ABB Profit Beats Estimates as CEO Gets Grip on Project Delays
Oct. 22 (Bloomberg) — ABB Ltd. posted earnings that beat analyst estimates as a previously loss-making unit managing risky offshore wind projects broke even.
Third-quarter net income fell 12 percent to $734 million, the Swiss maker of grid connections and robots said in a statement today. The average estimate of 15 analysts surveyed by Bloomberg was for $691.6 million.
“In Power Systems, we achieved significant milestones in project execution, continued to de-risk the portfolio and implement a new business model for offshore wind projects,” Chief Executive Officer Ulrich Spiesshofer said in the statement. “The division broke even in the quarter.”
Spiesshofer, just over a year on the job, had pledged to return the Power Systems unit, which has been grappling with delays to complex renewable energy projects that have weighed on earnings, to profitability. Last month, he also announced a $4 billion share buyback to reward investors after the stock of the $42 billion sales company underperformed rivals such as Siemens AG and General Electric Co.
GE, which competes with ABB in power transmission and distribution equipment, last week reported better-than-expected earnings aided by a buoyant U.S. market. While Europe remains stagnant, the U.S. market is “probably the best we’ve seen it since the financial crisis,” GE Chief Executive Officer Jeffrey Immelt said at the time.
Increased Competition
Spiesshofer has set more moderate five-year targets for ABB than his predeccesor Joe Hogan, an acknowledgement that the Swiss company’s business isn’t growing as fast as the company expected five years ago. The company today reported quarterly sales of $9.8 billion, missing the $10.3 billion predicted by analysts.
Spiesshofer’s revamp comes at a time when ABB is facing increased competition in a number of markets.
Joe Kaeser, CEO of Siemens, has pledged to focus on electrification and automation, challenging ABB where the Swiss company is traditionally strong. Meanwhile, GE’s takeover of Alstom SA’s energy assets creates a stronger No. 3 competitor in electrical transmission.
To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel
