April 20, 2010 / 10:06 AM / 10 years ago

UPDATE 2-Kone shares gain on Q1 report, outlook upgrade

* Q1 EBIT 109 mln euros vs 100 mln avg in poll

* Order intake 895 mln euros, tops f’casts

* Sees 2010 EBIT 580-620 mln euros

* Sees 2010 sales flat to down 5 percent

* Kone shares surge to a 2010 high of 34.55 euros

(Adds analyst quotes, updates shares)

By Terhi Kinnunen

HELSINKI, April 20 (Reuters) - Finnish lift and escalator maker Kone (KNEBV.HE) reported first-quarter earnings ahead of market expectations thanks to cost cuts and strong Asian demand, hiking its outlook and sending its shares surging.

Kone shares rose 6.73 percent to 33.6 euros by 1139 GMT, having earlier hit a 2010 high of 34.55 euros.

The result is the latest in a string of solid reports from Kone, which thanks to investments in growth markets like China and India has been able to counter weakness in mature markets like North America and Europe.

“Profitability developed as expected. New orders were clearly higher than expected,” said Ohman analyst Jari Harjunpaa.

“When you consider the market situation, this is a strong performance,” said Pohjola Bank analyst Pekka Spolander.

“It seems that Kone has won market share and that they have got a lot out of their internal efficiency programmes. These facts support (the earnings) going forward,” he said.

January-March operating profit rose around 11 percent year-on-year to 108.6 million euros ($146 million), compared with an average estimate of 100 million euros in a Reuters poll, but within the range of estimates.

Sales slipped by some 2 percent to 1.0 billion euros, coming in at the high end of the poll, but the January-March order intake of 895 million euros beat a mean expectation in the poll which had forecast 818 million euros. [ID:nLDE63F17B]

“We have so far managed to improve our performance all the the time in the weaker environment,” Kone Chief Executive Matti Alahuhta said in a statement.

“Orders received were approximately at the same level as a year ago, even though new equipment markets continued to be weak in Europe and the Americas,” he said.

Kone last year unveiled a plan to shave fixed costs by at least 40 million euros annually starting in 2010, including some job cuts, and said on Tuesday the programme was on track through the first quarter.

UPGRADE

Kone said 2010 operating profit would be between 580 million euros and 620 million euros, versus a previous forecast of between 560 million euros and 610 million euros. The company’s 2009 profit was 600 million euros.

It said 2010 sales would be flat to 5 percent lower, versus a forecast made in January for a 5 percent fall.

Kone said it expected the market for new lifts and escalators in Europe, Middle East and Africa to continue declining, but to stabilise towards the end of the year, while it saw demand for new equipment in Asia-Pacific increasing. (Editing by David Holmes and Sharon Lindores) ($1=.7431 Euro)

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