Engineering group ABB increases orders despite China slowdown
[1/2]The logo of Swiss power technology and automation group ABB is seen at a plant in Baden, Switzerland January 28, 2019. REUTERS/Arnd Wiegmann/File Photo
ZURICH, July 20 (Reuters) – ABB (ABBN.S) said customer activity remained “robust” during its second quarter despite the Swiss engineering company providing the latest evidence of an economic slowdown in China.
ABB said its orders in China, its second biggest market, fell 9% in the three months to the end of June, with electrification, motion and robotics divisions all seeing lower demand.
The information will add to concerns about the slowing Chinese economy, with data earlier this week showing only tepid growth as demand weakened at home and abroad.
ABB, whose results are seen as a signifier for the health of the broader industrial economy with its motors, drives, controllers and electrification products used in transport systems and factories, also saw lower demand in Germany.
Still, ABB increased its orders in the United States – its biggest market – and India, which helped offset the downturn as the company increased its overall order intake by 2%.
Chief Executive Bjorn Rosengren highlighted how ABB, whose products range from electric motors for ships to drives used in factories, had increased orders from “last year’s already high level.”
“It was good to see that the customer activity remained robust throughout the period,” said Rosengren in a statement.
The company was also seeing a return to normal buying patterns by customers who had been previously been buying in advance to avoid long waits caused by component shortages.
Overall, ABB took in more orders than it delivered, resulting in an increase in its order backlog by 14% to $21.9 billion.
For the second quarter, ABB reported core operating profit rising 25% to $1.43 billion, better than the $1.37 billion forecast by analysts.
The company increased its profit margin 2 percentage points to 17.5%, its highest ever level, helped by higher prices and bigger production volumes which offset more expensive labour and commodity costs.
Net income rose to $906 million, better than the $873 million expected by analysts polled in a consensus of company-gathered forecasts, while revenue rose 14% to $8.16 billion.
Reporting by John Revill; Editing by Friederike Heine and Kim Coghill
Our Standards: The Thomson Reuters Trust Principles.
Read Nore:Engineering group ABB increases orders despite China slowdown