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Announcement to clients of BCM Begin Capital Markets CY Ltd (BCM). More information

Swiss-Swedish conglomerate ABB Grouop has been a global Fortune 500 company for 24 years. The behemoth worth nearly $60 billion in market capitalization does business in over 100 countries across multiple industries, including electrification, robotics and infrastructure.

Sustaining a rough couple of years, the ABB Group stock dropped 15% since the start of 2022  amid deteriorating macroeconomic conditions, inflation-linked turmoil and exacerbated political instability. How did it recently perform and what does the future hold for ABB Group?


The Legacy of ABB

ABB was selected to deliver the technological services for the first dedicated CO2-storage vessels. It announced in June 2022 that it’ll also deliver the main electrical, automation and safety systems for the Northern Lights project; a joint venture between Equinor, Shell and Total which is the first carbon-capturing and storage project to develop an open and flexible infrastructure for the storage of CO2 from European industries.

A majority of its centers are located in Canada & China, but the highest number of centers are in Europe. In the Czech Republic for example, the ABB group has a strong presence in production and development centers. They are known not only for sockets and other domestic electrical appliances manufactured in Czech Republic, but also for worldwide supply of electrical equipment for renewable sources or robotics from the new center in Ostrava.


ABB’s Recent Struggles

According to Zacks, ABB experienced the struggles of persistent supply-chain impediments, primarily stemming from semiconductor shortages, raw commodities cost inflation, and rising freight & labor costs. Cost of revenue shot up 4.19% on a year-on-year basis.

Due to its international presence in the world, foreign-currency woes are also hurting the ABB business, and such headwinds caused its shares to fall 24% % in the past six months, compared to the industry’s decrease of 15.4%.

With market conditions worsening, revenue for fiscal year 2019 was $27.97 billion, $26.13 billion in 2020 and $28.94 billion in 2021. Sami Atiya, head of ABB's robotics division told Reuters, "It's getting better right now, but it's not over yet. It will take a few quarters,". He said that despite tough economic conditions in Europe, and that’s evident in its revenue for the 12 months ending September 30, 2022 of $29.189B, indicating a 2.2% increase year-over-year.


Technical View

As shown in the TradingView chart, NYSE-listed ABB recorded a 15% fall from the start of the year.* Priced at around $30, the stock trades above support levels near $25 and $29, and below resistance marks by $31 and $37. The long-term outlook looks optimistic for the ABB stock. [1]



Future Outlook

Since the start of 2022, the company has notably intensified its business through a number of investments & acquisitions, and the opening of vanguard production facilities in Italy & the US.

More recently, ABB announced plans to spin-off Accelleron; a global leader in high-power turbochargers. This coincides with the ABB E-mobility announcement of signing a pre-IPO private placement of nearly CHF200 million for newly-issued shares. ABB E-mobility will use proceeds towards executing its growth strategy, driven by investments in hardware & software.

According to Yahoo Finance, the expected revenue of ABB Group for FY 2022 is $29.3 billion. [2] Its diverse involvement in multiple sectors may leave it exposed to the economic storm that the global market is currently experiencing. Despite that risk, the future seems significantly optimistic for the group as it pushes its sustainable future goals, and opens new centers for business activity, production and development across the ever-so-evolving planet.

BCM analyst team


* Past performance is no guarantee of future results.

[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.


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The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data. Past performance is no guarantee of future results.

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