ABB India announced its Third Quarter Financial Results which witnessed a gradual increase, from their mixed markets. Commenting on the results Sanjeev Sharma, Managing Director of ABB India) remarked that the momentum in the growth of orders, revenue, and profits in the quarter in mixed market conditions has been sustained.
"We have sustained the growth momentum in orders, revenue, and profitability in the quarter in mixed market conditions," said Sanjeev Sharma, Managing Director, ABB India. "With a strong cash position, steady operating margins, a keen focus on costs and operational excellence initiatives, we will strive for long term growth and value additions for our stakeholders. Our agility and performance-oriented culture demonstrated in this quarter's results will also help us navigate any headwinds in the shorter term in select markets and segments," he added.
On December 17, 2018, ABB declared an agreed sale of the Power Grids business. Thus, the results of this business are given as discontinued operations. The results for all the periods have been adjusted accordingly.
The gross orders were 1,606 crores INR, which was an increase of 5 percent during the quarter, and the YTD orders were 5,374 crores INR. The increase in service orders was 16 percent, which was led by process improvement and production optimization initiatives when private Capex is lagging. While motion businesses and electrification had a solid growth pattern, Industrial Automation and Robotics and Discrete Automation faced challenges in the navigation of sectoral headwinds.
In this quarter, smart cities in Ranchi provided orders and the ancient city of Ujjain for smart power distribution equipment such as ring main units and compact substations. A major Steel business gave a significant order on electrification ArTuK panels. Transportation proved to be a growth driver with strong orders for propulsion systems. An order for 33 KV gas-insulated switchgear (GIS) by a leading metro operator was procured. The motion business got considerable orders for energy-efficient industrial equipment such as medium voltage drives and a large order for motors.
We have a robust cash position, good operating margins, excellent focus on expenses, and operational excellence initiatives. We strive for value-additions and long-term growth of our stakeholders. This quarter’s results demonstrate our nimbleness and performance-oriented culture to steer any headwinds in the brief term in specific markets and segments.
Sanjeev Sharma
Managing Director, ABB India
A gamut of orders in power management, instrumentation, SCADA, control, and electrical were from an Oil and Gas prime company. In the Mining space, new clients were added for the Aluminum Smelter and the Copper Refinery applications.
The third-quarter revenue was 1,746 crores INR. A constant, stable order book conversion, which leveraged pockets of growth across business segments and particular applications, accrued to this amount. The company signed an MoU with a leading private distribution company in New Delhi for improvement of the power distribution network and concentrated on flexibility, reliability, and safety for future requirements to pilot the smart substation control and protection devices of the company.
The Profit Before Tax (PBT) is of 113 crores INR and the Profit After Tax (PAT) is 79 crores INR. The momentum can be sustained by support from services in the larger businesses, revenue mix, higher capacity utilization, and robust backlog. Recently, the Government announced a tax cut, which also helped the company.
Operational EBITA was 119 crores INR. The focus on cash over revenue and profit over volumes is continuing with all businesses displaying enhanced cash flows. The market has a liquidity crunch, and the collections have enhanced with a cash position of 1,350 crores INR. In the Power Grid business, the gross orders were of 1,164 crores INR, and the revenue was 1,007 crores INR. The business had a PBT of 82 crores INR and PAT of 56 crores INR.
The company continues to display resilience in a mixed domestic market and geopolitical uncertainties are in the global market. The company has a flexible, technologically sound, and nimble portfolio. It leverages pockets of stabilization and gains the advantages of the recently declared government reforms. The recent reforms offer the tailwind for stable growth opportunities in the short to medium term. The remaining months are vital to managing the structural and cyclical headwinds.
The push on infrastructure, fiscal reforms, and job creation are expected to offer some balance to the supply-demand ratio in the CY 2019 economy. The company is witnessing a solid quality of growth and fundamentals. It is in a good position to steer any turbulence from commodity price volatility, forex fluctuations, and trade uncertainties in all types of markets.
The company has a vast order backlog on September 30, 2019, at 4,372 crores INR. This provides visibility in revenue and displays good alignment for growth in the upcoming quarters.
ABB is a technology leader that drives the digital transformation of industries. Its history of innovation spans more than 130 years. It has a four, customer-focused, globally leading business: Electrification, Industrial Automation, Motion, and Robotics & Discrete Automation. The company is in more than 100 nations with more than 147,000 employees.
The operational EBITA margin is Operational EBITA as a percentage of operational revenues. This is operational earnings before interest, taxes, and acquisition-related amortization that represents income from operation excluding the following:
- Gains and losses from the sale of businesses
- Changes in estimates relating to opening balance sheets of acquired businesses
- Alterations in the amount recorded for obligations pertinent to divested businesses that occur after the divestment date
- Restructuring, related, and implementation expenses
- Acquisition-related amortization
- Acquisition-related and divestment-related expenses and integration costs
- Other non-operational items
- Foreign exchange or commodity timing differences in income from operations
Operational EBITA is used to measure segment gain and evaluate the profitability of the company as a whole. Consolidated financial results have been published with a note on ABB Power Products and Systems India Limited (APPSIL). This was incorporated on February 19, 2019, as a completely owned subsidiary of ABB India Limited. In this time period, no transactions of APPSIL excluding allotment of share capital.
