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ABB posts forecasts-beating Q2 results on across-the-board growth UPDATE

07.26.07, 3:43 AM ET

(Updating with more details on divisions, main markets, margins, cash reserves)

ZURICH (Thomson Financial) - ABB Ltd (nyse: ABB - news - people ) reported forecast-beating second-quarter results, with net profit almost doubling to 729 mln usd, from 367 mln the year before, citing continued robust demand in all regions and businesses, operational improvements as well as lower taxes.

For the remainder of 2007, ABB predicts its business environment to remain in line with that seen in 2006 and during the first half of this year, although order growth is expected to moderate somewhat.

Analysts had forecast net profit to rise to 517-664 mln usd, or 570 mln on average.

Additional factors contributing to the higher net income were an improvement in net finance expenses, resulting from lower debts, as well as the non-recurrence of the year earlier period's bond-related costs.

EBIT during the second quarter rose to 1.030 bln usd, from 645 mln, also beating forecasts of 0.845-1.001 bln.

The group's EBIT margin improved to 14.4 pct, from 11.4 pct one year ago.

Sales in the period increased to 7.143 bln usd, compared to 5.641 bln a year ago, and to forecasts of 6.541-6.930 bln.

In parallel, new orders climbed to 8.666 bln usd, from 6.868 bln.

'ABB continues to benefit from increased global investments in energy efficiency, as well as power and industrial infrastructure,' chief executive Fred Kindle commented.

ABB said that its power products division once again benefited from efforts to make regional grid interconnections in Europe more efficient, along with power infrastructure expansions in the Middle East.

As a result, the volume of large orders of more than 15 mln usd almost doubled to about 1.4 bln usd compared to the year earlier period, bringing the power products division's total orders to 2.780 bln usd, from 2.411 bln.

The power systems unit also benefited from a doubling of large orders, including a subsea interconnection between the UK and the Netherlands as well as a large substation order from Abu Dhabi.

The unit's total orders during the period climbed to 2.217 bln usd, from 1.388 bln.

In the automation products division, markets continued to develop favourably, with order growth for standard products remaining strong, while engineering products and system order growth was flat, ABB said.

Geographically, the strongest growth came from China, South America, Eastern Europe and the Middle East.

The unit's orders reached 2.221 bln usd, after 1.957 bln.

In process automation, new orders rose to 1.937 bln usd, from 1.682 bln, with high commodity prices driving investments to expand capacity in the metals and minerals business.

Robotics also recorded a sharp rise in new orders to 392 mln usd, from 268 mln, with orders higher from both general industry as well as the automotive industry.

Orders were higher in all regions, led by Europe, ABB said.

ABB said that its financial position at the end of the second quarter remained strong, with net cash totaling 2.4 bln usd, roughly unchanged from a year ago.

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http://www.forbes.com/markets/feeds/afx/2007/07/26/afx3953858.html