Atlas Copco announces record Q2 margins

21 July 2010 | 04:54 Code : 20098 Geoscience events
Swedish compressor and machinery maker Atlas Copco (ATCOa.ST) bounded to...

Swedish compressor and machinery maker Atlas Copco (ATCOa.ST) bounded to record second-quarter margins and profit ahead of forecasts on the back of improved demand from miners and emerging economies.Atlas suffered like other industrial players during the global economic crisis and revenues slumped in 2009.But a strong recovery led on Friday to a record operating profit margin in the second quarter while pretax profit rose to 3.4 billion crowns ($466.1 million), compared with 2.5 billion in the previous quarter and an average forecast of 2.9 billion in a Reuters poll.The company’s shares rose 3 percent initially, but later fell back to be down 0.83 percent by 1251 GMT. One analyst said Swedish industrial shares were broadly down, but had no immediate explanation for the turn in Atlas Copco.Another said there could be a shift of portfolios taking place due to the view that Swedish industrial shares had had a good recent run and that earnings growth had topped out.Shares in bearings maker SKF (SKFb.ST), which reported strong earnings on Thursday, also fell.But Atlas Copco was upbeat, posting record order intakes in Asia, including new records in China and India.It also benefited from strong demand from Australian mining companies, reflecting high demand in Asia for coal and iron ore."The overall demand for the group’s products and services has recovered rapidly and a positive demand development was seen in all business areas," said Chief Executive Ronnie Leten."We continue to see a strong growth in India, China, and Brazil. The United States had a good development and Europe showed solid improvement, apart from the southern parts," he added in a statement.Other companies in the sector have also been upbeat.Komatsu Ltd (6301.T), the world’s number two construction machinery maker, upgraded its full-year profit forecast by 14 percent on Tuesday.Several countries in southern Europe have suffered from debt crises and governments have had to take austerity measures.Atlas Copco said that in Europe, where it had previously expected largely unchanged demand, it now saw a gradual increase in demand in parts of the region.For North America it still expected a gradual demand increase and for emerging markets to develop favourably."It is pretty good. And I think the mining equipment side may start to see good growth for a while to come ... China needs to mine more, you’ll start see more mining in West Africa, Madagascar," said MF Global Securities analyst Charlie Dove-Edwin."And the world will use more steel, so I think the demand for quantity is sort of constant so the exposure to mining equipment will be pretty good," he added.Swedbank analyst Mats Liss said the results looked good and pointed to a strong order intake, which came in at 19.2 billion crowns, versus a forecast 18.1 billion. (additional reporting by Jens Hansegard and Helena Soderpalm) ($1=7.295 Swedish Crown) (Editing by David Cowell)

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