ABB on course for growth despite Q4 profit fall
Swiss engineering group ABB has given a brighter outlook for 2018 despite its 2017 fourth quarter earnings falling below expectations
Swiss engineering group ABB has given a brighter outlook for 2018 despite its 2017 fourth quarter earnings falling below expectations.
The group said that improving markets around the world would drive profitability this year.
In the last three months of 2017, the company saw orders falling 3% to $8.48bn compared to the same period in 2016.
Net profit fell 8% to $393mn during the three months ended Dec. 31, missing the average estimate of $424mn.
The figures were hit by a fourth-quarter charge of $76mn from restructuring its business.
Revenues rose 3 percent to $9.28bn, short of the poll estimate of $9.5bn, while orders rose to a weaker-than-expected $8.48bn.
The Zurich headquartered company proposed raising its dividend by two cents to 0.78 Swiss francs per share.
The results included “the dampening effect of our massive transformation,” said Ulrich Spiesshofer, chief executive.
He has streamlined ABB to focus on higher growth markets and to cut costs, but has struggled to increase sales.
The company spent much of 2017 reorganising as it battled a long-term downturn in industries like mining and oil and gas, where low prices have stalled customers' investments.
ABB also cut down costs, simplifying its structures and ditching fringe businesses like the high-risk and low-margin engineering, procurement and construction business it spun off in December
Orders in the fourth quarter were also hit by lower big orders in its power grids division - following a large deal from India in 2016.
Overall, revenues for the full year were up 1% at $34.3bn, while operating profits were down 2 per cent at $4.13bn.
ABB businesses range from robotics to power grids, with much of its revenue depending on investment spending by governments and utilities.
ABB pointed to strong growth in overall “base orders” - worth less than $15m - as indicating an improvement in its underlying performance. Base orders rose 9 per cent in the fourth quarter, and were up 5 per cent for the full year, with increases in all regions and divisions.
In a statement, Mr Spiesshofer added: “The momentum we have built in 2017 positions us for profitable growth as the global markets are improving. Today’s proposal to increase the dividend for the ninth consecutive year demonstrates our confidence in the future.”