ZURICH-Thursday 28 February 2019 [ AETOS Wire ]
(BUSINESS WIRE) -- FULL YEAR 2018 HIGHLIGHTS
Total orders +8%1, up in all divisions and regions
Revenues +4%, strong growth in Robotics and Motion
Order backlog +6% at end of year, book-to-bill ratio2 at 1.03x
ABB Ability™ drives growth across all divisions
Operational EBITA margin 10.9%2, impacted by a combined 250 basis
points due to stranded costs, charges for legacy non-core projects and
GEIS dilution
Reported net income at $2,173 million, -2%
Cash flow from operating activities at approx. $3 billion
New ABB announced
Focus of portfolio on digital industries through divestment of Power Grids
Simplification of business model and structure
Shape four leading businesses aligned with customer patterns
Acquisition of GEIS completed on June 30, 2018
CHF 0.80 per share dividend proposed
FOURTH QUARTER HIGHLIGHTS
Total orders +7%, higher in all divisions and regions
Revenues +5%
Operational EBITA margin 7.9%, impacted by a combined 400 basis points
due to stranded costs, legacy non-core charges and GEIS dilution
Solid cash flow from operating activities at approx. $1.9 billion
Sylvia Hill to succeed Jean-Christophe Deslarzes as Chief Human
Resources Officer and member of the Executive Committee, effective June
1, 2019
KEY FIGURES
CHANGE
CHANGE
($ in millions, unless otherwise indicated)
Q4 2018
Q4 2017 Recast
US$
Comparable
1
FY 2018
FY 2017 Recast
US$
Comparable1
Orders
6,985
6,328
+10%
+7%
28,590
25,034
+14%
+8%
Revenues
7,395
6,804
+9%
+5%
27,662
25,196
+10%
+4%
Income from operations
275
324
-15%
2,226
2,230
0%
Operational EBITA2
584
664
-12%
-10%3
3,005
2,817
+7%
+5%3
as % of operational revenues
7.9%
9.7%
-1.8pts
10.9%
11.2%
-0.3pts
Income from continuing operations, net of tax
210
214
-2%
1,575
1,519
4%
Net income attributable to ABB
317
393
-19%
2,173
2,213
-2%
Basic EPS ($)
0.15
0.18
-19%4
1.02
1.04
-2%4
Operational EPS ($)2
0.30
0.33
-9%4
-6%4
1.33
1.25
+7%4
+8%4
Cash flow from operating activities
1,867
1,869
0%
2,924
3,799
-23%
On
December 17, 2018, ABB announced an agreed sale of its Power Grids
division. Consequently, the results of the Power Grids business are
presented as discontinued operations. The company’s results for all
periods have been adjusted accordingly.
“In 2018, we
brought the company back to growth and delivered solid order and revenue
growth. We drove topline momentum with our leading Robotics and Motion
offering and played a strong role in the ongoing recovery of process
industries with our industrial automation business and ABB Ability™
digital solutions. We will continue to drive the operational
improvements in Electrification Products and our company overall”, said
ABB CEO Ulrich Spiesshofer.
“At the end of 2018, we set
the course for a new ABB as a pioneering technology leader in digital
industries. We announced three transformational actions to focus our
portfolio, simplify and fundamentally reset our business model as well
as strengthen the leading business positions of our company. Our
confidence in ABB’s future is reflected in the proposed 10th consecutive
dividend increase to CHF 0.80.”
Short-term outlook
Macroeconomic
signs are mixed in Europe and trending positively in the United States,
with growth expected to continue in China. The overall global market is
growing, with rising geopolitical uncertainties in various parts of the
world. Oil prices and foreign exchange translation effects are expected
to continue to influence the company’s results.
Full-year 2018 Group results
ABB
delivered strong order and revenue performance in 2018. The group’s
digital solutions offering, ABB Ability™, continued to build its leading
market position. Total orders were 8 percent higher (14 percent in US
dollars) with strong positive contributions from Robotics and Motion and
Industrial Automation as well as solid performance from Electrification
Products. Total orders exhibited similar growth trends across all
regions. Base orders (classified as orders below $15 million) improved 6
percent (14 percent in US dollars) in 2018, rising in all divisions and
regions. Large orders increased 45 percent (20 percent in US dollars),
albeit off a low comparative base, and represented 7 percent of total
orders, compared to 6 percent in the prior year. Service orders were 7
percent higher (12 percent in US dollars) and now stand at 19 percent of
total orders.
Revenues improved 4 percent (10 percent
in US dollars) to $27,662 million. Revenues grew across all divisions,
with strong performance from Robotics and Motion and robust
contributions from Electrification Products and Industrial Automation.
Service revenues were up 7 percent (11 percent in US dollars) to 19
percent of group revenues. The book-to-bill ratio stood at 1.03x in 2018
compared with 0.99x in the previous year.
ABB
continued to shift its center of gravity, de-risking the portfolio and
improving organic growth prospects. The exit from EPC (Engineering,
Procurement and Construction) activities progressed as ABB transferred
its turnkey AC Substation business to Linxon, a new joint-venture with
SNC Lavalin. ABB continues to unwind the remaining legacy EPC contracts,
which impacted results reported through the period for the non-core
business unit in Corporate and other. ABB strengthened the
competitiveness of its Electrification Products division through the
acquisition of GE Industrial Solutions (“GEIS”) on June 30, 2018.
Integration efforts are well underway. GEIS’ performance in the second
half of 2018 has been in line with managements expectations.
ABB
announced fundamental actions to focus, simplify and lead in digital
industries on December 17, 2018. The group’s actions included the
divestment of the Power Grids business. As a consequence of the
announced sale, the results of the Power Grids business are now
presented as discontinued operations and the group has reflected
stranded costs in its operational EBITA result for both the 2017 and
2018 periods, in line with the guidance provided as part of the
announcement on December 17, 2018. Stranded costs are services provided
by the group to Power Grids that do not qualify to be reported as
discontinued operations. These services include real estate, IT, and
other shared corporate services. The company expects the vast majority
of these costs to either be transferred to Power Grids or eliminated by
the closing of the transaction, which is anticipated in the first half
of 2020.
The company’s operational EBITA in 2018
reached $3,005 million, an increase of 7 percent in US dollars (5
percent in local currencies), including stranded costs of $297 million.
The operational EBITA margin was 10.9%, including 110 basis points
related to stranded costs as well as an 100 basis point charge related
to legacy non-core business activities, and 40 basis points dilution
from GEIS.
Net income attributable to ABB of $2,173
million was 2 percent lower compared to 2017. Basic EPS was 2 percent
lower at $1.02. Operational EPS2 was $1.33, up 8 percent in constant
currency2.
Cash flow from operating activities5 of
$2,924 million for the full year was 23 percent lower year on year. This
is mainly due to lower cash from discontinued operations as well as
less favorable timing of tax payments. Net working capital of $2,584
million stood at 9 percent of revenues at the end of 2018, compared to
10 percent at the end of the prior year period. Capital expenditures for
the group were $772 million during the year, at the same level as in
2017. Adjusted free cash flow2 of $2,024 million was 31 percent below
the prior year.
Dividend
ABB’s board
has proposed an ordinary dividend of 0.80 Swiss francs per share for
2018, subject to shareholder approval at the company’s annual general
meeting on May 2, 2019. The proposal is in line with ABB’s dividend
policy to pay a rising, sustainable dividend over time. The ex-dividend
and payout dates in Switzerland are expected to be in May 2019. Further
information will be available on ABB’s website.
Q4 2018 Group results
Orders
Total
orders rose 7 percent (10 percent in US dollars), up in all divisions
and regions compared to a year ago. Base orders increased 5 percent (11
percent in US dollars), higher in all divisions during the quarter.
Large orders represented 5 percent of total orders, steady compared to
the prior year period. The order backlog rose 6 percent (5 percent in US
dollars) compared to a year ago, improving in all divisions, to end the
year at $13.1 billion.
Service orders were up 5
percent (7 percent in US dollars). Service orders represent 20 percent
of total orders, compared to 21 percent in the prior year period.
Changes
in the business portfolio, including the acquisition of GEIS resulted
in a net positive impact of 8 percent on total reported orders. Foreign
exchange translation effects had a 5 percent negative impact on reported
orders.
Market overview
ABB saw positive order trends across its three regions in the quarter:
Total orders from Europe rose 4 percent (5 percent in US dollars), with
positive contributions from Italy, Sweden, the Netherlands and France
outpacing lower contributions from Germany, Norway and Spain. Base
orders rose 2 percent (2 percent in US dollars).
Total orders
from the Americas increased 11 percent (32 percent in US dollars).
Orders from the United States rose 8 percent (38 percent in US dollars)
and also improved in Mexico and Brazil. Base orders from the Americas
increased 13 percent (37 percent in US dollars).
In Asia,
Middle East and Africa (AMEA), total orders grew 7 percent (steady in US
dollars), supported by growth in China, India and Japan. In China,
demand was softer in select end-markets, but remained positive, with
total orders rising 6 percent (6 percent in US dollars). Base orders for
AMEA were steady (1 percent lower in US dollars).
Demand was supportive across the majority of ABB’s key customer segments:
ABB saw healthy demand from process industries, including oil and gas,
mining, and pulp and paper, with customers continuing to invest in
automation and digital solutions.
Demand across discrete
industries remained solid, including continued growth from the food
& beverage sector. Demand was strong in the automotive market,
with customers seeking robotics solutions for both ICE and EV assembly
lines, more than offsetting softer investments from customers in the
consumer electronics sector.
Transport and infrastructure
demand was healthy. Demand from construction and buildings related
customers was robust. Data center growth continued with customer demand
focused on combined automation and distribution solutions. ABB saw
further activity in cruise ships and from rail customers.
Revenues
Revenues
improved 5 percent to $7,395 million (9 percent in US dollars), with
strong growth in Robotics and Motion, robust performance from
Electrification Products and a steady result from Industrial Automation.
Service revenues were up 4 percent (8 percent in US dollars), enhanced
by ABB’s leading digital portfolio, ABB Ability™ solutions. Services
represented 20 percent of total revenues, steady versus the prior year
period.
Business portfolio changes, including the
acquisition of GEIS, contributed a net positive of 8 percent to reported
revenues. Changes in exchange rates resulted in a negative translation
impact on reported revenues of 4 percent.
The book-to-bill ratio stood at 0.94x in the quarter compared with 0.93x in the previous year’s period.
Operational EBITA
Operational
EBITA of $584 million in the fourth quarter was 12 percent lower in US
dollars (10 percent in local currencies) compared to the prior year
period. The operational EBITA margin of 7.9 percent, included $72
million, or a 100-basis point impact from stranded costs. As well,
operational EBITA reflects 260 basis points impact from charges for
legacy non-core activities, mainly related to substations, and a 40
basis points impact due to the acquisition of GEIS.
Net income, basic and operational earnings per share
Net
income was $317 million, 19 percent lower year on year. Basic earnings
per share of $0.15 also moved the same amount in percentage terms.
Operational earnings per share of $0.30 was 9 percent lower, and 6
percent in constant currency4.
Cash flow from operating activities
The
group delivered solid cash flow from operating activities of $1,867
million, steady compared to the similarly strong cash flow delivered in
the prior year period. Continued focus on working capital had a positive
impact compared to the same period last year, offset by less favorable
timing of tax payments and a lower contribution from discontinued
operations.
Q4 divisional performance
($ in millions, unless otherwise indicated)
Orders
CHANGE
3rd party base orders
CHANGE
Revenues
CHANGE
Op EBITA %
CHANGE
US$
Compa-
rable
1
US$
Compa-
rable1
US$
Compa-
rable1
Electrification Products
3,139
+23%
+2%
3,032
+27%
+3%
3,320
+23%
+3%
11.7%
-3.0pts
Industrial Automation
1,866
+4%
+8%
1,639
+0%
+4%
1,938
-4%
+0%
12.9%
-2.0pts
Robotics and Motion
2,175
+7%
+11%
1,872
+2%
+6%
2,341
+7%
+11%
15.0%
+1.2pts
Corporate & Other
(195)
11
(204)
ABB Group
6,985
+10%
+7%
6,554
+11%
+5%
7,395
+9%
+5%
7.9%
-1.8pts
Effective
January 1, 2018, management responsibility and oversight of certain
remaining engineering, procurement and construction (EPC) business,
previously included in the Industrial Automation and Robotics and Motion
operating segments and the former Power Grids business, were
transferred to a new non-core operating business within Corporate and
Other. The Power Grids division was moved from continuing to
discontinued operations. All previously reported amounts have been
adjusted consistent with these portfolio changes.
Electrification Products
Total
orders rose 2 percent (23 percent in US dollars) and third-party base
orders increased 3 percent (27 percent in US dollars). Good demand for
products was dampened by a lower order volume for systems. Revenues
improved 3 percent (23 percent in US dollars), driven by growth in our
short-cycle businesses. Operational EBITA margin was 300 basis points
lower year-on-year at 11.7 percent. The integration of GEIS diluted
margins by 210 basis points, in line with expectations. Excluding GEIS,
operating margins were impacted by negative contractual charges
amounting to approximately 90 basis points, which outweighed positive
mix, cost savings and pricing actions during the quarter.
Industrial Automation
Compared
to the prior year period, total orders improved 8 percent (4 percent in
US dollars), boosted by selective large order activity, while
third-party base orders were up by 4 percent (steady in US dollars).
Order activity for cruise ships and in process industries including
mining and pulp and paper was strong during the quarter. Revenues were
steady (4 percent lower in US dollars). The operational EBITA margin of
12.9 percent reflects change in the business mix as well as a one-time
charge due to payment default by a customer that impacted the divisional
margin by approximately 80 basis points.
Robotics and Motion
The
division saw continued order momentum with total orders up 11 percent
(7 percent in US dollars) and third-party base orders up 6 percent (2
percent in US dollars). Order growth was achieved across all regions,
supported by large orders from automotive and rail customers and
continued demand from process industries. Revenues increased 11 percent
(7 percent in US dollars). Operational EBITA margin at 15.0 percent
expanded 120 basis points year-on-year, driven by positive volumes and
continued cost management.
2018 Highlights
During
2018, ABB recorded strong order momentum across all divisions and
regions. The company’s pioneering technology leadership in digital
industries advanced, with ABB Ability™ recognized by industry analysts
as #1 globally in Distributed Control Systems and Enterprise Asset
Management software. ABB Ability™ was launched in 2017 and offers more
than 220 digital solutions, which enable enterprises to increase
productivity and safety at lower costs. For example, ABB and Helsinki
City Transport held at the end of 2018 a groundbreaking trial of a
remotely operated passenger ferry, which was retrofitted with ABB’s new
dynamic positioning system, ABB Ability™ Marine Pilot Control, and
steered from a control center in Helsinki.
ABB
continues to invest in its future. During 2018, the group announced a
€100 million investment to build a cutting-edge R&D campus in
Austria, and a $150 million investment to build a state-of-the-art
flexible robotics manufacturing site, also including an Artificial
Intelligence center of excellence, in Shanghai, China.
The
acquisition of GEIS completed on June 30, 2018, strengthened the
competitiveness of Electrification Products, particularly in the
attractive North American market. ABB targets $200 million per annum
synergies from GEIS by 2022.
On December 17, 2018, ABB
announced the agreed sale of its Power Grids business, expanding its
existing partnership with Hitachi. Alongside, ABB announced its
intention to simplify the business structure and to shape four new
leading businesses: Electrification, Industrial Automation, Motion, and
Robotics and Discrete Automation. ABB expects a total of $500 million
annual run-rate cost reductions across the group over the medium-term.
Approximately $500 million of related non-operational restructuring and
implementation charges are expected to be taken through 2020. ABB is
targeting a medium-term group operational EBITA margin target of 13-16
percent. New margin targets for the four businesses are available today
at ABB̕s strategy update (further details can be found under
www.abb.com).
Management changes
ABB
announced today the appointment of Sylvia Hill (59) as Chief Human
Resources Officer and member of the Executive Committee, effective June
1, 2019. She succeeds Jean-Christophe Deslarzes (55), who has decided to
step down to pursue a non-executive career. Sylvia Hill joined ABB’s
Human Resources (HR) team in 1993 and has held positions of increasing
responsibility within the HR function, including Head of HR for the
Robotics and Motion division, country HR manager for France and the
Czech Republic, and Head of HR of the Mediterranean Region. Currently,
she is Group Function Head of Global HR Services and HR Transformation.
“Sylvia
brings a wealth of experience in HR, change management and talent
management to the role,” said ABB CEO Ulrich Spiesshofer. “I am
delighted to welcome Sylvia to the Executive Committee. I would like to
thank JC Deslarzes for his outstanding contribution as Chief Human
Resources Officer over the past five years. Under his leadership, ABB
has developed a world-class talent management and people development
strategy for the digital era, and significantly improved its
attractiveness to young talent.”
Deslarzes will
continue to support ABB’s transformation until beginning of 2020 and
report directly to CEO Ulrich Spiesshofer. He will remain non-executive
Chairman of ABB India.
In December 2018, ABB announced
the appointment of Morten Wierod, currently Managing Director Business
Unit Drives, as business leader for the newly created Motion business.
He will become a member of the Executive Committee effective April 1,
2019.
Short- and long-term outlook
Macroeconomic
signs are mixed in Europe and are trending positively in the United
States, with growth expected to continue in China. The overall global
market is growing, with rising geopolitical uncertainties in various
parts of the world. Oil prices and foreign exchange translation effects
are expected to continue to influence the company’s results.
ABB’s
businesses are either the global #1 or #2 player in attractive markets
with strong secular drivers. The company’s addressable market for its
new businesses Electrification, Industrial Automation, Motion, and
Robotics and Discrete Automation is expected to grow long term by 3.5-4
percent per annum.
More information
The
Q4 2018 results press release and financial information documents are
available on the ABB News Center at www.abb.com/news and on the Investor
Relations homepage at www.abb.com/investorrelations.
ABB
will host a press conference today starting at 9:00 a.m. Central
European Time (CET) (8:00 a.m. BST, 3:00 a.m. EST). The event will be
accessible by webcast on
https://new.abb.com/media/media-event---strategy-update-2019.
ABB
will host an analyst and investor conference today starting at 12:00
p.m. CET (11:00 a.m. GMT, 6:00 a.m. EST). The event will be webcast for
approximately 90 minutes, covering Q4 and FY18 results and the group’s
Strategy update presentation. The webcast and related materials will be
accessible from 11:00 a.m. CET at: go.abb/strategy-update-2019
A recorded session will be available as a webcast following the end of the conference call.
ABB
(ABBN: SIX Swiss Ex) is a pioneering technology leader in power grids,
electrification products, industrial automation and robotics and motion,
serving customers in utilities, industry and transport &
infrastructure globally. Continuing a history of innovation spanning
more than 130 years, ABB today is writing the future of industrial
digitalization with two clear value propositions: bringing electricity
from any power plant to any plug and automating industries from natural
resources to finished products. As title partner in ABB Formula E, the
fully electric international FIA motorsport class, ABB is pushing the
boundaries of e-mobility to contribute to a sustainable future. ABB
operates in more than 100 countries with about 147,000 employees.
www.abb.com
INVESTOR CALENDAR 2019
Annual General Meeting
May 2, 2019
First quarter 2019 results
May 2, 2019
Second quarter 2019 results
July 25, 2019
Third quarter 2019 results
October 23, 2019
Important notice about forward-looking information
This
press release includes forward-looking information and statements as
well as other statements concerning the outlook for our business,
including those in the sections of this release titled “Short-term
outlook”, “Full-year 2018 Group Results”, “2018 Highlights” and “Short-
and long-term outlook”. These statements are based on current
expectations, estimates and projections about the factors that may
affect our future performance, including global economic conditions, the
economic conditions of the regions and industries that are major
markets for ABB Ltd. These expectations, estimates and projections are
generally identifiable by statements containing words such as “expects,”
“believes,” “estimates,” “targets,” “intends”, “aims” or similar
expressions. However, there are many risks and uncertainties, many of
which are beyond our control, that could cause our actual results to
differ materially from the forward-looking information and statements
made in this press release and which could affect our ability to achieve
any or all of our stated targets. The important factors that could
cause such differences include, among others, business risks associated
with the volatile global economic environment and political conditions,
costs associated with compliance activities, market acceptance of new
products and services, changes in governmental regulations and currency
exchange rates and such other factors as may be discussed from time to
time in ABB Ltd’s filings with the U.S. Securities and Exchange
Commission, including its Annual Reports on Form 20-F. Although ABB Ltd
believes that its expectations reflected in any such forward-looking
statement are based upon reasonable assumptions, it can give no
assurance that those expectations will be achieved.
Zurich, February 28, 2019
Ulrich Spiesshofer, CEO
1
Growth rates for orders, third-party base orders and revenues are on a
comparable basis (local currency adjusted for acquisitions and
divestitures). US$ growth rates are presented in Key Figures table.
2 For non-GAAP measures, see the “Supplemental Financial Information” attachment to the press release.
3Constant currency (not adjusted for portfolio changes).
4EPS
growth rates are computed using unrounded amounts. Comparable
operational earnings per share is in constant currency (2014 exchange
rates not adjusted for changes in the business portfolio).
5 Cash
flow from operating activities is presented in the Consolidated
Statement of Cashflows and includes both cash flows from continuing and
discontinued operations.
Contacts
For more information, please contact:
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com
or
Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
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فوكوكا، اليابان-الخميس 28 فبراير 2019 [ ايتوس واير ]
