Markets News

UPDATE 2-ABB sees COVID-19 hitting revenue for rest of the year

* Demand in United States, Europe still subdued

* Sees strong recovery in China

* Operating profit beats forecasts

* Power grid business sale boosts net profit

* Shares indicated 3.3% higher (Recasts, adds analyst, shares)

ZURICH, Oct 23 (Reuters) - ABB expects its orders and revenue to remain under pressure for the rest of 2020, the Swiss engineering company said on Friday, as the pandemic reduces industrial activity in many parts of the world.

Demand from customers in the United States and Europe was still subdued, ABB said, offsetting a strong recovery it was seeing in China.

For the fourth quarter ABB said it now expects revenue to decline by more than the 4% rate reported in the three months to the end of September.

“The impact of COVID-19 continues to weigh on the short-term outlook across many end-markets, particularly in oil and gas, conventional power generation, automotive, marine and buildings,” ABB said after posting its third-quarter results.

Still, some end markets such as electrical distribution, transport, data centres, consumer electronics and food and beverage were doing OK, the company said.

It reported a 4% fall in third-quarter revenue to $6.58 billion, beating a consensus forecast of $6.30 billion.

Operational EBITA fell 2% to $787 million, beating forecasts for $689 million in a company-provided consensus of analysts.

Shares were indicated 3.3% higher in pre-market activity as analysts were cheered by the 30 basis point improvement in profit margin.

“ABB reported a strong underlying performance,” JP Morgan said in a note.

Orders, an indication of future growth, were 9% lower, hurt by a big downturn in the United States, ABB’s biggest market. Europe, now facing a second wave of the virus, also saw orders fall.

In contrast, orders in China, ABB’s second biggest market, rose 7% as its economy recovers.

Third-quarter net profit rose more than eight-fold to $4.53 billion, the company said, as it booked the proceeds from selling its power grid business to Hitachi. (Reporting by John Revill, editing by John Miller and Jason Neely)