ABB: Q3 2022 Results

Strong order progress, excessive revenues and traditionally excessive Operational EBITA margin

• Orders $8.2 billion, +4%; comparable1 +16%
• Revenues $7.4 billion, +5%; comparable +18%
• Income from operations $708 million; margin 9.6%
• Operational EBITA1 $1,231 million; margin1 16.6%
• Basic EPS $0.19; -41percent2
• Cash circulate from working actions $791 million

Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange

ABB (SWX:ABBN):

This press launch options multimedia. View the complete launch right here: https://www.businesswire.com/news/home/20221019006028/en/

“In the third quarter, we delivered high order growth, a strong top-line development and a historically high margin. We have not seen any material changes in the underlying customer activity. It looks like we are likely to achieve our 2023 margin target one year early. We are now starting to see the real benefits of the ABB Way operating model.”

Björn Rosengren, CEO

CEO abstract

There had been a number of optimistic takeaways from the third quarter 2022. Strong order progress of 4% (16% comparable), resulted in a book-to-bill ratio of above one for the seventh consecutive quarter. Revenues had been supported by the sequential easing of element provide constraints facilitating buyer deliveries but additionally by a considerably decrease degree of interruptions from Covid-related lockdowns in China.

I used to be happy to see the Operational EBITA improve by 16% year-on-year and the excessive Operational EBITA margin of 16.6%, with enhancements famous in all business areas. An glorious achievement, pushed by greater volumes and operational enhancements together with good pricing execution which offset price inflation associated to uncooked supplies, freight and labor. Importantly, this indicators that our new method of working, with greater accountability, transparency and pace, is admittedly beginning to take maintain. I’m proud that we’re prone to obtain our goal of Operational EBITA margin of at the least 15% already in 2022, one yr forward of plan.

It was good to see money circulate from working actions of $791 million, the next degree than within the earlier quarter, and I anticipate an extra step up within the fourth quarter.

Orders elevated in all areas, led by a really sturdy improvement within the Americas. In whole, Europe improved strongly though some normalization of stock ranges was famous in Germany for elements of our buyer base. Asia, Middle East and Africa improved regardless of softness famous in China.

Customer exercise was at a excessive degree within the quarter with general secure to optimistic improvement in most segments exterior of discrete industries. In the latter we famous some prospects normalizing order patterns in anticipation of shorter supply lead-times as provide constraints ease. Overall, demand elevated for each the short-cycle circulate business and the systems-driven choices. Changes in alternate charges weighed on whole orders in all business areas, nevertheless the underlying buyer exercise improved. In whole, our order backlog remained at a excessive degree of $19.4 billion.

Income from operations amounted to $708 million and declined by 17% (7% fixed foreign money) year-on-year. This consists of the non-operational provision of roughly $325 million associated to the remaining issues for the legacy Kusile venture, with an analogous money circulate impression anticipated in subsequent quarters. We at the moment are resolving this matter, associated to a venture awarded in 2015. The new ABB Way working mannequin is guided by our code of conduct and is a part of our common and clear business opinions.

I’m happy in regards to the a number of portfolio administration actions within the quarter. Importantly, Motion signed two acquisitions – within the NEMA motors and Traction divisions – which can additional cement their main market positions. I additionally need to spotlight our funding into an accelerated strategic collaboration between Process Automation and Canada’s Hydrogen Optimized launched in 2020. Together we’re advancing the deployment of financial large-scale inexperienced hydrogen manufacturing techniques to decarbonize hard-to-abate industries.

We additionally introduced the early divestment of the remaining 19.9% of the Hitachi Energy three way partnership to Hitachi as they exercised the decision choice that was agreed in 2018. We don’t foresee any important acquire or loss on account of the sale and anticipate web optimistic money inflows of roughly $1.4 billion upon closing, anticipated within the fourth quarter 2022. This will additional strengthen our steadiness sheet and provides us further flexibility in our capital allocation choices. With regards to E-mobility, we stay dedicated to our plans to record the division, though we now not anticipate it to occur this yr as a result of present volatility in capital markets. Finally, simply after the shut of the third quarter we distributed Accelleron to shareholders as a dividend in form. I used to be delighted to mark the primary day of buying and selling of Accelleron by becoming a member of the administration workforce in ringing the bell on the Swiss inventory alternate. I want the workforce nice success as a individually listed firm.

Björn Rosengren

CEO

Outlook

In the fourth quarter of 2022, we anticipate a low double-digit comparable income progress, impacted by the excessive degree of revenues recorded final yr. We anticipate the everyday sample of a sequentially decrease Operational EBITA margin.

In full-year 2022, we’re prone to obtain early the 2023 goal of an Operational EBITA margin of at the least 15%, supported by elevated effectivity as we totally incorporate the decentralized working mannequin and efficiency tradition in all our divisions and powerful top-line execution.

The full press launch together with the appendices is on the market at www.abb.com/information.

ABB (ABBN: SIX Swiss Ex) is a number one international expertise firm that energizes the transformation of society and business to attain a extra productive, sustainable future. By connecting software program to its electrification, robotics, automation and movement portfolio, ABB pushes the boundaries of expertise to drive efficiency to new ranges. With a historical past of excellence stretching again greater than 130 years, ABB’s success is pushed by about 105,000 proficient workers in over 100 nations.

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