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ABB Q2 Profit Weak, Orders Rise; Sees Improvement Ahead; Stock Up

abb july21 lt

Swiss engineering company ABB Ltd. reported Thursday weak profit in its second quarter with lower revenues, while orders climbed amid a positive market momentum. Looking ahead, the company projects higher revenues in the third quarter, and margin improvement in fiscal 2022. In Switzerland, ABB shares were gaining around 2 percent.

Bjrn Rosengren, CEO, said, "Overall, I am pleased with how the teams delivered strong order growth as well as a margin in line with our long-term target. This was achieved despite the pressure from a tight supply chain, Covid-enforced lockdowns in China and the inflationary environment. Cash flow came in higher than in the first quarter, and I expect a good momentum in the second half of the year."

For the third quarter, the company anticipates double-digit comparable revenue growth and the Operational EBITA margin to sequentially improve, excluding the 60 basis points positive impact from special items in the second quarter.

The company said it anticipates further easing of component supply in the coming quarters.

For fiscal 2022, ABB expects a steady margin improvement towards the 2023 target of at least 15 percent, supported by increased efficiency. The company also projects support from a positive market momentum and strong order backlog.

For the second quarter, net income attributable to the company declined 50 percent to $379 million from last year's $752 million.

Basic earnings per share were $0.20, down 47 percent from $0.37 a year ago.

Income from operations fell 46 percent from last year to $587 million. Operational EBITA was $1.14 billion, up 2 percent from prior year's $1.11 billion. Comparable operational EBITA grew 9 percent.

Operational EBITA margin was 15.5 percent, up from 15.0 percent a year ago.

Revenues dropped 3 percent to $7.25 billion from last year's $7.45 billion, despite positives of strong price execution and increased volumes. Comparable revenue growth was 6 percent.

Comparable revenues increased in all business areas except for Robotics & Discrete Automation.

Orders were $8.81 billion, a growth of 10 percent on a reported basis and 20 percent on a comparable basis. Comparable orders increased at a double-digit rate in all regions.

Order backlog was $19.5 billion.

In Switzerland, ABB shares were trading at 27.74 Swiss francs, up 1.54 percent.

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