STOCKHOLM (Reuters) - Swedish industrial technology group Hexagon (HEXAb.ST) beat quarterly sales expectations, helped by a recovery in its PPM division that makes software for operators of plants, ships and offshore facilities, lifting its shares to an all-time high.
Hexagon, whose sensors and software are used for measurement and quality inspection in manufacturing and engineering plant design, has seen strong industrial demand across most of its markets, but a weak oil and gas sector has weighed on the power, process and marine (PPM) division.
Hexagon said the PPM business saw organic growth of 14 percent in the second quarter, compared with 1 percent growth in the preceding three months.
It said it had won several large orders and saw strong growth in North America.
Group sales rose 9 percent, accelerating from 7 percent in the first quarter, and above the 7.4 percent expected in a Reuters poll of analysts.
Shares in Hexagon, whose products are also used in infrastructure planning, construction, mining, agriculture and energy, were up 5.1 percent at 534 crowns at 0824 GMT.
The STOXX Europe 600 Technology index .SX8P, which Hexagon has outperformed this year, was down slightly.
“I think the strong organic growth was the key stand-out,” said Handelsbanken Capital Markets analyst Daniel Djurberg, who has an “overweight” rating and target price of 540 crowns on Hexagon’s stock.
He said strong organic growth across regions should allow Hexagon to mitigate the impact of tougher comparisons in the second half of 2018.
Industrial software and technology produced by Hexagon and rivals such as Autodesk (ADSK.O) and Dassault Systemes (DAST.PA) are in demand as companies move to automate manufacturing operations through the use of sensors to gather more digital data.
Under Chief Executive Ola Rollen, Hexagon has transformed from a sprawling conglomerate with a market value of a few billion crowns in 2000 into a $20 billion technology market leader thanks to a string of acquisitions and rapid growth.
Hexagon’s quarterly adjusted quarterly operating earnings rose to 228 million euros ($267 million) from 205 million a year earlier, in line with the 226 million mean forecast.
The company stuck to its target for annual sales of 4.6-5.1 billion euros and an operating margin of 27-28 percent by the end of 2021. This compares with sales of 3.5 billion euros and an operating margin of 24.1 percent in 2017.
($1 = 0.8538 euros)
Reporting by Esha Vaish in Stockholm; editing by Anna Ringstrom and Louise Heavens