By John Revill
ZURICH (Reuters) – ABB expects the coronavirus epidemic to trigger a “sharp drop” in demand over the next three months as lockdowns disrupt business activity around the world, the engineering company said on Tuesday.
ABB said the COVID-19 crisis had lowered revenues and profit margins in all its business during the first quarter. Revenues fell 9% to $6.22 billion, while net income fell 30% to $376 million, both ahead of market expectations.
“In the second quarter, we expect ABB’s operations to be significantly challenged by a sharp drop in demand due to lockdowns in many parts of the world,” Chief Executive Bjorn Rosengren said in a statement.
The maker of industrial robots, drives and charging stations for electric cars, and electric motors for ships is affected by the economic downturn as customers shut their factories.
In a gloomy outlook, the Swiss company said despite initial signs of a recovering economic captivity in China, many countries including the United States – its biggest market – faced restrictions.
Plunging oil prices were also hurting demand, which together with COVID-19 was hitting the oil and gas, power generation and marine industries, ABB said. Rail, logistics, distribution and data centres were relatively resilient, the company said.
ABB last month warned all of its businesses would be hit by the downturn, particularly its robotics and discrete automation business.
On Tuesday ABB said most of its production facilities were fully or partly operational, although some disruption was being experienced at production and service sites in some countries.
ABB said despite the downturn, it still planned to complete the sale of its Power Grids business to Hitachi by the end of the second quarter. Cash proceeds from the deal, which valued the business at $11 billion, would still be returned to shareholders via a share buyback.
(Reporting by John Revill; Editing by Michael Shields)