ABB reports 15% drop in Q3 profits due to weak US, China market
Swiss engineering company ABB reported a fall of 15% in Q3 profits, attributing the reason to a weak US, China market.
The trade war between China and US had taken a toll on the economies of both the countries and in view of this ABB reported a negative order intake in the US and a rapid decline of the Chinese economy. The company disclosed a drop in profits from the previous year’s figures of $603 million to a $515 million for the current year. However, the figures surpassed market expectations for the company
A large part of the drop was also attributed to the reduction of large projects value by $80 million in the Power Grids segment that will be sold to Hitachi of Japan. Revenue drop by 3% from an earlier $7.1 billion to the current $6.9 billion was slightly less than analysts’ expectations of $6.94 billion.
Another reason for the drop was attributed to the company pulling resources from a project to fund the building of a power plant based in South Africa. Resources were pulled off from its industrial automation division.
ABB manufacturers a wide array of goods ranging from industrial drives to factory robots and its products have wound their way in factories, transport schemes, electrification projects etc. The company stated that it was affected by the weak macroeconomic conditions prevailing in the US though they continued to be mixed in China and parts of Europe.
The orders of its robotics division dipped by 16% as its automotive customers put off their purchases of new machinery. Orders from China dropped by 7% while those from US dropped by 1%.
China’s economy faced a downturn in the third quarter as its factory production was hit badly by the trade war with the US.
Peter Voser, Chief Executive of the company declared the company results to be ‘robust’ in view of the feeble macroeconomic conditions expereinced by the company.