ZURICH (Dow Jones)--Switzerland-based electrical engineering company ABB Ltd. (ABB) Thursday reported its first full-year net profit in five years and said it was confident to further boost profit in 2006.
The Zurich-based company said net profit for the full year ending Dec. 31, 2005, was $735 million compared to a loss of $35 million in the year-earlier period, when restructuring costs and charges related to an asbestos trial in the U.S. depressed earnings.
The bottom line results beat analyst forecast of $690 million despite the fact that ABB made charges of more than $100 million for its discontinued businesses and the restructuring of its transformer business.
"We met our original 2005 targets which, in view of the special charges throughout the year, is a solid achievement", said chief executive Fred Kindle. "A strong second half of 2005 has given us a good basis now to enter 2006 and generate further profitable growth", Kindle said.
ABB said due to the strong performance, in which the company was also able to cut its debt to $508 million from a previous $1 billion, it wants to pay out its first dividend in five years.
ABB plans to recompense shareholders with a dividend of CHF0.12 per share. The last time ABB paid a dividend was for the year 2000, when the company posted a net profit of around $1.4 billion and paid a dividend of CHF0.75 a share.
Analysts welcomed the dividend as the payout underlined that ABB has fully recovered after several years of heavy restructuring that included ten-thousands of job cuts and asset sales.
During the few past years, ABB posted aggregate losses of more than $2 billion as costs related to asbestos litigation in the U.S. and restructuring charges hit its bottom line.
Analysts are also confident that the company will stay on track during the remainder of the year as markets for automation and power products continue to thrive. They are also upbeat that ABB will soon solve its $1.43 billion asbestos litigation in the U.S.
ABB, which has paid more than $1 billion for asbestos litigation during the past decade, will face a final hearing in the U.S. on Feb. 28.
Industry experts expect that ABB's settlement plan will be confirmed at the hearing and that a potential positive ruling won't be appealed like in the past.
Meanwhile, ABB said that demand for power transmission products in Asia and the U.S. are likely to be strong in 2006.
Likewise, the company expects that automation-related investments will remain at attractive levels in several sectors such as metals.
Furthermore, ABB said that oil-related investments could rise should the price for crude remain high.
Analysts also pointed out strong sales and order development.
For the full-year, ABB's revenues rose 9% to $22.44 billion from a previous $20.61 billion, while orders also jumped 9% to $23.58 billion from a previous $21.59 billion.
In the fourth quarter alone, ABB swung to a net profit of $222 million after a loss of $223 million in the year ago period. The figure equally beat analysts expectations for a net profit of $130 million. During that period, sales rose 2% to $6.06 billion while orders rose 7% to $5.57 billion.
Company Web Site:http://www.abb.com
-By Goran Mijuk, Dow Jones Newswires; +41 43 443 80 47; firstname.lastname@example.org
(END) Dow Jones Newswires