purpose-driven, profit-focused resilient performance
TRANSCRIPT
APRIL 27, 2021
Driving Innovation in automation, robotics & digitalizationABB India Ltd
Analyst CallQ1 2021
—
—Important notices
April 28, 2021 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 India Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans,” “outlook,” “on track,” “framework” 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 Ltd’s filings with the Securities and Exchange Board of India (SEBI), including its
Annual Report– Impact of ongoing pandemic
Although ABB India 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.
Further, Information shared herein inter-alia contains some key financials pertaining to ABB India. ABB India being a listed entity is obliged by law not to
share the said information to any one (other than those who are involved in the process and who are bound by Insider Trading Regulation) unless and until
the financials are considered and approved by ABB India Board and thereafter announced to stock exchanges as per the listing obligations entrusted upon
ABB India. Therefore, privy to this presentation should kindly ensure strict confidentiality of the information shared and discussed herein.
Slide 2
—
Business highlights
Financial Highlights
Agenda
April 28, 2021 Slide 3
—Priority areas for Q1 2021
Ensuring Business Continuity
Focus on high growth segments
Cost and Cash management
April 28, 2021 Slide 4
Health and Safety
—Good momentum across various market segmentsKey financial metrices witnessing pick-up sequentially
CQ includes one-off gain of Rs. 75 Cr on sale of fixed asset
Slide 5
WELL BALANCED PORTFOLIO 1 EXECUTION EXCELLENCE 2PRODUCT MIX AND TECHNOLOGY VALUE ADDITIONS 3
Orders Revenues PBT & PBT %
1,955
1,200 1,3081,470
1,825
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
1,522
986
1,612
1,701 1,629
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
8723
114
80 204
5.7
2.4
7.1 4.7
12.5
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
INR Crores INR Crores % to revenue+24%
+155%
—ABB India – Highlights during the quarter
1 - Sewage Treatment Plant; 2 – Compact Secondary Sub-station3 – Industrial Automation Process IndustriesApril 28, 2021 Slide 6
Installed smart sensors and soft starters to reduce water usage in Shimla, Himachal Pradesh
HVAC drives for Chennai Metro ABB India wins order for Robotics solutions for OLA Electric
EV charging stations for IOCL fuel stations across 76 locations in Tier 2, 3 cities in India
Energy efficient drives commissioned for a biopharmaceutical major
Electrification and flow meter solutions for clean drinking water for Surat Smart City in Gujarat
Customer Centricity and innovation at the core
Slide 6
—Partnering India’s growth story, across sectors—
High growth segments contribute 80% to ABB India business
High Moderate Moderate - low
Data Centres
Renewables
Electronics
Food & Beverage
Pharmaceuticals
Power Distribution
Water & Wastewater
Railways & Metro
Automotive
Buildings & Infra
Oil & Gas
Chemicals
Cement
Steel
One of the largest e-commerce companies uses ABB medium and low voltage products for its Data Centers
Our robotics solutions to be deployed by a leading electronics manufacturer for critical component finishing
Pharma companies are accelerating digitization using our Industrial Automation solutions
Leading F&B companies in India trust our Motion solutions, and Robotics end-of line palletizing solution
Aiding efficient water management, conservation and distribution for cities across India
Success stories
——Our focus on ‘Aatmanirbhar’ BharatConsistent focus on localization; Currently 60% of the solutions made locally across divisions
Smart factories in Nashik and Nelamangala
Energy efficient M3BP motors
EMAX2 Digital circuit breaker
Locally developed blending solutions &
Terminal Automation Software
Launch of antibacterial switches and
sockets - Tvisha
LEED certified green building for
sustainable operations
—Implementing ESG Strategy
April 28, 2021 Slide 9
10 Point ESG Framework
Following indicators to be used for benchmarking across ABB India:
1. Green Infrastructure
2. Energy Efficiency Improvement
3. Renewable Energy
4. GHG Emission Reduction
5. Water Conservation
6. Material Conservation
7. Waste Management & Circularity
8. Green Supply Chain & Customer
9. Product Stewardship & Life cycle analysis
10. Innovation & Biodiversity
Green Infrastructure Activities Green Factory Building: Evaluation
Each location scored on below parameters:
• Site Efficiency
• Innovation in Design
• Water Conservation
• Indoor Environment and Health
• Energy Conservation
• Material Conservation
Driving sustainability to the last mile
Currently Under Execution
Phase 1Green Factory Buildings
Phase 2Green Manufacturing Process
Phase 3Green Products
—Sustainability is embedded in our businessLow carbon society, preserving resources, social progress
Safety - 98.5%“of hazards resolved
Don’t look the other way”
Health & wellbeing COVID-19 control, guidelines aligned itself with Govt of India protocols, Telemedicine and COVID-19 care package, special insurance packages to support with COVID-19 related hospitalizations.
Society - 12 community projects in
2020 impacting over 1 lakh lives with focus on contributing towards the pandemic
Waste - ~93%Of all wastes generated were recycled
Green power - 40% of total energy is sourced form green Power
Water ~ 30% reductionReduction in water withdrawal was reduced by 30% from the previous year*
—
Supplier sustainability 234 – onsite assessments carried out so far
(2010-2020). a new further comprehensive program called Sustainable Supply Base Management (SSBM) being launched
—Promoting diversity through Social Responsibility
April 28, 2021 Slide 11
Partnerships contours
• Lila Poonawalla Foundation:
• Pioneer in the field of girl child education
• Driving Women Empowerment through merit-cum-need based Scholarships and Skill Building
• ABB sponsoring 100 meritorious and economically challenged Girls with an interest in Science and Technology
• Financial Support for fees
• Technical trainings /guidance
• Mentorship
• Driving holistic skill development
Joins hands with Lila Poonawalla Foundation to build future women leaders in technology
—Agenda
Business highlights
Financial highlights
April 28, 2021 Slide 12
—
Slide 13
Financial Performance
INR crores
Resilient performance in a challenging period
Full Year 2020Actual
Q4, 2020Actual
Q1, 2020Performance Indicator
ActualQ1, 2021
5,914 1,470 1,937 Base Orders Received 1,825
18 - 18 Large Orders Received -
5,932 1,470 1,955 Total Orders Received 1,825
4,114 4,114 4,451 Order Backlog (end of period) 4,328
5,821 1,701 1,522 Revenue 1,629
304 80 87 Profit Before Tax(PBT) 204
5.2 4.7 5.7 PBT % 12.5
230 62 66 Profit After Tax (PAT) 151
4.0 3.7 4.3 PAT % 9.2
293 170 43 Operational EBITA 111
5.0 10.0 2.8 Operational EBITA% 6.8
2,207 2,207 1,464 Cash balance 2,528
—
Slide 14
Q1 CY21 financial summary
• Impact of revenue mix and commodity prices hardening on material cost
• Employee cost rationalization
• Profit Before Tax was mainly driven by operational improvement initiatives, capacity utilization and reduced expenses
• A one-time gain of INR 75 crore due to disposal of an asset as a part of footprint rationalization initiative
Amount % Amount % Amount % Amount %
INCOME
Revenue from Operations 1,629.2 100.0 1,700.8 100.0 1,522.2 100.0 5,821.0 100.0
Other Income 25.3 1.6 14.4 0.8 45.8 3.0 106.9 1.8
Total Income 1,654.4 101.6 1,715.1 100.8 1,568.0 103.0 5,927.8 101.8
EXPENDITURE
Material cost 1,086.1 66.7 1,154.2 67.9 992.7 65.2 3,870.4 66.5
Personnel Expenses 153.8 9.4 149.3 8.8 163.3 10.7 568.0 9.8
Other Expenses 257.0 15.8 294.7 17.3 351.7 23.1 1,106.6 19.0
Depreciation 25.3 1.5 29.7 1.7 27.1 1.8 120.4 2.1
Interest 3.2 0.2 6.9 0.4 3.4 0.2 16.9 0.3
Total Expenditure 1,525.3 93.6 1,634.7 96.1 1,538.2 101.0 5,682.2 97.6
Profit before Tax and exceptional 129.1 7.9 80.4 4.7 29.8 2.0 245.58 4.2
Exceptional item (loss)/gain 74.5 - - - 56.8 - 58.8 -
Profit before Tax and after exceptional 203.6 12.5 80.4 4.7 86.6 5.7 304.4 5.2
Current tax 53.0 3.3 12.7 0.7 24.9 1.6 71.7 1.2
Deferred Tax - - 5.5 0.3 (4.2) (0.3) 2.2 0.0
Profit after tax 150.6 9.2 62.2 3.7 66.0 4.3 230.4 4.0
Quarter ended
on 31.12.2020
Quarter ended on
31.3.2020
Year ended
31.12.2020
Quarter ended
on 31.03.2021
—Q1 2021 ElectrificationImproving on a solid track record
548
358
598 647 633
-13%
-35%
67%
8%-2%
-40%
-20%
0%
20%
40%
60%
80%
-
500
1,000
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Revenue Revenue growth
April 28, 2021 Slide 15Slide 15
Orders - Rs 684 croresOrder Backlog Rs 1,355 crores
Data Centres, Metro Rail, Food & Beverage
Growth across all divisions
Repeat orders in MV Distribution
Revenues - Rs 633 crores
Strong export performance
Service business related constraints persist
PBIT - Rs. 75 crores
Capacity uptick & cost rationalization helped margin accretion
Supportive pricing actions
Favorable forex impact
664
504 492
631 684
0%
-24%
-2%
28%
8%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-
500
1,000
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Orders Order growth
Growth trend on sequential basis
—Q1 2021 Motion
Slide 16
Good start to the year with strong Q1 results
844
381
554 535
638
-81%
-55%
45%
-3%
19%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
-
500
1,000
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Orders Order growth
569
391
629 648 631
-18%
-31%
61%
3%-3%
-40%
-20%
0%
20%
40%
60%
80%
-
500
1,000
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Revenue Revenue growth
April 28, 2021Slide 16
Orders - Rs 638 croresOrder Backlog Rs 1,502 crores
Focus on transportation, digitalization and service
Order basket concentrated with short cycle base orders
Good contribution from Channel business & Packaging
Q1’20 included high value orders
Revenues - Rs 631 crores
Growth across all divisions except traction business
Strong focus on execution of OBL resulted in improvement in products sales
PBIT - Rs. 90 crores
Capacity utilization & reduced expenses
Execution of better margin orders
Growth trend on sequential basis
—Q1 2021 Process Automation
Slide 17
Impacted by COVID-19
293
237
367 387
326
-29%
-19%
55%
5%
-16%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
-
250
500
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Revenue Revenue growth
343 309
274 280
440
-23%
-10% -11%
2%
57%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
-
250
500
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Orders Order growth
April 28, 2021Slide 17
Orders - Rs 440 croresOrder Backlog Rs 1,344 crores
Investment decisions post first phase of COVID and enhancement of channel business in process industries led to order growth
Demand in the oil and gas segment has been stable
Fluctuation in crude price led to muted demand from engine based Power Plants .
Revenues - Rs 326 crores
Higher backlog conversion in process industries
In Q1’2020: impact of slow moving legacy projects of power generation
PBIT - Rs 29 crores
Better cost structure and backlog realization
No legacy projects impact
Growth trend on sequential basis
—Q1 2021 Robotics and Discrete Automation
Slide 18
Customers watchful with 2nd wave catching up
43
25
45 43 48
-34%-42%
80%
-4%
12%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
-
10
20
30
40
50
60
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Revenue Revenue growth
46
20
33
47
94
-28%
-57%
65%
42%100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
-
20
40
60
80
100
Q1/20 Q2/20 Q3/20 Q4/20 Q1/21
Orders Order growth
April 28, 2021Slide 18
Orders - Rs 94 croresOrder Backlog Rs 175 crores
Robotic automation solution for building electric scooters for OLA
Early signs of recovery from 2-wheelers and Electronics segments
Lower orders from Auto OEMs and Tier 1 as they continue to be cautious on investments
Revenues - Rs 48 crores
Service revenues going steady with few system upgrades
Project execution progressing well, but slow due to COVID travel restrictions
PBIT - Rs. 5 crores
Service revenues boosting the overall profitability
Capacity and operational excellence initiatives
Growth trend on sequential basis
—
April 28, 2021
42%
33%
4%
21%
EL MO RA IA
40%
35%
4%
21%
EL MO RA IA
39%
39%
2%
20%
EL MO RA IA
37%
37%
3%
23%
EL MO RA IA
Orders
Revenues
CY 2019 CY 2020Rs 6,970 Cr Rs 5,932 Cr
Rs 7,315 Cr Rs 5,821 Cr
Improved profitability across product segment
Slide 19
45%
37%
4%
14%
EL MO RA IA
45%
47%
1% 7%
EL MO RA IA
PBIT
Rs 535 Cr Rs 321 Cr
37%
34%
5%
24%
EL MO RA PA
38%
39%
3%
20%
EL MO RA PA
38%
45%
3%14%
EL MO RA PA
Q1 2021Rs 1,825 Cr
Rs 1,629 Cr
Rs 132 Cr
—
April 28, 2021 Slide 20
Outlook
Managing COVID second wave
Continued focus on business continuity
Focus on growth segments
Mitigate headwinds on commodity, forex volatility
Stakeholder and customer engagement
—
April 28, 2021 Slide 21
Driving Innovation: together