Swiss engineering giant ABB, Ltd (NYSE: ABB – $24.65) provider of electrification and automation products, reported fourth quarter adjusted net profit of $0.33 per share, unchanged from the prior year period and four cents above the Street estimate. Revenue was $9.28 billion, up from $8.99 billion reported for the same period last year, but fell short of the $9.49 billion analysts’ views. Solid growth in the Robotics and Motion division was offset by a decline in Power Grids. The Industrial Automation and Electrification Products divisions had steady revenues and Service revenues were 7% higher and represented 20% of total revenues, compared with 19% a year ago. A weaker US dollar versus the prior year period resulted in a positive translation impact on reported revenues of 3%. Changes in the business portfolio related to the acquisitions of B&R and the divestments made in 2017 had a net negative impact of about 1% on total revenue. The company said: “Macroeconomic signs are trending positively in Europe and the United States, with growth expected to continue in China” and “The overall global market is back to growth (while) still impacted by uncertainties in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.”
Shares are down about 6% in today’s trading along with most industrials. Also, this stock is best suited to patient investors as ABB is likely to underperform equity market averages over the next year until top-line growth improves. Macroeconomic signals, however, are pointing to solid demand growth across most developed economies. Thus, those willing to pursue a buy-and-hold strategy may see above-average total returns out to the 2020-2022 stretch. The shares, yielding nearly 3% at current levels, sweeten the pot.