ABB Predicts Q3 Profit of $1bn

18 October 2009 (Last Updated October 18th, 2009 18:30)

Swiss power and technology automation group ABB expects its third-quarter net income to be boosted to around $1bn due to a reduction in provisions, the company has announced. ABB said it was lowering provisions by $380m after it set aside $850m for anticipated charges linked to certain

Swiss power and technology automation group ABB expects its third-quarter net income to be boosted to around $1bn due to a reduction in provisions, the company has announced.

ABB said it was lowering provisions by $380m after it set aside $850m for anticipated charges linked to certain compliance, tax and restructuring matters in December.

One Zurich-based trader told Reuters the impact on the shares was likely to be neutral.

"It's a reduction of provision and therefore an increase on the net, but it's a one-time effect."

The group said the amount of money it had set aside as at the end of the third quarter would be mainly impacted by changes in provisions linked to alleged anti-competitive practices, including the European Commission's power transformer decision earlier this month.

The EC fined ABB €33.8m ($50.43m) for taking part in a power transformer cartel. An ABB spokesman was not immediately able to say whether the fine was higher or lower than had been expected, reports Reuters.

The group also said the cost of doing business in Russia had increased and that it was continuing to review its business model there, which could result in organisational changes.

ABB is due to publish third-quarter figures at the end of this month.