"The COVID-19 pandemic impacted our first quarter results, lowering revenues and operating margins in all our businesses, although order growth held up well. We are doing our utmost to ensure the health and safety of our employees while maintaining business continuity, serving our customers and continuing to invest in R&D for the long-term," said Björn Rosengren, CEO of ABB.


"In the second quarter, we expect ABB's operations to be significantly challenged by a sharp drop in demand due to lockdowns in many parts of the world. Nevertheless, we will accelerate our efforts to manage our costs and safeguard liquidity, while moving ahead with decentralizing the group and our target to complete the divestment of Power Grids at the end of the second quarter."

KEY FIGURES                                               CHANGE 
($ millions, unless otherwise 
indicated)                              Q1 2020  Q1 2019  US$       Comparable 
Orders                                  7,346    7,613    -4%       +1% 
Revenues                                6,216    6,847    -9%       -7% 
Income from operations                  373      590      -37% 
Operational EBITA(1)                    636      766      -17%      -16%(3) 
as % of operational revenues            10.2     11.2     -1.0 pts 
Income from continuing operations, net 
 of tax                                 326      415      -21% 
Net income attributable to ABB          376      535      -30% 
Basic EPS ($)                           0.18     0.25     -30%(2) 
Operational EPS ($)(1)                  0.30     0.30     -2%(2)    -1%(2) 
Cash flow from operating activities(4)  (577)    (256)    -125% 
On December 17, 2018, ABB announced an agreed sale of its Power Grids 
business. Consequently, the results of the Power Grids business are presented 
as discontinued operations. 



Against the backdrop of COVID-19, orders for the first quarter remained robust, with Motion and Industrial Automation both benefiting from strong large orders. However, revenues declined in all businesses, reflecting a drop in product demand due to the pandemic, at first in China, and then across other parts of the world, with mobility restrictions also constraining system installation and services activities. These developments, in turn, weighed on operating margins in all businesses, reflecting that certain costs remain essential for business continuity.




Orders were 4 percent lower (up 1 percent comparable) in the quarter compared to the prior year period. Foreign exchange translation effects had a net negative impact of 3 percent and portfolio changes a net negative impact of 2 percent. The order backlog was 1 percent lower (up 8 percent comparable) at the end of the quarter.


Regional overview

   -- Orders from Europe were 1 percent higher (5 percent comparable), 
      supported by large orders. At the country level, performance was mixed. 
      Sweden, Norway, the Netherlands and the UK were strong, but in Germany, 
      Switzerland, Italy and Spain, where COVID-19 impacted earlier, orders 
      declined when compared to the prior year period. In Germany, orders were 
      7 percent lower (4 percent comparable). 
   -- Orders from the Americas were steady (up 2 percent comparable), 
      reflecting the later onset of COVID-19 in the region. Orders from the 
      United States were 2 percent higher (up 2 percent comparable). 
   -- In Asia, Middle East and Africa (AMEA), orders were 12 percent lower (7 
      percent comparable). Orders from India, South Korea, Thailand and 
      Indonesia advanced well while orders from Australia, Singapore and Japan 
      fell back. In China, where the impacts of COVID-19 materialized first, 
      orders declined 21 percent (16 percent comparable). 

End-market overview

   -- In discrete industries, orders were disrupted in most end-markets, while 
      orders from automotive and automotive-sector related industries were 
      materially lower. 
   -- In process industries, ABB saw solid demand from customers in the mining 
      and pulp & paper segments. Unconventional oil & gas and conventional 
      power generation remained challenged. 
   -- In transport & infrastructure, investments were robust, with strong 
      growth in ports, rail and water & wastewater, as well as good order 
      growth in distribution utilities. 
   -- Buildings market activity eased as construction companies faced increased 
      constraints to activities from quarantine efforts. 



Revenues were 9 percent lower (7 percent comparable) year-on-year. Foreign exchange translation effects had a net negative impact of 1 percent and portfolio changes a net negative impact of 1 percent. The book-to-bill ratio for the quarter was 1.18x(1) , compared to 1.11x in the prior year period.


Income from operations and operational EBITA


Income from operations of $373 million declined 37 percent. The result includes a combined $263 million of non-operational items, including $65 million acquisition-related amortization, a net $80 million loss related to timing differences on commodities and foreign exchange, restructuring charges for the ABB-OS simplification program, as well as transaction and separation costs related to the carve-out of Power Grids and the Solar inverters business.


Operational EBITA(1) of $636 million was 17 percent lower (16 percent in local currencies). The operational EBITA margin(1) of 10.2 percent was 100 basis points lower year-on-year. All businesses reported lower margins compared to the prior year period, partly offset by improved Corporate and Other, mainly due to lower non-core and stranded costs. Stranded costs of $21 million were reflected in Corporate and Other.


Net income and basic earnings per share


Net income from continuing operations was $326 million, 21 percent lower year-on-year. Net income from discontinued operations of $54 million was lower, with the business impacted by the transfer of stranded costs, ongoing restructuring costs and net losses related to timing differences on commodities and foreign exchange.


Group net income attributable to ABB was $376 million and basic EPS $0.18, both 30 percent(2) lower year-on-year. The group's effective tax rate was 19.5 percent and includes the positive effects from resolving certain estimated tax contingencies. Operational EPS of $0.30(1) was 2 percent(2) lower compared to the prior year period.


Cash flow from operating activities


Cash flow from operating activities declined to -$577 million, compared to -$256 million in the first quarter of 2019, including $22 million lower cash flow from operating activities from discontinued operations relative to a year ago.


Cash flow from continuing operating activities was impacted versus the prior year period mainly by timing differences on employee incentive payments, which were distributed in the first quarter this year as opposed to the second quarter last year, as well as by lower income from operations and less favorable timing of tax payments. This was partly offset by improvements in working capital management, including better harmonization of payment terms for trade payables. Net working capital as a percent of revenues was 12.3 percent at quarter end.


Q1 2020 Business results


Electrification (EL)

                                                            -- Subdued 
                                                            demand and 
                                                            buildings demand 
                                                            drove orders 
                                                            lower, while 
                                                            select markets 
                                                            utilities and 
                                                            resilient. By 
                                                            region, in 
                                                            terms, orders 
                                                            were slightly up 
                                                            in Europe, 
                                                            subdued in the 
                                                            Americas and 
                                                            challenged in 
                                                            China. -- 
                                                            Revenues were 
                                                            lower due to 
                                                            activities and 
                                                            lower product 
                                                            sales arising 
                                                            from production 
                                                            outages, mainly 
                                                            in Asia. -- 
                                                            Margins were 
                                                            held back by 
                                                            lower volumes 
                                                            and weak 
                                                            performance in 
                                                            solar. This was 
                                                            partly mitigated 
                                                            by improving 
                                                            performance in 
                                                            Products and 
KEY FIGURES                           CHANGE                initiatives. 
($ millions, 
unless otherwise 
indicated)          Q1 2020  Q1 2019  US$       Comparable 
Orders              3,121    3,363    -7%       -2% 
Order backlog       4,386    4,394    0%        +9% 
Revenues            2,773    3,057    -9%       -7% 
 EBITA(1)           318      377      -16% 
as % of 
 revenues           11.4%    12.4%    -1.0 pts 

Industrial Automation (IA)

                                                            -- IA's strong 
                                                            development was 
                                                            driven by large 
                                                            orders awarded 
                                                            in the mining, 
                                                            pulp and paper 
                                                            and ports 
                                                            power generation 
                                                            challenged while 
                                                            oil & gas, 
                                                            slowed. Orders 
                                                            were up in all 
                                                            regions, led by 
                                                            Europe. -- 
                                                            reflects ongoing 
                                                            challenges to 
                                                            activities and 
                                                            installation and 
                                                            activities. -- 
                                                            Margins moved 
                                                            lower due to 
                                                            business mix, 
                                                            execution delays 
                                                            and mobility 
KEY FIGURES                           CHANGE                activities. 
($ millions, 
unless otherwise 
indicated)          Q1 2020  Q1 2019  US$       Comparable 
Orders              1,757    1,666    +5%       +8% 
Order backlog       5,183    5,139    +1%       +6% 
Revenues            1,462    1,518    -4%       -1% 
 EBITA(1)           144      205      -30% 
as % of 
 revenues           9.7%     13.5%    -3.8 pts 

Motion (MO)

                                                            -- Strong 
                                                            long-cycle order 
                                                            growth was led 
                                                            by large orders 
                                                            in rail and for 
                                                            applications. In 
                                                            addition, the 
                                                            business also 
                                                            won orders from 
                                                            new OEM 
                                                            customers and 
                                                            saw a strong end 
                                                            of the quarter 
                                                            in China. These 
                                                            outpaced a 
                                                            deterioration in 
                                                            particularly for 
                                                            drives. Order 
                                                            growth was led 
                                                            by Europe and 
                                                            AMEA, while the 
                                                            Americas were 
                                                            steady. -- 
                                                            Revenues reflect 
                                                            and postponement 
                                                            of deliveries 
                                                            where customer 
                                                            sites closed. -- 
                                                            contraction was 
                                                            driven by lower 
                                                            volumes and 
                                                            logistics costs, 
                                                            partly offset by 
KEY FIGURES                           CHANGE                mitigation. 
($ millions, 
unless otherwise 
indicated)          Q1 2020  Q1 2019  US$       Comparable 
Orders              1,901    1,800    +6%       +8% 
Order backlog       3,259    2,942    +11%      +15% 
Revenues            1,510    1,605    -6%       -4% 
 EBITA(1)           230      263      -13% 
as % of 
 revenues           15.3%    16.4%    -1.1 pts 

Robotics & Discrete Automation (RA)

                                                            -- Order 
                                                            developments for 
                                                            robotics reflect 
                                                            deterioration in 
                                                            the automotive 
                                                            and related 
                                                            industries plus 
                                                            weakening in 
                                                            industries and 
                                                            3C demand. 
                                                            recorded strong 
                                                            benefiting from 
                                                            prior design 
                                                            wins and 
                                                            stockpiling. -- 
                                                            Growth was 
                                                            strong in the 
                                                            however orders 
                                                            were weak in 
                                                            Europe, and 
                                                            challenged in 
                                                            AMEA. -- 
                                                            Revenues were 
                                                            impacted by 
                                                            lower demand, 
                                                            particularly for 
                                                            systems business 
                                                            and service 
                                                            exacerbated in 
                                                            China because of 
                                                            lockdowns. -- 
                                                            reflects mainly 
                                                            lower volumes, 
                                                            partly mitigated 
                                                            by cost 
KEY FIGURES                           CHANGE                savings. 
($ millions, 
unless otherwise 
indicated)          Q1 2020  Q1 2019  US$       Comparable 
Orders              811      967      -16%      -14% 
Order backlog       1,454    1,556    -7%       -2% 
Revenues            671      851      -21%      -19% 
 EBITA(1)           59       95       -38% 
as % of 
 revenues           8.8%     11.2%    -2.4 pts 

Corporate and Other

                                                    -- Corporate and Other 
                                                    operational EBITA 
                                                    improved to -$115 
                                                    million. Compared to a 
                                                    year ago this reflects 
                                                    lower stranded and 
                                                    non-core costs and 
                                                    lower ongoing 
                                                    corporate costs, 
                                                    partly offset by the 
                                                    absence of gains that 
                                                    benefited the result 
                                                    in the first quarter 
                                                    of 2019. -- In the 
                                                    first quarter of 2020, 
                                                    stranded costs of $21 
                                                    million were 
                                                    recognized, impacting 
                                                    operational EBITA by 
KEY FIGURES                                 CHANGE  30 basis points. 
($ millions, unless 
otherwise indicated)      Q1 2020  Q1 2019  US$ 
Orders                    (244)    (183)    +61 
Revenues                  (200)    (184)    +16 
Income from operations    (173)    (230)    (57) 
Operational EBITA(1)      (115)    (174)    (59) 
Corporate and Other orders and revenues primarily represent intersegment 

COVID-19 response


ABB's primary focus is on securing the health and safety of our employees while maintaining business continuity. ABB is constantly monitoring the evolving situation and taking all necessary precautions, in line with local government and WHO guidelines. With the COVID-19 pandemic ongoing, ABB is working constantly with customers and partners to maintain the supply of goods and services. As part of this response, ABB is maximizing use of remote service tools and ABB Ability(TM) digital solutions, including free remote services. The majority of ABB's production facilities remain fully or partly operational at this time, with some disruption being experienced at production and service sites in specific countries. Where possible the company is adjusting resources to meet the anticipated slow-down in demand and eliminating non-essential costs.


The Board of Directors and the Executive Committee of ABB are voluntarily taking a 10 percent reduction in board compensation and salary for the duration of the crisis. In addition, ABB will contribute CHF 1 million to the International Committee of the Red Cross (ICRC) COVID-19 effort.


The company and its employees are helping communities, for example by using ABB's resources to deliver protective equipment to hospitals and frontline workers in some of the most badly affected countries, such as China and Italy, as well as through equipment donations and fundraising efforts.


Transformation progress


In preparation for its divestment, Power Grids is fully operational on a stand-alone basis. ABB has eliminated the majority of the $290 million annual stranded costs that resulted when Power Grids was deconsolidated. ABB aims to resolve any remaining dis-synergies from the carve-out through the ABB-OS simplification program. The divestment is targeted for completion at the end of the second quarter, as planned, and ABB remains committed to a share buyback program using net cash proceeds from the transaction. ABB is planning to execute this in an efficient and responsible way, taking account of the prevailing circumstances.


Decentralization and the refinement of ABB's operating model through ABB-OS is continuing, enabling the businesses to act quickly to respond to the circumstances around COVID-19 while working towards delivering the cost savings for the Group as planned.


During the quarter, the Electrification business completed the divestment of the solar inverters activities to FIMER SpA on February 29, 2020. On March 17, 2020, ABB Electrification completed the acquisition of a majority stake in Chargedot Shanghai New Energy Technology Co., Ltd. The purchase expands ABB's relationship with leading electric vehicle manufacturers in China and broadens its offering with hardware and software developed specifically for local requirements. Further, ABB Electrification acquired Cylon Controls Ltd, on March 3, 2020, enhancing its Smart Buildings portfolio in the commercial buildings segment.


Short-term outlook


The global economy is expected to contract in 2020 after a rapid deterioration in outlook driven by the COVID-19 pandemic. Despite unprecedented stimuli by governments and central banks around the world and initial signs of recovering economic activity in China, macro-indicators point to a global recession of uncertain duration, as many countries, including the United States, continue to face restrictions with anticipated long-term economic consequences.


The impact of COVID-19, as well as the fall in oil prices, has significantly impacted the short-term outlook in specific end markets such as oil and gas, conventional power generation, automotive and marine. Some end markets such as distribution utilities, data centers, logistics and rail continue to show relative resilience.


ABB is not currently providing guidance for full year 2020. ABB expects its results to be significantly impacted in the second quarter. Orders and revenues are expected to show material sequential decline in all businesses, with Robotics & Discrete Automation expected to decline by more than 30 percent year-on-year. While the company is taking prompt action to adapt its operations and cost base to safeguard profitability, it also expects the loss of volume to further dampen margins. Despite short-term disruptions, ABB is confident in the underlying resilience of its businesses and operating model. The company has a strong balance sheet and is confident that its liquidity needs will be well covered.


More information


The Q1 2020 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations. A conference call and webcast for analysts and investors is scheduled to begin today at 10:00 a.m. CEST (9:00 a.m. BST). To pre-register for the conference call or to join the webcast, please refer to the ABB website: www.abb.com/investorrelations. The recorded session will be available after the event on ABB's website.


ABB (ABBN: SIX Swiss Ex) is a technology leader that is driving the digital transformation of industries. With a history of innovation spanning more than 130 years, ABB has four, customer-focused, globally leading businesses: Electrification, Industrial Automation, Motion, and Robotics & Discrete Automation, supported by the ABB Ability(TM) digital platform. ABB's Power Grids business will be divested to Hitachi in 2020. ABB operates in more than 100 countries with about 144,000 employees.

CEO first perspectives (webcast)  June 10, 2020 
Q2 2020 results                   July 22, 2020 

Important notice about forward-looking information


This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business, including those in the sections of this release titled "COVID-19 response", "Transformation progress" and "Short-term outlook". These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB. These expectations, estimates and projections are generally identifiable by statements containing words such as "anticipates", "expects," "believes," "estimates," "plans", "targets" or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others, business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd's filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.


Zurich, April 28, 2020


Björn Rosengren, CEO

(1) For a reconciliation of non-GAAP measures, see "supplemental 
reconciliations and definitions" in the attached Q1 2020 Financial 
(2) EPS growth rates are computed using unrounded amounts. Comparable 
operational earnings per share is in constant currency (2019 exchange rates 
not adjusted for changes in the business portfolio). 
(3) Constant currency (not adjusted for portfolio changes). 
(4) Amount represents total for both continuing and discontinued operations. 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200427005920/en/


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(END) Dow Jones Newswires

April 28, 2020 01:03 ET (05:03 GMT)