UPDATE 2-Kone ups sales guidance after decent Q2

(Updates share price, analyst comment, details, CEO, sales by area)

By Azer Sawiris

HELSINKI, July 22 (Reuters) - Finnish lift and escalator maker Kone (KNEBV.HE) posted an 18 percent rise in its second-quarter operating profit on Tuesday, boosted by continuing good demand, and raised its 2008 sales forecast.

April-June operating profit rose to 137 million euros ($218 million) from 116 million euros a year earlier, and compared with an average forecast of 139 million in a Reuters poll of analysts.

Kone also raised its sales guidance to more than 10 percent on constant currencies from about 10 percent, but kept its operating profit outlook intact.

Kone's shares fell 4.2 percent to 22.75 euros by 1330 GMT on the Helsinki bourse, underperforming the 1.4 percent lower European Industrials stock index .SXNP, as the firm said its order intake growth would slow in the second half sequentially.

"As the guidance for operating profit remained the same, we have to conclude that the margin outlook is slightly lower than earlier or ... it is more cautious," Pekka Spolander from Pohjola Bank said.

"The report lacked any positive surprises, or bigger triggers for the time being," said eQ Bank analyst Erkki Vesola.

EQ's Vesola also said that second-quarter margins were softer than expected.

The company repeated it sees its full-year operating profit rising close to 20 percent.

"Even though some markets have weakened, Kone has been able to continue to have a strong growth in orders received," Kone Chief Executive Matti Alahuhta told Reuters.

Second-quarter order intake grew 16 percent to 1.09 billion euros, in line with analyst expectations, from last year's 944 million euros.

Sales increased 13 percent to 2.05 billion euros from 1.81 billion a year ago.

The company said the overall demand for new equipment continued to be at a good level during the second quarter and the modernisation market provided growth opportunities.

Kone's new equipment market forms slightly less than half of its sales, with most revenue coming from services.

"In Europe, Middle East and Africa, the business was mixed," Kone said, noting that the North European market, especially Scandinavia, experienced increasing hesitation in the residential sector.

Sales grew in all three regions, with Europe, Middle East and Africa accounting for about two thirds of sales, while the Americas and Asia-Pacific had slightly under one fifth each. (Editing by David Cowell)