UPDATE 1-Hexagon sees stronger U.S. demand after healthy Q3

Fri Oct 26, 2012 4:47am EDT

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STOCKHOLM, Oct 26 (Reuters) - Measurement technology group Hexagon AB said on Friday a recovery in the United States was gathering pace and that stronger demand in emerging markets would help offset weaker European markets.

Hexagon posted a 17 percent rise in quarterly operating earnings, in line with forecasts, with brisk growth in Asia and the Americas offsetting weaker demand in Europe.

"It feels more and more that the (U.S.) recovery one speaks of is underway," Chief Executive Ola Rollen told Reuters.

"The engineering and auto sectors have driven this so far. What we are now seeing is that infrastructure work is also getting going," he added.

Organic growth, which strips out acquisitions and currency fluctuations, rose 11 percent in Asia in the quarter - compared with a flat result in Europe, the Middle East and Africa.

The group's Americas division, which includes the United States, Canada and South America, saw a 7 percent sales rise.

"I expect a continued recovery and stable growth from the U.S., while I expect a weak market in west Europe," Rollen said.

Analysts have also expected a gradual pick-up in demand for the firm's design and measurement instruments and software in China to help drive business following a slowdown last year.

Rollen said organic growth in China was 11 percent.

The Swedish company, which sells under brands such as Leica Geosystems as well as its own name, reported a third-quarter operating profit of 116 million euros, compared with an average forecast of 115 million seen in a Reuters poll of analysts.

"This is a solid report, and even if it is just in line with expectations they show that they continue to deliver," said Jon Hyltner, an analyst at Handelsbanken.

Hexagon shares, up almost 40 percent so far this year, edged 0.8 percent lower in early trade, in line with the wider blue chip Stockholm index. ($1 = 0.8093 euros) (Reporting by Helena Soderpalm and Mia Shanley, editing by Patrick Lannin)

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