ABB Fourth-Quarter Net Profit Soars to $422 Million

ABB said Thursday its fourth-quarter net profit almost doubled on continued cost-cutting and buoyant markets in Europe and Asia.

The Swiss-Swedish electrical engineering firm said net profit for the quarter ending Dec. 31 rose 90% to $422 million (323 million euros), from $222 million in the year-earlier period.

"Our order backlog has grown significantly, and improved business execution is allowing us to capture more of that growth in our bottom line," said Chief Executive Fred Kindle. "We are heading into 2007 in a strong position."

The company said it was doubling its dividend to 0.24 Swiss francs ($0.19; 0.15 euros) per share, from 0.12 francs.

Fourth-quarter sales were $7.19 billion (5.5 billion euros), 21% higher than the $5.92 billion posted a year ago. Orders, which indicate future revenue and profit momentum, increased 36% to $7.48 billion (5.72 billion euros) from $5.5 billion, with fast growth in Asia, Europe and the Middle East.

The company said its net income for the full year rose 89% to $1.39 billion (1.06 billion euros) from $735 million in 2005. It said it is benefiting from strong demand for technology to increase power grid reliability, industrial productivity and energy efficiency.

The results allowed ABB to cut down its debt and further strengthen its balance sheet, raising hopes the company could soon pursue a multibillion-dollar takeover for the first time in years.

"We have the financial strength to pursue large takeovers," Kindle told a news conference. "But a potential takeover target has to match our portfolio and we will remain very disciplined in our approach."

ABB, which has recovered from a failed expansion strategy and costly asbestos-related lawsuits in the United States, is expected to gain cash in the months ahead from the pending sale of oil and gas unit Lummus Global. The company has already sold stakes in two noncore power projects for $490 million (375 million euros) earlier this year.

At the end of 2006, cash flow from operations already doubled to $2 billion (1.5 billion euros), providing ABB with ample liquidity to target mid-sized competitors, analysts said. Several analysts expect the company could accumulate nearly $4 billion in liquid assets by the end of this year.

"Order growth is excellent and this points to another strong year in 2007," said Alessandro Migliorini, analyst at brokerage Helvea.

Shares declined 3.2% to 22.70 francs ($18.25) on the Zurich exchange.