ABB Ltd. ( ABB ) reported
fourth-quarter 2012 earnings per share of 26 cents, below the Zacks
Consensus Estimate of 32 cents and the prior-year earnings of 36
Earnings per share for the full year 2012 decreased to $1.18
from $1.38 in 2011.
However, the company performed well during the year 2012, as its
revenue and order trends increased. The cash flow position was also
strong during the year.
Total revenue in the quarter climbed 5% year over year in terms
of local currency to $11 billion, aided by Automation and Power
Products business. The acquisition of Thomas & Betts was a
significant gain which helped ABB to derive substantial benefit
from the growing North American market.
Power Products revenue was $3.1 billion, flat
year over year. Order level was also flat during the quarter. Order
level increased in the Americas and the Middle East and Africa
while it was stable in Europe and declined in Asia.
Power Systems revenue was $2.3 billion, down 4%
in terms of local currency. Orders in Power System were down 10%,
due to a decline in large orders.
Motion revenue was $2.5 billion, up 7% in terms of local
currency. Order level increased by 3%, driven by an increase in
large orders in South America and Europe for robotics and power
electronics equipment, which was partially offset by a decline in
the order level in Asia.
Low Voltage Products revenue was $2.0 billion,
up 46% in terms of local currency. Order increased by 54%, due to a
rise in demand in northern Europe and China.
Process Automation revenue decreased 3% in
local currency to $2.0 billion. Order level inched up 18%, aided by
large project awards in oil and gas, mining and marine in the
Middle East, the Americas and Asia.
Income and Expenses
The company achieved savings of approximately $320 million in
the quarter. Costs associated with the program for full year were
about $1.1 billion.
EBITDA in the quarter amounted to $1.4 billion, down 12% year
Balance Sheet and Cash Flow
At the end of 2012, ABB had total debt of $10 billion compared
with $4 billion at the end of 2011. Cash from operating activities
reached a record level in the fourth quarter 2012, at $2.4 billion,
driven by good working capital management. Free cash flow for the
full year 2012 amounted to $2.6 billion, representing a conversion
rate of 94% of net income.
ABB maintains a positive long-term outlook. Rising investments
in grid upgrades and industry spending, with more expenditure on
automation solutions to increase energy efficiency and
productivity, are the positives for the company. However,
short-term uncertainties prevail with the continuing macroeconomic
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, Americas, Asia, the Middle East and
ABB Ltd. currently has a Zacks #4 Rank (Sell). Its close rivals
such as Tyco International ( TYC ) has a Zacks Rank
#1 (Strong Buy) and Siemens AG ( SI ) has a Zacks Rank #2
(Buy).ABB LTD-ADR (ABB): Free Stock Analysis ReportSIEMENS AG-ADR (SI): Free Stock Analysis ReportTYCO INTL LTD (TYC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment