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 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 October 22, 2014.

 

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 in Q3

 

·                     Orders up 28%1 driven by large orders in power infrastructure and oil and gas

·                     Base orders increased for 5th consecutive quarter

·                     PS ‘step change’ program on track; operational EBITDA2 at breakeven in Q3

·                     Revenues and operational EBITDA reflect lower opening order backlog and Power Systems

·                     Cost reduction and cash generation on track

·                     Launched Next Level strategy aimed at accelerating sustainable value creation

 

Zurich, Switzerland, Oct. 22, 2014 – ABB’s focus on profitable organic growth and the related strategic initiatives resulted in a strong order increase across all regions in the third quarter.

 

Total orders3 rose to $11.2 billion, boosted by large orders (above $15 million) including a power transmission link in Europe, a mining automation project in the Americas and a gas treatment plant in Africa. Base orders (below $15 million) increased in every region. Continued successful implementation of ABB’s service strategy resulted in a 10-percent increase in service orders in the quarter.

 

“Our program for profitable organic growth has successfully created healthy order momentum across all regions,” said CEO Ulrich Spiesshofer. “I am encouraged to see attractive large project wins and five consecutive quarters of base order growth.”

 

In line with a lower order backlog at the start of 2014, revenues were 6 percent lower (4 percent like-for-like4) at $9.8 billion. The operational EBITDA margin was 14.3 percent in the third quarter versus 15.7 percent a year earlier. The margin reflected lower revenues and the result in Power Systems (PS).

 

“In PS, we achieved significant milestones in project execution, continued to de-risk the portfolio and implement a new business model for offshore wind projects,” Spiesshofer said. “The division broke even in the quarter. We continue to drive our focused action program to complete the turnaround and address the remaining challenges ahead. Overall, our efforts on relentless execution, including our cost savings program, are on track.”

 

Net income was $734 million and basic earnings per share was $0.32. Targeted net working capital management measures supported cash from operations, which increased 29 percent in the first nine months. ABB initiated the $4-billion share buyback program announced in September and purchased shares with a value of approximately $350 million during the quarter.

 

“We are driving profitable growth through penetration, innovation and expansion, aimed at growing ahead of the global economy.” the CEO added. “We will carefully manage costs and cash as the short-term outlook for the global economy is increasingly uncertain. The entire management team is taking decisive actions in line with our Next Level strategy, which was announced at our Capital Markets Day in September.”

 

2014 Q3 and nine-month key figures

 

 

 

Q3 14

 

Q3 13

 

Change

 

9M 14

 

9M 13

 

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions unless otherwise indicated

 

 

 

 

 

US$

 

Local

 

Like-for-like4

 

 

 

 

 

US$

 

Local

 

Like-for-like4

 

Orders

 

11’225

 

9’089

 

24%

 

25%

 

28%

 

32’150

 

28’893

 

11%

 

13%

 

13%

 

Order backlog (end Sept)

 

27’005

 

27’454

 

-2%

 

4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

9’823

 

10’535

 

-7%

 

-6%

 

-4%

 

29’484

 

30’475

 

-3%

 

-2%

 

-2%

 

Operational EBITDA

 

1’418

 

1’638

 

-13%

 

 

 

 

 

4’020

 

4’657

 

-14%

 

 

 

 

 

as % of operational revenues4

 

14.3%

 

15.7%

 

 

 

 

 

 

 

13.6%

 

15.3%

 

 

 

 

 

 

 

Income from operations

 

1’222

 

1’324

 

-8%

 

 

 

 

 

3’129

 

3’564

 

-12%

 

 

 

 

 

as % of revenues

 

12.4%

 

12.6%

 

 

 

 

 

 

 

10.6%

 

11.7%

 

 

 

 

 

 

 

Net income attributable to ABB

 

734

 

835

 

-12%

 

 

 

 

 

1’914

 

2’262

 

-15%

 

 

 

 

 

Basic earnings per share ($)

 

0.32

 

0.36

 

 

 

 

 

 

 

0.83

 

0.99

 

 

 

 

 

 

 

Cash flow from operating activities

 

1’169

 

1’241

 

-6%

 

 

 

 

 

2’012

 

1’561

 

29%

 

 

 

 

 

 

 

ABB Group Q3 results 2014

Page 1 of 9

 

 



 

Press Release

 

 

Summary of Q3 results

 

Growth overview

Utility demand for power distribution solutions was steady in the quarter while investments in power transmission systems remained selective. Industrial demand varied by region and end market, with positive demand in oil and gas and general industry. Demand in the mining sector was stable at low levels. Infrastructure and construction markets were mixed, while rail and marine transportation demand was positive.

 

In this mixed environment, total orders received were up 25 percent in the quarter (28 percent on a like-for-like basis). Most of the increase resulted from higher large orders, which represented 25 percent of total orders received in the quarter, compared to 9 percent in the same quarter in 2013.

 

Base orders were up 3 percent (5 percent like-for-like) on a combination of growing demand in some of ABB’s early-cycle product businesses—such as wiring accessories and low-voltage motors—as well as growth initiatives across many businesses, products and geographies. Base order growth was strongest in the Discrete Automation and Motion division and in the two power divisions.

 

Service orders increased 10 percent and represented 15 percent of total orders, down from the year-earlier quarter due to the effects of the higher total order intake.

 

Revenues declined in the third quarter (down 4 percent like-for-like). Higher like-for-like revenues in the Discrete Automation and Motion and Low Voltage Products divisions were more than offset by a decline in the Process Automation, Power Products and Power Systems divisions, where opening order backlogs were lower. Service revenues were steady and reached 16 percent of total revenues, up from 15 percent in the same quarter a year earlier.

 

The order backlog at the end of September amounted to $27 billion, an increase of 4 percent compared to the end of the same quarter in 2013 and 9 percent higher than at the end of 2013.

 

Orders received and revenues by region

$ millions unless
otherwise indicated

 

Orders received

 

Change

 

Revenues

 

Change

 

 

 

Q3 14

 

Q3 13

 

US$

 

Local

 

Like-for-
like

 

Q3 14

 

Q3 13

 

US$

 

Local

 

Like-for-
like

 

Europe

 

4’010

 

3’001

 

34%

 

36%

 

40%

 

3’271

 

3’684

 

-11%

 

-10%

 

-7%

 

The Americas

 

2’969

 

2’807

 

6%

 

7%

 

11%

 

2’859

 

3’016

 

-5%

 

-3%

 

-1%

 

Asia

 

3’099

 

2’499

 

24%

 

24%

 

25%

 

2’809

 

2’836

 

-1%

 

-1%

 

0%

 

Middle East and Africa

 

1’147

 

782

 

47%

 

47%

 

47%

 

884

 

999

 

-12%

 

-10%

 

-10%

 

Group total

 

11’225

 

9’089

 

24%

 

25%

 

28%

 

9’823

 

10’535

 

-7%

 

-6%

 

-4%

 

 

All regions recorded growth in base and large orders on a like-for-like basis and across both power and automation in the third quarter.

 

Growth in Europe was led by the UK, where both large and base orders increased strongly. Switzerland, Finland and France also showed strong order growth, while Germany was lower.

 

Order growth in the Americas mainly reflects a large mining order in Brazil. Orders in the US grew on a like-for-like basis.

 

Large marine orders in South Korea led strong Asia growth in the quarter. This was supported by continued growth in China, although at a slower pace than in the first half of the year. Orders decreased in India.

 

 

ABB Group Q3 results 2014

Page 2 of 9

 

 



 

Press Release

 

 

Orders increased in the Middle East and Africa, led by the large order won in Tunisia, and were higher in both power and automation.

 

Orders received and revenues by division

 

 

 

Orders received

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions unless
otherwise indicated

 

Q3
2014

 

Q3
2013

 

 

 

Change

 

 

 

Q3
2014

 

Q3
2013

 

 

 

Change

 

 

 

 

 

 

 

 

 

US$

 

Local
currency

 

Like-
for-like

 

 

 

 

 

US$

 

Local
currency

 

Like-
for-like

 

Discrete Automation and Motion

 

2’697

 

2’410

 

12%

 

13%

 

14%

 

2’635

 

2’539

 

4%

 

4%

 

4%

 

Low Voltage Products

 

1’914

 

1’938

 

-1%

 

0%

 

3%

 

1’921

 

2’001

 

-4%

 

-3%

 

3%

 

Process Automation

 

2’622

 

1’688

 

55%

 

57%

 

58%

 

1’899

 

2’128

 

-11%

 

-10%

 

-6%

 

Power Products

 

2’725

 

2’450

 

11%

 

13%

 

 

 

2’455

 

2’692

 

-9%

 

-8%

 

 

 

Power Systems

 

2’177

 

1’216

 

79%

 

84%

 

 

 

1’637

 

2’062

 

-21%

 

-19%

 

 

 

Corporate and other
(incl. inter-division eliminations)

 

(910)

 

(613)

 

 

 

 

 

 

 

(724)

 

(887)

 

 

 

 

 

 

 

ABB Group

 

11’225

 

9’089

 

24%

 

25%

 

28%

 

9’823

 

10’535

 

-7%

 

-6%

 

-4%

 

 

Discrete Automation and Motion: Orders increased in all businesses and regions, driven by growth initiatives to drive base orders—including service—as well as continued demand growth in sectors such as rail and marine. Higher revenues were driven mainly by the execution of the strong order backlog in robotics as well as power conversion and service.

 

Low Voltage Products: Like-for-like orders increased in a mixed environment, and were steady to higher in all businesses. Regionally, growth was driven by Asia, the Americas and the Middle East and Africa. Europe orders were steady. Like-for-like revenues grew in line with orders.

 

Process Automation: Large orders in the oil and gas, marine and mining sectors offset a decline in base orders in the quarter. Orders grew strongly in all regions. Revenues decreased, reflecting the lower opening order backlog. An increase in lifecycle service revenues in the quarter was offset by lower full service revenues.

 

Power Products: Large and base orders increased in most markets supported by the industry sector and continued selective investments in large transmission projects. Orders grew at a double-digit pace in Europe, the Americas and the Middle East and Africa. Orders were lower in Asia but grew in China. The revenue decline in the quarter mainly reflects the lower opening order backlog.

 

Power Systems: Higher orders in the quarter reflect an increase in both base and large orders, including an $800-million order for an HVDC (high-voltage direct current) connection in the UK. Initiatives to drive base order growth contributed to a double-digit base order increase. Utilities remained 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.

 

 

ABB Group Q3 results 2014

Page 3 of 9

 

 



 

Press Release

 

 

Earnings overview

 

Operational EBITDA

Operational EBITDA in the third quarter of 2014 amounted to $1.4 billion, 13 percent below the year-earlier period. The operational EBITDA margin also declined. These results were due primarily to lower revenues and the ongoing execution of certain low- and negative-margin projects out of the backlog in Power Systems. Cost savings and further productivity improvements more than offset price pressures in the quarter.

 

Net income

Net income for the quarter amounted to $734 million. After-tax gains from the sale of businesses amounted to $145 million in the quarter. Net income for the quarter also included net pre-tax charges for foreign exchange and commodity timing differences of $76 million compared with positive pre-tax impacts of $113 million in the third quarter of 2013.

 

Basic earnings per share amounted to $0.32 in the third quarter compared to $0.36 in the same quarter a year earlier.

 

Earnings and cash flows by division

 

$ millions unless
otherwise indicated

 

Operational EBITDA

 

Operational
EBITDA margin

 

Cash flows from
operating activities

 

 

 

 

 

 

 

 

 

 

 

Q3
2014

 

Q3
2013

 

Change
US$

 

Q3
2014

 

Q3
2013

 

Q3
2014

 

Q3
2013

 

Change
US$

 

Discrete Automation and Motion

 

478

 

476

 

0%

 

18.1%

 

18.8%

 

409

 

526

 

-22%

 

Low Voltage Products

 

364

 

395

 

-8%

 

18.9%

 

19.7%

 

308

 

435

 

-29%

 

Process Automation

 

239

 

289

 

-17%

 

12.6%

 

13.6%

 

258

 

271

 

-5%

 

Power Products

 

362

 

389

 

-7%

 

14.6%

 

14.6%

 

325

 

207

 

57%

 

Power Systems

 

9

 

141

 

-94%

 

0.5%

 

7.0%

 

(92)

 

(118)

 

n/a

 

Corporate and other
(incl. inter-division eliminations)

 

(34)

 

(52)

 

 

 

 

 

 

 

(39)

 

(80)

 

 

 

ABB Group

 

1’418

 

1’638

 

-13%

 

14.3%

 

15.7%

 

1’169

 

1’241

 

-6%

 

 

Discrete Automation and Motion: The operational EBITDA margin decline reflects the dilutive impact from Power-One, acquired during the third quarter of 2013. Excluding that impact, the division’s operational EBITDA margin was higher versus the year-earlier period.

 

Low Voltage Products: The operational EBITDA margin decline mainly reflects a higher share of system revenues, which tend to have lower margins.

 

Process Automation: The operational EBITDA and margin decline mainly reflects the impact of lower revenues and the comparison with a very strong result in the same quarter a year earlier.

 

Power Products: Cost savings and favorable mix secured margin stability despite lower revenues.

 

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

 

 

ABB Group Q3 results 2014

Page 4 of 9

 

 


 


 

Press Release

 

 

Balance sheet and cash flow

Total debt at the end of the third quarter amounted to around $7.9 billion, approximately the same as at the end of 2013. Net debt4 at the end of the third quarter increased slightly compared to the end of 2013 and amounted to approximately $1.7 billion.

ABB reported cash from operations of $1.2 billion in the third quarter, a decrease of 6 percent compared with the third quarter in 2013. For the first nine months of 2014, cash from operations increased 29 percent as the impacts from an improvement in net working capital (NWC) more than offset the impacts of lower net income during the period. NWC as a percentage of revenues4 amounted to 16.6 percent compared with 17.8 percent in the third quarter of 2013.

 

Share buyback

As announced at its Capital Markets Day on September 9, ABB has initiated a $4-billion share buyback program. During September, ABB purchased approximately 15.4 million shares under the program with a buyback value of approximately $350 million.

 

Divestitures

ABB completed the previously-announced divestiture of Thomas & Betts’ steel structures business during the third quarter for cash proceeds of approximately $590 million. The company also announced in August an agreement to divest its Full Service business for an undisclosed amount. The sale is expected to close in the fourth quarter of 2014, subject to regulatory approval.

 

Next Level strategy

In September, ABB announced its Next Level strategy and financial targets for the 2015-2020 period aimed at accelerating sustainable value creation. The strategy builds on ABB’s three focus areas of profitable growth, relentless execution and business-led collaboration. The company intends to drive profitable growth by shifting its center of gravity toward high-growth end markets, enhancing competitiveness and lowering risk in business models.

Under the plan, ABB expects to grow operational earnings per share (EPS) 10-15 percent compound annual growth rate (CAGR) and deliver attractive cash returns on investment (CROI) in the mid-teens over the period 2015-2020. It targets to grow revenues on a like-for-like basis on average 4-7 percent per year, faster than forecasted GDP and market growth. ABB plans to steadily increase over the same time period its profitability, measured in operational EBITA, within a bandwidth of 11-16 percent while targeting an average conversion of the annual free cash flow above 90 percent. The new financial targets take effect on January 1, 2015.

 

Management changes

In connection with the Next Level strategy announced in September, the company said it is aligning its Executive Committee (EC) structure. Peter Terwiesch, currently head of ABB in Central Europe and Germany, was appointed EC member responsible for the Process Automation division. ABB also said it will streamline its regional structure from eight to three regions responsible for customer collaboration, shared services and the related countries. The newly created regions will be led by current EC members – Frank Duggan (Asia, Middle East and Africa), Greg Scheu (Americas) and Veli-Matti Reinikkala (Europe). All organizational and management changes are effective January 1, 2015.

 

 

ABB Group Q3 results 2014

Page 5 of 9

 

 



 

Press Release

 

 

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. These trends are also expected to drive demand in ABB’s infrastructure and transportation markets. 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, macroeconomic and geopolitical developments are signaling a mixed picture with increased uncertainty. Some early-cycle macroeconomic signs in the US remain positive and growth in China is expected to continue. At the same time, the market remains impacted by slow growth in Europe, political tensions in various parts of the world as well as the health situation in Africa.

In this market environment, ABB’s management team aims to continue to outgrow its market in major customer segments by systematically driving 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.

 

 

ABB Group Q3 results 2014

Page 6 of 9

 

 



 

Press Release

 

 

More information

The 2014 Q3 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 10:00 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 14011, followed by the # key.

A conference call for analysts and investors is scheduled to begin today at 3:00 p.m. CET (2:00 p.m. BST, 9:00 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 2014-15

 

 

Fourth-quarter 2014 results

February 5, 2015

 

First-quarter 2015 results

April 29, 2015

 

Annual General Meeting (Zurich, Switzerland)

April 30, 2015

 

Annual Information Meeting (Västerås, Sweden)

May 4, 2015

 

Second-quarter 2015 results

July 23, 2015

 

Third-quarter 2015 results

October 21, 2015

 

 

ABB (www.abb.com) is a leader in power and automation technologies that enable utility, industry, and transport and infrastructure customers to improve their performance while lowering environmental impact. The ABB Group of companies operates in roughly 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, including those in the Next Level strategy and Outlook sections of this release. 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, October 22, 2014

Ulrich Spiesshofer, CEO

 

 

 

 

 

 

For more information please contact:

 

 

Media Relations:

Thomas Schmidt, Antonio Ligi

(Zurich, Switzerland)

Tel: +41 43 317 7111

media.relations@ch.abb.com

Investor Relations:

Switzerland: Tel. +41 43 317 71 11

investor.relations@ch.abb.com

ABB Ltd

Affolternstrasse 44

CH-8050 Zurich, Switzerland

 

 

ABB Group Q3 results 2014

Page 7 of 9

 

 


 

 


 

Press Release

 

 

Key figures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions unless otherwise indicated

 

Q3 14

 

Q3 13

 

 

 

Change

 

 

 

9M 14

 

9M 13

 

 

 

Change

 

 

 

 

 

 

 

 

 

 

US$

 

Local

 

Like-for-like4

 

 

 

 

 

US$

 

Local

 

Like-for-like4

Orders

 

ABB Group

 

11,225

 

9,089

 

24%

 

25%

 

28%

 

32,150

 

28,893

 

11%

 

13%

 

13%

 

 

Discrete Automation and Motion

 

2,697

 

2,410

 

12%

 

13%

 

14%

 

8,180

 

7,287

 

12%

 

13%

 

10%

 

 

Low Voltage Products

 

1,914

 

1,938

 

-1%

 

0%

 

3%

 

5,828

 

5,852

 

0%

 

1%

 

2%

 

 

Process Automation

 

2,622

 

1,688

 

55%

 

57%

 

58%

 

6,670

 

5,976

 

12%

 

14%

 

18%

 

 

Power Products

 

2,725

 

2,450

 

11%

 

13%

 

 

 

8,216

 

7,905

 

4%

 

5%

 

 

 

 

Power Systems

 

2,177

 

1,216

 

79%

 

84%

 

 

 

5,434

 

4,160

 

31%

 

35%

 

 

 

 

Corporate and other
(incl. inter-division eliminations)

 

(910)

 

(613)

 

 

 

 

 

 

 

(2,178)

 

(2,287)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

ABB Group

 

9,823

 

10,535

 

-7%

 

-6%

 

-4%

 

29,484

 

30,475

 

-3%

 

-2%

 

-2%

 

 

Discrete Automation and Motion

 

2,635

 

2,539

 

4%

 

4%

 

4%

 

7,559

 

7,228

 

5%

 

5%

 

2%

 

 

Low Voltage Products

 

1,921

 

2,001

 

-4%

 

-3%

 

3%

 

5,739

 

5,707

 

1%

 

1%

 

4%

 

 

Process Automation

 

1,899

 

2,128

 

-11%

 

-10%

 

-6%

 

5,854

 

6,236

 

-6%

 

-5%

 

-2%

 

 

Power Products

 

2,455

 

2,692

 

-9%

 

-8%

 

 

 

7,508

 

7,962

 

-6%

 

-4%

 

 

 

 

Power Systems

 

1,637

 

2,062

 

-21%

 

-19%

 

 

 

5,055

 

6,075

 

-17%

 

-15%

 

 

 

 

Corporate and other
(incl. inter-division eliminations)

 

(724)

 

(887)

 

 

 

 

 

 

 

(2,231)

 

(2,733)

 

 

 

 

 

 

Operational EBITDA

 

ABB Group

 

1,418

 

1,638

 

-13%

 

 

 

 

 

4,020

 

4,657

 

-14%

 

 

 

 

 

 

Discrete Automation and Motion

 

478

 

476

 

0%

 

 

 

 

 

1,316

 

1,320

 

0%

 

 

 

 

 

 

Low Voltage Products

 

364

 

395

 

-8%

 

 

 

 

 

1,074

 

1,082

 

-1%

 

 

 

 

 

 

Process Automation

 

239

 

289

 

-17%

 

 

 

 

 

751

 

800

 

-6%

 

 

 

 

 

 

Power Products

 

362

 

389

 

-7%

 

 

 

 

 

1,109

 

1,170

 

-5%

 

 

 

 

 

 

Power Systems

 

9

 

141

 

-94%

 

 

 

 

 

(44)

 

469

 

n/a

 

 

 

 

 

 

Corporate and other
(incl. inter-division eliminations)

 

(34)

 

(52)

 

 

 

 

 

 

 

(186)

 

(184)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA % 4

 

ABB Group

 

14.3%

 

15.7%

 

 

 

 

 

 

 

13.6%

 

15.3%

 

 

 

 

 

 

 

 

Discrete Automation and Motion

 

18.1%

 

18.8%

 

 

 

 

 

 

 

17.4%

 

18.3%

 

 

 

 

 

 

 

 

Low Voltage Products

 

18.9%

 

19.7%

 

 

 

 

 

 

 

18.7%

 

19.0%

 

 

 

 

 

 

 

 

Process Automation

 

12.6%

 

13.6%

 

 

 

 

 

 

 

12.8%

 

12.8%

 

 

 

 

 

 

 

 

Power Products

 

14.6%

 

14.6%

 

 

 

 

 

 

 

14.7%

 

14.7%

 

 

 

 

 

 

 

 

Power Systems

 

0.5%

 

7.0%

 

 

 

 

 

 

 

-0.8%

 

7.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

ABB Group

 

1,222

 

1,324

 

-8%

 

 

 

 

 

3,129

 

3,564

 

-12%

 

 

 

 

 

 

Discrete Automation and Motion

 

390

 

403

 

-3%

 

 

 

 

 

1,065

 

1,101

 

-3%

 

 

 

 

 

 

Low Voltage Products

 

552

 

315

 

75%

 

 

 

 

 

1,208

 

809

 

49%

 

 

 

 

 

 

Process Automation

 

214

 

270

 

-21%

 

 

 

 

 

650

 

727

 

-11%

 

 

 

 

 

 

Power Products

 

283

 

346

 

-18%

 

 

 

 

 

874

 

975

 

-10%

 

 

 

 

 

 

Power Systems

 

(121)

 

127

 

n/a

 

 

 

 

 

(313)

 

340

 

n/a

 

 

 

 

 

 

Corporate and other
(incl. inter-division eliminations)

 

(96)

 

(137)

 

 

 

 

 

 

 

(355)

 

(388)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations %

 

ABB Group

 

12.4%

 

12.6%

 

 

 

 

 

 

 

10.6%

 

11.7%

 

 

 

 

 

 

 

 

Discrete Automation and Motion

 

14.8%

 

15.9%

 

 

 

 

 

 

 

14.1%

 

15.2%

 

 

 

 

 

 

 

 

Low Voltage Products

 

28.7%

 

15.7%

 

 

 

 

 

 

 

21.0%

 

14.2%

 

 

 

 

 

 

 

 

Process Automation

 

11.3%

 

12.7%

 

 

 

 

 

 

 

11.1%

 

11.7%

 

 

 

 

 

 

 

 

Power Products

 

11.5%

 

12.9%

 

 

 

 

 

 

 

11.6%

 

12.2%

 

 

 

 

 

 

 

 

Power Systems

 

-7.4%

 

6.2%

 

 

 

 

 

 

 

-6.2%

 

5.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Orders received and revenues by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions

 

Orders received

 

 

 

Change

 

 

 

Revenues

 

 

 

Change

 

 

 

 

9M 14

 

9M 13

 

US$

 

Local

 

Like-for-like4

 

9M 14

 

9M 13

 

US$

 

Local

 

Like-for-like4

Europe

 

11,136

 

10,034

 

11%

 

11%

 

12%

 

10,240

 

10,482

 

-2%

 

-3%

 

-2%

The Americas

 

9,263

 

8,341

 

11%

 

14%

 

14%

 

8,530

 

8,892

 

-4%

 

-1%

 

-2%

Asia

 

8,628

 

7,808

 

11%

 

12%

 

12%

 

7,955

 

8,163

 

-3%

 

-1%

 

-1%

Middle East and Africa

 

3,123

 

2,710

 

15%

 

17%

 

17%

 

2,759

 

2,938

 

-6%

 

-5%

 

-5%

Group total

 

32,150

 

28,893

 

11%

 

13%

 

13%

 

29,484

 

30,475

 

-3%

 

-2%

 

-2%

 

 

ABB Group Q3 results 2014

Page 8 of 9

 



 

Press Release

 

 

Operational EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions unless otherwise indicated

 

ABB

 

Discrete Automation
and Motion

 

Low Voltage
Products

 

Process Automation

 

Power Products

 

Power Systems

 

 

Q3 14

 

Q3 13

 

Q3 14

 

Q3 13

 

Q3 14

 

Q3 13

 

Q3 14

 

Q3 13

 

Q3 14

 

Q3 13

 

Q3 14

 

Q3 13

Revenues

 

9,823

 

10,535

 

2,635

 

2,539

 

1,921

 

2,001

 

1,899

 

2,128

 

2,455

 

2,692

 

1,637

 

2,062

FX/commodity timing differences on Revenues

 

86

 

(90)

 

2

 

(13)

 

8

 

 

(7)

 

(7)

 

22

 

(22)

 

60

 

(49)

Operational revenues

 

9,909

 

10,445

 

2,637

 

2,526

 

1,929

 

2,001

 

1,892

 

2,121

 

2,477

 

2,670

 

1,697

 

2,013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,222

 

1,324

 

390

 

403

 

552

 

315

 

214

 

270

 

283

 

346

 

(121)

 

127

Depreciation

 

212

 

206

 

41

 

38

 

45

 

48

 

17

 

18

 

49

 

46

 

22

 

20

Amortization

 

110

 

121

 

37

 

36

 

29

 

32

 

5

 

5

 

5

 

7

 

20

 

25

including total acquisition-related amortization of

 

93

 

100

 

35

 

34

 

24

 

30

 

4

 

4

 

4

 

6

 

22

 

23

Restructuring and restructuring-related expenses

 

55

 

40

 

-

 

3

 

17

 

11

 

2

 

2

 

12

 

11

 

21

 

11

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

 

(257)

 

60

 

1

 

12

 

(291)

 

4

 

6

 

1

 

(1)

 

10

 

18

 

-

FX/commodity timing differences in income from operations

 

76

 

(113)

 

9

 

(16)

 

12

 

(15)

 

(5)

 

(7)

 

14

 

(31)

 

49

 

(42)

Operational EBITDA

 

1,418

 

1,638

 

478

 

476

 

364

 

395

 

239

 

289

 

362

 

389

 

9

 

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

14.3%

 

15.7%

 

18.1%

 

18.8%

 

18.9%

 

19.7%

 

12.6%

 

13.6%

 

14.6%

 

14.6%

 

0.5%

 

7.0%

 

 

 

 

 

 


1 Orders up 28 percent on a like-for-like basis. See the “Supplemental Financial Information” attachment to the press release.

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

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

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

 

 

ABB Group Q3 results 2014

Page 9 of 9

 



 

 

 

 

 

Supplemental financial information

September 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 nine and three months ended September 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 margin

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

 

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).

 

Page 1 of 10



 

 

 

 

 

Supplemental financial information

September 30, 2014

 

 

 

Reconciliation

 

 

Nine months ended September 30, 2014

($ in millions, unless otherwise
indicated)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate and
Other and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

7,559

 

5,739

 

5,854

 

7,508

 

5,055

 

(2,231)

 

29,484

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

1

 

17

 

(3)

 

28

 

139

 

-

 

182

 

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

 

(2)

 

-

 

2

 

2

 

26

 

-

 

28

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(7)

 

(6)

 

(5)

 

(11)

 

(34)

 

-

 

(63)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

7,551

 

5,750

 

5,848

 

7,527

 

5,186

 

(2,231)

 

29,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,065

 

1,208

 

650

 

874

 

(313)

 

(355)

 

3,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

234

 

227

 

67

 

164

 

136

 

160

 

988

 

Restructuring and restructuring-related expenses

 

14

 

29

 

26

 

35

 

34

 

4

 

142

 

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

 

-

 

(395)

 

9

 

10

 

10

 

6

 

(360)

 

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

14

 

12

 

8

 

48

 

116

 

3

 

201

 

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

 

(2)

 

-

 

3

 

5

 

14

 

-

 

20

 

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

 

(9)

 

(7)

 

(12)

 

(27)

 

(41)

 

(4)

 

(100)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

1,316

 

1,074

 

751

 

1,109

 

(44)

 

(186)

 

4,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

 

17.4%

 

18.7%

 

12.8%

 

14.7%

 

(0.8)%

 

-

 

13.6%

 

 

Page 2 of 10



 

 

 

 

 

Supplemental financial information

September 30, 2014

 

 

 

 

 

Nine months ended September 30, 2013

($ in millions, unless otherwise
indicated)

 

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

 

Gains and losses from sale of businesses, 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%

 

 

Page 3 of 10



 

 

 

 

 

Supplemental financial information

September 30, 2014

 

 

 

 

 

Three months ended September 30, 2014

 

($ in millions, unless otherwise
indicated)

 

Discrete
Automation
and Motion

 

Low Voltage
Products

 

Process
Automation

 

Power
Products

 

Power
Systems

 

Corporate and
Other and
Intersegment
elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

2,635

 

1,921

 

1,899

 

2,455

 

1,637

 

(724)

 

9,823

 

Foreign exchange/commodity timing differences in total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on derivatives

 

6

 

13

 

2

 

31

 

54

 

1

 

107

 

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

 

(1)

 

-

 

4

 

2

 

26

 

-

 

31

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(3)

 

(5)

 

(13)

 

(11)

 

(20)

 

-

 

(52)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational revenues

 

2,637

 

1,929

 

1,892

 

2,477

 

1,697

 

(723)

 

9,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

390

 

552

 

214

 

283

 

(121)

 

(96)

 

1,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

78

 

74

 

22

 

54

 

42

 

52

 

322

 

Restructuring and restructuring-related expenses

 

-

 

17

 

2

 

12

 

21

 

3

 

55

 

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

 

1

 

(291)

 

6

 

(1)

 

18

 

10

 

(257)

 

Foreign exchange/commodity timing differences in income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

13

 

15

 

2

 

32

 

48

 

2

 

112

 

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

 

-

 

-

 

4

 

3

 

23

 

-

 

30

 

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

 

(4)

 

(3)

 

(11)

 

(21)

 

(22)

 

(5)

 

(66)