ABB sees brighter outlook after Q4 net profit drops

  • The company said net profit fell 8 percent to $393 million during the three months ended Dec. 31, missing the average estimate of $424 million in a Reuters poll of analysts.
  • The figures were hit by a fourth-quarter charge of $76 million from restructuring its business.

ABB gave a brighter outlook for 2018, saying on Thursday it saw improving markets around the world after its overhaul hit the engineering group's fourth-quarter earnings.

The maker of power transmission equipment and industrial robots said net profit fell 8 percent to $393 million during the three months ended Dec. 31, missing the average estimate of $424 million in a Reuters poll of analysts.

The figures were hit by a fourth-quarter charge of $76 million from restructuring its business.

Revenues rose 3 percent to $9.28 billion, short of the poll estimate of $9.5 billion, while orders rose to a weaker-than-expected $8.48 billion.

It proposed raising its dividend by two cents to 0.78 Swiss francs per share.

Gianluca Colla | Bloomberg | Getty Images

Chief Executive Ulrich Spiesshofer said the results showed the "dampening effects of our massive transformation". The company spent much of 2017 reorganising as it battled a long-term downturn in industries like mining and oil and gas, where low prices have stalled customers' investments.

ABB responded by cutting costs, simplifying its structures and ditching fringe businesses like the high-risk and low-margin engineering, procurement and construction business it spun off in December.

But Spiesshofer was more positive about the future, saying the simplified company was now ready to benefit from an upswing in many markets. Small orders -- worth under $15 million and a signal of underlying demand -- grew for the fourth quarter in a row, registering a 9 percent rise during the October to December period.

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"The momentum we have built in 2017 positions us for profitable growth as the global markets are improving," he said in a statement.

ABB's view contrasted with industrial rivals General Electric and Siemens, which have announced major overhauls after being hit by weak demand from the power and gas sector.