ABB profit warning is 'purely operational': CEO

Wednesday, 22 Jan 2014 | 4:19 AM ET
ABB's profit warning is operational: CEO
Wednesday, 22 Jan 2014 | 4:30 AM ET
Ulrich Spiesshofer, CEO at ABB, explains that delays regarding one of the group's offshore platforms is behind the profit warning but adds he is "quite optimistic over the medium term."

ABB's fourth-quarter profit warning is "purely operational" and the company is looking to "turn the page", the Swiss engineering firm's CEO, Ulrich Spiesshofer, told CNBC in a TV interview from Davos.

The comments come after the world's largest maker of power transformers said its fourth-quarter earnings would be hit by $260 million in charges due to projects delayed storm-related delays in offshore wind projects and "operational issues" in its Power Systems division.

Spiesshofer said the company had pulled teams from their offshore platforms after the severe storms hit.

"We installed offshore platforms. During the instillation...we had severe storms. It is our responsibility to have safe operations out there. We pulled our teams off these platforms during the storm phase. That resulted in delays and the associated costs and that is what is hitting us at the moment," Spiesshofer said.

(Read more: Shell shock: Oil giant warns of 'significantly lower' profit)

But the ABB CEO insisted the company is ready to "move on and turn the page".

Results will also be affected by restructuring and basic earnings per share are expected to be approximately $0.23, down from $0.26 a year ago.

ABB's profit warning follows the announcement from its French rival, Alstrom, which lowered its profit targets on Tuesday for this year and next year, due to weak orders for its power equipment.

Like many of its rivals, ABB is facing a tough environment where companies are holding back on infrastructure spending amid a tepid European growth story.

(Read more: As stocks hit record highs, so do profit warnings)

However, Spiesshofer was upbeat on the prospects for the sector in 2014.

"We see a continued slow decision-making on large infrastructure projects on the energy side. This is something that will be hopefully getting better now that we had the elections over in some of the European countries. So I'm quite optimistic in the medium-term," he said.

The forecast comes just four months after Spiesshofer became CEO and contrasts heavily with the strong performance of the Swiss company in the third quarter which saw revenues rise compared with the previous year.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal


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