Transformation on Track

ABB’s 2019 results show a resilient, versatile company weathering the storm

ABB has been through the storm, weathered the storm, at the eye of the storm…pick your meteorological phrase. Executive shuffle, repurposing of businesses and branches, mergers and acquisitions—all have occurred at the Swiss-based tech-industrial conglomerate during the chaotic decade that was the 2010s. Through it all, ABB appears to have retained its fiscal composure.

The company’s full Q4 and 2019 earnings were released February 5, under the descriptor “Transformation on Track”, which is quite fitting. ABB—which notably owns Baldor Electric—has been a vocal advocate of all kinds of transformation. Not to mention they manufacture transformers. Here are the numbers:

  • Orders $28.6 billion, steady; comparable +1%
  • Revenues $28.0 billion, +1%; comparable +1%
  • Operational EBITA margin1 11.1%, impacted by a combined 130 basis points due to stranded costs and non-core activities
  • Income from operations $1,938 million, -13%
  • Net income $1,439 million, -34%
  • Basic EPS $0.67, -34%2; Operational EPS1 $1.24, -7%
  • Cash flow from operating activities $2,325 million, -20%, incl. cash outflows for simplification program and Power Grids carve-out
  • CHF 0.80 per share dividend proposed

And here’s the executive rundown:

“ABB gave a resilient performance in 2019 in the face of challenging market conditions and a significant transformation. Our revenues and operating margin both improved slightly. The divestment of Power Grids is on track and we are clearly starting to see the positive effects of implementing our new operating model and new culture,” said Peter Voser, Chairman and CEO of ABB. “In line with our dividend policy we are proposing a dividend of 0.80 CHF per share. We are committed to providing attractive returns to shareholders, further enhanced by the commencement of share buybacks using the net cash proceeds from the Power Grids transaction later this year.”

Voser will concede partial control to Bjӧrn Rosengren, recently appointed CEO, effective March 1.

Here is a full transcript of the 2019 earnings call, courtesy of The Motley Fool.

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