ABB India, the power T&D equipment and automation major has registered 15% growth in its sales for the quarter ended December 2018 to Rs 1966.32 crore. Higher sales together with 250 bps expansion in operating profit margin facilitated 48% jump in operating profit to Rs 215.43 crore. Other income was down by 4% to Rs 15.98 crore and thus the growth at PBIDT moderated and stood at 43% to Rs 231.41 crore. However gained by lower interest and depreciation cost, the PBT was up by 67% to Rs 202.26 crore. However hit by higher taxation (up 86% to Rs 73.62 crore) the PAT (from continuing business) was up by 58% to Rs 128.64 crore. The profit (net of tax) from discontinued operations was down by 23% to Rs 69.27 crore. However after accounting for higher other comprehensive expense (up 522% to Rs 9.02 crore, the net profit (total comprehensive income) was up by just 11% to Rs 188.89 crore.

ABB on December 17, 2018, announced an agreed sale of its Power Grids division. Consequently, the results of the Power Grids business are presented as discontinued operations. The company's results for corresponding previous period have been adjusted accordingly.

• Strong growth in sales was largely driven by robotics & Motions business with its segment revenue up by 31% to Rs 698.07 crore. The segment revenue of electrification products and industrial automation was up by 18% (to Rs 748.03 crore) and 10% (to Rs 515.47 crore). The segment revenue of others was down by 15% to Rs 128.40 crore.

• EBIT for the quarter was down by 5% to Rs 223.03 crore hit by lower segment profit from electrification products and industrial automation business segments. The segment profit of robotics and motions was higher by 39% to Rs 74.93 crore facilitated by higher sales and higher margin. The segment margin of robotics and motions stood expanded by 60 bps to 10.7%. However despite higher sales, hit by sharp fall in segment margin, the segment profit of electrification products and industrial automation stood lower. Hit by 450 bps contraction in segment margin to 10.1%, the segment profit of electrification products was down by 18% to Rs 75.64 crore. Similarly hit by 470 bps contraction in segment margin to 14.1%, the segment profit of industrial automation was down by 18% to Rs 72.46 crore.

• OPM expanded by 250 bps to 11% and that is largely due to fall in material cost, sub contract cost and staff cost. Material cost as proportion to sales net of stocks was down by 320 bps to 55.4%. Similarly the sub contract expense was down by 250 bps to 2.7% and that of staff cost was down by 130 bps to 5.2%. However the cost of traded goods was up by 290 bps to 8.8% and that of other expenses were up by 140 bps to 16.8%.

• Operational EBITA [represents income from operations excluding: (i) amortization expense on intangibles, (ii) restructuring and restructuring-related expenses, (iii) non-operational pension cost, (iv) gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items, as well as (v) foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)] for the quarter as per the press release of the company was higher by 37% to Rs 180 crore with margin expand by 140 bps to 9.1%.

• Other income was lower by 4% to Rs 15.98 crore. However the interest was lower by 61% to Rs 5.27 crore and depreciation was higher by 14% to Rs 23.88 crore. Thus propelled by lower interest cost the PBT was up by 67% to Rs 202.26 crore.

• Taxation in absolute term was higher by 87% to Rs 73.62 crore and the effective tax rate for the quarter was also stood higher at 36.4% compared to 32.6% in the corresponding previous period. Thus the PAT was eventually higher by 58% to Rs 128.64 crore.

• Profit (net of tax) from discontinued operations was lower by 23% to Rs 69.27 crore. Thus the PAT after profit from discontinued operations was up by 15% to Rs 197.91 crore.

• Other comprehensive expense net of tax jumped up by 522% to Rs 9.02 crore. And thus the total comprehensive income was up by 11% to Rs 188.89 crore.

Yearly performance

Standalone sales were higher by 10% to Rs 6690.12 crore with all three major business of the company register growth in segment revenue for the period. The EBIT for the period was up by 8% to Rs 660.03 crore with upside coming largely come from robotics and IA business. The segment profit of electrification products was down by 11% to Rs 249.58 crore but that of robotics and IA was up by 35% and 12% respectively to Rs 220.52 crore and Rs 189.93 crore. The interest was down by 6% to Rs 53.90 crore. And the PBT was up by 18% to Rs 395.14 crore. Eventually the PAT was up by 13% to Rs 254.19 crore with taxation stand higher by 30% to Rs 140.95 crore.

Profit from discontinued operations (net of tax) was up by 32% to Rs 256.70 crore and thus the PAT after profit from discontinued operations was up by 22% to Rs 510.89 crore. The OCI was down by 12% to Rs 1.95 crore and thus the total comprehensive income was up by 21% to Rs 512.84 crore.

Other developments

The Zurich head quartered ABB on 17th December 2018, announced the sale of its Global Power Grids Business to Hitachi. Further to the global announcement, in the Board meeting held on 13th February, 2019 the Board of the company granted in-principle approval for the segregation of the Company's Power Grid's business from the other business of the Company. Consequently, in pursuant to the requirements of Ind AS 105 - Non Current Assets Held for Sale and Discontinued Operations, the Company has classified the assets and liabilities as at 31st December 2018 pertaining to the Power Grids Business as Assets 1 Liabilities held for sale and measured the same at lower of cost and fair value (fair value less costs to sell). The results of Power Grid business are presented in results from discontinued operations in the current and prior periods presented.

To pay a dividend of Rs 4.80 per equity share (of Rs 2 face value each) for the year ended on 31st December 2018 as recommended by the Board of Directors of the Company on their meeting on March 1, 2019.

Management comment

Sanjeev Sharma, Managing Director of ABB India commented, We have delivered another quarter and year of profitable growth. It has been a year of solid double-digit step-up of fundamentals - orders, revenue, and operating profits creating greater value for all our stakeholders. ABB India enjoys tremendous goodwill with the customers based on its world-class technology footprint. We have a well-entrenched installed base with a good forward visibility in emerging businesses, He further added, The fundamental shift in ABB Group's business model and go-to-market strategy, led by a strong global management team, towards digital automation, industrial motion and electrical equipment will further improve the speed, agility and subsequent return ratios of the company. ABB India's commitment to customers and ongoing engagement with growing and newer segments is stronger than ever. We will continue to focus on the multitude of opportunities in a rapidly growing and evolving India,

Order book & Outlook

Order intake for the quarter ended Dec 2018 was up by 17% to Rs 1900 crore [Service order up 7%yoy to Rs 380 crore; export order down 11% to Rs 170 crore]. Similarly the order intake for fiscal ended Dec 2018 was up by 16% to Rs 6729 crore with service order up by 27% to Rs 1394 crore and export order up 50% to Rs 960 crore. Order backlog as end of Dec 31, 2018 was at Rs 4227 crore, a growth of 10% from Rs 3835 crore as end of Dec 2017.

Structural and economic reforms are likely to continue, albeit at a slower pace because of the impending elections. Growth will likely be led by consumption and infrastructure spending by the government. The company's pioneering technology leadership in digital industries positions ABB to take advantage of opportunities arising in industries, utilities, as well as in transportation & infrastructure.

ABB India : Results

ABB : Segment results