February 5, 2020 / 6:42 AM / 17 days ago

CORRECTED-UPDATE 2-ABB braces for hit from virus outbreak in China

(Changes China share of sales to 15% from around half)

* Voser sees impact from virus on key market China

* Q4 net profit rises 3% to $325 mln, operating margin improves

* Proposes steady dividend of 0.80 Swiss francs per share

ZURICH, Feb 5 (Reuters) - Swiss engineering company ABB is going to take a hit from the coronavirus outbreak in China, where it generated around 15% of its sales last year, Chief Executive Peter Voser said on Wednesday.

“We think there is likely to be an impact. We have a significant footprint in China,” he told reporters after the group posted a surprise increase in fourth-quarter profit.

“While the impact of the virus outbreak on our business is not quantifiable at this moment, we are supporting ... our employees and have put in place plans to ramp up manufacturing capacity as soon as possible,” he added.

The outbreak, the death toll from which is now close to 500, has clouded the outlook for ABB this year, when the company plans to improve its operating margin and Voser hands over the CEO post to former Sandvik boss Bjorn Rosengren though he will remain chairman..

Rosengren, a Swede, is expected to accelerate the decentralisation of ABB and give more autonomy to its four business units that cover electrification, industrial drives, industrial controls and robots.

Fourth-quarter net profit rose 3% to $325 million, beating analysts’ estimates of $230 million in a company-gathered consensus despite a slowdown in industrial demand in some markets including the United States.

Sales dropped 2% on a comparable basis to $7.07 billion, missing forecasts of $7.14 billion. Orders rose a comparable 1% to $6.9 billion.

ABB proposed a steady dividend of 0.80 francs per share.

It said it expects its annual operational EBITA margin to improve in 2020, mostly in the second half, aided by higher margins in the electrification business and cost cuts.

ABB stock was little changed in early trading.

Voser said nearly two-thirds of ABB’s portfolio serves market segments that are steady or robust, but “material challenges” remained in conventional power generation, onshore upstream oil and gas, automotive, and machine building.

The sale of its Power Grids business to Hitachi in an $11-billion deal was on track to close in the second quarter, generating profits to be returned to shareholders in the form of a stock buyback.

Voser said ABB now estimated a pretax book gain of around $5 billion from the sale. (Reporting by John Revill and Michael Shields, Editing by Riham Alkousaa, Sherry Jacob-Phillips and Timothy Heritage)

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