Swiss engineering firm ABB says demand ‘normalising’ after 2022’s stock build-ups

SWISS engineering company ABB on Thursday (Feb 2) said it expected demand for its products to “normalise” this year, after customers built up their stocks and pre-ordered to avoid supply-chain disruptions and component shortages last year.

The company, which makes products ranging from electric-vehicle chargers to industrial motors, also posted fourth-quarter earnings of US$1.13 billion. The figure was greater than market forecasts.

Its shares were 0.9 per cent higher in Swiss pre-market trade indications.

Bjorn Rosengren, chief executive of ABB, said: “Looking into 2023, we currently do not anticipate a major setback in demand, although the high inflationary environment adds uncertainty.”

He added that comparable order growth in the first half of the year would be affected by “last year’s very high order level, coupled with a normalisation of customers’ order patterns”.

Still, ABB said it expected a strong start to the year, as it works its way through a US$19.9 billion order backlog.

It also expected comparable revenue growth in the double-digit percentage range in the first three months of the year, with growth exceeding 5 per cent for the whole year.

The company’s comments are viewed as indicators of the broader global economy’s health, as its products are used in many factories as well as transport and infrastructure projects.

Rockwell Automation, ABB’s industrial automation peer, last month raised its full-year sales guidance to reflect its results, order backlog and improving supply-chain situation.

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Meanwhile, ABB’s fourth-quarter earnings were boosted by a gain from selling its remaining stake in its power-grid business to Hitachi in December.

The Swiss company’s quarterly revenue rose 16 per cent on a comparable basis to US$7.82 billion. Its new order intake increased 2 per cent, compared with 16 per cent for the whole of 2022.

It said that activity was stable or improving slightly in most customer segments, barring declines in residential construction and discrete manufacturing.

Orders were increasing from the electric-vehicle sector, while demand was robust in oil, gas, water and power generation, and normalising in consumer-related products like electronics. REUTERS