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 2013

 

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 24, 2013.

2.              Announcements regarding transactions in ABB Ltd’s Securities made by the directors or the members of the Executive Committee.

 

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

 

2



 

Press Release

GRAPHIC

 

ABB Q3: Solid performance across the business

 

·                      Revenues(1) and operational EBITDA(2) higher in all divisions, net income up 10 percent

·                      Base orders(3) return to year-on-year growth, large project awards remain slow

·                      New CEO outlines priorities on growth, collaboration and execution

 

Zurich, Switzerland, October 24, 2013 — ABB reported higher revenues, earnings and cash flows in the third quarter of 2013, on improved performance across all divisions.

 

Orders in early-cycle businesses, driven mainly by customer investments in improved productivity and efficiency, grew compared to the same quarter in 2012, while further delays in large project awards — mainly the result of ongoing economic uncertainties - and the strategic repositioning of the Power Systems division resulted in lower large orders.

 

“It was a solid quarter where we executed well to grow revenues, earnings, cash and net income despite the continued mixed business climate,” said Ulrich Spiesshofer, ABB’s CEO. “We drove good order growth in a number of key markets, including China and Germany, and our base orders returned to year-over-year growth. Project tendering activity in sectors like power transmission and oil and gas continues to increase but the award of large orders remained slow.

 

“At the same time, we can do more to improve our performance and deliver greater value to all of our stakeholders,” he said. “For example, we have significant opportunities to drive profitable growth through increased market penetration—delivering more to our existing customer segments—and by accelerating the development and marketing of innovative products and packaged solutions. We will also continue to expand into attractive markets, both by growing organically, as well as continuing to fill gaps in the portfolio through bolt-on acquisitions.

 

“The second focus area will be to improve our collaboration across the businesses to create more customer value by selling and delivering ABB’s combined automation and power portfolio. Enhanced collaboration in operations will allow us to drive productivity to the next level.

 

“Relentless execution will be the third focus area. We will drive sustainable cost savings momentum, cash flow as well as capital efficiency even harder. In addition, we are stepping up the focus on the successful integration of our acquisitions to maximize the return on our investments. The announcement earlier this week that Greg Scheu will lead our global acquisition integration efforts from the senior executive team reflects our commitment to realizing the value of our acquisitions.

 

“Looking ahead, the long-term growth drivers are fully intact but several forward-looking indicators are mixed and we still face some near-term market uncertainty,” Spiesshofer said. “But even in a volatile environment, our strong market positions, leading technologies and broad business portfolio will allow us to capture profitable growth opportunities. Therefore, we will continue to drive the top line in a very targeted way while executing on cost, business-led collaboration and improved capital efficiency.”

 

Key figures

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q3 13

 

Q3 12

 

US$

 

Local

 

9M 13

 

9M 12(4)

 

US$

 

Local

 

Orders

 

9,089

 

9,295

 

-2

%

-2

%

28,893

 

29,715

 

-3

%

-3

%

Order backlog (end Sept)

 

27,454

 

29,175

 

-6

%

-4

%

 

 

 

 

 

 

 

 

Revenues

 

10,535

 

9,745

 

+8

%

+9

%

30,475

 

28,315

 

+8

%

+8

%

Income from operations

 

1,324

 

1,146

 

+16

%

 

 

3,564

 

3,195

 

+12

%

 

 

as % of revenues

 

12.6

%

11.8

%

 

 

 

 

11.7

%

11.3

%

 

 

 

 

Operational EBITDA

 

1,638

 

1,483

 

+10

%

 

 

4,657

 

4,182

 

+11

%

 

 

as % of operational revenues

 

15.7

%

15.3

%

 

 

 

 

15.3

%

14.8

%

 

 

 

 

Net income attributable to ABB

 

835

 

759

 

+10

%

 

 

2,262

 

2,100

 

+8

%

 

 

Basic net income per share ($)

 

0.36

 

0.33

 

 

 

 

 

0.99

 

0.92

 

 

 

 

 

Cash from operating activities

 

1,241

 

768

 

+62

%

 

 

1,561

 

1,341

 

+16

%

 

 

 

3



 

Summary of Q3 results

 

Growth overview

 

The global business environment remained mixed in the third quarter. Demand in early-cycle businesses grew in line with macroeconomic developments. Growth was led by demand from both industrial and utility customers for products and solutions that help them increase the productivity and reliability of existing assets.

 

ABB’s ability to tap these early-cycle growth opportunities is reflected in the 5-percent increase in base orders, driven in part by ABB’s improved geographic balance, especially in the US through its successful integrations of the Thomas & Betts and Baldor Electric acquisitions. Sustained investments in sales and research and development through the cycle have also supported base order growth. Base orders were up in all divisions except Power Systems, where greater selectivity—part of the division’s repositioning towards higher value-added projects—impacted base orders in businesses such as substations.

 

Late-cycle capital investments by customers in markets such as power utilities and mining continued to be delayed, partly due to overcapacity in some markets as well as economic uncertainties. As a result of this and the timing of project awards, large orders (above $15 million) declined 43 percent. However, tendering activity in these markets is increasing as the underlying need for industrial productivity, infrastructure upgrades as well as grid reliability improvements remained intact across all regions. Large orders represented 9 percent of total orders, compared to 15 percent in the year-earlier period.

 

Service orders increased by 2 percent in the quarter and represented 17 percent of total orders, up from 16 percent in the same quarter in 2012.

 

Revenues rose 9 percent and were higher in all divisions, primarily on the combination of stronger growth in early-cycle businesses as well as execution of the order backlog. Service revenues increased by 5 percent in the quarter compared with a year ago and represented 15 percent of total revenues.

 

2013 Q3 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q3 13

 

Q3 12

 

US$

 

Local

 

Q3 13

 

Q3 12

 

US$

 

Local

 

Europe

 

3,001

 

2,871

 

+5

%

+2

%

3,684

 

3,428

 

+7

%

+4

%

The Americas

 

2,807

 

3,072

 

-9

%

-7

%

3,016

 

2,749

 

+10

%

+12

%

Asia

 

2,499

 

2,331

 

+7

%

+9

%

2,836

 

2,712

 

+5

%

+6

%

Middle East and Africa

 

782

 

1,021

 

-23

%

-22

%

999

 

856

 

+17

%

+21

%

Group total

 

9,089

 

9,295

 

-2

%

-2

%

10,535

 

9,745

 

+8

%

+9

%

 

Orders grew in Europe as double-digit increases in markets like Norway, Sweden, Germany and Switzerland more than compensated for continued weakness in southern Europe—mainly Italy—and a decline in the UK. In the Americas, US orders were unchanged versus the same period a year earlier, as lower large orders were compensated by solid growth in base orders. Order growth in China, India and South Korea contributed to higher Asia orders in the quarter, while orders in the Middle East and Africa declined due to the delay in large project awards.

 

4



 

2013 Q3 orders received and revenues by division

 

 

 

Orders received

 

Revenues

 

$ millions unless
otherwise indicated

 

Q3 2013

 

Q3 2012

 

Change
in US$

 

Change
in local
currency

 

Q3 2013

 

Q3 2012

 

Change
in US$

 

Change
in local
currency

 

Discrete Automation and Motion

 

2,410

 

2,266

 

+6

%

+6

%

2,539

 

2,306

 

+10

%

+10

%

Low Voltage Products

 

1,938

 

1,861

 

+4

%

+3

%

2,001

 

1,880

 

+6

%

+6

%

Process Automation

 

1,688

 

1,706

 

-1

%

0

%

2,128

 

1,904

 

+12

%

+13

%

Power Products

 

2,450

 

2,401

 

+2

%

+3

%

2,692

 

2,526

 

+7

%

+7

%

Power Systems

 

1,216

 

1,765

 

-31

%

-30

%

2,062

 

1,901

 

+8

%

+10

%

Corporate and other (incl. inter-division eliminations)

 

(613

)

(704

)

 

 

 

 

(887

)

(772

)

 

 

 

 

ABB Group

 

9,089

 

9,295

 

-2

%

-2

%

10,535

 

9,745

 

+8

%

+9

%

 

Discrete Automation and Motion: Orders were driven mainly by continued investments in robotics equipment from automotive and general industry as well as demand for products to improve industrial productivity. Revenues improved on execution of the order backlog and increased sales of products such as variable-speed drives. Service orders and revenues grew at a double-digit pace. The Power-One acquisition, completed in July, also contributed to the growth in orders and revenues.

 

Low Voltage Products: Orders and revenues increased in all product businesses and were higher in all regions, in line with economic developments. Revenue growth was led by Europe and Asia—including a double-digit increase in China—and was modestly higher in the Americas. Service orders and revenues grew significantly faster than total orders and revenues for the division.

 

Process Automation: Base orders grew across most businesses in the quarter—led by North America and China—but were offset by continuing delays in the award of large projects, especially in the mining and oil and gas sectors. Strong revenue growth was driven by the execution of the order backlog. Service revenues remained stable versus the same quarter a year ago.

 

Power Products: Industrial and power distribution demand remained steady in the quarter and utilities continued to make selective investments in power transmission. Higher revenues reflect delivery from the order backlog while service volumes grew faster than total revenues.

 

Power Systems: Orders declined on a combination of the postponement of large order awards and increased project selectivity that is part of the division’s strategic repositioning. Revenues were higher across most businesses in the quarter on execution of the order backlog. Service revenues also grew.

 

Earnings overview

 

Operational EBITDA

 

Operational EBITDA in the third quarter of 2013 amounted to $1.6 billion, an increase of 10 percent versus the same period a year earlier.

 

The Group’s operational EBITDA margin increased to 15.7% from 15.3%, mainly reflecting the positive impact of higher volumes. Cost savings and productivity improvements more than compensated price pressure.

 

5



 

Income from operations and net income

 

Income from operations amounted to approximately $1.3 billion, 16 percent higher compared to the same quarter in 2012.

 

Net income for the quarter increased 10 percent to $835 million, in line with operational EBITDA. Basic earnings per share in the third quarter amounted to $0.36 versus $0.33 a year earlier. Year to date, basic EPS increased 8 percent and operational EPS(5) increased 7 percent.

 

2013 Q3 earnings and cash flows by division

 

$ millions unless

 

Operational EBITDA

 

Change

 

Operational
EBITDA margin

 

Cash flows from
operating activities

 

Change

 

otherwise indicated

 

Q3 2013

 

Q3 2012

 

in US$

 

Q3 2013

 

Q3 2012

 

Q3 2013

 

Q3 2012

 

in US$

 

Discrete Automation and Motion

 

476

 

437

 

+9

%

18.8

%

18.9

%

526

 

393

 

+34

%

Low Voltage Products

 

395

 

366

 

+8

%

19.7

%

19.5

%

435

 

334

 

+30

%

Process Automation

 

289

 

233

 

+24

%

13.6

%

12.3

%

271

 

230

 

+18

%

Power Products

 

389

 

374

 

+4

%

14.6

%

14.8

%

207

 

258

 

-20

%

Power Systems

 

141

 

109

 

+29

%

7.0

%

5.9

%

(118

)

(294

)

n/a

 

Corporate and other (incl. inter-division eliminations)

 

(52

)

(36

)

n/a

 

n/a

 

 

 

(80

)

(153

)

n/a

 

ABB Group

 

1,638

 

1,483

 

+10

%

15.7

%

15.3

%

1,241

 

768

 

+62

%

 

Discrete Automation and Motion: Operational EBITDA increased on higher revenues, while margins remained steady.

 

Low Voltage Products: The operational EBITDA margin increased through a combination of successful cost management and growth in a number of higher-margin product businesses.

 

Process Automation: The growth in operational EBITDA and margins primarily reflects the strong revenue increase as well as improved project execution compared to the same quarter in 2012.

 

Power Products: Operational EBITDA increased on higher revenues while the operational EBITDA margin reflects a different revenue mix compared to the same period a year ago.

 

Power Systems: The increase in operational EBITDA margin reflects the combination of higher revenues, better project execution and improved cost management compared to the same period in 2012.

 

Cash flow and balance sheet

 

ABB reported cash from operations of $1,241 million compared to $768 million in the third quarter of 2012. Net working capital as a percentage of revenues(5) amounted to 18 percent, an increase of 1 percentage point versus the end of the same quarter a year earlier.

 

ABB’s net debt(5) at the end of the quarter was $3.4 billion, as at the end of June, and includes the impact from the net payment in July of approximately $750 million for the acquisition of Power-One.

 

6



 

Management changes and organizational update

 

ABB announced earlier this week a realignment of responsibilities in the Group Executive Committee (EC) to put a strong focus on acquisition integration and the significantly expanded North American business portfolio. Under these changes, Greg Scheu, who is currently responsible for Marketing and Customer Solutions (MC) on the EC, will lead the Group’s global acquisition integration efforts and take over responsibility for North America, ABB’s largest geographical market. Scheu will retain responsibility for ABB’s service business, while the remaining activities of MC will be taken up by other members of the EC. All changes will be effective November 1, 2013.

 

Earlier in the third quarter, ABB announced the appointment of Jean-Christophe Deslarzes to its Executive Committee as Head of Human Resources (HR), effective November 15, 2013. He brings a proven track record as a successful leader of HR in global companies to the role and has significant operational and integration experience. He succeeds Gary Steel, who is retiring.

 

In an orderly internal succession, Pekka Tiitinen was appointed to ABB’s Executive Committee as head of the Discrete Automation and Motion division as of September 15, 2013. He previously led ABB’s global Drives and Controls business through a period of significant organic growth and profitability improvement. He succeeded Ulrich Spiesshofer, who took over as ABB CEO.

 

Strategic initiatives

 

Ulrich Spiesshofer, who assumed the role of CEO on September 15, 2013, said the executive team intends to focus on three key areas in the coming quarters: driving profitable organic and inorganic growth; stronger collaboration across the organization to improve ABB’s offering to its customers and lift productivity; and “relentless execution” across the business operations.

 

“We have made good progress against our 2011 to 2015 goals and will continue to execute on that plan,” Spiesshofer said. “At the same time, there are significant opportunities for us to step up our performance and deliver even greater value to our customers—together.”

 

Profitable growth will be driven by increasing the market penetration of existing customer segments by combining offerings across different businesses more effectively and continuously enhancing customer intimacy and service. This will include both new products and innovative packages and solutions of existing offerings and services.

 

Greater collaboration across businesses will deliver significantly greater value to customers by offering a more integrated set of solutions. It will also lift productivity in areas like sales, product development and order fulfillment. “It’s clear that we can do more to make our customers more competitive, to improve our own productivity and to accelerate profitable growth,” Spiesshofer said.

 

Management focus on execution will include not only consistent delivery of cost savings equivalent to 3-5 percent of cost of goods sold every year, but also stricter management of net working capital to lift cash flow as well as driving excellence in the integration of newly acquired businesses.

 

Outlook

 

Our long-term demand drivers—such as the need for greater industrial productivity, more reliable and efficient power delivery and the development of renewable energies—remain in place. Early-cycle macroeconomic developments remain positive but several forward-looking indicators contain mixed signals and we still face some near-term market uncertainty.

 

In this environment, we will continue to execute on our 2011-15 plan. Growth will be supported by delivering from our large order backlog as well as increasing the focus on market penetration, innovation and expansion. We will continue to drive cost savings and productivity improvements equivalent to 3-5 percent of cost of sales every year through improved supply management, better quality and higher returns on investments in sales and R&D.

 

We remain committed to delivering higher cash to shareholders and improving the cash return on our invested capital.

 

7



 

More information

 

The 2013 Q3 results press release is available from October 24, 2013, on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorcenter, where a presentation for investors will also be published.

 

A video from Chief Executive Officer Ulrich Spiesshofer on ABB’s third-quarter 2013 results will be available at 06:30 a.m. Central European Time (CET) today at www.youtube.com/abb.

 

ABB will host a media conference call starting at 10:00 a.m. CET. Callers from the US and Canada should dial +1 631 570 5613 (Toll-Free). U.K. callers should dial +44 203 059 58 62. From Sweden +46 85 051 00 31, and from the rest of Europe, +41 58 310 50 00. Lines will be open 15 minutes before the conference starts. Playback of the call will start 1 hour after the call ends and will be available for 24 hours: Playback numbers: +44 207 108 62 33 (U.K.), +41 91 612 43 30 (rest of Europe) or +1 866 416 25 58 (U.S./Canada). The code is 15906, followed by the # key. The recorded session will also be available as a podcast 1 hour after the end of the call and can be downloaded from www.abb.com/news.

 

A conference call for analysts and investors is scheduled to begin today at 3:00 p.m. CET (2:00 p.m. in the UK, 9:00 a.m. EDT). Callers should dial +1 866 291 41 66 from the US/Canada (toll-free), +44 203 059 58 62 from the U.K., +46 8 5051 00 31 (Sweden) or +41 58 310 50 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 conference call and can be downloaded from our website. You will find the link to access the podcast at www.abb.com/investorcenter.

 

Investor calendar 2013-2014

 

Fourth-quarter 2013 results

 

February 13, 2014

First-quarter 2014 results

 

April 29, 2014

Annual General Meeting, Zurich, Switzerland

 

April 30, 2014

Second-quarter 2014 results

 

July 24, 2014

Third-quarter 2014 results

 

October 22, 2014

 

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 150,000 people.

 

Zurich, October 24, 2013

Ulrich Spiesshofer, CEO

 

Important notices

 

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, 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.

 

This press release also contains non-GAAP measures of performance. Definitions of these measures and reconciliations between these measures and their GAAP counterparts can be found in “Supplemental financial information” attached to this press release.

 

For more information please contact:

 

Media Relations:

Thomas Schmidt, Antonio Ligi

(Zurich, Switzerland)

Tel: +41 43 317 65 68

Fax: +41 43 317 79 58

media.relations@ch.abb.com

Investor Relations:

Switzerland: Tel. +41 43 317 71 11

USA: Tel. +1 919 856 38 27

investor.relations@ch.abb.com

ABB Ltd

Affolternstrasse 44

CH-8050 Zurich, Switzerland

 

8



 

Key figures

 

$ millions

 

 

 

Q3 13

 

Q3 12

 

Change

 

9M 13

 

9M 12

 

Change

 

 

 

 

 

 

 

 

 

US$

 

Local

 

 

 

 

 

US$

 

Local

 

Orders

 

ABB Group

 

9,089

 

9,295

 

-2

%

-2

%

28,893

 

29,715

 

-3

%

-3

%

 

 

Discrete Automation and Motion

 

2,410

 

2,266

 

6

%

6

%

7,287

 

7,372

 

-1

%

-1

%

 

 

Low Voltage Products

 

1,938

 

1,861

 

4

%

3

%

5,852

 

4,853

 

21

%

20

%

 

 

Process Automation

 

1,688

 

1,706

 

-1

%

0

%

5,976

 

6,493

 

-8

%

-8

%

 

 

Power Products

 

2,450

 

2,401

 

2

%

3

%

7,905

 

8,309

 

-5

%

-5

%

 

 

Power Systems

 

1,216

 

1,765

 

-31

%

-30

%

4,160

 

5,613

 

-26

%

-25

%

 

 

Corporate and other (incl. inter-division eliminations)

 

(613

)

(704

)

 

 

 

 

(2,287

)

(2,925

)

 

 

 

 

Revenues

 

ABB Group

 

10,535

 

9,745

 

8

%

9

%

30,475

 

28,315

 

8

%

8

%

 

 

Discrete Automation and Motion

 

2,539

 

2,306

 

10

%

10

%

7,228

 

6,916

 

5

%

4

%

 

 

Low Voltage Products

 

2,001

 

1,880

 

6

%

6

%

5,707

 

4,668

 

22

%

22

%

 

 

Process Automation

 

2,128

 

1,904

 

12

%

13

%

6,236

 

5,926

 

5

%

6

%

 

 

Power Products

 

2,692

 

2,526

 

7

%

7

%

7,962

 

7,649

 

4

%

4

%

 

 

Power Systems

 

2,062

 

1,901

 

8

%

10

%

6,075

 

5,580

 

9

%

10

%

 

 

Corporate and other (incl. inter-division eliminations)

 

(887

)

(772

)

 

 

 

 

(2,733

)

(2,424

)

 

 

 

 

Income from operations

 

ABB Group

 

1,324

 

1,146

 

16

%

 

 

3,564

 

3,195

 

12

%

 

 

 

 

Discrete Automation and Motion

 

403

 

362

 

11

%

 

 

1,101

 

1,098

 

0

%

 

 

 

 

Low Voltage Products

 

315

 

278

 

13

%

 

 

809

 

597

 

36

%

 

 

 

 

Process Automation

 

270

 

224

 

21

%

 

 

727

 

690

 

5

%

 

 

 

 

Power Products

 

346

 

324

 

7

%

 

 

975

 

949

 

3

%

 

 

 

 

Power Systems

 

127

 

72

 

76

%

 

 

340

 

197

 

73

%

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(137

)

(114

)

 

 

 

 

(388

)

(336

)

 

 

 

 

Income from operations %

 

ABB Group

 

12.6

%

11.8

%

 

 

 

 

11.7

%

11.3

%

 

 

 

 

 

 

Discrete Automation and Motion

 

15.9

%

15.7

%

 

 

 

 

15.2

%

15.9

%

 

 

 

 

 

 

Low Voltage Products

 

15.7

%

14.8

%

 

 

 

 

14.2

%

12.8

%

 

 

 

 

 

 

Process Automation

 

12.7

%

11.8

%

 

 

 

 

11.7

%

11.6

%

 

 

 

 

 

 

Power Products

 

12.9

%

12.8

%

 

 

 

 

12.2

%

12.4

%

 

 

 

 

 

 

Power Systems

 

6.2

%

3.8

%

 

 

 

 

5.6

%

3.5

%

 

 

 

 

Operational EBITDA

 

ABB Group

 

1,638

 

1,483

 

10

%

 

 

4,657

 

4,182

 

11

%

 

 

 

 

Discrete Automation and Motion

 

476

 

437

 

9

%

 

 

1,320

 

1,300

 

2

%

 

 

 

 

Low Voltage Products

 

395

 

366

 

8

%

 

 

1,082

 

849

 

27

%

 

 

 

 

Process Automation

 

289

 

233

 

24

%

 

 

800

 

744

 

8

%

 

 

 

 

Power Products

 

389

 

374

 

4

%

 

 

1,170

 

1,124

 

4

%

 

 

 

 

Power Systems

 

141

 

109

 

29

%

 

 

469

 

345

 

36

%

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(52

)

(36

)

 

 

 

 

(184

)

(180

)

 

 

 

 

Operational EBITDA %

 

ABB Group

 

15.7

%

15.3

%

 

 

 

 

15.3

%

14.8

%

 

 

 

 

 

 

Discrete Automation and Motion

 

18.8

%

18.9

%

 

 

 

 

18.3

%

18.8

%

 

 

 

 

 

 

Low Voltage Products

 

19.7

%

19.5

%

 

 

 

 

19.0

%

18.2

%

 

 

 

 

 

 

Process Automation

 

13.6

%

12.3

%

 

 

 

 

12.8

%

12.6

%

 

 

 

 

 

 

Power Products

 

14.6

%

14.8

%

 

 

 

 

14.7

%

14.7

%

 

 

 

 

 

 

Power Systems

 

7.0

%

5.9

%

 

 

 

 

7.7

%

6.2

%

 

 

 

 

 

9



 

Orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

9M 13

 

9M 12

 

US$

 

Local

 

9M 13

 

9M 12

 

US$

 

Local

 

Europe

 

10,034

 

9,979

 

1

%

-1

%

10,482

 

10,255

 

2

%

1

%

The Americas

 

8,341

 

8,701

 

-4

%

-3

%

8,892

 

7,652

 

16

%

18

%

Asia

 

7,808

 

7,856

 

-1

%

0

%

8,163

 

7,743

 

5

%

6

%

Middle East and Africa

 

2,710

 

3,179

 

-15

%

-12

%

2,938

 

2,665

 

10

%

13

%

Group total

 

28,893

 

29,715

 

-3

%

-3

%

30,475

 

28,315

 

8

%

8

%

 

Operational EBITDA

 

 

 

ABB

 

Discrete Automation
and Motion

 

Low Voltage
Products

 

Process Automation

 

Power Products

 

Power Systems

 

$ in millions

 

Q3 13

 

Q3 12

 

Q3 13

 

Q3 12

 

Q3 13

 

Q3 12

 

Q3 13

 

Q3 12

 

Q3 13

 

Q3 12

 

Q3 13

 

Q3 12

 

Revenues

 

10,535

 

9,745

 

2,539

 

2,306

 

2,001

 

1,880

 

2,128

 

1,904

 

2,692

 

2,526

 

2,062

 

1,901

 

FX/commodity timing differences on Revenues

 

(90

)

(70

)

(13

)

2

 

 

(4

)

(7

)

(15

)

(22

)

(1

)

(49

)

(54

)

Operational revenues

 

10,445

 

9,675

 

2,526

 

2,308

 

2,001

 

1,876

 

2,121

 

1,889

 

2,670

 

2,525

 

2,013

 

1,847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,324

 

1,146

 

403

 

362

 

315

 

278

 

270

 

224

 

346

 

324

 

127

 

72

 

Depreciation

 

206

 

183

 

38

 

35

 

48

 

40

 

18

 

16

 

46

 

42

 

20

 

19

 

Amortization

 

121

 

124

 

36

 

31

 

32

 

38

 

5

 

4

 

7

 

9

 

25

 

26

 

including total acquisition-related amortization of

 

100

 

104

 

34

 

30

 

30

 

36

 

4

 

3

 

6

 

7

 

23

 

24

 

Restructuring and restructuring-related expenses

 

40

 

21

 

3

 

9

 

11

 

5

 

2

 

(1

)

11

 

8

 

11

 

(1

)

Acquisition-related expenses and certain non-operational items

 

60

 

49

 

12

 

2

 

4

 

20

 

1

 

1

 

10

 

1

 

 

 

FX/commodity timing differences in income from operations

 

(113

)

(40

)

(16

)

(2

)

(15

)

(15

)

(7

)

(11

)

(31

)

(10

)

(42

)

(7

)

Operational EBITDA

 

1,638

 

1,483

 

476

 

437

 

395

 

366

 

289

 

233

 

389

 

374

 

141

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

15.7

%

15.3

%

18.8

%

18.9

%

19.7

%

19.5

%

13.6

%

12.3

%

14.6

%

14.8

%

7.0

%

5.9

%

 


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

(2) See Reconciliation of operational EBITDA to Income from continuing operations before taxes in Note 14 to the Interim Consolidated Financial Information (unaudited)

(3) Base orders are orders of less than $15 million

(4) 9-month 2012 figures include the results of Thomas & Betts for the period mid-May to September 2012.

(5) For reconciliations of non-GAAP measures, see the “Supplemental financial information” attachment to this press release

 

10



 

 

Supplemental financial information

September 30, 2013

 

ABB presents the following financial measures to supplement its Interim Consolidated Financial Information (unaudited) which is prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). These supplemental financial measures are, or may be, considered non-GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission (SEC).

 

While ABB’s management believes that the non-GAAP financial measures herein are useful in evaluating ABB’s operating results, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP. Therefore these measures should not be viewed in isolation but considered together with the Interim Consolidated Financial Information (unaudited) prepared in accordance with U.S. GAAP as of and for the nine and three months ended September 30, 2013.

 

Operational EBITDA margin

 

Definition

 

Operational EBITDA

 

Operational EBITDA represents income from operations excluding depreciation and amortization, restructuring and restructuring-related expenses, and acquisition-related expenses and certain non-operational items, as well as foreign exchange/commodity timing differences in income from operations consisting of: (i) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).

 

Operational revenues

 

Operational revenues are total revenues adjusted for foreign exchange/commodity timing differences in total revenues of: (i) unrealized gains and losses on derivatives, (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables (and related assets).

 

Operational EBITDA margin

 

Operational EBITDA margin is Operational EBITDA as a percentage of Operational revenues.

 

1



 

Reconciliation

 

 

 

Nine months ended September 30, 2013

 

($ in millions, except Operational
EBITDA margin in %)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate
and Other
and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

7,228

 

5,707

 

6,236

 

7,962

 

6,075

 

(2,733

)

30,475

 

Foreign exchange/commodity timing differences in total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

(9

)

4

 

6

 

3

 

(7

)

 

(3

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

 

 

9

 

5

 

(4

)

 

10

 

Unrealized foreign exchange movements on receivables (and related assets)

 

1

 

(2

)

(4

)

(16

)

6

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

7,220

 

5,709

 

6,247

 

7,954

 

6,070

 

(2,733

)

30,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,101

 

809

 

727

 

975

 

340

 

(388

)

3,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

204

 

241

 

65

 

163

 

135

 

158

 

966

 

Restructuring and restructuring-related expenses

 

7

 

17

 

14

 

38

 

16

 

2

 

94

 

Acquisition-related expenses and certain non-operational items

 

19

 

9

 

2

 

10

 

1

 

51

 

92

 

Foreign exchange/commodity timing differences in income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

 

(15

)

7

 

(12

)

(12

)

(28

)

(7

)

(67

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

1

 

 

4

 

4

 

(3

)

 

6

 

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

 

3

 

(1

)

 

(8

)

8

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

1,320

 

1,082

 

800

 

1,170

 

469

 

(184

)

4,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

18.3

%

19.0

%

12.8

%

14.7

%

7.7

%

 

15.3

%

 

2



 

 

 

Nine months ended September 30, 2012

 

($ in millions, except Operational
EBITDA margin in %)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate
and Other
and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

6,916

 

4,668

 

5,926

 

7,649

 

5,580

 

(2,424

)

28,315

 

Foreign exchange/commodity timing differences in total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

5

 

(13

)

(22

)

(22

)

(91

)

(1

)

(144

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(1

)

 

(3

)

2

 

40

 

1

 

39

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(3

)

6

 

1

 

21

 

7

 

1

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

6,917

 

4,661

 

5,902

 

7,650

 

5,536

 

(2,423

)

28,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,098

 

597

 

690

 

949

 

197

 

(336

)

3,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

192

 

159

 

60

 

155

 

129

 

146

 

841

 

Restructuring and restructuring-related expenses

 

5

 

10

 

7

 

27

 

3

 

3

 

55

 

Acquisition-related expenses and certain non-operational items

 

7

 

104

 

1

 

1

 

3

 

4

 

120

 

Foreign exchange/commodity timing differences in income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

 

(2

)

(28

)

(22

)

(37

)

(37

)

1

 

(125

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(1

)

 

3

 

6

 

41

 

1

 

50

 

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

 

1

 

7

 

5

 

23

 

9

 

1

 

46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

1,300

 

849

 

744

 

1,124

 

345

 

(180

)

4,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

18.8

%

18.2

%

12.6

%

14.7

%

6.2

%

 

14.8

%

 

3



 

 

 

Three months ended September 30, 2013

 

($ in millions, except Operational
EBITDA margin in %)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate
and Other
and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

2,539

 

2,001

 

2,128

 

2,692

 

2,062

 

(887

)

10,535

 

Foreign exchange/commodity timing differences in total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

(20

)

(4

)

(13

)

(19

)

(71

)

 

(127

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(1

)

 

5

 

 

(6

)

 

(2

)

Unrealized foreign exchange movements on receivables (and related assets)

 

8

 

4

 

1

 

(3

)

28

 

1

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

2,526

 

2,001

 

2,121

 

2,670

 

2,013

 

(886

)

10,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

403

 

315

 

270

 

346

 

127

 

(137

)

1,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

74

 

80

 

23

 

53

 

45

 

52

 

327

 

Restructuring and restructuring-related expenses

 

3

 

11

 

2

 

11

 

11

 

2

 

40

 

Acquisition-related expenses and certain non-operational items

 

12

 

4

 

1

 

10

 

 

33

 

60

 

Foreign exchange/commodity timing differences in income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

 

(21

)

(18

)

(11

)

(30

)

(61

)

(3

)

(144

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(1

)

 

3

 

(1

)

(6

)

 

(5

)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

 

6

 

3

 

1

 

 

25

 

1

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

476

 

395

 

289

 

389

 

141

 

(52

)

1,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

18.8

%

19.7

%

13.6

%

14.6

%

7.0

%

 

15.7

%

 

4



 

 

 

Three months ended September 30, 2012

 

($ in millions, except Operational
EBITDA margin in %)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate
and Other
and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

2,306

 

1,880

 

1,904

 

2,526

 

1,901

 

(772

)

9,745

 

Foreign exchange/commodity timing differences in total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

2

 

(8

)

(12

)

(19

)

(90

)

1

 

(126

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(1

)

 

(6

)

2

 

19

 

1

 

15

 

Unrealized foreign exchange movements on receivables (and related assets)

 

1

 

4

 

3

 

16

 

17

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

2,308

 

1,876

 

1,889

 

2,525

 

1,847

 

(770

)

9,675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

362

 

278

 

224

 

324

 

72

 

(114

)

1,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

66

 

78

 

20

 

51

 

45

 

47

 

307

 

Restructuring and restructuring-related expenses

 

9

 

5

 

(1

)

8

 

(1

)

1

 

21

 

Acquisition-related expenses and certain non-operational items

 

2

 

20

 

1

 

1

 

 

25

 

49

 

Foreign exchange/commodity timing differences in income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

 

(3

)

(17

)

(14

)

(28

)

(49

)

2

 

(109

)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

 

(1

)

(1

)

3

 

20

 

3

 

24

 

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

 

1

 

3

 

4

 

15

 

22

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

437

 

366

 

233

 

374

 

109

 

(36

)

1,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

18.9

%

19.5

%

12.3

%

14.8

%

5.9

%

 

15.3

%

 

5



 

Operational EPS

 

Definition

 

Operational net income

 

Operational net income is calculated as Net income attributable to ABB adjusted for the net-of-tax impact (using the Group’s effective tax rate) of:

 

i)       restructuring and restructuring-related expenses,

ii)      acquisition-related expenses and certain non-operational items,

iii)     foreign exchange/commodity timing differences in Income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities), and

iv)     amortization related to acquisitions.

 

Amortization related to acquisitions

 

Amortization expense on intangibles arising upon acquisitions.

 

Operational EPS

 

Operational EPS is calculated as Operational net income divided by the weighted-average number of shares used in determining Basic EPS.

 

Reconciliation

 

 

 

Nine months ended

 

 

 

September 30, 2013

 

September 30, 2012

 

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

 

 

 

EPS(1)

 

 

 

EPS(1)

 

Net income (attributable to ABB)

 

2,262

 

0.99

 

2,100

 

0.92

 

Restructuring and restructuring-related expenses(2)

 

67

 

0.03

 

40

 

0.02

 

Acquisition-related expenses and certain non-operational items(2)

 

66

 

0.03

 

87

 

0.04

 

FX/commodity timing differences in Income from operations(2)

 

(42

)

(0.02

)

(21

)

(0.01

)

Amortization related to acquisitions(2)

 

205

 

0.09

 

183

 

0.08

 

Operational net income

 

2,558

 

1.11

 

2,389

 

1.04

 

 

 

 

Three months ended

 

 

 

September 30, 2013

 

September 30, 2012

 

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

 

 

 

EPS(1)

 

 

 

EPS(1)

 

Net income (attributable to ABB)

 

835

 

0.36

 

759

 

0.33

 

Restructuring and restructuring-related expenses(2)

 

29

 

0.01

 

16

 

0.01

 

Acquisition-related expenses and certain non-operational items(2)

 

43

 

0.02

 

36

 

0.02

 

FX/commodity timing differences in Income from operations(2)

 

(82

)

(0.04

)

(30

)

(0.01

)

Amortization related to acquisitions(2)

 

72

 

0.03

 

77

 

0.03

 

Operational net income

 

897

 

0.39

 

858

 

0.37

 

 


(1) EPS amounts are computed separately, therefore the sum of the per share amounts shown may not equal to the total.

(2) Net of tax at Group effective tax rate.

 

6



 

Net debt

 

Definition

 

Net debt

 

Net debt is defined as Total debt less Cash and marketable securities.

 

Total debt

 

Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt.

 

Cash and marketable securities

 

Cash and marketable securities is the sum of Cash and equivalents and Marketable securities and short-term investments.

 

Reconciliation

 

($ in millions)

 

September 30, 2013

 

December 31, 2012

 

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

 

567

 

2,537

 

Long-term debt

 

7,553

 

7,534

 

Total debt

 

8,120

 

10,071

 

 

 

 

 

 

 

Cash and equivalents

 

4,296

 

6,875

 

Marketable securities and short-term investments

 

380

 

1,606

 

Cash and marketable securities

 

4,676

 

8,481

 

 

 

 

 

 

 

Net debt

 

3,444

 

1,590

 

 

7



 

Net debt to EBITDA

 

Definition

 

Net debt to EBITDA is calculated as Net debt divided by Income from operations adjusted to exclude depreciation and amortization for the trailing twelve months.

 

Reconciliation

 

($ in millions)

 

September 30, 2013

 

December 31, 2012

 

 

 

 

 

 

 

Net debt (as defined above)

 

3,444

 

1,590

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

Income from operations for the three months ended:

 

 

 

 

 

September 30, 2013

 

1,324