ABB Ltd.
(
ABB
) reported third-quarter 2012 earnings per share of 33 cents,
below the Zacks Consensus Estimate and prior-year earnings of 34
cents.
Despite the prevailing difficult economic conditions, the
company continued to receive orders and reported an increased
revenue.
Total Revenue
Total revenue in the quarter climbed 10% year over year in
terms of local currency to $9.7 billion. The company's better
access to North American markets with recent acquisitions added
to growth. Order level in the quarter was flat in terms of
local currency at $9.3 billion, with a backlog of $29.2 million.
Order level in the quarter was aided by higher demand in
industries for Automation solutions.
Segment Results
Power Products
revenue was $2.5 billion, flat in terms of local currency. Order
rate decreased by 6%, due to the timing of certain projects
received. Decline in utility activity in power distribution also
affected the order levels.
Power Systems
revenue was $1.9 billion, up 11% in terms of local currency.
Orders in Power System were down 27%. Orders of 2011 included a
$1-billion offshore wind order in Germany.
Discrete Automation
& Motion
revenue was $2.3 billion, up 5% in terms of local currency. Order
level increased by 1%, driven by large orders received from the
utility, traction and automotive sectors while partially offset
by lower demand from the wind and solar energy sectors.
Low Voltage Products
revenue was $1.9 billion, up 44% in terms of local currency.
Order increased by 45%, aided by the contribution from the
acquisition of Thomas & Betts.
Process Automation
revenue increased by3% in local currency to $1.9 billion. Order
level inched down 3%, led by a decrease in large orders in oil
and gas sectors.
Income and Expenses
The company achieved savings of approximately $280 million in
the quarter. Costs associated with the program in the quarter
were about $20 million. About 45% of cost savings in the quarter
came from global sourcing initiatives, 50% from operational
excellence projects and about 5% from footprint changes.
EBITDA in the quarter amounted to $1.5 billion, down 6% year
over year.
Balance Sheet and Cash Flow
At the end of the quarter, ABB had cash and cash equivalents
of $4.6 billion, down from $4.8 billion at the end of 2011.
Long-term debt was $7.1 billion and shareholders equity was $17.1
billion. Cash from operating activities was $768 million.
Outlook
ABB maintains a positive long-term outlook. Rising investments
in grid upgrades and industries spending more on automation
solutions to increase energy efficiency and productivity are the
benefactors for the company. However, short-term uncertainties
prevail with the continuing macroeconomic volatility.
ABB Ltd. is a Zurich (Switzerland) based power and
automation technology company. The company operates in
approximately 100 countries, structuring its global organization
into five regions: Europe, the Americas, Asia, the Middle East
and Africa. A major competitor of ABB Ltd. is
Siemens AG
(
SI
).
We maintain a Zacks #3 Rank (short-term Hold recommendation)
on ABB Ltd.
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