Wednesday, April 20, 2016

ABB feels reluctance of customers – financial and economic


ABB ( ABBN 20:14 3:12% ) feel the headwind from the markets. Order intake, sales, operating and net profit in the first quarter 2016 compared to the same period in dollars – taken – the currency of the automation and power technologies group. It is encouraging that the operating margin and operating cash flow could be increased. As for the short-term outlook, ABB remains defensive: “We expect the challenging market conditions persist,” said CEO Ulrich Spiesshofer in a conference call with journalists on the occasion of the result presentation

The demand in the three major customer segments of ABB. reflected the continuing macroeconomic uncertainty in the first quarter. Utilities remained cautious, however, took further before targeted investment for grid integration of renewable energy sources and to improve security of supply. Demand from industrial customers was particularly muted in the process industry. The low oil and gas prices led to a decline in the quarter again investments from oil and gas customers. The transport and infrastructure market was mixed, with solutions to increase energy efficiency, improve reliability and to support infrastructure projects were still in high demand.

Weak demand in America

in Europe, demand was positively impacted by the construction sector and the grid integration of renewable energies in the first quarter. In the Americas, there was a reduced demand, especially in the oil and gas sector and in the mining industry and weaker industrial activity. In Asia, the Middle East and Africa – especially in the largest markets, China and India -. Were signs observed a positive trend in demand

The order intake decreased in the first quarter of 2016 compared to the same period last year 11% to 9.3 billion $ . The sharp decline is due to significant large orders in the first quarter, 2015. Base orders (below $ 15 million) were down 5%. The order backlog at the end of March 2016, about 26 billion $ – 2% more than the end of March 2015. Sales fell 8% to $ 7.9 billion. Legitimate reason to declines in short-term sales-related orders, caused by weak demand in the process industry. The ratio of orders received to sales fakturiertem (book-to-bill ratio) in the first quarter 2016 at 1.17, compared with 1.22 in the prior year period.

to silence Division grids

operating profit at level EBITA decreased slightly by 1% to 943 million $ . The EBITA margin increased 0.9 percentage points to 12%. Decisive for this was the continued turnaround in Division grids and successful productivity improvement and cost reduction measures. Consolidated net profit declined 11% to $ 500 million. This was mainly attributable restructuring costs and exchange rate changes. Operating cash flow increased 199% to $ 252 million. The jump is due to an improved working capital management and lower income tax payments.

The announced last autumn strategic review of the division grids runs according to ABB, “according to plan”. About results of the Group will inform only the Capital Markets Day on 4 October. is undertaken a comprehensive review as CEO Spiesshofer in conference call with reporters said. be viewed Kind structure, processes, service portfolio and ownership of the Division. As regards the latter, are “all options on the table” as Spiesshofer explained in an interview with “Finanz und Wirtschaft” in the fall. To speculation, the recent good performance of the Division demonstrate the presence to remain in the lap of ABB, took Spiesshofer no position. Even on a question if there was any inquiries from potential buyers admit – known as an interested party is about State Grid Corporation of China, the largest power company in the Middle Kingdom – he did not answer

View. stresses uncertainties

A concrete forecast for the current 2016 financial year did not make ABB. In short-term outlook it is said in the statement the quarterly financial statements only that macroeconomic and geopolitical developments pointed to a “mixed scenario with ongoing uncertainty”. Some macroeconomic signals from the United States are still positive. As for China, it is expected that the growth continues, albeit at a lower level than 2015. The markets were also impacted by the sluggish growth in Europe and the geopolitical tensions in various parts of the world. The price of oil and the effects of currency conversion would likely affect the consolidated result further.

The ABB shares advanced on Wednesday after the result publication by noon to 3% before. Since January, they rose 12%. Cut thus clearly outperformed the Swiss blue-chip index SMI ( SMI 8154.86 0.03% to ) , which is 8% like. Since 2014, the price of the titles has declined more or less steadily. 2015 resulted in a decline of over 14% – significantly weaker than the overall market, which lost only 2%. From operations of ABB ago is unlikely to get further support the upward trend in the share price recovered given the subdued outlook. Positive impetus for the securities could however start from a possible elimination of the division grids. Risk Eligible investors can it enter into a bet. With a price-earnings ratio in 2016 of 19 stocks are fairly valued. By 2016, an attractive dividend yield of 3.7% can be expected.

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