Dear All,
Forwarding you the Result Flash on ABB for 4QCY2010 with a Neutral Recommendation.
ABB 4QCY2010
Revenues lower than estimates: ABB reported a moderate growth of 9.0% yoy in its top-line to `2,072cr (`1,902cr), which was lower by 6.1% from our expectation of `2,207cr. For the full year the revenues reported a flattish growth of 1% yoy to `6,359cr.
EBIDTA margins crash: EBITDA margins witnessed a sharp erosion of 723bps yoy to 1.6% as compared to our expectation of 10.7%. Consequently EBDITA plummeted by 80.5% yoy to `33cr (`168cr) which was substantially lower than our expectations of `235cr. Management ascribes the above fall in EBDITA margins to the incremental exit cost from pending Rural Electrification projects as well as loss on account of forex transactions for firm trade commitments and embedded derivative contracts.
Reported PAT dips much lower than estimates: Lower than expected growth in revenues coupled with the crash in EBDITA margins had negatively impacted the PAT leading to a 93.8% yoy fall to around `7cr (`110cr), much lower than our expectation of `179cr.
At CMP of `712, the stock is trading at 24.8x and 15.3x its CY2011E and CY2012E earnings estimate.
We will revisit our estimates and release a detailed note post the conference call with the management.
Actual vs Estimates
| ` cr | Actual | Estimates | Var (%) |
| Revenues | 2,072 | 2,207 | (6.1) |
| EBITDA | 33 | 235 | (86.1) |
| PAT | 7 | 179 | (96.2) |
| EPS | 0.3 | 8.5 | (96.2) |
Performance highlights
| (` cr) | 4QCY10 | 4QCY09 | % chng (yoy) | 3QCY10 | % chg (qoq) | CY10 | CY09 | % chg (yoy) |
| Net Sales | 2,051 | 1,885 | 8.8 | 1,334 | 53.7 | 6,287 | 6,237 | 0.8 |
| Other operating income | 21.4 | 16.4 | 30.5 | 15.0 | 42.9 | 72 | 54 | 33.1 |
| Total income | 2,072 | 1,902 | 9.0 | 1,349 | 53.6 | 6,359 | 6,291 | 1.1 |
| Stock adjustments | 16.4 | (42.9) | | (43.4) | | (9.9) | (43.5) | |
| Raw Material | 1,657 | 1,456 | 13.8 | 1,033 | 60.5 | 4,812 | 4,561 | 5.5 |
| (% of total income) | 80.0 | 76.6 | | | | 75.7 | 72.5 | |
| Employee Cost | 127 | 88 | 44.9 | 122.9 | 3.3 | 490 | 389 | 26.1 |
| (% of total income) | 6.1 | 4.6 | | | | 7.8 | 6.2 | |
| Other Expenses | 201 | 221 | (9.0) | 229 | (12.0) | 817 | 754 | 8.2 |
| (% of total income) | 9.7 |
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