ABB sees growth in second half as supply chain problems ease

The logo of Swiss power technology and automation group ABB is seen during the company's annual news conference in Zurich, Switzerland February 28, 2019. REUTERS/Arnd Wiegmann
  • Expects component supplies to improve in coming quarters
  • Offsetting higher costs with raised prices and higher volumes
  • Company decides to quit Russia following war in Ukraine

ZURICH, July 21 (Reuters) - ABB (ABBN.S) gave an upbeat assessment on the remainder of 2022 after the Swiss engineering company reported a 20% increase in orders during its second quarter and said its supply chain problems were easing.

ABB, which competes with Germany's Siemens (SIEGn.DE) and France's Schneider Electric (SCHN.PA), is seen as a barometer of the global economy with its control systems and motors used in the transport sector and factories.

Its business has been constrained by the global shortage of semi-conductor chips - which has delayed deliveries of its industrial robots and installation of electrification systems, but the situation was now easing, it said.

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"Overall, the supply chain constraints slightly eased compared with the previous quarter," ABB Chief Executive Bjorn Rosengren said in a statement. "We anticipate further easing of component supply in the coming quarters."

Similarly, Hyundai (005380.KS) posted a big increase in profit as more chips helped the Korean carmaker ramp up production and Volkswagen (VOWG_p.DE) also expects a strong second half of 2022 as chip shortages dissipate. read more

ABB said it was seeing strong demand particularly in machine building, food & beverage and in general industry as well as at carmakers where it is a big supplier.

Rosengren said he expected "good momentum" in the second half of the year, reporting higher demand from all regions and businesses during the second quarter.

Its stock was indicated 1.6% higher in premarket activity on the Swiss exchange.

In the third quarter of 2022, ABB said it anticipates double-digit comparable revenue growth and its core operating profit margin to improve from the 15.5% posted for the April to June period.

ABB said it had increased its margin despite higher costs of raw materials and transport by raising prices and production volumes.

During the second quarter, ABB suffered a hit from exiting fringe businesses and its decision to quit Russia following the war in Ukraine, which halved shareholders' profit.

Net income fell to $379 million from $752 million a year earlier, missing analyst forecasts for $467 million in a company-gathered consensus.

The company took a $195 million charge from exiting old businesses like train retrofitting work and quitting Russia triggered a charge of $57 million.

Revenue fell 3%, although the figure was 6% higher when the impact of currency movements and changes to its business were removed.

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Reporting by John Revill, Editing by Muralikumar Anantharaman and Elaine Hardcastle

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