Denmark's FLSmidth & Co. A/S (FLS.KO), a leading equipment supplier to the cement and mining industries, Thursday said it was raising its full-year revenue guidance as demand is expected to improve, despite posting a 41% drop in second-quarter net profit and lower revenue.

"Investments in the minerals industry made a strong comeback in the second quarter of 2010, where a number of contracts within gold, copper, coal and phosphate became effective.," the company said.

The company's order intake totaled DKK7.52 billion in the second quarter, up from DKK2.5 billion from a year ago and DKK5.2 billion in the first quarter, with order backlog growing to DKK26.6 billion in the first half of the year from DKK25.96 billion in the first half of 2009.

FLSmidth said quarterly net profit fell to DKK258 from DKK437 million ($44.4 million), missing analysts expectations of DKK317.7 million. Revenue dropped to DKK4.92 billion from DKK5.59 billion. The numbers were below consensus forecasts of DKK4.99 billion.

The company was hit hard last year as the financial crisis restricted access to project financing, and the global downturn weakened demand for cement and minerals.

"So far, the propensity to invest has not been significantly affected by higher mine taxes in Australia, unrest in the eurozone or increasing concern over the growth in China," the company said, adding that the list of potential sales opportunities in Minerals remains long, and it's in talks with a number of potential customers.

"It's expected that the minerals industry's investments will develop positively over the coming years, albeit with quarterly fluctuations in the order intake," it said.

The Copenhagen-based engineering company raised its guidance, saying that revenue in 2010 will be between DKK20 billion and DKK21 billion, up from the previous expectation for DKK19-DKK20 billion, and maintained its target for earnings before interest and taxes, or EBIT, ratio at approximately 8-9%.

"In 2010, the global market for new contracted cement kiln capacity (exclusive of China) is still expected to be around 50 million tonnes per year, up from 45 million tonnes in 2009, based on local demand for new capacity in particular in India, Indonesia, South America and Africa," the company said.

The company expects investments costs for 2010 of about DKK600 million, higher than the original estimate of DKK400 million, for its investment in regional service centers, spare parts inventories and expansion of production facilities in India and China.

Exane BNP Paribas analyst Su Zhang said the report was very positive.

"Sales and order numbers were in line with expectations, but margins were better then seen--indicating good pricing terms," he said, adding that the company's strong order intake indicates that there seem to be a return of orders that were put on hold due to the financial crises.

Sydbank analyst Jacob Pedersen agreed that the report was solid.

"Order intake and earnings were a little stronger than I expected, and the upgraded full year revenue guidance was pretty much in line with the market expectations. Overall, a strong report", he said.

At 0720 GMT, the company's shares were up DKK8.40, or 2.1%, at DKK405.40, outperforming a positive Danish market.

-By Erik Durhan, Dow Jones Newswires; +46-8-5451-3091; erik.durhan@dowjones.com
FLSmidth and Co AS (PK) (USOTC:FLIDY)
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