ABB Post First Quarter Results
ABB report top-line growth in a challenging environment in Q1 2012
- Orders up 2% (unchanged organic), revenues up 8% (6% organic) vs Q1 2011
- Order backlog at a near-record $29.9 billion
- Operational EBITDA 7% lower on negative mix and pricing
- Net income up 5%
Zurich, Switzerland - ABB (ABB) reported higher orders and revenues in the first quarter of 2012, led by growth in North America. Operational EBITDA declined 7 percent compared to the same quarter a year earlier while net income was up 5 percent.
Orders were 2 percent above the very high levels in the first quarter of 2011, driven mainly by utility investments in power distribution and industrial demand for automation solutions that increase productivity. Order growth mirrored regional economic trends and was weakest in China and southern Europe. Service orders were up 9 percent and represented 20 percent of total orders, reflecting progress in implementing the service growth strategy.
Revenues increased in all divisions and were 8 percent higher than the same quarter a year earlier, led by 21-percent growth in Discrete Automation and Motion (15 percent organic) and 9 percent in Power Products. Revenues were also supported by the strong order backlog, which continued to grow in the first quarter and is now at a near-record $29.9 billion. Service revenues grew 12 percent.
Operational EBITDA was $1.2 billion with an operational EBITDA margin of 13.9 percent, down 1.8 percentage points versus Q1 2011 on continuing mix and price pressure that were partly offset by positive volume impacts and cost savings of approximately $260 million.
“ABB once again demonstrated its resilience, with good growth despite the tough comparison with a great first quarter last year and continued macroeconomic uncertainty in many markets,” said ABB Chief Executive Officer Joe Hogan. “Our diverse business and geographic scope and growing service business helped mitigate that uncertainty, while our strong order backlog supported revenues.
“As we guided after Q4, there was continued price pressure on revenues coming out of the order backlog and mix effects that impacted profitability, but we could mitigate most of that through cost savings,” Hogan said. “We saw improved profitability in several businesses compared to the end of last year, and we intend to build on that momentum to tap the many opportunities we see for profitable growth over the rest of the year.”
Management discussion of orders and revenues focuses on local currency changes. U.S. dollar changes are reported in the results tables.
Organic changes exclude the acquisition of Baldor at the end of January, 2011
See reconciliation of operational EBITDA in Note 13 to the Interim Consolidated Financial Information (unaudited)