ABB's Q3 Earnings & Revenues Trump Estimates, Shares Up
Zacks Investment Research | Oct 25, 2017 10:52PM ET
ABB Ltd. (NYSE:ABB) reported operational earnings per share of 34 cents for third-quarter 2017, up 4% year over year, beating the Zacks Consensus Estimate of 30 cents by 13.3%. Strong top-line growth and diligent cost-saving initiatives helped maintain earnings.
Investors cheered the impressive earnings and revenue growth, taking ABB’s shares up 3.1% at one point in pre-market trading.
Quarterly revenues were up 6% year over year in comparable terms, came in at $8,724 million, trumping the Zacks Consensus Estimate of $8,499 million. Individually, revenues witnessed growth in three of the four segments of the company, with growth in Electrification Products, Robotics and Motion, and Industrial Automation, more than offsetting minor contraction in Power Grids growth.
Revenue in Segments
Electrification Products (up 5% year over year in comparable terms to $2,596 million): Orders were up 7% year over year to $2,547 million, driven by positive construction and utility demand, particularly in the AMEA region.
Robotics and Motion (up 8% to $2,201 million): Sales grew steadily on solid demand trends in robotics and energy-efficient solutions in the automotive and general industry sectors. Orders of this segment moved up 4% year over year to $2,032 million on a year-over-year basis, backed by continued strong demand patterns in robotics and light industry.
Industrial Automation (up 1% to $1,804 million): Orders continued to be steady after witnessing the recent negative trend, rising 14% year over year to $1,654 million, owing to selective capital expenditure investments in cruise and specialty vessels, and mining.
Power Grids (flat at $2,533 million): Steady execution of a healthy order backlog and good project execution kept revenues steady. Orders declined 6% to $2,244 million mainly due to the timing of large contract awards and continued selectivity driven by change in business model.
Total orders were up 8% year over year at $8,157 million and increased 5% on a comparable basis, reflecting solid base order development across most regions and divisions. Base orders grew 6% on a year-over-year basis, while large orders were down 5%, mirroring the change in the company’s business model. The order backlog at quarter end amounted to $23.4 billion (down 1% year over year).
On a geographic basis, demand was positive in the European countries, with moderate overall growth and good timing of large capital investments. Orders displayed sound growth in the Americas as well, fueledby increased demand for automation and energy efficient solutions. The United States grew 6% in total orders. The Asia, Middle East and Africa (AMEA) region witnessed a mixed performance, with substantial order growth in UAE, South Africa and Australia, which were slightly offset by order declines in China.
Book-to-bill ratio at the end of the reported quarter was 0.94, up from 0.91 recorded in the comparable quarter a year ago.
Operational earnings before interest, taxes and amortization (“Operational EBITA”) in the quarter under review rose 3% year over year in comparable terms to $1,124 million. The figure was driven by the positive net savings effect and volume contribution, which was partially offset by commodity price escalation and investments in growth and business transformation.
ABB Ltd Price, Consensus and EPS Surprise
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