CEO Ulrich Spiesshofer comments :
“Our Q3 results reflect the challenging markets we face. Short-cycle demand in oil and gas, China and the US was down and the orders compare to a strong Q3 2014 when we won a record amount of large orders in Power Systems and Process Automation. However, building on our Next Level strategy, we were able to win key customer orders and to deliver margin accretion as well as a positive book-to-bill ratio in spite of significant market headwinds. We delivered a 50 basis point improvement in operational EBITA margin and higher operational earnings per share by building on our strong focus on execution, restructuring and cost measures as well as the Power Systems ‘step change’ program.”
Revenues
Revenues in the third quarter declined 2 percent on a like-for-like basis (13 percent in US dollars). Revenues increased in Power Products and Power Systems due to strong execution of the order backlog. Revenues in the other divisions declined, primarily due to a lack of short-cycle volumes and weak demand in many parts of the distribution channels in the first nine months of 2015. The higher US dollar versus the prior year period resulted in a negative currency translation impact on revenues of 10 percent; 2014 divestitures had a negative impact of 1 percent.
Total service revenues increased 5 percent (down 11 percent in US dollars) and were 16 percent of total revenues.
Operational EBITA
Operational EBITA declined 1 percent on a like-for-like basis (9 percent in US dollars), reflecting the lower revenue base. Currency translation negatively impacted operational EBITA by approximately 8 percent.
The operational EBITA margin increased 50 basis points to 12.5 percent, led by the turnaround in Power Systems and ongoing restructuring and cost savings measures. The increased profitability in Low Voltage Products reflects a strong focus on cost savings and execution. The operational EBITA margin in Discrete Automation and Motion decreased principally due to a decline in the share of higher-margin standard products and services in total revenues, mainly resulting from weaker demand in the oil and gas sector in recent quarters. Process Automation was negatively impacted by reduced short-cycle discretionary spend for oil and gas. In Power Products, the operational EBITA margin was steady, as higher revenues offset unfavorable mix effects and ramp-up costs associated with new production facilities in key markets.
Cash flow
ABB reported steady cash flow from operating activities of $1,173 million in the third quarter compared with $1,169 million in the same quarter of 2014. The impact of the lower net income was offset by stronger working capital management.
Operational EBITA declined 1 percent on a like-for-like basis (9 percent in US dollars), reflecting the lower revenue base. Currency translation negatively impacted operational EBITA by approximately 8 percent.
The operational EBITA margin increased 50 basis points to 12.5 percent, led by the turnaround in Power Systems and ongoing restructuring and cost savings measures. The increased profitability in Low Voltage Products reflects a strong focus on cost savings and execution. The operational EBITA margin in Discrete Automation and Motion decreased principally due to a decline in the share of higher-margin standard products and services in total revenues, mainly resulting from weaker demand in the oil and gas sector in recent quarters. Process Automation was negatively impacted by reduced short-cycle discretionary spend for oil and gas. In Power Products, the operational EBITA margin was steady, as higher revenues offset unfavorable mix effects and ramp-up costs associated with new production facilities in key markets.
Cash flow
ABB reported steady cash flow from operating activities of $1,173 million in the third quarter compared with $1,169 million in the same quarter of 2014. The impact of the lower net income was offset by stronger working capital management.
Short-term outlook
Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2014. The market remains impacted by modest growth in Europe and geopolitical tensions in various parts of the world. Current oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.
source : Press Release ABB Ltd., October 21, 2015
Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2014. The market remains impacted by modest growth in Europe and geopolitical tensions in various parts of the world. Current oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.
source : Press Release ABB Ltd., October 21, 2015
