Sales and orders declined. On the other hand, the improvement in the operating margin - which has improved for the seventh time in a row - is positive.

© ABB

ABB 's total order intake in the second quarter of 2016 decreased by 5% (8% in US dollars) to USD 8.16 billion compared to the same period of the previous year, which the company attributes to timing effects in the awarding of major orders. Accordingly, basic orders remained stable, while major orders fell by 39%. Sales also fell in the second quarter by 2% (5% in US dollars) to USD 8.677 billion. The company attributed this to a decline in the volume of early-cycle orders and timing effects in the processing of the order backlog. In terms of sales, the stronger US dollar compared to the same period of the previous year had a negative translation effect of 2% - the exit from some businesses in the Electricity Grids division had a negative impact of around 1%. Sales in the service business increased by 1% (decline of 2% in US dollars) and contributed 17% to total sales, as in the same period of the previous year.

ABB believes that the outlook for the future remains uncertain. Some macroeconomic signals in the USA remain positive and growth in China is also likely to continue. However, the company fears that the markets will continue to be impacted by subdued growth and increased uncertainty in connection with Brexit in Europe as well as geopolitical tensions in other parts of the world. The oil price and currency translation effects are also expected to continue to impact the company's results.

However, according to ABB, the long-term outlook for demand in the three most important customer segments - utilities, industry, transportation and infrastructure - remains positive.

The individual divisions

The 2nd quarter of 2016 at a glance: The performance of ABB's divisions.

© ABB

Order intake in the Industrial Automation and Drives division was affected by a decline in major orders and the stable development of external basic orders. Continued strong demand from the automotive industry and the food and beverage industry could not fully compensate for lower investments in the process industry such as the oil and gas sector. Sales were impacted by declining volumes and timing effects in the processing of the order backlog.

The Process Automation division's figures were adversely affected by lower investments and subdued spending by the process industry on large and basic orders. Total incoming orders fell by 20%, while external basic orders declined by 8%. Sales decreased due to timing effects in the processing of the order backlog and weaker demand for basic orders.

Order intake in the Electrification Products division was mixed, as ABB reported that the positive order trend in Europe was unable to compensate for the declines in the Americas and AMEA. Product orders increased in Germany and Russia, but declined in China, Saudi Arabia and the USA. The weaker demand was also reflected in sales.

The 7% increase in external basic orders offset the decline in major orders in the Electricity Grids division, meaning that order intake remained constant overall. Sales increased, mainly due to the strong generation of sales revenue from the order backlog.