ABB Ltd. ABB reported disappointing first-quarter 2020 results, wherein both earnings and revenues declined on a year-over-year basis.
Operational earnings were 30 cents per share, which recorded a decline of 2% on a year-over-year basis.
ABB’s first-quarter revenues totaled $6,216 million, down 9.2% from the year-ago quarter. The downside can be attributed to a decline at all of its segments. On a comparable basis, revenues were down 7%.
Total orders were $7,346 million, decreasing 4% year over year. The metric increased 1% on a comparable basis, backed by strong orders in Industrial Automation and Motion segments, largely offset by weakness in Robotics & Discrete Automation. 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
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $2,773 million, decreasing 9% year over year. Orders were down 7% year over year to $3,121 million, owing to lower short-cycle industrial demand in the Americas and AMEA regions.
Industrial Automation: Revenues were $1,462 million, declining 4% year over year. Orders increased 5% year over year to $1,757 million. The upside was owing to robust orders in the mining, pulp and paper, and ports segments across all regions.
Motion: Revenues amounted to $1,510 million, down 6% from the year-ago quarter. Orders rose 6% year over year to $1,901 million on account of robust orders for rail and water applications in Europe and AMEA.
Robotics & Discrete Automation: Revenues were $671 million, declining 21% year over year. Also, orders decreased 16% to $811 million. The decline was owing to softness in general and automotive sector-related markets.
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales decreased 7.2% year over year to $4,306 million. It represented 69.3% of first-quarter revenues compared with 67.7% a year ago. Gross margin was 30.7%, down from 32.3% in the year-ago quarter. Selling, general and administrative expenses declined 7.6% year over year to $1,252 million.
Operational earnings before interest, taxes and amortization (EBITA) in the quarter decreased 17% to $636 million. Operational EBITA margin decreased 100 basis points to 10.2%.
Balance Sheet and Cash Flow
Exiting the first quarter, ABB had cash and cash equivalents of $5,971 million, up from $3,544 million recorded in the previous quarter. Long-term debt was $6,830 million, higher than $6,772 million at the end of 2019.
In the first three months of 2020, net cash used in operating activities totaled $577 million compared with $256 million used in the year-ago comparable period.
ABB believes that the coronavirus outbreak-led market downturn and the volatile oil market will adversely impact its near-term results. Also, foreign currency translation might affect the company. In fact, it anticipates orders and revenues to decline in the second quarter on a sequential basis.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks are Intellicheck, Inc. IDN, Berry Global Group, Inc. BERY and Acco Brands Corporation ACCO. 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.
Intellicheck delivered a positive earnings surprise of 36.91%, on average, in the trailing four quarters.
Berry Global delivered a positive earnings surprise of 0.26%, on average, in the trailing four quarters.
Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.
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