Strong dollar drags down ABB's 2014 earnings
Swiss engineering giant ABB's net profit in 2014 dropped by seven percent from the previous year, dragged down by a stronger dollar and restructuring costs, the company said on Thursday.
Zurich-based ABB, a top player in the global electrical engineering sector, said its net profit fell to $2.6 billion while sales dipped five percent to $39.8 billion.
Fewer orders at the start of the year and costs linked to the restructuring of ABB's Power Systems division adversely impacted financial results, the company said.
ABB chief Ulrich Spiesshofer said the restructuring efforts were paying off.
"We delivered on our ambition to achieve a break even result for Power Systems for the full year," he said in a statement.
The 2013 purchase of US group Power One, meanwhile, diluted the company's operating margin, the company said.
ABB, which counts Germany's Siemens and Alstom of France as its main competitors, said its orders for the full year rose seven percent to $41.5 billion, boosted by a 50-percent hike in orders worth more than $15 million.
During the fourth quarter, the company said its operating profit fell three percent to $1.3 billion, blaming the rising value of the dollar.
ABB said that the strengthening of the greenback drained five percent from its fourth-quarter orders and six percent from its revenues once its balance sheet was converted.
Looking forward, the group voiced optimism for the long term, but acknowledged that the shorter term would be trickier.
"Macroeconomic and geopolitical developments are signalling a mixed picture with increased uncertainty," ABB said.
While there were positive signs in the United States and growth in the Chinese market, it said "the market remains impacted by slow growth in Europe and geopolitical tensions in various parts of the world."
Current oil prices were meanwhile expected to heavily influence the spending of ABB customers in many different segments, it said, adding that strong currency fluctuations could also take their toll.
Despite its slumping earnings, ABB said its board planned to propose hiking the dividend paid to shareholders to 0.72 Swiss francs a share, up from 0.70 a year earlier.
Following the announcement, the company saw its share price slip 0.65 percent to 18.37 francs a piece in midday trading, as the Swiss stock exchange's main SMI index fell 0.70 percent.