* Q2 core EBITA 131 mln euros vs 104 mln in poll
* Order intake beats
* Lifts profitability target to 15 pct
* Shares rise 9 percent
(Adds comments, background, updates shares)
By Sakari Suoninen and Jussi Rosendahl
HELSINKI, July 31 Finnish engineering company
Metso reported strong quarterly profits and orders
and lifted its core earnings target to above 15 percent of sales
within three years, sending its shares up 9 percent to a
Metso makes most of its money from the mining industry,
which has been retrenching after a decade of heady expansion.
Weaker metals prices and an investor backlash over the scale of
investment forced major mining companies such as Rio Tinto
and BHP Billiton to slash spending.
Metso said it saw light at the end of the tunnel.
"The market has somewhat recovered... Mining investments
seem to be bottoming out," CEO Matti Kahkonen told Reuters by
telephone, though he cautioned that he did not expect demand to
start growing again this year.
Analysts struck a similar tone. "This does appear to be
suggesting that things are starting to improve. I'm not sure
we're past the worst just yet, but things now look better than
expected," Berenberg Bank analyst Alexander Virgo said.
Metso, which spun off paper machine business Valmet
at the start of the year, said adjusted earnings
before interest, tax and amortisation rose to 131 million euros
($175 million) in the quarter to the end of June from 118
million a year earlier, beating the average forecast of 104
million in a Reuters poll of analysts.
Order intake in the quarter totalled 947 million euros, also
above the consensus forecast of 882 million.
Metso said expected to reach an EBITA margin above 15
percent of sales within three years. Its previous target was 11
to 16 percent.
Shares in Metso, which Britain's Weir Group tried
to buy earlier this year, were up 9.4 percent at 29.65 euros by
1310 GMT, after touching 29.84, their highest since April.
Berenberg's Virgo said Metso's underlying performance was
strong and the 15 percent EBITA margin target quite aggressive
and well ahead of previous estimates.
CEO Kahkonen said three areas could each boost the operating
margin by a percentage point: cost efficiencies, a concentration
on more profitable business lines and improved capacity usage in
manufacturing and services.
Metso said it was mulling a sale of its process automation
business, which serves the pulp, paper and power industries.
Kahkonen said a decision would come by the end of the year.
($1 = 0.7467 Euros)
(Editing by Jane Baird and Tom Pfeiffer)