* ABB says $260 mln charge due to project delays,
* Sees Q4 net profit at $525 mln vs $924.25 mln analyst
* Sees Q4 EPS at $0.23 vs $0.40 analyst forecasts
* Follows Alstom Q4 profit warning
* ABB shares down 4 percent
By Katharina Bart
ZURICH, Jan 22 Swiss engineering group ABB
told investors on Wednesday it would miss
fourth-quarter profit expectations due to weak orders at its
power division and delays on wind projects in the North Sea.
ABB said its power division would take $260 million in
charges, bringing its fourth-quarter net profit expectations to
$525 million, well short of analysts' average forecast of $924
million, according to Thomson Reuters data.
Most of the charges were due to storms delaying construction
for offshore wind farms, which are among the most expensive
renewable energy projects, while $50 million was due to past
legal issues, losses from selling and discontinuing some
Chief Executive Ulrich Spiesshofer said ABB was still
"seeing uncertainty in the market on the power side", with
stiffer regulation and project delays causing orders in the unit
to soften last year.
The power unit is also aiming to be more selective about the
offshore wind power projects it takes on to increase returns.
"The division's new leadership is assessing the progress and
targets of the realignment, and we expect to provide an update
when we announce the fourth-quarter and full-year results (on
Feb. 13)," Spiesshofer told investors.
ABB has appointed Claudio Facchin as unit head to replace
Brice Koch, who began as boss of OC Oerlikon last week.
"This is a setback for ABB in turning around the power
systems division," said Bank J. Safra Sarasin analyst Michael
Studer, who said the unit may be "kitchen-sinking" charges into
its accounts following the management change.
ABB's shares were down 4 percent at 23.22 Swiss francs at
0945 GMT, underperforming a 0.3 percent fall in the broader
European industrial index.
ABB's power rivals are having similar troubles. On Tuesday,
shares in French heavy engineering group Alstom, which
is more active in large thermal power systems, tumbled when it
cut its targets for profitability and cashflow after weak orders
for power equipment.
Wholesale power prices have plunged in recent years
due to generation overcapacity as Europe's weak economy has
curbed energy demand.
In addition, cheap U.S. coal has been pouring into Europe,
making gas-fired generation uncompetitive.
European utilities have mothballed or closed more than 21
gigawatts (GW) of capacity over the past 18 months and focused
on new sources of income, including renewables and energy
Like rivals Schneider Electric of France and
Germany's Siemens, ABB is also facing a dearth of big
orders as industrial customers delay spending in a weak global
For the period 2011-2015, ABB aims to increase overall sales
at a compound annual growth rate of 7-10 percent organically,
aiming to outpace economic and market growth.
After spending more than $10 billion on acquisitions in
recent years, the group is now focusing on integrating those
purchases, which include U.S. groups Baldor and Thomas & Betts
as well as solar energy company Power One.
The company, which makes products as varied as robots, power
grids for utilities, and transformers used on electric trains,
hopes that expanding services such as maintenance and technical
support will help shield its business from economic cycles.