and 3.0% (vs 3.3% in December) respectively in its March Interim Economic Outlook Report. The group notes that higher trade barriers in several G20 economies and increased policy uncertainty will weigh on investment and household spending, pulling growth lower.
- The forecasts “are based on an assumption that bilateral tariffs between Canada and the United States and between Mexico and the United States are raised by an additional 25 percentage points on almost all merchandise imports from April”.
- As such, Canada and Mexico have seen the largest growth downgrade in 2025 and 2026: Canada 0.7% in 2025 (vs 2.0% in December) and Mexico -1.3% in 2025 (vs 1.2% in December).
- US growth was revised down to 2.2% in 2025 (vs 2.4% in December) and 1.6% in 2026 (vs 2.1% in December).
- Euro Area growth was revised down three tenths in both 2025 and 2026 to 1.0% and 1.2% respectively, with Germany seeing the largest downward revision in 2025 and Italy in 2026.
- See the full report here.
US TSY FUTURES: A Managers Cut Longs Further Out Curve, Non-Comms Add To Short
The latest CFTC CoT report saw asset managers trim their overall net DV01 equivalent exposure by over $8mln. They reduced longs further out the curve (UXY, US & WN), although that was partially offset by an uptick in longs through the short end and intermediates (TU, FV & TY). The cohort remains net long across all contracts.
- Hedge fund positioning had a modest bias towards an extension of their net short position, with the DV01 equivalent move in that direction (across TU, TY, US & WN) outweighing pockets of short cover (FV & UXY). The cohort remains net short across all contracts.
- Broader non-commercial net positioning saw net shorts added to in most cases, with only short cover in UXY futures breaking that trend. The cohort remains net short across all contracts.
Source: MNI - Market News/CFTC/Bloomberg
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