Reuters - Video

Edition: US | UK | IN | CN | JP

Finance Videos

ABB warns on 'uncertain' outlook

Wednesday, October 22, 2014 - 02:12

ABB shares are a strong early riser on European stock markets after it announces strong third-quarter orders. But, as David Pollard reports, the Swiss engineering group is increasingly worried by the uncertain global outlook.

▲ Hide Transcript

View Transcript

Orders are up nearly a quarter for ABB - to a forecast beating 11 billion dollars. Net profit in the third quarter was down 12 per cent to 734 million - but still in line with expectations. So why the worry for the Swiss engineering giant? ABB says larger contracts are boosting demand. Momentum for its smaller orders, though, is slipping. Growth for those was at three per cent compared to nine per cent in the previous quarter. And that mirrors a gloomier outlook - chief exec Ulrich Spiesshofer talking of a ''rising level of uncertainty''. Reuters Breakingviews columnist Olaf Storbeck. SOUNDBITE (English) Olaf Storbeck, Columnist, Reuters Breakingviews: ''ABB is a capital goods maker and so they are really dependent on the investment profile of their customers and if major customers become more reluctant to increase capital spending, ABB is going to suffer.'' Slow growth in Europe, geopolitical tensions and Ebola, ABB says, could offset a positive U.S. and China. Others in the sector - Rolls-Royce, Schneider Electric and Siemens - have already talked of customers delaying capital spending. The results were also depressed by its troubled Power Systems unit. It's suffered a series of costly delays. On the plus side, it broke even in the third quarter, raising hopes that the division is being fixed. SOUNDBITE (English) Olaf Storbeck, Columnist, Reuters Breakingviews: ''ABB is addressing the problems of this unit which owe to large-scale projects in renewables - offshore wind parks and solar parks - and the unit for the first time after three quarters has been making positive operational EBITDA and seems to be on a good track.'' One other area of concern: European energy policy. ABB makes products such as industrial robots and power grid transformers. Without a clear, predictable policy, customers could continue to delay large projects. ABB has this year has warned on profits, missed earnings and shaved margin targets. But after the latest news its shares were up, signalling investors think its fortunes may be on the way up too.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

ABB warns on 'uncertain' outlook

Wednesday, October 22, 2014 - 02:12