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FRANKFURT (Dow Jones) – The Swiss technology group ABB lost almost 90 percent of its profits in the third quarter. Income from operations was $ 71 million, compared to $ 577 million in the same period last year, according to a press release. This was mainly caused by goodwill amortization of $ 311 million and negative effects from previously sold parts of the company of $ 203 million. The bottom line was that the sale of Power Grids to Hitachi generated billions in profit.
The operating EBITA fell 2 percent to $ 787 million. With a simultaneous 4 percent decline in sales to just under $ 6.6 billion, the return on sales in relation to operating EBITA improved by 30 basis points to 12.0 percent. A book gain of $ 5.3 billion from the sale of 80.8 percent of the Power Grids division to Hitachi increased the surplus from $ 515 million a year ago to $ 4.53 billion.
ABB said the business environment has remained challenging. The demand weakened in all regions compared to the previous year, and the strong recovery in China had a positive effect on the order situation. The positive development in the short-cycle product business was offset by declining major orders and the ongoing restrictions in the service business. Incoming orders fell 9 percent to $ 6.1 billion – the inventory is now just under 13.9 billion.
In the fourth quarter, ABB expects an even more pronounced decline in sales. The operating margins, on the other hand, are likely to rise year-on-year due to lower special charges, but will decline in the third quarter due to seasonal factors. ABB expects cash flow to be robust for the full year.
Regarding the ongoing restructuring, it was said that the planned net savings of $ 500 million are progressing faster than expected. The group intends to discuss future portfolio development at a capital market day on November 19.
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(END) Dow Jones Newswires
October 23, 2020 01:46 AM ET (05:46 GMT)