ABB looks beyond Europe for growth

Swiss engineer ABB SIX: ABBN, NYSE: ABB,OMX: ABB hopes new orders in China and a North American recovery will bring growth back on track later this year after forecasting a tough start to 2012 with competition forcing down its margins.

ABB's products are used by oil, mining and utility companies and it hopes a global push to upgrade electrical grid infrastructure and use energy more efficiently will drive longer term demand, Reuters reports.

But doubts over the global economy and the festering euro zone crisis have limited spending on big projects and put prices under pressure in its power business as rivals scramble for contracts.

"There are signs of recovery in the North American economy and China appears to be returning to a focus on growth," ABB said after announcing fourth quarter profits that failed to meet expectations.

Underlining the shift from struggling Europe that faces companies in many industries, ABB said the number of new orders on the continent fell 8 per cent in the fourth quarter from a year before. In China they rose 6 per cent and in the United States more than 80 per cent, the latter mostly due to its Baldor acquisition last year.

Because of competition on prices and a backlog of less profitable orders, ABB said the operating margin in the first quarter of 2012 could be below the 12.3 per cent in the same quarter of 2011.

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