ABB reports increased earnings, though transmission sector remains sluggish

Swiss power and automation technology company ABB on Oct. 24 reported higher revenues, earnings and cash flows in 3Q13, on improved performance across all divisions, though transmission was not among the company’s major movers.

“Project tendering activity in sectors like power transmission and oil and gas continues to increase but the award of large orders remained slow,” ABB CEO Ulrich Spiesshofer said during the company’s quarterly earnings call on Oct. 24.

He blamed “slow decision-making in some of the transmissions and utility infrastructure” for the decline in large orders.

“Utilities continued to make selective investments in power transmission,” he said, noting that higher revenues reflect delivery from the order backlog while service volumes grew faster than total revenues.

Revenue from ABB’s operations in the Americas rose to $3.01bn, compared to $2.75bn from the same quarter the year before. Revenues in North America and South America represented approximately 28.6% of the company’s revenues across its four discrete regions, including Europe, Asia, the Middle East and Africa. However, revenue growth in the Americas was not attributable to company activities in the United States.

“U.S. orders were unchanged versus the same period a year earlier, as lower large orders were compensated by solid growth in base orders,” he said. Future orders received in the Americas dropped to $2.81bn from $3.07bn.

Further, mechanical power transmission sales were up more than 25% outside of the U.S., Speisshoffer said.

The company’s overall revenue from power products, which includes transmission, grew to $389m in 3Q13, a 4% increase from $374m in 3Q12.

Taken as a whole, revenues and operational earnings before interest, taxes, depreciation and amortization were higher in all divisions. The company reported total revenue of $10.5bn in 3Q13 compared to $9.7bn in 3Q12, an increase of 8%. Net income was $835m, a 10% over net income of $759m during the same quarter in 2012.

The 3Q13 results reflect primarily on the leadership of ABB’s previous CEO, Joe Hogan. After Hogan announced his resignation in May, ABB’s board of directors unanimously appointed Spiesshofer CEO on June 17. However, Hogan remained CEO until what the company called “an orderly transition” on Sept. 15. Hogan joined the company in 2008 after a 23-year career with General Electric (NYSE:GE).