RPT-UPDATE 1-Hexagon hits record profit buoyed by Asia

Thu Aug 9, 2012 4:07am EDT

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* Q2 op profit 128 mln euros matches consensus

* Sees organic growth in all regions this year

* Q2 sales rise 6 pct to 607 mln euros

* Shares up 2.0 pct, outperforming wider market

STOCKHOLM, Aug 9 (Reuters) - Technology group Hexagon AB said on Thursday emerging market demand for its design and measurement instruments and software would help drive growth in the latter part of 2012, helping offset flat North America and weak European markets.

Brisk demand in the automotive, aerospace and energy sectors where its 3D mapping and visualisation programmes are used helped fuel strong growth across all regions and divisions in the second quarter, said Hexagon, which sells under brands such as Leica Geosystems as well as its own name.

That helped the firm reach a record profit of 128 million euros ($158 million) in the quarter, up 12 percent on the year and right in line with analyst forecasts in a Reuters poll.

Organic growth in Asia jumped 10 percent in the quarter, compared with a more moderate 5 percent increase in the Americas and a slim 3 percent rise in Europe, Middle East and Africa.

Hexagon was hit last year by a slowdown in China as Beijing sought to engineer a soft landing for the booming economy but the company has been gradually more upbeat about demand in the country while South American sales should also drive growth.

"What we have seen in China is a continued strong growth within the engineering segment," Chief Executive Ola Rollen told Reuters. "It looks good and stable in Asia, and Asia for us is of course very much China. We think China is developing well."

Like many other firms which are suffering due to uncertainties surrounding a debt crisis in the eurozone, Hexagon said Europe was very much of a "two-speed region", with demand coming mainly from Northern and Eastern regions.

"While we recognise the increased uncertainty ahead of us, particularly in the engineering segments and regionally across parts of Europe, we expect our diversified business model to drive continued growth in the latter part of 2012," Rollen said in a statement.

Overall organic sales in the second quarter rose 6 percent to 607 million euros, just beating analyst forecasts.

"The report was fully in line with expectations - a better development in Asia and the Americas compensated for a weaker development in Europe, and operating margins were also in line with expectations," said Jon Hyltner, an analyst at Handelsbanken.

DNB Markets said the company's organic sales growth was slightly above its own forecast. It noted in particular a better than expected recovery in geosystems due to a faster recovery in China.

Geosystems, which provides imaging for mapping applications, made up 35 percent of group sales in the second quarter.

Hexagon shares were up 2.0 percent in early trade, outpacing a 0.5 percent rise in the wider Stockholm blue-chip index .

A steady stream of acquisitions and strong organic growth has made Hexagon the market leader in a specialised sector straddling software and engineering hardware, pitting it against rivals such as U.S. Trimble Navigation. ($1 = 0.8093 euros) (Reporting by Mia Shanley and Helena Soderpalm, additional reporting by Olof Swahnberg; Editing by Sophie Walker)

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