ABB profits soar

(AFP) Swiss-Swedish engineering group ABB has announced a huge increase in net profit in the first quarter of 2005, posting 199 million dollars (154 million euros) against just one million dollars in the same period last year.

Overall sales rose 12 percent during the first three months of the year to reach 5.08 billion dollars, while orders increased by eight percent to 6.26 billion dollars, the company said in a statement. The results exceeded the expectations of analysts, who had been counting on a net profit around 105 million dollars.

In 2004, the engineering giant recorded a loss of 35 million dollars after footing an additional payment of 232 million dollars to settle long-running litigation over health problems caused by asbestos in the United States.

But the underlying business results had shown a return to form following ABB’s sudden slump into record losses and liquidity problems in 2000.

“We have made a strong start into 2005,” said Fred Kindle, ABB’s president and chief executive.

“Favourable market developments along with our ongoing focus on execution, improving operating efficiency and cutting corporate costs, have boosted our overall profitability,” he added.

The group was maintaining its target for a 7.7 percent increase in the margin of earnings before interest and tax (EBIT) in 2005, despite increased costs expected later in the year.

The strongest growth in ABB’s order book was recorded in the Middle East, with a 65 percent increase to 584 million dollars, followed by the Americas with a 35 percent increase (1.16 billion dollars).

In Asia, orders rose 12 percent to 1.41 billion dollars. But ABB recorded a decline in its biggest market in financial terms, Europe, where orders fell six percent to 3.11 billion dollars. The company warned in February that its financial situation still needed to be shored up before it could recommend a dividend payment.