DMG Mori Seiki AG Plans 2014 Growth With Japanese Partner’s Help

DMG Mori Seiki AG (GIL), the German tool-machine maker that plans to merge with a Japanese manufacturer, has a target to increase orders to about 2.2 billion euros ($3 billion) next year, its chief executive officer said.

The Bielefeld-based company, which changed its name from Gildemeister this month, will benefit from cooperation with its Japanese partner, CEO Ruediger Kapitza said in a phone interview today. There are no plans to speed up the planned merger, which will happen by about 2020, he said.

DMG Mori Seiki today raised forecasts for the current year, saying it expects both sales and orders to rise to more than 2 billion euros. The company is benefiting from cooperation with Japan’s DMG Mori Seiki Co. as a weaker yen is making it easier for the German company to find buyers in the euro area for its Japanese partner’s products. The weaker yen is also making it cheaper to obtain parts from Japan, Kapitza said.

“The partnership is helping a lot,” Kapitza said in the interview. “You can see that in the new orders, you can also see it in the improved costs of sales.” When merged, the company will keep a listing on both the Frankfurt and the Tokyo exchanges, Kapitza said.

The German company’s shares rose as much as 7.7 percent, the biggest intraday jump since January, and were up 6.1 percent at 22.92 euros as of 12:02 p.m. in Frankfurt. That took the advance to 54 percent this year, giving the business a market value of 1.8 billion euros.

Pretax profit will rise to about 130 million euros this year with net income of about 90 million euros, the company said today. Previously, it forecast pretax profit of 120 million euros and net income of 82 million euros.

Shareholders agreed in May to change the German company’s name as a precursor to a merger with Japan’s Mori Seiki Co. The companies, which started cooperating in 2009, already hold stakes in each other.

Third-quarter earnings before interest and tax rose 3.4 percent to 39.2 million euros, beating a 38.4 million-euro estimate. Sales fell 3.4 percent to 505.5 million euros.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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