January 28, 2019 / 11:38 AM / 4 months ago

UPDATE 2-Atlas Copco's vacuum business powers earnings, lifting shares

* Q4 op profit SEK 5.66 bln mean forecast 5.22 bln

* Q4 order intake SEK 23.7 bln vs forecast 23.0 bln

* Organic order intake in vacuum -17 pct vs -24 pct f’cast

* Atlas Copco shares rise 6.6 pct (Adds analyst comment, CEO comment, background, detail, updates shares)

By Johannes Hellstrom

STOCKHOLM, Jan 28 (Reuters) - Atlas Copco beat quarterly earnings forecasts on Monday as its Vacuum Technique business exceeded analysts’ expectations, lifting the Swedish firm’s shares.

The vacuum pumps business, which competes with Germany’s Pfeiffer Vacuum, accounts for more than a fifth of Atlas Copco’s order intake. It is heavily exposed to semiconductors, where clients include Samsung and Intel.

Shares in Atlas Copco, which has been hit by negative news from the semiconductor sector, were up 6.6 percent at 1235 GMT after the maker of compressors, vacuum pumps and industrial tools said its operating earnings rose to 5.66 billion crowns ($625 million) from 4.86 billion a year earlier, beating a mean forecast of 5.22 billion in a Reuters poll.

“The quarter is dominated by a big beat in Vacuum Technique,” Barclays said in note, adding that market expectations for the business had been “very low”.

Order intake at the vacuum unit fell less than expected, helping quarterly group orders to reach 23.7 billion Swedish crowns ($2.6 billion), up 1 pct year-on-year on an organic basis and above the 23.0 billion forecast by analysts.

While the vacuum business represented the majority of the profit beat, the industrial tools business, which includes the bulk of Atlas’ auto exposure, also topped expectations.

“I am very proud of our performance in the quarter and we can summarize the full year 2018 as a year where revenues, orders and profit reached all-time high,” Atlas Copco CEO Mats Rahmstrom said in a statement.

Vacuum Technique orders still fell 17 percent organically compared with market forecasts for a 24 percent drop, and Atlas said the fall for semiconductor equipment was mainly due to lower investment activity in South Korea.

Along with other engineering stocks, Atlas Copco has also been under pressure due to global growth fears, with China a primary concern due to falling car sales and softening industrial activity data.

The firm forecast somewhat lower customer demand in the first quarter. In its forecast for the fourth quarter, issued in October, it also forecast somewhat lower demand but highlighted the semiconductor and automotive segments as the main drivers.

($1 = 9.0548 Swedish crowns)

Reporting by Johannes Hellstrom; editing by Niklas Pollard and Alexander Smith

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