Pockets full, on the prowl

26 April 2007 By Una Galani Follow @ugalani

The Swiss engineering group posted stellar firstquarter results. In five years, its market cap has jumped from a washout $1bn to $33bn. This well managed turnaround proves ABB is ready to go on the prowl. Indeed, it has almost $15bn of buying power.

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Swiss engineering group ABB reported better than expected firstquarter results.

Revenues rose 21% to $6.22bn compared to the previous year, while net income rose by 163% to $537m, and the group recorded a 13% operating margin. ABB an equipment supplier said demand was driven by both emerging markets and industrialised countries.

ABB has recovered from a big restructuring, following a spending spree in the 1990s and settlement of huge asbestos liabilities in several units, most of which it has since disposed. Shares have risen 1533% to Sfr24 since late October 2002 when ABB's market capitalisation was $1.1bn. ABB's is now worth almost $33bn and has a $2.3bn cash pile.

The group now trades a premium to the sector on an 2007 estimated 20 times price to earnings ratio, beating rivals Siemens, General Electric and Emerson which trade on 17 times, and Schneider Electric which trades at around 15 times earnings.

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