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ABB Q4 Profit Falls On Charges, Orders Rise; Hikes Dividend

ABB Q4 Profit Falls On Charges, Orders Rise; Hikes Dividend
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2/14/2013 1:50 AM ET

Swiss engineering firm ABB Ltd (ABB: Quote) reported Thursday a 27 percent decline in fourth-quarter profit mainly on charges even as revenues increased on acquisition and strong performance by Americas and Asia. The company also recorded order growth, despite cautious customer spending in a tough environment. Further, the company declared higher dividend.

Looking ahead, ABB stated that shorter-term trends such as industrial production growth and government policy are expected to be the main determinants of demand in 2013.

The company also said that in a market environment in which near-term uncertainty is likely to remain, it will continue to focus on executing large order backlog and taking advantage of broad product and geographic scope to capture profitable growth opportunities in line with 2011-15 targets.

Chief Executive Officer Joe Hogan said, "Looking ahead, the fundamental long-term drivers of our business, such as growing electricity consumption, urbanization and industrialization in emerging markets, growth in renewables and the need to increase energy and resource efficiency all remain intact."

In its recently concluded fourth quarter, net income fell to $604 million or $0.26 per share from last year's $830 million or $0.36 per share.

The latest quarterly results mainly included $341 million of depreciation and amortization, of which $107 million of amortization was related to acquisitions. The results also included restructuring and related expenses.

On average, three analysts polled by Thomson Reuters expected earnings of $0.36 per share. Analyst estimates typically exclude special items.

Operational EBITDA fell 12 percent, primarily on lower earnings in the Power Systems division, mostly related to charges associated with refocusing the division for higher long-term profitability.

Negative price impacts, mainly reflecting weak pricing on power orders taken in previous quarters, were more than offset by cost savings, the company said.

Revenues, however, grew 4 percent to $11.02 billion, reflecting the contribution of approximately $600 million from Thomas & Betts. On an organic basis, revenues dropped 1 percent. Analysts expected $11.21 billion revenues.

Europe and Middle East and Africa generated lower revenues, while Americas and Asia showed good improvement. Revenues were higher in Discrete Automation and Motion and Low Voltage Products, and flat to lower in the other divisions.

Orders also grew 4 percent to $10.52 billion, with double-digit growth in Americas and Middle East and Africa and a 1 percent increase in Europe more than offsetting a sharp decline in Asian orders. Meanwhile, total large orders, i.e., above $15 million, declined 9 percent. Order backlog as of December end increased 7 percent to $29.30 billion.

For fiscal 2012, net income dropped 15 percent to $2.70 billion or $1.18 per share, while revenues rose 4 percent to $39.34 billion. Orders remained flat on a reported basis, but grew 4 percent in local currency.

ABB board proposed a higher dividend for 2012 of 0.68 Swiss francs per share, compared with 0.65 francs per share in the prior year.

ABB shares closed Wednesday's trading at $21.61, up $0.50 or 2.37 percent.

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by RTT Staff Writer

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