At ABB, Q1 Revenues Steady Despite Economic Challenges
o Large order growth offset by strong decline in base orders - order backlog up $1.2 billion vs the end of Q4 2008
o Local-currency revenues up on backlog execution, base business decreases
o EBIT at $862 million, cost take-out target increased to $2 billion by 2010
o Net income at $652 million
Zurich, Switzerland, April 23, 2009 - ABB's first-quarter 2009 revenues rose 3 percent in local currencies as execution of the solid order backlog offset lower sales of standard products and declining base business compared to the same quarter in 2008.
Orders decreased by 3 percent (16 percent in U.S. dollar terms) to $9.2 billion compared to the very high levels a year earlier as large orders (more than $15 million) in the power and oil and gas sectors could not compensate for lower base orders (less than $15 million) across all divisions. The order decline also reflects lower prices resulting from decreased raw material costs.
Revenues amounted to $7.2 billion (up 3 percent in local currencies, down 9 percent in U.S. dollars). The sale of standard products and base orders that convert into revenues within the same quarter declined significantly compared to the same quarter in 2008.
EBIT was $862 million with an EBIT margin of 12.0 percent. Excluding the mark-to-market treatment of hedging transactions in the respective quarters and certain other items, the EBIT margin deteriorated by approximately 3 percentage points versus the same quarter a year ago. The main driver of the deterioration was lower capacity utilization compared to the very high levels of a year ago, as well as a change in product mix and some price erosion in the short-cycle businesses.
Net income was $652 million, while cash from operations was negative $104 million, declining in line with EBIT.
"Demand in the power, oil and gas sectors was relatively resilient in the quarter, which allowed us to maintain orders close to the near-record level of a year ago," said Joe Hogan, ABB's CEO. "Revenues benefited from our order backlog but earnings declined, partly on lower capacity utilization versus the very high levels of a year ago as well as some non-operational items such as asset write-offs and the mark-to-market of hedging transactions.
"We saw good momentum with our cost-out program in the first quarter and we're expanding the program to $2 billion with continued focus on optimized sourcing, global footprint, G&A and operational excellence," Hogan added. "We are determined to stay ahead of the market on cost while remaining alert for opportunities to grow the business."
Link to full story: http://www.abb.com/cawp/seitp202/ecd4dc7b1a358260c125757f004f920d.aspx
