Raising Sandvik's Moat Rating to Wide but Slightly Lowering Our FVE to SEK 198 on Weaker Outlook

Sandvik enjoys strong market positions in niche mining equipment and premium metal-cutting tools. Sandvik has established a more resilient and profitable business than its past, via a continuous focus on improving operational efficiency, divestments and a large share of aftermarket sales and servicing throughout the life of its mining equipment. Despite this, the short-cycle nature of demand for its products, most notably in its machining segment, exposes the group to cyclical swings in demand and leads to regular restructuring programs to protect profitability through the cycle.