ABB's Rise in 3Q Earnings Falls Short of Expectations — Update
By Pierre Bertrand
ABB reported a jump in third-quarter profit and revenue, helped by pricing and backlog conversion, but missed analyst expectations.
The Switzerland-based technology company said on Wednesday that it made $882 million in quarterly net profit, compared with $360 million a year prior after having booked a nonoperational provision related to its legacy Kusile power-station project in South Africa.
Revenue in the quarter grew 8% on a reported basis to $7.97 billion and its operational earnings before interest, taxes and amortization grew 13% to $1.39 billion with a 17.4% margin, ABB said.
It compares with analysts' expectations of $919 million in profit and $8.1 billion in revenue, according to a company-provided consensus.
Orders in the quarter fell 2% on year on a reported basis to $8.05 billion, with declines at its electrification, motion and its robotics and discrete automation businesses, the latter seeing a 26% reported fall. ABB's process automation business, however, saw orders rise 20%.
"Strong demand for the project-and systems-related businesses, often linked to the medium voltage offerings, more than offset a decline in parts of the short-cycle businesses hampered by inventory adjustments among channel partners and normalizing order patterns," ABB said.
Orders rose 9% on a reported basis in the Americas region, while in Europe and Asia orders fell 11% and 5%, respectively.
The fall in orders in Europe was the result of softer markets, including the impact of customers normalizing inventory levels. It was also affected by last year's high comparable supported by timing of customers placing large orders, ABB said.
ABB said that it expects to achieve low to mid single-digit comparable revenue growth and a lower operational Ebita margin, compared with 3Q, of around 16% in 4Q.
ABB also clarified its yearly guidance, saying it anticipated comparable revenue growth in the low teens, compared to at least 10% previously. It also said it expected its operational Ebita margin to be in the range of 16.5% to 17% compared with above 16% previously.
Write to Pierre Bertrand at pierre.bertrand@wsj.com
(END) Dow Jones Newswires
October 18, 2023 02:22 ET (06:22 GMT)
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