ABB has released its second quarter 2014 (Q2) results, reporting strong order growth, stable revenues and a significant increase in cash from operations.
ABB Chief Executive Officer Ulrich Spiesshofer commented: “Last October we said that we will drive organic growth through penetration, innovation and expansion and now we are delivering results. Our focused actions are paying off and support overall increased order momentum. In the second quarter we saw encouraging growth in our two largest markets, the US and China”.
Total order received were up 14% in Q2. Approximately half of the increase resulted from higher large orders (above US$ 15 million). Base orders (below US$ 15 million) were up 9% on growth in most of ABB’s early-cycle product businesses. Large orders represented 14% of total orders received in the quarter, compared to 9% for the same quarter in 2013.
Service orders increased 12% and represented 17% of total orders, unchanged versus 2013.
Revenues were flat in the second quarter. Higher revenues in the Discrete Automation and Motion division offset a revenue decline in Process Automation and Power Systems divisions where opening backlogs were lower compared to the same quarter last year. Service revenues were flat and represented 16% of total revenues, unchanged compared to the same quarter a year earlier.
The order backlog at the end of June amounted to US$ 27.1 billion, a decrease of 5% compared to the end of the sane quarter in 2013 but 5% higher than at the end of 2013.
Orders were mixed across Europe. For example, orders increased in Russia, the Netherlands and Germany and declined in Norway, the UK and France.
Asian order growth was led by increases in China, Indonesia and South Korea. Order decreased in India.
Orders increased in the Middle East and Africa, including Saudi Arabia, mainly on higher demand in the power division.
Operational earnings before interest, tax, depreciation and amortization (EBITDA) in Q2 were US$ 1.3 billion, 15% below Q2 2013 figures. This was primarily the result of weak performance in power systems, mainly related to EPC projects for offshore wind and solar power generation. The operational EBITDA margin was steady to higher in all other divisions.
Cost savings and further productivity improvements more than compensated pricing pressures.
Net income for the quarter was US$ 636 million and included US$ 333 million of depreciation and amortization, of which approximately US$ 100 million of amortization was related to acquisitions. Restructuring-related charges amounted to US$ 40 million.
Net income also includes after-tax gains of approximately US$ 60 million from divestures in the quarter.
Basic earnings per share amounted to US$ 0.28 in Q2 compared to US$ 0.33 in the same quarter 2013.
Adapted from a press release by Emma McAleavey.
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