SWITZERLAND – Switzerland-based technology leader in electrification and automation ABB has reported high revenue growth of 13% (17% comparable) in the second quarter of 2023, giving the group CEO confidence of a good year.
According to a statement from ABB, the higher revenue of US$8.163 billion was supported by backlog execution. Income from operations amounted to US$1.298 billion, a 121% rise from the US$587 million recorded in the same period in 2022.
All the company’s four businesses contributed to the record-high achievements on both absolute Operational EBITA of US$1.4 billion and Operational EBITA margin of 17.5%, up 200 basis points from last year.
ABB noted that this growth was supported by a strong price contribution which more than offset labor inflation as well as some limited cost inflation related to commodities, with additional support from operational leverage on increased volumes in production.
An important performance indicator, order value recorded a 2% comparative growth to US$8.667 billion mainly boosted by robust customer activity throughout the period.
This offset some softening from last year’s high order level in the short-cycle business, mainly evident in the residential construction segment and across the board in discrete manufacturing where customers normalize order patterns in the face of shortening delivery lead times.
Order momentum was strongest in the systems- and project-related businesses, driven predominantly by the medium voltage segment and process-related industries which offset some softening from last year’s high order level in the short-cycle business.
In total, ABB reported a book-to-bill ratio of 1.06 driven by three out of four business areas, and we further increased order backlog.
“In my view, the quarter is an additional indication that we are establishing ABB’s operational performance at a higher level,” said Björn Rosengren, CEO.
“It was good to see our cash flow from operating activities improve by $378 million from last year and I expect us to improve cash conversion from here onwards.”
Rosengren further highlighted that over the first six months, the company generated just over $1 billion in Cash flow from operating activities, which helps position us well for what I expect to be a good cash delivery this year.
ABB experienced an IT security incident doing the second quarter but CEO reassured that his team was able to contain the incident and as a result, ABB had no consequential material financial impact in the quarter.
Just after the end of the second quarter, ABB also managed to divest the Power Conversion division at around US$500 million and expects to record a non-operational book gain estimated at approximately US$50 million in Income from operations in the third quarter of 2023.
“With this transaction, we have completed all divisional portfolio divestments announced at the end of 2020,” Rosengren said.
ABB also recently acquired Eve Systems as part of portfolio optimization strategy which will add to the Smart Buildings division in business area Electrification.