abb-india_earnings-ppt_q1-cy2024_-final.pdf

abb-india_earnings-ppt_q1-cy2024_-final.pdf

• 1.
  — © 2022 ABB.All rights reserved. Q1, 2024 results Solid start for the year – strong growth in orders & revenues, margin expansion with cash accretion B E N G A L U R U , I N D I A | M A Y 1 3 , 2 0 2 4 | S A N J E E V S H A R M A , C M D & T K S R I D H A R , C F O ABB India Analyst Call | Q1 CY2024 | January – March 2024
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  — © 2022 ABB.All rights reserved. Important notices May 14, 2024 Slide 2 This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, and the economic conditions of the regions and industries that are major markets for ABB Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans,” “outlook” or similar expressions. There are numerous risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this presentation and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others: • business risks associated with the volatile global economic environment and political conditions • costs associated with compliance activities • market acceptance of new products and services • changes in governmental regulations and currency exchange rates, and • such other factors as may be discussed from time to time in ABB India Limited’s filings with the Securities and Exchange Board of India (SEBI), including its Annual Report. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.
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  — — ABB in Indiaat a glance ABB Group ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company’s solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered, and operated. Building on over 140 years of excellence, ABB’s more than 105,000 employees are committed to driving innovations that accelerate industrial transformation. ABB in India ABB is present in India for over a century and manufacturing for 74 years. The manufacturing unit is a listed entity. It operates with the entire eco-system of ABB R&D and Services. 5 Electrification Distribution Solutions Smart Power Smart Building Installation Products Service EV Motion Drive Products System Drives Service NEMA Motors IEC LV Motors Large Motors & Generators Traction Process Automation Energy Industries Process Industries Marine & Ports Measurement & Analytics Robotics & Discrete Automation Robotics Machine automation1 Manufacturing locations Plants 25 28 Sales Offices Partners 750+ 1 – Machine Automation division is not part of ABB India & is run separately out of ABB B&R
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  — — Business highlights
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  — Q1 2024 highlights Orders+15%1 underlining the success of ABB India’s multi-division portfolio Revenue +28%1 driven by a strong backlog & conversion from book-to-bill PAT +87%1 due to capacity leverage and cost optimisation Robust cash position at INR 5,036 crore 88% reduction in greenhouse gas emission (scope 1 and 2) at own operation as compared to baseline year of 2019 Water positive operations for half of ABB India’s campuses Launched compact drive ACH180, catering to the HVACR equipment sector 1. YoY comparable © 2024 ABB. All rights reserved.
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  — Positive market momentumacross segments Orders Healthy mix of short and long cycle opportunities Process Strong demand from energy industry, metals & mining Orders (+15%)1 Revenues (+28%)1 INR crores INR crores 1.YoY comparable Order backlog grew +25%1 to INR 8,935 crore Discrete Continued momentum in automotive sector, electronics Data Centers Market uptake for distribution solutions, smart power Tier II & Tier III Markets Increased market penetration through accessible solutions 2,291 2,767 2,634 2,335 3,125 3,044 3,004 3,147 3,607 0% 20% 40% 60% 80% Q1/22 Q3/22 Q1/23 Q3/23 Q1/24 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Orders YoY Growth % 1,968 2,053 2,120 2,427 2,411 2,509 2,769 2,757 3,080 0% 20% 40% 60% Q1/22 Q3/22 Q1/23 Q3/23 Q1/24 - 500 1,000 1,500 2,000 2,500 3,000 3,500 Revenue YoY Growth % Transport Demand for propulsion technology for railways and electrification for metros Export Orders +23%1
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  — © 2022 ABB.All rights reserved. Proven capabilities leading to significant wins Compact substations, smart power products, MV switchgear for a large data center project Robotics solutions for primary, secondary and end of line packaging solutions major for F&B segment System Drives order for a global metal product manufacturer Robotics solutions for electronics in consumer goods & mobile phone assembly Low voltage motors for a range of pump manufacturing, water solutions and engineering companies PA solutions for remote terminal unit, leak detection system and SCADA for brown field project of an energy major
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  — © 2022 ABB.All rights reserved. Continuous customer engagement Diverse segments, deeper coverage Value Provider Conference by Robotics Retailers Meet in Bangalore & Navi Mumbai by Electrification Smart Power and Smart Building Technology Day for cold storage industry, Aligarh by Motion Technical Seminar for steel major in Asansol Electrification Service Camp for a tyre manufacturer in Trichy by Motion Training sessions, Punjab for Paper & Metals Industry by Motion
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  Data Centers Railways &Metro Electronics Renewables Automotive Warehouse & Logistics Water & Wastewater Building & Infrastructure Power Distribution Food & Beverage Textile Marine & Ports Rubber & Plastics Metals & Mining Oil, Gas and Chemicals Pharma & Healthcare Pulp & Paper Cement High Growth Moderate Growth Moderate-Low Growth Focus Enhance Sustain Diverse businesses catering to 23 market segments
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  — © 2022 ABB.All rights reserved. • Buildings & Infrastructure Industry in India expected to reach $1.4 Tn in medium term at a CAGR of ~9% • Infrastructure development in areas of smart cities, roads, waterways, ports among others • Categorization of Buildings: Theme for the quarter Buildings & Infrastructure: a deep-dive • Need for Affordable Houses: By 2030, more than 40% of our population expected to live in urban India creating a demand for 25 Mn additional affordable houses • Adoption of Green Building Solutions: Use of green building materials, energy efficient HVAC and lighting systems • Technology/AI Shaping the Industry: Techniques such as prefabricated buildings, building information modelling etc. • Proactive Government Policies & Support • PMAY: Housing for all – 2 crore houses in next 5 years • PM GatiShakti fueled by $1.5 trillion National Infrastructure Pipeline till FY25 to improve multimodal connectivity • 100% FDI permitted under automatic route Segment Insights Key Drivers & Trends ABB’s offerings include LV & MV Switchgear, Building Automation, Switches, Wiring Accessories, Drives & Motors, Digital Power Train, Port Infrastructure Solutions Source: IBEF, Invest India ; PMAY: Pradhan Mantri Awas Yojana May 14, 2024 Slide 10 Residential buildings Commercial buildings Healthcare Offices and public buildings Hospitality Transportation buildings Industrial buildings
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  — Sustainability in practice Trackingour green goals: Q1 FY24 progress By 2024 (plan) By Q1’24 (actual) Scope 1&2 GHG Emissions* 88% 88%* Water recyclability ~45% ~37% Water positive unit 4 3 Zero Waste to Landfill unit (No.) 2 1 * Compared to 2019 baseline and all figures are on a cumulative basis
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  — © 2022 ABB.All rights reserved. Care: Performance with Purpose Focus on local development, education, diversity & inclusion, and healthcare for communities May 14, 2024 Slide 12 Special school to mainstream children with special needs Phase-2 Nelamangala rural road infrastructure upgradation Inauguration of the pediatric OPD at Municipal hospital, Delhi, supported by ABB Science competitions for National Science day 2024
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  — © 2022 ABB.All rights reserved. Summary Domestic demand and elections Cautiously optimistic – in short run, moderation expected especially in large capex & channel spend Demographic and social change By 2030, India’s overall consumption could more than double as income distribution in the country shifts. However inflation can soften the spend potential Technological advancements Robotics could reduce India’s relative cost advantage over developed economies by 4-5% over a decade Energy access and transition Energy demand expected to grow by ~50% over next decade; est. 2/3rd of India’s energy mix Aligning with India’s growth and global shifts Global offshoring Manufacturing share of GDP expected to rise from 15.6% currently to 25% by 2025; develop focused sectors for exports Private capex Significant private investment in areas like data centre, automation, industrial automation, metals & mining, PLI-led capex Source: Mckinsey, BCG, Bain reports, internal assessments
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  — — Financial highlights
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  — Full year 2023 Actual Q1 23 Actual Q423 Performance Indicator Actual Q1 24 Change vs Q1 23 Change vs Q4 23 10,999 3,125 2,547 Base Orders Received 3,234 3% 27% 1,320 - 600 Large Orders Received 373 12,319 3,125 3,147 Total Orders Received 3,607 15% 15% 8,404 7,170 8,404 Order Backlog (end of period) 8,935 25% 6% 10,447 2,411 2,757 Revenue 3,080 28% 12% 1,659 328 454 Profit Before Tax (PBT) 617 88% 36% 15.9 13.6 16.5 PBT % 20.0 1,248 245 345 Profit After Tax (PAT) 460 87% 33% 11.9 10.2 12.5 PAT % 15.0 1,384 274 409 Operational EBITA 514 87% 26% 13.3 11.4 14.8 Operational EBITA% 16.7 1,489 285 417 EBITDA 565 98% 35% 14.3 11.8 15.1 EBITDA % 18.3 4,727 3,942 4,727 Cash balance (including T bills) 5,036 4,543 4,229 4,543 Own Workforce 4,656 Performance Overview Q1 2024 May 14, 2024 Slide 15 First time – Revenue crosses INR 3000 Cr, PAT 15%, Cash 5k+ Cr All figures in INR Crores Key Highlights • Orders: Momentum in base orders continued. Large value orders received from Data center segment • Revenues: Driven by a strong backlog & conversion from book-to-bill, revenues increased across all business divisions. • Profitability: Reduced material cost, supported by capacity leverage / cost optimization resulted in better profitability. • Cash: While overall cash position improved with good collection drive, stocking to deliver backlog commitments & March ending for customers resulted in slight deceleration
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  — Demand vs Supply Growthfor ABB in India is 15% while for ABB Group it is 5% Q1/24 Q1/23 Change % 392 342 15% 5 7 -28% 10 40 -75% 407 389 5% Orders originating from India (Demand view as per Group) Orders as reported by local entity (Supply view relevant for ABB India Ltd) May 14, 2024 Slide 16 3rd Party Customers in India ABB India Ltd Other ABB Cos in India 3rd Party Customers in India ABB India Ltd ABB Cos outside+ 3rd Party outside India ABB India Ltd Q1/24 Q1/23 Change % 392 342 15% 61 51 20% 453 393 15% Fig in MUSD @ 1 $ = 83.02 INR ABB Cos outside India - To all ABB Units in India + To all ABB Units o/s India From customers in India & outside India to ABB India Ltd
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  — Financial summary — Q1 2024vs Q1 2023 Other income: 87 Cr (72 Cr) Major component is Interest on fixed deposits – 83 Cr for the quarter vs 56 Cr prev year Material cost: 59.8% (63.7%) • Revenue mix especially higher service & exports • Localization, SCM savings • Better margin orders from backlog Personnel expenses: INR 221 Cr (INR 187 Cr) Annual salary revision and headcount increase Other expenses: INR 457 Cr (INR 401 Cr) Majority is volume linked, one-time favorable tax refund, q1/23 had a one-time warranty cost Interest costs: INR 3.8 Cr (INR 2.2 Cr) Comprises MSME interest & Notional interest on lease discounting
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  — Electrification Orders Received • Growthfrom data centres, smart building • Tier 2/3, OEMs expansion • Installed base opportunities Revenues • Seamless backlog execution of system & product orders PBIT • Revenue mix with growth in service • Execution of higher margin orders • No major forex impact • Efficient capacity utilization 1,335 1,100 1,032 1,037 1,791 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Orders Received (+34%) 999 1,006 1,042 1,130 1,296 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Revenues (+30%) 1,918 2,468 Q1/23 Q1/24 (+29%) Order Backlog INR crores 19.5 16.3 19.3 19.0 23.7 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 PBIT %
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  — Orders Received • Decisionon system orders slightly delayed • Price pressure of standard products Revenues • Steady backlog leading to a stable growth PBIT • Revenues mix and price advantage in select product revenue streams • Advantage of higher revenue from services • Cost structure in control 1,216 1,126 1,417 1,400 1,181 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Orders Received (-3%) 972 917 981 915 1,013 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Revenues (+4%) 2,344 3,675 Q1/23 Q1/24 (+57%) Order Backlog Motion INR crores 12.0 14.5 19.4 17.7 21.4 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 PBIT %
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  — Process Automation Orders Received •Orders from power, metal, logistics Revenues • Higher execution of order backlog • Continued contribution from services and exports PBIT • Revenue mix accompanied with strong support from service revenues • Optimization of value chain costs in project revenue stream 463 784 529 695 541 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Orders Received (+17%) 420 510 676 631 726 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Revenues (+73%) 2,692 2,686 Q1/23 Q1/24 Flat Order Backlog INR crores 9.2 11.1 14.5 12.8 16.3 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 PBIT %
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  — Robotics and DiscreteAutomation Orders Received • Strong inflow from automotive sector, electronics Revenues • Execution of industry & automotive orders from backlog • Good momentum in execution of book & bill revenues PBIT • Higher revenues from services & automotive segment 156 61 116 57 152 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Orders Received (-3%) 68 123 118 108 109 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Revenues (+60%) 298 226 Q1/23 Q1/24 (-28%) Order Backlog INR crores 15.8 12.6 12.0 11.8 15.4 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 PBIT %
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  — Resilient and diversifiedbusiness model (by revenues) 36% 40% 40% 44% 40% 41% 11% 9% 10% 9% 11% 9% Q1/23 Q1/24 CY/23 OEMs EPCs Partners Direct Sales 78% 71% 76% 13% 16% 14% 9% 14% 10% Q1/23 Q1/24 CY/23 Projects Services Products 40% 41% 40% 40% 32% 36% 17% 23% 21% 3% 3% 4% Q1/23 Q1/24 CY/23 RA PA MO EL 91% 92% 90% 9% 8% 10% Q1/23 Q1/24 CY/23 Export Domestic Channels Geography Offerings Segment
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  May 14, 2024Slide 23