Q1 2023 results

Zurich, Switzerland, April 25, 2023

Strong start to the year

• Orders $9,450 million, +1%; comparable¹ +9% 
• Revenues $7,859 million, +13%; comparable +22% 
• Income from operations $1,198 million; margin 15.2% 
• Operational EBITA¹ $1,277 million; margin¹ 16.3%
• Basic EPS $0.56; +78%²
• Cash flow from operating activities⁴ $282 million

“ABB had a strong start to the year, with a positive development in most measures, including cash flow. This gives us the confidence to raise our 2023 guidance.”

Björn Rosengren, CEO

CEO summary
Customer activity was strong in the first quarter. Despite a very high comparable from last year, we increased order intake by 1% (9% comparable), with a positive development in three out of four business areas. While Robotics & Discrete Automation improved orders sequentially, it declined from last year’s high level which benefited from pre-buys in a period of significant component shortages. Particularly strong momentum was noted in Process Automation with orders reaching the highest level in recent history. A positive underlying momentum was noted also in all three regions.

Just like in the previous quarter, we did not face significant supply chain constraints, hence we converted backlog into customer deliveries. Revenue growth was strong at 13% (22% comparable), with double-digit comparable increases in all business areas. The impacts from robust development in both pricing and volumes more than offset the notable adverse impact from changes in exchange rates. Despite strong revenue growth we built order backlog, with book-to-bill at 120%.

I was pleased about the operational execution of the increased revenues. We improved the Operational EBITA by 28% to $1,277 million and the margin was up by 200 basis points to 16.3%. This is the strongest first quarter result in many years. 

On top of the strong operational performance, net income was additionally supported by net positive tax impacts of approximately $200 million linked to a favorable resolution of certain prior year tax matters, mainly related to the divestment of the Power Grids business.

It was good to see our cash flow improve from last year by $855 million, in line with our expectations. Cash flow from operating activities of $282 million was strong for a first quarter, and set us off to a robust start for what I expect will be a good cash delivery this year. I feel confident that our balance sheet will be strong enough to support both organic and acquired growth, a rising, sustainable dividend per share over time and utilizing share buybacks as a means to return excess cash to our shareholders. In early April, we launched our new share buyback program of up to $1 billion, which will run until March 2024. 

In February, we published our first integrated report, including our 2022 sustainability report showing solid progress toward our 2030 goals. One highlight to mention is that we reduced our own greenhouse gas emissions by 43%, a total reduction of 65% from the 2019 baseline.

Furthermore, we defined a new emissions reduction target for our supply chain, covering suppliers that account for 70% of our procurement spend. We have continued our work to strengthen ABB’s circularity approach by defining clear key performance indicators for every stage of the product life cycle, from design to end-of-life. The largest positive environmental impact we can make is through providing our customers with resource-efficient products and the demand for clean energy and efficiency is broad and long-term. 

After having been listed on the New York Stock Exchange (NYSE) since 2001, we have decided to delist and plan to eventually deregister with the SEC. The main reason being that the access to international equity markets has increased since our listing, through digital trading on multiple platforms. Consequently, we no longer see the need to be listed on as many as three equity capital markets. We plan to delist our American Depositary Receipts (ADRs) on or around May 23, 2023, and as from the time of delisting, the ABB ADRs will instead be converted to a sponsored Level I program. This still gives US investors the ability to invest in ABB through ADRs. The ABB shares will remain listed on the SIX Swiss Exchange and the Swedish Nasdaq exchange due to the company’s heritage. The delisting and planned deregistration in the US would be yet another step towards further simplification and efficiency at ABB.

I want to emphasize that we remain as committed to the US-market, which represented 24% of our revenues in 2022. The United States is critical to ABB’s success, and approximately 85% of ABB’s sales in the US are from products produced locally. To support future success, we are currently investing approximately $170 million in our US facilities to meet increasing demand for clean energy and automation. 

Björn Rosengren
CEO

Outlook
In the second quarter of 2023, we anticipate double-digit comparable revenue growth to support an improvement in the Operational EBITA margin, year-on-year.

In full-year 2023, despite current market uncertainty, we anticipate comparable revenue growth to be at least 10% and we expect to improve Operational EBITA margin, year-on-year.

The complete press release including the appendices is available at www.abb.com/news  

ABB (ABBN: SIX Swiss Ex) is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company’s solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated. Building on more than 130 years of excellence, ABB’s ~105,000 employees are committed to driving innovations that accelerate industrial transformation. www.abb.com