ABB (ABB) Q2 2024 earnings summary

Executive summary

• Achieved record-high Operational EBITA margin of 19.0% in Q2 2024, driven by strong performance in Electrification and Process Automation, while Robotics and E-mobility lagged.

• Revenues reached $8.2 billion, up 1% year-over-year (+4% comparable), with net income up 21% to $1,096 million and free cash flow up 51% to $918 million.

• Orders remained flat year-over-year, with growth in short-cycle orders offsetting lower large order bookings; order backlog reached $22 billion.

• Sustainability efforts advanced, including SBTi approval for 2030/2050 targets and investments in AI-based clean tech and Smart Buildings acquisitions.

• Leadership transition announced, with new presidents for Electrification and Motion, and incoming CEO Morten Wierod.

Financial highlights

• Operational EBITA up 10% year-over-year to $1,564 million; margin increased by 150 bps to 19.0%, an all-time high.

• EPS rose 22% to $0.59; free cash flow reached $918 million for Q2 and nearly $1.5 billion for H1 2024.

• Book-to-bill ratio positive at 1.02; order backlog grew 4% year-over-year to $22 billion.

• Gross margin improved to 38.5%, supported by positive pricing and higher volumes.

• Net working capital as a percentage of revenues improved to 11.2% from 14.7% a year ago.

Outlook and guidance

• Q3 2024 expected to see sequentially higher comparable revenue growth and Operational EBITA margin around 18.5% or slightly below.

• Full-year 2024 guidance for about 5% comparable revenue growth and Operational EBITA margin about 18% reaffirmed, with confidence in backlog conversion.

• Approximately 49% of the $22 billion order backlog is expected to be fulfilled in 2024, 33% in 2025, and the remainder thereafter.