Heavy engineering group ABB has almost tripled earnings in the second quarter and reported a strong rise in profitability.
The engineering firm, which makes products used in refineries and pipelines, is benefiting from high oil prices as as energy companies ramp up investments to increase capacity.
The group said yesterday its net profit rose to £199 million from £68 million a year earlier, beating average expectation.
Operating income came in at £346 million, up 73 per cent, resulting in an operating margin of 10.7 per cent, ahead of the group's target of "above ten per cent" by 2009.
"We continued to deliver strong results in the second quarter," said Fred Kindle, ABB president and chief executive.
"We are clearly benefiting from the strong global demand for improved power infrastructure and increased industrial efficiency.
"On top of that, our efforts to further improve our business performance continue to pay off and we look forward to a solid second half."
Lehman Brothers said in a note: "Given the earnings performance, to us it looks more likely now that the company can achieve its 2009 margin target of 10 per cent two years early."
ABB stuck to its conservative targets but a spokesman said it may raise its guidance next year.
"We will revise our internal strategic plan in 2007 and, if necessary, adjust our targets afterwards," he said.
The maker of industrial robots also targets an average annual revenue growth rate of more than five per cent in 2005-2009.
ABB said it expected automation-related industrial investments to continue in most sectors, especially in metals and minerals, marine and oil and gas.
A brisk global economy is also driving demand, boosting orders by 19 per cent to a forecast-beating £3.94 billion.
Second-quarter sales rose five per cent to £3.25 billion, slightly below average expectations.
ABB also swung to a net cash position of £163 million at the end of the second quarter, an important milestone after ABB came close to financial collapse four years ago with a net debt burden of around £2.7 billion.
The need for new power infrastructure and for greater industrial efficiency in the face of high oil prices should drive demand for the remainder of the year, ABB said.
But the maker of industrial robots also cautioned that risks included the impact of volatile prices for oil and commodities on the global economy and the potential for further political instability in the Middle East.
ABB received almost 10 per cent of its orders from the Middle East and Africa. The region recorded the highest growth rate in orders in the second quarter.
The group also said its asbestos-related plan for its Lummus subsidiary would become final by the end of August if there were no appeals.
The Swedish-Swiss engineering group has a number of subsidiaries in the West Midlands, including sites in Coventry, Derby, Stone and Telford.
"These figures, except sales, came in much better than expected," said a dealer at a major Swiss bank.
"The margins look good and especially order intake looks strong. We expect positive impact on stock today."
A dealer at a major Scan-dinavian brokerage agreed the order intake is very strong and said the outlook remains good. He said forecasts will probably rise on the back of today's statement.
Shares closed up 17.5p at 681.