ABB Ltd., (NYSE:ABB) of Zurich, Switzerland, reported steady
orders and higher revenues in the third quarter of 2012 despite a challenging
macroeconomic environment. The power and automation company benefited from its well-balanced
market exposure, especially the improved access to the North American
automation market gained through recent acquisitions.
ABB reported that power orders were lower than they were
during the third quarter of 2011, which included a large offshore wind order.
Excluding that order, power orders rose 10%, driven by utility and industry
investments in power transmission. Automation orders were up 13% (flat
organic), driven by demand for improved industrial productivity, mainly in Europe
and North America and in the mining and marine sectors.
Net income for the quarter decreased 4% to $759 million and
resulted in basic earnings per share (EPS) of $0.33 compared to $0.34 in the
year-earlier period. ABB’s operational EBITDA and operational EBITDA margin
were lower than in the strong third quarter of last year, mainly due to the
execution of lower-priced power orders from the backlog, but were higher than
they were during the second quarter of this year. An increase in divisional cash
flows was more than offset by cash outflows from hedging corporate exposures as
a result of the stronger US dollar.
ABB’s diverse geographic and business scope helped the
company record steady orders received in the quarter, despite a challenging
business environment and a 30% decline in large orders (above $15 million)
compared to last year. The acquisition of US-based low-voltage product
manufacturer Thomas & Betts in the second quarter made a “significant
contribution,” the company reports, especially to growth in base orders (below
$15 million) of 8%. Excluding Thomas & Betts, total orders declined 6% and
base orders were flat. Service orders grew faster than total orders and were up
9%.
“We’re encouraged that we could grow the business and
sustain profitability well within our target corridor despite a challenging
macro environment,” said Joe Hogan, ABB’s CEO, in a press release. “We
continued to execute on cost reduction and grow the service business, two of
our key strategic initiatives. The geographic rebalancing of our automation
business towards North America, for example through the Thomas & Betts
acquisition, is also paying off.”