* Q2 adjusted op profit 140 mln euros vs f'cast 138 mln
* CEO says organic growth should continue to improve
* Says Russia sanctions may hit sales in H2
* Shares up more than 3 pct
(Adds quotes, shares, background, detail)
STOCKHOLM, Aug 7 Swedish design and measurement
technology group Hexagon AB posted forecast-topping
earnings on Thursday and predicted improved growth through the
rest of the year, on the back of strong demand from industrial
Its shares, which hit a record 230.2 Swedish crowns earlier
this year having more than doubled in value since late 2011,
gained more than 3 percent to as high as 219.6 crowns.
Hexagon, market leader in a specialised sector including
software and engineering hardware, said like-for-like growth in
the second quarter reached 6 percent, helped by stronger sales
in Europe, higher than the 5 percent seen in the first quarter.
"We stick to our belief of a gradual improvement in organic
growth continuously during the year," Chief Executive Ola Rollen
told Reuters, though sales to Russia may be affected by
sanctions imposed in July.
"As it looks right now, most of that business will able to
continue, but there is a risk after all," Rollen said.
Hexagon has about 3 percent of its sales in Russia and
counts state-controlled energy groups Gazprom and
Rosneft among its clients, Rollen said.
"This is a thicket of rules, and it isn't easy to tell how
this embargo will pan out," he said, adding it was not yet clear
whether any sales to those companies or others would be
Speaking on a conference call, Rollen said the sanctions may
reduce group sales growth by half a percentage point during the
second half of the year.
Hexagon's sales in Russia mainly consist of software to help
design facilities such as nuclear plants, mines and oil rigs, as
well as products used to build infrastructure, such as
high-speed rail links and highways, Rollen said.
Adjusted operating earnings at the group, which sells under
brands such as Leica Geosystems as well as its own name, rose to
140 million euros ($187 million) from a year-ago 132 million
against a mean forecast of 138 million in a Reuters poll of
Hexagon shares, which trade on a multiple of some 18 times
forecast earnings against a peer average of 15.8 times according
to Reuters data, were up 3.4 percent by 1031 GMT, outperforming
the wider Stockholm market which rose 0.2 percent.
(1 US dollar = 0.7475 euro)
(Reporting by Sven Nordenstam; Editing by Mia Shanley and David