ABB quarter results echo Longbow optimism
ABB's financial reports were announced yesterday in Zurich, for the most recent quarter:
Q4 results: Strong execution, resilient portfolio
• Fast cost take-out keeps full-year EBIT margin well within target range –
2-year savings program expanded to $3 billion
• Pace of base order decline year-on-year slows in Q4, stabilizes versus Q3 2009
• Q4 net income was $540 million after approx. $350 million of restructuring-related expense
• Record cash from operations for Q4 of $1.8 billion
• Proposal to increase dividend 6 percent to CHF 0.51 per share
Zurich, Switzerland, Feb. 18, 2010 – ABB reported earnings before interest and taxes (EBIT) of almost $800 million in the quarter, despite approximately $350 million in restructuring-related charges. Full-year profitability was well within the company’s EBIT margin target range of 11-16 percent on a combination of rapid cost take-out and solid operational execution.
Combined with record cash from operations and double-digit order growth from emerging markets, the results “show the resilience of ABB’s business portfolio and geographic scope, as well as our ability to execute in a tough market environment,” said Chief Executive Officer Joe Hogan.
Orders declined to $7.5 billion, equivalent to a local-currency reduction of 5 percent as lower demand mainly in mature markets outweighed continued growth in emerging markets in both power infrastructure and industrial equipment. Orders stabilized compared with third-quarter 2009 levels.
Revenues for the quarter were $8.8 billion, down 12 percent in local currency but the second-highest level of revenues in a quarter. Cost savings amounted to more than $500 million in the quarter.
Net income amounted to $540 million and cash flow from operations reached a record $1.8 billion, mainly the result of lower inventories and efforts to improve customer collections.
“By acting quickly and decisively, we delivered a 2009 result well within our profitability target, despite the worst recession in memory,” said CEO Hogan. “We are in a stronger position today than we were a year ago and have successfully positioned ourselves for growth as the economy recovers.
“We’re encouraged that the year-on-year rate of order decline slowed in the fourth quarter and that base orders were slightly higher than the third quarter of 2009,” Hogan said. “We’ll continue to aggressively pursue growth in emerging markets and opportunities globally to improve industrial productivity, lower energy consumption and tackle climate change. At the same time, cost will remain a key focus. We have therefore expanded our cost savings target to $3 billion to ensure we remain within our profitability target.”