Management repeated guidance that in 2012 sales and EPS will grow y/y. There may have been some fear in the market because of weakening macro-economic and sector-specific trends, so this news may be reason for some relief.
Market trends broadly resemble 1H trends
Industrial Services operated on a level that in 3Q12 was slightly lower y/y, but volumes are currently more or less stable. The weaker segments are still French automotive and electro, and semiconductor equipment. Other segments fare better, and German automotive is doing better than is generally perceived, according to management.
New initiatives re product development and cross-selling are able to partly compensate for softness in some end markets. Flow Control experienced organic sales growth, a higher gross margin (due to mix and rawmat prices), and better order intake in 3Q12y/y. The segment performance was on average still sluggish in construction (US > Europe) and strong in other segments such as oil & gas, industry, beer, and utilities. Market share was gained, according to management.
No impact on the investment case
We will leave our 2012 estimates unchanged, in spite of a slight weakening of the US dollar vs. our input of 1.25 (negative translation) and a decline in copper prices (good for gross margins). For 2013, we will assess our estimates after the 3Q12 earnings season, as by then we should be able to have a better grasp where end markets are heading to.