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 February 2017

 

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 ☒ 

Form 40-F ⬜ 

 

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): ⬜ 

 

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): ⬜ 

 

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 ⬜ 

No ☒ 

 

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 February 8, 2017 titled “ABB delivers growth in fourth quarter”.

2.              Q4 2016 Financial Information.

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

 

The information provided by Item 2 above is incorporated by reference into ABB Ltd's registration statement on Form F-3 (File No. 333-180922) and registration statements on Form S-8 (File Nos. 333-190180, 333-181583, 333-179472, 333-171971 and 333-129271) each of which was previously filed with the Securities and Exchange Commission.

 

  

 


 

 

ZUrich, switzerland, february 8, 2017

ABB delivers growth in fourth quarter

Solid transformation progress in 2016

 

Fourth quarter highlights

            3%1 orders growth driven by large contract awards

            9% orders growth in the United States and China

            Revenues up 1%

            Power Grids strong growth in orders (up 15%) and revenues (up 4%); Op EBITA margin2 increased to 10.4%

            Operational EBITA margin 11.7% impacted by default of a large distributor in Turkey and Egyptian currency losses

            Net Income $489 mn versus $204 mn in Q4 2015

Full year 2016 highlights

            Operational EBITA margin up 50 bps to 12.4%

            Operational earnings per share2 up 4%

            Orders -5% and revenues -1%

            Successful launch of ABB AbilityTM – integrating and expanding digital offering

            Cash return on invested capital up 70 bps to 14.1%; free cash flow up 5%

            Cost savings and working capital programs progressing

            8th consecutive dividend increase to CHF0.76 per share proposed

 

“We delivered growth in the fourth quarter, driven by the strong performance of Power Grids, in a continued tough market,” said CEO Ulrich Spiesshofer. “Our customers are excited about ABB Ability, which bundles our leading offering as a digital champion in our industry. With the related orders already received, and significant interest, we are building growth momentum as we implement Next Level Stage 3,” he said. “The underlying performance improvement momentum continued and was stronger than the numbers we are reporting if you consider the one-off events that impacted us during the quarter.”

“In 2016, we made significant progress transforming ABB into a more customer focused, leaner, digital technology leader,” Spiesshofer said. “We delivered margin accretion through our continued focus on productivity and cost. Our working capital program, strong cash generation and disciplined capital allocation reflect the new cash culture of ABB. We are delivering on our commitment to attractive shareholder returns.”

Key Figures

 

 

 

Change

 

 

Change

($ in millions, unless otherwise indicated)

Q4 2016

Q4 2015

US$

Comparable1

FY 2016

FY 2015

US$

Comparable1

Orders

8,277

8,262

0%

+3%

33,379

36,429

-8%

-5%

Revenues

8,993

9,242

-3%

+1%

33,828

35,481

-5%

-1%

Operational EBITA1

1,057

1,101

-4%

-2%3

4,191

4,209

0%

+2%3

as % of operational revenues

11.7%

11.9%

-0.2pts

 

12.4%

11.9%

+0.5pts

 

Net income

489

204

+140%

  

1,963

1,933

+2%

 

Basic EPS ($)

0.23

0.09

+147%4

 

0.91

0.87

+5%4

 

Operational EPS2 ($)

0.33

0.35

-5%4

-3%4

1.29

1.26

+3%4

+4%4

Cash flow from operating activities

1,519

1,994

-24%

 

3,934

3,818

+3%

 

Free cash flow

 

 

 

 

3,156

3,019

+5%

 

Cash return on invested capital (CROI)

 

 

 

 

14.1%

13.4%

+0.7pts

 

 

1 Growth rates for orders, revenues and order backlog are on a comparable basis (local currency adjusted for acquisitions and divestitures), previously referred to as ‘like-for-like’. US$ growth rates are presented in Key Figures table

2 For a reconciliation of non-GAAP measures, see “Supplemental Reconciliations and Definitions” in the attached Q4 2016 Financial Information

3 Constant currency (not adjusted for portfolio changes)

4 EPS growth rates are computed using unrounded amounts. Comparable operational earnings per share is in constant currency (2014 exchange rates and not adjusted for changes in the business portfolio)

 

 

1


 

Short-term outlook

Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs remain positive in the United States and growth in China is expected to continue. The overall global market remains impacted by modest growth and increased uncertainties, e.g., Brexit in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results. With this and the ongoing transformation of ABB, we expect 2017 to be a transitional year.

 

 

Q4 2016 Group results

Orders

Orders increased 3 percent (steady in US dollars) compared with the fourth quarter a year ago, driven primarily by large contract awards. Large orders ($15 million and above) were 35 percent higher (24 percent in US dollars) from large orders in Power Grids and Discrete Automation and Motion. Large orders represented 17 percent of total orders compared with 14 percent in the same quarter a year ago. These large orders included a $640 million ultra-high-voltage direct current systems order for Raigarh-Pugalur in India and a $100 million order for the upgrade of Sylmar converter station of the Pacific Intertie high-voltage direct current power link in the USA. Base orders (below $15 million) were 1 percent lower (4 percent in US dollars); improving in Discrete Automation and Motion, steady in Process Automation and lower in the two remaining divisions. Total service and software orders increased 4 percent (2 percent in US dollars) compared with the fourth quarter of 2015 and represented 20 percent of total orders, slightly higher than the same period a year ago.

The order backlog at the end of December 2016, amounted to $23 billion, 1 percent lower (5 percent in US dollars) compared with the end of 2015. The book-to-bill2 ratio in the fourth quarter was 0.92x compared with 0.89x in the fourth quarter of 2015.

 

Market overview 

Demand patterns in ABB’s three regions: 

        Demand in Europe was subdued due to moderate overall growth and timing of large capital investments. Total orders declined 8 percent (12 percent in US dollars) while base orders were stable (3  percent lower in US dollars). Base order  demand was positive in Spain, Norway and the United Kingdom while weak in Turkey, France and the Netherlands.

        The  Americas was steady mainly driven by increased momentum for transmission and distribution needs. Total orders were steady in the quarter as large order awards offset a base order decline of 3 percent. The United States grew 9 percent (9 percent in US dollars). Base orders were positive in the United States and Mexico and declined in Canada and Brazil.

        Demand in Asia, the Middle  East and Africa (AMEA) was strong as India continued to invest in reliable and efficient power transmission solutions and China fostered further investment in industrial automation. Total orders for the  region grew 17 percent (13 percent in  US dollars) driven by strong order  development in India and China. Base orders were 2 percent lower (5 percent in US dollars) as strong order development in India, up 14 percent (12 percent in US dollars) and China up 11 percent (5 percent in US dollars), could not offset declines in Saudi Arabia and other parts of South East Asia.

 

Demand patterns in ABB’s three major customer sectors:

        Utilities continued their  investment activities to upgrade the aging power infrastructure and to integrate renewable  energy in the grid.

        In industry, investments in robotics solutions and  light industries such as automotive, food and beverage remained positive while  demand from the process industries, specifically mining and oil and gas remain subdued.

        Transport and infrastructure demand  has been mixed. Demand for building automation solutions as well as solutions involving energy efficiency for rail  transport remained strong while the marine sector suffered from a sharp decline due to the subdued oil and gas sector with the exception of cruise ships.

 

 

2


 

Revenues

Revenues increased 1 percent (3 percent lower in US dollars) in the fourth quarter with revenues higher in Electrification Products and Power Grids. Total services and software revenues increased 2 percent (steady  in US dollars) and represented 18.5 percent  of total revenues compared with 18.0 percent a year ago. 

 

Operational EBITA 

Operational EBITA  was $1,057 million, 2 percent lower in  constant  currencies  (4 percent in  US dollars). Operational EBITA margin was 11.7 percent, 20 basis points lower compared with the same quarter a year ago. Positive impacts from net savings and volume were offset by business mix and higher bad debt expenses due to the default of a large distributor in Turkey and operational currency losses due to the devaluation in Egypt. The bad debt expense and operational currency losses were $30 million and impacted operational EBITA margin by approximately 30 basis points. Excluding these charges, the operational EBITA margin would have increased. The strong margin improvements in Process Automation and Power Grids did not fully offset these negative and unique events in the other divisions.

 

ABB modified its definition of Operational EBITA to exclude non-operational pension costs and the impacts from changes in pre-acquisition estimates. The results of previous periods have been adjusted to be presented on a comparable basis.

 

Net income, Basic and Operational earnings per share

Net income increased to $489 million and basic earnings per share was $0.23 compared with $0.09 for the same quarter of 2015. Restructuring and restructuring-related expenses were significantly lower than the same quarter of 2015. During the quarter, net income also included the positive impact from the reassessment of the restructuring and restructuring-related provisions associated with the white collar productivity program which were reduced by $114 million pre-tax. This adjustment was due to significantly higher than originally expected attrition and internal re-deployment rates.

 

Net income was also impacted by non-operational pension costs of $38 million pre-tax, which primarily resulted from the change in Norway from a defined benefit to defined contribution pension plan as well as an increase of $92 million pre-tax for estimated warranty costs in the solar business for products which were designed and sold by Power-One prior to the acquisition in 2013. During the long warranty periods of the solar inverters designed and sold by Power-One pre-dating the acquisition in 2013, warranty costs have exceeded the amounts originally estimated.

 

Operational EPS was $0.33 compared to $0.35 for the same quarter of 2015, a decrease of 3 percent in constant currency.

 

Cash flow from operating activities 

Cash flow from operating activities was $1,519 million, 24 percent lower compared with the fourth quarter of 2015, reflecting ABB’s focus on more stable quarterly cash generation throughout the year.

 

 

3


 

Q4 divisional performance 

($ in millions, unless otherwise indicated)

Orders

Change

Revenues

Change

Operational EBITA %

CHANGE

US$

Comparable1

US$

Comparable1

Electrification Products

2,157

-8%

-5%

2,462

0%

+3%

15.5%

-0.9pts

Discrete Automation

and Motion

2,013

+1%

+4%

2,211

-3%

-1%

11.7%

-1.0pts

Process Automation

1,520

-15%

-14%

1,737

-10%

-8%

13.4%

+1.3pts

Power Grids

2,879

+10%

+15%

3,042

-2%

+4%

10.4%

+0.9pts

Corporate & other (incl. inter-division elimination)

-292

 

 

-459

 

 

 

 

ABB Group

8,277

0%

+3%

8,993

-3%

+1%

11.7%

-0.2 pts

 

 

Electrification Products 

Total orders reflect lower large orders in the systems business compared with the same period a year ago. Positive order  development in China and India could not offset declines in the US, Canada and the United Kingdom. Revenues grew 3 percent in the quarter as a result of the execution of the systems backlog and higher demand in building products. Operational EBITA margin was impacted by the default of a Turkish distributor and Egyptian operational currency losses resulting collectively in a 90 basis points decline to 15.5 percent. Excluding these charges operational EBITA margin would have been steady in the quarter despite adverse mix. Effective January 1, 2017, electric vehicle charging, solar and power quality businesses are transferred from Discrete Automation and Motion and is expected to initially have a dampening effect on the division’s margin.

 

Discrete Automation and  Motion 

Total orders grew 4 percent and revenues were steady as continued strong demand patterns in robotics and the light industry more than offset the impacts from capex declines in process industries such as oil and gas. Operational EBITA margin declined 100 basis points compared with the same quarter a year ago mainly impacted by lower margins in solar, unfavorable mix and low capacity utilization. Effective January 1, 2017, electric vehicle charging, solar and power quality businesses are transferred to the Electrification Products Division due to the synergistic opportunities they have with that portfolio. This transfer of business is expected to have a supportive effect on the division’s margin.

 

Process Automation

Total orders were 14  percent  lower  as a result of continued capital  expenditure  reduction in  the process  industries.  Revenues  declined 8 percent as higher service revenues could not offset declines in mining and oil and gas. Operational EBITA margin increased 130 basis points to 13.4 percent due to positive mix and successfully implemented cost reduction and productivity measures.

 

Power Grids

Total orders were 15 percent higher compared with the same quarter a year ago due to significant large contract awards. Such orders included a $640 million ultra-high-voltage direct current order for Raigarh-Pugalur in India and a $100 million order for the upgrade of Sylmar converter station of the Pacific Intertie high-voltage direct current power link in the USA. Revenues increased 4 percent due  to steady execution of  a healthy order backlog.  Operational  EBITA margin increased by 90 basis points to 10.4 percent, mainly driven by higher revenues, improved productivity, solid project execution and continued cost savings. These results reflect the success of the “step change” transformation to date. Going forward, the division will continue to drive further transformation and value creation through its “Power Up” program.

 

 

4


 

Full-year 2016 Group Results

Orders were 5 percent lower (8 percent in US dollars) compared with 2015. Base order development was 2 percent lower (5 percent in US dollars) while large orders were down 24 percent (27 percent in US dollars) reflecting the high order intake in 2015. Total service and software orders grew 3 percent (0 percent in US dollars) to 18.4 percent of total group orders. The book-to-bill2 ratio was 0.99x for 2016.

 

Revenues were steady (down 5 percent in US dollars) as revenue growth in Power Grids and Electrification Products offset declines in Discrete Automation and Motion and Process Automation. Total services and software revenues grew 3 percent (0 percent in US dollars) to 17.8 percent of total group revenues.

 

ABB continued to execute its Next Level strategy in 2016 which resulted in a 50 basis points improvement of the operational EBITA margin to 12.4 percent. The main drivers for the group’s enhanced profitability were continued cost savings and productivity measures.

 

Net income for the year amounted to $1.96 billion, an increase of 2 percent compared to the previous year. Basic earnings per share in the period improved 5 percent to $0.91 and operational earnings per share was $1.29, an increase of 4 percent on a constant currency basis.

 

Cash flow from operating activities improved 3 percent to $3.9 billion, free cash flow improved 5 percent to $3.2 billion and cash return on invested capital (CROI) increased 70 basis points to 14.1%. Net working capital as a percentage of revenues reduced by 150 basis points to 11.5 percent compared to 2015.

 

During 2016, ABB returned $2.9 billion in cash to shareholders through the dividend (in the form of a nominal value reduction) and share repurchases.

 

Dividend

For 2016, the Board has proposed a dividend increase of 0.02 Swiss francs to 0.76 Swiss francs per share. The proposal is in line with the company’s dividend policy to pay a steadily rising, sustainable dividend over time. If approved by shareholders at the company’s annual general meeting on April 13, 2017, the Board proposes that the dividend be paid as an ordinary dividend. The ex-dividend and payout dates in Switzerland are expected in April 2017. Further information will be made available on ABB’s website in due course.

 

Share buyback program

On September 30, 2016, ABB announced the completion of the share buyback program that was introduced in September 2014. During the buyback program, ABB repurchased approximately 171 million registered shares (equivalent to 7.4 percent of its issued share capital at the launch of the buyback program) for a total amount of approximately $3.5 billion. In October 2016, ABB announced its plans for a new share buyback program of up to $3 billion from 2017 through 2019. This reflects the company’s confidence in the continued strength of ABB’s cash generation and financial position.

 

 

5


 

Next Level strategy – Stage 3

On October 4, 2016, ABB launched Stage 3 of  its Next Level strategy to unlock value  for  customers and shareholders. The core  elements of this included: shaping ABB’s divisions into four market-leading,  entrepreneurial units; realizing ABB’s full digital potential; accelerating momentum in operational excellence; and strengthening ABB’s brand.

 

Driving growth in four market-leading, entrepreneurial units

ABB is driving growth in four market leading entrepreneurial divisions, Electrification Products, Robotics and Motion, Industrial Automation and Power Grids. These divisions were effective January 1, 2017 and are fully operational.

 

A quantum leap in digital with ABB AbilityTM

The ABB AbilityTM offering combines ABB’s portfolio of digital solutions and services across  all customer segments, cementing the  group’s  leading  position in  the  Fourth Industrial Revolution and  supporting the  competitiveness  of ABB’s four  entrepreneurial divisions. With ABB Ability, the company sees an annual addressable market of up to $20 billion.

 

Accelerating momentum in operational excellence

The White-Collar  Productivity savings program is on track to deliver the increased cost reduction target of $1.3 billion, run rate end of 2017. ABB will achieve these  additional savings within the initially announced timeframe  and for $200 million lower of total combined restructuring program and implementation costs than initially announced. ABB is continuing its regular  cost-savings programs to achieve savings equivalent to 3-5 percent of cost of sales each year. 

 

ABB is on track to deliver its Net Working Capital program to free up $2 billion by the end of 2017. As of December 2016, it has freed up approximately $900 million. Net working capital as a percentage of revenues reduced 150 bps to 11.5% compared to 2015.

 

Strengthening ABB’s brand

ABB is adopting a single corporate  brand, consolidating all  its brands around the  world  under  one  umbrella. ABB’s portfolio of companies is being unified, showcasing the full breadth and depth of the  company’s global offering under one  master  brand. The unified brand plays a key part in realizing the value potential of ABB’s digital offering, as it increased brand loyalty, price premiums and purchase probability.

 

The brand features design elements intended to clearly articulate ABB’s vision, direction and unique market position to customers, shareholders, employees and all other stakeholders. ABB’s heritage as a pioneering technology leader and the three focus areas of its Next Level strategy are reflected in its new brand promise: “Let’s write the future.”TM

 

 

Outlook

Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs remain positive in the United States and growth in China is expected to continue. The overall global market remains impacted by modest growth and increased uncertainties, e.g., Brexit in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results. With this and the ongoing transformation of ABB, we expect 2017 to be a transitional year.

 

The attractive  long-term  demand outlook in ABB’s three major  customer  sectors — utilities, industry and transport & infrastructure  —  is driven by the Energy and Fourth Industrial Revolutions.

 

ABB is well-positioned to tap into these opportunities for long-term  profitable  growth  with its strong market presence, broad geographic and business scope, technology leadership and financial strength. 

 

 

6


 

More information

The Q4 and full-year 2016 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 press conference today starting at 10:00 a.m. Central European Time (CET) (9:00 a.m. BST, 4:00 a.m. EDT). The event will be accessible  by webcast on http://new.abb.com/media/annual-press-conference-2017

 

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 from the UK should dial +44 203 059 58 62.  From Sweden, the  number to dial. is +46 85 051 00 31, and from the  rest  of Europe, +41  58  310 50 00. Callers from the US and Canada should dial +1 866 291 41  66 (toll free) or +1  631  570 56 13 (long-distance charges apply). Callers are requested to phone in 10 minutes before the  start of the call.  The  call will also be accessible  on  the ABB website and a recorded session will be available  as a podcast one hour  after  the  end of the conference  call and can be downloaded from our website  www.abb.com

 

ABB (ABBN: SIX Swiss Ex) is a pioneering technology leader in electrification products, robotics and motion, industrial automation and power grids, serving customers in utilities, industry and transport & infrastructure globally. Continuing more than a 125-year history of innovation, ABB today is writing the future of industrial digitalization and driving the Energy and Fourth Industrial Revolutions. ABB operates in more than 100 countries with about 132,000 employees. www.abb.com 

 

 

 

Investor calendar 2017

Annual General Meeting (Zurich) 

April 13, 2017 

First quarter 2017 results

April 20, 2017 

Second quarter 2017 results

July 20, 2017

Third quarter 2017 results

October 26, 2017

 

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 sections of this release titled “Short-term outlook”, “Outlook”, “Dividend”, “Share buy back program”, “Q4 divisional performance” and “Next Level strategy – Stage 3”.  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”, “intends” 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, 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, February 8, 2017  

Ulrich Spiesshofer, CEO

 

 

 

For more information, please contact:

 

Media Relations

Tel: +41 43 317 65 68

media.relations@ch.abb.com

Investor Relations

Tel. +41 43 317 71 11

investor.relations@ch.abb.com

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

  

 

 

7


 

  

 

1              Q4 2016 Financial Information 


 

 

Financial  Information

 

 

 

 

 

 

 

 

 

3     Key Figures

 

 

8     Interim  Consolidated  Financial  Information  (unaudited)

 

8           Interim  Consolidated  Income  Statements

9           Interim  Condensed  Consolidated  Statements  of Comprehensive  Income 

10         Interim  Consolidated  Balance  Sheets

11          Interim  Consolidated  Statements  of Cash  Flows 

12         Interim  Consolidated  Statements  of Changes  in  Stockholders’  Equity 

13         Notes  to  the  Interim  Consolidated  Financial  Information

 

 

 

33       Supplemental Reconciliations and Definitions

 

 

 

 

  

2              Q4 2016 Financial Information 


 

Financial Information

Key Figures

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q4 2016

Q4 2015

US$

Comparable(1)

 

Orders

8,277

8,262

0%

3%

 

Order backlog (end December)

22,981

24,121

-5%

-1%

 

Revenues

8,993

9,242

-3%

1%

 

Operational EBITA(1)

1,057

1,101

-4%

-2%(2)

 

 

as % of operational revenues(1)

11.7%

11.9%

-0.2 pts

 

 

Net income

489

204

140%

 

 

Basic earnings per share ($)

0.23

0.09

147%(3)

 

 

Operational earnings per share(1) ($)

0.33

0.35

-5%(3)

-3%(3)

 

Cash flow from operating activities

1,519

1,994

-24%

 



 

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

FY 2016

FY 2015

US$

Comparable(1)

 

Orders

33,379

36,429

-8%

-5%

 

Revenues

33,828

35,481

-5%

-1%

 

Operational EBITA(1)

4,191

4,209

0%

2%(2)

 

 

as % of operational revenues(1)

12.4%

11.9%

+0.5 pts

 

 

Net income

1,963

1,933

2%

 

 

Basic earnings per share ($)

0.91

0.87

5%(3)

 

 

Operational earnings per share(1) ($)

1.29

1.26

3%(3)

4%(3)

 

Cash flow from operating activities

3,934

3,818

3%

 

 

(1)  For a reconciliation of non-GAAP measures see “Supplemental Reconciliations and Definitions” on page 33.

(2)  Constant currency (not adjusted for portfolio changes).

(3) Earnings per share growth rates are computed using unrounded amounts. Comparable Operational earnings per share growth is in constant currency (2014 foreign exchange rates and not adjusted for changes in the business portfolio).

3              Q4 2016 Financial Information 


 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q4 2016

Q4 2015

US$

Local

Comparable

 

Orders

ABB Group

8,277

8,262

0%

2%

3%

 

 

Electrification Products

2,157

2,340

-8%

-5%

-5%

 

 

Discrete Automation and Motion

2,013

1,984

1%

4%

4%

 

 

Process Automation

1,520

1,796

-15%

-14%

-14%

 

 

Power Grids

2,879

2,628

10%

12%

15%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(292)

(486)

 

Third-party base orders

ABB Group

6,860

7,122

-4%

-1%

-1%

 

 

Electrification Products

2,051

2,158

-5%

-2%

-2%

 

 

Discrete Automation and Motion

1,820

1,779

2%

5%

5%

 

 

Process Automation

1,285

1,309

-2%

0%

0%

 

 

Power Grids

1,692

1,864

-9%

-7%

-7%

 

 

Corporate and Other

12

12

 

 

 

 

Order backlog (end December)

ABB Group

22,981

24,121

-5%

-2%

-1%

 

 

Electrification Products

2,612

2,872

-9%

-5%

-5%

 

 

Discrete Automation and Motion

4,078

4,232

-4%

0%

0%

 

 

Process Automation

5,258

6,036

-13%

-10%

-10%

 

 

Power Grids

12,437

12,502

-1%

3%

4%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,404)

(1,521)

 

Revenues

ABB Group

8,993

9,242

-3%

0%

1%

 

 

Electrification Products

2,462

2,459

0%

3%

3%

 

 

Discrete Automation and Motion

2,211

2,288

-3%

-1%

-1%

 

 

Process Automation

1,737

1,926

-10%

-8%

-8%

 

 

Power Grids

3,042

3,107

-2%

1%

4%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(459)

(538)

 

Operational EBITA

ABB Group

1,057

1,101

-4%

-2%

 

 

 

Electrification Products

382

403

-5%

-4%

 

 

 

Discrete Automation and Motion

260

291

-11%

-8%

 

 

 

Process Automation

231

235

-2%

0%

 

 

 

Power Grids

318

293

9%

12%

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(134)

(121)

 

Operational EBITA %

ABB Group

11.7%

11.9%

 

 

 

 

 

Electrification Products

15.5%

16.4%

 

 

 

 

 

Discrete Automation and Motion

11.7%

12.7%

 

 

 

 

 

Process Automation

13.4%

12.1%

 

 

 

 

 

Power Grids

10.4%

9.5%

 

 

 

 

Income from operations

ABB Group

751

347

 

 

 

 

 

Electrification Products

319

267

 

 

 

 

 

Discrete Automation and Motion

89

134

 

 

 

 

 

Process Automation

244

105

 

 

 

 

 

Power Grids

334

145

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(235)

(304)

 

Income from operations %

ABB Group

8.4%

3.8%

 

 

 

 

 

Electrification Products

13.0%

10.9%

 

 

 

 

 

Discrete Automation and Motion

4.0%

5.9%

 

 

 

 

 

Process Automation

14.0%

5.5%

 

 

 

 

 

Power Grids

11.0%

4.7%

 

 

 

 

Cash flow from operating activities

ABB Group

1,519

1,994

 

 

 

 

 

Electrification Products

451

590

 

 

 

 

 

Discrete Automation and Motion

308

372

 

 

 

 

 

Process Automation

186

374

 

 

 

 

 

Power Grids

559

835

 

 

 

 

 

Corporate and Other

15

(177)

 

 

 

4              Q4 2016 Financial Information 


 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

FY 2016

FY 2015

US$

Local

Comparable

 

Orders

ABB Group

33,379

36,429

-8%

-5%

-5%

 

 

Electrification Products

9,158

9,833

-7%

-4%

-4%

 

 

Discrete Automation and Motion

8,654

9,222

-6%

-4%

-4%

 

 

Process Automation

5,866

7,347

-20%

-18%

-18%

 

 

Power Grids

11,232

12,205

-8%

-5%

-4%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,531)

(2,178)

 

 

 

 

Third-party base orders

ABB Group

28,887

30,302

-5%

-2%

-2%

 

 

Electrification Products

8,657

9,106

-5%

-2%

-2%

 

 

Discrete Automation and Motion

7,777

8,046

-3%

-1%

-1%

 

 

Process Automation

5,094

5,555

-8%

-6%

-6%

 

 

Power Grids

7,304

7,527

-3%

0%

0%

 

 

Corporate and Other

55

68

 

 

 

 

Order backlog (end December)

ABB Group

22,981

24,121

-5%

-2%

-1%

 

 

Electrification Products

2,612

2,872

-9%

-5%

-5%

 

 

Discrete Automation and Motion

4,078

4,232

-4%

0%

0%

 

 

Process Automation

5,258

6,036

-13%

-10%

-10%

 

 

Power Grids

12,437

12,502

-1%

3%

4%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,404)

(1,521)

 

Revenues

ABB Group

33,828

35,481

-5%

-2%

-1%

 

 

Electrification Products

9,292

9,547

-3%

1%

1%

 

 

Discrete Automation and Motion

8,714

9,127

-5%

-2%

-2%

 

 

Process Automation

6,598

7,224

-9%

-6%

-6%

 

 

Power Grids

10,975

11,621

-6%

-3%

1%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,751)

(2,038)

 

Operational EBITA

ABB Group

4,191

4,209

0%

2%

 

 

 

Electrification Products

1,528

1,561

-2%

0%

 

 

 

Discrete Automation and Motion

1,195

1,295

-8%

-6%

 

 

 

Process Automation

824

863

-5%

-2%

 

 

 

Power Grids

1,021

877

16%

19%

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(377)

(387)

 

Operational EBITA %

ABB Group

12.4%

11.9%

 

 

 

 

 

Electrification Products

16.4%

16.4%

 

 

 

 

 

Discrete Automation and Motion

13.7%

14.2%

 

 

 

 

 

Process Automation

12.4%

11.9%

 

 

 

 

 

Power Grids

9.3%

7.6%

 

 

 

 

Income from operations

ABB Group

3,060

3,049

 

 

 

 

 

Electrification Products

1,335

1,356

 

 

 

 

 

Discrete Automation and Motion

831

991

 

 

 

 

 

Process Automation

696

685

 

 

 

 

 

Power Grids

888

613

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(690)

(596)

 

 

 

 

Income from operations %

ABB Group

9.0%

8.6%

 

 

 

 

 

Electrification Products

14.4%

14.2%

 

 

 

 

 

Discrete Automation and Motion

9.5%

10.9%

 

 

 

 

 

Process Automation

10.5%

9.5%

 

 

 

 

 

Power Grids

8.1%

5.3%

 

 

 

 

Cash flow from operating activities

ABB Group

3,934

3,818

 

 

 

 

 

Electrification Products

1,221

1,364

 

 

 

 

 

Discrete Automation and Motion

1,002

1,206

 

 

 

 

 

Process Automation

728

690

 

 

 

 

 

Power Grids

1,120

970

 

 

 

 

 

Corporate and Other

(137)

(412)

 

 

 

5              Q4 2016 Financial Information 


 

Operational EBITA

 

  

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions, unless otherwise indicated)

ABB

Products

and Motion

Automation

Grids

 

 

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

 

Revenues

8,993

9,242

2,462

2,459

2,211

2,288

1,737

1,926

3,042

3,107

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in total revenues

20

(4)

4

(4)

7

4

(11)

13

21

(16)

 

Operational revenues

9,013

9,238

2,466

2,455

2,218

2,292

1,726

1,939

3,063

3,091

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

751

347

319

267

89

134

244

105

334

145

 

Acquisition-related amortization

67

73

23

24

29

32

2

3

8

10

 

Restructuring and

 

 

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

68

531

25

104

31

81

(21)

106

(5)

122

 

Non-operational pension cost

38

8

2

2

2

1

 

Changes in pre-acquisition estimates

92

12

92

12

 

Gains and losses from sale of businesses,

 

 

 

 

 

 

 

 

 

 

 

acquisition-related expenses and certain

 

 

 

 

 

 

 

 

 

 

 

non-operational items

54

76

7

4

14

26

9

(5)

(8)

1

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in income from operations

(13)

54

8

4

3

6

(5)

24

(12)

15

 

Operational EBITA

1,057

1,101

382

403

260

291

231

235

318

293

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

11.7%

11.9%

15.5%

16.4%

11.7%

12.7%

13.4%

12.1%

10.4%

9.5%



 

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions, unless otherwise indicated)

ABB

Products

and Motion

Automation

Grids

 

 

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

 

Revenues

33,828

35,481

9,292

9,547

8,714

9,127

6,598

7,224

10,975

11,621

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in total revenues

81

(28)

4

(11)

5

4

21

13

51

(33)

 

Operational revenues

33,909

35,453

9,296

9,536

8,719

9,131

6,619

7,237

11,026

11,588

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

3,060

3,049

1,335

1,356

831

991

696

685

888

613

 

Acquisition-related amortization

279

310

95

100

120

128

11

12

35

52

 

Restructuring and

 

 

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

543

674

73

124

88

125

79

130

101

160

 

Non-operational pension cost

38

19

3

(3)

2

3

2

6

(2)

3

 

Changes in pre-acquisition estimates

131

21

131

21

 

Gains and losses from sale of businesses,

 

 

 

 

 

 

 

 

 

 

 

acquisition-related expenses and certain

 

 

 

 

 

 

 

 

 

 

 

non-operational items

100

120

8

4

18

26

9

14

(2)

39

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in income from operations

40

16

14

(20)

5

1

27

16

1

10

 

Operational EBITA

4,191

4,209

1,528

1,561

1,195

1,295

824

863

1,021

877

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

12.4%

11.9%

16.4%

16.4%

13.7%

14.2%

12.4%

11.9%

9.3%

7.6%

 

(1) Amounts also include the incremental implementation costs in relation to the White Collar Productivity program.



 

Depreciation and Amortization

 

  

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions)

ABB

Products

and Motion

Automation

Grids

 

 

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

Q4 16

Q4 15

 

Depreciation

191

192

49

51

38

39

13

15

50

51

 

Amortization

91

96

26

27

33

36

4

5

16

17

 

including total acquisition-related amortization of:

67

73

23

24

29

32

2

3

8

10



 

6              Q4 2016 Financial Information 


 

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions)

ABB

Products

and Motion

Automation

Grids

 

 

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

FY 16

FY 15

 

Depreciation

767

764

199

206

156

149

57

60

201

204

 

Amortization

368

396

106

110

136

146

17

19

65

76

 

including total acquisition-related amortization of:

279

310

95

100

120

128

11

12

35

52

 

Orders received and revenues by region

 

  

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

Q4 16

Q4 15

US$

Local

parable

Q4 16

Q4 15

US$

Local

parable

 

Europe

2,529

2,888

-12%

-10%

-8%

3,016

3,028

0%

3%

6%

 

The Americas

2,487

2,491

0%

0%

0%

2,469

2,627

-6%

-6%

-6%

 

Asia, Middle East and Africa

3,261

2,883

13%

17%

17%

3,508

3,587

-2%

1%

2%

 

ABB Group

8,277

8,262

0%

2%

3%

8,993

9,242

-3%

0%

1%



 

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

FY 16

FY 15

US$

Local

parable

FY 16

FY 15

US$

Local

parable

 

Europe

11,213

12,568

-11%

-9%

-8%

11,315

11,602

-2%

0%

4%

 

The Americas

9,351

10,505

-11%

-9%

-9%

9,741

10,554

-8%

-5%

-5%

 

Asia, Middle East and Africa

12,815

13,356

-4%

0%

0%

12,772

13,325

-4%

-1%

-1%

 

ABB Group

33,379

36,429

-8%

-5%

-5%

33,828

35,481

-5%

-2%

-1%

7              Q4 2016 Financial Information 


 

 

 

 

Financial Information

Interim Consolidated Financial Information

 

 

  

 

 

ABB Ltd Interim Consolidated Income Statements (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

Three months ended

 

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

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

 

Sales of products

27,816

29,477

7,339

7,599

 

Sales of services and software

6,012

6,004

1,654

1,643

 

Total revenues

33,828

35,481

8,993

9,242

 

Cost of sales of products

(20,431)

(21,694)

(5,451)

(5,820)

 

Cost of services and software

(3,650)

(3,653)

(1,027)

(1,027)

 

Total cost of sales

(24,081)

(25,347)

(6,478)

(6,847)

 

Gross profit

9,747

10,134

2,515

2,395

 

Selling, general and administrative expenses

(5,349)

(5,574)

(1,394)

(1,580)

 

Non-order related research and development expenses

(1,300)

(1,406)

(349)

(408)

 

Other income (expense), net

(38)

(105)

(21)

(60)

 

Income from operations

3,060

3,049

751

347

 

Interest and dividend income

73

77

19

21

 

Interest and other finance expense

(261)

(286)

(31)

(63)

 

Income from continuing operations before taxes

2,872

2,840

739

305

 

Provision for taxes

(790)

(788)

(203)

(66)

 

Income from continuing operations, net of tax

2,082

2,052

536

239

 

Income from discontinued operations, net of tax

16

3

2

1

 

Net income

2,098

2,055

538

240

 

Net income attributable to noncontrolling interests

(135)

(122)

(49)

(36)

 

Net income attributable to ABB

1,963

1,933

489

204

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

1,947

1,930

487

203

 

Net income

1,963

1,933

489

204

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.91

0.87

0.23

0.09

 

Net income

0.91

0.87

0.23

0.09

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.90

0.87

0.23

0.09