Thursday, February 18, 2010

ABB Posts Solid Results

Swiss industrial-electrical company ABB reported earnings this morning, and the results were solid.  I've been bullish on this company for awhile, and the stock has been, okay.  I love the story here.  They can service all the electrical infrastructure being built in the coming years.  That includes wind, solar, hydro.  You name it.  They'll play an integral part in updating power grids to handle new power sources.  The best part is they are truly global, so they are ready for wherever the growth comes from.  I keep an eye on their order updates, and they receive big orders from Brazil, China, the Middle East and Africa, which are all high growth areas.  They also have large operations in the US and Europe.

As far as results, here are some highlights from the release.  Take a look at the link for a detailed story and many stats.

  • Fast cost take-out keeps full-year EBIT margin well within target range – 2-year savings program expanded to $3 billion

  • Pace of base order decline year-on-year slows in Q4, stabilizes versus Q3 2009

  • Q4 net income was $540 million after approx. $350 million of restructuring-related expense

  • Record cash from operations for Q4 of $1.8 billion

  • Proposal to increase dividend 6 percent to CHF 0.51 per share

Zurich, Switzerland, Feb. 18, 2010 – ABB reported earnings before interest and taxes (EBIT) of almost $800 million in the quarter, despite approximately $350 million in restructuring-related charges. Full-year profitability was well within the company’s EBIT margin target range of 11-16 percent on a combination of rapid cost take-out and solid operational execution.

Combined with record cash from operations and double-digit order growth from emerging markets, the results “show the resilience of ABB’s business portfolio and geographic scope, as well as our ability to execute in a tough market environment,” said Chief Executive Officer Joe Hogan.

Results were helped by cost-cutting, but they are obviously delivering on their goals.  Lots of cash coming in as well, and as you can see the dividend was increased, which is always nice.

I've considered selling this stock a few times because I do have stocks that I think may perform better.  But, I like the story, and if they continue to deliver, the stock will be a steady performer, and will probably take off once we see things heat up again in the emerging markets.

They got an upgrade this morning, and the stock is up 6%.

So, good stuff for now.  I'll continue to hold my shares, and we'll see where we're at next quarter.

Disclosure: Long ABB

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