(Adds CEO comments, details, shares)
STOCKHOLM Feb 11 Measurement technology group Hexagon said it saw improving demand ahead as it posted Q4 sales and operating profit in line with expectations on Tuesday, sending shares higher.
Operating earnings at the group, which sells under brands such as Leica Geosystems as well as its own name, rose to 136.7 million euros ($186.56 million) from a year-ago 133.6 million and against a mean forecast of 138 million in a Reuters poll of analysts.
Sales rose to 631.7 million in the quarter from 629 million a year ago, corresponding to organic growth of 5 percent, driven by a recovery in the European construction sector and a strong development in the oil and gas segment.
"Looking ahead, we see improving market conditions in our core industries across EMEA, China and Americas and stabilizing demand from the defence sector," the company, the market leader in a specialised sector straddling software and engineering hardware, said.
Hexagon CEO Ola Rollen told Reuters that demand had continued to slowly improve this year, and that organic sales were seen growing by at least 5 percent in 2014.
"Overall demand is going in the right direction, it's stabilising and getting better and better", Rollen said.
The group's sales have been pressured by significantly lower demand from the U.S. defense segment for several quarters, but Rollen said there were indications so far this year of those sales bottoming out.
Hexagon shares rose 4.3 percent after the report, sharply outperforming a 0.7 percent rise in the broader OMXS-index in Stockholm at 0830 GMT.
Its shares have risen roughly 8 percent so far this year compared to an 8 percent decline for U.S. competitor Trimble Navigation.
($1 = 0.7327 euros) (Reporting by Johannes Hellstrom; Editing by Alistair Scrutton)