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STOCKHOLM, July 17 (Reuters) - Swedish medical technology group Getinge reported stronger than expected orders thanks to a robust performance in capital goods and in emerging markets, sending its stock up more than 10 percent on Tuesday.
The group, which sells products used in areas such as surgery, intensive care, infection control and sterilization, also forecast organic sales growth of 2 to 4 percent for 2018. It had previously expected growth to be “slightly positive”.
The order intake beat and positive forecast overshadowed a quarterly earnings miss, sending Getinge’s shares up 10.5 percent to 96.04 Swedish crowns by 0745 GMT.
Ahead of the results, the company’s stock was trading at its lowest since mid 2009, hammered in recent years by the company’s tepid growth, repeated earnings misses and quality control problems.
The start of the year had also been turbulent. Getinge has booked a provision relating to a fraud probe in Brazil and been hit by higher costs in R&D, quality and sales and unfavourable currency moves.
But Tuesday’s results indicated that the business was beginning to improve as Getinge said that operating expenses had stabilised after a number of quarters where they gradually increased.
Order intake grew 10 percent on an organic basis to 6.1 billion Swedish crowns ($693.5 million) for the three months to the end of June, beating the 5.9 billion forecast in a Reuters poll of analysts.
“The big positive was exceptionally strong top line growth and therefore the market is finally rewarding this company for delivering this growth,” said Peter Ostling, analyst at Pareto Securities.
He said the results showed that Getinge was on track with its turnaround. Pareto, the only brokerage with a “buy” rating on the stock, has a target price of 110 Swedish crowns on Getinge.
Adjusted EBITA (earnings before interest, taxes and amortisation) fell to 538 million from 702 million a last year, missing the 572 million forecast.
But Getinge said this was due to more sales in its lower-margin units and higher expenses that came along with strong sales, which was “natural in a growth phase”. ($1 = 8.7966 Swedish crowns) (Reporting by Esha Vaish in Stockholm Editing by Keith Weir)