ABB Profit Rise Hits Expectations, Ups Guidance
Swiss engineering group ABB met forecasts with a 34 percent jump in second-quarter net profit and raised its 2008 guidance for its automation activities on Thursday.
Net profit rose to $975 million, the group said, in line with the average estimate of $987 million in a Reuters poll of 22 analysts, as it benefits from rampant global power infrastructure demand.
The group raised its guidance for its automation activities to "clearly above 10 percent", having previously forecast growth of around 10 percent and reiterated that it sees growth of about 15 to 20 percent for its power-related activities.
The group is benefiting as Europe and the United States are replacing ageing power systems, while rapid economic growth in emerging economies is forcing countries such as India and China to invest heavily in power infrastructure.
Investors are now looking for clues as to how cash-rich ABB will spend its war chest after it named GE top manager Joseph Hogan this month as its new chief executive.
Net cash at the end of the second quarter was $6 billion.
Second-quarter operating profit rose 42 percent to $1.4 billion on revenue up 27 percent at $9 billion, while orders rose 31 percent to $11.3 billion.
The earnings before interest and tax (EBIT) margin rose to 16.1 percent from 14.4 percent in the year-ago period.
ABB is trading at 16.2 times expected 2008 earnings, according to Reuters data, at a premium to rival Schneider, which is trading at 9.9 times.