Wind, solar projects still hurting ABB's EBITDA in Q3

Oct 22, 2014 - Swiss-Swedish industrial group ABB (VTX:ABBN) saw its operational EBITDA fall by 13% to USD 1.42 billion (EUR 1.1bn) in the third quarter of 2014 mainly due to low- and negative-margin projects in the Power Systems unit.

The particular division’s operational EBITDA, or earnings before interest, tax, depreciation and amortisation, fell from USD 141 million a year ago to USD 9 million in July-September 2014. This 94% plunge was mainly a result of the continued impact of project-related costs in offshore wind and certain engineering, procurement and construction (EPC) deals in the solar power segment, ABB said.

The good news is that Power Systems has returned to positive EBITDA after several months in the red. The division designs, installs and upgrades high-efficiency transmission and distribution systems and power plant automation and electrification solutions. Its revenues in the reporting quarter declined by 21% to USD 1.64 billion.

Orders for Power Systems, meanwhile, jumped by 79% to USD 2.18 billion helped by a major contract in the UK. In September ABB unveiled a deal worth over USD 800 million from utility SSE Plc (LON:SSE) for a subsea power link in northern Scotland that would facilitate the integration of 1.2 GW of renewable energy capacity.

ABB’s total revenues for the third quarter declined by 7% on the year to USD 9.82 billion. Net profit was USD 734 million, down from USD 835 million a year earlier. The long-term demand outlook for its businesses remains “clearly positive”, the company noted.

(USD 1 = EUR 0.786)

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