ABB 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“We grew orders in a number of key sectors and geographies, including China. And we saw an encouraging trend with sequential order growth in almost all of our product businesses compared to the first quarter of the year.”

” each one of these regions is, you all know on the phone, has its own dynamics from an economic standpoint right now”

“when you look at our short cycle, the shorter cycle businesses we have, you’re really seeing some positive trends here over the last quarter that we haven’t seen in the last few. On the other hand, uncertainty around the timing of large orders is likely to persist as we saw here in the second quarter. We see that there are some large projects in the United States that are now likely to be pushed out to next year. Brazil has been weaker than expected, and that shouldn’t be a surprise given the economic difficulties that, that country has been seeing right now.”

” in Asia, we see positive signs out of China, while India remains a challenge. So in aggregate, I’d say things are moving sideways. But I wouldn’t expect demand to go down from here.”

“From a mining standpoint, it shouldn’t be — to me, it shouldn’t be a mystery that we see some pressure from mining. But mainly, we talk about if it’s really the excavation side of mining and we might call greenfield or bigger expansions in mining. When you look at order processing and things that have to do with productivity or just the efficiency that you want to drive in ore body inside of a mine, we still feel pretty good about our tender backlog in that area, things like drills, mill drives and mine hoist and those kind of things that appeal to that part of the mining industry. So again, the mining is down. But again, we see it and we, I think, understand it. ”

“What we see is the oil and gas that we expressed through marine, we haven’t seen as many offshore ships actually being contracted this year than we did last year. So that’s the change there. I don’t think that means that the CapEx is going down. You just move your CapEx into different areas because that’s the way the shipbuilding piece goes”

“Some of the upside we’ve seen has been in transportation, things like transformers that are used on electric trains. Medium voltage switchgear that’s used on the stationary part of electric trains was positive. If you go back then maybe 1.5 years ago, we’re talking about how those orders dried up because of the uncertainty around the transportation secretary, the leadership that was going on in China, whatever. We see that gradually improving. We also had some nuclear orders that are moving through also, from a power standpoint, that was a positive — from a year-to-year standpoint also on the power piece. So we think that China will continue to be in a growth phase for us. We’re not predicting double digits here in any short period of time, but this is relatively robust in the sense of the breadth of what we’re seeing in China right now for the first half from a growth standpoint. On the automation side, if you drill in low voltage, low voltage is up pretty well within China, too. Some of that has to do with the construction market in China particularly as we — as it moves west. And some of it has to do with the industrial side.”

“if you see a big increase in low-voltage drives and low voltage products in those areas, they tend to be our most sensitive short cycle businesses, that is a positive mix indicator”

“we’re not predicting any dire economic changes out there. We see orders, we see customers wanting to move at times. It’s just slower than what we’d like to see at this point. But overall, when you look at internally some of the leading indicators that we look at, as Eric mentioned, our short cycle index that we use as a key indicator here actually turned up this quarter for the first time in several quarters. And that’s a good sign for us.”

“But there’s bad signs out there also, in the sense of some CapEx spends and utility delays and those kind of things. So probably, we just see different signals and we’re cautious but there’s nothing in us that says that were we’re really pessimistic about the future or repeating something that we saw in the first quarter or the second quarter of ’09.”

“I think it’s kind of obvious right now that the mining companies, given the changes of the CEOs that are going on out there and then the real strong focus on productivity, that they’re looking to optimize the assets that they have rather than the expenses and that’s obviously feeding through into the kinds of CapEx that they’re following through within and that’s how we’re pursuing these pieces.”

“But there have been some segments in the marketplace such as coal mining and things where you would sell significant number of industrial motors that have been hit because of that industry being down, we are very much aware of that. But we see other areas like gas and different areas where it’s actually picked up.”

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