ZURICH Engineering firm ABB (ABBN.VX) hailed an uptick in China and resilient sales in the United States and parts of Europe to back an upbeat view of the future as second quarter profit missed forecasts.
The company said the tide seemed to have turned after a period of tough competition on prices and weak demand for power products such as transformers for utility companies, which has been hit by capital expenditure squeezes and government austerity.
ABB said although Chinese orders declined 2 percent from a year ago, they were higher than in the first quarter while price competition on new power orders showed signs of easing and utility, oil and gas customers were investing in new equipment.
Overall orders in the second quarter hit $10.052 billion, against an estimate of $9.909 billion, while net profit of $656 million trailed a forecast of $728 million, due in part to the strengthening of the U.S. dollar and about $100 million in charges related to its purchase of U.S. low voltage product manufacturer Thomas & Betts.
"The macroeconomic view remains uncertain, but the positive developments we've seen in China, the continued strength of the U.S. market and our resilience in Europe make us more confident about the short-term outlook than we were three months ago," Chief Executive Joe Hogan said.
In China, demand has been surging in factories for automation technology, a boon for companies such as ABB that make equipment such as sensors, frequency converters and conveyor belts.
The firm, which also makes components for the oil and gas industry and is increasingly focusing on green technology, said the longer-term outlook was also favorable as companies increasingly sought to save energy and urbanization increased in some emerging markets.
Compared with a year ago, orders in Europe grew 2 percent in Europe, 10 percent in the Americas and 34 percent in the Middle East and Africa.
(Editing by David Cowell)