ABB growth forecast boosted by fourth-quarter power contracts

SWISS engineering group ABB expects to report double-digit net income growth after winning a large number of power infrastructure orders in Europe and the Middle East in the fourth quarter of 2010.

High levels of industrial activity in most regions were supporting its short and mid-cycle businesses in the automation and power sectors, ABB said yesterday.

The company said it expected a broad recovery in utility investments for power transmission equipment later in 2011.

“All their guidance appears to be in line with what I was looking for,” said Helvea analyst Alessandro Migliorini.

ABB shares closed 1.5 per cent up at Sfr22.61 (£15.07) in the Swiss market.

The company said charges of approximately $120m (£75.6m) in the power systems division, mostly related to a cable project, will be included in fourth-quarter 2010 reported earnings before tax.

“The real issue is the provision which is disappointing but I think people will be prepared to see it as a one-off. It stands on the back of a project where they had already announced that there were issues,” Migliorini said.

ABB said 89.4 per cent of shares in Baldor Electric had been tendered in an offer it made for the US industrial motors company, and that it was to buy the remaining Baldor shares at $63.50.

With the Baldor deal, ABB expects to capitalise on a global push for energy efficiency and boost its North American presence.