* Q1 order intake down 3 pct, but smaller orders up 2 pct
* Sees early signs of recovery in sectors hit by energy
* Q1 net profit tops expectations, boosted by one-off gain
* Company posts best organic sales rise since Q2 2015
(Recasts, adding CEO comments, analyst, market reaction)
By John Revill
ZURICH, April 20 Swiss engineering group ABB
reported a rise in smaller orders and signs of recovery
in some sectors hit by recent cutbacks by oil and gas companies,
saying these were a better guide to the future than a drop in
volatile big-ticket orders.
The transmission and industrial automation company said on
Thursday its overall order intake fell 3 percent in the three
months ended March 31, when adjusted for currencies and
divestments, halting an uptick at the end of 2016.
But ABB Chief Executive Ulrich Spiesshofer said he was
encouraged by the 2 percent growth in base orders - projects
under $15 million - which he said were the most reliable
indicator of growth in the business.
Sales adjusted for currency fluctuations and divestments
also rose by 3 percent, ABB's best performance since the second
quarter of 2015.
"Base orders in three of our four divisions are up,"
Spiesshofer told reporters. "Large orders are lumpy, they
fluctuate from quarter to quarter, and this quarter had lower
larger orders ... This is something I wouldn’t take as the
Before the fourth quarter of 2016, ABB's order book had
fallen for six straight quarters, putting pressure on the
company to turn around its fortunes and catch up with rivals
such as Germany's Siemens.
Analysts said the order downturn was expected, and ABB's
stock rose 2 percent in early trading following earnings that
A $200 million gain from one-offs including selling its high
voltage cable business to Denmark's NKT Cables last year, helped
ABB lift net profit by 45 percent to $724 million, ahead of
forecasts of $489 million in a Reuters poll.
Revenue fell 1 percent to $7.85 billion, though it rose 3
percent after stripping out the effect of divestments and
currency fluctuations. The performance was highlighted by
Barclays analyst James Stettler as ABB's highest sales
performance in two years.
In recent quarters, ABB has been wrestling with reduced
orders from process industries such as oil and gas where
customers have reacted to lower raw materials prices by
postponing or cancelling investments in new equipment.
Oil prices will likely continue to influence ABB's results
during 2017, the company said, while political uncertainties
linked to developments such as Britain's exit from the European
Union would also weigh.
But Spiesshofer said he was seeing the "first signals of
market stabilization in some process industries, as well as some
growth signals in early-cycle businesses."
The company said some macroeconomic signs in the United
States remained positive, while growth in China was expected to
continue. The two countries are ABB's two largest markets.
(Reporting by John Revill; Editing by Christian Schmollinger
and Mark Potter)