ABB records strong start to 2021

ABB has announced a good first quarter for this year and expects growth to continue.

The global tech company involved mainly in robotics, power, heavy electrical equipment, and automation technology says orders of US$7.8 billion were up 6%, revenue of US$6.9b is up 11% and cash flow from operating activities is US$543 million.

Income from operations is US$797 million (margin 11.5%), operational EBITA US$959m (margin 13.8%) and basic earnings per share (EPS) is US25c, up 41%.

In New Zealand, ABB and Audi New Zealand recently partnered to provide EV charging throughout Audi’s New Zealand dealer network.

“After a busy year of creating the right set-up for the group, we are now starting to show the real potential of our underlying businesses,” ABB chief executive Björn Rosengren says.

He says demand is especially strong in the short-cycle business, “beyond our expectations”.

“The increased customer activity, in combination with the impact from previously implemented cost measures, resulted in double-digit growth in operational EBITA, and a very high first quarter margin of 13.8%.

“I am pleased to see good performance also in cash flow, which was high for a first quarter at $523 million. That said, while there was no material impact on results in the period, the progressively tighter supply of certain components such as semiconductors and plastics, is a concern.”

ABB anticipates prolonged delivery lead-times to customers in parts of its businesses in the coming quarter.

“On a separate note, we made the important launch of our new collaborative robot families,” Rosengren says.

“Through this expansion of our offering, we aim to unlock customer groups with currently a low level of automation.”

Demand is likely to have been driven by a stock build-up related to supply chain concerns, Rosengren says.

“On the downside, growth was hampered by a weak development in the cruising and oil and gas segments – albeit initial signs of stabilisation were noted.

“Overall, orders increased slightly in Europe and AMEA, with the latter supported by a stellar growth in China. Underlying business momentum improved in the Americas, driven by the US.”

Rosengren says ABB has made its e-mobility business a separate division and initiated a carve out into a separate legal structure. “These steps will allow us to prepare for a possible public listing, creating a platform for accelerated growth and value creation in this business.”

ABB anticipates growth rates in the second quarter of 2021 to reflect the low level of business activity in Q2 2020. Comparable orders and revenues are expected to grow more than 10%, with orders growing more than revenues.

In 2021, ABB expects a steady pace of improvement from 2020 toward the 2023 operational EBITA margin target of upper half of the 13%-16% range.