ABB: Q3 2021 Results

Rhea-AI Summary

ABB reported Q3 2021 with strong demand reflected in orders of $7.9 billion, up 29% year-on-year. Revenue reached $7.0 billion, increasing by 7%, while operational EBITA rose 35% to $1,062 million, with a margin of 15.1%. However, net income dropped 86% to $652 million, and basic EPS fell to $0.33. The company announced divesting its Mechanical Power Transmission division for $2.9 billion and acquiring ASTI Mobile Robotics. Despite supply chain challenges, strong cash flow of $1.1 billion was achieved.

Positive

• Orders increased by 29% to $7.9 billion.
• Revenue rose 7% to $7.0 billion.
• Operational EBITA increased by 35% to $1,062 million with a margin of 15.1%.
• Cash flow from operating activities reached $1.1 billion.

Negative

• Net income decreased by 86% to $652 million.
• Basic EPS fell 85% to $0.33.

Strong demand, supply chain constraints impacting revenues

• Orders $7.9 billion, +29%; comparable¹ +26%
• Revenues $7.0 billion, +7%; comparable +4%
• Income from operations $852 million; margin 12.1%
• Operational EBITA¹ $1,062 million; margin¹ 15.1%
• Basic EPS $0.33; -85%²
• Cash flow from operating activities was $1,104 million and from operating activities in continuing operations it was $1,119 million

AD HOC ANNOUNCEMENT PURSUANT TO ART. 53 LISTING RULES OF SIX SWISS EXCHANGE

ZURICH--(BUSINESS WIRE)-- ABB (SWX:ABBN):

KEY FIGURES
						CHANGE								CHANGE
($ millions, unless otherwise indicated)		Q3 2021		Q3 2020		US$		Comparable1		9M 2021		9M 2020		US$		Comparable1
Orders		7,866		6,109		29%		26%		23,611		19,509		21%		16%
Revenues		7,028		6,582		7%		4%		21,378		18,952		13%		8%
Gross Profit		2,294		1,834		25%				7,070		5,731		23%
as % of revenues		32.6%		27.9%		+4.7 pts				33.1%		30.2%		+2.9 pts
Income from operations		852		71		n.a.				2,743		1,015		170%
Operational EBITA1		1,062		787		35%		32% 3		3,134		2,074		51%		43% 3
as % of operational revenues1		15.1%		12.0%		+3.1 pts				14.6%		10.9%		+3.7 pts
Income (loss) from continuing operations, net of tax		687		(503)		n.a.				2,027		218		830%
Net income attributable to ABB		652		4,530		-86%				1,906		5,225		-64%
Basic earnings per share ($)		0.33		2.14		-85%2				0.95		2.45		-61%2
Cash flow from operating activities4		1,104		408		171%				2,310		511		352%
Cash flow from operating activities in continuing operations		1,119		398		181%				2,305		650		255%

“In the face of a difficult supply chain environment, I am pleased that we achieved a good margin this quarter. Our cash generation was very strong, leaving ample headroom on our balance sheet to support both organic growth and acquisitions as well as rewarding shareholders.”

Björn Rosengren, CEO

CEO summary

Q3 painted a mixed picture, containing on one hand a high level of demand driving strong order growth, while on the other hand the tight supply chain impacted our revenues more than anticipated. Still, we improved both the underlying operational earnings and margin, delivered strong cash flows, made progress with portfolio adjustments, as well as delivered some important product launches.

Orders increased by 29% (26% comparable), year-on-year. We make conscious efforts to screen that orders we accept are backed up by real demand, but in the current environment of a strained supply chain it is only fair to assume it includes a certain element of customers putting through safety-orders to secure future deliveries. All business areas contributed with double-digit growth rates and all segments and regions noted positive developments. In sequential terms, the underlying customer activity increased somewhat in the Americas, declined in Europe and remained stable in China.

Revenues were hampered by supply chain constraints delaying customer deliveries. This was primarily related to semiconductors and imbalances in the overall supply chain, with the impact most tangible in Electrification and Robotics & Discrete Automation. Revenues increased by 7% (4% comparable).

Operational EBITA increased by 35% year-on-year, and margin expanded by 310 basis points, to 15.1%. This improvement however benefited from the adverse temporary items in last year’s results, good development in most business areas and unusually low corporate costs in the current quarter.

I am pleased we delivered another quarter with strong cash flow, which more than doubled from last year to USD 1.1 billion. Our balance sheet is strong with a net debt/EBITDA ratio of 0.5.

In line with our active portfolio management strategy, we announced both a divestment and an acquisition in the period. We agreed to divest the Mechanical Power Transmission division (Dodge) for $2.9 billion in cash and we expect completion of the deal before the end of this year. Robotics and Discrete Automation acquired ASTI Mobile Robotics Group (ASTI), a leading global autonomous mobile robot (AMR) manufacturer. This deal will support us in capturing the potential in areas such as logistics and warehouse automation. We are also making good progress with the other portfolio activities.

I was pleased to see the E-mobility business launch the Terra 360, the world’s fastest electric car charger. It is the only charger in the market designed to simultaneously charge up to four vehicles with dynamic power distribution. It has a maximum output of 360 kW and is capable of fully charging any electric car in 15 minutes or less. This will further cement our leading position in the EV-charging space.

On a similar topic but with focus on the mining industry, Process Automation launched the ABB Ability™ eMine comprising a portfolio of technologies facilitating the all-electric mine, including monitoring and optimizing energy usage. From 2022, it will also include ABB Ability™ eMine FastCharge which provides high-power electric charging for haul trucks. It also incorporates the ABB Ability™ eMine Trolley System which can reduce diesel consumption by up to 90%.

We were also acknowledged for our sustainability efforts as we once again were included in the FTSE4Good Index Series with an overall score of 4.2 on a scale from 0 to 5 (5 is the best score). We are ranked among the best performers in the index globally and above sector average.

Björn Rosengren

CEO

Outlook

In the fourth quarter of 2021, ABB anticipates a continued tight supply chain to impact customer deliveries. Comparable revenue growth is estimated to be broadly similar to the third quarter.

In line with recent historical pattern, the Operational EBITA margin in the fourth quarter is expected to decline, sequentially.

ABB anticipates comparable revenue growth of 6%-8% (update from just below 10%) for full-year 2021, hampered by supply constraints towards the end of the year.

In 2021, ABB expects a strong pace of improvement from 2020 toward the 2023 operational EBITA margin target of the upper half of the 13%-16% range.

The complete press release including the appendices is available at www.abb.com/news.

ABB (ABBN: SIX Swiss Ex) is a leading global technology company that energizes the transformation of society and industry to achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation and motion portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching back more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.

		1 For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q3 2021 Financial Information.
		2 EPS growth rates are computed using unrounded amounts.
		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/20211020006194/en/

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

Media Relations

+41 43 317 71 11

media.relations@ch.abb.com

Investor Relations

+41 43 317 71 11

investor.relations@ch.abb.com

Source: ABB

FAQ

What were ABB's Q3 2021 orders and revenue figures?

In Q3 2021, ABB reported orders of $7.9 billion, up 29%, and revenues of $7.0 billion, which is a 7% increase.

How did ABB's operational EBITA perform in Q3 2021?

ABB's operational EBITA for Q3 2021 increased by 35% to $1,062 million, with a margin of 15.1%.

What caused ABB's net income decline in Q3 2021?

ABB's net income fell by 86% to $652 million primarily due to supply chain constraints impacting revenues.

What were the cash flow results for ABB in Q3 2021?

ABB achieved a strong cash flow from operating activities of $1.1 billion in Q3 2021.

What acquisitions or divestments did ABB announce in Q3 2021?

ABB announced the divestment of its Mechanical Power Transmission division for $2.9 billion and the acquisition of ASTI Mobile Robotics.