Barclays sees 'unavoidable' short-term tariff pain for European capital goods

SKF AB

25/04/2025 08:50

** Barclays sees short-term pain from U.S. tariffs across the European capital goods sector as "unavoidable"

** The broker says tariffs add to an already subdued backdrop for the sector, which faces muted recovery in industrial activity globally and minimal capex growth outside of hyperscaler investment

** It foresees likely effects such as cuts to output and operational expenditure, a pause on investment decisions, and potential double-digit price increases in the U.S.

** "We think this downturn could be characterised by an absence of a 'V' shaped recovery due to the lack of available stimulus support in U.S. and Europe" in comparison with to the Covid pandemic and the global financial crisis of 2008

** It cuts Gea Group G1AG.DE, SKF SKFb.ST, Morgan Advanced Materials MGAMM.L, TT Electronics TTG.L and Autostore AUTO.OL to "equal-weight" from "overweight"

** Downgrades Metso METSO.HE to "underweight" from "equal-weight"

** "The medium- to long-term silver lining is that the re-cutting of global supply chains/reshoring should bring stronger growth to industrials as companies would build it, but perceived near-term demand shock is winning," broker says

** SKF flagged on Friday like-for-like sales are likely to weaken in Q2 as tariffs threaten already muted demand

(Reporting by Linda Pasquini)

((linda.pasquini@thomsonreuters.com))