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ABB Ltd: Short cycle orders drive growth

May 17, 2013 | Updated on Oct 30, 2019

ABB Ltd has announced first quarter results of financial year 2013 (It is a December ending company). The company has reported 10% YoY growth in sales. However, bottom line has declined by 10.7% YoY. Here is our analysis of the results.

Performance summary
  • Sales increased by 10% YoY during 1QCY13. Strong performance from the power systems (+32.2% YoY) and discrete automation & motion (+6.8% YoY) segments boosted the top line growth during the quarter. Strong opportunity from the renewable space was one of the key growth drivers during the quarter. Faster execution of short cycle orders also helped revenue growth.
  • Operating profits increased 9.2% YoY during the quarter due to strong performance at the topline level. However, operating margins were relatively flat on a YoY basis.
  • Net profits decline 10.7% YoY during the quarter, due to fall in other income and rise in interest expenses. Other income fell by 25.8% YoY while interest expenses increased by 265.7% YoY. Interest expenses are increasing because of increase in retention money in long cycle orders. Higher retention money stretches the working capital cycle and increases the reliance on debt.
  • Order inflow during the quarter stood at Rs 15.3 bn, compared to an inflow of Rs 16.6 bn in 1QCY12, representing a fall of 7.9% YoY. The order backlog at the end of the quarter stood at Rs 82.2 bn.

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