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UPDATE 3-ABB braces for hit from coronavirus outbreak in China

* Voser sees impact from virus on key market China

* Q4 net profit rises 3% to $325 mln, operating margin improves

* Proposes steady dividend of 0.80 Swiss francs per share (Adds CEO comments, market reaction)

ZURICH, Feb 5 (Reuters) - Swiss engineering company ABB is going to take a hit from the coronavirus outbreak in China, where it generated around 15% of its sales last year, Chief Executive Peter Voser said on Wednesday.

“We think there is likely to be an impact. We have a significant footprint in China,” he told reporters after the group posted a surprise increase in fourth-quarter profit.

“While the impact of the virus outbreak on our business is not quantifiable at this moment, we are supporting ... our employees and have put in place plans to ramp up manufacturing capacity as soon as possible,” he added.

ABB’s factories in China -- where it has 20,000 workers -- have been shut down in line with government guidance, but ABB has not evacuated staff, Voser said. It has restricted travel to China and Hong Kong to essential business, and employees are subject to a 14-day quarantine before returning to work.

ABB is shipping about 200,000 protective masks to Chinese staff and their families, Voser said.

The outbreak, the death toll from which is now close to 500, has clouded the outlook for ABB in a year in which it wants to improve its operating margin and Voser hands over the CEO post to former Sandvik boss Bjorn Rosengren next month although he will remain chairman..

Rosengren, a Swede, is expected to accelerate the decentralisation of ABB and give more autonomy to its four business units that cover electrification, industrial drives, industrial controls and robots.

FOURTH-QUARTER NET PROFIT RISES

Fourth-quarter net profit rose 3% to $325 million, beating analysts’ estimates of $230 million in a company-gathered consensus despite a slowdown in industrial demand in some markets including the United States.

Sales dropped 2% on a comparable basis to $7.07 billion, missing forecasts of $7.14 billion. Orders rose a comparable 1% to $6.9 billion. ABB proposed a steady dividend of 0.80 francs per share.

It said it expects stable to slightly higher sales this year and its annual operational EBITA margin to improve in 2020, mostly in the second half, aided by higher margins in the electrification business and cost cuts.

ABB stock rose 2.8% by 0910 GMT.

Voser said nearly two-thirds of ABB’s portfolio serves market segments that are steady or robust, but “material challenges” remained in conventional power generation, onshore upstream oil and gas, automotive, and machine building.

The sale of its Power Grids business to Hitachi in an $11-billion deal was on track to close in the second quarter, generating net proceeds of up to $7.8 billion to be returned to shareholders via a stock buyback.

Voser said ABB now estimated a pretax book gain of around $5 billion from the sale. (Additional reporting by John Revill, Editing by Riham Alkousaa, Sherry Jacob-Phillips and Timothy Heritage)

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