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Draegerwerk Surges as Earnings Flout Skeptics: Frankfurt Mover

Jan. 23 (Bloomberg) -- Draegerwerk AG & Co. rose the most in 15 months in Frankfurt after the medical and aerospace supplier said 2012 profit beat its own forecast, wrong-footing skeptics who predicted a fourth-quarter margin squeeze.

Draegerwerk climbed as much as 8 percent, the most since Oct. 6, 2011. The shares were up 7.1 percent at 87.25 euros as of 11:55 a.m., giving the company a market value of 1.27 billion euros ($1.69 billion). More than 160,000 shares were traded, exceeding the average daily volume in the last three months sixfold.

Earnings before interest and tax were as much as 9.7 percent of revenue last year, Luebeck, Germany-based Draegerwerk said in a preliminary earnings statement last night. The company previously forecast the Ebit margin to be midway between 8 percent and 9.5 percent.

“Sales and Ebit margin beat our estimates and that of the market and the estimates the company gave in the third quarter; that’s surprising,” Igor Kim, an analyst with Close Brothers Seydler Research AG in Frankfurt, said in an interview. “Many analysts expected fourth-quarter expenses would burden the margin.”

Order intake “appeared strong,” with a 2.2 percent increase excluding currency effects, which is positive for 2013, Kim said. Of 14 analysts who rate Draegerwerk’s stock, 11 have buy ratings, including Kim. Three advise holding the shares, according to data compiled by Bloomberg.

Draegerwerk, which is scheduled to publish final results on March 12, said some expenses originally planned for the fourth quarter weren’t incurred. Demand for ventilators “was particularly strong,” it said.

Sales excluding currency effects this year should rise at about the same rate as in 2012, it said. The company forecasts an Ebit margin of 8 percent to 10 percent this year.

To contact the reporter on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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