SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of: November 2002
ABB Ltd
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(Exact name of registrant as specified in charter)
N/A
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(Translation of registrant's name into English)
Switzerland
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(Jurisdiction of organization)
P.O. Box 8131, Affolternstrasse 44, CH-8050, Zurich, Switzerland
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(Address of principal executive offices)
Registrant's telephone number, international: + 011-41-1-317-7111
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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
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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 X
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"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 of ABB Ltd (the "Company"), dated November 8, 2002, in
connection with the Company's new short- and medium-term business targets.
Press Release
For your business and technology editors
ABB Sets New Short- and Medium-Term Business Targets
Zurich, Switzerland, November 8, 2002 - ABB, the leading power and automation
technology group, said today it expects earnings before interest and taxes in
2002 to reach a margin of 1.5 percent, with revenues flat or slightly down.
ABB also gave further details of future targets, as well as the structural
changes and restructuring program designed to cut its cost base and improve
operational performance.
The key points, being announced today at a briefing for financial analysts and
investors in Zurich, include:
- EBIT margin expected to be 1.5 percent for 2002; target of 4 percent
in 2003 and 8 percent for 2005
- Group revenues expected to be flat or slightly down in 2002; annual
revenue growth of about 4 percent from 2002 through 2005
- Automation Technologies and Power Technologies divisions set EBIT
targets of 10.7 and 10 percent respectively for 2005
- Management of Automation Technologies and Power Technologies
streamlined; Business Areas cut from 18 to 12; key country and region
managers integrated into divisional management teams to increase
management efficiency
- New program to lower cost base by 4 percent of revenues, announced on
October 24, to start on January 1, 2003, and be completed in 18
months. Two-thirds of cost reductions to come from job cuts, one-third
from other actions, but not possible yet to give job reduction figures
- Current US$ 500 million cost reduction program to be completed by
mid-2003
- Oil, Gas and Petrochemicals division, as well as Building Systems, to
be divested in 2003
The new EBIT margin targets follow the announcement on October 21, 2002 that ABB
was revising its earnings outlook because of lingering market weakness and
slower than expected benefits from its cost reduction program.
"The streamlining of our structure and the program to lower the cost base by
four percent of revenues demonstrate our commitment to restoring profitability,"
said chairman and CEO Jurgen Dormann. "We are taking forceful action to improve
operational performance and cash flow."
"We need a rapid and radical change. We are taking the measures needed to
optimize the business, build on our strong product and customer base, and
technological leadership positions. Over time, the aim is real expansion with
increased market share and profitable growth," said Dormann.
"The underlying strengths in our core businesses of automation and power
technologies are reflected by the EBIT margins set for 2005," he added.
Revised structure and cost reductions
Actions are being taken to cut Corporate/Other costs. They include cutting
headquarter costs by about US$ 20 million to an estimated US$ 130 million in
2005, and eliminating losses from noncore activities by 2005.
The head of the Automation Technologies division, Dinesh Paliwal, set an annual
revenue growth target of 3.3 percent from 2002 through 2005, and an EBIT target
margin of 10.7 percent for 2005. For 2003, divisional revenues are expected to
grow by 3 percent with an EBIT margin of 7.1 percent.
For the full year 2002, Automation Technologies' divisional revenues are
expected to decline 3 percent, and EBIT margin is expected at 6.5 percent.
The head of the Power Technologies division, Peter Smits, set an annual revenue
growth target of 5.3 percent from 2002 through 2005, and an EBIT margin of 10
percent for 2005. For 2003, divisional revenues are expected to also grow by 5.3
percent, with an EBIT margin of 7 percent.
For the full year 2002, Power Technologies' divisional revenues are expected to
increase 2.2 percent, and EBIT margin is expected at 6 percent.
Managements in both divisions have been simplified to increase efficiency, and
more cohesive management teams now include Country Managers, Region Managers and
Local Division Managers from key countries.
Automation Technologies has about 63,000 employees and revenues of around US$
8.4 billion.
The divisional management team:
Dinesh Paliwal Division Head
Herbert Parker CFO
Don Aiken Country Manager, U.S.
China Local Division Manager
Martinus Brandal Paper, Metals, Minerals & Marine
Frank Duggan Petroleum, Chemicals & Consumer
Bo Elisson Robotics, Automotive & Manufacturing
Germany Local Division Manager
Sten Jakobsson Country Manager, Sweden
Bernhard Jucker Drives, Motors & Turbochargers
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Tom Sjokvist Low Voltage Products & Instruments
Teemu Tunkelo Control Platform Products
Power Technologies has about 43,000 employees and annual revenues of around US$
7.5 billion.
The division management team:
Peter Smits Division Head and member of the ABB
Group Executive Committee
Victor Bolt CFO
Max Abitbol Region Manager, Middle East and Africa
Jens Birgersson High-Voltage Products
Josef A. Durr Power Systems
Michael Hirth Utility Automation Systems
Brice Koch Distribution Transformers
Peter Leupp Country Manager, China
Benny Olsson Region Manager, Latin America
Joakim Olsson Power Transformers
John Sullivan Local Division Manager, U.S.
Guido Traversa Medium-Voltage Products
Further balance sheet improvements
ABB remains on track to reduce net debt by at least US$ 1.5 billion in 2002,
from US$ 4.1 at the end of December 2001.
Going forward, ABB will communicate its target for total debt instead of net
debt (net debt is defined as total debt minus marketable securities). This is
more appropriate to ABB's industrial core businesses.
The Group expects to reduce total debt to approximately US$ 6.5 billion in 2003,
with a gearing (total debt as a percentage of total capitalization) of about 70
percent.
The target for 2005 is to reduce total debt to about US$ 4 billion with a
gearing of about 50 percent.
Debt reductions will be achieved using proceeds from the divestment of non-core
activities and higher operational cash-effective earnings.
ABB (www.abb.com) is a leader in power and automation technologies that enable
utility and industry customers to improve performance while lowering
environmental impacts. The ABB Group of companies operates in more than 100
countries and employs about 146,000 people.
This press release includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ.
These statements are based on current expectations, estimates and projections
about global economic conditions, the economic conditions of the regions and
industries that are major markets for ABB Ltd and ABB Ltd's lines of business.
These expectations, estimates and projections are generally identifiable by
statements containing words such as "expects", "believes", "estimates" or
similar expressions. Important factors that could cause actual results to differ
materially from those expectations include, among others, economic and market
conditions in the
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geographic areas and industries that are major markets for
ABB's businesses, market acceptance of new products and services, changes in
governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in ABB's
filings with the U.S. Securities and Exchange Commission. Although ABB Ltd
believes that its expectations reflected in any such forward-looking statement
are based upon reasonable assumptions, it can give no assurance that those
expectations will be achieved.
For more information, please contact:
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Media Relations: Investor Relations:
ABB Corporate Communications, Zurich Switzerland: Tel. +41 43 317 3804
Thomas Schmidt Sweden: Tel. +46 21 325 719
Tel: +41 43 317 6492 USA: Tel. +1 203 750 7743
Fax: +41 43 317 7958 investor.relations@ch.abb.com
media.relations@ch.abb.com
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ABB LTD
Date: November 8, 2002 By: /s/ BEAT HESS
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Name: Beat Hess
Title: Group Senior Officer
By: /s/ HANS ENHORNING
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Name: Hans Enhorning
Title: Group Vice President