Strong performance in a recovery quarter

Q2 and H1 2021 HIGHLIGHTS

• Orders up 41% for the quarter and 11% for H1 Y-o-Y
• Revenue up 45% for the quarter and 22% for H1 Y-o-Y
• PAT up by 308% for the quarter and 165% for H1 Y-o-Y

“I am proud of ABB business model resilience and our business divisions’ teams, as we have posted a strong recovery, while leveraging growth market segments with a good bounce back once the pandemic wave started to wane in June. The solid demand for ABB products, solutions and services portfolio in many of our targeted market segments ensured our profitability despite the sharp increase in commodity prices during the quarter aided by operational efficiencies. The health and safety of all our stakeholders continues to be our top priority and is an integral part of our business continuity strategy to serve customers. We have rolled out a voluntary pan-India vaccination drive for all our employees, families, and partners across locations with nearly >80% targeted personnel coverage by end of June. Effective work-related safety protocols and vaccination has been and will continue to be a key enabler for our stakeholder health assurance and business continuity in coming months.   We are on track with our 10-point ESG plan and continue to invest in this initiative and are seeing the impact in our targeted communities. We are well prepared to leverage our strength and readiness in H2 CY2021,” said Sanjeev Sharma, Managing Director, ABB India.

KEY FIGURES INR Crores (for continuing business without Power Grid)

Orders 

Total orders for the quarter were at INR 1,689 crore as compared to INR 1,200 crore in Q2 2020, a growth of 41%. The month of June witnessed a gradual bounce back in orders by most businesses despite various state level lockdowns in the first two months of the quarter. There was a marginal dip in orders sequentially with businesses impacted by localized impact of the second wave.

Electrification business area secured orders from utility, data center segments for a range of power equipment especially in the low voltage category. Motion business area secured order growth across all divisions supported by channel businesses and exports with our world-class energy efficiency portfolio. Robotics & Discrete Automation business area continued to record reasonable order inflows, including green shoots of recovery in the automotive market and demand in new market segments. Our portfolio in energy management, grid integration stability with advanced process controls and digitalization were some of the focus areas for Process Automation business area orders.

Key orders include:

• One of the biggest orders for city gas distribution network with SCADA and remote terminal unit solutions for a leading public sector diversified, integrated energy major for 7 states and 17 geographical areas
• Power equipment for data center in north India from 33kV GIS Substation- E house, GIS, AIS and LV – supply
• Power equipment like switchgears of 33kV and 11kV for railway tunnel project in J&K
• Electrification and instrumentation package for a red mud filtration project for an aluminum major
• Gas insulated switchgear package for a north India corridor of the Regional Rapid Transit System
• Robotics paint system order from Indian auto major

Revenue and operations

The company reported INR 1,425 crore revenue for the quarter which is higher by 45% as compared to Q2 last year. Strong backlog execution and solid customer-connect and service business supported a recovery in June, which to a large extent compensated for the muted offtake in first months of the quarter. All divisions witnessed a growth during the period under review. On a sequential basis, there was a decline of 12.5% primarily due to interruptions caused by the second wave of pandemic.

Profit and cash flow from operating activities

The company reported a Profit before tax (before exceptional items and one-offs) of INR 90 crore for the quarter mainly driven by better capacity utilization, revenue mix, operational efficiency, and cost optimization. While the profitability improvement was witnessed across all business segments, external headwinds like increasing commodity prices, supply disruptions in electronic components and currency volatility were building up.

Profit after tax reported at INR 68 crores, a growth of 308% over Q2 2020 with better preparedness and localized impact of the second wave.

The company’s cash position continues to remain robust at INR 2,364 crore at the end of Q2 2021 vis-a-vis INR 1,498 crore in Q2 2020.

Outlook

The market is expected to recover in India with improving macro backdrop, decreasing current case load and global recovery. However, the resurgence of cases in certain large countries, a potential third wave of infections and its impact on domestic and global business traction remain areas of uncertainty. We have a business continuity plan in place with people and operations, and safety protocols with close monitoring and engagement in our key market segments. The cautious lookout for commodity price cycles is being factored in by our business divisions. We will continue to leverage growth pockets and calibrate our businesses to the recovery of growth industries like datacenters, renewables, electronics, F&B, and pharmaceuticals and other large core industries that should re-start long overdue capex cycle. ABB India remains cautiously optimistic on order wins and seamless execution in close engagement with customers while gaining operational efficiencies & innovative sustainable practices.

ABB (ABBN: SIX Swiss Ex) is a leading global technology company that energizes the transformation of society and industry to achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation and motion portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching back more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.

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*Operational EBITA

Operational EBITA margin is Operational EBITA as a percentage of Operational revenues. Operational EBITA is Operational earnings before interest, taxes and acquisition-related amortization. Operational EBITA represents income from operations excluding:

• acquisition-related amortization (as defined below),

• restructuring, related and implementation costs,

• changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations related to divested businesses),

• changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates),

• gains and losses from sale of businesses,

• acquisition- and divestment-related expenses and integration costs,

• certain other non-operational items, as well as

• foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).

Certain other non-operational items generally include: certain regulatory, compliance and legal costs, certain asset write downs/impairments as well as other items which are determined by management on a case-by-case basis.

Operational EBITA is our measure of segment profit but is also used by management to evaluate the profitability of the Company as a whole.