Metso shares up on strong Q2 orders

The group said recovering demand, especially in emerging markets helped it report better-than-expected earnings for the second quarter

HELSINKI (Reuters) - 

Finnish engineering group Metso Oyj (MEO1V.HE: Quote) reported higher-than-expected second-quarter earnings on Thursday as recovering demand, especially in emerging markets, led to a surge in orders.

At 1132 GMT Metso shares were up 8.5 percent at 31.23 euros, its highest level this year, outpacing a flat STOXX Europe 600 industrial goods and services index .

Brisk demand made the stock the most traded in Helsinki, ahead of usual No 1 Nokia

"The results were strong all around and especially the order intake was good," said Swedbank analyst Erkki Vesola. "Good results were (expected) looking at what (Swedish rivals) Atlas Copco and Sandvik reported, but this topped them."

April-June underlying operating profit leapt 46 percent year-on-year to 110.8 million euros ($144 million), clearly beating all expectations in a Reuters poll, where forecasts ranged from 70 million to 102 million euros.

Sales rose 10 percent to 1.4 billion euros, at the high end of forecasts in the poll, but new orders surpassed all expectations coming in at 1.67 billion euros -- 12 percent above the highest forecast in the poll.

"The overall positive tone in the global economy and the recovery of demand remains in most of our customer industries, especially in the emerging economies," Chief Executive Jorma Eloranta said in a statement.

Earnings were driven by the firm's mining and construction unit, with operating profit more than doubling versus the year-ago quarter to 95.7 million euros.

"The confidence of mining companies in long-term positive demand and the price development for minerals has strengthened," Metso said.

"As a consequence, mining companies have clearly increased their capacity expansion plans and new orders for mining equipment have started growing strongly."

Metso, also a supplier to the forestry and energy sectors, said it now saw 2010 sales up 10 percent from a year ago, having previously just said it expected a rise. The Reuters poll called for sales this year to rise 5.8 percent. "That was an extra bonus," Swedbank's Vesola said. (Editing by Will Waterman, Mike Nesbit) ($1=.7684 euros)

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