Swiss engineering firm ABB Ltd (ABB, ANN.L) Wednesday reported a slight drop in first-quarter profit, as demand headwinds continued with deceleration in growth in the U.S. and mixed investments by customers in Europe.
ABB CEO Joe Hogan said, "Given the continued uncertainties in the global economy, this is a satisfactory start to 2013...We achieved these results despite continued demand headwinds. Growth in the US decelerated further in the quarter and industrial investments in much of Europe remained mixed.''
Net income attributable to the company dropped 3 percent to $664 million from $685 million in the previous year. Earnings per share slid to $0.29 from $0.30.
The latest results included net foreign currency and derivative impacts, as well as amortization related to acquisitions.
Operational Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA climbed 19 percent to $1.5 billion, compared to a relatively weak first quarter in the previous year. The recently acquired Thomas and Betts, a low-voltage products maker, contributed about $100 million to operational EBITDA.
Total revenues increased 9 percent to $9.715 billion from last year's $8.907 billion. Revenue grew 3 percent on organic basis. ABB said execution of the strong order backlog helped offset early-cycle order and revenue weakness.
Orders advanced 1 percent to $10.492 billion. Order backlog at the end of the quarter was $29.614 billion, a slight drop from last year's $29.910 billion.
Orders received declined 4 percent on an organic basis, but increased 2 percent including Thomas and Betts.
Revenues grew 4 percent in the Discrete Automation & Motion to $2.327 billion, on strong order backlog, especially in robotics. But orders dropped 7 percent as higher large orders in robotics and for power conversion equipment in the rail industry could not offset order declines in motors and drives that stemmed from weaker early-cycle demand.
Low Voltage Products revenue surged 49 percent to $1.777 billion and orders increased 45 percent, but were flat on an organic basis as early-cycle demand remained near the low levels seen last year in most regions.
Process Automation revenues were nearly flat at $1.978 billion and orders slid 2 percent. ABB said order growth in mining and marine was offset by declines in metals and pulp and paper.
Power Products revenues slid 1 percent to 2.489 billion. Orders were down 8 percent from last year, reflecting continued project selectivity in a challenging market and strong prior-year comparison.
Power Systems revenues were 14 percent higher at $2.051 billion, but orders decreased 16 percent partly due to the timing of large project awards as well as increased selectivity in project tendering.
Revenues and orders were flat in Europe at $3.377 billion and $3.884 billion, respectively, as strong increases in eastern Europe, especially Russia, offset order declines in both northern and southern Europe, including Germany and Italy.
The Americas saw a 21 percent growth in revenues at $2.824 billion while orders advanced 4 percent. On an organic basis, orders declined, mainly due to lower large orders in power and oil and gas.
Revenue climbed 10 percent in Asia to $2.544 billion and orders advanced 2 percent on the back of 20-percent order growth in China.
Middle East and Africa revenues increased 11 percent to $970 million and orders slid 2 percent amid strong demand for renewable energy solutions in South Africa and a decline in large orders in the Middle East.
''However, our strong order backlog will help mitigate some of that uncertainty, and we're confident that our better balance across businesses and regions will continue to provide us with profitable growth opportunities," Hogan said.
The firm plans to continue to drive cost savings and productivity improvements equivalent to 3-5 percent of cost of sales every year.
The stock rose 4.1 percent in Zurich on Tuesday to settle at 20.50 Swiss francs.
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