Slide 1: ABB Q3 2012 results
October 25, 2012 ABB Q3 2012 results Joe Hogan, CEO Michel Demaré, CFO
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: Q3 2012: Improved portfolio and geographic balance
Q3 2012: Improved portfolio and geographic balance A steady result in an uncertain market Base orders1 steady in a mixed economic environment China “moving sideways,” North America up double digits, southern Europe2 slightly positive Op EBITDA margin3 steady vs Q2 2012, down vs strong Q3 2011 Power
Slide 4: Key figures for Q3 2012
Key figures for Q3 2012 Q3 2012 performance Q3 2012 Q3 2011 Change vs Q3 2011 Change vs Q3 2011 US$ millions unless otherwise stated US$ local currencies 0% Orders 9,295 9,826 -5% (organic1: -6%) Order backlog (end Sept.) 29,175 28,492 2% 3% 10% Revenues 9,745 9,337 4% (organic: 4%) -6% Operational
Slide 5: Our geographic scope provides a natural hedge
Our geographic scope provides a natural hedge Capturing growth opportunities where they arise Order growth by region Q3 2012 vs Q3 2011 (in local currencies) Power -51% Automation +4% Europe -24%1 Americas +38% excl. T&B Asia +16% MEA -13% Power +20% Automation +52% +73% Power -18% (excl. T&B +14%)
Slide 6: Americas with another strong quarter
Americas with another strong quarter Large projects a key factor in Germany, India and MEA Order growth by selected country Q3 2012 vs Q3 2011 (in local currencies) Sweden +6% Canada +42% UK +73% Germany -64%1 (+10% excl. T&B) Italy +3% US +41% (+13% excl. T&B) Southern Europe2 +2% Turkey >2x China
Slide 7: Q3 divisional overview: Power
Q3 divisional overview: Power PP margins stable, PS affected by project margins 1 1 Margin Margin Orders Revenues Op EBITDA Op EBITDA vs Q3 11 vs Q3 11 vs Q3 11 margin vs Q3 11 vs Q2 12 (percentage pts) (percentage pts) Power -6% +0% -19% 14.8% -2.4 +0.1 Products Orders lower, mainly timing of proje
Slide 8: Successes and challenges in Power Q3 2012
Successes and challenges in Power Q3 2012 Quarterly successes Power Systems orders up ~25% excl. offshore wind comparison Continued sequential stability in Power Products op EBITDA margin Cost initiatives continue to generate significant savings Order growth in China, US, Middle East and Africa Powe
Slide 9: Power Systems: Actions to return to target margins in 2013
Power Systems Actions to return to target margins in 2013 Pressure on project margins DolWin1 offshore wind project Platform sail-away postponed, permits not available Platform substructure (“jacket”) sailed out and installed Additional cost overruns of ~$20 mill booked this quarter Complex framewor
Slide 10: Q3 divisional overview: Automation
Q3 divisional overview: Automation Resilient performance supported by Thomas & Betts Margin Margin Orders1 Revenues1 Op EBITDA Op EBITDA vs Q3 11 margin vs Q3 11 vs Q2 12 vs Q3 11 vs Q3 11 (percentage pts) (percentage pts) Discrete +1% +5% -4% 18.9% -0.7 +0.1 Automation & Motion Lower industry and r
Slide 11: Successes and challenges in Automation Q3 2012
Successes and challenges in Automation Q3 2012 Quarterly successes Resilient demand (flat organic order growth) despite mixed market LP cost savings drove margin improvement vs Q2 2012 Some price improvements in LP Thomas & Betts integration and synergies on target New products in LV switchgear, mot
Slide 12: Thomas & Betts update: A strong start
Thomas & Betts update: A strong start Integration on track Q3 stand-alone vs. year-earlier period 4% revenue growth Q3 operational EBITDA margin 19% vs 17%1 in Q3 2011 Contributed ~$620 mill in revenues, ~$120 mill in op EBITDA and ~$90 mill in cash from operations Integration on track Integration c
Slide 13: Operational EBITDA bridge – Q3 12 vs Q3 11
Operational EBITDA bridge – Q3 12 vs Q3 11 Factors affecting operational EBITDA Q3 2012 Approximations Product Volume Project Cost Sales and Business Other1 T&B price margins savings R&D Mix Net negative +$280 mill impact of Price pressure Incl. ~$100 $97 mill in power Project million forex unchange
Slide 14: Cost savings update Q3 2012
Cost savings update Q3 2012 Driving continuous and sustainable cost savings Approx. share of savings by type Approx. share of savings by business Percent Percent Indirect sourcing 10% Automation 40% Operational Excellence 50% ~$280 35% Direct ~$280 sourcing mill mill 60% Power Global 5% footprint ~$
Slide 15: Improved cash flow from divisions
Improved cash flow from divisions Strengthening US dollar affected total cash flow US$ millions 921 811 768 Divisional cash flow up ~$160 mill vs 761 Q3 2011 Divisional Group cash flow reflects lower cash Total CFO1 CFO from hedging corporate exposures on strengthening USD Continued focus to improve
Slide 16: Outlook for remainder of 2012 and beginning of 2013
Outlook for remainder of 2012 and beginning of 2013 Short-term view Macro indicators in most markets remain mixed, limited visibility Short-cycle business growth is being challenged Q3 provided reasons for cautious optimism Resilient demand in key markets, well-balanced portfolio Sustainability of o
Slide 17: Power and productivity for a better world
Power and productivity | for a better world™ iA A a
Slide 18: Balanced business and geographic portfolio
Balanced business and geographic portfolio Orders by division Orders by region % of total orders Q3 2012 (non-consolidated) % of total orders Q3 2012 Middle East Process Power & Africa Automation Products 17% 11% 24% 31% Europe LV 18% Asia 25% Products 18% 23% Power Systems 33% Discrete Automation A
Slide 19: Orders and revenues by region and division Q3 2012
Orders and revenues by region and division Q3 2012 Regional share of total orders and revenues by division US$ 3% 5% 11% 7% Orders 23% 30% 27% 24% 31% 33% 37% 23% 30% 39% 18% 29% 31% 28% 37% 34% Power Products Power Systems Discrete Automation Low Voltage Process & Motion Products Automation 3% Reve
Slide 20: Reconciliation of Operational EBITDA by Division
Reconciliation of Operational EBITDA by Division Q3 2012 vs Q3 2011 Operational EBITDA Q3 2012 vs Q3 2011 US$ millions Power Power Discrete Automation Low Voltage ABB Process Automation Products Systems & Motion Products Q3 12 Q3 11 Q3 12 Q3 11 Q3 12 Q3 11 Q3 12 Q3 11 Q3 12 Q3 11 Q3 12 Q3 11 Operati
Slide 21: Operational EPS analysis
Operational EPS analysis Q3 11 Q3 12 Change1 US$ in millions, except per share data in US$ EPS EPS US$ Local Net income 790 0.34 759 0.33 -4% 2% Restructuring-related costs2 21 0.01 16 0.00 FX/commodity timing differences on EBIT2 75 0.04 -30 -0.01 Acquisition-related expenses and certain non- -3 0.
Slide 22: Major forex movements
Major forex movements USD change Q3 2012 vs. Q3 2011 24% 20% 17% 13% 4% 2% 1% -1% BRL INR CHF EUR SEK GBP AUD CNY Source: Bloomberg Chart 22
Slide 23: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures ($ in millions) Net cash (Net debt) Sep. 30, Dec. 31, (= Cash and equivalents plus marketable securities and short-term 2012 2011 investments, less total debt) Cash and equivalents 4'683 4'819 Marketable securities and short-term investments 742 948 Cash and marke
Slide 24: 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 25: Appendix: Definitions
Appendix: Definitions 2 Operational net income: Net income adjusted for the net-of-tax impact (using the Group’s effective tax rate) of i) unrealized gains and losses on derivatives (FX, commodities, embedded derivatives), ii) realized gains and losses on derivatives where the underlying hedged tran
Slide 26: For more information, call ABB Investor Relations
For more information, call ABB Investor Relations Or visit our website at www.abb.com/investorrelations 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 (Zurich) Tatyana Dubina +41 43 317