ABB Reports Surge in Q3 Profit Despite Order Decline
Swiss Tech Giant ABB Ltd. Sees Significant Increase in Q3 Net Income
Swiss tech giant ABB Ltd. has reported a remarkable surge in its net income for the third quarter, with profits rising by 145% to $882 million. This impressive growth, up from $360 million the previous year, has also led to a substantial increase in basic earnings per share, which rose by 149% to $0.48 from last year’s $0.19. Additionally, the company achieved a growth of 13% in operational EBITA, amounting to $1.39 billion, and saw an 8% rise in revenues, reaching $7.97 billion compared to last year’s $7.41 billion.
Factors Driving Profit Surge and Order Decline
ABB attributes the surge in profit to pricing adjustments, order backlog conversion, and a nonoperational provision associated with the Kusile power-station project in South Africa. However, despite this success, the company reported a 2% year-on-year decline in orders, amounting to $8.05 billion. This decline is primarily attributed to changes in customer ordering patterns and inventory adjustments in China, specifically affecting the robotics-and-discrete automation segment.
Abb’s Shares Dip Following Results
Following the release of these results, ABB’s shares experienced a 5.6% decline in Zurich. The company’s net profit of $882 million and revenue of $7.97 billion fell short of analyst expectations of $919 million and $8.11 billion, respectively. Citigroup analysts have identified the decline in orders as a potential red flag for investors.
Future Outlook and Annual Projections
Looking ahead, ABB anticipates low to mid single-digit comparable revenue growth in the fourth quarter, with an operational EBITA margin around 16%. The company has also updated its annual guidance for 2023, now expecting low teens growth in comparable revenue and an operational EBITA margin of 16.5% to 17%, surpassing prior projections of at least 10% revenue growth and an operational EBITA margin above 16%. It is worth noting that these projections were already factored into consensus expectations, according to Berenberg analysts.
Swiss Tech Giant ABB Ltd. Sees Surge in Q3 Profit Despite Order Decline
Swiss tech giant ABB Ltd. has reported a significant increase in its third-quarter net income, which rose by 145% to $882 million, up from $360 million the previous year. The company’s basic earnings per share also saw a substantial rise of 149% to $0.48 from last year’s $0.19. Operational EBITA experienced a growth of 13%, amounting to $1.39 billion, while revenues rose by 8% to reach $7.97 billion, compared to last year’s $7.41 billion.
Factors Driving Profit Surge and Order Decline
The surge in profit was driven by pricing adjustments, order backlog conversion, and a nonoperational provision tied to the Kusile power-station project in South Africa. Despite this success, ABB reported a 2% year-on-year order decline to $8.05 billion due to changes in customer ordering patterns and inventory adjustments in China affecting the robotics-and-discrete automation segment.
ABB’s Shares Tumble Following Results
Following these results, ABB’s shares tumbled 5.6% in Zurich. The company missed analyst expectations of a net profit of $919 million and revenue of $8.11 billion. The decline in orders was identified as a potential red flag for investors by analysts at Citi.
Future Outlook and Annual Projections
Looking towards the fourth quarter, ABB anticipates low to mid single-digit comparable revenue growth and an operational EBITA margin around 16%. The firm updated its annual guidance for 2023, now expecting low teens growth in comparable revenue and an operational EBITA margin of 16.5% to 17%, surpassing prior projections of at least 10% revenue growth and an operational EBITA margin above 16%. However, Berenberg analysts noted that consensus expectations had already factored in these projections.
