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ZURICH, Aug 26 (Reuters) - First-half net profit at Sulzer AG fell less than expected to 25 million Swiss francs ($17.7 million) from 42 million a year earlier, the Swiss machinery and engineering group said on Tuesday.
The firm, whose shares are being dropped from the blue-chip SMI index , expected full-year net profit to lag the 2002 result despite an improvement in operating profit on the back of higher orders and sales in local currencies.
This was because first-half 2002 earnings had been lifted by gains on real estate sales and the disposal of a business unit.
Analyst estimates had on average called for net profit of 17 million francs for the period from January to June.
"The second half of the year 2003 will remain challenging," Sulzer said. With 2002 net profit boosted by exceptionally high real estate income and a gain from the sale of Sulzer Burckhardt, 2003 would remain below last year's level.
Chief Executive Fred Kindle said, "We were able to end the first half with a slightly improved operational performance and a better outlook than a year ago. Sulzer remains committed to profitable growth."
Operating earnings before tax, interest costs and amortisation (EBITA) improved to 45 million francs from 43 million in the first six months of 2002. Operating earnings before interest and tax (EBIT) dropped to 36 million from 66 million, but came in slightly above analyst forecasts calling on average for 34 million.
Sales slipped eight percent to a disappointing 866 million francs, falling well short of analyst estimates of 901 million.
"This decline is attributable above all to currency effects," Sulzer said. Adjusted for acquisitions, divestitures, and currency effects, sales grew a slight one percent. ($1=1.415 Swiss Franc)