Q1 2021 results

Q1 2021 results

Strong start to the year

  • Orders $7.8 billion, +6%; comparable1 +1%
  • Revenues $6.9 billion, +11%; comparable +7%
  • Income from operations $797 million; margin 11.5%
  • Operational EBITA1 $959 million; margin1 13.8%
  • Basic EPS $0.25; +41%2
  • Cash flow from operating activities $543 million; cash flow from operating activities in continuing operations $523 million
KEY FIGURES
($ in millions, unless otherwise indicated) CHANGE
Q1 2021 Q1 2020 US$ Comparable1
Orders
7,756 7,346 6% 1%
Revenues
6,901 6,216 11% 7%
Gross Profit 2,268 1,910 19%
     as % of revenues 32,9% 30.7% +2.2 pts
Income from operations 797 373 114%
Operational EBITA1 959 636 51% 40%3
     as % of operational revenues1 13.8% 10.2% +3.6 pts
Income from continuing operations, net of tax 551 326 69%
Net income (loss) attributable to ABB 502 376 34%
Basic earnings per share ($) 0.25 0.18 41%2
Cash flow from operating activities4 543 (577) n.a.
Cash flows from operating activities in continuing
operations
523 (396) n.a.

1For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q1 2021 Financial Information.
2EPS growth rates are computed using unrounded amounts.
3Constant currency (not adjusted for portfolio changes).
4Amount represents total for both continuing and discontinued operations.

"After a busy year of creating the right set-up for the Group, we are now starting to show the real potential of our underlying businesses. Through greater accountability, transparency and speed, we increasingly create value for our stakeholders." 

Björn Rosengren, CEO

CEO summary

Market activity continued to recover from its lowest point during the summer 2020. Demand was especially strong in the short-cycle business, beyond our expectations. The increased customer activity, in combination with the impact from previously implemented cost measures, resulted in double-digit growth in Operational EBITA, and a very high first quarter margin of 13.8%. I am pleased to see good performance also in cash flow, which was high for a first quarter at $523 million. That said, while there was no material impact on results in the period, the progressively tighter supply of certain components such as semiconductors and plastics, is a concern. We anticipate prolonged delivery lead-times to customers in parts of our businesses in the coming quarter. On a separate note, we made the important launch of our new collaborative robot families. Through this expansion of our offering, we aim to unlock customer groups with currently a low level of automation.

In total, we registered order growth of 6% (1% comparable), supported by a broad recovery in most of our short-cycle businesses. To some extent, demand is likely to have been driven by a stock build-up related to supply chain concerns. On the downside, growth was hampered by a weak development in the cruising and oil & gas segments - albeit initial signs of stabilization were noted. Overall, orders increased slightly in Europe and AMEA, with the latter supported by a stellar growth in China. Underlying business momentum improved in the Americas, driven by the US, although the region faced high comparable numbers in the previous period, which put pressure on growth rates.

I am pleased about the progress toward our 2023 margin target, with all business areas increasing operational EBITA margin by more than 100 basis points. That said, we are taking actions to further improve operational performance in Process Automation, which should also benefit from an anticipated improvement in end markets during the latter part of the year.

We made good progress with the divestment process for the three previously announced divisions and I expect us to sign the first deal during the second half of the year. Furthermore, we have turned our E-mobility business into a separate division and initiated a carve out into a separate legal structure. These steps will allow us to prepare for a possible public listing, creating a platform for accelerated growth and value creation in this business.

We held the Annual General Meeting at which the proposed dividend of CHF 0.80 was approved. Furthermore, we announced an additional share buyback program of up to $4.3 billion, whereby re-confirming the intention to return $7.8 billion of cash proceeds from the Power Grids divestment to shareholders.

Björn Rosengren, CEO
Björn Rosengren, CEO

Outlook

Based on the current market situation, ABB anticipates growth rates in the second quarter of 2021 to reflect the low level of business activity in Q2 2020. Comparable orders and revenues are expected to grow >10%, with orders growing more than revenues.

The Operational EBITA margin for the Group is expected to significantly improve year-on-year, to approximately 14%.

As announced in the recent trading update, ABB anticipates comparable revenue growth of ~5% or higher for full-year 2021, with the process industry related part of the business expected to recover during the second half of the year.

In 2021, ABB expects a steady pace of improvement from 2020 toward the 2023 Operational EBITA margin target of upper half of the 13%-16% range. This excludes the combined adverse impact related to the Kusile project and stranded costs, which weighed on margin in 2020.

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