ABB Ltd (ABB) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 21, 2022 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ann-Sofie Nordh

Greetings to all, and nice to connect again, as I bid you welcome to this presentation of ABB's Second Quarter results. I'm Ann-Sofie Nordh, Head of Investor Relations. And I’m here with our CEO, Bjorn Rosengren, and our CFO, Timo Ihamuotila. We will walk you through the presentation before we open up for the Q&A session.

But before we begin, I should mention the information regarding safe harbor notices and our use of non-GAAP measures on Slide 2 of the presentation. Also this call will include forward-looking statements which are based on the company's current expectations and certain assumptions and are, therefore, subject to certain risks and uncertainties.

And with that said, I will hand over to Bjorn and Timo to take you through our results.

Bjorn Rosengren

Thank you, Ann-Sofie, and a warm welcome from me as well. And let's start off by looking at a few highlights from the quarter. It was really good to see that demand remains on high level despite the challenges from high inflation, COVID-related lockdowns in China, and strained supply chain. Our orders reached $8.8 billion, the second highest level in recent years and we saw a steady profile of demand throughout the quarter. The pattern in Q2 was similar to what we have seen recently, namely, strong orders paired with revenues hampered by component shortages. This time, we also had an added challenge from the lockdowns in China.

And total book-to-bill was 1.21 and it was the sixth consecutive quarter when we build order backlog. Then I want to highlight the margin of 15.5% in line with our group targets for 2023. I'm very pleased about this. And it was backed by a good operational performance in three out of four business areas. Where we need to improve is in Robotics & Discrete Automation. Just like in Q1, this is the business area significantly impacted by semiconductor shortages, preventing outcome deliveries and it is primarily related to the Robotics business. And I was pleased to see momentum improved in the machine automation. They ended the quarter on a strong note.

I would also mention that we had additional support from the corporate cost. These include 60 basis points from some specific positive items. I will come back to that later. In total, I'm pleased we could improve from an already high level last year. Cash flow came in higher than in the first quarter and we expect good momentum in the second half of the year. Timo will talk more about that in a moment.