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UPDATE 1-Atlas Copco sees firmer demand after Q3 core profit tops forecast
October 20, 2014 / 11:07 AM / 3 years ago

UPDATE 1-Atlas Copco sees firmer demand after Q3 core profit tops forecast

* Sees slightly higher demand in near term

* Growth for industrial gear underpinning growth

* Adjusted Q3 EBIT 4.6 bln SEK vs forecast 4.5 bln (Adds detail, background)

STOCKHOLM, Oct 20 (Reuters) - Swedish engineering group Atlas Copco forecast slightly higher demand in the final months of 2014 after posting a bigger-than-expected rise in earnings, excluding large one-off costs, in the third quarter.

The maker of industrial equipment, compressors and mining gear struck an upbeat tone amid market gloom over dimming growth prospects in Europe and emerging markets, saying demand from the manufacturing industry had improved.

“The overall demand for the group’s equipment and service is expected to increase somewhat,” the company said of its near-term outlook, by which it means the current quarter.

Third-quarter operating earnings rose to 4.6 billion Swedish crowns ($638.6 million) -- excluding 459 million crowns of extraordinary items such as restructuring costs and asset impairments -- versus 4.21 billion the same time last year.

The mean forecast in a Reuters poll of analysts, which on average included only 5 million crowns of one-off items, was for operating earnings of 4.48 billion.

“The demand from the manufacturing industry improved, which resulted in a record quarter for our Industrial Technique business area and increased orders for small industrial compressors,” Chief Executive Ronnie Leten said in a statement.

Atlas Copco and its peers in a Nordic cluster of mining gear suppliers including Sweden’s Sandvik, Denmark’s FLSmidth and Finland’s Metso have been squeezed by spending cuts among miners over the past two years.

While mining demand has been at a low ebb, brisker business in Atlas Copco’s compressor and industrial business has bolstered order intake, though recent signs of slowing European growth had raised doubts about prospects ahead.

The company said order intake, driven by strong growth for compressors and industrial equipment, rose 20 percent year on year in the third quarter compared with the 19 percent predicted by analysts.

1 US dollar = 7.2036 Swedish crown Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Mark Potter

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