ABB Reports on 2nd Quarter
Zurich-based ABB, Ltd. (NYSE: ABB $21.96) reported higher revenues and earnings in the second quarter despite challenging global markets. Revenues rose 6%, primarily on the execution of a strong orders backlog. Net income for the quarter increased 16% to $763 million, mainly associated to commodity timing differences as well as lower acquisition-related expenses and certain non-operational items. Earnings per share in the second quarter amounted to $0.33 versus $0.29 a year earlier. Analysts’ were looking for $0.36. Orders declined in Europe on a total order basis as power utility investments remained cautious. Automation orders in Europe were steady compared to the same quarter in 2012, while total orders increased in key markets such as Germany and Sweden in the quarter, as well as an uptick in China. ABB won an oil and gas contract worth $20 million for providing power and automation technologies to a floating production, storage and offloading vessel built by the Chinese shipyard COSCO Nantong for Korea’s Dana Petroleum. It also was awarded a contract worth around $30 million from Zagros Energy to build four new transmission and distribution substations in Iraq, as part of an overall initiative to expand and strengthen a regional power grid. Acquisitions, such as Thomas & Betts have expanded ABB’s geographic footprint and enhanced its presence in certain short-cycle sectors of the market to complement its power infrastructure and automation businesses. For those conservative investors with a long-term view, the shares, yielding 3.2%, can be held for worthwhile total return potential out to late decade.