ABB posted higher profit and revenue, but cash flow falls more than expected

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By Ed Frankl

ABB Ltd. on Thursday posted first-quarter profit and revenue that grew on year, but said cash flow fell more than expected despite higher pricing offsetting higher inflationary costs.

The Swiss industrial company reported net income of $604 million in the three months to the end of March, up from $502 million in the same period the year before.

Orders climbed 28% from 2021 to $9.37 billion, while revenue rose 7% to $6.97 billion, both on a comparable basis.

The numbers compared with expectations of $562 million for net profit and $7.08 billion for revenue, according to analysts’ consensus provided by the company.

The company’s closely watched operational earnings before interest, taxes, and amortization rose to $997 million from $959 million the previous year.

However, a drop in cash flow to negative $573 million was sharper than anticipated due to a higher-than-expected build-up of net working capital to support deliveries from the order backlog, the company said.

“Cash delivery will clearly be in focus going forward and I expect a solid full-year cash flow,” Chief Executive Bjorn Rosengren said.

However, higher volumes and stronger pricing offset hits from cost inflation related to raw materials, certain components, logistics and tight labor markets, ABB said.

Write to Ed Frankl at edward.frankl@dowjones.com


By Ed Frankl

ABB Ltd. on Thursday posted higher first-quarter profit and revenue, lifted by a jump in orders, but said cash outflow was higher than expected.

The Swiss industrial company said quarterly net income rose to $604 million from $502 million last year on orders that climbed 28% on a comparable basis to $9.37 billion.

The company’s closely watched operational earnings before interest, taxes, and amortization rose to $997 million in the first three months of the year from $959 million in 2021.

Analysts had predicted net profit of $562 million and operational EBITA of $946 million, according to consensus figures provided by the company.

However, a drop in cash flow from operating activities to negative $573 million was sharper than anticipated due to a higher-than-expected build-up of net working capital to support deliveries from the order backlog, the company said.

“Cash delivery will clearly be in focus going forward and I expect a solid full-year cash flow,” Chief Executive Bjorn Rosengren said.

Cash flow was in positive territory at this point last year, at $523 million.

But higher volumes and stronger pricing offset hits from cost inflation related to raw materials, certain components, logistics and tight labor markets, ABB said.

ABB said the level of component shortages was broadly similar to the fourth quarter of 2021, except in its robotics & discrete automation division where customer deliveries were delayed due to semiconductor shortages.

The sharp revenue decline in the division was more than offset by “strong comparable improvements” in the other business areas, it said.

The strong order intake was driven by “high general customer activity” and not by large orders, the Zug-based company said.

Quarterly revenue rose 7% on a comparable basis to $6.97 billion, though that was slightly below consensus of $7.08 billion.

The company kept its full-year guidance and confirmed that it expects to make a decision on a spinoff or sale of its turbocharging business in the second quarter.

“ABB has started the year with a promising performance in the face of multiple external uncertainties. I expect this year to result in improving profitability, solid cash flow and execution of our planned portfolio activities,” Mr. Rosengren said.

Write to Ed Frankl at edward.frankl@dowjones.com


This article was originally published by Marketwatch.com. Read the original article here.

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