ABB sees stable growth despite tough market

ABB China, the Chinese unit of the Swiss-Swedish multinational engineering company ABB Ltd, registered stable annual sales growth in 2012, despite difficult local industrial conditions.

In a financial statement issued on Wednesday the company said sales in China grew by 2 percent to $5.2 billion, which it put down to the country's ongoing infrastructure program as well as surging exports to neighboring countries.

However, officials said the past year had been a tough one for the group.

Competing with companies such as Siemens AG, ABB saw its group profit in the third quarter drop by 4 percent to $759 million, compared with an average analyst forecast for $764 million, according to a Reuters poll.

Strong demand in China in the fourth quarter, however, helped the group beat quarterly forecasts, sending its shares to one of their highest points in 18 months, said Reuters.

ABB China President Claudio Facchin told a press conference in Beijing that revenue had been "stable" for the whole of 2012, despite an economic situation "more challenging than expected".

According to the group's financial statement, overall revenues grew to $39 billion from $38 billion a year earlier while profits declined to $2.7 billion from $3.2 billion a year ago. No profit figures were released for China.

Facchin added the company will "remain cautious about China's market volatility" in 2013, as the country bids to transform its economic model and growth remains slower than in the past.

In the meantime, given the scale and maturity of its industrial economy, the company will also continue investing in China, especially boosting its presence in the less prosperous second- and third-tier cities, he added.

ABB invested $120 million in China last year, boosting its total investment in the country to more than $1.6 billion over the last decade - a strong commitment to a local engineering sector which suffered an overall downturn during the past 12 months.

Because of high government investment in the national grid in previous years, significant expansion in the sector is unlikely.

"Increased investments in the State grid may have hit a ceiling," said Li Gen, an analyst with Dongxing Securities Co.

"A lower but steady expansion will become the new industry norm over the next few years," he added.

Profits for electrical and power equipment companies listed on China's stock market suffered a 41 percent decline during the first half of 2012, according to industry reports, one of the lowest readings over the past decade.