ABB Ltd. shares rose after the company doubled its revenue forecast for the year, saying a surge of new orders and higher prices point to better results.
(Bloomberg) — ABB Ltd. shares rose after the company doubled its revenue forecast for the year, saying a surge of new orders and higher prices point to better results.
The Swiss industrial manufacturer now expects comparable revenue to increase by more than 10% in 2023, after estimating roughly 5% in February, according to a statement Tuesday. Shares gained as much as 3.9% in early trading.
ABB has been able to weather the economic slowdown as a backlog of sales kept order books full. The company, which sees orders coming down from elevated levels this year, has also been able to pass through price increases to offset record inflation.
First-quarter operational earnings before interest, taxes and appreciations increased 28% to $1.28 billion. ABB now expects its operating margin to exceed last year’s level of 15.2%.
“ABB had a strong start to the year, with a positive development in most measures,” Chief Executive Officer Björn Rosengren said in the statement. “This gives us the confidence to raise our 2023 guidance.”
New customer orders reached $9.5 billion in the first quarter, an increase of 1% compared to the previous year and exceeding an average analyst estimate of $8.3 billion.
“This points at strong revenue visibility by management and thus confidence to reach at least the new target, if not over-deliver on it,” said Sebastian Kuenne, an analyst at RBC.
Rosengren has been under pressure from some minority investors to streamline the conglomerate. ABB sold its power-conversion unit in January for $505 million and listed its Accelleron turbocharging division in October. The company also plans to list its electric-car charging operations but has postponed the share sale due to unfavorable market conditions. That deal has been valued by minority investors at about 2.5 billion Swiss Francs ($2.7 billion).
ABB also said it plans to delist its American Depository Receipts from the NYSE, saying it’s no longer necessary now that investors can trade digitally on multiple platforms. The delisting is expected to take effect on or around May 23.
(Updates with shares beginning in first paragraph.)
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