ABB sees first half hit to profits

ABB sees first half hit to profits

Business news |
By Nick Flaherty

ABB has been shifting from power generation equipment to electrification, with a new structure of four divisions coming in to effect in April this year. 

“Overall total orders and revenues continued to grow, led by Electrification and Motion while Robotics and Discrete Automation in particular felt the downturn in automotive and machine building,” said Timo Ihamuotila, CFO of ABB. “At the same time, we are making good progress with the carve-out of our Power Grids business, the integration of GEIS and the roll-out of our ABB-OS operating model, which all are planned to make ABB more profitable.”

Revenue was up 6 percent for the first half of 2019 to $13.172bn with profits down 47 percent at $1.33bn. Overall, orders were up 2 per cent to over $14bn. 

The company took a $455m charge on the sale of its solar inverter business to FIMER in Italy earlier this month, which is expected to close in the first quarter of 2020. The solar inverter business has approximately 800 employees in more than 30 countries, with manufacturing and R&D sites located in Italy, India and Finland and turn over of $290m. It includes the solar inverter business from Power-One which was acquired by ABB’s Discrete Automation and Motion division in 2013. The sell off will make the electrification business more proftiable says ABB.

“ABB continued to generate top-line momentum during the second quarter despite macroeconomic headwinds and geopolitical uncertainty,” said Peter Voser, Chairman and CEO of ABB. “Going forward we will drive long-term growth across our businesses, while staying focused on costs and portfolio management.”

Orders from Europe were stable (3 percent lower in US dollars). Strong growth in France, the Netherlands and Spain, plus robust growth from Germany was more than offset by lower order levels from Italy, the UK, Finland and Sweden. In Germany, orders were up 1 percent (2 percent lower in US dollars). 

Boost from the Americas

Orders from the Americas increased 7 percent (30 percent in US dollars). Orders developed particularly well across South America including Brazil and Chile. Orders from the United States rose 1 percent (29 percent in US dollars).

In Asia, Middle East and Africa (AMEA), orders were 3 percent lower (6 percent in US dollars). Lower order levels from countries including Japan, Saudi Arabia and China outweighed strong growth from South Korea, South Africa and Australia and solid growth in India. In China, orders were 1 percent lower (3 percent lower in US dollars).

Traditional automotive and automotive-sector related industries were particularly difficult, said the company. 

In electrification the total orders were up 5 percent (22 percent in US dollars) driven by rail, data centres, wind and EV infrastructure.On a regional basis, orders grew well in the Americas and AMEA regions, incl. China, and were up in Europe. Revenues improved 4 percent (22 percent in US dollars). However for industrial Automation orders were 4 percent lower (8 percent in US dollars), hit by lower large orders in Europe and Middle East

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