(Reuters) -Engineering services firm ABB India reported a 7% drop in its third-quarter profit on Thursday, as higher expenses and fewer new orders dampened gains from the execution of pending projects.
The India unit of Switzerland’s ABB reported a profit of 4.09 billion rupees ($46.53 million) in the three months ended September 30, from 4.4 billion rupees a year ago.
Excluding large one-off deals, new orders for the capital goods sector fell about 20% year-on-year during the quarter, according to analysts at Elara Capital, who add that order momentum should recover in the second half of the fiscal year.
Muted private-sector capex has also weighed on demand for engineering services firms amid stiff competition, analysts at Ambit Capital said.
ABB India’s overall orders during the quarter fell 3% to 32.33 billion rupees.
A 24% surge in the cost of raw materials pushed ABB India’s total expenses up 18% during the quarter.
Analysts said higher metal prices, especially copper, likely added to ABB India’s input costs during the quarter.
ABB India is a key player in the capital goods space – firms that manufacture and supply industrial equipment and system – with a focus on power, transport and clean energy. It provides automation, electrification and motion solutions.
Revenue from its biggest electrification segment, which makes solar inverters and wiring accessories, rose 19%, while that from its motion segment grew 9%.
Overall revenue rose 13.7% to 33.11 billion rupees.
Rival Thermax will post results next week.
Shares of ABB India closed 0.31% lower ahead of results.
($1 = 87.8950 Indian rupees)
(Reporting by Aleef Jahan in Bengaluru; Editing by Harikrishna Nair and Ronojoy Mazumdar)
