Strong performance in a recovery quarter
- Orders $8.0 billion, +32%; comparable1 +24%
- Revenues $7.4 billion, +21%; comparable +14%
- Income from operations $1,094 million; margin 14.7%
- Operational EBITA1 $1,113 million; margin1 15.0%
- Basic EPS $0.37; +150%2
- Cash flow from operating activities and from operating
activities continuing operations was $663 million
ABB (SWX:ABBN):
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Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX
Swiss Exchange
KEY FIGURES
CHANGE
CHANGE
($ millions, unless otherwise
indicated)
Q2 2021
Q2 2020
US$
Comparable1
H1 2021
H1 2020
US$
Comparable1
Orders
7,989
6,054
32%
24%
15,745
13,400
18%
11%
Revenues
7,449
6,154
21%
14%
14,350
12,370
16%
11%
Gross Profit
2,508
1,987
26%
4,776
3,897
23%
as % of revenues
33.7%
32.3%
+1.4 pts
33.3%
31.5%
+1.8 pts
Income from operations
1,094
571
92%
1,891
944
100%
Operational EBITA1
1,113
651
71%
59% 3
2,072
1,287
61%
50% 3
as % of operational revenues 1
15.0%
10.6%
+4.4 pts
14.4%
10.4%
+4 pts
Income from continuing operations, net of
tax
789
395
100%
1,340
721
86%
Net income (loss) attributable to ABB
752
319
136%
1,254
695
80%
Basic earnings per share ($)
0.37
0.15
150%2
0.62
0.33
91%2
Cash flow from operating activities4
663
680
-3%
1,206
103
n.a.
Cash flows from operating activities in
continuing operations
663
648
2%
1,186
252
n.a.
“I am very encouraged that we have delivered a
clearly improved performance. The strong upturn in Operational
EBITA margin reflects the recovery in demand in combination with
increased internal efficiency and the strength of ABB’s
electrification and automation offerings. We will continue to
sharpen our focus on profitability through innovation,
sustainability and digitalization, while actively managing our
portfolio.”
Bj�rn Rosengren, CEO
CEO Summary
The underlying customer activity in the second quarter increased
slightly on a sequential basis. However, orders and revenues
increased significantly compared with last year’s low levels, when
the adverse business impact of the COVID-19 pandemic was at its
peak. Double-digit order growth was reported in all business areas
driven by a broad-based improvement across most short-cycle
customer segments and a positive development in several
process-related businesses. Growth was to some extent supported by
customers stock-building.
We improved Operational EBITA by 71% and the Operational EBITA
margin increased to the high level of 15.0%, up 440 basis points,
year-on-year. Results were supported by the recovery in demand in
combination with the impact from earlier implemented cost measures,
as well as ongoing restricted travel spending. An additional effect
was derived from proactive price measures taken to mitigate the
expected increase in headwinds from higher commodity prices. I am
pleased to see how well the team has handled certain component
shortages, whereby managing to limit the impact on customer
deliveries. Despite active management of the situation the tight
supply of certain components, such as semiconductors, is expected
to continue in the coming quarter. The strong earnings converted
into cash flow from operating activities in continuing operations
of $663 million, improving slightly from last year. I am pleased
with how the team managed to keep net working capital broadly
stable year-on-year in this strong growth environment. Our strong
cash generation in the first half of the year provides a good base
to deliver on our guidance of a solid cash flow in 2021.
During the second quarter Robotics & Discrete Automation
broadened its automation offering to the construction segment.
Robotic automation is not yet widely used in this industry and we
see potential to increase efficiency in areas such as fabrication
of modular homes, welding and material handling. Additionally, it
was good to receive the prestigious Innovation and Entrepreneurship
in Robotics & Automation (IERA) award for our PixelPaint
robotic non-overspray technology for the automotive industry.
We made further progress toward our long-term sustainability
target of reducing emissions and achieving carbon neutrality in our
own operations by 2030 by joining three initiatives led by the
international non-profit Climate Group. They include electrifying
our fleet of more than 10,000 vehicles, sourcing 100% renewable
electricity, as well as establishing energy efficiency targets and
continuing to deploy energy management systems at our sites.
Furthermore, our targets have received approval by the Science
Based Targets initiative (SBTi) confirming they are in line with
the Paris Agreement. ABB also joined the Business Ambition for
1.5°C Campaign, a global coalition of UN agencies, business and
industry leaders, led by the UN Global Compact (UNGC).
I am pleased to see that our increased focus on acquired growth
resulted in Robotics & Discrete Automation acquiring ASTI,
after the close of the second quarter. It is a leading global
mobile robotics manufacturer and this transaction will expand our
offering to make ABB the only company to offer a holistic
automation portfolio for the entire value chain, helping customers
replace today’s linear production lines with fully flexible
networks. Going forward, I expect to see more of these small- to
mid-sized bolt-on deals as the divisions fill up their target
pipelines. We have also made good progress with the announced
portfolio changes and I expect to announce an agreement for a
divestment during the third quarter.
Bj�rn Rosengren CEO
Outlook
ABB anticipates growth rates in the third quarter of 2021
to reflect the low level of business activity in Q3 2020. Based on
the current market situation, comparable revenues are expected to
grow ~10%, with orders growing more than revenues.
In the third quarter, higher demand and service revenues
should be supportive to the Operational EBITA margin year-on-year,
however some sequential adverse impact is expected from rising raw
material costs, component shortages as well as increasing travel
spend as pandemic-related restrictions ease.
ABB anticipates comparable revenue growth of just below 10%
(update from ~5% or more) for full-year 2021, with the
process industry related part of the business expected to recover
during the second half of the year.
In 2021, ABB expects a strong (update from steady) pace
of improvement from 2020 toward the 2023 operational EBITA margin
target of the upper half of the 13%-16% range.
The complete press release including the appendices is available
at www.abb.com/news.
ABB (ABBN: SIX Swiss Ex) is a leading global technology
company that energizes the transformation of society and industry
to achieve a more productive, sustainable future. By connecting
software to its electrification, robotics, automation and motion
portfolio, ABB pushes the boundaries of technology to drive
performance to new levels. With a history of excellence stretching
back more than 130 years, ABB’s success is driven by about 105,000
talented employees in over 100 countries.
1 For a reconciliation of non-GAAP measures, see “supplemental
reconciliations and definitions” in the attached Q2 2021 Financial
Information. 2 EPS growth rates are computed using unrounded
amounts. 3 Constant currency (not adjusted for portfolio changes).
4 Amount represents total for both continuing and discontinued
operations.
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