There has been very little news of orders, applications or new products from the Process Automation side of ABB over the last six months, basically since the acquisition of the CGM wide screen display business last August. So it was reassuring to read the 2015 full year results, published this month, where CEO Ulrich Speisshofer advises that orders and revenues were steady, on a constant currency basis, in the face of adverse macro-economic and geo-political developments: it was just that the strength of the US Dollar compared to the prior year resulted in a negative translation impact into the final figures, of around 9%.
Because of productivity improvements, and accelerated cost reduction programmes, plus a successful turnaround of the Power Systems business, the operational EBITA margin improved 60 points to 11.8%, and free cash flow generation improved 16% (or 6% in USD) to $3Bn. The strategic review of the Power Grids business is on track for completion in 2016. Through 2015, ABB returned $3.2Bn to shareholders, and now proposes another dividend increase this year, the 7th year running.
Highlights and detail
Speisshofer mentioned particularly the launch of the YuMi collaborative robot, and their targeting on food and beverage markets and Africa as very successful. Declines in orders at Process Automation and Discrete Automation/Motion were offset by growth from Power Systems and Power Products – Process Automation suffered from a marked decrease in the discretionary spending from oil and gas markets in Q4 2015. However one major order received was for monitoring, control and security of the 1850km Trans-Anatolian pipeline, which will bring gas from Azerbaijan to Europe. The strategic review of the Power Grids business is on track for completion in 2016.
Geographically orders grew by 7% in Europe, reflecting steady demand from Germany, and major growth in Sweden and Turkey. While the Americas were steady, China showed a double digit decline, causing a fall in the total Asia plus MEA territory. Large orders (above $15m) grew 10% (down 5% in USD terms) which offset the base order decline of 3% (which was 14% in USD).
…..HVDC links are growing
ABB installed the World’s first HVDC power transmission link from Vastervik to Ygne on the island of Gotland, in the Baltic, in 1954. Upgraded through the years, this link now operates at 150kV, and can transmit 320MW of power over 100km under the sea, providing electric power to the 58,000 residents. In December the operator, Vattenfall Eldistribution, awarded ABB a new $22m contract for further enhancements that will enable greater amounts of the wind power now generated on the island to be returned to the mainland: a state-of-the-art MACH control and protection system will be installed to incorporate advanced fault registration and remote control functions. Having pioneered this technology 60 years ago, ABB has supplied 110 similar projects world-wide, with a capacity total of 120,000 MW – this represents around half the global installed capacity for this technology.
See the pdf giving the ABB review of the development of HVDC power technology: http://tinyurl.com/Ptalk-ABB
(c) Nick Denbow 2016
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