"ABB delivered its second consecutive quarter of revenue growth.
Underlying operational performance improved considering last year's
communicated correction of insurance reserves," said ABB CEO Ulrich
Spiesshofer. "We are seeing the first signals of market stabilization in
some process industries, as well as some growth signals in early-cycle
businesses. Power Grids' order pattern for the quarter reflects a
Chinese HVDC project, which was awarded in Q1 2016. Overall, underlying
demand in China remains positive."
"We commercially launched ABB Ability, our industry-leading digital
offering and are really pleased with the very positive customer
response," he said. "With the completed sale of the cables business and
the recently announced acquisition of B&R, an innovation leader in
machine and factory automation, we continue our active portfolio
management, as we further de-risk the portfolio and continue to shift
ABB's center of gravity to higher growth segments and strengthened
Macroeconomic and geopolitical developments are signaling a mixed
picture with continued uncertainty. Some macroeconomic signs in the US
remain positive and growth in China is expected to continue. The overall
global market remains impacted by modest growth and increased
uncertainties, e.g., Brexit in Europe and geopolitical tensions in
various parts of the world. Oil prices and foreign exchange translation
effects are expected to continue to influence the company's results.
With this and the ongoing transformation of ABB, 2017 is expected to be
a transitional year.
Q1 2017 Group results
Orders decreased 3 percent (9 percent in US dollars) compared with the
first quarter a year ago, driven primarily by lower large order awards.
Large orders ($15 million and above) were 34 percent lower (50 percent
in US dollars) due to fewer large order awards in Industrial Automation
and Power Grids. Large orders represented 10 percent of total orders
compared with 17 percent in the same quarter a year ago. Large orders in
the quarter included a $280 million high-voltage direct current systems
order to link the power networks of France and the UK. Base orders
(below $15 million) were 2 percent higher (1 percent lower in US
dollars), improving in Electrification Products, Robotics and Motion and
Industrial Automation. Total service and software orders increased 7
percent (5 percent in US dollars) compared with the first quarter of
2016 and represented 24 percent of total orders compared to 21 percent
for the same period a year ago.
The order backlog at the end of March 2017 amounted to $23 billion, 2
percent lower (11 percent in US dollars) compared with the end of the
first quarter of 2016. The book-to-bill2 ratio in the first
quarter was 1.07x compared with 1.17x in the first quarter of 2016.
Demand patterns in ABB's three regions:
Demand patterns in ABB's three major customer sectors:
Revenues increased 3 percent (1 percent lower in US dollars) in the
first quarter with revenues higher in Electrification Products, Robotics
and Motion and Power Grids. Total services and software revenues was 1
percent higher (1 percent lower in US dollars) and represented 18
percent of total revenues unchanged compared with a year ago.
Operational EBITA was $943 million, 2 percent higher in constant
currencies (1 percent lower in US dollars). Operational EBITA margin was
12.1 percent, unchanged compared with the same quarter a year ago.
Operational EBITA included margin improvements in Electrification
Products, Industrial Automation and Power Grids and a margin decrease in
Robotics and Motion. In addition, the comparable operational EBITA in
2016 was 60 bps higher due to the cumulative elimination of certain
intercompany insurance reserves of $50 million in 2016.
Net income, Basic and Operational earnings per share
Net income increased to $724 million from $500 million and basic
earnings per share was $0.34 compared with $0.23 for the same quarter of
2016. This increase includes the impacts of the capital gain from
divestment of the high voltage cable business and other charges recorded
to adjust liabilities for retained obligations of this business. In
addition, acquisition-related expenses and certain non-operational items
negatively impacted net income while foreign exchange and commodity
timing differences had a positive impact. The lower effective tax rate
reflects the impacts from the cable divestment.
Operational EPS was $0.28 compared to $0.28 for the same quarter of
2016, an increase of 1 percent in constant currency2.
Cash flow from operating activities
Cash flow from operating activities was $509 million compared to $252
million in 2016 due to the change in timing of incentive payments in
2017 to the second quarter in 2017 due to impacts of the South Korea
ABB announced on February 22, 2017 that it had uncovered a sophisticated
criminal scheme involving significant embezzlement and misappropriation
of funds in its South Korean subsidiary. The company immediately
launched a thorough investigation, involving internal and external
parties, which is progressing well. ABB is working with the local police
on the investigation as well as with Interpol. The company has checked
and reconfirmed the balances of its global bank accounts and can confirm
that this situation is limited to South Korea. ABB has a zero-tolerance
approach to unethical behavior and maintains the highest standards
regarding integrity and ethical business practices. ABB has started
implementing disciplinary consequences and will continue to do so as
Q1 divisional performance
($ in millions, unless otherwiseindicated)
Corporate & other (incl.inter-division elimination)
Total orders increased reflecting improved market demand in the United
States, China and Germany. Revenues grew 3 percent in the quarter
(steady in US dollars), and operational EBITA margin improved due to
volume, mix, productivity and cost savings.
Robotics and Motion
Total orders grew 7 percent (4 percent in US dollars), with third-party
base orders increasing 13 percent (10 percent in US dollars) on
continued strong demand patterns in robotics and light industry.
Revenues improved 5 percent (3 percent in US dollars). Operational EBITA
margin was impacted by unfavorable mix and low capacity utilization in
the quarter. Demand pattern and increasing backlog will ease this
situation over time.
Total orders reflect lower large orders related to specialty vessels.
The improvement in the underlying demand for products, services and
software was seen in the positive base order development in the quarter.
Revenues declined 5 percent (7 percent in US dollars) on lower revenue
coming from the order backlog. Operational EBITA margin increased 130
basis points to 13.3 percent due to positive mix and successfully
implemented cost reduction and productivity measures.
Total orders were lower than the same quarter a year ago, primarily due
to the timing of large contract awards. The positive base order
development in many markets could not offset soft demand in the Middle
East and a tough comparable in China last year. Revenues were 4 percent
higher (2 percent lower in US dollars) due to steady execution of a
healthy order backlog. Operational EBITA margin was 10.3 percent, driven
by higher revenues, improved productivity, solid project execution and
continued cost savings.
Next Level strategy - Stage 3
ABB continued implementation of its Next Level strategy during the
quarter by further shifting its center of gravity to higher growth
segments, strengthening its competitiveness and de-risking the portfolio.
ABB announced the acquisition of B&R, an innovation leader in machine
and factory automation on April 4, 2017. This acquisition will close
ABB's historic gap in machine and factory automation and will create a
uniquely comprehensive automation portfolio for customers globally. B&R
is a proven innovation leader in Programmable Logic Controllers (PLC),
Industrial PCs (IPC) and servo motion-based machine and factory
automation and will strengthen ABB's number 2 position in industrial
automation. The transaction is expected to close in summer 2017.
ABB commercially launched ABB Ability offering more than 180 solutions
across all customer segments which combines ABB's portfolio of digital
solutions and services, cementing the group's leading position in the
Fourth Industrial Revolution and supporting the competitiveness of ABB's
four entrepreneurial divisions.
In addition, ABB successfully completed the divestment of its
high-voltage cables and cable accessories businesses to NKT Cables.
Macroeconomic and geopolitical developments are signaling a mixed
picture with continued uncertainty. Some macroeconomic signs remain
positive in the United States and growth in China is expected to
continue. The overall global market remains impacted by modest growth
and increased uncertainties, e.g., Brexit in Europe and geopolitical
tensions in various parts of the world. Oil prices and foreign exchange
translation effects are expected to continue to influence the company's
results. With this and the ongoing transformation of ABB, 2017 is
expected to be a transitional year.
The attractive long-term demand outlook in ABB's three major customer
sectors - utilities, industry and transport & infrastructure - is driven
by the Energy and Fourth Industrial Revolutions.
ABB is well-positioned to tap into these opportunities for long-term
profitable growth with its strong market presence, broad geographic and
business scope, technology leadership and financial strength.
The Q1 2017 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 press conference today starting at 10:00 a.m. Central
European Time (CET) (9:00 a.m. BST, 4:00 a.m. EDT). The event will be
accessible by conference call. Callers from the UK should dial +44 203
059 58 62. From Sweden, the number to dial is +46 85 051 00 31, and from
the rest of Europe, +41 58 310 50 00. Callers from the US and Canada
should dial +1 866 291 41 66 (toll free) or +1 631 570 56 13
(long-distance charges apply). 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. CET (1:00 p.m. BST, 8:00 a.m. EDT). Callers
from the UK should dial +44 203 059 58 62. From Sweden, the number to
dial is +46 85 051 00 31, and from the rest of Europe, +41 58 310 50 00.
Callers from the US and Canada should dial +1 866 291 41 66 (toll free)
or +1 631 570 56 13 (long-distance charges apply). Callers are requested
to phone in 10 minutes before the start of the call. The call will also
be accessible on the ABB website and a recorded session will be
available as a podcast one hour after the end of the conference call and
can be downloaded from our website www.abb.com/investorrelations.
ABB (ABBN: SIX Swiss Ex) is a pioneering technology leader in
electrification products, robotics and motion, industrial automation and
power grids, serving customers in utilities, industry and transport &
infrastructure globally. Continuing more than a 125-year history of
innovation, ABB today is writing the future of industrial digitalization
and driving the Energy and Fourth Industrial Revolutions. ABB operates
in more than 100 countries with about 132,000 employees. www.abb.com
Third quarter 2017 results
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", "Outlook", and "Next Level strategy - Stage 3". 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 "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 20, 2017Ulrich Spiesshofer, CEO
1 Growth rates for orders, base orders, revenues and order
backlog are on a comparable basis (local currency adjusted for
acquisitions and divestitures). US$ growth rates are presented in Key
Figures table2 For a reconciliation of non-GAAP
measures, see "Supplemental Reconciliations and Definitions" in the
attached Q1 2017 Financial Information3 EPS growth
rates are computed using unrounded amounts. Comparable operational
earnings per share is in constant currency (2014 exchange rates and not
adjusted for changes in the business portfolio)4 Constant
currency (not adjusted for portfolio changes)
View source version on businesswire.com: http://www.businesswire.com/news/home/20170419006804/en/
[ Back To NFVZone's Homepage ]