Krones Gains as Margins at Break-Even Units May Improve

Krones AG, the world’s largest maker of filling and packaging machines, rose to the highest in almost six years after Hauck & Aufhaeuser upgraded its outlook for earnings and margins at its Process Technology unit.

Shares in the Neutraubling, Germany-based company closed 3.8 percent higher in Frankurt at 63.99, its highest level since November 7, 2007. Trading volume was twice the three-month daily average.

“Krones currently is undergoing a significant transformation which looks set to result in an increase of efficiency and thus cash flows,” Torben Teichler, Hamburg-based analyst at Hauck & Aufhaeuser, wrote in a note today. Process Technology will see “margin improvement potential” as Krones seeks to improve production and expand into the “less volatile non-alcoholic beverage market.”

The company’s Kosme unit will remain at break-even in 2014, said Teichler, who upgraded his recommendation on the stock to buy from hold with a 12-month target price of 71 euros.

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