Jan. 23 (Bloomberg) -- ABB Ltd. fell to the lowest in almost four weeks after competitor Siemens AG, Europe’s largest engineering company, said demand at its industrial unit is declining and orders in China may only pick up later this year.
ABB dropped as much as 1.1 percent to 19.16 Swiss francs, the lowest intraday price since Dec. 28, and was trading down 0.1 percent at 3:01 p.m. in Zurich. That compared with a 1.4 percent gain in the Swiss Market Index of the country’s 20 largest and most liquid stocks.
“The question is when will China kick in and provide some necessary growth by year end” in the short-cycle business, which includes industrial automation and drive technology, Siemens Chief Financial Officer Joe Kaeser said today on a conference call. The Munich-based company’s industry unit competes with Zurich-based ABB in those products as well as low-voltage switchgear.
“There is a definitely a read through” from the forecast at Siemens for ABB’s stock performance and earnings outlook, Martin Prozesky, a London-based analyst at Sanford C. Bernstein, said today in an e-mail. At the same time, “I would be surprised to see ABB’s base orders down 12 percent, as we saw in the case of Siemens Industrial Automation,” because the Swiss company is less dependent on Europe’s economy.
ABB Chief Executive Officer Joe Hogan said in October that the manufacturer was seeing a slowdown in demand for motors, generators and some low-voltage products, and that generating revenue and savings from the takeover last year of Thomas & Betts Corp. would be a “critical” focus for management in the fourth quarter. He also pledged improvement in project execution at the power-systems division.
Siemens expects sales in businesses with short order-to-delivery times to remain tough for some months, Kaeser said today. Sales and profit as a proportion of revenue declined at the industrial unit in the fiscal first quarter through December, mainly in Europe and Asia. Siemens will spend 400 million euros ($534 million) on restructuring the industry unit this year, Chief Executive Officer Peter Loescher said today at a press conference.
The unit posted sales of 18.9 billion euros in the fiscal year ended Sept. 30. That compares with combined sales in 2011 of about 21.1 billion francs ($22.7 billion) at ABB’s units for process automation, discrete automation & motion and low-voltage products.
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