ABB Cuts 2021 Guidance as Revenue Hit by Supply-Chain Constraints -- Update
By Ed Frankl
ABB Ltd. cut its full-year growth guidance as a tight supply
chain bit into its revenue, despite orders climbing, the company
said as it unveiled third-quarter results.
The Swiss engineering company said Thursday that it anticipates
comparable revenue growth in 2021 of 6%-8%, down from "just below"
10% previously, as logistical issues continued to impact customer
Revenue at the Zurich-based company ticked up 7% in the three
months to the end of September to $7.03 billion from $6.58 billion
in the same period last year, ABB said.
Sales were hampered by supply-chain constraints primarily
related to a lack of semiconductors, a tight job market, pandemic
restrictions and imbalances in the overall supply chain, it said.
Like-for-like sales rose 4%, the company said.
Orders increased 29% to $7.87 billion, with all business areas
achieving double-digit growth rates, ABB said.
ABB's closely watched operational earnings before interest,
taxes, and amortization rose to $1.06 billion from $787 million a
year earlier, driven by increased profit in its process automation
segment, it said. Its margin expanded to 15.1% from 12% in the
third quarter of 2020.
ABB confirmed its margin guidance, with an operational-Ebita
margin in 4Q that is expected to decline slightly
quarter-on-quarter, in line with historical patterns.
"The third quarter painted a mixed picture, containing on one
hand a high level of demand driving strong order growth, while on
the other hand the tight supply chain impacted our revenues more
than anticipated," Chief Executive Bjorn Rosengren said.
The company said it continues to expect a strong pace of
improvement from 2020 toward the 2023 operational-Ebita margin
target of the upper half of the 13%-16% range.
ABB posted net profit that fell to $652 million in the quarter,
from $4.53 billion in the same period of 2020. Last year's figure
included the book gain related to the divestment of its power-grids
unit to Hitachi.
Order growth in the U.S., at 31%, outstripped China, which rose
by 16%, although the latter country helped drive orders in its
automotive segment, the company said.
Cash flow from operating activities jumped to $1.10 billion from
$408 million in the same period last year, ABB said.
"Our cash generation was very strong, leaving ample headroom on
our balance sheet to support both organic growth and acquisitions
as well as rewarding shareholders," Mr. Rosengren added.
Write to Ed Frankl at firstname.lastname@example.org
(END) Dow Jones Newswires
October 21, 2021 02:31 ET (06:31 GMT)
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