Swedish engineering group Atlas Copco calms demand jitters (updated)

Pfeiffer Vacuum Technology AG

15/07/2019 12:40

(Adds detail, background, analyst comments)
    STOCKHOLM, July 15 (Reuters) - Swedish industrial group
Atlas Copco  ATCOa.ST  on Monday forecast only a slight drop in
demand in the third quarter after a rise in second-quarter
orders allayed some investor fears of a sharp slowdown.
    Investors and analysts have grown jittery about the
near-term industrial outlook as warnings from a string of
automotive suppliers, industrial technology company Hexagon
 HEXAb.ST  and chemicals producer BASF  BASFn.DE  have hit
confidence.  urn:newsml:reuters.com:*:nL8N24A1B9
    Hexagon  HEXAb.ST  this month said it had experienced a much
weaker than expected June in China, hurt by weakness in
electronics. 
    Atlas Copco has heavy exposure to the chipmaking sector
through its vacuum pumps business.  urn:newsml:reuters.com:*:nL8N2460NP
    Monday's results lifted the company's shares by 1.6% in
morning trade as investors took heart from organic order growth
of 2% in the second quarter, outpacing the 1% posted for the
previous quarter. 
    "We continue to grow and deliver high profitability despite
the uncertainties in the global economy," Atlas Copco CEO Mats
Rahmstrom said in a statement.
    JPMorgan described the share price gain as "a fair
reflection" on a second quarter that it feels was mostly in line
with first-quarter trends."
    "Demand has certainly not fallen off a cliff," it said in a
research note. 
    Shares in Atlas Copco, which competes with the like of
Gardner Denver  GDI.N  and Pfeiffer Vacuum  PV.DE , have climbed
by 35% this year but stalled somewhat on downbeat sector
sentiment this month.
    The maker of compressors, vacuum pumps and industrial tools
reported second-quarter operating profit of 5.38 billion Swedish
crowns ($575 million), down from 5.43 billion crowns a year ago
and lagging the 5.69 billion crowns forecast in a poll of
analysts.  urn:newsml:reuters.com:*:nL8N24D337
    Adjusted for items affecting comparability, Atlas said
operating profit was 5.62 billion crowns.
    Organic orders at the company's biggest business, Compressor
Technique, grew 3% in the quarter. Orders fell 7% at its Vacuum
Technique operation but that was a much smaller drop than in
previous quarters.
($1 = 9.3605 Swedish crowns)

 (Reporting by Johannes Hellstrom
Editing by David Goodman)
 ((johannes.hellstrom@thomsonreuters.com; +4687001008; Reuters
Messaging: johannes.hellstrom.reuters.com@reuters.net))