The Swiss technology group is under pressure from alarming news from its Indian subsidiary. Despite double -digit sales growth, profitability broke dramatically – a warning shot for the global strategy?
Margen collapse despite the increase in sales
The numbers from India speak a clear language: While sales in the second quarter increased a solid 12.2 percent to 3,175 Crore rupees, net profit crashed by 21 percent to only 352 crore rupees.
The development of the operational margin shows even more dramatic. The EBITDA margin dropped from 19.2 percent catastrophic to 13 percent in the same period last year. With this, the company destroyed more than six percentage points of profitability within a year.
Management identified currency fluctuations and one -off provisions in the electrification business as the cause. But can external factors explain why a growing business suddenly throws off so much less?
Robotics outsourcing as a liberation?
At the same time, the group announced a strategic conversion. The robotic business is outsourced to an independent subsidiary – a step that is part of the global realignment.
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Should investors sell immediately? Or is it worth getting started with ABB?
Despite the weak earnings situation, the board decided an interim dividend of 9.77 rupees per share. A signal of strength or desperate attempt to keep investors happy?
The facts at a glance:
- Sales growth: Plus 12.2 percent in India
- Burrings in profits: Net profit minus 21 percent
- Margenkollaps: EBITDA margin from 19.2 to 13.0 percent
- Dividend policy: Interim dividend despite weak numbers
- Strategic conversion: Robotics division becomes independent
Digitization as the last straw
Hope comes from the digitization area. A partnership with the Think Gas gas supplier is intended to fully automate its urban distribution network. Such projects show technological competence, but can hardly cover the structural problems.
Particularly worrying: the order input decreased because large orders from the previous year failed. This shouldn’t actually happen in a high -growing market like India.
The important Indian market is developing into a problem for the Swiss Group. The combination of dwindling profitability and declining orders should continue to burden the stock.
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The latest ABB numbers speak a clear language: urgent need for action for ABB shareholders. Is it worth getting started or should you sell? In the current free analysis of August 3, you will find out what to do now.
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