ABB’s net income plummets after solar inverter pull-out

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
Contacted by PV Tech earlier this month, ABB spokesperson Daniel Smith linked the firm's exit from inverter business to

ABB has seen one of its key financial indicators nosedive after taking a significant hit in return for offloading an under-pressure PV inverter subsidiary.

Figures released by the Swiss group on Thursday reveal a net income of US$64 million throughout Q2 2019, a 91% plunge compared to the US$681 million posted for the same quarter last year.

The drop emerged even as ABB reported growth on other fronts including orders and revenues, which rose in Q2 2019 to around US$7.4 billion and US$7.1 billion, respectively.

The net income fall was linked, ABB said, to downturns in its Robotics and Discrete Automation units, as well as the financial hit it faced in return for exiting the solar inverter business.

In early July, the Zurich-headquartered group agreed to pay US$470 million in return for offloading its inverter unit to FIMER, an Italian group that also manufactures the devices.

According to this week’s results, US$455 million of the total was already absorbed by ABB during Q2 2018. The transaction is not expected to fully close until Q1 2020, the firm explained.

The divestment of its solar inverter unit should, ABB calculates, improve the operational EBITA margin of the Electrification division by 50 basis points, helping progress towards a target of 15-19% margins.

“We are making good progress with the carve-out of our Power Grids business, the integration of GEIS and the roll-out of our ABB-OS operating model, which all are planned to make ABB more profitable,” the firm’s CFO Timo Ihamuotila said as the Q2 2019 results were released.

Contacted by PV Tech earlier this month, ABB spokesperson Daniel Smith declined to shed light on the profitability of its sold inverter unit, describing it however as a “drag” for the margins of the broader Electrification division.

Asked at the time for the rationale of ABB’s retreat from solar inverters, Smith said the unit’s revenue decline reflects “falling demand globally” for these devices, after the market peak in 2012.

 “At the same time, new entrants from China has led to severe price pressure,” the spokesperson added.

See here for ABB's Q2 2019 results in full

Read Next

June 5, 2021
PV Tech's live coverage of SNEC 2021 continues on day three of the exhibition, featuring interviews with industry heavyweights such as Tongwei, Trina Solar and JinkoSolar.
May 26, 2021
ReneSola Power is aiming to build on its solid first quarter financial performance to reach a 2GW PV project pipeline by the end of the year, as it prepares to enter at least two new Europen markets.
May 25, 2021
Solar contractor iSun’s pre-tax earnings fell further at the start of 2021 compared to the same period last year, while its gross margin took a hit due to project delays brought on by COVID-19.
May 13, 2021
Spanish tracker manufacturer Soltec saw its revenue and earnings tumble in the first quarter of the year, citing delays in PV project development due to higher raw material costs that have led to increased module prices.
May 12, 2021
Inverter supplier SMA Solar reported a fall in sales during Q1 2021, but cited the political landscape in the US and Europe as being “extremely encouraging” in the long term.
May 11, 2021
Spain’s Solarpack was affected by pandemic-related project delays in Chile during a first quarter, in which it saw its net profit shrink 95% year-on-year to €300,000.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
June 15, 2021
Solar Media Events
July 6, 2021
Solar Media Events
August 24, 2021
Solar Media Events, Upcoming Webinars
October 6, 2021