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Despite the prevailing difficult economic conditions, the company continued to receive orders and reported an increased revenue.
Total revenue in the quarter climbed 10% year over year in terms of local currency to $9.7 billion. The company’s better access to North American markets with recent acquisitions added to growth. Order level in the quarter was flat in terms of local currency at $9.3 billion, with a backlog of $29.2 million. Order level in the quarter was aided by higher demand in industries for Automation solutions.
Power Products revenue was $2.5 billion, flat in terms of local currency. Order rate decreased by 6%, due to the timing of certain projects received. Decline in utility activity in power distribution also affected the order levels.
Power Systems revenue was $1.9 billion, up 11% in terms of local currency. Orders in Power System were down 27%. Orders of 2011 included a $1-billion offshore wind order in Germany.
Discrete Automation& Motion revenue was $2.3 billion, up 5% in terms of local currency. Order level increased by 1%, driven by large orders received from the utility, traction and automotive sectors while partially offset by lower demand from the wind and solar energy sectors.
Low Voltage Products revenue was $1.9 billion, up 44% in terms of local currency. Order increased by 45%, aided by the contribution from the acquisition of Thomas & Betts.
Process Automation revenue increased by3% in local currency to $1.9 billion. Order level inched down 3%, led by a decrease in large orders in oil and gas sectors.
Income and Expenses
The company achieved savings of approximately $280 million in the quarter. Costs associated with the program in the quarter were about $20 million. About 45% of cost savings in the quarter came from global sourcing initiatives, 50% from operational excellence projects and about 5% from footprint changes.
EBITDA in the quarter amounted to $1.5 billion, down 6% year over year.
Balance Sheet and Cash Flow
At the end of the quarter, ABB had cash and cash equivalents of $4.6 billion, down from $4.8 billion at the end of 2011. Long-term debt was $7.1 billion and shareholders equity was $17.1 billion. Cash from operating activities was $768 million.
ABB maintains a positive long-term outlook. Rising investments in grid upgrades and industries spending more on automation solutions to increase energy efficiency and productivity are the benefactors for the company. However, short-term uncertainties prevail with the continuing macroeconomic volatility.
ABB Ltd. is a Zurich (Switzerland)based power and automation technology company. The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, the Americas, Asia, the Middle East and Africa. A major competitor of ABB Ltd. is Siemens AG ( SI - Analyst Report ) .
We maintain a Zacks #3 Rank (short-term Hold recommendation) on ABB Ltd.
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