The Switzerland-based technology company, ABB, has released its third-quarter earnings report. Let’s take a closer look at the key details:
Revenue Highlights:
- ABB recorded $7.97 billion in quarterly revenue, marking an 8% increase compared to the previous year. However, this figure fell slightly short of analysts’ expectations, who predicted revenue of $8.1 billion.
Net Income:
- The company’s net profit for the third quarter reached $882 million, more than doubling the $360 million reported in the same period last year. This increase can be attributed to a non-operational provision linked to ABB’s Kusile power plant project in South Africa. Despite the significant growth, net profit still missed analysts’ expectations of $919 million.
Key Points of Interest:
Order Growth:
- ABB experienced a 2% decline in orders across the entire company, amounting to $8.05 billion. However, the company achieved a book-to-bill ratio of 1.01. Notably, orders grew by 9% in the Americas but fell by 11% in Europe and 5% in the Asia, Middle East, and Africa region. ABB’s Robotics & Discrete Automation business saw a significant decline in reported orders, decreasing by 26% due to the customers normalizing their orders and weakness in the Chinese market. On the other hand, the Process Automation business witnessed a 20% growth in orders compared to the previous year, driven by a substantial $258 million contract that will be executed over several years.
Sentiment Outlook:
- ABB expects low to mid-single digit comparable revenue growth for the fourth quarter. The company also anticipates a sequential decrease in its fourth-quarter operational earnings before interest, taxes, and amortization (Ebita) margin, which is estimated to be around 16%, down from the 17.4% reported in the third quarter. ABB mentions that this decline aligns with historical patterns. Additionally, ABB revised its full-year outlook, projecting comparable revenue growth in the low teens, compared to the previous target of at least 10%. The operational Ebita margin is now expected to fall within the range of 16.5% to 17%, as opposed to just above 16% as previously stated. ABB acknowledges that the pressure on its Robotics & Discreet Automation business is likely to persist in the next few quarters.
