By John Revill
ZURICH-- ABB Ltd. reported a 30% rise in earnings for its latest
quarter on Thursday, as the power and automation giant's new
strategic direction produced some early gains.
Zurich-based ABB, the world's largest maker of power grids, said
net profit for the three months to Dec. 31 rose to $680 million,
from $525 million a year earlier. The figure missed analyst
expectations of $737 million.
Revenue fell to $10.35 billion, from $11.37 billion, due to
lower order backlogs the company said, missing forecasts of $10.79
billion.
ABB recently launched a five-year strategic plan aimed at
minimizing the sort of risky project that has caused the company
problems in recent years. ABB has said it would also now focus on
high-growth markets and on collaborations such as its recently
announced joint venture with Hitachi Ltd. to develop high-voltage
power grids in Japan.
ABB's new strategy comes amid concern that the global economic
and political climate has clouded the company's prospects. In
October, ABB cautioned that slow growth in Europe, political
tension around the world and the Ebola epidemic in Africa had the
potential to weigh on its business. The company has been affected
by recent decisions at power utilities and governments in Europe to
hold off on investments.
On Thursday, ABB said it expected the short-term economic
outlook to continue to be mixed with positive signs in the U.S. and
growth expected to continue in China, while Europe would remain
slow.
2014 had been a challenging year with problems in the company's
power systems division and a low order backlog, said Chief
Executive Ulrich Spiesshofer.
But the company had made "solid progress on the Next Level
strategy," which put the company in a "strong position to manage
the global uncertainties heading into 2015," he said in a
statement.
ABB said on Thursday it has seen some recent improvement at it
power system division, which makes electricity substations and
power grids and has previously been a drag on the company's
performance.
The company, which proposed lifting its dividend to 0.72 Swiss
francs from 0.70 francs a year earlier also said it has completed
$730 million, or roughly 18% of a $4 billion share buyback
announced last September. The buyback is designed to support ABB's
stock, which has been one of the weakest performers on the
blue-chip Swiss Market Index during the past 12 months.
ABB said it had been affected by currency swings during 2014,
particularly the weakening of the euro versus the dollar and the
franc. In the fourth quarter the company said the rise in the value
of the dollar had reduced the value of its orders by 5% and
revenues by 6%.
If the exchange rate remains at current levels, ABB expects a
negative translation effect to continue into 2015.
ABB's German rival Siemens AG last week posted a roughly 25%
decline in net profit in its latest quarter, citing a reduction in
customer orders.
Write to John Revill at john.revill@wsj.com
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