ABB warns on uncertain outlook as profit misses estimates

Business Wednesday 08/February/2017 13:38 PM
By: Times News Service
ABB warns on uncertain outlook as profit misses estimates

Zurich: ABB warned that global economic uncertainty is clouding the outlook of the Swiss maker of power grids as fourth-quarter profit came in below estimates.
"Macroeconomic and geopolitical developments are signaling a mixed picture,” the Zurich-based company said in a statement on Wednesday, adding that 2017 will be a "transitional” year. "Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.”
Dwindling demand from clients in the oil-and-gas industry is hampering Chief Executive Officer Ulrich Spiesshofer’s attempts to ramp up growth at the company after years of restructuring. The CEO remains steadfast in his decision to keep a power equipment unit that activist investor Cevian Capital wanted to see spun off.
Net income more than doubled to $489 million, the Swiss industrial company said. That undershot the average $543.9 million estimated by analysts in a Bloomberg survey. Orders increased 3 per cent compared with a year ago, driven primarily by large contract awards.
A $92 million increase in estimated costs for warranties on products designed and sold by solar business Power-One, acquired by ABB in 2013, weighed on net income, the company said. ABB bought the unit to try to bolster its position as a maker of solar inverters, the technology behind a solar-power panel system.
"The underlying performance improvement momentum continued and was stronger than the numbers we are reporting if you consider the one-off events that impacted us during the quarter,” Spiesshofer said in the statement.
ABB shares have jumped 38 per cent in the past year, outpacing a 27 per cent increase in the Stoxx 600 Industrial Goods & Services Index.