ABB with continued high demand – Switzerland
ZURICH – ABB also benefited from strong demand in the second quarter. The bottom line is that the industrial group earned less because of the abandonment of activities in Russia and because of a special charge.
The order intake rose by 10 percent to 8.81 billion US dollars, as the manufacturer of industrial robots, charging stations for electric cars or automation solutions announced on Thursday. On a comparable basis, the increase was even 20 percent. The second quarter was characterized by brisk demand. All business areas with all divisions had recorded double-digit increases.
ABB described the demand from the segments mechanical engineering, food and beverages, general industry and the automotive industry as very positive because of the electric vehicles.
Currency effects depress sales
When it comes to sales, the situation is somewhat different. At 7.25 billion, it was 3 percent below the previous year’s figure, while on a comparable basis it was up 6 percent. Currency effects in particular had a negative impact of 7 percent, and portfolio changes also contributed 2 percent to the drop in sales.
The exchange rate changes more than offset the positive impact of good pricing and modest volume growth, ABB said.
But the delivery dates for components also had a slowing effect, albeit not as much as in the previous quarter. And the company describes the lockdowns in China as another challenge for supplying customers.
Operating profit (EBITA) increased 9 percent in constant currency to $1,136 million, with corresponding margin improving 0.5 percentage points to 15.5 percent. The effects of the sale of Dodge’s high-margin business and the exchange rate influence were offset by the operating performance, it said.
Net income impacted by special charges
However, net profit fell by 50 percent to 379 million. This decrease was primarily related to charges totaling approximately $250 million resulting from the exit from a legacy non-core business project. The decision to withdraw from activities in Russia also contributed to this, which resulted in a financial burden of 57 million dollars.
For the third quarter of 2022, ABB is forecasting double-digit comparable revenue growth and an improvement in the operational EBITA margin compared to the previous quarter. However, the margin forecast excludes the positive effect of 60 basis points from special items in the second quarter, which resulted from the exit from the old project and the sale of a property.
For 2022 as a whole, the company continues to expect a steady improvement in the margin, probably to the target of at least 15 percent from 2023. The positive market dynamics and the high order backlog will help here.
(sda / awp)