Slide 1: Continued margin growth in tough markets
ABB LTD, ZURICH, SWITZERLAND, OCTOBER 27, 2016 Continued margin growth in tough markets 2016 Q3 results Ulrich Spiesshofer, CEO; Eric Elzvik, CFO
Slide 2: Important notices
— Important notices This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including
Slide 3: Q3 2016: Continued margin growth in tough markets
— Q3 2016: Continued margin growth in tough markets Orders Base orders Revenues $7.5 bn $6.7 bn $8.3 bn -13%1 -6%1 0%1 Cash flow from operating Operational EBITA margin Operational EPS activities 12.6 % $0.32 $1.1 bn +10 bps steady2 -8% ©ABB October 27, 2016 Slide 3 1On a comparable basis; 2Operatio
Slide 4: Q3 2016: Continued margin growth in tough markets
— Q3 2016: Continued margin growth in tough markets Orders reflect increased uncertainty due to Brexit and US elections; Power Grids orders reflect customer hesitation prior to the Capital Markets Day Profitable Growth Steady1 revenues; three of four divisions steady to positive Launch of digital of
Slide 5: Q3 2016: Increased uncertainties
— Q3 2016: Increased uncertainties Brexit and the US election with additional dampening effect 2016 Q3 total order growth by region 2016 Q3 base order growth2 Change on a comparable basis Change on a comparable basis Brazil -33% Europe Canada -16% Total -18% China -3% Germany -20% UK -56% Germany +3
Slide 6: Q3 2016: Performance by division
— Q3 2016: Performance by division Key figures Discrete $ bn Electrification Power unless otherwise ABB Group Products Automation Process Automation Grids stated and Motion Orders 7.5 2.2 2.1 1.2 2.4 Comparable -13% -4% -4% -21% -21% Revenues 8.3 2.3 2.2 1.5 2.6 Comparable 0% 0% 0% -7% +1% Op. E
Slide 7: Q3 2016: Operational EBITA margin up 10 bps
— Q3 2016: Operational EBITA margin up 10 bps 12.5% op. 12.6% op. EBITA margin EBITA margin Operational EBITA bridge Q3 2015 to Q3 2016, $ mn +107 -41 +29 -63 -52 -15 1,081 1,046 Op. EBITA Net savings Net Project Mix Other Forex Op. EBITA Q3 2015 volume margins Q3 2016 ©ABB October 27, 2016 Slide 7
Slide 8: Q3 2016: Updated White Collar Productivity program costs
— Q3 2016: Updated White Collar Productivity program costs 30% increased target with $100 mn less combined cost $ mn Original New 2015 2016 2017 2018 target target Gross savings 1,000 1,300 (run rate end of 2017) Gross savings ~25 >550 450 300 (incremental y-o-y) Original New 2015 2016 2017 $ mn gui
Slide 9: Q3 2016: Working capital program yielding results
— Q3 2016: Working capital program yielding results Net Working Capital reduction A solid, consistent cash generator NWC as a % of revenues Cash flow from operating activities, $ mn 18 17 3000 +30% 16 2500 2,415 15 Q3 2000 1,824 14 2014 1,081 Q2 2015 1500 13 1,173 Q1 12 1000 2016 1,082 11 500 598 10
Slide 10: Next Level Stage 3 – committed to unlocking value
— Next Level Stage 3 – committed to unlocking value Four actions 1 Driving growth in four market-leading entrepreneurial divisions Profitable Growth 2 Quantum leap in digital Relentless Execution 3 Accelerating momentum in operational excellence Business-led Collaboration 4 Strengthening the global
Slide 11: ABB names Timo Ihamuotila as Chief Financial Officer
— ABB names Timo Ihamuotila as Chief Financial Officer Appointment effective April 1, 2017 Timo Ihamuotila joins ABB as CFO from Nokia Extensive experience in communications, software & services industries, active portfolio management and operational performance improvement Deep understanding in cor
Slide 12: Q3 2016 summary and outlook
— Q3 2016 summary and outlook Q3 results Outlook Operational EBITA margin increased to 12.6% Mixed short-term picture WCP on track to $1.3 bn savings; expected total Modest growth and increased uncertainties in cost reduced by $100 mn Europe e.g. Brexit; slower growth in China; Net Income $568 milli
Slide 13: Slide 13
— ©ABB October 27, 2016 Slide 13
Slide 14: Key figures Q3 2016
— Key figures Q3 2016 Q3 2016 Q3 2015 Change $ mn unless $ Local currency Comparable otherwise indicated Orders 7,533 8,767 -14% -13% -13% Order backlog (end 24,554 25,371 -3% -3% -2% September) Revenues 8,255 8,519 -3% -2% 0% Operational EBITA 1,046 1,081 -3% -2% as % of operational 12.6% 12.5% +0.
Slide 15: Key figures first nine months 2016
— Key figures first nine months 2016 9M 2016 9M 2015 Change $ mn unless $ Local currency Comparable otherwise indicated Orders 25,102 28,167 -11% -8% -8% Order backlog (end 24,554 25,371 -3% -3% -2% September) Revenues 24,835 26,239 -5% -2% -1% Operational EBITA 3,095 3,088 0% +3% as % of operationa
Slide 16: Order backlog by division
— Order backlog by division Q3 2016 Q3 2015 Change Order backlog (end $ Comparable September) $ mn Electrification Products 3,093 3,038 +2% +3% Discrete Automation 4,458 4,601 -3% -2% and Motion Process Automation 5,675 6,322 -10% -11% Power Grids 13,063 13,117 0% +2% Corporate and Other (incl. Inte
Slide 17: Third party base orders by division
— Third party base orders by division Q3 2016 Q3 2015 % Change Third-party base orders $ mn Comparable Electrification Products 2,095 2,173 -1% Discrete Automation and 1,899 1,983 -3% Motion Process Automation 1,128 1,316 -13% Power Grids 1,588 1,782 -9% Corporate and Other 17 18 Total Group 6,727 7
Slide 18: Cash flow from operating activities by division
— Cash flow from operating activities by division Q3 2016 Q3 2015 % Change Cash flow from operating activities $ mn Electrification Products 373 372 0% Discrete Automation and 322 386 -17% Motion Process Automation 234 197 +19% Power Grids 189 189 0% Corporate and Other -37 29 Total Group 1,081 1,17
Slide 19: Operational EPS analysis
— Operational EPS analysis Q3 2016 Q3 2015 mn $, except per share data in $ EPS EPS 1 Net income (attributable to ABB) 568 0.27 577 0.26 +2% Operational adjustments: Acquisition–related amortization 70 74 Restructuring and restructuring- related expenses (including WCP implementation 39 59 costs) G
Slide 20: Regional share of total orders and revenues by division
— Regional share of total orders and revenues by division Q3 2016 Electrification Discrete Automation Process Power Products and Motion Automation Grids 31% 24% Orders 36% 37% 35% 39% 38% 50% 26% 27% 34% 23% 29% Revenues 37% 36% 37% 41% 41% 28% 38% 27% 34% 21% 31% ©ABB October 27, 2016 Slide 20 Euro
Slide 21: Electrification Products
— Electrification Products Q3 2016 In $ mn, y-o-y change comparable -4% Total orders were down as growth in Europe could not Orders offset a decline in the Americas and AMEA. In 2,365 2,223 particular, markets including China, Saudi Arabia, Brazil and Turkey were challenging, while Italy, Q3 2015 Q3
Slide 22: Discrete Automation & Motion
— Discrete Automation & Motion Q3 2016 In $ mn, y-o-y change comparable -4% Continued strong demand patterns in robotics and Orders food and beverage could not fully offset the capex 2,241 2,123 declines in process industries such as oil and gas, thus negatively impacting order development. Q3 2015
Slide 23: Process Automation
— Process Automation Q3 2016 In $ mn, y-o-y change comparable -21% Total orders were 21 percent lower as reduced capital Orders expenditure and cautious discretionary spending in 1,529 1,193 process industries continued to impact large as well as base orders. Q3 2015 Q3 2016 1 2 -7% Revenues decline
Slide 24: Power Grids
— Power Grids Q3 2016 In $ mn, y-o-y change comparable Total orders were lower compared with the same -21% quarter a year ago primarily due to the timing of Orders large order awards 3,082 2,391 Lower base orders reflect sluggishness in some Q3 2015 Q3 2016 markets such as the US, Saudi Arabia and B
Slide 25: More information available at ABB Investor Relations
— More information available at ABB Investor Relations Name Telephone E-Mail Alanna Abrahamson +41 43 317 3804 alanna.abrahamson@ch.abb.com Head of Investor Relations Beat Fueglistaller +41 43 317 4144 beat.fueglistaller@ch.abb.com Annatina Tunkelo +41 43 317 3820 annatina.tunkelo@ch.abb.com Ruth Ja