ABB Results Top Estimates
Swiss-based engineering, automation and power-grid company ABB Ltd. (NYSE: ABB – $22.90) reported adjusted net profit of $0.28 per share for the first quarter, unchanged from the prior year period. Analysts called for a net profit of $0.25 per share. Revenues were $7.85 billion, down slightly from $7.90 billion reported for the same period last year and compared to the Street estimate of $7.77 billion. Sales, however, rose 3% on a comparable basis that adjusted for currency changes, acquisitions and divestments. Orders were $8.4 billion in the first three months of the year, down 9% from the same period in 2016, though they declined a milder 3% on a comparable basis.
Utilities continued their investment activities to upgrade the aging power infrastructure and to integrate renewable energy in the grid. Investments in robotics solutions for automotive, food and beverage remained positive while demand from the process industries, specifically oil and gas, remain soft. Transport & infrastructure demand has been mixed. Demand for building automation solutions as well as solutions involving energy efficiency for rail transport remained strong while the marine sector, except for cruise ships, suffered from a sharp decline due to the subdued energy sector.
ABB said 2017 “is expected to be a transitional year” with “modest growth and increased uncertainties” in global markets. “Some macroeconomic signs in the U.S. remain positive and growth in China is expected to continue”. These shares, up about 2.8% on the earning’s news, should continue to appeal to patient conservative investors. The dividend yield of 3.4% is significantly above the market median, as is appreciation potential out to the 2020- 2022 stretch.