ABB ABB Ltd

   By Ed Frankl 
 

Shares in ABB Ltd. rose on Thursday after it posted higher-than-expected profits for the first quarter, lifted by a jump in orders, offsetting the brunt of raw-material inflation and component shortages.

The Swiss industrial-technology company posted quarterly net profit of $604 million, above expectations of $562 million according to analysts' consensus provided by ABB, and higher than last year's $502 million.

ABB's closely watched operational earnings before interest, taxes, and amortization rose to $997 million, ticking above consensus of $946 million.

Orders jumped 28% on a comparable basis to $9.37 billion, though revenue at $6.97 billion missed expectations of $7.08 billion.

Shares at 1040 were up 6.1% at 31.89 Swiss francs.

However, a drop in cash outflow from operating activities to $573 million was sharper than anticipated, due to a higher-than-expected build-up of net working capital to support deliveries from its order backlog, the Zurich-based company said.

"Cash delivery will clearly be in focus going forward and I expect a solid full-year cash flow," Chief Executive Bjorn Rosengren said.

Higher volumes and stronger pricing offset hits from cost inflation related to raw materials, certain components, logistics and tight labor markets, ABB said in its earnings release.

ABB's quarterly orders and margin performance were strong, and should ultimately matter more than a small miss on the top line soft free cash flow, Berenberg analysts said in a note.

The fact that ABB kept its full-year outlook unchanged is also encouraging, as is the second-quarter expectation of sequential growth in revenue and margin, especially given the fragile macroeconomic situation, Berenberg added.

ABB registered consensus beats in its electrification, motion, and industrial-automation units, with only its robotics missing expectations on not absorbing fixed costs due to semiconductor component constraints, analysts at Citi said.

Still, the results were encouraging on both orders and pricing, and April demand appears to have started in a similar way, the U.S. bank said.

Write to Ed Frankl at edward.frankl@dowjones.com

(END) Dow Jones Newswires

April 21, 2022 07:21 ET (11:21 GMT)

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