UPDATE 2-Heijmans shares up as margins stay positive
* Heijmans Q3 operating margin 1 pct, up year-on-year
* Unprofitable building activities in 2008 turn positive
* Housing market still struggling
* Shares up 7.2 pct
(Adds analyst's comments, margin details, updates shares)
AMSTERDAM, Nov 12 (Reuters) - Shares in Dutch builder Heijmans (HEIJ.AS) surged on Thursday as cost cutting kept margins positive as it showed further proof of its recovery, although a lacklustre housing market continued to hit sales.
Heijmans said on Thursday its underlying operating margin, excluding restructuring costs, was about 1 percent of sales in the third-quarter, and its performance considerably improved compared with the negative result in the same period in 2008.
The firm had pushed its margin above zero in the second-quarter from a negative result in the first and kept it positive in the third, although it fell from the 2.7 percent in the second, affected by the traditionally weak holiday season.
It had a margin of 0.34 percent over the first-half of 2009, but did not say what its third-quarter margin was last year, when it battled debt and project management problems.
RBS analyst Mark Hesselink also welcomed an increase in Heijmans' order book.
"More importantly new orders are at higher margins than older orders due to Heijmans' selective order intake," he said.
Shares in Heijmans were up 8.6 percent to 13.56 euros by 1212 GMT, the second top gainer in Amsterdam and outperforming a 1.2 percent rise in the midcap index .AMX.
Heijmans said its order book at Sept. 30 rose slightly in comparison to the 2.52 billion euros it had at the end of June 2009. The order book in the first-half had fallen from 3 billion euros at the end of 2008 due to its selective contracting policy and a slowdown in the inflow of new projects.
Heijmans said Dutch building activities and the projects in Belgium that were highly unprofitable in 2008 made, on balance, a positive contribution to its result over the past few months.
"We are well on track; the downsizing is proceeding more rapidly than planned and we are making progress on the reduction of debt. The company is progressively doing better," Chief Executive Rob van Gelder said.
HOUSING SALES STILL LAGGING
Sales in the Netherlands in the last few months were lower year-on-year due to a selective contracting policy and the housing market slowdown, while international revenues over the past few months were slightly higher.
Heijmans warned the stagnation of the housing market is still affecting it adversely and that while increased movement in the housing market is perceptible, the volume of new homes sold and revenue continues to lag 2008 levels.
In the first 10 months of this year about 1,000 homes were sold, down from 2,150 over the full 12 months of 2008.
Dutch rival BAM (BAMN.AS), which unveiled 50 job cuts at its Dutch property activities last month, has also taken a hit from the housing slump, but said in August the market had slightly improved. BAM will report third-quarter results next week.
Heijmans has been restructuring since last year, planning to sell the bulk of its foreign operations after losing money on projects it had priced too cheaply. The company also closed a 101 million euro rights offering in July. (Editing by Jon Loades-Carter and Simon Jessop)
