ABB Ltd. warned that global economic uncertainty is clouding the outlook of the Swiss maker of power grids and could slow a burgeoning recovery in orders.
“We’ll absolutely sustain the ambition to drive the order momentum going forward,” Chief Executive Officer Ulrich Spiesshofer said on a call with journalists on Wednesday. “What the markets give us, I can’t say in this uncertain world.”
Dwindling demand from clients in the oil-and-gas industry is hampering Spiesshofer’s attempts to ramp up growth at the company after years of restructuring. The CEO remains steadfast in his decision to keep a power equipment unit that activist investor Cevian Capital wanted to see spun off.
The shares fell 2.5 percent to 22.73 swiss francs as of 9:17 a.m. in Zurich, the steepest intraday decline in three months.
Quarterly orders rose for the first time since the first three months of 2015, increasing 3 percent compared with a year ago on large contract awards. The momentum is “not that strong yet,” Spiesshofer said on the call. German rival Siemens AG also gave a cautious outlook for orders and said the decline seen in the fourth quarter would extend into the start of 2017.
Uncertain World
Increased uncertainty stemming from the U.K.’s decision to leave the European Union as well as geopolitical tensions in other parts of the world are overshadowing global markets, ABB said in the statement. Oil prices and foreign exchange movements are expected to influence the company’s results in what will be a “transitional year,” it said.
“The bigger picture today is that ABB has returned to growth – despite all of the lingering order concerns,” Morgan Stanley analyst Ben Uglow wrote in a note to clients.
Net income more than doubled to $489 million, the Swiss industrial company said. That undershot the average $543.9 million estimated by analysts in a Bloomberg survey.
A $92 million increase in estimated costs for warranties on products designed and sold by solar business Power-One, acquired by ABB in 2013, weighed on net income, the company said. ABB bought the unit to try to bolster its position as a maker of solar inverters, the technology behind a solar-power panel system.