ABB meets forecast and raises dividend
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Swiss technology group ABB returned to profit in the final quarter of 2021 and met its full-year forecast, which had previously been cut in October. Demand picked up significantly at the end of the year, order intake recovered, and revenue grew more than expected despite disrupted supply chains in parts of the business, the Siemens competitor said. Shareholders are to receive a 2-cent higher dividend of 0.82 Swiss francs per share for the past year. Orders rose 18 percent to $8.26 billion in the fourth quarter, while revenue increased 5 percent to $7.57 billion, ABB said. On a comparable basis, revenue was up 8 percent. Operating earnings before interest, taxes, depreciation, and amortisation (EBITA) jumped 20 per cent to $998 million and the EBITA margin improved 1.6 percentage points to 13.2 per cent. Overall, ABB posted a net profit of $2.64 billion, compared with a loss of $79 million in the same period last year. Basic earnings per share were $1.34, up from negative $0.04. For the full year, revenue rose 11 per cent to $28.9 billion, or 8 per cent growth on a comparable basis. Operating EBITA climbed 42 per cent to $4.12 billion, with the corresponding margin up 3.1 points to 14.2 per cent. For 2022, ABB said it expects the margin to continue to improve steadily towards its 2023 target, supported by efficiency enhancements. The expected positive market momentum and high order backlog should also prove beneficial.
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The SMI closed little changed at 12,360 points. Among the 20 SMI stocks, there were 15 price gainers and five price losers. 47.70 (previously: 51.36) million shares were traded. The Swiss government's plans to lift all Corona measures as of mid-February had a slightly supporting effect. The upward movement was slowed down by the strong minus of the Novartis share. The pharmaceutical company almost tripled its profits in the past financial year to just over 24 billion dollars with the help of the sale of Roche shares worth billions. The dividend is to rise by 3.3 per cent to 3.10 francs. The share was nevertheless the weakest SMI stock with a minus of 3.1 per cent. "The figures are in the lower range of expectations," said a market participant. It was also disappointing that Novartis had said nothing concrete about the sale of Sandoz but was even keeping all options open. Julius Baer shares fell 5.7 per cent. The private bank reported a record profit for the past year, but the share buyback announced at the same time was lower than hoped for and operating expenses were higher at the same time. The Clariant share rose by 1.4 per cent. The sale of the stake in the Scientific Design joint venture to partner Sabic for 130 million dollars went down well with shareholders.
European stocks rose on Wednesday as investors questioned whether the European Central Bank (ECB) would tighten its tone after its monetary policy meeting on Thursday. The Stoxx Europe 600 index gained 0.5% to 477.0 points. In Paris, the CAC 40 and the SBF 120 gained 0.2% each. In Frankfurt, the DAX 40 was almost flat and in London, the FTSE 100 rose 0.6%. Technology and defence group Thales (-3.1%) has approached investors about a potential takeover of the Big Data & Cybersecurity (BDS) division of Atos (+8.2%), Reuters news agency reported on Wednesday, citing unnamed sources. Elior (-6.8%) suffered from a downgrade by Stifel, from "hold" to "sell". The financial intermediary also lowered its price target from EUR 6.5 to EUR 4.9. Solvay (+3%) was upgraded from "hold" to "buy" by Société Générale, which also raised its target price from 115 to 140 euros. The chemical group announced on Wednesday that it intends to triple its sales to the automotive sector by 2030. Vodafone shares are among the biggest FTSE 100 risers, up 3.3% after the U.K. mobile-phone operator said third-quarter trading matched expectations and that it is on track to meet fiscal 2022 guidance. Ørsted rose 4.2% in Copenhagen trading, after the wind power company posted fourth-quarter net income below consensus, but revenue ahead of expectations. Investors also smiled on an 8.7% dividend hike and upbeat guidance on earnings in 2022, when it expects operating profit to be between 19 billion Danish krone and DKK21 billion. Santander, up 0.3%, posted a net profit of EUR2.3 billion in the fourth quarter, ahead of expectations, on a strong showing in the U.K. and the U.S. and fewer provisions and forecast higher profits this year.
U.S. stocks rose Wednesday, extending their winning streak, as a strong earnings report from Google parent Alphabet outweighed weak economic reports. The three major indexes all rose for a fourth straight session. The Dow Jones Industrial Average climbed 224.09 points, or 0.6%, to 35629.33. The S&P 500 added 42.84 points, or 0.9%, to 4589.38. The index has gained 6.1% in recent days, its largest four-day percentage gain since November 2020. The Nasdaq Composite gained 71.54 points, or 0.5%, to 14417.55. In corporate news, shares of Alphabet, Google’s parent company, rose $207.12, or 7.5% to $2,960, after profit rose by a third in the latest quarter. The search giant also unveiled plans for a 20-for-1 stock split. Chip maker Advanced Micro Devices gained $5.98, or 5.1% to $122.76 after it reported revenue and a sales outlook above analysts’ forecasts, also sending shares of Xilinx, a semiconductor firm it is planning to acquire, up $9.65, or 4.9%, to $207.97. PayPal tumbled $43.23, or 25%, to $132.57, its worst one-day performance on record, after the company posted lower earnings and higher expenses and scrapped an ambitious growth strategy. It’s a stark reversal from the past two years, when PayPal was an investor favorite, given the rise in pandemic-induced online shopping. PayPal shares are at their lowest level since May 2020 and other consumer-facing stocks fell as well. Square parent Block declined 11%, and Starbucks fell 1% after it said rising costs will continue to weigh on its profit in the months ahead. Investors punished two high-profile names after the markets closed. Meta Platforms, formerly known as Facebook, was down 20% after it posted rising revenue but a sharper-than-expected decline in profits as it ramped up spending to execute the pivot to the metaverse. Spotify, already embroiled in controversy, lost 12% post-market after the company said it wouldn’t provide annual guidance, despite adding more users and reporting a surge in advertising revenue in its recently completed quarter.
Stock market activity in East Asia picks up on Thursday after trading resumes following the holiday break. However, stock exchanges in Hong Kong and mainland China remain closed for Lunar New Year celebrations. "Pent-up demand" and an encouraging Markit manufacturing purchasing managers' index push the Kospi up 2.6 per cent in Seoul. In Tokyo, however, the Nikkei 225 index loses 1.1 per cent. The Japanese stock market is particularly burdened by the 6.4 per cent drop in Sony shares. Panasonic falls almost 7 per cent after the company's third-quarter figures missed market expectations. Japan Airlines (-2.2 per cent) closed the first nine months of the financial year with a loss. In Seoul, shares of chipmakers Samsung Electronics and SK Hynix rise 1.1 and 3.7 per cent respectively.
Long-dated U.S. government debt yields slipped on Wednesday. The yield on the Treasury 10-year note fell to its lowest level in more than a week Wednesday after Automatic Data Processing reported that U.S. private-sector payrolls dropped in January by the most since the start of the pandemic. The yield on the benchmark 10-year Treasury note closed at 1.765% from 1.799% on Tuesday.
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