ABB dispels industrial gloom to raise full-year outlook
By John Revill
ZURICH (Reuters) -ABB Ltd raised its full-year outlook for sales and profit outlook on Tuesday after the Swiss engineering and technology group reported first-quarter profit ahead of forecasts.
The maker of chargers for electric vehicles and factory robots has seen a strong start of the year, offsetting recent sector concerns about subdued demand, driven by rising interest rates – which undercut demand for goods – and buyer resistance to higher prices.
The JP Morgan Global Manufacturing Purchasing Managers Index dipped to 49.6 points in March, data showed earlier this month, the seventh successive month the forward-looking indicator has been below the no-change threshold of 50 points.
Production at U.S. factories fell more than expected in March, but eked out a modest gain in the first quarter, while industrial activity in Japan and China also struggled.
Still, ABB CEO Bjorn Rosengren pointed to an uptick in orders, up 9% on a comparable basis, as a reason for optimism.
The company has also overcome supply chain bottlenecks, meaning it was able to work through its order backlog to deliver motors, drives and controllers to customers, he said.
“ABB had a strong start to the year, with a positive development in most measures, including cash flow,” Rosengren said. “This gives us the confidence to raise our 2023 guidance.”
ABB now expects to increase its full-year revenue by at least 10% this year, up from its previous expectations for an above 5% growth, and hike its operational profit margin.
The upgrade came after the company increased net profit by 72% to $1.04 billion in the three-month period ended March, beating forecasts for $877 million in a company-gathered consensus of analyst estimates.
The figure was boosted by a $200 million tax gain from the sale of its Power Grids business.
Operational earnings before interest, tax and amortisation increased by 28% to $1.28 billion, beating forecasts for $1.15 billion. Revenue also came in ahead of forecasts, rising 13% to $7.86 billion.
(Reporting by John Revill, Editing by Sherry Jacob-Phillips and Rachel More)