February 7, 2018 / 11:54 AM / 6 months ago

FLSmidth profit tops forecasts, sees higher margin in 2018

STOCKHOLM, Feb 7 (Reuters) - Danish engineering group FLSmidth reported a surprise rise in fourth-quarter operating earnings on Wednesday and forecast higher revenues and profitability in 2018 on the back a cyclical recovery in demand, sending its shares higher.

Operating profit at FLSmidth, part of a Nordic cluster of mining gear makers including Swedish Sandvik and Atlas Copco and Finland’s Metso, rose to 372 million Danish crowns ($62 million) from a year-ago 308 million.

That compared with a mean forecast 300 million crown profit seen in a poll of analysts.

FLSmidth also proposed raising its dividend to 8 crowns per share while analysts were expecting the Danish company to keep its annual payout unchanged at 6 crowns.

While demand from the mining sector has begun picking up from a deep slump, the Danish manufacturer was hit last year by a slowdown in its business for cement making equipment.

FLSmidth said group order intake rose 6 percent to 4.84 billion crowns in the quarter against a forecast 4.83 billion, with bookings in its cement business alone up a better than expected 19 percent on the year.

“Our order intake increased and the momentum in the mining industry continues in 2018, while cement market conditions are expected to remain unchanged,” CEO Thomas Schulz said.

Shares in FLSmidth, up just under 2 percent ahead of the results, rose 6.3 percent by 1117 GMT.

FLSmidth said it expected revenues of 18-20 billion crowns in 2018 and operating margin (EBITA) of between 8 and 10 percent. The company reported turnover of 18.0 billion crowns and a margin of 8.4 percent for full-year 2017.

“In 2018, we expect increasing revenue and a higher EBITA margin,” the company said in a statement.

Ahead of the earnings release, analysts were on average expecting the group’s revenues to be 18.8 billion crowns this year with an EBITA margin of 9.2 percent.

$1 = 6.0276 Danish crowns Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Simon Johnson and Jane Merriman

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