Slide 1: ABB delivers growth in fourth quarter
ABB LTD, ZURICH, SWITZERLAND, MARCH 10, 2017, FULL-YEAR AND Q4 2016 RESULTS (RESTATED) ABB delivers growth in fourth quarter Solid transformation progress in 2016 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 gl
Slide 3: Agenda
Agenda Q4 and full-year 2016 performance Next Level transformation Outlook and priorities 2017 March 10, 2017 Slide 3
Slide 4: Full-year and Q4 2016
Full-year and Q4 2016 Orders Revenues Operational Operational EPS Free cash flow EBITA margin FY 2016 $33.4 bn $33.8 bn 12.4 % $1.29 $3.1 bn -5%1 -1%1 +50 bps +4%2 +2% Orders Base orders Revenues Operational EBITA margin Q4 2016 $8.3 bn $6.9 bn $9.0 bn 11.7 % +3%1 -1%1 +1%1 -20 bps3 1On a comparable
Slide 5: Q4 2016: ABB delivers growth
Q4 2016: ABB delivers growth +3%1 order growth reflects strong orders in Power Grids, strong growth in US & China +9%1 Profitable Revenues grew1; positive contribution by Power Grids and Electrification Products Growth Launched ABB AbilityTM – significant interest, momentum building Op. EBITA impact
Slide 6: Q4 2016: strong growth in the US and China
Q4 2016: strong growth in the US and China Q4 2016 total order growth by region Q4 2016 base order growth2 Change on a comparable basis Change on a comparable basis Brazil -36% Europe Canada -30% Total -8% China +11% Germany -9% UK +16% Germany +3% Italy +48% India +14% Turkey -78% Americas AMEA1 It
Slide 7: Q4 2016: Power Grids orders
Q4 2016: Power Grids orders >$840 million, 3 continents India USA Brazil Philippines Raigarh-Pugalur 800kV Sylmar converter station Belo Monte National Grid Corp of Pacific Intertie power link Philippines $640 mn $100 mn $75 mn $27 mn UHVDC system India Upgrade HVDC station 800kV ultra-high voltage
Slide 8: Q4 2016: performance by division
Q4 2016: performance by division Key figures Discrete $ bn Electrification Process Power unless otherwise ABB Group Products Automation Automation Grids stated and Motion Orders 8.3 2.2 2.0 1.5 2.9 Comparable +3% -5% +4% -14% +15% Revenues 9.0 2.5 2.2 1.7 3.0 Comparable 1% +3% -1% -8% +4% Op. EB
Slide 9: Q4 2016: Operational EBITA margin bridge
Q4 2016: Operational EBITA margin bridge 11.9% op. 11.7% op. EBITA margin EBITA margin Operational EBITA bridge Q4 2015 to Q4 2016, $ mn +111 +32 -8 -26 -132 -21 1,101 (e.g. Distributor 1,057 default; operational currency losses) Op. EBITA Net Net Project Mix Other Forex Op. EBITA Q4 2015 savings vo
Slide 10: Q4 2016: Operational EBITA to net income bridge
Q4 2016: Operational EBITA to net income bridge -67 -68 1,057 -38 -92 -73 Q4 2016 -54 +13 -12 -194 -47 425 -73 -531 1,101 Q4 2015 -8 -12 0 -76 -54 -42 -66 -35 204 Op. PPA Restructuring Non- Changes in South Other FX/ Finance net Tax Disc. ops & Net EBITA amortization related operational pre-acquisit
Slide 11: 2016: Working Capital program yielding results
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 5000 3,818 3,843 16 4000 Q4 15 1,428 Q3 14 3000 1,994 2014 Q2 13 2000 1,081 2015 Q1 12 1,173 2016 1000 1,082 11 598 1
Slide 12: Next Level transformation
Next Level transformation Starting point 2013 2016 achievements Growth momentum building (i.e. PIE1) in key markets Profitable Double digit growth in F&B2, robotics Lack of organic growth focus Growth Launch of ABB AbilityTM, 3 partnerships Strategic portfolio review Power Grids completed Power Grid
Slide 13: Next Level Stage 3 – committed to unlocking value
Next Level Stage 3 – committed to unlocking value Four actions ANNOUNCED OCTOBER 4TH, 2016 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
Slide 14: Four market-leading entrepreneurial divisions
1 Four market-leading entrepreneurial divisions Operational as of January 1, 2017 Partner of choice for… Position Actions …. Combine all electrification components Electrification …electrification of #2 in Investment in growth platforms Products all consumption points electrification (renewables, EV
Slide 15: PG shift from “Step Change” to “Power Up” transformation
1 PG shift from “Step Change” to “Power Up” transformation Operational EBITA margin, % 14% 12% 10% 10.4 8% 9.3 9.0 9.5 7.6 7.9 4.8 2014 2015 2016 Q1 Q2 Q3 Q4 Winning World- Growth 2020 FY FY FY 2016 2016 2016 2016 portfolio, class digital & execution business models “Step Change” “Power Up” Signific
Slide 16: Quantum leap in digital: launch of ABB Ability
2 Quantum leap in digital: launch of ABB AbilityTM One common offering for digital end-to-end solutions Driving growth by: Integrating Penetrating Replicating Digital ABB offering across all businesses March 10, 2017 Slide 16
Slide 17: ABB Ability – creating value for customers
2 ABB AbilityTM – creating value for customers Robot Studio Ormen Lange gas field, Central Hudson Gas & Electric (14,000 users/week) Norske Shell Distribution Grid, USA Leading robot simulation & ABB 800xA DCS Wireless communication Digital offline programming software network aggregating multiple A
Slide 18: Accelerating momentum in operational excellence
3 Accelerating momentum in operational excellence Constant Opex and SCM savings Increased White Collar Productivity ambition Target 3-5% of cost of sales Run rate gross savings in $ mn 5% $1.3 bn 3% new target 1.2 1.2 +30% 1.1 1.1 $1.0 bn original target 2013 2014 2015 2016 2017 2015 2016 2017 Opex
Slide 19: Committed to delivering attractive shareholder returns
Committed to delivering attractive shareholder returns Returned $2.9 bn of cash to shareholders in 2016 Improved free cash flow, Improving cash return on Share repurchase volume strong cash conversion investment 13.8% 13.4% 3.0 in $ bn 12.7% 3.0 3.1 2.9 11.6% 1.5 2.6 1.3 156% 161% 0.7 94% 110% 1 201
Slide 20: Outlook – short term market conditions
Outlook – short term market conditions Pioneering technology Utilities Industry Transport & Infrastructure T&D: positive drivers, policy Discrete & hybrid industries1: Transportation: rail growing, support investment remains positive specialty ships strong, cargo Oil & Gas: bottoming onshore, vessel
Slide 21: 2017 priorities
2017 priorities Drive organic growth through PIE, expand technology leadership Profitable Drive ABB AbilityTM momentum through customer base and within every business unit Growth Ready for disciplined inorganic moves and partnerships Deliver White Collar Productivity and Working Capital programs Rel
Slide 22: Why own ABB
Why own ABB Pioneering technology leader Strong positions in attractive markets Clear transformation agenda driving operational EPS and CROI Efficient balance sheet; generating attractive returns for shareholders Committed to unlocking value March 10, 2017 Slide 22
Slide 23: AL GD ED
AL GD ED PADD ED
Slide 24: Key figures Q4 2016
Key figures Q4 2016 Q4 2016 Q4 2015 Change $ mn unless $ Local currency Comparable otherwise indicated Orders 8,277 8,262 0% +2% +3% Order backlog 22,981 24,121 -5% -2% -1% (end December) Revenues 8,993 9,242 -3% 0% +1% Operational EBITA 1,057 1,101 -4% -2% as % of operational 11.7% 11.9% -0.2 pts.
Slide 25: Key figures 2016
Key figures 2016 FY 2016 FY 2015 Change $ mn unless $ Local currency Comparable otherwise indicated Orders 33,379 36,429 -8% -5% -5% Order backlog 22,981 24,121 -5% -2% -1% (end December) Revenues 33,828 35,481 -5% -2% -1% Operational EBITA 4,191 4,209 0% +2% as % of operational 12.4% 11.9% +0.5 pts
Slide 26: Third party base orders by division
Third party base orders by division Q4 2016 Q4 2015 % Change Third-party base orders $ mn Comparable Electrification Products 2,051 2,158 -2% Discrete Automation and 1,820 1,779 +5% Motion Process Automation 1,285 1,309 0% Power Grids 1,692 1,864 -7% Corporate and Other 12 12 Total Group 6,860 7,122
Slide 27: Order backlog by division
Order backlog by division Q4 2016 Q4 2015 Change Order backlog $ Comparable (end December) $ mn Electrification 2,612 2,872 -9% -5% Products Discrete Automation 4,078 4,232 -4% 0% and Motion Process Automation 5,258 6,036 -13% -10% Power Grids 12,437 12,502 -1% +4% Corporate and Other (incl. Inter-d
Slide 28: Operational EPS analysis
Operational EPS analysis Q4 2016 Q4 2015 mn $, except per share data in $ EPS EPS 1 Net income (attributable to ABB) 425 0.20 204 0.09 +115% Operational adjustments: Acquisition–related amortization 67 73 Restructuring and restructuring-related 68 531 expenses2 Non-operational pension cost 38 8 Cha
Slide 29: Operational EPS analysis – full year
Operational EPS analysis – full year FY 2016 FY 2015 mn $, except per share data in $ EPS EPS 1 Net income (attributable to ABB) 1,899 0.88 1,933 0.87 +2% Operational adjustments: Acquisition–related amortization 279 310 Restructuring and restructuring-related 543 674 expenses2 Non-operational pens
Slide 30: Cash flow from operating activities by division
Cash flow from operating activities by division Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Cash flow from operating activities $ mn Electrification 451 590 -24% 1,221 1,364 -10% Products Discrete Automation 308 372 -17% 1,002 1,206 -17% and Motion Process 186 374 -50% 728 690 +6% Automation P
Slide 31: Group Targets
Group Targets Status 2015 – 2020 financial targets Status as of December 2016 unless otherwise stated Group Status Revenue growth1 3 – 6% 0% Operational EBITA %2 11 – 16% 12.4% Operational EPS growth CAGR3 10 – 15% 4% FCF conversion to net income >90% 161% CROI %4 Mid-teens 14.1% 1Average annual rev
Slide 32: White Collar Productivity program costs
White Collar Productivity program costs $ 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 guidance guidance 1,200- 1,020- Total Cost 420 370 ~230 1,250 1,070 Restruc
Slide 33: Regional share of total orders and revenues by division
Regional share of total orders and revenues by division Q4 2016 Electrification Discrete Automation Process Power Products and Motion Automation Grids 32% 20% Orders 36% 36% 35% 36% 42% 48% 32% 28% 33% 22% Revenues 38% 35% 32% 36% 43% 38% 42% 30% 27% 32% 19% 28% March 10, 2017 Slide 33 Europe Americ
Slide 34: Electrification Products Q4 2016
Electrification Products Q4 2016 In $ mn, y-o-y change comparable -5% Total orders reflects lower large orders in the systems business compared with the same period Orders 2,340 2,157 a year ago. Positive order development in China and India could not offset declines in the US, Q4 2015 Q4 2016 Canad
Slide 35: Discrete Automation & Motion Q4 2016
Discrete Automation & Motion Q4 2016 In $ mn, y-o-y change comparable +4% Total orders grew 4 percent as continued strong demand patterns in robotics and light industry Orders 1,984 2,013 more than offset the impacts from capex declines in process industries such as oil and gas. Q4 2015 Q4 2016 1 2
Slide 36: Process Automation Q4 2016
Process Automation Q4 2016 In $ mn, y-o-y change comparable -14% Total orders were 14 percent lower as a result of continued capital expenditure reduction in the Orders 1,796 1,520 process industries. Q4 2015 Q4 2016 1 2 -8% Revenues declined 8 percent as higher service Revenues revenues could not o
Slide 37: Power Grids Q4 2016
Power Grids Q4 2016 In $ mn, y-o-y change comparable Total orders were 15 percent higher compared with +15% the same quarter a year ago due to a significant Orders increase in large contract awards. 2,628 2,879 Q4 2015 Q4 2016 1 2 +4% Revenues increased 4 percent due to steady Revenues execution of
Slide 38: Q1 2016 Proforma – new structure
Q1 2016 Proforma – new structure Electrification Robotics Industrial Power ABB Group Products and Motion Automation Grids Orders ($ mn) 9,253 2,506 2,088 1,838 3,307 Revenues ($ mn) 7,903 2,289 1,873 1,664 2,518 Operational EBITA 951 307 286 202 198 ($ mn) Operational EBITA margin 12.1% 13.5% 15.3%
Slide 39: FY 2016 Proforma – new structure
FY 2016 Proforma – new structure Electrification Robotics Industrial Power ABB Group Products and Motion Automation Grids Orders ($ mn) 33,379 9,775 7,868 6,041 11,232 Revenues ($ mn) 33,828 9,916 7,915 6,778 10,975 Operational EBITA 4,191 1,458 1,224 865 1,021 ($ mn) Operational EBITA margin 12.4%
Slide 40: FY 2015 Proforma – new structure
FY 2015 Proforma – new structure Electrification Robotics Industrial Power ABB Group Products and Motion Automation Grids Orders ($ mn) 36,429 10,606 8,285 7,525 12,205 Revenues ($ mn) 35,481 10,272 8,201 7,431 11,621 Operational EBITA 4,209 1,519 1,290 908 877 ($ mn) Operational EBITA margin 11.9%
Slide 41: 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 Ruth Jaeger +41 43 317 3808 ruth.jaeger@ch.abb.com March 10, 2017 Slid