UPDATE 2-SPX sees 2008 profit up on global energy demand
(Rewrites first paragraph, adds CEO comments, details)
NEW YORK, Jan 23 (Reuters) - Diversified U.S. manufacturer SPX Corp (SPW.N) on Wednesday forecast 2008 profit would rise 26 percent to 31 percent even as local Chinese competition takes a bite out of its global infrastructure business.
SPX, which makes cooling towers used in power plants, fluid-handling products used in oil and gas products, and other industrial equipment, said it expects 2008 profit from continuing operations of $6.00 to $6.20 per share.
While Chinese investment in energy, oil and gas projects has been a particular bright spot in SPX's strong power development business, local competition is starting to crop up in China, Chief Executive Chris Kearney told Reuters.
SPX is not facing the same problem of local competition in either its Middle Eastern or South African infrastructure businesses, Kearney said.
The company has done business in South Africa since the early 1990s and enjoys the status of a local company despite being headquartered in Charlotte, North Carolina, he said.
SPX won a $235 million contract in South Africa in 2007, the largest in company history.
Its testing and measurement unit, which makes automotive diagnostic equipment, has struggled in the face of Detroit automakers' efforts to contain costs. Kearney sees the primary area of growth for the unit to be overseas rather than domestically.
Three of the five acquisitions SPX has made in the past five years have been in Europe for its Testing and Measurement segment.
It is reasonable to expect that the company would continue to do acquisitions that would support the growth of key units, such as that one, Kearney said.
The company expects 2008 revenue of $6.1 billion, up 25 percent to 30 percent.
Analysts on average expect 2008 earnings of $6.02 per share on revenue of $5.93 billion.
SPX has not yet reported its 2007 results. Analysts expect a profit of $4.80 per share on revenue of $4.91 billion.
Global energy investment drove a 68.6 percent increase in SPX shares last year, far outpacing a 13.1 percent gain in the Standard & Poor's capital goods index .GSPIC.
SPX shares, trading at about 15.6 times estimated 2008 earnings per share, are not cheap, Deutsche Bank analyst Nigel Coe wrote in a research note. "But we continue to be attracted to the global infrastructure growth story," which has the potential to drive revenue and profit growth through 2010, he said.
Shares were down $3.19 to $92.04 in early afternoon trade on the New York Stock Exchange. (Reporting by Helen Chernikoff; editing by John Wallace/Leslie Gevirtz)
