* Q3 net profit up 10 pct to $835 mln vs $791 mln in poll
* Orders fall 2 pct to $9.09 bln vs 9.17 bln forecast
* Says large project awards slow
* New CEO eyes stronger collaboration among businesses
* Shares rise, outperform sector
By Caroline Copley
ZURICH, Oct 24 Swiss industrial group ABB
beat expectations for third-quarter profit and said it
would seek closer co-operation between its businesses and push
ahead with cost cuts to boost growth.
Presenting his first results since taking over as chief
executive in mid-September, Ulrich Spiesshofer said better
collaboration between ABB's divisions should help improve
performance in uncertain markets.
"It's clear we can do more to make our customers more
competitive, to improve our own productivity and to accelerate
profitable growth," he said in a statement.
Like rivals Schneider Electric of France and
Germany's Siemens, ABB is facing a dearth of large
orders as industrial customers delay spending in a weak global
ABB, which makes products as varied as power grids for
utilities, robots and transformers used on electric trains,
hopes that expanding services such as maintenance and technical
support will help shield its business from economic cycles.
Orders fell 2 percent to $9.09 billion in the third quarter,
slightly below the average forecast in a Reuters poll of
analysts, as delays to large-scale projects offset strong growth
in China and Germany, two of its biggest markets.
The fall in orders reflected lower spending by utility
companies and mining customers, partly due to overcapacity and
economic uncertainty. Large orders, over $15 million, dropped 43
U.S. heavy equipment maker Caterpillar Inc blamed
weak spending by miners for lower-than-expected profit on
Wednesday, while Finnish engine maker Wartsila said
on Thursday customers were delaying investment.
Cost control and an improving early-cycle business, which
includes products like industrial robots and circuit breakers,
lifted ABB's net profit 10 percent to $835 million in the
quarter, beating the average forecast for a 4 percent rise.
Revenue rose 8 percent to $10.54 billion, also beating
"ABB looks a compelling story into year end/2014 having
significantly underperformed the sector over the last five
years," said Morgan Stanley analysts.
Shares in ABB trade at 15.1 times forward earnings, a
premium to Siemens's 13.2 times and Alstom's
8.9 times. The stock was up 3.5 percent at 22.72 Swiss
francs by 0953 GMT, outperforming a 0.7 percent gain in the
industrial goods and service sector index.
After shelling out more than $10 billion on acquisitions in
recent years, the Swiss 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.
On Tuesday, the company named Greg Scheu to lead its
business in North America, which is now the company's largest
market by geography.
ABB is focusing on high-growth areas such as solar, subsea
oil and gas production and electric vehicles and wants to expand
in existing markets by introducing new products to its
It will still consider acquisitions to fill gaps, such as
for technology, and to bulk up in markets where it is not one of
the top players.
ABB said it would continue to make savings equivalent to
3-5 percent of its cost of sales each year.
For the period 2011-2015, it aims to increase sales at a
compound annual growth rate of 7-10 percent organically, aiming
to outpace economic and market growth.