Abb Ltd (Adr) ((ABBNY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During its latest earnings call, ABB Ltd (ADR) reported a record year, marked by significant achievements in operational performance, particularly within its Electrification segment, and overall regional growth. However, challenges persist, notably in the Robotics and Discrete Automation sectors, alongside ongoing struggles in China and substantial losses in the E-mobility segment.
Record Year for ABB
ABB celebrated a milestone year, achieving a new record level for its operational EBITA margin at 18.1%, and an all-time high gross margin of 37.4%. The company saw a 6% increase in earnings per share and delivered a robust free cash flow of $3.9 billion, resulting in a free cash flow margin of 12%.
Electrification Segment Success
The Electrification segment saw considerable success, with orders rising by 16% and revenue growth reaching 11%, surpassing the $4 billion mark for the first time. Operational EBITA in this segment improved by 19% to $863 million, translating to a margin of 21.3%.
Strong Regional Growth
ABB experienced positive order growth across all three major regions. Europe led with a 9% increase, followed by the Americas with a 7% rise. In China, excluding backlog adjustments, the decline was limited to just 1%.
Improvements in Robotics and Discrete Automation
Robotics and Discrete Automation showed signs of recovery, experiencing positive order growth after eight consecutive quarters of decline, despite facing some backlog adjustments.
Challenges in Robotics and Discrete Automation
Despite the positive order growth, the Robotics and Discrete Automation segment faced significant setbacks due to backlog adjustments, resulting in de-bookings of approximately $130 million, which impacted growth significantly.
Continued Weakness in China
China’s performance was notably weak, with orders declining by 11% due to backlog adjustments. Even without these adjustments, China faced challenges, with orders down by 1%.
E-mobility Segment Losses
The E-mobility segment reported significant losses totaling $272 million in 2024, with expectations of continued, albeit reduced, losses in 2025.
Forward-Looking Guidance
Looking ahead, ABB’s management provided a positive outlook for 2024, with operational EBITA up by 10% year-on-year, reaching a new record margin level of 18.1%. The company’s free cash flow remained strong at $3.9 billion, with a 12% margin, marking the second year of double-digit margins. ROCE was reported at 22.9%, surpassing the target of over 18%. For 2025, ABB anticipates mid-single-digit comparable revenue growth and further improvement in operational EBITA margin, alongside a new share buyback program of up to $1.5 billion.
In summary, ABB Ltd (ADR) has reported a record year, underscored by strong operational performance and regional growth, particularly in the Electrification segment. However, the company faces challenges in several areas, including Robotics and Discrete Automation, as well as continued losses in the E-mobility segment. Looking forward, ABB remains optimistic about achieving new records in 2025, despite these challenges.
