Swiss engineering group ABB has reported its first year-on-year increase in quarterly orders for almost two years, helped by a pick up in its power grids division which activist investors had urged it to spin-off.
The 3 per cent rise to $8.3bn in orders in the final three months of 2016 came as a relief for Ulrich Spiesshofer, chief executive, who is under shareholder pressure to return ABB to growth.
Zürich-based ABB’s businesses range from robotics to power systems and depend heavily on investment spending by companies and governments. Sales have been hit in recent years by sluggish global economic growth, upheaval in the energy sector and fierce competition, including robots.
“We have reversed the trend. We’re back to growth,” Mr Spiesshofer told journalists on Wednesday.
The previous occasion when ABB reported a year-on-year increase in quarterly orders was in the first three months of 2015. Operating profits before tax were lower-than-expected, however, falling 2 per cent in constant currencies to $1.1bn in the fourth quarter after one-off costs including the default of a distributor in Turkey.
Mr Spiesshofer last year resisted pressure from Cevian Capital, Europe’s largest activist investing fund, to break-up the group’s complex conglomerate structure by spinning off the power grids unit – the largest of ABB’s four divisions.
His decision appeared to have paid off in the fourth quarter, when the power grids division reported a 15 per cent rise to $2.9bn in orders. But the figures were distorted by a number of large contracts, including a $640m deal for an ultra-high voltage system in India.
Overall, ABB said demand in the final three months of 2016 had been “subdued” in Europe, “steady” in the US and “strong” in Asia.
In the previous quarter, ABB had reported a sharp fall in UK orders, which it blamed on the uncertainty created by the country’s June 23 vote to leave the EU. ABB said UK orders had stabilised in the fourth quarter but Mr Spiesshofer said it was too early to hail a return to growth.
Mr Spiesshofer said the outlook for 2017 was uncertain but ABB would “try to keep the momentum”. Some economic signals “remain positive in the US and growth in China is expected to continue”, ABB said.
For the whole of 2016, orders fell 5 per cent to $33.4bn on a comparable basis, while revenues fell 1 per cent to $33.8bn. Net income for the year rose 2 per cent to $2bn.