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ABB Ltd: Execution delays hurt profits

Mar 5, 2013

ABB has announced fourth quarter and full year results of financial year 2012 (It is a December ending company). The company has reported a 5.3% YoY and 73.8% YoY fall in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Sales declined by 5.3% YoY during 4QCY12 (December ending fiscal). Poor performance from the power systems (fall of 18.1% YoY) and discrete automation & motion (fall of 6.4% YoY) segments impacted the top line growth during the quarter. For the full year, revenues grew at a modest pace of 1.6% YoY.
  • Operating profits fell 19.1% YoY during the quarter due to muted performance at the topline level. Operating margins also declined by 50 bps (0.5%) and stood at 3.2% during the quarter.
  • Net profits decline 73.8% YoY during the quarter, due to muted performance at the operating level and fall in other income. However, after adjusting for forex gain of Rs 75 m during the current quarter, profits have declined by 96.4% YoY.
  • Order inflow during the year stood at Rs 69.6 bn, compared to an inflow of Rs 81.8 bn in CY11, representing a fall of 14.9% YoY. The order backlog at the end of the year stood at Rs 86.7 bn.
  • The board of directors have recommended a dividend of Rs 3 per share for the fiscal under consideration.
  • The debt/equity ratio at the end of the year stood at 0.13 times.

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