Slide 1: Positioned for profitable growth
— ABB LTD, ZURICH, SWITZERLAND, FEBRUARY 8, 2018, FULL-YEAR AND Q4 2017 RESULTS Positioned for profitable growth Transition delivers streamlined and strengthened portfolio and operations Ulrich Spiesshofer, CEO; Timo Ihamuotila, 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: Agenda
— Agenda Full-year and Q4 2017 financial performance Next Level update ABB’s way forward February 8, 2018 Slide 3
Slide 4: 2017 – ABB streamlined and strengthened
— 2017 – ABB streamlined and strengthened Year of transition Base orders growing in all divisions and regions Profitable ABB AbilityTM momentum building, 210+ solutions Growth Streamlined and strengthened portfolio Streamlined and strengthened operations Relentless – White Collar Productivity (WCP):
Slide 5: Full-year and Q4 2017
— Full-year and Q4 2017 Orders Revenues Operational Operational Cash flow from EBITA margin EPS operating activities FY 2017 $33.4 bn $34.3 bn 12.1 % $1.25 $3,799 mn +0%1 +1%1 -0.3 pts -1%2 steady Orders Base orders Revenues Operational EBITA margin Q4 2017 $8.5 bn $7.9 bn $9.3 bn 10.9 % -3%1 +9%1 -
Slide 6: Q4 2017: strong base order momentum
— Q4 2017: strong base order momentum 2017 Q4 total order growth by region 2017 Q4 base order growth2 Change on a comparable basis Change on a comparable basis EUROPE Aust ralia +26% Base orders +8% Canada +28% Total orders +5% China +1% Germany +15% Finland -7% UK -5% Germany +7% Sweden -19% India
Slide 7: EPC business model change completed in Q4 2017
— EPC business model change completed in Q4 2017 Actions across three divisions Group financial impact Power Grids JV agreement for electrical substation projects Q4 2017 FY 2017 with SNC-Lavalin signed Reported Industrial Automation op. EBITA 10.9% 12.1% Oil & gas JV with Arkad completed margin Rob
Slide 8: Q4 2017: performance by division
— Q4 2017: performance by division Key figures $ bn unless Electrification Robotics and Industrial Power otherwise stated ABB Group Products Motion Automation Grids Orders 8.5 2.6 2.0 1.8 2.5 Comparable -3% +10% +6% -1% -16% Base orders1 7.9 2.4 1.8 1.6 2.0 Comparable +9% +8% +5% +5% +15% Revenu
Slide 9: Q4 2017: operational EBITA
— Q4 2017: operational EBITA Operational EBITA bridge Q4 2016 to Q4 2017, $ mn 11.7% op. 10.9% op. EBITA margin EBITA margin +186 -29 -23 -66 +11 -34 +21 +38 -140 1,161 1,057 1,021 Op. EBITA Net Net Net Invest in Mix Other Acq. / Forex Excl. EPC EPC Op. EBITA Q4 2016 savings commodity volume growth
Slide 10: Continued progress in Net Working Capital
— Continued progress in Net Working Capital Net Working Capital reduction Achievements vs. 2014 NWC as a % of revenues Net Working Capital lower by $1.9 bn excl. portfolio changes NWC % of revenue reduced 280 bps Freed up $1.5 bn in cash NWC % improved across all divisions 2014 and regions Further o
Slide 11: Reminder: framing 2018
— Reminder: framing 2018 Operational items Other items Order backlog and base order growth $200 – 250 mn “normal” capacity restructuring EPC business model change effective Jan 1, 2018 $1,000 mn CAPEX Corporate op. EBITA incl. EPC business ~$500 mn ~$220 mn finance net1 ‘Power Up’ investment continu
Slide 12: Next Level strategy
— Next Level strategy 2017 transition delivers streamlined and strengthened portfolio and operations Driving growth in four market-leading entrepreneurial divisions Profitable Quantum leap in digital Growth Value creating, strategic acquisitions and partnerships Shifting the Center of Gravity: compe
Slide 13: Streamlined and strengthened digital-first portfolio
— Streamlined and strengthened digital-first portfolio ABB today: two clear value propositions Bringing electricity from any Automating industries from natural power plant to any plug resources to finished products Partner of choice for… Power Grids Electrification Products Industrial Automation Rob
Slide 14: Driving growth in market-leading entrepreneurial divisions
— Driving growth in market-leading entrepreneurial divisions PIE approach: Penetration highlights 2017 Food & Beverage Microgrids Africa …orders up 20% …orders up 100%+ …orders up ~40% Industry solution offering, Growth driven by renewables Strong growth across all major awards from e.g. development
Slide 15: Driving growth in market-leading entrepreneurial divisions
— Driving growth in market-leading entrepreneurial divisions PIE approach: Innovation highlights 2017 Power Grids Electrification Products Leadership Leadership in electric vehicle in HVDC fast charging Industrial Automation Robotics and Motion Leadership in Leadership in collaborative process contr
Slide 16: Driving growth in market-leading entrepreneurial divisions
— Driving growth in market-leading entrepreneurial divisions PIE approach: Expansion highlights 2017 Power Grids Electrification Products #1 position Global #2 position strengthened in to be strengthened digital grid Industrial Automation Robotics and Motion Global #2 position Leading in strengthene
Slide 17: ABB Ability – making a quantum leap in digital
— ABB AbilityTM – making a quantum leap in digital 210+ ABB AbilityTM solutions Transportation Utilities Industry & Infrastructure solutions solutions solutions Common technologies for device, edge and cloud February 8, 2018 Slide 17
Slide 18: Shifting ABB's Center of Gravity
— Shifting ABB’s Center of Gravity Driving competitiveness, growth, risk profile Strengthening competitiveness Software / digital: Machine & factory ABB AbilityTM automation: B&R acquisition Partnerships: Innovation: extending Microsoft, IBM, HPE YuMi robot family Expansion through Service: leverage
Slide 19: Power Grids transformation well under way
— Power Grids transformation well under way Operational EBITA margin % Relentless execution Shaping our leading portfolio 14% and business models Future range1 12% New ABB AbilityTM -enabled services Current range 10% and software 10.2 8% 9.3 Delivering sustainable growth 7.2 in service 4.8 Driving
Slide 20: White Collar Productivity program target delivered
— White Collar Productivity program target delivered 2014 – 2017 WCP program savings1 Highlights $1.3+ bn End 2017 run-rate $1.3+ bn vs. initial $1.0 bn target Organization streamlined Lean business $1.0 bn functions – 5 4 divisions – 8 3 regions – ~1000 ~500 HQ employees – 60+ 2 global & 3
Slide 21: Linked strategy, performance and compensation
— Linked strategy, performance and compensation Base compensation Short-term incentives Long-term incentives2 As at 60% retention Systematic change 100% Group scorecard Jan. 2013 40% EPS 2018 Merit-driven 65% line-of-sight1 50% EPS effective compensation change 35% “one level up”1 50% TSR Driving st
Slide 22: Attractive shareholder returns, disciplined capital allocation
— Attractive shareholder returns, disciplined capital allocation Total shareholder return (TSR) 2017: +24%1 Capital allocation 2014 – 2017, $ bn Normalized to 100 125 3.7 16.3 2.3 120 3.5 6.8 115 110 Dividend2 Share Acquisitions Capex Total buyback 105 Capital allocation priorities 100 Fund organic
Slide 23: ABB's way forward
— ABB’s way forward Living Next Level Driving growth in four market-leading entrepreneurial divisions Profitable Quantum leap in digital Growth Value creating, strategic acquisitions and partnerships Shifting the Center of Gravity: competitiveness, growth, risk Relentless World-class operational exc
Slide 24: ABB: positioned for profitable growth
— ABB: positioned for profitable growth Summary Market growth across sectors ABB base order growth, yoy, comparable 9% Share of ABB total market 6% >3% p.a. 3% negative 0-1% 2017 1-3% p.a. p.a. 2% 0% 0% >3% p.a. 2018 – 20 >3% p.a. 1-3% p.a. 0-1% -1% p.a. -6% Q1 2016 Q4 Q1 2017 Q4 ABB better position
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Slide 26: Key figures Q4 2017
— Key figures Q4 2017 Q4 17 Q4 16 Change $ mn unless ot herw ise ind icat ed $ Local currency Comp arab le Ord ers 8,478 8,277 +2% -1% -3% Ord er b acklog (end Decemb er) 22,414 22,981 -2% -8% -4% Revenues 9,280 8,993 +3% 0% -1% Op erat ional EBITA 1,021 1,057 -3% -7% as % of op erat ional revenues
Slide 27: Key figures FY 2017
— Key figures FY 2017 FY 17 FY 16 Change $ mn unless ot herw ise ind icat ed $ Local currency Comp arab le Ord ers 33,387 33,379 0% 0% 0% Ord er b acklog (end Decemb er) 22,414 22,981 -2% -8% -4% Revenues 34,312 33,828 +1% +1% +1% Op erat ional EBITA 4,130 4,191 -1% -2% as % of op erat ional revenue
Slide 28: Third-party base orders by division
— Third-party base orders by division Q4 17 Q4 16 % Change Third-part y base orders $ mn Comparable Elect rificat ion Product s 2,394 2,170 +8% Robot ics and Mot ion 1,838 1,676 +5% Indust rial Aut omat ion 1,638 1,304 +5% Power Grids 1,994 1,691 +15% Corporat e and Ot her 18 19 n.a. Tot al Group 7,
Slide 29: FY 2017: performance by division
— FY 2017: performance by division Key figures $ bn Elect rificat ion Robot icsand and Indust rial Power Electrification Robotics Industrial unless ot herwise ABB Group ABB Group Power Grids Products Product s Motion Mot ion Automation Aut omat ion Grids st at ed Orders 33.4 10.1 8.5 6.6 9.6 Δ Compa
Slide 30: Cash flow from operating activities by division
— Cash flow from operating activities by division Q4 17 Q4 16 % Change Cash f low f rom operat ing act ivit ies $ mn Elect rificat ion Product s 590 436 +35% Robot ics and Mot ion 376 314 +20% Indust rial Aut omat ion 373 212 +76% Power Grids 515 542 -5% Corporat e and Ot her 15 -76 n.a. Tot al Grou
Slide 31: Order backlog by division
— Order backlog by division Q4 17 Q4 16 % Change Order backlog $ Comparable (end December) $ mn Elect rificat ion Product s 3,098 2,839 +9% +5% Robot ics and Mot ion 3,961 3,660 +8% +1% Indust rial Aut omat ion 5,376 5,409 -1% -10% Power Grids 11,330 11,638 -3% -7% Corporat e and Ot her -1,351 -565
Slide 32: Operational EPS analysis
— Operational EPS analysis Q4 17 Q4 16 1 $ mn, except per share dat a in $ EPS EPS Net income (at t ribut able t o ABB) 393 0.18 425 0.20 -7% Operat ional adjust ment s: Acquisit ion–relat ed amort izat ion 75 67 Rest ruct uring and rest ruct uring-relat ed 139 68 expenses 2 Non-operat ional pensio
Slide 33: Operational EPS analysis – full-year
— Operational EPS analysis – full-year FY 17 FY 16 1 $ mn, except per share dat a in $ EPS EPS Net income (at t ribut able t o ABB) 2,213 1.04 1,899 0.88 +17% Operat ional adjust ment s: Acquisit ion–relat ed amort izat ion 264 279 Rest ruct uring and rest ruct uring-relat ed 363 543 expenses 2 Non
Slide 34: Regional share of total orders and revenues by division
— Regional share of total orders and revenues by division Q4 2017 Elect rificat ion Robot ics and Indust rial Power Electrification Product s Robotics and Mot ion AutIndustrial omat ion Power Grids Products Motion Automation Grids 23% 28% 32% 32% 34% 35% 34% Orders 36% 38% 36% 42% 30% 25% 21% 28% Re
Slide 35: Electrification Products Q4 2017
— Electrification Products Q4 2017 In $ mn, y-o-y change comparable +10% Total orders were 10 percent higher, as all regions and end markets showed strong demand, in particular for data Orders center, food and beverage and electric vehicle fast-charging 2,556 2,276 solutions. Third-party base orders
Slide 36: Robotics and Motion Q4 2017
— Robotics and Motion Q4 2017 In $ mn, y-o-y change comparable +6% Total orders improved 6 percent, growing in all regions. The division saw improved demand from process end markets, Orders whilst large orders declined due to the timing of tender 2,040 awards. 1,856 Third-party base orders grew 5 pe
Slide 37: Industrial Automation Q4 2017
— Industrial Automation Q4 2017 In $ mn, y-o-y change comparable Third-party base orders continued to be positive at 5 percent -1% on continued operational investment by process customers; Orders total orders were 1 percent lower. Some selective capital expenditure was seen in mining and specialty v
Slide 38: Power Grids Q4 2017
— Power Grids Q4 2017 In $ mn, y-o-y change comparable -16% Orders Third-party base orders grew 15 percent mainly driven by industry, particularly in transportation and infrastructure. 2,493 2,868 Total orders declined 16 percent due to the exceptionally large UHVDC order that was awarded in India i
Slide 39: 2016 full-year figures
— 2016 full-year figures Pro-forma reflecting EPC business model change Electrification Robotics and Industrial Power Corporate and Approx. Total Products Motion Automation Grids other Before After Before After Before After Before After Before After Orders ($ bn) 9.8 9.8 7.9 7.9 6.0 6.0 10.8 10.5 -1
Slide 40: Q4 2017 figures
— Q4 2017 figures Pro-forma reflecting EPC business model change Electrification Robotics and Industrial Power Corporate and Approx. Total Products Motion Automation Grids other Before After Before After Before After Before After Before After Orders ($ bn) 2.6 2.6 2.0 2.0 1.8 1.8 2.5 2.4 -0.4 -0.3 8
Slide 41: 2017 full-year figures
— 2017 full-year figures Pro-forma reflecting EPC business model change Electrification Robotics and Industrial Power Corporate and Approx. Total Products Motion Automation Grids other Before After Before After Before After Before After Before After Orders ($ bn) 10.1 10.1 8.5 8.5 6.6 6.6 9.6 9.2 -1
Slide 42: More information available at ABB Investor Relations
— More information available at ABB Investor Relations Name Telephone Email Jessica Mitchell +41 43 317 3832 jessica.mitchell@ch.abb.com Head of Investor Relations Beat Fueglistaller +41 43 317 4144 beat.fueglistaller@ch.abb.com Benita Barretto +41 43 317 3876 benita.barretto@ch.abb.com Ruth Jaeger