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Hagemeyer Quarterly Sales Growth Slows

Dutch electrical parts distributor Hagemeyer posted third-quarter sales of 1.628 billion euros ($2.31 billion) on Tuesday, just below expectations, adding group organic sales grew 3.2
percent.

The company, which has seen its shares soar in recent weeks after French company Sonepar said it planned to make a bid at 4.25 euros per share, reiterated that figure significantly undervalued the company. Its shares closed at 4.72 euros on Monday.

Hagemeyer confirmed its financial target of a nine percent return on invested capital (ROIC) for 2007 and of a ROIC between 11-15 percent for 2009.

The average forecast in a Reuters poll of five analysts was for sales of 1.643 billion euros. Hagemeyer's organic sales grew 3.5 percent in the second quarter and 8 percent in the first quarter of 2007.

"We produced a solid sales performance for the third quarter, despite last year's comparison basis being boosted by extreme copper cable price increases," said Hagemeyer chief executive Rudi de Becker.

"In addition to growing sales, we continue to improve successfully gross margins, reduce costs and increase working capital productivity."

The Dutch company primarily serves the construction and installation sector and benefited throughout 2006 from soaring copper prices, which it passed on to buyers of its electrical wire.

However copper prices have not risen at the same pace in 2007, leaving Hagemeyer more exposed to difficult construction market conditions both in Europe and the United States and with challenging comparables.

Sonepar's intended offer has prompted hopes of a bid battle for the Dutch distributor as France's Rexel, long seen as a potential buyer, said it would review its options.

Hagemeyer trades at 19.6 times projected 2007 earnings, compared with Rexel at 11.2 times and Wesco at 10 times.

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