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ABB chief positive for 2018 despite profit drop

ABB is forecasting a better year ahead despite posting a dip in its profit and sales for the final quarter of 2017.

The FT reports the Swiss company expects improving global economic conditions to benefit them this year.

Revenues at the Zurich-based company rose 1 per cent to $34.3bn in 2017, it said on Thursday. But orders in the final three months of the year dropped 3 per cent to $8.48bn compared with the same period a year earlier. Full-year operating profits also fell, by 2 per cent to $4.13bn.
Ulrich Spiesshofer
Ulrich Spiesshofer, chief executive, has streamlined ABB to focus on higher growth markets and to cut costs, but has struggled to increase sales. Describing 2017 as a “transition year”, he said the annual results showed “the dampening effect of our massive transformation”.

Orders in the fourth quarter were also hit by lower big orders in its power grids division, following a large deal from India in 2016.

ABB’s products and services are based on automating industries and delivering electricity from power stations to final users, with much of its revenue depending on investment spending by governments and utilities.

Despite the weaker than expected figures, ABB highlighted strong growth in “base orders”, worth less than $15m, as indicating an improvement in its underlying performance. Base orders rose 9 per cent in the fourth quarter, and were up 5 per cent for the full year.

Mr Spiesshofer said “the momentum we have built in 2017 positions us for profitable growth as the global markets are improving. If you look at our markets all around the world, 2018 is really the first year where all of our markets are predicted to be either constant or to grow, which is really positive,” he told the Financial Times.

“The US is really set up to grow in 2018, with the impact of the tax programme.” China’s government spending programme, meanwhile, “suits ABB extremely well”, with investments in renewable energy, long-distance travel, cleaner cities and increased manufacturing productivity.