* Q4 orders fall 5 pct to $10 bln vs $9.9 bln f'cast
* Net profit of $525 mln hit by charges
* Rising early-cycle demand, offset by large order delays
* Revises revenue growth to 4-5 pct for 2011-2015 period
* Shares indicated down 2.2 pct
(Adds details, shares, analyst, CEO quote)
By Caroline Copley
ZURICH, Feb 13 Swiss engineering group ABB
lowered its target for mid-term sales growth on
Thursday, blaming a slower-than-expected economic recovery and
weaker capital spending by its customers.
The company, which makes products ranging from power grids
for utilities to industrial robots, said sales growth this year
would be challenging as uncertainty in emerging markets, like
China, offset growth in the United States and parts of Europe.
Like rivals, Germany's Siemens and Schneider
Electric of France, ABB has grappled with a dearth of
large orders as a weak global economy saps demand for capital
equipment and prompts clients to delay investments.
ABB said it had seen a pick-up in demand in its early cycle
businesses, which make products such as circuit breakers,
switches and industrial motors, in the fourth-quarter, but that
spending remained weak from utility and mining companies.
"The early cycle shows some signals in certain markets of a
pick-up, which is encouraging. However, it's still too early to
call it an upswing overall," Chief Executive Ulrich Spiesshofer
said in a video message.
Delays to offshore wind projects have also weighed on its
business, prompting ABB to book a $260 million charge last month
due to winter storms in the North Sea and restructuring costs at
its power systems unit.
ABB now expects to increase overall sales at a compound
annual growth rate of 4-5 percent for the 2011-2015 period. It
had previously guided for a growth rate of 7-10 percent
including some acquisitions.
Helvea analyst Stefan Gaechter said the revision to ABB's
target was long overdue because of subdued growth since 2011.
Shares in ABB, which have fallen over 7 percent since it hit
a 5-1/2 year high on Jan. 20, were indicated down 2.2 percent,
according to pre-market indications by bank Julius Baer.
The stock trades at 15.4 times forward earnings at a premium
to Siemens' 13.2 times and Schneider's 14.9 times.
FEWER LARGE ORDERS
Orders fell 5 percent in the fourth-quarter to $10 billion,
ahead of a forecast for $9.91 billion in a Reuters poll, hit by
a 36 percent drop in large orders above $15 million as customers
postponed infrastructure spending.
Weakness in the oil and gas and mining industries has also
weighed on orders at ABB, with companies like Norway's Statoil
and Chesapeake Energy Corp cutting capital spending to
focus on improving returns.
Spiesshofer, who took the helm in September, said the group
would focus on organic growth, cutting costs and improving the
returns in its power systems business this year. The company has
pledged to be more selective on projects to try to make the
division more profitable.
After shelling out more than $10 billion on acquisitions
under former CEO Joe Hogan, Spiesshofer has also said he is open
to pruning the group's portfolio.
The company is looking to sell off non-core assets from
Thomas & Betts Corp, the U.S. electrical components maker it
acquired two years ago for $3.9 billion, and Power-One Inc, the
U.S. solar energy company it bought for about $1 billion last
year, sources told Reuters.
Net profit dropped 13 percent to $525 million, hit by
previously flagged charges. Analysts in a Reuters poll had
expected net profit of $538 million on average.
Revenues rose 3 percent to $11.37 billion, in line with
The company said it expected earnings per share growth at a
compound annual growth rate towards the lower end of its target
range for 10-15 percent. It confirmed its other mid-term
ABB proposed a dividend of 0.70 Swiss francs per share for
2013, compared to 0.68 francs last year.
(Reporting by Caroline Copley, editing by Elizabeth Piper)