ABB focuses on costs to ride out sluggish global growth
ZURICH (Reuters) - Switzerland's ABB (NYSE: ABB - news) said it would focus on costs to offset near-term uncertainty about growth in Europe and the United States as it posted better-than-expected profit and orders in the fourth quarter.
The world's biggest supplier of industrial motors and power grids has sought to cut costs to combat a sluggish global economy that has sapped demand for factory equipment and prompted clients to postpone big capital expenditure projects.
"In the short term, there are still a lot of questions around the pace of growth in Europe and the U.S. and the timing of the rebound in China," Chief Executive Joe Hogan said in a statement on Thursday.
German rival Siemens (TLO: SIE.TI - news) said last month it did not expect the global economy to provide any tailwinds this year with weakness in China and recession in the euro zone dragging on demand.
ABB, which also makes components for the oil and gas industry, said it expected industrial production growth and government policy to be the main drivers of demand in 2013.
Signs have grown in recent weeks that the euro zone may be starting to pull out of recession, with output at factories in the troubled currency bloc rising in January for the first time since August.
Despite the global weakness in the fourth quarter, orders at ABB rose 4 percent to $10.5 billion (6.7 billion pounds) with a 41 percent jump in orders from the Americas offsetting a 25 percent slump in Asia. That was higher than the average estimate of $9.8 billion in a Reuters poll of analysts.
Fourth-quarter net profit fell 27 percent to $604 million, hit by a $350 million charge, flagged in December, to revamp its power systems unit. Analysts in a Reuters poll had forecast profit of $532 million.
The company, which also makes components for the oil and gas industry, said it was targeting cost savings and productivity improvements equivalent to 3 percent to 5 percent of cost sales every year.
It has proposed a dividend of 0.68 francs per share compared with 0.65 francs a year earlier.
(Reporting by Caroline Copley; Editing by Chris Gallagher)