ABB braces for COVID-19 impact

In: Grid
ABB released some further information on the effects of the COVID-19 (novel coronavirus) on its business. The company stated it has experienced a decline in trading conditions due to the outbreak, further impacted by a weakening oil price.

ABB stated that the situation in China has stabilised following extensive government-led efforts in February and operations at ABB’s three main production hubs of Shanghai, Beijing and Xiamen have largely returned to normal. While weakened customer demand in China will impact the first quarter results.

Although it is not yet possible to determine the exact impact of COVID-19 on its first quarter results, ABB expects revenues to decline in all its businesses relative to a year ago, while orders are somewhat less impacted.

Operational EBITA margins are also expected to decline in all ABB’s businesses, burdened by lower volumes, partly offset by self-help efforts. Self-help initiatives are aided by the framework ABB already has in place to implement ABB’s Operating System. At the same time, the company is intensifying mitigation measures and actively reducing all non-essential costs, and all of ABB’s businesses are focused on serving its customers while sustaining cash flow.

Currently, the majority of ABB’s production facilities remain fully or partly operational and supply chain impacts have been minimal. However, ABB stated the outbreak is expected to continue to have an impact globally, potentially creating disruption across production sites and further curtailing product demand, project and service activity.

ABB is accelerating and extending its mitigation measures ahead of what looks set to be a difficult second quarter, with a focus on adjusting capacity to meet reduced demand.

Given continued uncertainty, including the recent oil price decline, ABB is no longer providing financial guidance for full year 2020.

ABB CEO Björn Rosengren stated: “The health and safety of all stakeholders, above all our employees, remains our number one priority at this moment in time, while we also try our utmost to secure business continuity. We remain prepared for any scenario and will take strong action to mitigate the impact for our customers, shareholders and employees.”

“Furthermore, the Board of Directors and the Executive Committee of ABB have decided to voluntarily take an immediate 10 percent reduction in board compensation and salary for the duration of the crisis, with the view to extend this strong sign of solidarity to other senior management levels within the company. We must stay strong together for the whole of ABB and for our society. The money saved through the compensation and salary reductions will be donated by ABB towards efforts aimed at fighting the impacts of the Coronavirus crisis”
said the CEO.

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