Finnish engineering firms, led by Cargotec, reported strong orders for the first quarter which boosted their shares as business activity picked up following the global economic slowdown.
Finnish cargo handling equipment maker Cargotec reported a bigger-than-expected rise in first quarter profit and raised its 2011 sales forecast.
Crane maker Konecranes and Metso also reported strong orders for the quarter, even though their profits did not meet market expectations which had risen in the run-up to the announcement.
All three engineering firms were badly hit by the global financial crisis, which shrank their order books and forced them to lay off staff and cut other costs.
But hopes of a recovery have boosted the shares between 27 and 38 over the past year, ahead of a 25 percent rise in the STOXX Europe 600 Industrial Goods & Services index Cargotec’s January-March operating profit almost quadrupled to 50.6 million euros ($74 million), at the high end of forecasts in a Reuters poll, which ranged between 33 and 51 million.
“Cargotec was better-than-expected overall and it was its Marine unit’s profitability that surprised,” Swedbank analyst Erkki Vesola said.
Order intake jumped 37 percent to 819 million euros, beating all estimates.
Crane maker Konecranes booked a hefty increase of 59 percent to 510.9 million euros in new orders, beating all estimates, but its first-quarter profits were weighed down by IT investments and by a higher proportion of sales of less profitable items.
Its operating profit grew 59 percent 18.5 million euros, below all estimates in a Reuters poll. The firm, however, repeated its 2011 forecast of sales and operating profit to improve year-on-year.
Metso, which makes paper machines as well as crushers and grinding machines used by mining and construction companies, reported operating profit of 112.9 million euros, in line with the average forecast of 112 million euros in the poll.
It booked new orders worth 1.85 billion euros in the first quarter, exceeding all market estimates.
The company had already raised its full-year guidance on April 20, forecasting sales growth of around 15 percent and an improvement in EBITDA margin (earnings before interest, tax and amortization) from a year earlier.
Cargotec, which sells loading cranes, hatch covers and cargo lashing systems used by ships at ports, said it is benefiting from a pick-up in container ship market activity.
It said it now expects 2011 sales to grow around 20 percent, up from a previous 10 percent, with an operating profit margin of around 7 percent.
“Market activity for cargo handling solutions has, despite the natural catastrophes afflicting the world, strengthened to the extent that we raise our estimated sales growth,” chief executive Mikael Makinen said in a statement.
The new guidance was at the high end of analyst estimates, which ranged from 10 to 21 percent. (Reuters)