ABB Ltd 0NX2 3rd Quarter Results

  ABB Ltd (0NX2) - 3rd Quarter Results

RNS Number : 5028P
ABB Ltd
25 October 2012




Solid performance in an uncertain market

§ Group operational EBITDA^1 margin stable vs Q2 2012, including Power
Products

§ Orders and revenues supported by better geographic balance in automation

§ Strong divisional cash from operations

§ Thomas & Betts contributed approx. $120 million to operational EBITDA

§ Outlook: Limited visibility, but cautious optimism in an uncertain
environment

Zurich, Switzerland, October 25, 2012 - ABB reported steady orders and higher
revenues^2 in the third quarter of 2012 despite a challenging macroeconomic
environment, as the company benefited from its well-balanced market exposure,
especially the improved access to the North American automation market gained
through recent acquisitions.

Power orders were lower than the year-earlier period, which included a large
offshore wind order. Excluding that order, power orders rose 10 percent,
driven by utility and industry investments in power transmission. Automation
orders were up 13 percent (flat organic), driven by demand for improved
industrial productivity, mainly in Europe and North America and in the mining
and marine sectors.

The Group's operational EBITDA and operational EBITDA margin were lower than
in the strong third quarter of last year, mainly due to the execution of
lower-priced power orders from the backlog, but were higher than Q2 2012. The
operational EBITDA margin in Power Products was steady compared to the second
quarter of 2012. Cost savings for the Group amounted to about $280 million in
the quarter. The stronger US dollar continued to negatively impact ABB's
reported results.

An increase in divisional cash flows was more than offset by cash outflows
from hedging corporate exposures as a result of the stronger US dollar.

"We're encouraged that we could grow the business and sustain profitability
well within our target corridor despite a challenging macro environment," said
Joe Hogan, ABB's CEO. "We continued to execute on cost reduction and grow the
service business, two of our key strategic initiatives. The geographic
rebalancing of our automation business towards North America, for example
through the Thomas & Betts acquisition, is also paying off.

"That gives us reason for cautious optimism," Hogan said. "Short-term market
visibility is limited and volatility is high. In this environment, our
near-term focus will continue to be on competitive costs and using our strong
portfolio and geographic balance to tap profitable growth opportunities."

2012 Q3 key figures
                                              Q3 12  Q3 11       Change
Key figures
$ millions unless otherwise                                US$ Local Organic^3
indicated
Orders                                        9'295  9'826 -5%  0%      -6%
 Order backlog (end Sept.)                  29'175 28'492 2%   3%
Revenues                                      9'745  9'337 4%   10%     4%
EBIT                                          1'146  1'194 -4%
 as % of revenues                            11.8%  12.8%
Operational EBITDA                            1'483  1'580 -6%
 as % of operational revenues                15.3%  16.7%
Net income attributable to ABB                  759    790 -4%
Basic net income per share ($)                 0.33   0.34
Cash flow from operating activities   768    811 -5%



___________

1 See reconciliation of Operational EBITDA in Note 13 to the Interim
Consolidated Financial Information (unaudited)
2 Management discussion of orders and revenues focuses on local currency
changes. U.S. dollar changes are reported in results tables
3 Organic changes are in local currencies and exclude the acquisition of
Thomas & Betts in mid-May 2012

Summary of Q3 2012 results

Orders received and revenues

ABB's diverse geographic and business scope enabled the company to record
steady orders received in the quarter, despite a challenging business
environment and a 30-percent decline in large orders (above $15 million)
compared to last year. The acquisition of US-based low-voltage product
manufacturer Thomas & Betts in the second quarter made a significant
contribution, especially to growth in base orders (below $15 million) of 8
percent. Excluding Thomas & Betts, total orders declined 6 percent and base
orders were flat. Service orders grew faster than total orders and were up 9
percent.

On the power side, utility customers in most regions continued to selectively
invest in power transmission projects in line with long-term trends to
strengthen grid reliability and increase capacity. Power orders rose more than
20 percent in the US and Brazil in the quarter, and were more than 15 percent
higher in China, and more than 50 percent higher in the Middle East and
Africa. However, utility demand in the power distribution sector declined,
reflecting weaker economic growth, mainly in Europe. Power orders declined in
Germany and Italy, and were also lower in India compared to a strong quarter
the year before. Increased order selectivity to secure profitability also
affected the development of power orders.

Automation order growth was driven primarily by the acquisition of Thomas &
Betts, which provided ABB with greater access to the large US industrial
automation market and contributed approximately $620 million in orders in the
quarter. Orders grew in the mining and marine sectors, and were supported by
some large rail and automotive industry orders. Automation orders were higher
in most regions, driven mainly by large orders. In the Americas,automation
orders grew more than 50 percent (up 7 percent excluding Thomas & Betts).
Automation orders were lower in China, flat in Germany, and higher in Italy
and Brazil.

The order backlog at the end of September 2012 remained robust at $29 billion,
a local-currency increase of 3 percent compared to the year-earlier period and
a decrease of 2 percent versus the end of the second quarter of 2012.

Total power revenues increased in the quarter on the execution of the order
backlog, mainly in power transmission. Growth in total automation revenues
reflects the impact of the Thomas & Betts acquisition and execution of the
order backlog, mainly in the marine, oil and gas and discrete automation
sectors. Service revenues grew 6 percent in the quarter and comprised 16
percent of total revenues, unchanged versus the same quarter a year earlier.
Currency translation effects reduced reported US-dollar revenues by
approximately $570 million in the quarter compared to the same quarter in
2011.

Earnings and net income

The decline in operational EBITDA in the third quarter of 2012 mainly reflects
lower earnings and margins in the power businesses compared to a strong third
quarter in 2011, due primarily to execution of the lower-priced order backlog.
Operational EBITDA this quarter also includes a negative foreign exchange
translation impact of approximately $100 million. Margin declines in a number
of projects in the Power Systems division also weighed on profitability.
Margins were lower in the automation divisions on a combination of product mix
effects and higher selling and R&D expenses aimed at securing future growth.

Roughly 45 percent of cost savings in the quarter came from global sourcing
initiatives, 50 percent from operational excellence projects and about 5
percent from footprint changes. Savings initiatives provided significant
support to profitability in the Low Voltage Products division, where the
operational EBITDA margin exceeded 19 percent. Costs in the quarter associated
with the savings measures amounted to approximately $20million. For the first
nine months of the year, savings reached approximately $820 million on
associated costs of approximately $55 million.

Net income for the quarter decreased 4 percent to $759 million and resulted in
basic earnings per share (EPS) of $0.33 compared to $0.34 in the year-earlier
period.

Balance sheet and cash flow

Net debt at the end of the third quarter was $3.7 billion compared to $4
billion at the end of June 2012. Cash from operations was $768 million in the
quarter, a decline of $43 million compared to Q3 last year. Cash generated by
the divisions was up $160 million, more than offset by cash outflows on
corporate hedges.

Management changes

ABB announced last week that Michel Demaré will step down as the company's
Chief Financial Officer and member of the Executive Committee. He has been
appointed the new Chairman of the Board of Swiss-based Syngenta, beginning in
April 2013. A successor will be announced in due course and a smooth
transition is expected.

Outlook

The stability of the third quarter results compared to the second quarter,
despite a challenging business environment, again demonstrated the benefits of
ABB's diversified portfolio and provides reasons to be cautiously optimistic.
Notable positive trends were the strength of the US market, the stability of
orders in China and southern Europe, the sustainability of operational EBITDA
margins in the Power Products division for the fourth consecutive quarter, and
the faster growth of service orders compared to total orders in the quarter.

At the same time, uncertainty around the short-term growth prospects for
Europe, the emerging markets and the US has started to affect short-cycle
business growth, as reflected in the flat organic base order development in
the third quarter. This continues to limit market visibility over the next
several months. Developments to watch in coming quarters include the
development of GDP and industrial production-specifically in the key markets
of China, the US and western Europe-as well as the growth in electricity
consumption, which is a key driver of demand for the company's power
businesses.

The longer-term outlook in ABB's major end markets remains favorable, driven
by megatrends such as the need for greater resource efficiency, increasing
urbanization in the emerging markets, and the growing demand for more, and
more efficient and reliable, power delivery.

On this basis, management confirms its 2011-2015 targets. The company
continues to expect its balanced geographic and portfolio scope to support its
profitable growth ambitions. Regardless of macro conditions, management will
continue to focus on reducing costs and ensuring that investments in growth
are generating returns in line with our longer-term targets.



Divisional performance Q3 2012

Power Products
                                      Q3 12 Q3 11   Change

$ millions unless otherwise indicated             US$  Local
Orders                                2'401 2'660 -10%  -6%
 Order backlog (end Sept)            8'798 8'431  4%   4%
Revenues                              2'526 2'676 -6%   0%
EBIT                                    324   356 -9%
 as % of revenues                    12.8% 13.3%
Operational EBITDA                      374   464 -19%
 as % of operational revenues        14.8% 17.2%
Cash flow from operating activities     258   229 13%

Orders decreased in the third quarter, mainly the result of timing of some
project awards, greater selectivity by ABB on orders, and a lower level of
utility activity in power distribution. Industrial demand remained steady in
the quarter and the power transmission sector continues to see selective
investments by utilities.

Orders were higher in Middle East and Africa but lower in Asia, the Americas
and Europe.

Revenues were at the same level as the third quarter last year, mainly
reflecting the timing of order execution from the backlog. Service revenues
increased in the quarter.

Operational EBITDA and operational EBITDA margin were stable for the fourth
consecutive quarter. Both were lower than the same quarter last year,
primarily reflecting the execution of a lower margin order backlog resulting
from the pricing environment. Cost saving initiatives partially mitigated this
impact.

Power Systems
                                       Q3 12  Q3 11   Change

$ millions unless otherwise indicated               US$  Local
Orders                                 1'765  2'557 -31% -27%
 Order backlog (end Sept)            11'846 11'199  6%   6%
Revenues                               1'901  1'831  4%   11%
EBIT                                      72    104 -31%
 as % of revenues                      3.8%   5.7%
Operational EBITDA                       109    184 -41%
 as % of operational revenues          5.9%   9.7%
Cash flow from operating activities    (294)   (81) n.a.

Orders were lower than the same quarter in 2011, which included a $1-billion
offshore wind order in Germany. Excluding this order, quarterly orders
increased by approximately 25 percent, including a slight increase in base
orders. Utility demand for transmission grid upgrades and expansions remains
intact as reflected in a strong tender backlog but timing uncertainty persists
due to the overall macroeconomic climate.

Orders increased significantly in North and South America, as well as in the
Middle East and Africa, with several large orders won in Saudi Arabia and
Iraq. Orders were lower in Europe due to the effect of the large German order
last year. A lower level of large orders in India in the quarter could not be
fully offset by order growth in China and other Asian countries.

Revenue growth reflects the execution of projects from the order backlog.

Operational EBITDA and operational EBITDA margin declined compared with the
same quarter a year earlier, mainly due to the execution of lower margin
project orders in the backlog and project margin declines. The division does
not expect to achieve its operational EBITDA margin target corridor of 7-11
percent in 2012.

Discrete Automation and Motion
                                      Q3 12 Q3 11  Change

$ millions unless otherwise indicated             US$ Local
Orders                                2'266 2'377 -5%  1%
 Order backlog (end Sept)            4'587 4'373 5%   6%
Revenues                              2'306 2'313 0%   5%
EBIT                                    362   382 -5%
 as % of revenues                    15.7% 16.5%
Operational EBITDA                      437   456 -4%
 as % of operational revenues        18.9% 19.6%
Cash flow from operating activities     393   269 46%

Orders were steady compared to the third quarter a year earlier, as slower
industrial growth in some markets, along with lower demand from the wind and
solar energy sectors, was offset by larger orders received from the utility,
traction and automotive sectors. Base orders declined modestly in the quarter,
reflecting the lower growth rates in most markets.

Regionally, orders from the Americas and from the Middle East and Africa grew
at a double-digit pace. Asia orders declined, mainly reflecting the continued
weakness in the renewables-related business compared to the same quarter a
year ago. Orders from Europe were down slightly.

Revenues increased on solid execution of the strong order backlog, led by
robotics and power electronics and medium-voltage drives.

Operational EBITDA and operational EBITDA margin were lower, mainly the result
of product mix effects and higher selling and R&D expenses that support the
division's profitable growth strategy.

Low Voltage Products
                                  Q3 12    Q3 11      Change

$ millions unless otherwise                        US$    Local    Organic^1
indicated
Orders                            1'861    1'334   40%     45%        -1%
 Order backlog (end Sept)        1'081    1'048   3%       3%
Revenues                          1'880    1'364   38%     44%        -2%
EBIT                                278      226   23%
 as % of revenues                14.8%    16.6%
Operational EBITDA                  366      273   34%
 as % of operational             19.5%    19.9%
revenues
Cash flow from operating            334      155  115%
activities
^1  Organic changes are in local currencies and exclude the acquisition of
Thomas & Betts in mid-May 2012

Total order growth in the quarter was driven by the contribution from the
acquisition of Thomas & Betts. On an organic basis (excluding Thomas & Betts),
orders were steady-flat in the Americas, higher in Asia and lower in Europe.

Organic revenues (excluding Thomas & Betts) declined 2 percent in the quarter,
reflecting the weaker demand environment in most businesses compared to the
year-earlier period. Low-voltage systems revenues continued to grow on
execution of the strong order backlog. Thomas & Betts contributed revenues of
approximately $620 million.

The increase in operational EBITDA resulted primarily from the contribution of
approximately $120 million from Thomas & Betts. Excluding Thomas & Betts, the
operational EBITDA margin was steady year-on-year, as successful cost
reductions compensated for lower volumes. Compared to the second quarter of
2012, operational EBITDA margin excluding Thomas & Betts improved
significantly, primarily the result of successful cost reductions.

Process Automation
                                               Q3 12 Q3 11   Change

$ millions unless otherwise indicated                      US$  Local
Orders                                         1'706 1'899 -10%  -3%
 Order backlog (end Sept)                     6'316 6'334  0%   0%
Revenues                                       1'904 1'988 -4%   3%
EBIT                                             224   246 -9%
 as % of revenues                             11.8% 12.4%
Operational EBITDA                               233   261 -11%
 as % of operational revenues                 12.3% 13.0%
Cash flow from operating activities    230   189 22%

Orders were slightly down compared to last year due to lower level of large
orders, mainly in the oil and gas sector. Orders grew in the marine and mining
sectors. Service orders also increased, while orders for turbochargers
weakened in response to lower global shipping activity.

Regionally, orders were higher in the Americas, driven in part by a large
marine order in Brazil. Orders were steady in Europe, as order growth in
central and eastern Europe compensated for lower orders in western Europe,
where some large oil and gas orders were won in the third quarter of 2011.
Asian orders declined as a number of large marine orders won in the same
period a year ago in South Korea were not repeated. In the Middle East and
Africa, orders increased on higher base orders.

The revenue increase reflects execution of the stronger order
backlog-especially in the marine, pulp and paper and oil and gas businesses.
Service revenues declined modestly, mainly the result of lower demand for
turbocharger service as well as ABB's efforts to refocus its full service
portfolio.

Operational EBITDA and operational EBITDA margin declined, reflecting the
larger share of system sales in total revenues, as well as higher R&D costs to
generate future profitable growth.

More information

The 2012 Q3 results press release is  available from October 25, 2012, on  the 
ABB News Center at www.abb.com/news and on the Investor Relations homepage  at 
www.abb.com/investorrelations, where a presentation for investors will also be
published.

A video from  Chief Executive Officer  Joe Hogan on  ABB's third-quarter  2012 
results will be available today at www.youtube.com/abb.

ABB will host a media conference call starting at 10:00 a.m. Central  European 
Time (CET). U.K. callers  should dial +44  203 059 58 62.  From Sweden, +46  8 
5051 00 31,  from U.S.  (toll-free) +1 866  291 41  66, and from  the rest  of 
Europe, +41 91 610 56  00. Lines will be open  15 minutes before the start  of 
the conference. Audio playback of the call will start one hour after the  call 
ends and will be available  for 48 hours: Playback  numbers: +44 20 7108  6233 
(U.K.), +41 91 612 4330 (rest of Europe) or +1 866 416 2558 (U.S./Canada). The
code is  13540, followed  by the  # key.  The recorded  session will  also  be 
available as a podcast one hour after  the end of the conference call and  can 
be downloaded from www.abb.com/news.

A conference call for  analysts and investors is  scheduled to begin today  at 
1:00 p.m. CET (12:00 p.m.  in the UK, 7:00 a.m.  EDT). Callers should dial  +1 
866 291 4166 from the U.S./Canada (toll-free), +44 203 059 5862 from the U.K.,
+46 85 051 0031 from Sweden, or +41 91  610 56 00 from the rest of the  world. 
Callers are requested to phone in 15 minutes before the start of the call. The
recorded session will be available as a podcast one hour after the end of  the 
conference call and can be downloaded from our website. You will find the link
to access the podcast at www.abb.com.

Investor calendar 2013


Q4 2012 results        February 14, 2013
Q1 2013 results        April 24, 2013
Annual General Meeting April 25, 2013
Q2 2013 results        July 25, 2013
Q3 2013 results        October 24, 2013

ABB (www.abb.com) is a leader in power and automation technologies that enable
utility  and  industry  customers   to  improve  performance  while   lowering 
environmental impact.  The  ABB Group  of  companies operates  in  around  100 
countries and employs about 145,000 people.



Zurich, October 25, 2012

Joe Hogan, CEO



Important notice about forward-looking information

This press release includes forward-looking information and statements as well
as other statements concerning the outlook for our business. These  statements 
are based on current expectations, estimates and projections about the factors
that may affect our future performance, including global economic  conditions, 
and the  economic conditions  of the  regions and  industries that  are  major 
markets for  ABB  Ltd.  These  expectations,  estimates  and  projections  are 
generally identifiable  by  statements  containing words  such  as  "expects," 
"believes," "estimates," "targets," "plans"  or similar expressions.  However, 
there are many risks and uncertainties, many of which are beyond our  control, 
that  could  cause  our   actual  results  to   differ  materially  from   the 
forward-looking information  and statements  made in  this press  release  and 
which could affect our ability  to achieve any or  all of our stated  targets. 
The important factors that could cause such differences include, among others,
business risks associated  with the volatile  global economic environment  and 
political  conditions,  costs  associated  with  compliance  activities,   raw 
materials availability  and  prices, market  acceptance  of new  products  and 
services, changes in governmental regulations and currency exchange rates  and 
such other factors as may be discussed from time to time in ABB Ltd's  filings 
with the U.S. Securities and Exchange Commission, including its Annual Reports
on Form 20-F. Although ABB Ltd believes that its expectations reflected in any
such forward-looking statement are based  upon reasonable assumptions, it  can 
give no assurance that those expectations will be achieved.



For more information please contact:
Media Relations:           Investor Relations:             ABB Ltd
Thomas Schmidt, Antonio    Switzerland: Tel. +41 43 317    Affolternstrasse 44
Ligi                       7111                            CH-8050
(Zurich, Switzerland)      USA: Tel. +1 919 807 5758       Zurich,Switzerland
Tel:+41 43 317 6568       investor.relations@ch.abb.com   
Fax: +41 43 317 7958       
media.relations@ch.abb.com









To view the ABB Q3 and nine-month 2012 key figures table click on, or paste
the following link into your web browser, to view the associated PDF document

http://www.rns-pdf.londonstockexchange.com/rns/5028P_1-2012-10-25.pdf



To view the Operational EBITDA by division Q3 2012 vs Q3 2011 table click on,
or paste the following link into your web browser, to view the associated PDF
document

http://www.rns-pdf.londonstockexchange.com/rns/5028P_1-2012-10-25.pdf



                                      

                                 To view the

                                  Appendix I

                     Reconciliation of non-GAAP measures

                                 ($ millions)

table click on, or paste the following link into your web browser, to view the
                           associated PDF document

                                      

    http://www.rns-pdf.londonstockexchange.com/rns/5028P_1-2012-10-25.pdf

                                      



                     This information is provided by RNS
           The company news service from the London Stock Exchange

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