Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on ABB LTD-REG. We currently have 11 research reports from 1 professional analysts.
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Growth momentum still not visible
08 Feb 17
The company reported final 2016 results. In the fourth quarter ending in December, revenues declined 2.7% to US$8.99bn. The gross margin, however, improved from 25.9% to 28% mainly driven by higher product and service gross margins. EBIT jumped 109.2% to US$725.8m. The EBIT margin increased from 3.8% to 8.1% due to lower restructuring charges booked in Q4 15. Order intake remained stable at US$8.28bn. In the financial year 2016, revenues declined 4.7% to US$33.8bn. The EBIT margin improved from 8.6% to 9% and net income rose 1.6% to US$1.96bn. Management proposed a dividend increase of CHF0.02 from CHF0.74 to CHF076 per share. Order intake declined 8.4% to US$33.4bn and the order backlog reached US$22.98bn.
Solid operating performance but declining orders
27 Oct 16
In Q3 16, revenues declined 3.1% to US$8.26bn (our estimate: US$8bn). Order intake dropped 14.1% to US$7.53bn and the order backlog declined 3.2% to US$24.55bn. The gross margin increased from 29.6% to 29.8% and the EBIT margin from 10.4% to 10.6%. Total EBIT remained nearly stable at around US$878m (our estimate: US$680m). Net profit declined 1.6% to US$568m. Adjusted EBITA declined 3.2% to US$1.046bn which was marginally above the consensus estimates of around US$1.4bn. The operating performance of the company was in line with market expectations but exceeded our estimates. The performance was mainly driven by the Power Grids division. Real EBIT increased 39.6% to US$222m and the EBIT margin improved from 5.7% to 8.4%. The EBIT margin of the Electrifications division increased from 16.6% to 16.9%, Discrete Automation & Motion from 11.9% to 12.5% and Process Automation from 9.6% to 11.2%.
Return on equity reduced by law
13 Oct 16
In Germany, the regulatory environment for the grid network has changed. The German Network Agency (Bundesnetzagentur) has changed the imputed return on equity which will apply for the next five years. The current regulatory periods for gas and electricity will expire in 2017 (gas) and 2018 (electricity). The new regulations for gas will apply as of January 2018 and for electricity 2019. The new return on equity for new assets will be reduced from 9.05% to 6.91% and for so-called old assets (activation prior January 2006) will decline from 7.14% to 5.12%. In each case without inflation and before corporate tax and after trade tax. According to estimates the lowered return on equity (equity ratio 40% max.) will reduce the yield by around €650m per year.
Business as usual!
05 Oct 16
The capital markets day ended as expected. The Power Grids division will not be separated from the company. The shareholder Cevian with a stake of 6.2% in the company had asked for a spin-off, IPO or joint venture. ABB’s response was quite obvious. Management will streamline the group and has initiated a share buy-back programme. Management has also started partnerships with Flour (transformation station) and the Norwegian service and maintenance company Aibel for offshore wind energy. In addition, a new EBITA margin corridor for the Power Grids division was announced. In 2018, the EBITA margin should range between 10% and 14% compared to 8-12% previously. In addition, management added some buzzwords such as relentless execution, streamlining the portfolio and digitalisation.
The communication engine has started!
22 Sep 16
Just after the supervisory board meeting another argument has arisen about not selling the Power Grids division. The Chinese company State Grid Corporation is interested in ABB’s leading-edge technology HVDC (high voltage direct current). State Grid Corporation is ABB’s largest customer but might also become its the largest competitor. The company controls more than 80% of the Chinese grid. According to recent rumours, State Grid is willing to pay up to US$20bn, which is in line with our net asset valuation.
Power Grids to remain part of the group!
21 Sep 16
ABB has sold its high-voltage cable business to the Danish company NKT Cables. The total enterprise value reached €836m, or US$934m. The high-voltage business was part of the Power Grids division and generated total revenues of around US$524m with around 900 employees. The business unit has manufacturing and R&D facilities for high-voltage submarine and underground cables in Karlskrona, Sweden. The deal will be closed in the first quarter of 2017.
N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book
28 Mar 17
After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).
Panmure Morning Note 29-03-2017
29 Mar 17
We are cutting our recommendation to HOLD as we see little upside from current levels given the lack of positive surprises in today’s trading update. Multiples of 4.4x 2017 sales and 17x 2017 EBITDA imply an expectation of at least slightly exceeding expectations. We had assumed that acquisitions will provide the momentum until organic investments deliver. However, acquisitions are proving elusive and excess cash is diluting returns. Moreover, our forecast relies on at least one order in vehicle simulator market, which has yet to be announced. The management has shown that it can use the financial markets to raise equity but it now needs to show that it can deploy excess equity productively.
N+1 Singer - Severfield - Strong H2 drives upgrades; CEO temporarily steps down due to ill health
28 Mar 17
Severfield’s trading update highlights that trading during H2 was strong and the Group now expects results to be ahead of expectations. Cash flow performance has been similarly strong with net funds at the year end also expected to be ahead of expectations. The strong performance was driven by both a better than expected revenue performance and better than expected growth in the operating margin. We expect to increase our FY16 PBT forecasts by c.9% to around £19.5m. In addition, we are disappointed to see that Ian Lawson (CEO) has taken a temporary leave of absence due to physical ill health. John Dodds (non-executive Chairman) will step up to Executive Chairman on an interim basis and Alan Dunsmore (FD) has agreed to assume the role of CEO on a similar basis. This should ensure the continuity of the business whilst Ian is recovering. The outlook for Sevefield remains positive and the Group has reiterated its medium term target to double PBT from £13.2m in FY16 by FY20. We remain positive on Severfield (one of our best ideas for 2017) and continue to see clear potential for it to outperform its medium term targets.
N+1 Singer - Morning Song 30-03-2017
30 Mar 17
accesso Technology (ACSO LN) Acquisition | Findel (FDL LN) Update on customer redress programme | Hargreaves Services (HSP LN) Blindwells planning approval | Severfield (SFR LN) Upgrading forecasts and reiterating positive view | Summit Therapeutics (SUMM LN) FY results in line; full 24-week PhaseOut DMD data expected in Q1 ’18 | Tribal Group (TRB LN) 2016 delivered and more; future looking bright