UPDATE 1-Getinge looks to emerging markets as Europe cuts weigh

Wed Apr 17, 2013 8:36am EDT

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By Anna Ringstrom

STOCKHOLM, April 17 (Reuters) - Medical technology group Getinge forecast rising profits this year, before restructuring costs, as strong growth in emerging markets help offset sluggish European demand.

The Swedish maker of surgical theatre equipment such as heart-lung support and anesthesia systems has been feeling the bite in recent quarters from public sector cutbacks in Europe.

Getinge said its earnings before interest, tax, amortisation and restructuring costs fell to 792 million Swedish crowns ($124.2 million) from 854 million to fall just short of the 818 million seen by analysts in a Reuters poll.

Pretax earnings at the group were hard hit however as costs for restructuring, a new medical device tax in the United States and negative currency effects due to the strength of Swedish crown currency weighed.

The company, which began the year with a profit warning due to lower-than-expected demand in Europe, booked 240 million crowns of restructuring costs in the quarter, in line with market expectations.

Getinge said it expected "favourable" growth in earnings, excluding restructuring costs, while organic sales volume growth this year was seen being equal or somewhat better than 2012, a shade more upbeat than its previous outlook for unchanged sales.

It also stood by expectations for strong demand growth in emerging markets and increasing activity in the U.S. while weakness in Europe would continue to be a drag.

"In the Western European markets, the decline in demand for medical-technical capital goods has yet to hit bottom, while demand for disposables and services is expected to continue to grow," it said in a statement.

DNB Markets analyst Rune Dahl said that while earnings growth this year would come in emerging markets and the United States, mainly at the biggest Medical Systems division, European orders would sooner or later pick up again, recession or not.

"The Q1 report gives no comforting signs of a turnaround in the European market .. Hospitals are postponing investments, trying to wait to see if it gets better," he said.

"But you can only do that for so long. At some point they will need to reinvest and the question is, will that be in 2013? If not, I think we will possibly see, due to easy comparisons, a pick-up in 2014."

Getinge in February pushed back its profit margin target by one to two years, blaming weaker-than-expected demand and the introduction of the new tax in the United States.

($1 = 6.3756 Swedish crowns) ($1 = 6.3756 Swedish crowns) (Reporting by Stockholm Newsroom)

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