Wires

UPDATE 2-Swiss engineer ABB's earnings offer some relief as U.S., China weaken

John Revill

weaken@

* Shares rise after profit falls but beats forecasts

* Says macro economic situation weakening in the U.S,

* Expects "slight" 2019 revenue growth, improved margins

* ABB expects robotics market to remain difficult (Recasts with comments from CFO, analysts, share price)

ZURICH, Oct 23 (Reuters) - ABB's profit fell by less than expected in the third quarter, lifting its shares on Wednesday, although the Swiss engineering company said conditions were weakening in the United States and China, its two biggest markets.

Shares in ABB were 3.7% higher at 1033 GMT after it said its net profit dropped 15%, beating analyst forecasts as fewer than anticipated one-off charges materialised from selling its Power Grids and other elements of a business overhaul.

For 2019 as a whole ABB, said it still expected to see "slight revenue growth" with improved profitability as its cost-savings plan came into effect.

ABB said orders turned negative in the United States, while there was a faster drop in new business from China, whose economy grew at its most sluggish pace in more than three decades as the trade war with Washington took its toll.

"Clearly the trade war has some impact on overall conditions," Chief Financial Officer Timo Ihamuotila said, adding that ABB was relatively insulated because its Chinese factories predominantly supplied local customers.

U.S. manufacturing activity has also fallen to its lowest level since 2009 and ABB's U.S. orders fell 1% during the third quarter. It said orders from China fell 7%, as customers became more cautious.

ABB's robotics arm continued to struggle with orders down 18% as customers in the automotive industry, which accounts for around 40% of this business, held off buying new machinery.

ORDERS FALL

Overall orders fell 3%, while net profit fell to $515 million from $603 million a year earlier, as ABB was hit by lower profit at the Power Grids business it is selling to Japan's Hitachi.

The charges were less than expected, meaning ABB beat forecasts for $363 million in its own poll of 24 analysts.

ABB is undergoing another restructuring, reducing its business to four divisions and simplifying its operations. It expects to complete most of the dismantling of its complex structure by the end of this year.

The decentralisation is expected to accelerate under new Chief Executive Bjorn Rosengren, the Sandvik CEO who is due to take over at ABB in February.

"We see the potential for low-mid-single-digit consensus upgrades, and expect a positive share price reaction given the delivery on margins against a backdrop of weaker discrete markets," Citi analyst Martin Wilkie said. (Reporting by John Revill; Editing by Alexander Smith)