ZURICH -- Engineering giant ABB (IW 1000/112) said on Tuesday its net profit dropped 18% in the first quarter, and announced a major overhaul of its struggling power systems unit, sending its stock price into a tailspin.
During the first three months of the year, ABB, a top player in the global electrical engineering sector, saw its net profit plunge to $544 million.
That number, which fell far short of the analyst expectations, was dragged down by $333 million in depreciation and amortization during the quarter, including $100 million linked to acquisitions.
ABB, which counts Siemens and Alstom as its main competitors, said its sales fell 3% during the January-March period to $9.4 billion, as overall orders slid 1% and large orders plunged 12%.
Company chief executive Ulrich Spiesshofer acknowledged that the unit, which saw sales plummet 22% during the quarter, was a disappointment.
"We are disappointed with the continued poor performance in Power Systems and are rigorously executing actions that go well beyond the previously-announced strategic realignment," he said in the earnings statement.
He said the company had already launched "a number of corrective decisions," including management changes and a halt in bids for solar engineering, procurement and construction projects.
He warned though that the long-planned transformation of the unit would take longer than originally expected, but stressed: "we remain confident that the outcome will be a strong and competitive business."
"ABB will need to show its ability to take the right measures to satisfy investors again," J. Safra Sarasin analyst Oskar Schenker said in a note, decrying the weak order bookings, and also poor performance in ABB's power system's unit.
Copyright Agence France-Presse, 2014