ABB Expects Supply Bottlenecks to Continue in Short Term

ABB expects supply chain shortages to remain a drag on growth at the start of 2022, the Swiss engineering group said on Thursday, after posting fourth-quarter earnings that were better than expected.

The maker of fast chargers for electric vehicles and industrial drives for factories reported a jump of 18 percent in orders as demand surged from machine builders, food manufacturers and general industry.

The automotive sector also saw an upturn, fed by investments from electric vehicle makers and companies that make charging points, ABB said.

“In the fourth quarter, demand increased significantly …. with underlying strength shown across all business areas, regions and most customer segments,” Chief Executive Bjorn Rosengren said in a statement.

But revenues grew much more slowly as ABB battled bottlenecks and shortages of key components such as semiconductor chips that have hit the rest of industry..

Rosengren said the shortages were set to persist at the start of 2022, although ABB had not seen any unusual order cancellations as a result.

The company would also benefit from a big order backlog of$16.6 billion, as the year progressed, he said.

“In the first quarter of 2022, ABB anticipates the underlying market activity to remain overall stable, compared with the prior quarter,” Rosengren said.

“In full-year 2022 … we expect support from an anticipated positive market momentum and our strong order backlog.”

ABB is one of the first of the global capital goods makers to report its figures, which give an insight into the health of industry. Rivals Siemens, and Schneider are due to report in the next two weeks.

Last week, the International Monetary Fund cut its economic forecasts for China, the United States and the global economy and said uncertainty about the pandemic, inflation, supply disruptions and U.S. monetary tightening posed further risks.

During its fourth quarter, ABB reported net income of $2.64 billion, beating expectations for $2.42 billion in a company-gathered consensus of analyst forecasts.

Operating earnings before interest, tax, and amortisation (EBITA) increased 20 percent to $988 million, better than forecasts of $983 million.

Sales grew by 5 percent during the quarter, with the strongest growth coming from the Americas, where orders increased by more than a third during the fourth quarter.

The company proposed lifting its dividend to 0.82 Swiss francs from 0.80 francs for 2020.

ZURICH (Reuters)