ZURICH-Wednesday 17 April 2019 [ AETOS Wire ]
(BUSINESS WIRE)-- FIRST QUARTER HIGHLIGHTS
Effective October 1, 2018, the Power Grids division was moved from continuing to discontinued operations. All previously reported amounts have been restated consistent with these portfolio changes. Corporate & Other result is inclusive of inter-division eliminations.
*assuming shareholders approve the dividend at ABB’s AGM
Affolternstrasse 44
8050 Zurich
Switzerland
Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com
or
Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
Permalink : https://www.aetoswire.com/news/abb-resilient-growth/en
(BUSINESS WIRE)-- FIRST QUARTER HIGHLIGHTS
- Total orders +3%1, order backlog +6%
- Base orders +6%, higher in all divisions and regions
- Revenues +4%, book-to-bill2 1.11x
- Operational EBITA margin2 11.2%, impacted 100 basis points by GEIS dilution and a further 100 basis points by stranded costs
- Net income $535 million, -6%
- Operational EPS2 $0.31, +5%3
- Cash flow from operating activities -$256 million; solid cash delivery expected for the full year
- Global software partnership agreement with Dassault Systèmes announced
“We
delivered another quarter of solid orders and revenue growth
demonstrating the quality and resilience of our portfolio despite the
softening we have seen in some of our end-markets, particularly in
discrete manufacturing and the automotive sector,” said ABB CFO Timo
Ihamuotila.
“We
remain firmly focused on operational performance and the integration of
GEIS; excluding the GEIS impact, our operational margin improved. We
are well on track with the Power Grids separation and our four new
leading businesses started operations on April 1 as planned.”
On
December 17, 2018, ABB announced an agreed sale of its Power Grids
division. Consequently, the results of the Power Grids business are
presented as discontinued operations. The company’s results for all
periods have been adjusted accordingly.
Short-term outlook
Macroeconomic
signs are mixed in Europe with growth expected to continue in the US
and China. The overall global market is growing, with rising
geopolitical uncertainties in various parts of the world. Oil prices and
foreign exchange translation effects are expected to continue to
influence the company’s results.
Q1 2019 Group results
Orders
Total
orders were up 3 percent (1 percent in US dollars), led by order growth
in the Electrification Products and Robotics and Motion divisions.
Orders were well-supported by positive base order momentum. Third-party
base orders were up 6 percent (8 percent in US dollars); all divisions
and regions were up during the quarter. Large orders were below the
prior year period and represented 3 percent of total orders, down from
10 percent. The order backlog was up 6 percent (2 percent in US dollars)
compared to a year ago, ending the quarter at $13.9 billion.
Service
orders were up 6 percent (6 percent in US dollars). Service orders
represent 20 percent of total orders, up from 19 percent last year.
Changes
in the business portfolio including impacts from the acquisition of GE
Industrial Solutions (“GEIS”) and from the establishment of the Linxon
Joint Venture resulted in a net positive impact of 4 percent on total
orders. Foreign exchange translation effects had a net negative impact
of 6 percent on total orders.
Market overview
Performance on a regional basis was balanced during the quarter:
- Total orders from Europe were 3 percent lower (8 percent in US dollars), driven mainly by lower large orders. Positive contributions from Denmark, France and Italy were outweighed by declines in Germany, Norway and Sweden. Base orders grew 6 percent in Europe.
- Total orders from the Americas increased 9 percent (28 percent in US dollars). Orders from the United States rose 7 percent (33 percent in US dollars) and good growth was also evident in Canada and several South American countries including Chile. Base orders were up 7 percent in the Americas.
- In Asia, Middle East and Africa (AMEA), total orders were up 5 percent (7 percent lower in US dollars), with strong growth from Singapore, Japan, Australia, South Korea and China more than offsetting slower performance from countries including Saudi Arabia, Egypt, South Africa and India. In China, orders increased 6 percent (5 percent in US dollars). Base orders were 4 percent higher in the AMEA region.
Demand was mixed across ABB’s key customer segments:
- In industries, order momentum continued to be strong in select process industries such as from pulp and paper and mining customers, reflecting increased maintenance spend alongside a supportive commodity price environment. This benefited particularly ABB’s motion and industrial automation orders intake, including healthy demand for services offerings and ABB Ability™ solutions. Discrete manufacturing and automotive sector activity slowed during the quarter, while 3C activity remained subdued.
- Transport and infrastructure demand was healthy, with continued investments in rail and specialty marine vessels. Orders for ABB’s e-mobility offering and for data center infrastructure grew strongly. Construction demand was robust, with ongoing investment in commercial buildings such as hospitals and resorts.
Revenues
Revenues
improved 4 percent (6 percent in US dollars) with strong growth in
Electrification Products and Robotics and Motion, and a steady
performance in Industrial Automation.
Service
revenues were up 6 percent (6 percent in US dollars). Services
represented 19 percent of total revenues, the same level as in the prior
year period.
Business
portfolio changes including impacts from the acquisition of GEIS and
from the establishment of the Linxon JV contributed a net positive of 9
percent to reported revenues. Changes in exchange rates resulted in a
negative translation impact on reported revenues of 7 percent.
The book-to-bill ratio for the quarter was 1.11x compared to 1.17x in the previous year period.
Operational EBITA
Operational
EBITA of $766 million was up 2 percent in US dollars (10 percent in
local currencies) compared to the prior year period. The operational
EBITA margin stood at 11.2 percent and was 50 basis points lower
year-on-year.
In
the first quarter period, the impact of GEIS’ integration on the
operational EBITA margin was approximately 100 basis points while
stranded costs weighed a further 100 basis points. Stranded costs are
services provided by the group to Power Grids that do not qualify to be
reported as discontinued operations and which the group expects to be
predominantly transferred to Power Grids or eliminated by the closing of
the transaction, which is expected by first half of 2020. Stranded
costs of $67 million were recognized in the Corporate and Other
operational EBITA result, $9 million lower than the previous year.
Net income, basic and operational earnings per share
Net
income from continuing operations was $415 million. Discontinued
operations realized $149 million net income. Group net income
attributable to ABB was $535 million, 6 percent lower year on year.
Basic earnings per share was $0.25, 6 percent lower year on year.
Operational earnings per share of $0.31 was 3 percent lower and up 5
percent in constant currency terms3.
Cash flow from operating activities
Cash
flow from operating activities of -$256 million compares to -$518
million in the first quarter of 2018. Compared to the prior year
quarter, cash flow from operating activities in continuing operations
strengthened to -$97 million from -$365 million, while cash flow from
discontinued operations of -$159 million was steady versus the prior
year period.
In
the first quarter 2019, cash flow from continuing operating activities
benefited from the delayed payment of employee incentives and strong
milestone payment collection from ongoing projects, which outweighed
high payments for inventory. ABB expects solid cash delivery for the
full year, weighted to the second half.
Net working capital as a percentage of revenues was 11.2 percent, from 12.9 percent in the prior year period.
Effective October 1, 2018, the Power Grids division was moved from continuing to discontinued operations. All previously reported amounts have been restated consistent with these portfolio changes. Corporate & Other result is inclusive of inter-division eliminations.
Electrification Products
Total
orders were up 6 percent (21 percent in US dollars) and third-party
base orders were up 5 percent (22 percent in US dollars). All business
areas grew, with strength evident in systems and low voltage products,
especially in data centers and EV charging. On a regional basis, orders
grew across all geographies. Revenues improved 5 percent (23 percent in
US dollars). Operational EBITA margin was 280 basis points lower
year-on-year at 12.4 percent, mainly reflecting 270 basis points
dilution from GEIS which, prior to being acquired by ABB, in Q1 and Q2
2018 also exhibited relative margin weakness. Excluding GEIS, margins
benefited from positive volumes offset by mix effects.
Industrial Automation
Total
orders were 5 percent lower (11 percent in US dollars), weighed by a
tough comparative base for large orders, particularly in the European
region. Third-party base orders advanced well, up 7 percent (1 percent
in US dollars), evidencing strong demand from process industries and in
marine. The order backlog was up 2 percent (5 percent lower in US
dollars) at quarter end compared to the prior year period. Revenues were
steady in comparable terms (7 percent lower in US dollars). The
operational EBITA margin at 13.0 percent reflects mainly negative mix
effects and investments in growth.
Robotics and Motion
Total
orders were up 5 percent (steady in US dollars), despite a tough
comparative base and a more challenging market environment. Order growth
was strong for drives and motors, reflecting continued growth in
process industries. In robotics, order growth was steady, with higher
awards of solutions orders. On a regional basis, order growth was led by
AMEA. The order backlog ended the quarter up 9 percent (2 percent in US
dollars). Revenues improved 7 percent (1 percent in US dollars) while
the operational EBITA margin at 15.1 percent was 20 basis points lower
compared to the prior year period, primarily due to mix effects in
robotics.
A leader focused in digital industries
On
December 17, 2018, ABB announced fundamental actions to focus, simplify
and lead in digital industries for enhanced customer value and
shareholder returns. For further information please see ABB.com/writing-the-future.
On February 28, 2019, ABB presented its Strategy, including details of
its four leading businesses to the investor and analyst community at a
Strategy update event. For further information please see ABB.com/strategy-update-2019.
ABB’s management team has established two clear priorities for 2019: running the business and managing the transformation.
Business highlights
During
the first quarter, a continued focus on profitable growth delivered
another solid quarter of revenue growth demonstrating the quality in the
new ABB portfolio. ABB announced on March 26, 2019, that it had been
awarded a contract to supply a comprehensive power and propulsion
package, including ABB Ability™ solutions, for the construction of
China’s first domestically built cruise ship.
GEIS’
business unit integration with existing Electrification Products’
business lines continued apace. ABB remains on track to deliver the
expected ~$200 million of annual cost synergies during 2022.
A
significant global software partnership agreement with Dassault
Systèmes was announced February 28, 2019, adding to ABB’s strong partner
network for industrial digitalization, including Microsoft Azure and
HPE. With this partnership, ABB will develop and provide customers with
advanced digital twins, enabling customers to run ABB Ability™ solutions
and their operations with improved efficiency, flexibility and
sustainability.
ABB
strengthened its relationship with Ericsson, signing a Memorandum of
Understanding on April 1, 2019. The two companies will collaborate in
the research of wireless automation technologies, focusing on “factory
of the future” opportunities enabled by 5G connectivity.
Transformation update
Several
of ABB’s transformation milestones were achieved during the first
quarter. An experienced management team is now in place to lead the
Power Grids’ carve-out process and the separation of the business is on
track. The implementation of ABB’s new operating model, ABB-OS™, is
underway. A strong project team to oversee the simplification program
for ABB-OS™ has been in place since the start of the first quarter.
During the quarter, a new, business-led board that will govern ABB’s
Global Business Services efforts was established and the sales
organization was transferred to the businesses. Effective April 1, 2019,
ABB’s four leading businesses became operational.
ABB
expects a total of ~$500 million annual run-rate cost reductions across
the group with $150-200 million run-rate targeted during 2019 and the
full run-rate targeted during 2021. ABB-OS™ savings in 2019 will be
achieved mainly through the streamlining of group functions and country
organizations as they move to the businesses and the establishment of a
new leaner Corporate structure.
Short- and long-term outlook
Macroeconomic
signs are mixed in Europe with growth expected to continue in the US
and China. The overall global market is growing, with rising
geopolitical uncertainties in various parts of the world. Oil prices and
foreign exchange translation effects are expected to continue to
influence the company’s results.
ABB’s
four new businesses are either the global #1 or #2 player in attractive
markets with strong secular drivers. The company’s addressable market
for its new businesses Electrification, Industrial Automation, Motion,
and Robotics and Discrete Automation is expected to grow long term by
3.5-4 percent per annum.
More information
The Q1 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.
ABB
will host a media call today starting at 09:00 a.m. Central European
Summer Time (CEST) (08:00 a.m. BST, 03:00 a.m. EDT). The event will be
accessible by conference call. The media conference call dial-in numbers
are:
UK +44 207 107 0613
Sweden +46 8 5051 0031
Rest of Europe, +41 58 310 5000
US and Canada +1 866 291 4166 (toll-free) or +1 631 570 5613 (long-distance charges)
Lines will be open 10-15 minutes before the start of the call.
A
conference call and webcast for analysts and investors is scheduled to
begin today at 2:00 p.m. CEST (1:00 p.m. BST, 08:00 a.m. EDT). The
webcast will be accessible on the ABB website at: new.abb.com/investorrelations/. The analyst and investor conference call dial-in numbers are:
UK +44 207 107 0613
Sweden +46 8 5051 0031
Rest of Europe +41 58 310 5000
US and Canada +1 866 291 4166 (toll-free) or +1 631 570 5613 (long-distance charges)
A recorded session will be available as a webcast one hour after the end of the conference call.
ABB (ABBN:
SIX Swiss Ex) is a pioneering technology leader with a comprehensive
offering for digital industries. With a history of innovation spanning
more than 130 years, ABB is today a leader in digital industries with
four customer-focused, globally leading businesses: Electrification,
Industrial Automation, Motion, and Robotics & Discrete Automation,
supported by its common ABB Ability™ digital platform. ABB’s
market-leading Power Grids business will be divested to Hitachi in 2020.
ABB operates in more than 100 countries with about 147,000 employees. www.abb.com
INVESTOR CALENDAR 2019
|
|||
Annual General Meeting
|
May 2, 2019
|
||
Ex-dividend
|
May 7, 2019*
|
||
Second Quarter 2019 results
|
July 25, 2019
|
||
Third Quarter 2019 results
|
October 23, 2019
|
Important notice about forward-looking information
This
press release includes forward-looking information and statements as
well as other statements concerning the outlook for our business,
including those in the sections of this release titled “Short-term
outlook”, “Operational EBITA”, “Cash flow from operating activities”,
“Transformation update” and “Short and long-term outlook”. These
statements are based on current expectations, estimates and projections
about the factors that may affect our future performance, including
global economic conditions, the economic conditions of the regions and
industries that are major markets for ABB Ltd. These expectations,
estimates and projections are generally identifiable by statements
containing words such as “anticipates”, “aims”, “expects,” “believes,”
“estimates,” “targets,” “plans,” “is likely”, “intends” or similar
expressions. However, there are many risks and uncertainties, many of
which are beyond our control, that could cause our actual results to
differ materially from the forward-looking information and statements
made in this press release and which could affect our ability to achieve
any or all of our stated targets. The important factors that could
cause such differences include, among others, business risks associated
with the volatile global economic environment and political conditions,
costs associated with compliance activities, market acceptance of new
products and services, changes in governmental regulations and currency
exchange rates and such other factors as may be discussed from time to
time in ABB Ltd’s filings with the U.S. Securities and Exchange
Commission, including its Annual Reports on Form 20-F. Although ABB Ltd
believes that its expectations reflected in any such forward-looking
statement are based upon reasonable assumptions, it can give no
assurance that those expectations will be achieved.
Zurich, April 17, 2019
Timo Ihamuotila, CFO
1 Growth
rates for orders, order backlog and revenues are on a comparable basis
(local currency adjusted for acquisitions and divestitures).
2 For non-GAAP measures, see the “Supplemental Financial Information” attachment to the press release.
3 EPS growth rates are computed using unrounded amounts. Comparable operational earnings per share is in constant currency (2014 exchange rates not adjusted for changes in the business portfolio).
4 Constant currency (not adjusted for portfolio changes).
5 Amount represents total for both continuing and discontinued operations.
2 For non-GAAP measures, see the “Supplemental Financial Information” attachment to the press release.
3 EPS growth rates are computed using unrounded amounts. Comparable operational earnings per share is in constant currency (2014 exchange rates not adjusted for changes in the business portfolio).
4 Constant currency (not adjusted for portfolio changes).
5 Amount represents total for both continuing and discontinued operations.
Contacts
ABB LtdAffolternstrasse 44
8050 Zurich
Switzerland
Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com
or
Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
Permalink : https://www.aetoswire.com/news/abb-resilient-growth/en
No comments:
Post a Comment