ABB India April-June net profit fall 22% on weak order flow

Moneycontrol Bureau

Engineering major ABB India reported disappointing set of second quarter numbers on Friday, when stock indices were closed due to Eid holiday. The company’s net profit in April-June fell 22 percent on year to Rs 40.3 crore following contraction in revenue.

The Bengaluru based company reported 7.6 percent on year fall in revenue at Rs 1741.6 crore following lackluster order inflow. A CNBC-TV18 poll had expected the company to post 12.9 percent increase in net profit at Rs 58.3 crore and total income of Rs 1995 crore, a marginal hike of 5.9 percent.

The company received orders worth Rs 1,731 crores during the quarter ended June 30, 2013, compared to an order intake of Rs. 2,045 crores for the same period last year. “This reflects a challenging business environment as customers continue to exercise caution on large investments,” ABB said in a press release.

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The company’s operating margins however improved to 6.4 percent little better than market expectations during the quarter. Savings from operational excellence initiatives and cost take out programs helped offset the impact of price pressures and the higher cost of working capital, ABB said.

The company’s order backlog stood at Rs 8,235 crores at the end of the quarter as compared to Rs 9,175 crores during the same period last year.
 
ABB’s other income during the June quarter rose to Rs 3.78 crore from Rs 1.42 crore in a year ago quarter.

“The economic environment is now increasingly depressed. Our multiple productivity and operational excellence initiatives are yielding results. We are confident that our broad portfolio, cost take out programs, localisation initiatives and the ability to find new opportunities will give us pole position as the market eventually revives” said Bazmi Husain, Managing Director, ABB India in a release.