The ABB engineering group has swung to a profit for the first time in five years, posting net income of $735 million (SFr963 million) for 2005.This content was published on February 16, 2006 - 08:47
The figure compared with a net loss of $35 million in 2004 and with analysts' average expectations of close on $700 million.
A company statement from its Zurich headquarters on Thursday said that continuing market strength and further operational improvements in the fourth quarter contributed to the strong result.
"We have successfully moved into a phase of profitable organic growth," commented ABB chief executive Fred Kindle.
"Our market-leading positions led to a significant increase in orders and revenues, and further operational improvements contributed to a strong increase in Ebit [earnings before interest and tax].
Kindle added that ABB, which is active in power and automation technologies, had met its original 2005 targets, which he described as a "solid achievement" in view of special charges throughout the year.
"A strong second half of 2005 has given us a good basis now to enter 2006 and generate further profitable growth," he added.
The company posted a net profit of $222 million in the fourth quarter after customers in the Middle East and the United States invested in power grids.
It said its trading environment is expected to be similar in 2006 to what it experienced in 2005.
ABB said total sales for 2005 were $22.442 billion. Of this, Power Technologies contributed $9.784 billion and Automation Technologies $12.161 billion. Total group orders were $23.581 billion.
The company, which has been plagued by asbestos claims in the United States and crippling debt that pushed it to the brink of collapse in 2001, reported more positive news on these issues.
It said it had cut net debt to about $500 million at the end of last year from more than $1 billion at the end of 2004.
The consolidated provision at the end of last year relating to asbestos claims in the US was $1.128 billion, a net increase of $105 million from the previous year.
ABB said the increase was due to the revaluation of shares reserved to cover asbestos liabilities.
A US district court judge has set the hearing for a revised plan to reorganise ABB subsidiary Combustion Engineering, the company at the heart of the asbestos issue, for February 28.
Financial figures 2005
Sales: $22.442 billion (up by 8.9% on 2004)
Ebit: $1.742 billion (+66.5%)
Net profit/loss: $735 million (from -$35 million in 2004)
ABB plans to pay out a dividend of $0.12 per share - the first dividend since 2000.
Asea of Sweden and BBC Brown Boveri of Baden, Switzerland, merged in 1988 to form ABB.
After an initially successful expansion, ABB almost collapsed in 2001, with a record loss $691 million.
At the same time, the company reported that former bosses Percy Barnevik and Göran Lindahl had received SFr148 million and SFr85 million in pension benefits after stepping down. After an outcry, some of the money was paid back.
The company has had to set aside more than $1 billion to settle asbestos-related lawsuits in the US.
ABB said on February 8 it had disclosed to US authorities that it had made several payments in the Middle East that might have violated US anti-bribery laws. The consequences could include penalties and other costs.
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