ABB, the Swiss engineering conglomerate, said it was “cautiously optimistic” about the year ahead after posting a 9 per cent rise in sales, despite capricious global economic conditions.
In recent months, capital goods manufacturers have had to contend with uncertain markets in the US, as well as the malaise in Europe, but Joe Hogan, chief executive, said ABB’s geographic and product diversification left it well placed to meet such challenges.
“The overall level of economic activity is our main concern,” he said. “The last few years have been tough at times but we have seen that we can compete in just about any economic environment and we are prepared for whatever comes.”
In the three months to March 31, revenues rose to $9.7bn, up from $8.9bn a year earlier, partly because of new revenues brought in by ABB’s acquisition last year of the US low voltage group Thomas and Betts. Stripping out the effect of acquisitions, revenues rose 3 per cent.
“The Thomas and Betts integration and synergies are on track,” said Mr Hogan. “We’re very pleased with this acquisition and the improved balance it gives us in the North American market.”
ABB said it had achieved $260m of cost savings in the quarter, thanks to a combination of sourcing initiatives and operational improvements.
As a result of this cost control, and higher capacity utilisation, ABB’s earnings before interest, tax depreciation and amortisation rose faster than revenues, climbing 19 per cent to $1.46bn. However, net income fell 3 per cent to $664m, or $0.29 per share.
Analysts at Citi said the results represented “another quarter of continued robust delivery” and that they expected no significant change to consensus estimates.
“We expect some recovery in ABB’s short-cycle businesses …and the operational improvements in [the] power systems [division] to continue to support forecasts,” they said.
ABB said conflicting macroeconomic indicators made it difficult to predict how the early-cycle businesses will perform. However, Mr Hogan said ABB’s order backlog, which stood at $29.6bn at the end of March, would stand it in good stead.
”Our strong order backlog will help mitigate some of that uncertainty, and we’re confident that our better balance across businesses and regions will continue to provide us with profitable growth opportunities,” he said.
Shares in the company closed up 3.61 per cent at SFr21.24.
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