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ABB profit declines on loss in power services unit

Zurich-based company reports 17% drop in second quarter net earnings.

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ABB boss Ulrich Spiesshofer
ABB boss Ulrich Spiesshofer

ABB today reported a 17% decline in second quarter profit following a loss in its power services division.

Net earnings for the three months to 30 June fell to $636mn from $723mn in the second quarter of last year.

The Zurich-based company blamed the fall on ongoing project charges in large engineering, procurement and construction (EPC) projects for offshore wind and solar power generation.

Operational ebitda fell 15% to $1.33bn from $1.56bn a year earlier while revenue remained flat at $10.2bn despite the lower opening order backlog.

Orders of $10.6bn were 14% higher compared with the same quarter in 2013.

In the Middle East orders increased - including strong double-digit growth in Saudi Arabia — mainly on higher demand in the power divisions, the company said in its earnings statement.

Despite the dip in its bottom line, ABB said the long-term demand outlook for its businesses remains clearly positive.

“Last October we said that we will drive organic growth through penetration, innovation and expansion and now we are delivering results,” said chief executive officer Ulrich Spiesshofer.

“Our focused actions are paying off and support overall increased order momentum. In the second quarter we saw encouraging growth in our two largest markets, the US and China.”

The company said it had successfully executed on its announced strategic portfolio pruning of businesses that have limited synergies with the rest of the portfolio.

“Since October last year, we have moved quickly on our commitment to optimize the portfolio in a value-creating way and to strengthen the focus on the core,” Spiesshofer said.

“For the second half of the year we will continue to push hard on our organic growth initiatives in a mixed market environment,” he added.

“We will drive our relentless execution on cash and further step up the momentum on cost savings. We are confident that our balanced growth and execution initiatives will yield positive results for our shareholders.”

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