UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2012

 

Commission File Number 001-16429

 

ABB Ltd

(Translation of registrant’s name into English)

 

P.O. Box 1831, Affolternstrasse 44, CH-8050, Zurich, Switzerland

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x

Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indication by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o

No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

 



 

This Form 6-K consists of the following:

 

1.               Press release issued by ABB Ltd dated October 25, 2012.

 

The information provided by Item 1 above is deemed filed for all purposes under the Securities Exchange Act of 1934.

 

2



 

Press Release

 

GRAPHIC

 

Solid performance in an uncertain market

 

·                  Group operational EBITDA(1)margin stable vs Q2 2012, including Power Products

·                  Orders and revenues supported by better geographic balance in automation

·                  Strong divisional cash from operations

·                  Thomas & Betts contributed approx. $120 million to operational EBITDA

·                  Outlook: Limited visibility, but cautious optimism in an uncertain environment

 

Zurich, Switzerland, October 25, 2012 — ABB reported steady orders and higher revenues(2) in the third quarter of 2012 despite a challenging macroeconomicenvironment, as the company benefited from its well-balanced market exposure, especially the improved access to the North American automation market gained through recent acquisitions.

 

Power orders were lower than the year-earlier period, which included a large offshore wind order. Excluding that order, power orders rose 10 percent, driven by utility and industry investments in power transmission. Automation orders were up 13 percent (flat organic), driven by demand for improved industrial productivity, mainly in Europe and North America and in the mining and marine sectors.

 

The Group’s operational EBITDA and operational EBITDA margin were lower than in the strong third quarter of last year, mainly due to the execution of lower-priced power orders from the backlog, but were higher than Q2 2012. The operational EBITDA margin in Power Products was steady compared to the second quarter of 2012. Cost savings for the Group amounted to about $280 million in the quarter. The stronger US dollar continued to negatively impact ABB’s reported results.

 

An increase in divisional cash flows was more than offset by cash outflows from hedging corporate exposures as a result of the stronger US dollar.

 

“We’re encouraged that we could grow the business and sustain profitability well within our target corridor despite a challenging macro environment,” said Joe Hogan, ABB’s CEO. “We continued to execute on cost reduction and grow the service business, two of our key strategic initiatives. The geographic rebalancing of our automation business towards North America, for example through the Thomas & Betts acquisition, is also paying off.

 

“That gives us reason for cautious optimism,” Hogan said. “Short-term market visibility is limited and volatility is high. In this environment, our near-term focus will continue to be on competitive costs and using our strong portfolio and geographic balance to tap profitable growth opportunities.”

 

2012 Q3 key figures

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Organic(3)

 

Orders

 

9’295

 

9’826

 

-5

%

0

%

-6

%

Order backlog (end Sept.)

 

29’175

 

28’492

 

2

%

3

%

 

 

Revenues

 

9’745

 

9’337

 

4

%

10

%

4

%

EBIT

 

1’146

 

1’194

 

-4

%

 

 

 

 

as % of revenues

 

11.8

%

12.8

%

 

 

 

 

 

 

Operational EBITDA

 

1’483

 

1’580

 

-6

%

 

 

 

 

as % of operational revenues

 

15.3

%

16.7

%

 

 

 

 

 

 

Net income attributable to ABB

 

759

 

790

 

-4

%

 

 

 

 

Basic net income per share ($)

 

0.33

 

0.34

 

 

 

 

 

 

 

Cash flow from operating activities

 

768

 

811

 

-5

%

 

 

 

 

 


(1)             See reconciliation of Operational EBITDA in Note 13 to the Interim Consolidated Financial Information (unaudited)

(2)             Management discussion of orders and revenues focuses on local currency changes. U.S. dollar changes are reported in results tables

(3)             Organic changes are in local currencies and exclude the acquisition of Thomas & Betts in mid-May 2012

 

1



 

Summary of Q3 2012 results

 

Orders received and revenues

 

ABB’s diverse geographic and business scope enabled the company to record steady orders received in the quarter, despite a challenging business environment and a 30-percent decline in large orders (above $15 million) compared to last year. The acquisition of US-based low-voltage product manufacturer Thomas & Betts in the second quarter made a significant contribution, especially to growth in base orders (below $15 million) of 8 percent. Excluding Thomas & Betts, total orders declined 6 percent and base orders were flat. Service orders grew faster than total orders and were up 9 percent.

 

On the power side, utility customers in most regions continued to selectively invest in power transmission projects in line with long-term trends to strengthen grid reliability and increase capacity. Power orders rose more than 20 percent in the US and Brazil in the quarter, and were more than 15 percent higher in China, and more than 50 percent higher in the Middle East and Africa. However, utility demand in the power distribution sector declined, reflecting weaker economic growth, mainly in Europe. Power orders declined in Germany and Italy, and were also lower in India compared to a strong quarter the year before. Increased order selectivity to secure profitability also affected the development of power orders.

 

Automation order growth was driven primarily by the acquisition of Thomas & Betts, which provided ABB with greater access to the large US industrial automation market and contributed approximately $620 million in orders in the quarter. Orders grew in the mining and marine sectors, and were supported by some large rail and automotive industry orders. Automation orders were higher in most regions, driven mainly by large orders. In the Americas, automation orders grew more than 50 percent (up 7 percent excluding Thomas & Betts). Automation orders were lower in China, flat in Germany, and higher in Italy and Brazil.

 

The order backlog at the end of September 2012 remained robust at $29 billion, a local-currency increase of 3 percent compared to the year-earlier period and a decrease of 2 percent versus the end of the second quarter of 2012.

 

Total power revenues increased in the quarter on the execution of the order backlog, mainly in power transmission. Growth in total automation revenues reflects the impact of the Thomas & Betts acquisition and execution of the order backlog, mainly in the marine, oil and gas and discrete automation sectors. Service revenues grew 6 percent in the quarter and comprised 16 percent of total revenues, unchanged versus the same quarter a year earlier. Currency translation effects reduced reported US-dollar revenues by approximately $570 million in the quarter compared to the same quarter in 2011.

 

Earnings and net income

 

The decline in operational EBITDA in the third quarter of 2012 mainly reflects lower earnings and margins in the power businesses compared to a strong third quarter in 2011, due primarily to execution of the lower-priced order backlog. Operational EBITDA this quarter also includes a negative foreign exchange translation impact of approximately $100 million. Margin declines in a number of projects in the Power Systems division also weighed on profitability. Margins were lower in the automation divisions on a combination of product mix effects and higher selling and R&D expenses aimed at securing future growth.

 

2



 

Roughly 45 percent of cost savings in the quarter came from global sourcing initiatives, 50 percent from operational excellence projects and about 5 percent from footprint changes. Savings initiatives provided significant support to profitability in the Low Voltage Products division, where the operational EBITDA margin exceeded 19 percent. Costs in the quarter associated with the savings measures amounted to approximately $20 million. For the first nine months of the year, savings reached approximately $820 million on associated costs of approximately $55 million.

 

Net income for the quarter decreased 4 percent to $759 million and resulted in basic earnings per share (EPS) of $0.33 compared to $0.34 in the year-earlier period.

 

Balance sheet and cash flow

 

Net debt at the end of the third quarter was $3.7 billion compared to $4 billion at the end of June 2012. Cash from operations was $768 million in the quarter, a decline of $43 million compared to Q3 last year. Cash generated by the divisions was up $160 million, more than offset by cash outflows on corporate hedges.

 

Management changes

 

ABB announced last week that Michel Demaré will step down as the company’s Chief Financial Officer and member of the Executive Committee. He has been appointed the new Chairman of the Board of Swiss-based Syngenta, beginning in April 2013. A successor will be announced in due course and a smooth transition is expected.

 

Outlook

 

The stability of the third quarter results compared to the second quarter, despite a challenging business environment, again demonstrated the benefits of ABB’s diversified portfolio and provides reasons to be cautiously optimistic. Notable positive trends were the strength of the US market, the stability of orders in China and southern Europe, the sustainability of operational EBITDA margins in the Power Products division for the fourth consecutive quarter, and the faster growth of service orders compared to total orders in the quarter.

 

At the same time, uncertainty around the short-term growth prospects for Europe, the emerging markets and the US has started to affect short-cycle business growth, as reflected in the flat organic base order development in the third quarter. This continues to limit market visibility over the next several months. Developments to watch in coming quarters include the development of GDP and industrial production—specifically in the key markets of China, the US and western Europe—as well as the growth in electricity consumption, which is a key driver of demand for the company’s power businesses.

 

The longer-term outlook in ABB’s major end markets remains favorable, driven by megatrends such as the need for greater resource efficiency, increasing urbanization in the emerging markets, and the growing demand for more, and more efficient and reliable, power delivery.

 

On this basis, management confirms its 2011-2015 targets. The company continues to expect its balanced geographic and portfolio scope to support its profitable growth ambitions. Regardless of macro conditions, management will continue to focus on reducing costs and ensuring that investments in growth are generating returns in line with our longer-term targets.

 

3



 

Divisional performance Q3 2012

 

Power Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Orders

 

2’401

 

2’660

 

-10

%

-6

%

Order backlog (end Sept)

 

8’798

 

8’431

 

4

%

4

%

Revenues

 

2’526

 

2’676

 

-6

%

0

%

EBIT

 

324

 

356

 

-9

%

 

 

as % of revenues

 

12.8

%

13.3

%

 

 

 

 

Operational EBITDA

 

374

 

464

 

-19

%

 

 

as % of operational revenues

 

14.8

%

17.2

%

 

 

 

 

Cash flow from operating activities

 

258

 

229

 

13

%

 

 

 

Orders decreased in the third quarter, mainly the result of timing of some project awards, greater selectivity by ABB on orders, and a lower level of utility activity in power distribution. Industrial demand remained steady in the quarter and the power transmission sector continues to see selective investments by utilities.

 

Orders were higher in Middle East and Africa but lower in Asia, the Americas and Europe.

 

Revenues were at the same level as the third quarter last year, mainly reflecting the timing of order execution from the backlog. Service revenues increased in the quarter.

 

Operational EBITDA and operational EBITDA margin were stable for the fourth consecutive quarter. Both were lower than the same quarter last year, primarily reflecting the execution of a lower margin order backlog resulting from the pricing environment. Cost saving initiatives partially mitigated this impact.

 

Power Systems

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Orders

 

1’765

 

2’557

 

-31

%

-27

%

Order backlog (end Sept)

 

11’846

 

11’199

 

6

%

6

%

Revenues

 

1’901

 

1’831

 

4

%

11

%

EBIT

 

72

 

104

 

-31

%

 

 

as % of revenues

 

3.8

%

5.7

%

 

 

 

 

Operational EBITDA

 

109

 

184

 

-41

%

 

 

as % of operational revenues

 

5.9

%

9.7

%

 

 

 

 

Cash flow from operating activities

 

(294

)

(81

)

n.a.

 

 

 

 

Orders were lower than the same quarter in 2011, which included a $1-billion offshore wind order in Germany. Excluding this order, quarterly orders increased by approximately 25 percent, including a slight increase in base orders. Utility demand for transmission grid upgrades and expansions remains intact as reflected in a strong tender backlog but timing uncertainty persists due to the overall macroeconomic climate.

 

Orders increased significantly in North and South America, as well as in the Middle East and Africa, with several large orders won in Saudi Arabia and Iraq. Orders were lower in Europe due to the effect of the large German order last year. A lower level of large orders in India in the quarter could not be fully offset by order growth in China and other Asian countries.

 

Revenue growth reflects the execution of projects from the order backlog.

 

Operational EBITDA and operational EBITDA margin declined compared with the same quarter a year earlier, mainly due to the execution of lower margin project orders in the backlog

 

4



 

and project margin declines. The division does not expect to achieve its operational EBITDA margin target corridor of 7-11 percent in 2012.

 

Discrete Automation and Motion

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Orders

 

2’266

 

2’377

 

-5

%

1

%

Order backlog (end Sept)

 

4’587

 

4’373

 

5

%

6

%

Revenues

 

2’306

 

2’313

 

0

%

5

%

EBIT

 

362

 

382

 

-5

%

 

 

as % of revenues

 

15.7

%

16.5

%

 

 

 

 

Operational EBITDA

 

437

 

456

 

-4

%

 

 

as % of operational revenues

 

18.9

%

19.6

%

 

 

 

 

Cash flow from operating activities

 

393

 

269

 

46

%

 

 

 

Orders were steady compared to the third quarter a year earlier, as slower industrial growth in some markets, along with lower demand from the wind and solar energy sectors, was offset by larger orders received from the utility, traction and automotive sectors. Base orders declined modestly in the quarter, reflecting the lower growth rates in most markets.

 

Regionally, orders from the Americas and from the Middle East and Africa grew at a double-digit pace. Asia orders declined, mainly reflecting the continued weakness in the renewables-related business compared to the same quarter a year ago. Orders from Europe were down slightly.

 

Revenues increased on solid execution of the strong order backlog, led by robotics and power electronics and medium-voltage drives.

 

Operational EBITDA and operational EBITDA margin were lower, mainly the result of product mix effects and higher selling and R&D expenses that support the division’s profitable growth strategy.

 

Low Voltage Products

 

 

 

 

 

 

 

Change

 

 

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Organic(1)

 

Orders

 

1’861

 

1’334

 

40

%

45

%

-1

%

Order backlog (end Sept)

 

1’081

 

1’048

 

3

%

3

%

 

 

Revenues

 

1’880

 

1’364

 

38

%

44

%

-2

%

EBIT

 

278

 

226

 

23

%

 

 

 

 

as % of revenues

 

14.8

%

16.6

%

 

 

 

 

 

 

Operational EBITDA

 

366

 

273

 

34

%

 

 

 

 

as % of operational revenues

 

19.5

%

19.9

%

 

 

 

 

 

 

Cash flow from operating activities

 

334

 

155

 

115

%

 

 

 

 

 


(1)             Organic changes are in local currencies and exclude the acquisition of Thomas & Betts in mid-May 2012

 

Total order growth in the quarter was driven by the contribution from the acquisition of Thomas & Betts. On an organic basis (excluding Thomas & Betts), orders were steady—flat in the Americas, higher in Asia and lower in Europe.

 

Organic revenues (excluding Thomas & Betts) declined 2 percent in the quarter, reflecting the weaker demand environment in most businesses compared to the year-earlier period. Low-voltage systems revenues continued to grow on execution of the strong order backlog. Thomas & Betts contributed revenues of approximately $620 million.

 

5



 

The increase in operational EBITDA resulted primarily from the contribution of approximately $120 million from Thomas & Betts. Excluding Thomas & Betts, the operational EBITDA margin was steady year-on-year, as successful cost reductions compensated for lower volumes. Compared to the second quarter of 2012, operational EBITDA margin excluding Thomas & Betts improved significantly, primarily the result of successful cost reductions.

 

Process Automation

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Orders

 

1’706

 

1’899

 

-10

%

-3

%

Order backlog (end Sept)

 

6’316

 

6’334

 

0

%

0

%

Revenues

 

1’904

 

1’988

 

-4

%

3

%

EBIT

 

224

 

246

 

-9

%

 

 

as % of revenues

 

11.8

%

12.4

%

 

 

 

 

Operational EBITDA

 

233

 

261

 

-11

%

 

 

as % of operational revenues

 

12.3

%

13.0

%

 

 

 

 

Cash flow from operating activities

 

230

 

189

 

22

%

 

 

 

Orders were slightly down compared to last year due to lower level of large orders, mainly in the oil and gas sector. Orders grew in the marine and mining sectors. Service orders also increased, while orders for turbochargers weakened in response to lower global shipping activity.

 

Regionally, orders were higher in the Americas, driven in part by a large marine order in Brazil. Orders were steady in Europe, as order growth in central and eastern Europe compensated for lower orders in western Europe, where some large oil and gas orders were won in the third quarter of 2011. Asian orders declined as a number of large marine orders won in the same period a year ago in South Korea were not repeated. In the Middle East and Africa, orders increased on higher base orders.

 

The revenue increase reflects execution of the stronger order backlog—especially in the marine, pulp and paper and oil and gas businesses. Service revenues declined modestly, mainly the result of lower demand for turbocharger service as well as ABB’s efforts to refocus its full service portfolio.

 

Operational EBITDA and operational EBITDA margin declined, reflecting the larger share of system sales in total revenues, as well as higher R&D costs to generate future profitable growth.

 

6



 

More information

 

The 2012 Q3 results press release is available from October 25, 2012, on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations, where a presentation for investors will also be published.

 

A video from Chief Executive Officer Joe Hogan on ABB’s third-quarter 2012 results will be available today at www.youtube.com/abb.

 

ABB will host a media conference call starting at 10:00 a.m. Central European Time (CET). U.K. callers should dial +44 203 059 58 62. From Sweden, +46 8 5051 00 31, from U.S. (toll-free) +1 866 291 41 66, and from the rest of Europe, +41 91 610 56 00. Lines will be open 15 minutes before the start of the conference. Audio playback of the call will start one hour after the call ends and will be available for 48 hours: Playback numbers: +44 20 7108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 866 416 2558 (U.S./Canada). The code is 13540, followed by the # key. The recorded session will also be available as a podcast one hour after the end of the conference call and can be downloaded from www.abb.com/news.

 

A conference call for analysts and investors is scheduled to begin today at 1:00 p.m. CET (12:00 p.m. in the UK, 7:00 a.m. EDT). Callers should dial +1 866 291 4166 from the U.S./Canada (toll-free), +44 203 059 5862 from the U.K., +46 85 051 0031 from Sweden, or +41 91 610 56 00 from the rest of the world. Callers are requested to phone in 15 minutes before the start of the call. The recorded session will be available as a podcast one hour after the end of the conferencecall and can be downloaded from our website. You will find the link to access the podcast at www.abb.com.

 

Investor calendar 2013

 

 

Q4 2012 results

 

February 14, 2013

Q1 2013 results

 

April 24, 2013

Annual General Meeting

 

April 25, 2013

Q2 2013 results

 

July 25, 2013

Q3 2013 results

 

October 24, 2013

 

ABB (www.abb.com) is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 145,000 people.

 

Zurich, October 25, 2012

Joe Hogan, CEO

 

Important notice about forward-looking information

 

This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business. 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 Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans” or similar expressions. However, there are many 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 press release 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, raw materials availability and prices, 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 Ltd’s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB 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.

 

For more information please contact:

 

Media Relations:

Investor Relations:

ABB Ltd

Thomas Schmidt, Antonio Ligi

Switzerland: Tel. +41 43 317 7111

Affolternstrasse 44

(Zurich, Switzerland)

USA: Tel. +1 919 807 5758

CH-8050 Zurich, Switzerland

Tel: +41 43 317 6568

investor.relations@ch.abb.com

 

Fax: +41 43 317 7958

 

 

media.relations@ch.abb.com

 

 

 

7



 

ABB Q3 and nine-month 2012 key figures

 

 

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated 

 

Q3 12

 

Q3 11

 

US$

 

Local

 

9M 12

 

9M 11

 

US$

 

Local

 

Orders

 

Group

 

9,295

 

9,826

 

-5

%

0

%

29,715

 

30,050

 

-1

%

3

%

 

 

Power Products

 

2,401

 

2,660

 

-10

%

-6

%

8,309

 

8,330

 

0

%

4

%

 

 

Power Systems

 

1,765

 

2,557

 

-31

%

-27

%

5,613

 

6,148

 

-9

%

-3

%

 

 

Discrete Automation & Motion

 

2,266

 

2,377

 

-5

%

1

%

7,372

 

7,336

 

0

%

5

%

 

 

Low Voltage Products

 

1,861

 

1,334

 

40

%

45

%

4,853

 

4,160

 

17

%

21

%

 

 

Process Automation

 

1,706

 

1,899

 

-10

%

-3

%

6,493

 

6,845

 

-5

%

0

%

 

 

Corporate and other (inter-division eliminations)

 

(704

)

(1,001

)

 

 

 

 

(2,925

)

(2,769

)

 

 

 

 

Revenues

 

Group

 

9,745

 

9,337

 

4

%

10

%

28,315

 

27,419

 

3

%

8

%

 

 

Power Products

 

2,526

 

2,676

 

-6

%

0

%

7,649

 

7,786

 

-2

%

3

%

 

 

Power Systems

 

1,901

 

1,831

 

4

%

11

%

5,580

 

5,689

 

-2

%

4

%

 

 

Discrete Automation & Motion

 

2,306

 

2,313

 

0

%

5

%

6,916

 

6,441

 

7

%

12

%

 

 

Low Voltage Products

 

1,880

 

1,364

 

38

%

44

%

4,668

 

3,956

 

18

%

23

%

 

 

Process Automation

 

1,904

 

1,988

 

-4

%

3

%

5,926

 

5,983

 

-1

%

5

%

 

 

Corporate and other (inter-division eliminations)

 

(772

)

(835

)

 

 

 

 

(2,424

)

(2,436

)

 

 

 

 

EBIT

 

Group

 

1,146

 

1,194

 

-4

%

 

 

3,195

 

3,544

 

-10

%

 

 

 

 

Power Products

 

324

 

356

 

-9

%

 

 

949

 

1,123

 

-15

%

 

 

 

 

Power Systems

 

72

 

104

 

-31

%

 

 

197

 

403

 

-51

%

 

 

 

 

Discrete Automation & Motion

 

362

 

382

 

-5

%

 

 

1,098

 

956

 

15

%

 

 

 

 

Low Voltage Products

 

278

 

226

 

23

%

 

 

597

 

695

 

-14

%

 

 

 

 

Process Automation

 

224

 

246

 

-9

%

 

 

690

 

720

 

-4

%

 

 

 

 

Corporate and other (inter-division eliminations)

 

(114

)

(120

)

 

 

 

 

(336

)

(353

)

 

 

 

 

EBIT %

 

Group

 

11.8

%

12.8

%

 

 

 

 

11.3

%

12.9

%

 

 

 

 

 

 

Power Products

 

12.8

%

13.3

%

 

 

 

 

12.4

%

14.4

%

 

 

 

 

 

 

Power Systems

 

3.8

%

5.7

%

 

 

 

 

3.5

%

7.1

%

 

 

 

 

 

 

Discrete Automation & Motion

 

15.7

%

16.5

%

 

 

 

 

15.9

%

14.8

%

 

 

 

 

 

 

Low Voltage Products

 

14.8

%

16.6

%

 

 

 

 

12.8

%

17.6

%

 

 

 

 

 

 

Process Automation

 

11.8

%

12.4

%

 

 

 

 

11.6

%

12.0

%

 

 

 

 

Operational EBITDA*

 

Group

 

1,483

 

1,580

 

-6

%

 

 

4,182

 

4,446

 

-6

%

 

 

 

 

Power Products

 

374

 

464

 

-19

%

 

 

1,124

 

1,322

 

-15

%

 

 

 

 

Power Systems

 

109

 

184

 

-41

%

 

 

345

 

505

 

-32

%

 

 

 

 

Discrete Automation & Motion

 

437

 

456

 

-4

%

 

 

1,300

 

1,253

 

4

%

 

 

 

 

Low Voltage Products

 

366

 

273

 

34

%

 

 

849

 

803

 

6

%

 

 

 

 

Process Automation

 

233

 

261

 

-11

%

 

 

744

 

756

 

-2

%

 

 

Operational EBITDA %

 

Group

 

15.3

%

16.7

%

 

 

 

 

14.8

%

16.2

%

 

 

 

 

 

 

Power Products

 

14.8

%

17.2

%

 

 

 

 

14.7

%

17.0

%

 

 

 

 

 

 

Power Systems

 

5.9

%

9.7

%

 

 

 

 

6.2

%

8.8

%

 

 

 

 

 

 

Discrete Automation & Motion

 

18.9

%

19.6

%

 

 

 

 

18.8

%

19.4

%

 

 

 

 

 

 

Low Voltage Products

 

19.5

%

19.9

%

 

 

 

 

18.2

%

20.3

%

 

 

 

 

 

 

Process Automation

 

12.3

%

13.0

%

 

 

 

 

12.6

%

12.6

%

 

 

 

 

 


* See reconciliation of Operational EBITDA in Note 13 to the Interim Consolidated Financial Information (unaudited)

 

8



 

ABB Q3 2012 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Q3 12

 

Q3 11

 

US$

 

Local

 

Europe

 

2,871

 

4,140

 

-31

%

-24

%

3,428

 

3,602

 

-5

%

4

%

Americas

 

3,072

 

2,299

 

34

%

38

%

2,749

 

2,236

 

23

%

26

%

Asia

 

2,331

 

2,777

 

-16

%

-13

%

2,712

 

2,588

 

5

%

8

%

Middle East and Africa

 

1,021

 

610

 

67

%

73

%

856

 

911

 

-6

%

-1

%

Group total

 

9,295

 

9,826

 

-5

%

0

%

9,745

 

9,337

 

4

%

10

%

 

Nine months 2012 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

9M 12

 

9M 11

 

US$

 

Local

 

9M 12

 

9M 11

 

US$

 

Local

 

Europe

 

9,979

 

11,720

 

-15

%

-8

%

10,255

 

10,672

 

-4

%

4

%

Americas

 

8,701

 

7,027

 

24

%

28

%

7,652

 

6,472

 

18

%

21

%

Asia

 

7,856

 

8,776

 

-10

%

-8

%

7,743

 

7,280

 

6

%

9

%

Middle East and Africa

 

3,179

 

2,527

 

26

%

31

%

2,665

 

2,995

 

-11

%

-7

%

Group total

 

29,715

 

30,050

 

-1

%

3

%

28,315

 

27,419

 

3

%

8

%

 

Operational EBITDA by division Q3 2012 vs Q3 2011

 

Operational EBITDA Q3 2012 vs Q3 2011

 

 

 

ABB

 

Power
Products

 

Power
Systems

 

Discrete Automation
& Motion

 

Low Voltage
Products

 

Process Automation

 

 

 

Q3 12

 

Q3 11

 

Q3 12

 

Q3 11

 

Q3 12

 

Q3 11

 

Q3 12

 

Q3 11

 

Q3 12

 

Q3 11

 

Q3 12

 

Q3 11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

9,675

 

9,489

 

2,525

 

2,704

 

1,847

 

1,899

 

2,308

 

2,330

 

1,876

 

1,375

 

1,889

 

2,013

 

FX/commodity timing differences on Revenues

 

70

 

(152

)

1

 

(28

)

54

 

(68

)

(2

)

(17

)

4

 

(11

)

15

 

(25

)

Revenues (as per Financial Statements)

 

9,745

 

9,337

 

2,526

 

2,676

 

1,901

 

1,831

 

2,306

 

2,313

 

1,880

 

1,364

 

1,904

 

1,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

1,483

 

1,580

 

374

 

464

 

109

 

184

 

437

 

456

 

366

 

273

 

233

 

261

 

Depreciation

 

(183

)

(167

)

(42

)

(43

)

(19

)

(16

)

(35

)

(34

)

(40

)

(26

)

(16

)

(17

)

Amortization

 

(124

)

(90

)

(9

)

(7

)

(26

)

(26

)

(31

)

(30

)

(38

)

(3

)

(4

)

(5

)

including total acquisition-related amortization of

 

104

 

62

 

7

 

5

 

24

 

23

 

30

 

27

 

36

 

1

 

3

 

2

 

Acquisition-related expenses and certain non-operational items

 

(49

)

4

 

(1

)

 

 

 

(2

)

4

 

(20

)

 

(1

)

 

FX/commodity timing differences on EBIT

 

40

 

(104

)

10

 

(31

)

7

 

(32

)

2

 

(17

)

15

 

(20

)

11

 

8

 

Restructuring-related costs

 

(21

)

(29

)

(8

)

(27

)

1

 

(6

)

(9

)

3

 

(5

)

2

 

1

 

(1

)

EBIT (as per Financial Statements)

 

1,146

 

1,194

 

324

 

356

 

72

 

104

 

362

 

382

 

278

 

226

 

224

 

246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

15.3

%

16.7

%

14.8

%

17.2

%

5.9

%

9.7

%

18.9

%

19.6

%

19.5

%

19.9

%

12.3

%

13.0

%

 

Appendix I

Reconciliation of non-GAAP measures

($ millions)

 

 

 

Sep. 30,

 

Dec. 31,

 

 

 

2012

 

2011

 

Net cash (Net debt)

(= Cash and equivalents plus marketable securities and short-term investments, less total debt)

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents

 

4,683

 

4,819

 

Marketable securities and short-term investments

 

742

 

948

 

Cash and marketable securities

 

5,425

 

5,767

 

Short-term debt and current maturities of long-term debt

 

2,023

 

765

 

Long-term debt

 

7,055

 

3,231

 

Total debt

 

9,078

 

3,996

 

Net cash (Net debt)

 

(3,653

)

1,771

 

 

9



 

ABB Ltd Interim Consolidated Income Statements (unaudited)

 

 

 

Nine months ended

 

Three months ended

 

($ in millions, except per share data in $)

 

Sep. 30, 2012

 

Sep. 30, 2011

 

Sep. 30, 2012

 

Sep. 30, 2011

 

 

 

 

 

 

 

 

 

 

 

Sales of products

 

23,728

 

23,027

 

8,227

 

7,820

 

Sales of services

 

4,587

 

4,392

 

1,518

 

1,517

 

Total revenues

 

28,315

 

27,419

 

9,745

 

9,337

 

Cost of products

 

(16,890

)

(16,208

)

(5,835

)

(5,535

)

Cost of services

 

(2,970

)

(2,770

)

(987

)

(955

)

Total cost of sales

 

(19,860

)

(18,978

)

(6,822

)

(6,490

)

Gross profit

 

8,455

 

8,441

 

2,923

 

2,847

 

Selling, general and administrative expenses

 

(4,180

)

(3,936

)

(1,393

)

(1,317

)

Non-order related research and development expenses

 

(1,074

)

(972

)

(358

)

(332

)

Other income (expense), net

 

(6

)

11

 

(26

)

(4

)

Earnings before interest and taxes

 

3,195

 

3,544

 

1,146

 

1,194

 

Interest and dividend income

 

55

 

65

 

17

 

22

 

Interest and other finance expense

 

(238

)

(172

)

(94

)

(80

)

Income from continuing operations before taxes

 

3,012

 

3,437

 

1,069

 

1,136

 

Provision for taxes

 

(828

)

(997

)

(274

)

(318

)

Income from continuing operations, net of tax

 

2,184

 

2,440

 

795

 

818

 

Income (loss) from discontinued operations, net of tax

 

4

 

1

 

(1

)

2

 

Net income

 

2,188

 

2,441

 

794

 

820

 

Net income attributable to noncontrolling interests

 

(88

)

(103

)

(35

)

(30

)

Net income attributable to ABB

 

2,100

 

2,338

 

759

 

790

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

2,096

 

2,337

 

760

 

788

 

Net income

 

2,100

 

2,338

 

759

 

790

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.91

 

1.02

 

0.33

 

0.34

 

Net income

 

0.92

 

1.02

 

0.33

 

0.34

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.91

 

1.02

 

0.33

 

0.34

 

Net income

 

0.92

 

1.02

 

0.33

 

0.34

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding (in millions) used to compute:

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders

 

2,293

 

2,287

 

2,293

 

2,290

 

Diluted earnings per share attributable to ABB shareholders

 

2,295

 

2,290

 

2,295

 

2,291

 

 

See Notes to the Interim Consolidated Financial Information

 

10



 

ABB Ltd Interim Condensed Consolidated Statements of Comprehensive Income (unaudited)

 

 

 

Nine months ended

 

Three months ended

 

($ in millions) 

 

Sep. 30, 2012

 

Sep. 30, 2011

 

Sep. 30, 2012

 

Sep. 30, 2011

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income, net of tax

 

2,441

 

2,448

 

1,209

 

(125

)

Total comprehensive income attributable to noncontrolling interests, net of tax

 

(88

)

(100

)

(45

)

(19

)

Total comprehensive income attributable to ABB shareholders, net of tax

 

2,353

 

2,348

 

1,164

 

(144

)

 

See Notes to the Interim Consolidated Financial Information

 

11



 

ABB Ltd Interim Consolidated Balance Sheets (unaudited)

 

($ in millions, except share data)

 

Sep. 30, 2012

 

Dec. 31, 2011

 

 

 

 

 

 

 

Cash and equivalents

 

4,683

 

4,819

 

Marketable securities and short-term investments

 

742

 

948

 

Receivables, net

 

11,626

 

10,773

 

Inventories, net

 

6,659

 

5,737

 

Prepaid expenses

 

322

 

227

 

Deferred taxes

 

960

 

932

 

Other current assets

 

622

 

351

 

Total current assets

 

25,614

 

23,787

 

 

 

 

 

 

 

Property, plant and equipment, net

 

5,658

 

4,922

 

Goodwill

 

10,600

 

7,269

 

Other intangible assets, net

 

3,614

 

2,253

 

Prepaid pension and other employee benefits

 

182

 

139

 

Investments in equity-accounted companies

 

275

 

156

 

Deferred taxes

 

230

 

318

 

Other non-current assets

 

770

 

804

 

Total assets

 

46,943

 

39,648

 

 

 

 

 

 

 

Accounts payable, trade

 

4,697

 

4,789

 

Billings in excess of sales

 

1,924

 

1,819

 

Employee and other payables

 

1,391

 

1,361

 

Short-term debt and current maturities of long-term debt

 

2,023

 

765

 

Advances from customers

 

1,795

 

1,757

 

Deferred taxes

 

220

 

305

 

Provisions for warranties

 

1,262

 

1,324

 

Provisions and other current liabilities

 

2,372

 

2,619

 

Accrued expenses

 

2,098

 

1,822

 

Total current liabilities

 

17,782

 

16,561

 

 

 

 

 

 

 

Long-term debt

 

7,055

 

3,231

 

Pension and other employee benefits

 

1,632

 

1,487

 

Deferred taxes

 

1,842

 

537

 

Other non-current liabilities

 

1,497

 

1,496

 

Total liabilities

 

29,808

 

23,312

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Capital stock and additional paid-in capital (2,314,743,264 issued shares at September 30, 2012, and December 31, 2011)

 

1,673

 

1,621

 

Retained earnings

 

17,462

 

16,988

 

Accumulated other comprehensive loss

 

(2,155

)

(2,408

)

Treasury stock, at cost (21,260,194 and 24,332,144 shares at September 30, 2012, and December 31, 2011, respectively)

 

(370

)

(424

)

Total ABB stockholders’ equity

 

16,610

 

15,777

 

Noncontrolling interests

 

525

 

559

 

Total stockholders’ equity

 

17,135

 

16,336

 

Total liabilities and stockholders’ equity

 

46,943

 

39,648

 

 

See Notes to the Interim Consolidated Financial Information

 

12



 

ABB Ltd Interim Consolidated Statements of Cash Flows (unaudited)

 

 

 

Nine months ended

 

Three months ended

 

($ in millions)

 

Sep. 30, 2012

 

Sep. 30, 2011

 

Sep. 30, 2012

 

Sep. 30, 2011

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

2,188

 

2,441

 

794

 

820

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

841

 

730

 

307

 

257

 

Pension and other employee benefits

 

(56

)

(55

)

(7

)

11

 

Deferred taxes

 

23

 

24

 

12

 

30

 

Net gain from sale of property, plant and equipment

 

(12

)

(23

)

(4

)

(7

)

Loss (income) from equity-accounted companies

 

1

 

(1

)

(4

)

 

Other

 

104

 

83

 

56

 

36

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

(388

)

(617

)

(131

)

(357

)

Inventories, net

 

(466

)

(1,213

)

(90

)

(314

)

Trade payables

 

(326

)

74

 

(163

)

(183

)

Billings in excess of sales

 

57

 

53

 

(19

)

65

 

Provisions, net

 

(291

)

(340

)

(36

)

(75

)

Advances from customers

 

32

 

85

 

(9

)

4

 

Other assets and liabilities, net

 

(366

)

697

 

62

 

524

 

Net cash provided by operating activities

 

1,341

 

1,938

 

768

 

811

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

Purchases of marketable securities (available-for-sale)

 

(1,429

)

(899

)

(502

)

(281

)

Purchases of short-term investments

 

(30

)

(140

)

(3

)

 

Purchases of property, plant and equipment and intangible assets

 

(838

)

(576

)

(302

)

(233

)

Acquisition of businesses (net of cash acquired) and changes in cost and equity investments

 

(3,686

)

(3,636

)

(70

)

(450

)

Proceeds from sales of marketable securities (available-for-sale)

 

1,655

 

2,416

 

159

 

17

 

Proceeds from maturity of marketable securities (available-for-sale)

 

 

235

 

 

15

 

Proceeds from short-term investments

 

27

 

529

 

 

4

 

Proceeds from sales of property, plant and equipment

 

21

 

23

 

8

 

8

 

Proceeds from sales of businesses and equity-accounted companies (net of cash disposed)

 

9

 

4

 

4

 

1

 

Changes in financing and other non-current receivables, net

 

4

 

(61

)

25

 

14

 

Net cash used in investing activities

 

(4,267

)

(2,105

)

(681

)

(905

)

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Net changes in debt with original maturities of 90 days or less

 

103

 

1,124

 

(488

)

1,027

 

Increase in debt

 

5,279

 

1,468

 

429

 

151

 

Repayment of debt

 

(903

)

(1,571

)

(176

)

(232

)

Issuance of shares

 

 

105

 

 

 

Transactions in treasury shares

 

47

 

5

 

1

 

 

Dividends paid

 

(1,626

)

(1,569

)

 

 

Acquisition of noncontrolling interests

 

(3

)

(13

)

(3

)

(2

)

Dividends paid to noncontrolling shareholders

 

(121

)

(156

)

(30

)

(46

)

Other

 

(16

)

(1

)

2

 

(64

)

Net cash provided by (used in) financing activities

 

2,760

 

(608

)

(265

)

834

 

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and equivalents

 

30

 

(126

)

88

 

(296

)

 

 

 

 

 

 

 

 

 

 

Net change in cash and equivalents - continuing operations

 

(136

)

(901

)

(90

)

444

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents, beginning of period

 

4,819

 

5,897

 

4,773

 

4,552

 

Cash and equivalents, end of period

 

4,683

 

4,996

 

4,683

 

4,996

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid

 

91

 

103

 

21

 

38

 

Taxes paid

 

915

 

952

 

216

 

225

 

 

See Notes to the Interim Consolidated Financial Information

 

13



 

ABB Ltd Interim Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

($ in millions)

 

Capital
stock and
additional
paid-in
capital

 

Retained
earnings

 

Foreign
currency
translation
adjustment

 

Unrealized

gain (loss)
on
available-
for-
sale
securities

 

Pension
and other
postretirement
plan adjustments

 

Unrealized
gain (loss)
of cash
flow hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

Treasury
stock

 

Total ABB
stockholders’
equity

 

Noncontrolling
interests

 

Total
stockholders’
equity

 

Balance at January 1, 2011

 

1,454

 

15,389

 

(707

)

18

 

(920

)

92

 

(1,517

)

(441

)

14,885

 

573

 

15,458

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

2,338

 

 

 

 

 

 

 

 

 

 

 

 

 

2,338

 

103

 

2,441

 

Foreign currency translation adjustments

 

 

 

 

 

91

 

 

 

 

 

 

 

91

 

 

 

91

 

(4

)

87

 

Effect of change in fair value of available-for-sale securities, net of tax

 

 

 

 

 

 

 

(4

)

 

 

 

 

(4

)

 

 

(4

)

 

 

(4

)

Unrecognized income (expense) related to pensions and other postretirement plans, net of tax

 

 

 

 

 

 

 

 

 

31

 

 

 

31

 

 

 

31

 

1

 

32

 

Change in derivatives qualifying as cash flow hedges, net of tax

 

 

 

 

 

 

 

 

 

 

 

(108

)

(108

)

 

 

(108

)

 

 

(108

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,348

 

100

 

2,448

 

Changes in noncontrolling interests

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

2

 

(3

)

Dividends paid to noncontrolling shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(156

)

(156

)

Dividends paid

 

 

 

(1,569

)

 

 

 

 

 

 

 

 

 

 

 

 

(1,569

)

 

 

(1,569

)

Treasury stock transactions

 

(10

)