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Company says component supply problems easing further

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Says customer activity at a high level

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Expects to reach operating profit margin goal one year early

ZURICH, Oct 20 (Reuters) - ABB posted its highest-ever quarterly profit margin during the third quarter as the engineering and technology company said customer demand remained strong.

The maker of industrial drives and electric ship motors said on Thursday its core operating profit margin increased by 1.5 percentage points to 16.6%, the highest since the Swiss company was founded in 1988.

Higher volumes and prices helped ABB offset cost inflation from more expensive raw materials, transport and wages, while the company said components shortages continued to ease and COVID shutdowns in China had been less of a problem.

During the three months to the end of September, ABB posted revenue up 18% on a comparable basis to $7.4 billion, in line with forecasts, while orders increased by 16%.

As a large supplier of equipment to factories, the results from ABB, which competes with Germany's Siemens and France's Schneider Electric, are seen as a signifier for the health of the broader industrial economy.

Net profit fell 45% to $360 million after ABB was hit by a $325 million charge to cover costs related to investigations surrounding the Kusile power plant in South Africa, a charge it flagged last month.

But operational core earnings (EBITA) rose 27% on a comparable basis to $1.23 billion, beating forecasts for $1.14 billion in a company-gathered consensus.

The profit margin improvement brought the year to date figure to 15.5%, and meant ABB is likely to achieve its target of hitting 15% this year - one year early.

The company's shares were up 1.3% in premarket activity.

"We delivered high order growth, a strong top-line development and a historically high margin," Chief Executive Bjorn Rosengren said in a statement.

"I am proud that we are likely to achieve our target of Operational EBITA margin of at least 15% already in 2022, one year ahead of plan," he said.

The former Sandvik boss said shortly after joining ABB in 2020 he would focus on profitability, and introduced a decentralized business model with more responsibility devolved to divisions.

Rosengren's strategy has led to selling non-core businesses, like the mechanical power transmission business Dodge, and also spinning off its turbocharging business Accelleron to shareholders.

The company also sold its remaining stake in its power grids business to Hitachi, although it said it no longer expected to float its electric vehicle charging business this year, citing volatility on stock markets. (Reporting by John Revill; Editing by Michael Shields and Mark Potter)