* Shares up as much as 10 pct on solar unit performance
* Q2 EPS C$0.07 vs EPS C$0.16 last year
* Tepid outlook for both solar, automation units (Recasts with stock rise, details, forecast)
VANCOUVER, British Columbia, Nov 10 (Reuters) - Shares in ATS Automation Tooling Systems Inc (ATA.TO) surged on Tuesday after a better than expected quarter in its solar energy unit limited a slide in the company's overall earnings.
Shares of the Canadian firm leaped as much as 10 percent on the Toronto Stock Exchange after its French-based Photowatt division, which makes solar cells, wafers and panels, made a surprise profit in the second quarter even though demand and selling prices in the solar energy market remain depressed.
"The actions we have taken to fix our operations and reposition Photowatt over the last 18 months have enabled us to operate profitably in the second quarter, despite a significant decline in our revenues," said Chief Executive Anthony Caputo.
Over the past two years, the Cambridge, Ontario-based company has cut costs and improved the efficiency of its solar products as it faced a market downturn as a lack of funding halted projects.
For the company as a whole, ATS posted net income from continuing operations of C$6 million, or 7 Canadian cents a share in the three months to Sept. 27, down from C$12.7 million, or 16 Canadian cents a share, a year earlier.
Revenue at ATS, which also makes manufacturing and industrial equipment for the automotive, healthcare, energy and consumer electronics industries, fell to C$148.2 million from C$219.5 million.
Analysts had, on average, expected a profit of 6 Canadian cents a share on revenue of C$143.7 million, according to Thomson Reuters I/B/E/S.
In its automation systems group, customers continued to reduce or delay capital spending programs, resulting in a 47 percent drop in order bookings from last year, ATS said.
The company expects customers to continue to rein in capital spending until their markets are stable or growing.
Its Photowatt unit will likely continue to suffer at the hands of lower selling prices as countries reduce their solar energy subsidy programs, ATS said. To keep the unit competitive, the company is considering ways to reduce its cost structure but this could cost up to C$10 million.
Photowatt is looking at expanding its operations to Ontario, which recently passed an investor friendly Green Energy Act.
By late morning, ATS shares were off their highs but still up 5 percent, or 30 Canadian cents, at C$6.84.
$1=$1.05 Canadian Reporting by Nicole Mordant and Isheeta Sanghi in Bangalore; editing by Rob Wilson