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 July 2014

 

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 July 23, 2014.

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

 

ABB delivers strong order growth and cash in Q2

 

·                      Orders up 13%(1); book-to-bill ratio(2) of 1.04x

·                      Group operational EBITDA(3) impacted by loss in Power Systems (PS)

·                      Decisive step change actions implemented in PS

·                      Cash from operations up by more than $300 million

·                      Successful execution of announced portfolio pruning

 

Zurich, Switzerland, July 23, 2014 — ABB today reported strong order growth, stable revenues and a significant increase in cash from operations for the second quarter of 2014. The lower operational EBITDA margin mainly reflects ongoing project-related challenges in the Power Systems (PS) division.

 

Orders(4) of $10.6 billion were 14 percent higher (13 percent on a like-for-like basis(2)) compared with the same quarter in 2013. Base orders accelerated and large orders grew more than 70 percent. The positive growth momentum was supported across all regions.

 

“Last October we said that we will drive organic growth through penetration, innovation and expansion and now we are delivering results,” said ABB Chief Executive Officer Ulrich Spiesshofer. “Our focused actions are paying off and support overall increased order momentum. In the second quarter we saw encouraging growth in our two largest markets, the US and China.”

 

The strong order intake resulted in a positive book-to-bill ratio of 1.04x. ABB delivered steady revenues of $10.2 billion despite the lower opening order backlog.

 

Group operational EBITDA was impacted by a loss in the PS division related to ongoing project charges in large engineering, procurement and construction (EPC) projects for offshore wind and solar power generation. New management has taken strict actions to de-risk the PS portfolio and adjust capacity. In addition to the exit from the solar EPC business, ABB is implementing a new business model for offshore wind EPC. “As said previously, PS is likely to weigh on earnings in the coming quarters. Spiesshofer said. “We are driving the PS turnaround as a top priority and made good progress in lowering the exposure.”

 

Operational EBITDA margin(2) was stable to higher for the remaining divisions, excluding the expected dilutive impact of the Power-One acquisition in Discrete Automation and Motion. Cash from operations improved by more than 60 percent to $888 million in the quarter.

 

ABB successfully executed on its announced strategic portfolio pruning of businesses that have limited synergies with the rest of the portfolio. “Since October last year, we have moved quickly on our commitment to optimize the portfolio in a value-creating way and to strengthen the focus on the core,” Spiesshofer said.

 

“For the second half of the year we will continue to push hard on our organic growth initiatives in a mixed market environment,” he said. “We will drive our relentless execution on cash and further step up the momentum on cost savings. We are confident that our balanced growth and execution initiatives will yield positive results for our shareholders.”

 

ABB will host a capital markets day on September 9 in London to communicate its new strategy and financial targets as well as priorities for value creation and capital allocation.

 

2014 Q2 and half-year key figures

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 14

 

Q2 13

 

US$

 

Local

 

Like-for-like(2)

 

H1 14

 

H1 13

 

US$

 

Local

 

Like-for-like(2)

 

Orders

 

10’567

 

9’312

 

13

%

14

%

13

%

20’925

 

19’804

 

6

%

7

%

6

%

Order backlog (end June)

 

27’089

 

28’292

 

-4

%

-5

%

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

10’190

 

10’225

 

0

%

0

%

-1

%

19’661

 

19’940

 

-1

%

0

%

-1

%

Income from operations

 

1’052

 

1’188

 

-11

%

 

 

 

 

1’907

 

2’240

 

-15

%

 

 

 

 

as % of revenues

 

 10.3

%

11.6

%

 

 

 

 

 

 

9.7

%

11.2

%

 

 

 

 

 

 

Operational EBITDA

 

1’331

 

1’561

 

-15

%

 

 

 

 

2’602

 

3’019

 

-14

%

 

 

 

 

as % of operational revenues(2)

 

13.0

%

15.2

%

 

 

 

 

 

 

13.2

%

15.1

%

 

 

 

 

 

 

Net income

 

636

 

763

 

-17

%

 

 

 

 

1’180

 

1’427

 

-17

%

 

 

 

 

Basic earnings per share ($)

 

0.28

 

0.33

 

 

 

 

 

 

 

0.51

 

0.62

 

 

 

 

 

 

 

Cash from operating activities

 

888

 

543

 

64

%

 

 

 

 

843

 

320

 

163

%

 

 

 

 

 

1



 

Summary of Q2 results

 

Growth overview

 

Demand for power distribution systems and equipment from utility customers remained steady in the quarter while utility investments in power transmission remained selective. Industrial demand varied by region and end market, with positive trends in sectors such as oil and gas and general industry and continued weakness in mining. Infrastructure markets were also mixed. Construction markets were mainly flat to slightly weaker while rail and marine transportation demand was positive.

 

Total orders received were up 14 percent in the quarter (13 percent on a like-for-like basis). Approximately half of the increase resulted from higher large orders (above $15 million), particularly the $400-million HVDC (high-voltage direct current) power link order won in Canada. Base orders (below $15 million) were up 9 percent (7 percent like-for-like) on growth in most of ABB’s early-cycle product businesses. Large orders represented 14 percent of total orders received in the quarter, compared to 9 percent in the same quarter in 2013.

 

Service orders increased 12 percent and represented 17 percent of total orders, unchanged versus the year-earlier quarter.

 

Revenues were flat in the second quarter (down 1 percent like-for-like). Higher revenues in the Discrete Automation and Motion division compensated a revenue decline in Process Automation and Power Systems divisions where opening order backlogs were lower compared to the same quarter a year earlier. Service revenues were flat and represented 16 percent of total revenues, unchanged compared to the same quarter a year earlier.

 

The order backlog at the end of June amounted to $27.1 billion, a decrease of 5 percent compared to the end of the same quarter in 2013 but 5 percent higher than at the end of 2013.

 

Orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions unless 
otherwise indicated

 

Q2 14

 

Q2 13

 

US$

 

Local

 

Like-for-
like

 

Q2 14

 

Q2 13

 

US$

 

Local

 

Like-for-
like

 

Europe

 

3’262

 

3’149

 

4

%

1

%

-1

%

3’615

 

3’421

 

6

%

3

%

3

%

The Americas

 

3’531

 

2’736

 

29

%

33

%

31

%

2’939

 

3’052

 

-4

%

-1

%

-3

%

Asia

 

2’798

 

2’494

 

12

%

14

%

13

%

2’698

 

2’783

 

-3

%

-1

%

-2

%

Middle East and Africa

 

976

 

933

 

5

%

5

%

5

%

938

 

969

 

-3

%

-3

%

-3

%

ABB Group

 

10’567

 

9’312

 

13

%

14

%

13

%

10’190

 

10’225

 

0

%

0

%

-1

%

 

Orders were mixed across Europe. For example, orders increased in Russia, the Netherlands and Germany and declined in Norway, the UK and France.

 

The strong order development in the Americas partly reflects the large power transmission order won in Canada in the quarter, as well as a double-digit order increase in the US and a significant increase in Brazil compared with the low levels of 2013.

 

Asian order growth was led by double-digit increases in China—especially in Power Products and Discrete Automation and Motion—Indonesia, and South Korea. Orders decreased in India.

 

Orders increased in the Middle East and Africa—including strong double-digit growth in Saudi Arabia—mainly on higher demand in the power divisions.

 

2



 

Orders received and revenues by division

 

 

 

Orders received

 

Revenues

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless
otherwise indicated

 

Q2
2014

 

Q2
2013

 

US$

 

Local
currency

 

Like-
for-like

 

Q2
2014

 

Q2
2013

 

US$

 

Local
currency

 

Like-
for-like

 

Discrete Automation and Motion

 

2’667

 

2’392

 

11

%

11

%

7

%

2’543

 

2’362

 

8

%

7

%

3

%

Low Voltage Products

 

1’939

 

1’980

 

-2

%

-1

%

0

%

1’936

 

1’929

 

0

%

1

%

3

%

Process Automation

 

2’044

 

1’788

 

14

%

15

%

16

%

2’012

 

2’130

 

-6

%

-5

%

-2

%

Power Products

 

2’766

 

2’596

 

7

%

7

%

 

 

2’662

 

2’781

 

-4

%

-3

%

 

 

Power Systems

 

1’767

 

1’307

 

35

%

39

%

 

 

1’810

 

1’962

 

-8

%

-7

%

 

 

Corporate and other
(incl. inter-division eliminations)

 

(616

)

(751

)

 

 

 

 

 

 

(773

)

(939

)

 

 

 

 

 

 

ABB Group

 

10’567

 

9’312

 

13

%

14

%

13

%

10’190

 

10’225

 

0

%

0

%

-1

%

 

Discrete Automation and Motion: A combination of growth initiatives and higher demand in early-cycle businesses serving general industry and discrete manufacturing drove order growth in the quarter, led by a solid increase in base orders. Large orders were lower. Increased revenues in robotics and service more than offset the impact of a lower opening order backlog in large motors and medium-voltage drives compared to the same quarter in 2013.

 

Low Voltage Products: Orders were stable compared with the same period a year earlier and, excluding the previously-announced divestments, the remaining ongoing business improved. Revenue growth was driven mainly by product businesses and systems.

 

Process Automation: Both large and base orders improved in the second quarter, driven mainly by the strength of the marine and pulp and paper sectors. Demand from the mining industry was up but remained at low levels. Orders grew in the Americas and Asia. Orders were flat in Europe and down slightly in the Middle East and Africa. Revenues were lower as the execution of the strong order backlog in oil and gas was offset mainly by a decline in marine and mining revenues. Increased lifecycle service revenues in the quarter were offset by lower full service revenues.

 

Power Products: Both large and base orders increased in the second quarter, supported by the distribution and industry sectors and continued selective investments on large transmission projects. Order growth was driven by emerging markets, including China, India and Brazil. Orders also increased in North America but were lower in Europe. The lower revenues in the quarter mainly reflect the lower opening order backlog.

 

Power Systems: An increase in large orders, mainly the $400-million HVDC (high-voltage direct current) link project in Canada, drove the strong order improvement in the second quarter, although base orders also grew at a double-digit pace. Utilities remain cautious in their power transmission investments and ABB continues to be selective, focusing on margin and pull-through. Revenues were lower than the previous year impacted by the lower opening order backlog and the execution delays in selected projects.

 

3



 

Earnings overview

 

Operational EBITDA

 

Operational EBITDA in the second quarter of 2014 amounted to $1.3 billion, 15 percent below the year-earlier period, primarily the result of the continued weak operational performance in Power Systems, mainly related to EPC projects in offshore wind and solar power generation. The operational EBITDA margin was steady to higher in all other divisions (excluding the dilutive impact of the Power-One acquisition in the Discrete Automation and Motion division).

 

Cost savings and further productivity improvements more than compensated pricing pressures.

 

Net income

 

Net income for the quarter amounted to $636 million and included $333 million of depreciation and amortization, of which approximately $100 million of amortization was related to acquisitions. Restructuring-related charges amounted to $40 million.

 

Net income also includes after-tax gains of approximately $60 million from divestitures in the quarter.

 

Basic earnings per share amounted to $0.28 in the second quarter compared to $0.33 in the same quarter a year earlier.

 

Earnings and cash flows by division

 

 

 

Operational EBITDA

 

Operational
EBITDA margin

 

Cash flows from
operating activities

 

$ millions unless
otherwise indicated

 

Q2
2014

 

Q2
2013

 

Change
US$

 

Q2
2014

 

Q2
2013

 

Q2
2014

 

Q2
2013

 

Change
US$

 

Discrete Automation and Motion

 

443

 

428

 

4

%

17.4

%

18.1

%

374

 

326

 

15

%

Low Voltage Products

 

364

 

367

 

-1

%

18.8

%

19.0

%

273

 

255

 

7

%

Process Automation

 

248

 

252

 

-2

%

12.3

%

11.8

%

206

 

163

 

26

%

Power Products

 

393

 

409

 

-4

%

14.8

%

14.7

%

189

 

223

 

-15

%

Power Systems

 

(24

)

159

 

n/a

 

-1.3

%

7.9

%

54

 

(151

)

n/a

 

Corporate and other (incl. inter-division eliminations)

 

(93

)

(54

)

 

 

 

 

 

 

(208

)

(273

)

 

 

ABB Group

 

1’331

 

1’561

 

-15

%

13.0

%

15.2

%

888

 

543

 

64

%

 

Discrete Automation and Motion: The operational EBITDA increased on higher revenues while the operational EBITDA margin decline reflects the dilutive impact from Power-One, acquired in the third quarter of 2013. Excluding that impact, the division’s operational EBITDA margin was slightly higher than in the year-earlier period.

 

Low Voltage Products: Operational EBITDA margin declined due to an unfavorable revenue mix and increased investments to drive organic sales growth.

 

Process Automation: The operational EBITDA margin improvement reflects solid project execution out of the order backlog in the oil and gas business and continued strict cost control.

 

Power Products: The operational EBITDA margin was maintained at a steady level as a result of continued cost savings and solid execution.

 

4



 

Power Systems: The operational EBITDA loss reflects the continued impact of project-related charges, mainly in engineering, procurement and construction (EPC) contracts in solar power generation and in offshore wind. Lower revenues also affected earnings.

 

Balance sheet and cash flow

 

Total debt(2) at the end of the second quarter amounted to around $9 billion, approximately $1 billion higher than at the end of 2013, reflecting increased short-term borrowing. Net debt(2) at the end of the second quarter increased to approximately $3 billion compared with $1.5 billion at the end of 2013.

 

ABB reported cash flow from operations of $888 million in the second quarter, an increase of more than $300 million compared with the second quarter in 2013. Cash flow from the divisions improved by $280 million as the result of successful net working capital management efforts, especially in receivables and inventory management. Net working capital as a share of revenues(2) amounted to 17 percent, as in the second quarter of 2013.

 

Divestitures

 

In line with its strategy to continuously optimize the portfolio and to focus on driving profitable growth in the core automation and power businesses, ABB announced in June an agreement to divest Thomas & Betts’ steel structures business for $600 million in an all-cash transaction. The deal is expected to be closed in the third quarter of 2014, subject to regulatory clearances. ABB also divested the Power Solutions business of Power-One for approximately $120 million and completed the previously-announced sale of Thomas & Betts’ heating, ventilation and air conditioning business for approximately $260 million.

 

Outlook

 

The long-term demand outlook for ABB’s businesses remains clearly positive. The need for efficient and reliable electricity transmission and distribution will continue to increase, driven by factors such as: accelerating urbanization in emerging markets; actions to address global warming; the rapidly increasing power needs from digitization; and the refurbishment of aging power grids. At the same time, demand for industrial automation solutions will grow as customers strive to improve productivity, efficiency, product quality, and safety. ABB is well positioned to tap these opportunities for long-term profitable growth with its strong market presence, broad geographic and business scope, technology leadership and financial strength.

 

In the short term, there are positive early-cycle macroeconomic signs, for example, in the US. However, there remain uncertainties related to the speed and strength of economic development in some emerging markets. Growth in Europe is expected to continue the pattern seen in the second quarter and to vary by country and sector.

 

In this market environment, ABB’s management team aims to systematically drive profitable organic growth through increased market penetration, generating more revenues from our pipeline of new product innovations, and expanding into new attractive market segments. In addition, management intends to accelerate business-led collaboration, such as further developing the service business, driving the successful integration of acquired businesses and increasing ABB’s productivity by focusing stronger on the needs of customers. A third priority is relentless execution, especially in the areas of cost savings, cash flow generation and returning the Power Systems division to higher and more consistent returns.

 

5



 

More information

 

The 2014 Q2 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.

 

ABB will host a media conference call starting at 9:30 a.m. Central European Time (CET). The event will be accessible by conference call. U.K. callers should dial +44 203 059 58 62. From Sweden, the number is +46 85 051 00 31, and from the rest of Europe, +41 58 310 50 00. Callers from the US and Canada should +1 866 291 41 66 (toll-free) or +1 631 570 56 13 (local tariff). 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 24 hours: Playback numbers: +44 207 108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 631 982 4566 (U.S./Canada). The code is 18397, followed by the # key.

 

A conference call for analysts and investors is scheduled to begin today at 2:00 p.m. CET (1:00 p.m. BST, 8:00 a.m. EDT). Callers should dial +1 866 291 41 66 from the US/Canada (toll-free), +1 631 570 5613 (US/Canada local tariff), +44 203 059 58 62 from the U.K., +46 8 5051 00 31 from Sweden or +41 58 310 50 00 from the rest of the world. Callers are requested to phone in 10 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.

 

Investor calendar 2014

 

 

Capital Markets Day

 

September 9, 2014

Third-quarter 2014 results

 

October 22, 2014

Fourth-quarter 2014 results

 

February 5, 2015

 

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.

 

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, 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”, “is likely” 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.

 

Zurich, July 23, 2014

Ulrich Spiesshofer, CEO

 

For more information please contact:

 

Media Relations:

Investor Relations:

ABB Ltd

Thomas Schmidt, Antonio Ligi

Switzerland: Tel. +41 43 317 71 11

Affolternstrasse 44

(Zurich, Switzerland)

investor.relations@ch.abb.com

CH-8050 Zurich, Switzerland

Tel: +41 43 317 7111

 

 

Fax: +41 43 317 79 58

 

 

media.relations@ch.abb.com

 

 

 

6



 

Key figures

 

$ millions unless otherwise indicated

 

Q2 14

 

Q2 13

 

Change

 

H1 14

 

H1 13

 

Change

 

 

 

 

 

 

 

 

 

US$

 

Local

 

Like-for-like(2)

 

 

 

 

 

US$

 

Local

 

Like-for-like(2)

 

Orders

 

ABB Group

 

10,567

 

9,312

 

13

%

14

%

13

%

20,925

 

19,804

 

6

%

7

%

6

%

 

 

Discrete Automation and Motion

 

2,667

 

2,392

 

11

%

11

%

7

%

5,483

 

4,877

 

12

%

13

%

8

%

 

 

Low Voltage Products

 

1,939

 

1,980

 

-2

%

-1

%

0

%

3,914

 

3,914

 

0

%

1

%

1

%

 

 

Process Automation

 

2,044

 

1,788

 

14

%

15

%

16

%

4,048

 

4,288

 

-6

%

-4

%

1

%

 

 

Power Products

 

2,766

 

2,596

 

7

%

7

%

 

 

5,491

 

5,455

 

1

%

2

%

 

 

 

 

Power Systems

 

1,767

 

1,307

 

35

%

39

%

 

 

3,257

 

2,944

 

11

%

14

%

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(616

)

(751

)

 

 

 

 

 

 

(1,268

)

(1,674

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

ABB Group

 

10,190

 

10,225

 

0

%

0

%

-1

%

19,661

 

19,940

 

-1

%

0

%

-1

%

 

 

Discrete Automation and Motion

 

2,543

 

2,362

 

8

%

7

%

3

%

4,924

 

4,689

 

5

%

5

%

1

%

 

 

Low Voltage Products

 

1,936

 

1,929

 

0

%

1

%

3

%

3,818

 

3,706

 

3

%

4

%

4

%

 

 

Process Automation

 

2,012

 

2,130

 

-6

%

-5

%

-2

%

3,955

 

4,108

 

-4

%

-2

%

1

%

 

 

Power Products

 

2,662

 

2,781

 

-4

%

-3

%

 

 

5,053

 

5,270

 

-4

%

-3

%

 

 

 

 

Power Systems

 

1,810

 

1,962

 

-8

%

-7

%

 

 

3,418

 

4,013

 

-15

%

-13

%

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(773

)

(939

)

 

 

 

 

 

 

(1,507

)

(1,846

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

ABB Group

 

1,052

 

1,188

 

-11

%

 

 

 

 

1,907

 

2,240

 

-15

%

 

 

 

 

 

 

Discrete Automation and Motion

 

349

 

361

 

-3

%

 

 

 

 

675

 

698

 

-3

%

 

 

 

 

 

 

Low Voltage Products

 

400

 

262

 

53

%

 

 

 

 

656

 

494

 

33

%

 

 

 

 

 

 

Process Automation

 

217

 

233

 

-7

%

 

 

 

 

436

 

457

 

-5

%

 

 

 

 

 

 

Power Products

 

319

 

346

 

-8

%

 

 

 

 

591

 

629

 

-6

%

 

 

 

 

 

 

Power Systems

 

(90

)

108

 

n/a

 

 

 

 

 

(192

)

213

 

n/a

 

 

 

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(143

)

(122

)

 

 

 

 

 

 

(259

)

(251

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations %

 

ABB Group

 

10.3

%

11.6

%

 

 

 

 

 

 

9.7

%

11.2

%

 

 

 

 

 

 

 

 

Discrete Automation and Motion

 

13.7

%

15.3

%

 

 

 

 

 

 

13.7

%

14.9

%

 

 

 

 

 

 

 

 

Low Voltage Products

 

20.7

%

13.6

%

 

 

 

 

 

 

17.2

%

13.3

%

 

 

 

 

 

 

 

 

Process Automation

 

10.8

%

10.9

%

 

 

 

 

 

 

11.0

%

11.1

%

 

 

 

 

 

 

 

 

Power Products

 

12.0

%

12.4

%

 

 

 

 

 

 

11.7

%

11.9

%

 

 

 

 

 

 

 

 

Power Systems

 

-5.0

%

5.5

%

 

 

 

 

 

 

-5.6

%

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

ABB Group

 

1,331

 

1,561

 

-15

%

 

 

 

 

2,602

 

3,019

 

-14

%

 

 

 

 

 

 

Discrete Automation and Motion

 

443

 

428

 

4

%

 

 

 

 

838

 

844

 

-1

%

 

 

 

 

 

 

Low Voltage Products

 

364

 

367

 

-1

%

 

 

 

 

710

 

687

 

3

%

 

 

 

 

 

 

Process Automation

 

248

 

252

 

-2

%

 

 

 

 

512

 

511

 

0

%

 

 

 

 

 

 

Power Products

 

393

 

409

 

-4

%

 

 

 

 

747

 

781

 

-4

%

 

 

 

 

 

 

Power Systems

 

(24

)

159

 

n/a

 

 

 

 

 

(53

)

328

 

n/a

 

 

 

 

 

 

 

Corporate and other (incl. inter-division eliminations)

 

(93

)

(54

)

 

 

 

 

 

 

(152

)

(132

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA %

 

ABB Group

 

13.0

%

15.2

%

 

 

 

 

 

 

13.2

%

15.1

%

 

 

 

 

 

 

 

 

Discrete Automation and Motion

 

17.4

%

18.1

%

 

 

 

 

 

 

17.1

%

18.0

%

 

 

 

 

 

 

 

 

Low Voltage Products

 

18.8

%

19.0

%

 

 

 

 

 

 

18.6

%

18.5

%

 

 

 

 

 

 

 

 

Process Automation

 

12.3

%

11.8

%

 

 

 

 

 

 

12.9

%

12.4

%

 

 

 

 

 

 

 

 

Power Products

 

14.8

%

14.7

%

 

 

 

 

 

 

14.8

%

14.8

%

 

 

 

 

 

 

 

 

Power Systems

 

-1.3

%

7.9

%

 

 

 

 

 

 

-1.5

%

8.1

%

 

 

 

 

 

 

 

Orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

H1 14

 

H1 13

 

US$

 

Local

 

Like-for-like(2)

 

H1 14

 

H1 13

 

US$

 

Local

 

Like-for-like(2)

 

Europe

 

7,126

 

7,033

 

1

%

0

%

1

%

6,969

 

6,798

 

3

%

1

%

0

%

The Americas

 

6,294

 

5,534

 

14

%

18

%

16

%

5,671

 

5,876

 

-3

%

0

%

-2

%

Asia

 

5,529

 

5,309

 

4

%

6

%

5

%

5,146

 

5,327

 

-3

%

-1

%

-2

%

Middle East and Africa

 

1,976

 

1,928

 

2

%

5

%

4

%

1,875

 

1,939

 

-3

%

-2

%

-3

%

Group total

 

20,925

 

19,804

 

6

%

7

%

6

%

19,661

 

19,940

 

-1

%

0

%

-1

%

 

7



 

Operational EBITDA

 

 

 

ABB

 

Discrete Automation
and Motion

 

Low Voltage
Products

 

Process Automation

 

Power Products

 

Power Systems

 

$ millions unless otherwise indicated

 

Q2 14

 

Q2 13

 

Q2 14

 

Q2 13

 

Q2 14

 

Q2 13

 

Q2 14

 

Q2 13

 

Q2 14

 

Q2 13

 

Q2 14

 

Q2 13

 

Revenues

 

10,190

 

10,225

 

2,543

 

2,362

 

1,936

 

1,929

 

2,012

 

2,130

 

2,662

 

2,781

 

1,810

 

1,962

 

FX/commodity timing differences on Revenues

 

56

 

76

 

(4

)

1

 

2

 

 

5

 

13

 

1

 

 

52

 

63

 

Operational revenues

 

10,246

 

10,301

 

2,539

 

2,363

 

1,938

 

1,929

 

2,017

 

2,143

 

2,663

 

2,781

 

1,862

 

2,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,052

 

1,188

 

349

 

361

 

400

 

262

 

217

 

233

 

319

 

346

 

(90

)

108

 

Depreciation

 

215

 

204

 

41

 

35

 

45

 

51

 

18

 

17

 

48

 

44

 

23

 

21

 

Amortization

 

118

 

114

 

38

 

31

 

31

 

31

 

4

 

5

 

7

 

8

 

24

 

24

 

including total acquisition-related amortization of

 

96

 

93

 

35

 

28

 

33

 

30

 

3

 

3

 

5

 

5

 

14

 

22

 

Restructuring and restructuring-related expenses

 

40

 

35

 

13

 

3

 

4

 

2

 

4

 

9

 

15

 

20

 

5

 

 

Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items

 

(114

)

28

 

2

 

5

 

(108

)

3

 

2

 

1

 

6

 

 

(9

)

1

 

FX/commodity timing differences in income from operations

 

20

 

(8

)

 

(7

)

(8

)

18

 

3

 

(13

)

(2

)

(9

)

23

 

5

 

Operational EBITDA

 

1,331

 

1,561

 

443

 

428

 

364

 

367

 

248

 

252

 

393

 

409

 

(24

)

159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

13.0

%

15.2

%

17.4

%

18.1

%

18.8

%

19.0

%

12.3

%

11.8

%

14.8

%

14.7

%

-1.3

%

7.9

%

 


(1) Orders up 13 percent on a like-for-like basis. See the “Supplemental Financial Information” attachment to the press release.

(2) For non-GAAP measures, see the “Supplemental Financial Information” attachment to the press release.

(3) See reconciliation of operational EBITDA to Income from continuing operations before taxes in Note 13 to the Interim Consolidated Financial Information (unaudited)

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

 

8


 


 

 

Supplemental financial information

June 30, 2014

 

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 six and three months ended June 30, 2014.

 

Like-for-like Growth Rates

 

The like-for-like growth rates of revenues and orders are calculated by adjusting reported revenues and orders, in both the current and comparable periods, for the effects of currency translation and portfolio changes. The adjustment for portfolio changes is calculated as follows: where the results of any business acquired or divested have not been consolidated and reported for the entire duration of both the current and comparable periods, the reported revenues and orders of such business are adjusted to exclude the revenues and orders of any corresponding quarters which are not comparable when computing the like-for-like growth rate. In addition, certain other adjustments, which affect the business portfolio but do not qualify as a divestment, are treated in a similar manner to a divestment. We do not adjust for portfolio changes where the business acquired or divested has annual revenues of less than $50 million per year.

 

Operational EBITDA margin

 

Definition

 

Operational EBITDA

 

Operational EBITDA represents Income from operations excluding depreciation and amortization, restructuring and restructuring-related expenses, gains and losses from sale of businesses, 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



 

 

Supplemental financial information

June 30, 2014

 

Reconciliation

 

 

 

Six months ended June 30, 2014

 

($ 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

 

4,924

 

3,818

 

3,955

 

5,053

 

3,418

 

(1,507

)

19,661

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

(5

)

4

 

(5

)

(3

)

85

 

(1

)

75

 

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

 

(1

)

 

(2

)

 

 

 

(3

)

Unrealized foreign exchange movements on receivables (and related assets)

 

(4

)

(1

)

8

 

 

(14

)

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

4,914

 

3,821

 

3,956

 

5,050

 

3,489

 

(1,508

)

19,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

675

 

656

 

436

 

591

 

(192

)

(259

)

1,907

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

156

 

153

 

45

 

110

 

94

 

108

 

666

 

Restructuring and restructuring-related expenses

 

14

 

12

 

24

 

23

 

13

 

1

 

87

 

Gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items

 

(1

)

(104

)

3

 

11

 

(8

)

(4

)

(103

)

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1

 

(3

)

6

 

16

 

68

 

1

 

89

 

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

 

(2

)

 

(1

)

2

 

(9

)

 

(10

)

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

 

(5

)

(4

)

(1

)

(6

)

(19

)

1

 

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

838

 

710

 

512

 

747

 

(53

)

(152

)

2,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

17.1

%

18.6

%

12.9

%

14.8

%

-1.5

%

 

13.2

%

 

2



 

 

Supplemental financial information

June 30, 2014

 

 

 

Six months ended June 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

 

4,689

 

3,706

 

4,108

 

5,270

 

4,013

 

(1,846

)

19,940

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

11

 

8

 

19

 

22

 

64

 

 

124

 

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

 

1

 

 

4

 

5

 

2

 

 

12

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(7

)

(6

)

(5

)

(13

)

(22

)

(1

)

(54

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

4,694

 

3,708

 

4,126

 

5,284

 

4,057

 

(1,847

)

20,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

698

 

494

 

457

 

629

 

213

 

(251

)

2,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

130

 

161

 

42

 

110

 

90

 

106

 

639

 

Restructuring and restructuring-related expenses

 

4

 

6

 

12

 

27

 

5

 

 

54

 

Gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items

 

7

 

5

 

1

 

 

1

 

18

 

32

 

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6

 

25

 

(1

)

18

 

33

 

(4

)

77

 

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

 

2

 

 

1

 

5

 

3

 

 

11

 

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

 

(3

)

(4

)

(1

)

(8

)

(17

)

(1

)

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

844

 

687

 

511

 

781

 

328

 

(132

)

3,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

18.0

%

18.5

%

12.4

%

14.8

%

8.1

%

 

15.1

%

 

3



 

 

Supplemental financial information

June 30, 2014

 

 

 

Three months ended June 30, 2014

 

($ 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

 

2,543

 

1,936

 

2,012

 

2,662

 

1,810

 

(773

)

10,190

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

(4

)

3

 

2

 

4

 

50

 

 

55

 

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

 

(1

)

 

(2

)

1

 

10

 

 

8

 

Unrealized foreign exchange movements on receivables (and related assets)

 

1

 

(1

)

5

 

(4

)

(8

)

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

2,539

 

1,938

 

2,017

 

2,663

 

1,862

 

(773

)

10,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

349

 

400

 

217

 

319

 

(90

)

(143

)

1,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

79

 

76

 

22

 

55

 

47

 

54

 

333

 

Restructuring and restructuring-related expenses

 

13

 

4

 

4

 

15

 

5

 

(1

)

40

 

Gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items

 

2

 

(108

)

2

 

6

 

(9

)

(7

)

(114

)

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(4

)

5

 

 

30

 

3

 

34

 

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

 

(1

)

 

(1

)

4

 

5

 

 

7

 

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

 

1

 

(4

)

(1

)

(6

)

(12

)

1

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

443

 

364

 

248

 

393

 

(24

)

(93

)

1,331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

17.4

%

18.8

%

12.3

%

14.8

%

-1.3

%

 

13.0

%

 

4



 

 

Supplemental financial information

June 30, 2014

 

 

 

Three months ended June 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

 

2,362

 

1,929

 

2,130

 

2,781

 

1,962

 

(939

)

10,225

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

7

 

 

15

 

7

 

78

 

 

107

 

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

 

1

 

 

4

 

4

 

 

 

9

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(7

)

 

(6

)

(11

)

(15

)

(1

)

(40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

2,363

 

1,929

 

2,143

 

2,781

 

2,025

 

(940

)

10,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

361

 

262

 

233

 

346

 

108

 

(122

)

1,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

66

 

82

 

22

 

52

 

45

 

51

 

318

 

Restructuring and restructuring-related expenses

 

3

 

2

 

9

 

20

 

 

1

 

35

 

Gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items

 

5

 

3

 

1

 

 

1

 

18

 

28

 

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(10

)

13

 

(14

)

(12

)

14

 

(3

)

(12

)

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

 

1

 

 

1

 

3

 

(2

)

 

3