ABB to profit from commodity price hikes
28 Apr 2011
Zurich, Switzerland, – ABB has achieved a double-digit rise in orders, revenues and earnings for Q1 2011 driven. The performance, it said, reflected strong industrial efficiency demand, continued utility investment in grid interconnections and upgrades, and a more competitive cost base.
Looking ahead CEO Joe Hogan said: “We expect continued strong industrial demand to support our early cycle businesses and we see positive signs that our infrastructure-related businesses in both power and automation are on track for recovery later this year.”
The global outlook in major end markets remain good, ABB commenting: “High commodity prices are driving increased customer capital expenditures, while simultaneously supporting spending on efficiency and productivity improvements, including service.
“Utility spending on power transmission to integrate renewable energy into existing grids and to interconnect national and regional power grids continues to gain momentum. Recent events in Japan and high oil prices are expected to further increase the need for energy-efficient power and automation technologies.”
While overcapacity remains in some later-cycle infrastructure-related businesses, prices have stabilized in many sectors and ABB has initiated price increases in selected businesses in 2011, partly to offset increasing raw material costs.
ABB’s Q1/11 net income rose 41% to $655 million while operational EBITDA3 amounted to approximately $1.3 billion, a 37% increase over the same quarter in 2010. The operational EBITDA margin was 15.7 percent compared to 13.8 percent on the strong revenue increase and the success of ongoing cost savings. Orders increased 25% and were higher in all divisions. Base orders (below $15 million) were up in all divisions for the second consecutive quarter to reach the highest level since the second quarter of 2008. Revenues increased 18 % – the strongest growth in two years – on execution of the large order backlog and higher short-cycle product sales. Earnings before interest and taxes (EBIT) increased 43% to approximately $1 billion. EBIT includes $107 million of charges related to the Baldor acquisition.
