Engineering group Metso posted a better-than-expected rise in second-quarter profits on Wednesday, mainly due to efficiency improvements at its minerals unit, and slightly raised its 2004 profit forecast.
The Finnish firm said it made an underlying pre-tax profit of 24 million euros ($28.92 million) in the three months to June 30, up from 5 million in the same period last year and topping all forecasts in a Reuters poll of 10 analysts.
This was largely due to a return to profit for Metso Minerals, which made an operating profit of 21.6 million euros, which compared with a loss of 4 million last year. Sales at the unit rose 11 percent, with orders up 27 percent.
The global supplier of machinery to the mining and forestry industries said it now expected a slight improvement in 2004 operating profits before non-recurring items, having previously forecast unchanged profits.
It is a positive turn for the firm after a dismal 2003, when it posted a pre-tax loss of over 300 million euros due to one-off costs and goodwill write-downs at the minerals unit. It has also seen its debt ratings cut to "junk" status this year.
"The demand for Metso Minerals' products is expected to remain good in North America and in the mining industry," Metso said in a statement.
"The achieved profitability can be regarded as in line with expectations but is still insufficient. The work to achieve the financial targets and improve profitability continues." Metso shares rose 2.2 percent to 10.50 euros, but remain some 10 percent below year-highs reached in April before the firm said 2004 profits at its key paper unit would fall.
"The result is definitely better than what we were expecting, as was the guidance. You can see the company is beginning to improve, and their market is also in better shape," said Handelsbanken Capital Markets analyst Tom Skogman.