ABB Ltd. withdrew its outlook for 2020 and warned of a decline in its first-quarter financial results amid the coronavirus outbreak and weak oil prices.
"Given continued uncertainty, including the recent oil price decline, ABB is no longer providing financial guidance for full year 2020," the company said. The Switzerland-based company previously projected revenues to be steady or slightly up for the year, excluding the impact of the pandemic.
For the first quarter, ABB estimates revenues to decline in all the divisions on a yearly basis. The robotics and discrete automation business, which was already under pressure due to a weak automotive sector, is forecast to see an approximate 20% fall in both orders and revenues. Operational EBITA margins are also projected to decline in the quarter, dragged by lower volumes.
Reduced demand in China, ABB's second-largest market, would also affect overall financial results, even though three major production facilities in the country have largely returned to normal, the company said.
In the coming months, the company expects its project business to be "dampened by the weaker outlook for oil and gas capital expenditures and a fall-off in cruise ship activity," as it also noted a deterioration in trading conditions on the back of the outbreak and falling oil prices.
To support the business, members of ABB's board and executive committee decided to waive 10% of their compensation. The company is also working to complete the divestment of its power grids division, which is targeted for the second quarter.