* Stock hits lowest level in nearly two years
* New orders, revenues miss forecasts, net profit beats
* CEO says working hard to improve Power Grids business (Adds CEO comments, analysts, share price reaction)
By John Revill
ZURICH, Oct 25 (Reuters) - ABB's chief executive on Thursday promised to revitalise the Swiss engineering company's earnings to reverse a slump in its shares, which hit a nearly two-year low after the group reported third-quarter results.
ABB, which makes industrial robots and power transmission systems, had promised 2018 would be a stronger year after overhauling its operations last year, including exiting the low margin construction and engineering business.
But many shareholders remain unconvinced, with its shares losing a quarter of their value so far this year, trailing rivals like Germany's Siemens and France's Schneider Electric
On Thursday, ABB's stock fell 4 percent, after analysts said they were disappointed by its new orders and revenues during the third quarter even though net income just beat expectations.
Orders rose 13 percent in China, but ABB reported total orders of $8.94 billion, short of the average $9.18 billion in a Reuters poll of 22 analysts.
ABB also turned more cautious about its European outlook - citing concerns about Italy and Britain - and gave no clues on plans for its Power Grids business, its least profitable division.
CEO Ulrich Spiesshofer said: "It is absolutely our ambition to deliver results in the medium term and long term that will drive the share price in the right direction.
"If you take the transformation of ABB, that has progressed as all the momentum shows. It is very clear out of the orders there needs to come the revenue and the profit and that is our ambition for the next quarters," he told reporters on a call.
Capital goods makers like ABB have been hit by the increased global trade tensions and tariffs between the United States and China along with an economic slowdown in China and automotive supply chain disruption.
Caterpillar Inc this week tried to ease mounting concerns about China and global demand after it affirmed its 2018 profit estimate, a move that investors feared signalled a cap in earnings growth and sparked a sell-off in its shares.
Spiesshofer was silent on the future of Power Grids, which he decided to keep two years ago despite opposition from activist shareholder Cevian Capital.
Reuters reported last week that ABB had begun looking at options for the division, which makes transformers and substations, including selling a majority stake.
"We are transforming Power Grids, we are running on all cylinders to drive this transformation, we have really solid top-line growth," Spiesshofer said.
When asked if this meant the business would stay with ABB or be sold, Spiesshofer said: "When the time is right to talk more about it, we will talk about that."
Spiesshofer, who has led ABB since 2013, declined to comment on when ABB could get to the 35 Swiss franc share price target he promised could be possible two years ago. On Thursday the stock was trading at 19.75 Swiss francs.
"If ABB were to spin off or divest the Power Grids division, that could trigger a rerating of the stock. Simplifying the business is always a positive," said Fabio Riccelli, a fund manager at the European Dynamic Growth Fund of Fidelity. (Reporting by John Revill and Oliver Hirt; additional reporting by Rupert Pretterklieber Editing by Michael Shields and Jane Merriman)