* Q1 net profit $636 mln vs $706 mln forecast in poll
* Charges at Power Systems unit continue to weigh
* Expects unit to break even this year
* Orders rise 13 pct, buoyed by large contracts
* Shares underperform sector index
(Adds details on offshore wind, comments from CEO, analyst,
By Caroline Copley
ZURICH, July 23 Charges linked to costly delays
to offshore wind and solar power projects pushed ABB's
second-quarter earnings below forecasts, sending its shares down
2 percent on Wednesday.
Like many of its rivals, the Swiss company is suffering from
a lack of large orders for its power equipment and is working
its way through a backlog of less profitable contracts.
Its business making subsea cables and power systems to
connect renewable energy to the grid is losing money. Offshore
wind farm projects, which offer some of the biggest returns,
have been delayed by storms.
ABB said its net profit fell 17 percent in the quarter to
$636 million, missing the average analyst forecast of $706
million in a Reuters poll.
ZKB analyst Richard Frei, who has a "market weight" rating
on the stock, said the results were disappointing.
ABB said in April it would redouble efforts to turn the
troubled Power Systems division around, which racked up its
third consecutive loss in the second quarter, of $24 million.
The Zurich-based firm said investors should expect a weak
performance in the business to weigh on results in coming
"This is not a short-term sprint. This is really a marathon
run that will go a while," Chief Executive Ulrich Spiesshofer
But he suggested the efforts to fix the division, which
include changes to management and its business model to reduce
risk, should start to bear fruit in 2014.
"We still aim to get this business to profitability and we
still aim to get this to break-even within this year," he said.
Shares in ABB, which have dropped 13 percent so far this
year, underperforming an index of European industrial companies
, were down 1.7 percent at 20.70 Swiss francs by 0942
LARGE ORDER REVIVAL?
ABB is not alone in its struggles. German rival Siemens
has also racked up charges for similar delays in
linking offshore wind farms to the grid.
Spiesshofer said most offshore wind projects should be
completed by the end of 2015, while 90 percent of ABB's projects
to build and construct solar power plants should be finished by
the end of this year.
The problems in Power Systems depressed the company's
operating profit margin, which fell to 13 percent, the lower end
of its mid-term target of 13-19 percent.
Net profit included $333 million of depreciation and
amortisation, of which $100 million was related to acquisitions
including its purchase of Thomas & Betts and Baldor. The company
booked restructuring charges of $40 million.
Signs are growing that large orders - contracts worth over
$15 million - are starting to trickle in once again.
Orders grew 13 percent in the quarter to $10.6 billion, with
roughly half of the rise attributable to large orders, including
a $400 million deal to supply a power transmission link in
This resulted in a positive book-to-bill ratio of 1.04, ABB
The Zurich-based company stuck to cautious guidance for its
markets, saying uncertainty in some emerging economies may
offset more encouraging signs in the United States and parts of
(Reporting by Caroline Copley; editing by Michael Urquhart and