Baldor Boosts Abb Financials

Revenue from its newly acquired Baldor division helped ABB see first quarter revenue jump 18%, the highest growth in two years.

Ben Elias, an industrial infrastructure analyst with Sterne Agee, recently reported that Zurich, Switzerland-based ABB has “successfully transitioned from preservation mode to growth mode” via a restructuring and access to the North American market with the $4.2 billion acquisition of Fort Smith-based Baldor Electric Co.

The ABB Group is a global manufacturer of electric motors, drives, power system components, circuit breakers, switches and numerous other devices used in power and automation systems. The company operates in 100 countries and employs 124,000.

According to terms of the Baldor deal completed in January 2011, Fort Smith is the North American headquarters for ABB’s motors and generator division. Baldor continues to make, design and market industrial electric motors, motor drives, power transmissions and generators. Prior to the acquisition, Baldor employed between 7,000 and 7,500 in 26 plants in five countries and sales offices serving more than 80 countries. About 2,000 are employed by Baldor in the Fort Smith area.

Elias had predicted ABB would post first quarter revenue of $8.35 billion, but the revenue total reached $8.4 billion.

“The variance between our estimate and the actuals was as a result of a higher EBIT contribution from Baldor, which reported revenues for 2 months, in a seasonally weak quarter,” Elias noted in his report.

Continuing, Elias wrote: “The Baldor acquisition allows ABB to address its under-representation in North America in the motors and drives segment. Baldor was a provider of industrial energy efficiency solutions in N.A., and with ABB’s service and distribution network, the Baldor products can now be sold in faster growing emerging market countries.”

ABB reported April 27 that net income in the quarter was $655 million, up 41% compared to the 2010 quarter. The revenue figure was up 18%.

“We are successfully targeting growth areas and the Baldor acquisition made a great contribution to the results. Our lower cost base also continued to pay off by lifting profitability in our growing businesses and holding margins steady where we’re still waiting for recovery,” ABB CEO Joe Hogan said in the earnings report.

Elias said the recessionary “fog appears to have lifted” over ABB, with the company sporting “an order book and backlog reminiscent of pre-crisis levels.”

Michael Tilley with our content partner, The City Wire, is the author of this article. He can be reached by e-mail at [email protected].