Zurich, Switzerland – ABB, the Swiss industrial drives and motors manufacturer, disclosed a notable slowdown in revenue growth during the fourth quarter and reported a sustained decrease in orders originating from China, its second-largest market. This announcement was met with a sharp decline in ABB’s shares, with the stock plummeting by over 6%.
ABB, recognized as a prominent player in the Electrical Equipment industry, faced fierce competition from industry giants like Siemens and Schneider Electric (EPA:SCHN). In the previous quarter, ABB managed to achieve a 13% increase in its EBITA, bringing it to $1.392 billion, aligning with market expectations. However, revenues only saw an 8% uptick, reaching $8 billion, which fell slightly short of the projected $8.1 billion. Real-time metrics from InvestingPro indicated that revenue growth for the second quarter of 2023 stood at 8.47%.
The company’s overall order intake experienced a 2% decline, with notable losses in the Chinese and European markets, attributed to a softening underlying market and high comparables from the previous year. The losses from these regions were partially offset by double-digit growth in the United States and ongoing expansions in India and other parts of Asia.
Looking ahead, ABB is projecting low- to mid-single-digit revenue growth in the fourth quarter. The company is also anticipating an operational margin ranging from 16.5% to 17.0%, an increase from the earlier forecast of above 16%. Furthermore, ABB is optimistic about achieving low double-digit revenue growth for the entire year 2023.
InvestingPro’s real-time metrics provide an overview of ABB’s financial standing, with a market capitalization of $66.633 billion and a price-to-earnings (P/E) ratio of 18.73. Notably, ABB has maintained a consistent track record of dividend payments for 18 consecutive years, making it an appealing investment choice for those seeking regular income, as per InvestingPro Tips.
Financial stability is another strong point for ABB, as its cash flows are deemed sufficient to cover interest payments, according to insights from InvestingPro Tips. The company’s revenue for the last twelve months, up to Q2 2023, reached $31.25 billion, with a gross profit of $10.77 billion, indicating a robust financial performance.