ABB rode a tide of infrastructure build-outs around the world to a solid fourth quarter and higher-than-expected earnings, the company reported today. In fact, said ABB president and CEO Fred Kindle on a conference call announcing the results, strong growth in net income made 2006 "a record year." In the fourth quarter ended Dec. 31, 2006, ABB reported revenues of $7.1 billion, up 21% (in U.S. currency) over the $5.9 billion reported in the same period of 2005. Fourth-quarter earnings before interest and taxes (EBIT) increased 43% year over year to $744 million. For the year, the company reported net income of $1.4 billion, an impressive gain of 89% over the $735 million reported in 2005. Revenue, at $24 billion, was up 11% over 2005. While all of ABB's businesses are in good shape, the revenue surge was mainly a result of large orders within its Power Systems, Power Products, and Automation Products divisions, as Asian Pacific countries invest in power grid upgrades and the Middle East works to improve its power infrastructure to support the growth of the oil and gas industry. Meanwhile, the Process Automation and Robotics divisions remained fairly flat. Process Automation, for instance, generated $1.5 billion in revenue for the quarter and $5.4 billion for the year, a shade above the $1.3 billion reported in the fourth quarter of 2005 and last year's total revenue of $4.9 billion. The leveling off has nothing to do with a softening market, according to the company. Rather, ABB cited significant deals in the fourth quarter of 2005 in South Korea and Singapore, which could not be repeated in the like quarter of 2006. Moreover, Kindle told press and analysts that these large orders, which are associated with major process automation systems like the company's 800xA distributed control system, have longer throughput times, meaning much of the volume of the revenue is still to come, he said. Similarly, the Robotics group has been hindered by the automotive industry's malaise, a core market for robotics products. The group had a significant revenue dip for the fourth quarter and the year, down 32% and 24% respectively. But the company is working to correct the situation. "We have internal homework to do to move the operating situation upward," Kindle said. "2006 has been a year of repair and making sure we are moving in the right direction. We are confident we are, and that things will shape up. It's simply not visible yet." What is visible are some of the initiatives the company took to get the big-picture operations in order. Specifically, the remaining Building Systems business was reclassified as a discontinued operation in the fourth quarter, as ABB has been selling off regional divisions of the group in a piecemeal approach and using that money to reduce debt and strengthen the company's balance sheet. In addition, in line with its strategy to focus on power and automation technologies, ABB continued to divest non-core businesses in 2006, including a power lines unit and a cables business in Ireland. Earlier this year, the company announced that it had restarted its effort to divest the ABB Lummus Global oil and gas business. The ABB Lummus Global business, along with ABB's Combustion Engineering subsidiary, were the targets of asbestos litigation that has hampered the company in recent years and resulted in a corporate reorganization. The reorganization, finalized in 2006, channels any future claims to newly created Personal Injury Trusts. This reorganization is a great relief to the business as a whole, officials said. "In 2006, we had reason to rejoice, as we were able to put the asbestos issue to bed," Kindle said. "We were able to close this big, big problem that was hovering over our heads with dark clouds and lighting coming out." Overall, 2006 was indeed a record year, Kindle noted, pointing to growing revenues, higher capacity utilization, and cost reductions that contributed to a record $2.6 billion in EBIT for 2006. Moreover, in 2005 the company outlined a financial strategy that included growing revenue 5% by 2009. In 2006, that goal had already been surpassed, with the company growing revenue by 9% since the original strategy was outlined. As a result, the 2007 outlook is bright, Kindle said. "We are starting 2007 with $17 billion of order backlog, $5 billion more than what started last year... That gives us good confidence about 2007," he said. ABB's announcement of strong 2006 sales and earnings comes on the heels of year-end results from fellow automation supplier Schneider Electric, which announced its numbers last month. Riding record organic growth of almost 11% year over year, Schneider closed 2006 with revenues of €14 billion, up more than 17% on a constant currency basis.