ABB Shares Rise After 2Q Net Profit Beat
July 19 2018 - 4:53AM
Dow Jones News
By Nathan Allen
Shares in ABB Ltd. (ABBN.EB) rose sharply Thursday morning as
investors shrugged off weak top-line growth to focus on
second-quarter net profit, which came in ahead of expectations.
Net profit for the quarter rose 30% in U.S. dollar terms to $681
million, comfortably beating a FactSet-compiled consensus of $627
million.
"Through our continued productivity efforts, we delivered margin
improvement and double-digit operational EPS growth," said ABB
Chief Executive Ulrich Spiesshofer.
At 0803 GMT, technology multinational ABB traded 4.2% higher at
CHF22.90 in Zurich, having earlier risen more than 5%.
Nevertheless, group revenue of $8.89 billion was up just 1% on a
comparable basis, missing consensus of $9.02 billion and ABB's own
guidance of 3% to 6% sales growth.
An lack of new orders at ABB's power-grids units dragged down
overall revenue growth, according to Morgan Stanley analyst Ben
Uglow.
The division, which relies on large orders from national power
companies and other infrastructure operators, has struggled in
recent years amid a slowdown in capital spending in the utility
sector.
However, some analysts are optimistic that the cycle is starting
to turn.
"Large orders have reached historically low levels and look set
to rebound from current depressed levels, supported by an ongoing
recovery in process industries," Deutsche Bank's Gael de-Bray
said.
Margins at the division have strengthened considerably since ABB
faced calls from activist investor Cevian Capital to spin it off in
2014.
Mr. Spiesshofer said he is confident that a push into growth
areas such as micro grids and e-mobility will help the unit meet
its growth targets by the end of the year but didn't discount
further shakeups to the group's operations.
"Our portfolio is not cast in stone. The guiding principle will
always be what creates most value long term for all of our
shareholders," he said.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
July 19, 2018 04:38 ET (08:38 GMT)
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