Slide 1: ABB Q4 and FY 2012 results
February 14, 2013 ABB Q4 and FY 2012 results Joe Hogan, CEO Eric Elzvik, CFO 14 February 2013 | Slide 1
Slide 2: Safe-harbor statement
Safe-harbor statement 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, includin
Slide 3: 2012 summary and results overview
2012 summary and results overview Joe Hogan, CEO 14 February 2013 | Slide 3
Slide 4: FY 2012: Raising dividend, solid growth, strong cash
FY 2012: Raising dividend, solid growth, strong cash Improved geographic scope, successful M&A Growth Delivered higher1 orders and revenues in a difficult business climate Execution Cost savings and portfolio changes supported earnings and margins Strengthened power businesses for more stable return
Slide 5: Executing against our strategy
Executing against our strategy Actions taken and progress made in all areas in 2012 1 Drive Cost and productivity savings more than offset lower prices competitiveness Actions taken in Power to deliver more consistent profitability 2 Capitalize on Continued to differentiate in emerging markets with
Slide 6: Full Year 2012
Full Year 2012 FY 2012 performance FY 2012 FY 2011 Change vs 2011 Change vs 2011 US$ millions unless otherwise stated US$ local currencies +4% Orders 40,232 40,210 0% (organic1: 0%) Order backlog (end Dec.) 29,298 27,508 +7% +5% +7% Revenues 39,336 37,990 +4% (organic: 3%) -8% Operational EBITDA 5,5
Slide 7: Balanced growth across geographies FY 2012
Balanced growth across geographies FY 2012 Mature markets outgrew most emerging markets Order growth in countries with more than $1 bn/yr in orders, 2012 vs 2011 (in local currencies) Europe Power1 -18% - 6% Automation +3% Norway -7% Finland +10% UK +25% Germany1 -32% Americas Power +29% Italy -11%
Slide 8: Full-year 2012 divisional overview
Full-year 2012 divisional overview Solid numbers in a tough year Orders Revenues Op EBITDA Change in Division ( local ( local margin margin vs FY 11 currencies) currencies) Power Products +3% +2% 14.8% -1.5 pts 3.7% Power Systems -10% +2% -5.4 pts (ca. 7% excl. reset*) Discrete Automation and -0.5 p
Slide 9: Q4 results in detail
Q4 results in detail Eric Elzvik, CFO 14 February 2013 | Slide 9
Slide 10: Q4 2012: Strong cash and op EBITDA performance
Q4 2012: Strong cash and op EBITDA performance Short-cycle resilience in an uncertain market Growth Steady volumes despite overall macro weakness Strong order performance in robotics, oil & gas, mining Service order growth continues to outpace Group total Thomas & Betts with strong contribution Exec
Slide 11: Key figures for Q4 2012
Key figures for Q4 2012 Q4 2012 performance Q4 2012 Q4 2011 Change vs Q4 2011 Change vs Q4 2011 US$ millions unless otherwise stated US$ local currencies +4% Orders 10,517 10,160 +4% (organic1: -2%) Order backlog (end Dec.) 29,298 27,508 +7% +5% +5% Revenues 11,021 10,571 +4% (organic: -1%) -12% Ope
Slide 12: Balanced growth across geographies Q4 2012
Balanced growth across geographies Q4 2012 Americas, Europe and China led growth Order growth in selected countries, Q412 vs Q411 (in local currencies) Europe Power +10% +3% Automation -1% Norway -6% Finland +97% UK -1% Germany -14% Russia +38% Americas Power +38% Italy +4% + 42% Automation +46% (ex
Slide 13: Q4 divisional overview: Power
Q4 divisional overview: Power PP margins stable, PS reset under way Orders Revenues Op EBITDA Op EBITDA Change vs Q4 2011 ( local currencies) ( local currencies) US$ margin Power Products 0% 0% 0% +0.3 pts Selective transmission utility investments, distribution stable, industry led by oil & gas Ser
Slide 14: Power Systems reset
Power Systems reset Focus on selective growth for higher profitability Short-term drivers for 2013 Greater selectivity: More ABB content, better risk/return profile Stronger risk management to secure project margins Accelerated application of best practices across business units Actions completed St
Slide 15: Q4 divisional overview: Automation
Q4 divisional overview: Automation Resilient performance supported by Thomas & Betts Orders Revenues Op EBITDA Op EBITDA Change vs Q4 2011 ( local currencies) ( local currencies) US$ margin Discrete Automation and +3% +7% +6% +0.1 pts Motion Increase in large orders for robotics and power electronic
Slide 16: Thomas & Betts update: A strong start
Thomas & Betts update: A strong start Integration on track Q4 stand-alone vs. year-earlier period Stable revenues Contributed ~$600 mill in revenues, ~$100 mill in op EBITDA and ~$170 mill in cash from operations Q4 operational EBITDA margin 17.6% vs 16.6%1 in Q4 2011 Integration on track Integratio
Slide 17: Operational EBITDA bridge – Q4 12 vs Q4 11
Operational EBITDA bridge – Q4 12 vs Q4 11 Factors affecting operational EBITDA Q4 2012 Approximations Product Project Sales Cost and Other1 Volume T&B PS reset price margins savings R&D +$318 mill 1'568 +$103 mill 1'524 -$51 mill -$28 mill -$58 mill -$254 mill 1'373 -$273 mill +$48 mill 2.6% of rev
Slide 18: Strong cash generation by the divisions
Strong cash generation by the divisions Inventory turnover and receivables lead improvement US$ millions 2'438 Divisional cash up ~$300 mill vs Q4 11 2'282 +$290 mill +$156 mill Solid performance on 1'992 -$318 mill inventory-to-cash conversion 1'674 2'282 reduced overdues 1'674 higher customer adva
Slide 19: Solid investment grade balance sheet
Solid investment grade balance sheet Strong support for organic and inorganic growth Net cash (debt) position 2005-2012 Gross cash at $8.5 bn US$ billions Long-term funding secured at attractive rates 7.2 Pension underfunding at ~$1.8 bn 6.4 5.4 Net debt/EBITDA at 0.3x 5.2 Moody’s and S&P reaffirmed
Slide 20: Higher dividend: CHF 0.68 per share vs 0.65 in 2011
Higher dividend: CHF 0.68 per share vs 0.65 in 2011 Equivalent to 63% payout ratio, 3.6% yield1 Dividend policy A steadily rising, sustainable annual dividend over time Dividend payout 2005-2012 CHF per share 0.68 Proposed 5% increase vs 2011 0.65 0.60 Payment from capital contribution 0.51 0.48 0.4
Slide 21: Summary and outlook
Summary and outlook Capturing growth opportunities, driving higher productivity 14 February 2013 | Slide 21 Chart 21
Slide 22: Performance against our targets
Performance against our targets In-line on most indicators as we near the halfway mark Group targets Progress report end 2012 Organic1 revenue Strong order backlog compensates 7-10%2 9%3 growth early-cycle weakness (CAGR4) Op EBITDA FY 11 at 15.8% margin 13-19% 14.2% FY 12 at 14.8% (excl. PS reset)
Slide 23: Demand outlook heading into 2013
Demand outlook heading into 2013 Short term unclear, long term remains supportive Americas Europe Continued uncertainty Utility spending remains low Power from fiscal debate Industrial demand stable Industrial demand Eastern Europe outgrowing softer but still positive total Europe Automation Asia Gr
Slide 24: Examples of growth actions for 2013
Examples of growth actions for 2013 Building on our core and tapping new opportunities Build on footprint expansions in Middle East, China, India, Brazil Emerging markets Continue to “move west” in China Capture large potentials in North America Developed markets Refocus local resources in “Europe f
Slide 25: Technology will continue to drive growth
Technology will continue to drive growth ABB continues to break new ground in key areas Software Power electronics New automation system for New power electronic solutions higher marine energy efficiency for higher energy efficiency in rail Smart buildings Wireless New door entry systems for the Usi
Slide 26: Outlook for 2013 and management priorities
Outlook for 2013 and management priorities Limited view short term, but clear actions for growth Growth Long-term growth drivers intact: Industrial productivity, power efficiency Market uncertainty likely to remain high in near term Short-term driven by GDP, power consumption, government policies Ex
Slide 27: Power and productivity
Power and productivity | for a better world™ iA A a
Slide 28: Balanced business and geographic portfolio
Balanced business and geographic portfolio Orders by division Orders by region % of total orders Q4 2012 (non-consolidated) % of total orders Q4 2012 Middle East Power & Africa Process Automation Products 19% 10% 24% 33% Europe Asia 24% Low Voltage 16% Products 21% 20% Power 33% Systems Discrete Aut
Slide 29: Orders and revenues by region and division Q4 2012
Orders and revenues by region and division Q4 2012 Regional share of total orders and revenues by division US$ 10% 10% 3% 6% 15% 7% Orders 13% 31% 23% 19% 31% 31% 30% 34% 25% 27% 24% 14% 40% 33% 41% 37% 23% 39% 30% 30% 28% 18% 34% 26% 29% 39% 32% Power Products Power Systems Discrete Automation Low
Slide 30: Reconciliation of Operational EBITDA by Division
Reconciliation of Operational EBITDA by Division Q4 2012 vs Q4 2011 Operational EBITDA Q4 2012 vs Q4 2011 Power Power Discrete Automation Low Voltage ABB Process Automation Products Systems & Motion Products $ millio ns unless o therwise indicated Q4 12 Q4 11 Q4 12 Q4 11 Q4 12 Q4 11 Q4 12 Q4 11 Q4 1
Slide 31: Reconciliation of non-GAAP measures 1
Reconciliation of non-GAAP measures 1 ($ in millions) Free Cash Flow Year ended Dec. 31, (= Net cash provided by operating activities adjusted for i) changes in financing receivables and ii) purchases of property, plant and equipment and intangible 2012 2011 assets and iii) proceeds from sales of pr
Slide 32: Reconciliation of non-GAAP measures 2
Reconciliation of non-GAAP measures 2 ($ in millions) Cash Return on Investment (CROI) Year ended Dec. 31, CROI = (Net cash provided by operating activities + Interest paid ) / Capital 2012 2011 invested Net cash provided by operating activities 3'779 3'612 Interest paid 189 165 Adjustment to annual
Slide 33: Reconciliation of non-GAAP measures 3
Reconciliation of non-GAAP measures 3 ($ in millions) Net Working Capital as a Share of Revenues Dec. 31, 2012 Net Working Capital (as de fined above) 5'559 Revenues 39'336 Adjustment to annualize revenues of certain acquisitions (1) 915 Adjusted Revenues 40'251 Net Working Capital as a Share of Rev
Slide 34: Appendix: Definitions
Appendix: Definitions 1 Acquisition-related amortization: amortization expense on intangibles arising on acquisitions and the cost of sales impact from fair valuing inventory in an acquisition FX/commodity timing differences on EBIT: the sum of i) unrealized gains and losses on derivatives (foreign
Slide 35: For more information, call ABB Investor Relations
For more information, call ABB Investor Relations Or visit our website at www.abb.com/investorrelations Name Telephone E-mail Alanna Abrahamson Head of Investor Relations +41 43 317 3804 alanna.abrahamson@ch.abb.com (Zurich) John Fox +41 43 317 3812 john.fox@ch.abb.com Tatyana Dubina +41 43 317 3816