ABB powers ahead

ABB has been stirred to greater heights as a strong order book position has prompted improved quarterly results from the company.

The scrip of the power equipment company edged up 1.4% to Rs 283.20 on BSE in a little over an hour of trading on Monday. The scrip was trading close to the day's high of Rs 283.40.

ABB, though having surged from a recent low, has proved volatile of late. The scrip jumped 25.7% to Rs 269.40 on 9 January 2003 from Rs 214.15 on 22 November 2002. Ever since, it has been oscillating, though keeping in the Rs 282-260 range.

The scrip has strengthened in the last couple of trading sessions on the back of good Q4 and FY 2002 results and also due to the dividend of Rs 6 per share that it has announced.

The day (30 January 2003) the results were announced , the scrip eased to Rs 264.85 from its close of Rs 265.35 on 29 January 2003. In the next session , the scrip climbed 5.4% to Rs 279.25.

For Q4 and FY 2002, ABB has turned out good results on the back of healthy order backlog and higher revenues from standard products, a key strategic initiative taken by the management of the company.

For Q4, ABB registered 3% rise in revenues to Rs 373.72 crore (Rs 3.73 billion). The operating profit margin rose to 15.2% from 12.1% due to reduction in staff costs and other expenditure. Net profit was also boosted by surge in other income from Rs 1.88 crore to Rs 10.93 crore and also due to a sharp reduction in interest cost and depreciation. After providing substantially higher for current tax of Rs 22.30 crore (against Rs 7.50 crore) and deferred tax of Rs 7.9 million (against Rs 4.5 million), PAT was 34% higher at Rs 41.07 crore in Q4.

For the FY ended 31 December 2002, sales are 13% higher at Rs 1175.76 crore (Rs 11.75 billion) and OPM increased from 9.3% to 10.0%. For the FY there was an EO profit of Rs 15.83 crore in the form of capital gains due to the company divesting its air-handling business to Falk (India).

Pursuant to the ABB Group's decision to sell worldwide air-handling equipment business to Global Air Movement (Luxembourg), SARL, which became effective from 1 February 2002, the company has divested this business in India to Falkt (India) on May 2002. The operating loss of the air-handling business in the interim period between 1 February 2002 and 31 May 2002 has been reimbursed to the company which has been currently shown under other income (amounting to Rs 2.27 crore).

ABB witnessed a significant growth in order booking during the year at Rs 1305.00 crore (Rs 13.05 billion), an increase of 20% over the previous year. In the December 2002 quarter, the company booked an order intake of Rs 370.90 crore (Rs 3.7 billion), an increase of 10%.

Order intake for the year included major project orders from utility and industrial customers as well as significant enhancement in the standard products and service business. As part of the standard products thrust the company added over 100 channel partners to increase its penetration and spread. These efforts were further augmented with the success of the e-channel business, and this channel shall continue to be developed in the future.

It might be recalled that ABB India was recently awarded its single largest export order to date, valued at Rs 168 crore, by Public Establishment of Electricity for Generation & Transmission, the power generation and transmission utility of Syria. The turnkey order includes six new 230/66/20kV substations for Dera, Al-Fayha, Bebila, Telhamis, North Aleppo and Sarakeb and will help in substantially improving power supply to these towns. The project is being financed by the European Investment Bank and is scheduled for completion in around 24 months.

BSE Code: 500002