ZURICH (Reuters) -ABB raised its full-year sales forecast on Thursday, citing a recovery from last year’s pandemic-driven downturn, sending its stock to its highest level in nearly 13 years.
The maker of industrial robots and drives said customers were rebuilding inventories after running them down last year, and were concerned about getting enough components as global production recovers.
The Swiss company said it now expected full-year sales to rise by around 5% or more, when adjusted for currency swings and big acquisitions and divestments. It had previously expected an increase of 3-5%.
ABB shares climbed over 3% to a high of 30.48 Swiss francs, a level not see since June 2008, amid growing signs of optimism for the capital goods sector.
Rival Siemens raised its full-year guidance in February after seeing strong demand at its factory automation unit, while Schneider Electric forecast revenues would increase by 5%-8% this year.
“Other companies have already pointed to a strong quarter to March, notably Siemens in discrete automation and (French electrical parts supplier) Rexel in electrical distribution,” said Citi analyst Martin Wilkie. “Nonetheless, the ABB pre-release should be seen as a broad sector positive for Q1.”
Ahead of full first-quarter results on April 27, ABB said revenues in the three months had risen by 11% from a year earlier to $6.90 billion. On a like-for-like basis, which excludes the impact of currency swings, revenues rose by 7%.
First-quarter orders were up 1% to $7.75 billion, while the operational profit margin (EBITA) increased to 13.5% from 10.2% a year earlier.
ABB, which in February forecast a gradual improvement through 2021, said on Wednesday it had seen stronger than expected demand, especially during the last weeks of March.
It did not say where demand was strongest - only that its short cycle businesses were doing well, which analysts said meant its electrification and factory automation businesses.
“Customers are restocking due to fear of prices going up as raw materials get more expensive and lack of availability,” said JP Morgan analyst Andreas Willi, who said Siemens, Schneider should benefit from similar trends.
“The restock is likely a global feature and will last for a few months given the low level of inventories,” he added.
ABB also said it expected a recovery in process industries, which include oil and gas, in the second half of the year.
Reporting by John Revill. Editing by Brenna Hughes Neghaiwi and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.