Sweden's Trelleborg Q1 core profit tops forecast

STOCKHOLM (Reuters) - Swedish engineering firm Trelleborg TRELb.ST reported quarterly core earnings above expectations on Monday, sending its shares higher, and announced further savings amid a weak automotive market.

Group operating profit, excluding 48 million crowns in costs for restructuring programmes at three divisions, rose to 622 million crowns ($104 million) in the first quarter from 607 million a year ago. The mean forecast in a Reuters survey was for 612 million.

Trelleborg cited favourable market conditions and improved efficiency, as well as a better product and price mix, for the gain. But earnings in the firm's automotive division declined.

"The numbers are a bit of a relief... but the launch of more restructuring measures worsens the atmosphere a bit. It shows that the previous measures haven't had effect yet," said an analyst who asked not to be named.

The group, which sells to a wide range of industrial customers in the automotive and engineering sectors, said it was offsetting higher raw material costs through increased productivity, enhanced procurement measures and price hikes.

It forecast continued favourable growth in the second quarter within most of the its market segments.

"For such segments as aerospace, offshore oil/gas and agriculture, demand is expected to remain highly robust," Trelleborg said in a repeat of guidance offered ahead of the first quarter. "For automotive-related operations, the North American market is expected to be weaker than in 2007, while the European market is to experience slight growth."

Trelleborg shares, up near 3 percent before the news, rose 6 percent to 126 crowns at 1330 GMT, versus a 0.6 percent gain in the broader market .

Joakim Hoglund, analyst at Kaupthing Bank, said quarterly group numbers as a whole did not surprise much.