By John Revill
ZURICH--ABB Ltd (ABBN.VX), the world's largest power grid
builder, Thursday said it is feeling more confident about the
short-term outlook than it was three months ago despite the rising
value of the dollar triggering a worse-than-expected decline in
second-quarter net profit.
The Zurich-based company, which makes products ranging from
transformers and circuit breakers to industrial robots, has been
battling with a slowdown in its European and Chinese markets.
In China, ABB's second-biggest market after the U.S., demand for
the components used in the rail and building industries has been
faltering this year amid slower economic growth. In the second
quarter, the country's growth pace was at its lowest in three years
as the global economic turmoil spills over into China.
Despite this ABB said it had received higher orders and revenues
in local currencies, although on a reported level the company had
suffered from the translation of its results to U.S. dollars.
"The macroeconomic view remains uncertain, but the positive
developments we've seen in China, the continued strength of the
U.S. market and our resilience in Europe make us more confident
about the short-term outlook than we were three months ago.", said
Chief Executive Joe Hogan.
Net profit fell 27% to $656 million in the three months to June
30, below the $738 million forecast by analysts. Revenue fell 0.2 %
to $9.66 billion, lower than $9.85 billion forecast in a Dow Jones
poll of analysts.
ABB said utilities continued to invest in transmission grids,
while industrial customers, especially in oil and gas, increased
spending to secure reliable power and improve productivity.
But an unfavorable business mix impacted the operational profit
margin, ABB said, while significant differences in foreign exchange
rates compared with the second quarter of 2011 reduced US-dollar
reported revenues by approximately $600 million and operational
EBITDA by approximately $100 million.
ABB shares closed Wednesday at 15.79 Swiss francs, valuing the
company at CHF36.55 billion. The stock has lost 10% in value since
the start of the year.
-Write to John Revill at john.revill@dowjones.com
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