STOCKHOLM (Reuters) - Engineering group Atlas Copco (ATCOa.ST) reported surprisingly high profitability on Wednesday and said demand for vacuum equipment and mining gear drove its third-quarter order intake above market forecasts.
One of the first major European industrial companies to report third-quarter earnings, Atlas Copco said order bookings rose 17 percent on a like-for-like basis to 30.6 billion Swedish crowns ($3.75 billion). Analysts had expected 29.0 billion crowns of bookings.
“The strongest order growth was in vacuum equipment, due to robust demand from the semiconductor, scientific and general industries,” the company said in a statement. “Orders for mining equipment also grew significantly, mainly driven by expansions of existing mines.”
Like-for-like orders in its Vacuum Technique business rose 32 percent, benefiting from high demand in the semiconductor industry. Its mining business grew 22 percent and its largest unit, Compressor Technique, by 14 percent.
The company, which counts Sandvik (SAND.ST) among its top competitors, said adjusted earnings before interest and taxes rose to 6.19 billion crowns from a year-ago 5.24 billion crowns, the company said. That beat a mean forecast of 6.13 billion in a Reuters poll of analysts.
Its operating margin also beat forecasts, and the company said it expected near-term demand would remain at the “current high level”.
“We know that demand is strong, and in light of that it is crucial to look at how companies are able to manage costs in this environment,” Handelsbanken Capital Markets analyst Peder Frolen said.
Shares of Atlas Copco, which counts Sandvik (SAND.ST) among its top competitors, were up 2.3 percent at 1222 GMT. They had been trading roughly flat just ahead of the results. Sandvik shares were up 1.7 percent.
“Given this report it is clear it is going to be hard to beat expectations later on, because there are really no weaknesses here,” Handelsbanken’s Frolen said.
Atlas Copco shares had risen 10 percent over the past three months, outperforming a 3 percent gain in the STOXX 600 Industrial Goods & Services index .SXNP.
Reporting by Johannes Hellstrom; editing by Niklas Pollard, Larry King