ABB, the Swiss-Swedish electrical engineering group which is prominent in the UK water industry, said its sales and profits rose in the first quarter of 2012, but operating margins slipped to 13.9 per cent from 15.7 per cent in the last quarter.
The company said net earnings climbed by 5 per cent to $685m on the back of a 6 per cent rise in sales to $8.9bn. But operating margins remain under pressure amid intense competition in the market and operating profits have fallen 7 per cent from the same period last year to $1.23bn.
The order book rose to $10.4bn. Orders were 2 percent above the very high levels in the first quarter of 2011, driven mainly by utility investments in power distribution and industrial demand for automation solutions that increase productivity.
Joe Hogan, chief executive, said:
“As we guided after Q4, there was continued price pressure on revenues coming out of the order backlog and mix effects that impacted profitability.
“But we could mitigate most of that through cost savings. We saw improved profitability in several businesses compared to the end of last year and we intend to build on that momentum to tap the many opportunities we see for profitable growth over the rest of the year.”
ABB is offsetting challenges such as price pressure with cost cuts and productivity improvements – cost savings amounted to $260m in the first quarter.
The rise in sales and orders was down to improving business in North America, but business in Southern Europe and China slowed.
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