ABB Stock Up On Surge In Q2 Profit, Positive Outlook

Shares of ABB Ltd. were gaining around 3 percent in the trading in Switzerland after the Swiss engineering company reported Thursday significantly higher profit in its second quarter on strong revenue growth. Orders, meanwhile, declined from last year. Looking ahead, the company said it sees growth in its third quarter, and maintained revenue forecast for fiscal 2023.

Bjorn Rosengren, CEO, said, “The positive book-to-bill ratio and new record-high Operational EBITA earnings and margin add to our confidence about ABB’s 2023 outcome allowing us to sharpen our margin expectations.”

For the third quarter, ABB expects a low double-digit comparable revenue growth and the Operational EBITA margin to be slightly up from the 16.6 percent reported in the third quarter last year.

The divestment of the Power Conversion division at around $500 million would result in a nonoperational book gain of around $50 million in the third quarter.

In fiscal 2023, despite current market uncertainty, the company still anticipates comparable revenue growth to be at least 10 percent. The company now projects annual operational EBITA margin to be above 16 percent, while previous expectation was to improve Operational EBITA margin.

For the second quarter, net income attributable to ABB surged 139 percent to $906 million from last year’s $379 million. Basic earnings per share were $0.49, up 145 percent from $0.20 a year ago.

Operational EBITA grew 25 percent to $1.43 billion from last year’s $1.14 billion. Operational EBITA margin was 17.5 percent, up 2 percentage points from 15.5 percent last year, with all four business areas above 15 percent.

Revenues for the quarter climbed 13 percent to $8.16 billion from last year’s $7.25 billion. Comparable revenues went up 17 percent. The company said the customer activity remained robust throughout the period. The results mainly reflected increased volumes through execution of the order backlog, combined with a robust price contribution in the midsingle digit range.

Revenues increased in all business areas, supported by comparable growth in virtually all divisions, it said.

In the quarter, orders dropped 2 percent to $8.67 billion from prior year’s $8.81 billion. Orders grew 2 percent on a comparable basis.

Order momentum was strongest in the systems- and project-related businesses, mainly driven by the medium voltage segment and process-related industries.

Order intake increased in the Americas by 5 percent, mainly with mid-single digit growth in the United States. Europe as well as Asia, Middle East and Africa posted drop in orders.

In Switzerland, ABB shares were trading at 34.37 Swiss francs, up 2.75 percent.

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