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ABB Q2 Earnings and Revenues Decline Y/Y, Orders Decrease
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ABB Ltd. reported disappointing second-quarter 2020 results, wherein both earnings and revenues declined on a year-over-year basis.
Operational earnings were 22 cents per share, beating the Zacks Consensus Estimate of 11 cents. However, the figure recorded a decline of 35.3% on a year-over-year basis.
Top-Line Details
ABB’s second-quarter revenues totaled $6,154 million, down 14.2% from the year-ago quarter. The downside can be attributed to a revenue decline at all of its segments. On a comparable basis, revenues were down 10%.
Total orders were $6,054 million, decreasing 18% year over year. The metric decreased 14% on a comparable basis due to lower orders across Europe, the Americas, and Asia, Middle East and Africa (“AMEA”) regions. Order backlog decreased 1% on a year-over-year basis.
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $2,764 million, decreasing 16% year over year. Orders were down 18% year over year to $2,737 million, owing to lower short-cycle demand in the buildings market as well as a material decline in the oil and gas renewables markets.
Industrial Automation: Revenues were $1,382 million, declining 13% year over year. Orders decreased 20% year over year to $1,305 million. The downside was owing to weakness across energy and process industries across all regions.
Motion: Revenues amounted to $1,583 million, down 4% from the year-ago quarter. Orders fell 10% year over year to $1,586 million on account of lower short-cycle demand across all regions, particularly in the Americas.
Robotics & Discrete Automation: Revenues were $629 million, declining 26% year over year. Also, orders decreased 28% to $638 million. The decline was owing to softness in automotive, general industry and machine builder-related markets.
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales decreased 14.5% year over year to $4,167 million. It represented 67.7% of second-quarter revenues compared with 67.9% a year ago. Gross margin was 32.3%, up from 32.1% in the year-ago quarter. Selling, general and administrative expenses declined 17.4% year over year to $1,180 million.
Operational earnings before interest, taxes and amortization (EBITA) in the quarter decreased 21% to $651 million. Operational EBITA margin decreased 90 basis points to 10.6%.
Balance Sheet and Cash Flow
Exiting the second quarter, ABB had cash and cash equivalents of $2,518 million, down from $5,971 million recorded in the previous quarter. Long-term debt was $6,237 million, lower than $6,772 million at the end of 2019.
In the first six months of 2020, net cash provided by the operating activities totaled $252 million compared with $166 million used in the year-ago comparable period.
Outlook
ABB believes that weakness across the oil and gas, automotive, conventional power generation, marine, and buildings end markets, owing to the coronavirus outbreak-led issues, will adversely impact its near-term results. Also, foreign currency translation might affect the company. Notably, it anticipates a decline in orders and revenues for the third quarter on a year-over-year basis.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Altra Industrial delivered an earnings surprise of 9.78%, on average, in the trailing four quarters.
Berry Global delivered an earnings surprise of 6.63%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 7.13%, on average, in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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ABB Q2 Earnings and Revenues Decline Y/Y, Orders Decrease
ABB Ltd. reported disappointing second-quarter 2020 results, wherein both earnings and revenues declined on a year-over-year basis.
Operational earnings were 22 cents per share, beating the Zacks Consensus Estimate of 11 cents. However, the figure recorded a decline of 35.3% on a year-over-year basis.
Top-Line Details
ABB’s second-quarter revenues totaled $6,154 million, down 14.2% from the year-ago quarter. The downside can be attributed to a revenue decline at all of its segments. On a comparable basis, revenues were down 10%.
Total orders were $6,054 million, decreasing 18% year over year. The metric decreased 14% on a comparable basis due to lower orders across Europe, the Americas, and Asia, Middle East and Africa (“AMEA”) regions. Order backlog decreased 1% on a year-over-year basis.
ABB Ltd Price, Consensus and EPS Surprise
ABB Ltd price-consensus-eps-surprise-chart | ABB Ltd Quote
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $2,764 million, decreasing 16% year over year. Orders were down 18% year over year to $2,737 million, owing to lower short-cycle demand in the buildings market as well as a material decline in the oil and gas renewables markets.
Industrial Automation: Revenues were $1,382 million, declining 13% year over year. Orders decreased 20% year over year to $1,305 million. The downside was owing to weakness across energy and process industries across all regions.
Motion: Revenues amounted to $1,583 million, down 4% from the year-ago quarter. Orders fell 10% year over year to $1,586 million on account of lower short-cycle demand across all regions, particularly in the Americas.
Robotics & Discrete Automation: Revenues were $629 million, declining 26% year over year. Also, orders decreased 28% to $638 million. The decline was owing to softness in automotive, general industry and machine builder-related markets.
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales decreased 14.5% year over year to $4,167 million. It represented 67.7% of second-quarter revenues compared with 67.9% a year ago. Gross margin was 32.3%, up from 32.1% in the year-ago quarter. Selling, general and administrative expenses declined 17.4% year over year to $1,180 million.
Operational earnings before interest, taxes and amortization (EBITA) in the quarter decreased 21% to $651 million. Operational EBITA margin decreased 90 basis points to 10.6%.
Balance Sheet and Cash Flow
Exiting the second quarter, ABB had cash and cash equivalents of $2,518 million, down from $5,971 million recorded in the previous quarter. Long-term debt was $6,237 million, lower than $6,772 million at the end of 2019.
In the first six months of 2020, net cash provided by the operating activities totaled $252 million compared with $166 million used in the year-ago comparable period.
Outlook
ABB believes that weakness across the oil and gas, automotive, conventional power generation, marine, and buildings end markets, owing to the coronavirus outbreak-led issues, will adversely impact its near-term results. Also, foreign currency translation might affect the company. Notably, it anticipates a decline in orders and revenues for the third quarter on a year-over-year basis.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks are Altra Industrial Motion Corp. , Berry Global Group, Inc. (BERY - Free Report) and Dover Corporation (DOV - Free Report) . All the companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Altra Industrial delivered an earnings surprise of 9.78%, on average, in the trailing four quarters.
Berry Global delivered an earnings surprise of 6.63%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 7.13%, on average, in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>