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ABB Third-Quarter Profit Soars on Growing Demand

Swiss engineering giant ABB posted a 86 percent jump in third-quarter net profit on Thursday, beating analysts' expectations, as it benefited from growing demand for power infrastructure.

Net profit at ABB, which sells equipment to utilities and to oil and gas companies, rose to $738 million, easily above the $661 million average forecast in a Reuters poll of 19 analysts, and the company gave an upbeat outlook.

"The business environment for ABB during the rest of 2007 and into the first half of 2008 is expected to remain in line with the positive market conditions seen in the first nine months of this year," the group said in a statement.

The company also repeated new financial goals it set itself last month of average annual sales growth of between 8 and 11 percent for the 2007-2011 period and an operating profit margin of between 11 and 16 percent.

ABB, which competes with Schneider and Siemens, is benefiting from higher investment in ageing power transmission systems in the United States and Europe as well as from power infrastructure demand in emerging countries like India and China.

Operating profit rose 55 percent to $1.035 billion. Sales rose 26 percent to $7.190 billion, with orders rising 33 percent to $8.321 billion, boosted by investments to expand power infrastructure in emerging markets.

ABB's promising growth prospects mean it trades at around 19 times expected 2008 earnings, at a premium to Siemens, according to Reuters data.