The production machines manufacture body parts at the BMW main plant in Munich.
(Photo: dpa)
Zurich Despite tight supply chains and rising inflation, the electrical engineering group ABB got off to a good start in the current year. Thanks to volume increases and price increases, the Swiss group’s profit climbed by a fifth to $ 604 million in the first quarter, ABB announced on Thursday. According to a company survey, analysts had expected an average surplus of $562 million. “Despite numerous external uncertainties, ABB started the year with a promising performance,” said CEO Björn Rosengren.
The turnover of the Siemens rival rose from January to March on a comparable basis by seven percent to 6.97 billion dollars. Like many other industrial companies, ABB could have sold more if shortages in components, logistics and personnel had not hampered production. Order intake rose 28 percent to $9.37 billion. The increase came primarily from the areas of mechanical engineering, food and beverages, and the automotive industry. Operating margin (EBITA) climbed to 14.3 from 13.8 percent.
ABB CEO Rosengren said the industrial group had raised prices, offsetting the adverse effects of cost inflation in most business areas. This primarily affected raw materials and components such as microchips.
ABB exceeds market expectations
The robotics division in particular is suffering from the lack of chips: Order intake there grew by 60 percent compared to the same quarter of the previous year, but sales fell by 12 percent. The margin almost halved, falling from 12.4 percent to 6.7 percent. ABB warned of the future impact of the lockdowns in China on the division: “However, some operational effects are expected at the Shanghai production site in the second quarter.”
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ABB also had to accept a slight decline in the margin in its top-selling business area, electrification.
Things are looking better for the Zurich company in terms of sales growth and incoming orders. The e-mobility business, which ABB intends to list as an independent entity, more than doubled its order intake.
In a recent assessment, Vontobel analyst Mark Diethelm wrote: “Apart from robotics, profitability has exceeded expectations.” The market expected worse in view of rising cost inflation worldwide.
The company’s cash flow fell by about $1 billion as ABB stockpiled to prepare for potential further supply chain problems. Despite negative cash flow and significantly increased net debt, ABB launches a new share buyback program. The group wants to pay out three billion dollars to shareholders – to keep them happy despite all the crises.
ABB expects the market environment in the second quarter to be broadly in line with the previous quarter. Sales usually pick up in the second quarter for seasonal reasons, so a slight increase in margins is possible. The group from Zurich also confirmed the outlook for the year as a whole. ABB is aiming for a further improvement in profitability thanks to efficiency gains. From 2023, the group has set itself a value of at least 15 percent for the operating margin.
With material from Reuters.
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