ABB Misses Expectations on Supply-Chain Woes, Exchange-Rate Impacts -- Update
By Ed Frankl
ABB Ltd. said Thursday that second-quarter profit and revenue
missed expectations despite higher orders and volumes, as it
flagged strained supply chains and logistics issues in China as
well as exchange-rate impacts and a hit from exiting Russia.
The Swiss industrial company reported net income of $379 million
in the three months to the end of June, down from $752 million in
the same period the year before.
Orders climbed 10% from 2Q 2021 to $8.81 billion, though revenue
dropped 3% to $7.25 billion, both on a reported basis.
It meant ABB missed expectations of $467 million for net profit
and $7.44 billion for revenue, according to analysts' consensus
provided by the company.
ABB's closely-watched operational earnings before interest,
taxes, and amortization rose slightly to $1.14 billion from $1.11
billion the previous year.
"Negative impact from changes in exchange rates and portfolio
changes outweighed the positives of strong price execution and
increased volumes, with the latter somewhat held back by the
strained supply chain," ABB's Chief Executive Bjorn Rosengren
On a comparable basis, revenues rose at all its business areas
except its robotics segment, where deliveries slowed, hampered by
lockdowns in China and semiconductor shortages.
The Zurich-based company said there was pressure on customer
deliveries in China, where Covid-19 related lockdowns slowed down
logistics more than expected.
The company expects component supply constraints to ease in the
coming quarters. In 3Q it expects double-digit comparable revenue
growth and the operational Ebita margin to sequentially improve
from 15.5% in the second quarter. It kept its full-year
ABB also said it would exit Russia, triggering a charge of $57
million, of which $23 million will hit cash flow in 3Q.
The company stopped taking new orders in Russia after the
invasion of Ukraine. Most of ABB's 750-strong Russian workforce has
been on leave since March.
ABB said it is fully committed to proceed with the initial
public offering of its E-Mobility business, which it postponed in
2Q due to turbulent markets.
It comes after ABB on Wednesday said it would spin off its
turbocharging business Accelleron with a planned listing on Oct.
Write to Ed Frankl at email@example.com
(END) Dow Jones Newswires
July 21, 2022 02:29 ET (06:29 GMT)
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