UPDATE 3-Brexit dents Swiss engineer ABB's orders and outlook

* Orders slip 14 pct, unclear when they will rise again

* Shares fall 7.1 percent in ealy trading

* Profitability rises for 8th quarter on cost cuts

* CFO departs as ABB opts for ‘new talent’ (Adds analyst comment, updates shares)

By John Miller and Jens Hack

ZURICH/MUNICH, Oct 27 (Reuters) - ABB’s orders slipped for a sixth quarter and are not forecast to rise soon as Brexit, the U.S. elections and July’s attempted Turkish coup compounded hesitation among customers of its Power Grids business, knocking its shares.

Third-quarter orders at the Swiss engineering group fell 14 percent to $7.53 billion, ABB said on Thursday, lagging even the lowest of 17 estimates in a Reuters poll of analysts that on average expected $8.5 billion.

Orders last rose on a year-on-year comparison in early 2015.

The Zurich-based company, which also poached Nokia’s finance chief to be its CFO, reported net profit of $568 million for the three months ended Sept. 30, down from $577 million a year earlier. The figure beat forecasts of $555 million in the poll.

European demand was dented by Britain’s decision to exit the European Union as well as “considerable investment delays” that ABB Chief Executive Ulrich Spiesshofer pinned on the presidential race between Hillary Clinton and Donald Trump.

“We face continued adverse market conditions. That will not go away quickly,” Spiesshofer said on a conference call. “Brexit had a massive dampening effect.”

Spiesshofer added he was unable to predict when ABB would return to growth, cautioning “it will take a while.”

ABB shares were down 7.1 percent in early trading.

“The headwinds have become even stronger,” Bank Vontobel analyst Panagiotis Spiliopoulos said. “We fear the inflection point has been further delayed and all operations improvements are eaten up by top-line headwinds for more quarters.”

Orders in Power Grids, which makes everything from microgrid equipment to big HVDC converters, were also hurt by the hesitation of customers in the months leading up to ABB’s October announcement it would keep the division.


ABB rejected pressure from Sweden’s Cevian, its second- biggest investor, to unload Power Grids. Its profitability has been improving, in part as ABB partners with others including Fluor, to cut risks that led to large losses on projects like North Sea wind parks.

Spiesshofer said his “White Collar Productivity” cost-cutting program, now targeted at saving $1.3 billion by the end of nest year, helped boost overall profitability for an eighth straight quarter.

The margin on operating earnings before interest, taxes and amortisation rose to 12.6 percent from 12.5 percent.

ABB named Nokia’s Timo Ihamuotila as its CFO to replace Erik Elzvik, who is leaving in April after more than three decades to “pursue career opportunities outside of ABB”.

“We change the shape of the company and you have to look at the shape of the team,” Spiesshofer said. “We saw that it is time to move on and bring in new additional talent.” (Editing by Clarence Fernandez and Alexander Smith)