Slide 1: Progress in challenging markets
Ulrich Spiesshofer, CEO ABB; Eric Elzvik, CFO ABB, April 20th, 2016 Progress in challenging markets ABB 2016 Q1 Results © ABB Slide 1
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: Q1 2016 – Progress in challenging markets
Q1 2016 – Progress in challenging markets Next Level Strategy delivers Base orders steady1, total orders -7% reflect challenging Q1-15 comparison Profitable Order backlog +4%; book-to-bill 1.17x, all divisions >1.0x Growth PIE2 showing positive results mitigating market headwinds Strategic portfolio
Slide 4: Q1 2016 Key figures
Q1 2016 Key figures Orders Base orders Revenues $9.3 bn $7.6 bn $7.9 bn -7%1 steady1 -2%1 Operational EPS Cash flow from Op. EBITA margin operating activities 12.0% $0.28 $252 mn +0.9 pts. +3%2 +199 mn 1 On a comparable basis; © ABB April 20, 2016 Slide 4 2 Operational EPS growth is in constant curr
Slide 5: Steady base order development
Steady base order development Total order growth impacted by high large orders in Q1 2015 2016 Q1 base order 2016 Q1 total order growth by region growth2 Change on a comparable basis Change on a comparable basis Canada -9% Europe China -2% Base orders +6% Germany +5% Total -7% Germany -19% India -2%
Slide 6: Q1 2016 performance by division
Q1 2016 performance by division Key figures Discrete Electrification Process Power $ bn ABB Group Products Automation Automation Grids unless otherwise stated and Motion Orders 9.3 2.3 2.3 1.8 3.3 Comparable -7% -4% -6% -17% -8% Revenues 7.9 2.1 2.1 1.6 2.5 Comparable -2% 0% -5% -3% -2% Op. EBIT
Slide 7: Op. EBITA margin increased to 12.0%
Op. EBITA margin increased to 12.0% Driving Relentless Execution 11.1% op. 12.0% op. EBITA margin EBITA margin Operational EBITA bridge Q1 2015 to Q1 2016 $ mn +85 -50 +43 0 -58 -26 949 943 Op. EBITA Net Net Project Mix Other Forex Op. EBITA Q1 2015 savings volume margins Q1 2016 © ABB April 20, 201
Slide 8: Improved capital management
Improved capital management A solid, more balanced, cash generator Cash flow from operating activities $ mn 252 Improved inventory management 53 Higher cash collection Q1 2015 Q1 2016 Status of share buyback 2016 Total cash distribution Q1: 27.7 mn shares, buyback value of ~$500 mn Dividend payment
Slide 9: ABB – Next Level Stage 2
ABB – Next Level Stage 2 Accelerating transformation Presented September 9th, 2015 Shifting the Center of Gravity Divisional realignment along markets Profitable Accelerating organic growth Growth Ready for inorganic moves Value from partnerships Advancing leading operating model Stage 2 Relentl
Slide 10: Q1 2016: Profitable Growth
Q1 2016: Profitable Growth Shifting the Center of Gravity – strengthening competitiveness Examples IoTSP1 Digitalization Profitable Growth Power & Automation “for the grid” Power & Automation “for the site” First digital substation in the UK for Container terminal automation for SP Energy Networks A
Slide 11: Innovation Expansion Penetration
Q1 2016: Profitable Growth Shifting the Center of Gravity – driving organic growth Examples PIE Profitable Penetration Growth 6% base order growth Europe Large orders wins Organizational realignment yielding results Innovation Relentless Smart sensing solutions at Hannover Fair Execution Smart Enabl
Slide 12: Q1 2016: Relentless Execution
Q1 2016: Relentless Execution White Collar Productivity Global Shared Service Bangalore, India Profitable Growth Management structure in place First wave of functional activities migrated from: Accounting – Singapore, South East Asia, Relentless Gulf countries Execution HR – Australia Global HR Deli
Slide 13: Q1 2016: Relentless Execution
Q1 2016: Relentless Execution Working Capital improvements drove improved cash flow NWC Approach $ bn Profitable Growth 6.0 Relentless 5.3 Execution Business- Q1 2015 Q1 2016 led Collabo- ration Freeing up approx. $600 mn in cash for growth in last twelve months © ABB April 20, 2016 Slide 13
Slide 14: Q1 2016: Business-led Collaboration
Q1 2016: Business-led Collaboration Divisional realignment seeing initial results Power Grids Electrification Products Profitable Single face to customers One stop shop for electrification Growth Internal collaboration Common channel management with distributors Operational synergies in SCM, enginee
Slide 15: Q1 2016 summary and outlook
Q1 2016 summary and outlook Q1 results Outlook Profitability and cash flow up through execution Mixed short-term picture, uncertainty remains of Next Level Strategy Modest growth in Europe, slower growth in Base orders steady; total orders reflect China; Continued market growth in US challenging Q1
Slide 16: ABB Next Level
ABB Next Level Pioneering technology leader with strong positions in attractive markets Clear transformation agenda driving EPS and CROI Strong balance sheet; committed to attractive returns to shareholders Next Level Strategy: accelerating sustainable value creation © ABB April 20, 2016 Slide 16
Slide 17: Years serving the world from Switzerland
125 YEARS SERVING THE WORLD FROM SWITZERLAND www.abb.com Power and productivity for a better world™
Slide 18: Key figures Q1 2016
Key figures Q1 2016 Q1 16 Q1 15 Change $ mn unless $ Local currency Comparable otherwise indicated Orders 9,253 10,404 -11% -7% -7% Order backlog (end March) 25,978 25,491 +2% +2% +4% Revenues 7,903 8,555 -8% -3% -2% Operational EBITA 943 949 -1% +2% +2% as % of operational revenues 12.0% 11.1% +0.9
Slide 19: Order backlog by division
Order backlog by division Q1 2016 Q1 2015 Change % Order backlog (end March) $ Comparable $ mn Electrification Products 3,168 3,027 +5% +7% Discrete Automation and Motion 4,619 4,596 +1% +1% Process Automation 6,392 6,643 -4% -4% Power Grids 13,787 13,076 +5% +10% Corporate and Other (1,988) (1,851)
Slide 20: Third party base orders by division
Third party base orders by division Q1 2016 Q1 2015 Change% Third-party base orders Comparable $ mn Electrification Products 2,181 2,347 -2% Discrete Automation and Motion 2,021 2,204 -5% Process Automation 1,403 1,508 -2% Power Grids 2,024 1,957 +9% Corporate and other 13 19 Total Group 7,642 8,035
Slide 21: Cash flow from operating activities by division
Cash flow from operating activities by division Q1 2016 Q1 2015 Change % Cash flow from operating activities $ $ mn Electrification Products 33 56 -41% Discrete Automation and Motion 114 182 -37% Process Automation 48 21 +129% Power Grids 83 (122) n.a. Corporate and other (26) (84) Total Group 252 5
Slide 22: Operational EPS analysis
Operational EPS analysis Q1 2016 Q1 2015 mn $, except per share data in $ EPS1 EPS1 2 Net income 500 0.23 564 0.25 -9% (attributable to ABB) Restructuring and restructuring- 51 0.02 19 0.01 related expenses3 (including WCP implementation costs) Gains and losses on sale of businesses, acquisition- 2
Slide 23: Regional share of total orders and revenues by division
Regional share of total orders and revenues by division Q1 2016 Discrete Electricfication Process Power Automation and Products Automation Grids Motion 36% 31% 35% Orders 38% 38% 48% 35% 44% 26% 31% 17% 21% Revenues 35% 31% 44% 41% 31% 38% 34% 34% 27% 35% 22% 28% © ABB Europe Americas Asia, Middle E
Slide 24: Electrification Products
Electrification Products Q1 2016 -4% Order declines in US, China and Brazil were partially offset by growth in Europe Orders 2,555 2,327 Medium Voltage products business was affected by weaker industrial demand Q1 15 Q1 16 0% Revenues were steady compared to the same Revenues quarter a year ago 2,22
Slide 25: Discrete Automation & Motion
Discrete Automation & Motion Q1 2016 -6% Total orders were lower due to weaker demand in oil and gas, minerals and mining Orders 2,569 2,317 Strong orders for robotics in Europe could not compensate lower orders in US and China Q1 15 Q1 16 -5% Revenues were lower on short-cycle business as Revenues
Slide 26: Process Automation
Process Automation Q1 2016 -17% Total orders declined due to the substantial large order decline resulting from lower spending in Orders 2,272 1,784 process industries, primarily in oil and gas and related sectors Q1 15 Q1 16 -3% Revenues were lower as steady performance in Revenues service revenues
Slide 27: Power Grids
Power Grids Q1 2016 -8% Solid large and third party base order intake in the quarter could not compensate the Orders 3,741 exceptionally large Nordlink HVDC order in the 3,307 prior year Q1 15 Q1 16 -2% Revenues were slightly lower reflecting the timing Revenues of project milestones 2,772 2,518 Q1
Slide 28: 2015-2020 targets
2015-2020 targets Group targets and divisional Operational EBITA margin targets effective January 2016 Group Divisions Electrification Products 15-19% Revenue growth1 3-6% Discrete Automation and Motion 14-19% Operational EBITA %2 11-16% Process Automation 11-15% Operational EPS CAGR3 10-15% Power G
Slide 29: 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 Binit Sanghvi +41 43 317 3832 binit.sanghvi@ch.abb.com Beat Fueglistaller +41 43 317 4144 beat.fueglistaller@ch.abb.com Annatina Tunkel