UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2011

 

Commission File Number 001-16429

 

ABB Ltd

(Translation of registrant’s name into English)

 

P.O. Box 1831, Affolternstrasse 44, CH-8050, Zurich, Switzerland

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x

Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indication by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o

No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

 



 

This Form 6-K consists of the following:

 

1.               Press release issued by ABB Ltd dated July 21, 2011.

2.               Announcements regarding transactions in ABB Ltd’s Securities made by the directors or the members of the Executive Committee.

 

The information provided by Item 1 above is deemed filed for all purposes under the Securities Exchange Act of 1934, including by reference in the Registration Statements on Form S-8 (Registration No. 333-129271 and Registration No. 333-171971).

 

2



 

Press Release

 

ABB second-quarter net income rises 43% amid steady top line growth

 

·                  Orders up 18%(1) (10% organic(2)); 17% revenue growth (9% organic)

·                  Strong top line and business execution boost bottom line

·                  Operational EBITDA(3) up 22% to $1.5 billion

·                  Solid contribution to results from acquisitions

 

Zurich, Switzerland, July 21, 2011 — ABB reported a 43-percent increase in second-quarter net income to $893 million amid strong industrial growth, higher earnings in the Power Systems division and the contribution from recent acquisitions, especially Baldor Electric.

 

Revenues rose 17 percent and orders increased 18 percent from the second quarter of last year, with growth in both mature and emerging markets.

 

Customer investments aimed at increasing operational efficiency translated into strong demand for robots, energy-efficient motors and low-voltage systems in the second quarter, while capacity expansions and the need for service drove higher orders in the oil and gas, pulp and paper, metals and marine sectors.

 

Increasing requirements for electricity in industry and general economic growth, especially in the emerging markets, drove demand for power distribution solutions. Transmission-related investments, which generally come later in the economic cycle, remained at low levels.

 

A key measure of profitability — operational EBITDA(3) — increased 22 percent on the strong revenue growth. The operational EBITDA margin declined on a combination of higher investments in sales and R&D, price erosion in the power business that was not fully offset by cost savings, and a less favorable revenue mix in the automation segments. Cash from operations rose significantly.

 

“This was a strong quarter where we continued to execute well, driving further revenue growth, cash generation and a solid increase in shareholder returns,” said Joe Hogan, ABB’s CEO. “We’re pleased with the growth and results in the quarter and for the first half of the year.”

 

“Looking ahead, it’s clear that macroeconomic concerns around public debt and inflation have increased recently. However, based on what we know today, we continue to expect strong demand for productivity and energy efficiency solutions in industry and a recovery in power transmission demand in the second half of the year.”

 

2011 Q2 key figures

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

9,867

 

7,665

 

29

%

18

%

Order backlog (end June)

 

29,983

 

24,437

 

23

%

9

%

Revenues

 

9,680

 

7,573

 

28

%

17

%

EBIT

 

1,337

 

975

 

37

%

 

 

as % of revenues

 

13.8

%

12.9

%

 

 

 

 

Operational EBITDA(3)

 

1,547

 

1,264

 

22

%

 

 

as % of operational revenues(3)

 

16.0

%

16.6

%

 

 

 

 

Net income

 

893

 

623

 

43

%

 

 

Basic net income per share ($)

 

0.39

 

0.27

 

44

%

 

 

Cash flow from operating activities

 

891

 

649

 

 

 

 

 

 


(1)  Management discussion of orders and revenues focuses on local currency changes. US dollar changes are shown in the tables.

(2)  Organic changes exclude the impact of acquisitions (Ventyx and Baldor Electric).

(3)  Operational EBITDA represents earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges, the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables, and non-recurring charges related to acquisitions (Ventyx and Baldor Electric)—see reconciliation of non-GAAP measures in Appendix 1.

 

3



 

Summary of Q2 2011 results

 

Orders received and revenues

 

Demand for ABB products that boost energy efficiency, industrial productivity and power reliability continued to grow in the second quarter, resulting in higher orders received in all divisions compared to the same quarter in 2010.

 

The Discrete Automation and Motion division recorded the strongest growth, up more than 60 percent in local currencies on strong orders from Baldor Electric—acquired in the first quarter of 2011—and also reflecting good growth in the robotics and drives businesses. Excluding Baldor Electric, the division recorded a 25-percent increase in orders. Orders were higher in Low Voltage Products, mainly on increased demand for low-voltage systems to improve electrical efficiency in industry. The Process Automation division saw orders up 15 percent as increasing commodity prices continued to drive customer investments in new capacity and services to improve the productivity of existing assets, especially in the oil and gas, pulp and paper and marine sectors.

 

Orders rose 4 percent in Power Products, with both utility and industrial demand improving. Continuing investments by utilities to expand and upgrade their power grids fuelled an 11-percent order increase in the Power Systems division.

 

Orders grew most in the Americas, mainly reflecting the acquisition of Baldor Electric, but also the result of strong growth in South America. Orders were also higher in both eastern and western Europe, while Asian growth was led by India (up almost 40 percent). Orders in China grew 4 percent compared to the same quarter in 2010.

 

On an organic basis (excluding the recent acquisitions of U.S.-based Ventyx and Baldor Electric), orders grew in both mature and emerging economies, up 6 percent and 13 percent, respectively.

 

Base orders (below $15 million) increased 18 percent (8 percent organic) and were up in all divisions. Base orders in Power Products increased for the third consecutive quarter and were 6 percent higher than the first quarter of 2011. Large orders (above $15 million) increased 19 percent in the quarter and represented 12 percent of total orders, roughly the same as in the year-earlier period.

 

The order backlog at the end of June reached $30 billion, a local-currency increase of 9 percent (8 percent organic) compared to the year-earlier period and flat versus the end of the first quarter of 2011.

 

Revenues continued growing and were higher in all divisions. The growth reflects the execution of the very strong order backlog, higher sales of short cycle products and services as well as a contribution of approximately $600 million from acquisitions(4). Excluding acquisitions, revenues rose by 9 percent.

 

Earnings and net income

 

EBIT in the second quarter of 2011 amounted to $1.3 billion, a 37-percent increase compared to the same quarter a year earlier. Revenue growth, including the impact from acquisitions, was the main contributor to the improvement.

 


(4)  Acquisitions comprise Ventyx and Baldor Electric.

 

4



 

As part of the company’s previously-announced $1-billion cost savings initiative for 2011, savings of approximately $270 million were achieved in the quarter, of which about 50 percent were derived from optimized sourcing. For the first six months of 2011, savings amounted to approximately $480 million. Costs associated with the program in the second quarter amounted to approximately $30 million and were immaterial in the first quarter.

 

Operational EBITDA in the second quarter of 2011 amounted to $1.5 billion, an increase of 22 percent over the year-earlier period. Acquisitions contributed approximately $115 million to operational EBITDA.

 

The operational EBITDA margin decline partly reflects an increase of almost $90 million in investment in research and development and selling expenses to tap growth opportunities and secure the company’s technology advantage. The operational EBITDA margin in Power Products was also lower compared to the very high level in the second quarter of 2010. In addition, the operational EBITDA margin in Low Voltage Products decreased as a result of rapid increases in silver prices that could not immediately be compensated by higher prices initiated during the quarter along with a higher proportion of systems revenues in the total revenue mix.

 

Net income for the quarter grew 43 percent to almost $900 million and resulted in basic earnings per share of $0.39 compared to $0.27 in the year-earlier period.

 

Balance sheet and cash flow

 

Net cash at the end of the second quarter was $1.2 billion, down from $2.2 billion at the end of the previous quarter. The decline primarily reflects the dividend payment in May of approximately $1.6 billion.

 

Cash from operating activities increased significantly compared to the same quarter of 2010, mainly the result of higher net earnings as well as higher customer advances that offset higher inventories needed to support growth.

 

ABB issued two U.S.-dollar denominated bonds during the second quarter, one of $600 million with a 2.50-percent coupon maturing in 2016 and the second of $650 million with a 4.00 percent coupon maturing in 2021.

 

The credit rating agency Moody’s in June lifted the rating on ABB’s long-term corporate debt to A2 from A3 with a stable outlook.

 

Acquisitions

 

During the second quarter, ABB acquired Netherlands-based Epyon B.V., a supplier of direct current fast-charging stations for electrical vehicles. ABB also announced an agreement to acquire Brisbane, Australia-based software company Mincom to expand its presence in enterprise asset management software and services. Financial terms of the deal were not disclosed. The Mincom transaction, subject to customary approvals, has not yet closed and had no impact on ABB’s second-quarter results.

 

Earlier this month, ABB announced the acquisition of Sweden-based pulp and paper systems and equipment supplier Lorentzen & Wettre, and Switzerland-based specialty transformer manufacturer Trasfor Group. Both transactions are expected to close in the second half of 2011.

 

5



 

Outlook

 

While macroeconomic concerns have increased recently, particularly around public debt in the U.S. and Europe and inflation in China, the long-term global outlook in ABB’s major end markets remains favorable. High commodity prices are driving increased customer capital expenditures, while simultaneously supporting spending on efficiency and productivity improvements, including service. Utility spending on power transmission to integrate renewable energy into existing grids and to interconnect national and regional power grids continues to gain momentum. The potential shift away from nuclear power and high oil prices are expected to further increase the need for energy-efficient power and automation technologies.

 

Emerging markets will remain the principal drivers of growth in the medium term but demand in the mature economies across all of ABB’s portfolio is also expected to continue growing over the coming quarters.

 

While overcapacity remains in some later-cycle infrastructure-related businesses, prices have stabilized in many sectors and ABB has initiated price increases in selected businesses in 2011, partly to offset increasing raw material costs.

 

Therefore, over the rest of 2011, management will continue to focus on adjusting costs while seeking profitable growth opportunities, both organic and inorganic, based on its leading technology, broad global presence, competitive cost base and strong balance sheet.

 

Divisional performance Q2 2011

 

Power Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

2,810

 

2,480

 

13

%

4

%

Order backlog (end June)

 

8,955

 

7,796

 

15

%

3

%

Revenues

 

2,783

 

2,528

 

10

%

1

%

EBIT

 

417

 

421

 

-1

%

 

 

as % of revenues

 

15.0

%

16.7

%

 

 

 

 

Operational EBITDA(1)

 

454

 

515

 

 

 

 

 

as % of operational revenues

 

16.5

%

20.3

%

 

 

 

 

Cash flow from operating activities

 

158

 

384

 

 

 

 

 

 


(1) Earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges and the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables—see reconciliation of non-GAAP measures in Appendix 1

 

The order growth in the quarter was driven primarily by demand from utilities and industry for power distribution solutions. Orders for equipment used to integrate renewable power into the grid and service orders also increased. Customer investments in the power transmission sector have yet to pick up. Both base and large orders increased in the quarter.

 

Regionally, orders were higher in the Americas, mainly as a result of grid refurbishment and power distribution investments in the U.S. and infrastructure expansion in Brazil driven by sustained economic growth. Continuing grid expansions and a large order in Saudi Arabia drove an increase in the Middle East and Africa. Orders grew in Asia and decreased in Europe, with base orders steady in the region.

 

Revenues were stable in the quarter as growth in the power distribution and service businesses compensated for lower levels in the later-cycle power transmission equipment business.

 

6



 

The lower operational EBITDA versus the very high levels of the second quarter a year earlier was due to price pressure from transmission-related orders in the backlog that was only partially offset by cost savings.

 

Power Systems

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

1,654

 

1,354

 

22

%

11

%

Order backlog (end June)

 

11,310

 

9,128

 

24

%

9

%

Revenues

 

2,025

 

1,635

 

24

%

12

%

EBIT

 

194

 

17

 

n.a.

 

 

 

as % of revenues

 

9.6

%

1.0

%

 

 

 

 

Operational EBITDA(1)

 

189

 

59

 

 

 

 

 

as % of operational revenues

 

9.4

%

3.6

%

 

 

 

 

Cash flow from operating activities

 

112

 

-65

 

 

 

 

 

 


(1) Earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges, the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables and non-recurring charges related to acquisitions (Ventyx)—see reconciliation of non-GAAP measures in Appendix 1

 

Order growth in the quarter was driven by the need for power infrastructure to support growth in sectors such as mining and oil and gas as well as related investments in power generation, transmission links, substations and distribution solutions. Base orders grew at a double-digit pace and were higher in all businesses. Base order growth also partly reflects increased service orders.

 

Revenues improved on the execution of the strong order backlog, especially in the power generation, HVDC (high-voltage direct current) and offshore wind sectors. The increase in base orders taken in recent quarters, which are executed faster than longer-cycle large orders, also positively affected revenues. The order and tender backlogs remained at a high level.

 

Operational EBITDA and operational EBITDA margin improved significantly compared to the same quarter a year earlier on a combination of higher revenues as well as a return to profitability in the cables business.

 

Discrete Automation and Motion

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

2,615

 

1,476

 

77

%

63

%

Order backlog (end June)

 

4,595

 

3,223

 

43

%

25

%

Revenues

 

2,248

 

1,287

 

75

%

61

%

EBIT

 

349

 

200

 

75

%

 

 

as % of revenues

 

15.5

%

15.5

%

 

 

 

 

Operational EBITDA(1)

 

419

 

243

 

 

 

 

 

as % of operational revenues

 

18.7

%

18.9

%

 

 

 

 

Cash flow from operating activities

 

303

 

154

 

 

 

 

 

 


(1) Earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges, the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables and non-recurring charges related to acquisitions (Baldor Electric)—see reconciliation of non-GAAP measures in Appendix 1

 

Orders continued to grow strongly in the second quarter, reflecting both increased demand for energy-efficient automation solutions in all regions of the world as well as the contribution from U.S.-based industrial motor manufacturer Baldor Electric, acquired by ABB in the first quarter of 2011. Orders increased across all businesses, led by robotics and motors and generators. Excluding the impact of the Baldor Electric acquisition, orders increased by 25 percent in local currencies compared to the same quarter in 2010.

 

7



 

Regionally, orders grew strongest in the Americas—more than tripling—due mainly to the Baldor Electric acquisition. Excluding Baldor Electric, orders in the Americas grew 46 percent. Orders were also strongly higher in Europe and Asia, led mainly by demand growth in emerging markets.

 

Revenues increased at a similar pace to orders on solid execution of the strong order backlog.

 

The operational EBITDA rose on the increase in revenues while the operational EBITDA margin was roughly unchanged compared to the same quarter in 2010.

 

Low Voltage Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

1,417

 

1,219

 

16

%

6

%

Order backlog (end June)

 

1,141

 

879

 

30

%

18

%

Revenues

 

1,397

 

1,102

 

27

%

16

%

EBIT

 

234

 

205

 

14

%

 

 

as % of revenues

 

16.8

%

18.6

%

 

 

 

 

Operational EBITDA(1)

 

268

 

236

 

 

 

 

 

as % of operational revenues

 

19.2

%

21.4

%

 

 

 

 

Cash flow from operating activities

 

67

 

121

 

 

 

 

 

 


(1) Earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges and the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables—see reconciliation of non-GAAP measures in Appendix 1

 

Order growth in the quarter was driven primarily by increased demand for low-voltage systems. Orders in most other businesses also increased, although at a slower pace than in the past several quarters, reflecting more challenging comparisons with the strong quarters of 2010. Orders for control products declined as a result of weaker demand from the renewable energy sector.

 

Revenues increased in all businesses in the second quarter. Revenues grew faster than orders, reflecting the combination of product sales in the current quarter plus execution of the growing backlog of system orders won in previous quarters.

 

Operational EBITDA increased on higher revenues. Operational EBITDA margin declined, however, reflecting the increased share of total revenues from the lower-margin systems business and the rapid increase in silver costs that could not immediately be compensated by higher prices.

 

Process Automation

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Orders

 

2,340

 

1,825

 

28

%

15

%

Order backlog (end June)

 

6,829

 

5,585

 

22

%

7

%

Revenues

 

2,095

 

1,737

 

21

%

9

%

EBIT

 

223

 

189

 

18

%

 

 

as % of revenues

 

10.6

%

10.9

%

 

 

 

 

Operational EBITDA(1)

 

249

 

228

 

 

 

 

 

as % of operational revenues

 

11.8

%

13.0

%

 

 

 

 

Cash flow from operating activities

 

222

 

143

 

 

 

 

 

 


(1) Earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges and the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables—see reconciliation of non-GAAP measures in Appendix 1

 

Orders increased in the quarter on continued demand growth mainly in the marine and oil and gas sectors. Orders were also higher in pulp and paper, metals and turbochargers. Orders were

 

8



 

lower in the minerals sector compared to the high levels of the year-earlier period. Lifecycle service orders rose more than 20 percent in the quarter.

 

Regionally, order growth was highest in Asia—up more than 50 percent—as a result of strong marine orders in South Korea, Singapore and Japan. Orders were almost 40 percent higher in the Americas, driven by pulp and paper and minerals orders in South America and higher service orders in the U.S. Orders declined in the Middle East and Africa as large orders valued at more than $250 million in the second quarter of 2010 were not repeated.

 

The revenue increase reflects execution of the stronger order backlog as well as the recent growth in service orders. Operational EBITDA increased on higher revenues. The operational EBITDA margin declined reflecting revenues from some lower-margin system orders executed from the backlog.

 

9



 

More information

 

The 2011 Q2 results press release is available from July 21, 2011, 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 second-quarter 2011 results will be available at 07:00 am 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, 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 24 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 12925, 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 4:00 p.m. CET (3:00 p.m. in the UK, 10:00 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., 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 2011

 

 

Q3 2011 results

 

Oct. 27, 2011

ABB Capital Markets Day 2011

 

Nov. 4, 2011

 

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 130,000 people.

 

Zurich, July 21, 2011

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, 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 Ligi

Switzerland: Tel. +41 43 317 7111

Affolternstrasse 44

(Zurich, Switzerland)

USA: Tel. +1 203 750 7743

CH-8050 Zurich, Switzerland

Tel:  +41 43 317 6568

investor.relations@ch.abb.com

 

Fax: +41 43 317 7958

 

 

media.relations@ch.abb.com

 

 

 

10



 

ABB Q2 and half-year 2011 key figures

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 11

 

Q2 10

 

US$

 

Local

 

H1 11

 

H1 10

 

US$

 

Local

 

Orders

 

Group

 

9,867

 

7,665

 

29

%

18

%

20,224

 

15,732

 

29

%

21

%

 

 

Power Products

 

2,810

 

2,480

 

13

%

4

%

5,670

 

4,881

 

16

%

9

%

 

 

Power Systems

 

1,654

 

1,354

 

22

%

11

%

3,591

 

3,112

 

15

%

8

%

 

 

Discrete Automation & Motion

 

2,615

 

1,476

 

77

%

63

%

4,959

 

2,884

 

72

%

63

%

 

 

Low Voltage Products

 

1,417

 

1,219

 

16

%

6

%

2,826

 

2,325

 

22

%

15

%

 

 

Process Automation

 

2,340

 

1,825

 

28

%

15

%

4,946

 

3,940

 

26

%

18

%

 

 

Corporate and other (inter-division eliminations)

 

-969

 

-689

 

 

 

 

 

-1,768

 

-1,410

 

 

 

 

 

Revenues

 

Group

 

9,680

 

7,573

 

28

%

17

%

18,082

 

14,507

 

25

%

17

%

 

 

Power Products

 

2,783

 

2,528

 

10

%

1

%

5,110

 

4,847

 

5

%

-1

%

 

 

Power Systems

 

2,025

 

1,635

 

24

%

12

%

3,858

 

3,019

 

28

%

19

%

 

 

Discrete Automation & Motion

 

2,248

 

1,287

 

75

%

61

%

4,128

 

2,500

 

65

%

57

%

 

 

Low Voltage Products

 

1,397

 

1,102

 

27

%

16

%

2,592

 

2,113

 

23

%

16

%

 

 

Process Automation

 

2,095

 

1,737

 

21

%

9

%

3,995

 

3,472

 

15

%

7

%

 

 

Corporate and other (inter-division eliminations)

 

-868

 

-716

 

 

 

 

 

-1,601

 

-1,444

 

 

 

 

 

EBIT

 

Group

 

1,337

 

975

 

37

%

 

 

2,350

 

1,684

 

40

%

 

 

 

 

Power Products

 

417

 

421

 

-1

%

 

 

767

 

776

 

-1

%

 

 

 

 

Power Systems

 

194

 

17

 

n.a.

 

 

 

299

 

10

 

n.a.

 

 

 

 

 

Discrete Automation & Motion

 

349

 

200

 

75

%

 

 

574

 

361

 

59

%

 

 

 

 

Low Voltage Products

 

234

 

205

 

14

%

 

 

469

 

347

 

35

%

 

 

 

 

Process Automation

 

223

 

189

 

18

%

 

 

474

 

347

 

37

%

 

 

 

 

Corporate and other (inter-division eliminations)

 

-80

 

-57

 

 

 

 

 

-233

 

-157

 

 

 

 

 

EBIT %

 

Group

 

13.8

%

12.9

%

 

 

 

 

13.0

%

11.6

%

 

 

 

 

 

 

Power Products

 

15.0

%

16.7

%

 

 

 

 

15.0

%

16.0

%

 

 

 

 

 

 

Power Systems

 

9.6

%

1.0

%

 

 

 

 

7.8

%

0.3

%

 

 

 

 

 

 

Discrete Automation & Motion

 

15.5

%

15.5

%

 

 

 

 

13.9

%

14.4

%

 

 

 

 

 

 

Low Voltage Products

 

16.8

%

18.6

%

 

 

 

 

18.1

%

16.4

%

 

 

 

 

 

 

Process Automation

 

10.6

%

10.9

%

 

 

 

 

11.9

%

10.0

%

 

 

 

 

Operational EBITDA*

 

Group

 

1,547

 

1,264

 

22

%

 

 

2,866

 

2,226

 

29

%

 

 

 

 

Power Products

 

454

 

515

 

-12

%

 

 

858

 

923

 

-7

%

 

 

 

 

Power Systems

 

189

 

59

 

220

%

 

 

321

 

121

 

165

%

 

 

 

 

Discrete Automation & Motion

 

419

 

243

 

72

%

 

 

797

 

439

 

82

%

 

 

 

 

Low Voltage Products

 

268

 

236

 

14

%

 

 

530

 

406

 

31

%

 

 

 

 

Process Automation

 

249

 

228

 

9

%

 

 

495

 

408

 

21

%

 

 

Operational EBITDA %

 

Group

 

16.0

%

16.6

%

 

 

 

 

15.9

%

15.3

%

 

 

 

 

 

 

Power Products

 

16.5

%

20.3

%

 

 

 

 

16.8

%

19.0

%

 

 

 

 

 

 

Power Systems

 

9.4

%

3.6

%

 

 

 

 

8.4

%

4.0

%

 

 

 

 

 

 

Discrete Automation & Motion

 

18.7

%

18.9

%

 

 

 

 

19.3

%

17.5

%

 

 

 

 

 

 

Low Voltage Products

 

19.2

%

21.4

%

 

 

 

 

20.5

%

19.2

%

 

 

 

 

 

 

Process Automation

 

11.8

%

13.0

%

 

 

 

 

12.4

%

11.8

%

 

 

 

 

 


* Operational EBITDA represents earnings before interest and taxes, and depreciation and amortization, adjusted for restructuring-related charges, the mark-to-market treatment of hedging transactions along with unrealized foreign exchange movements on receivables/payables, and non-recurring charges related to acquisitions (Ventyx and Baldor Electric)—see reconciliation of non-GAAP measures in Appendix 1.

 

11



 

Q2 2011 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Q2 11

 

Q2 10

 

US$

 

Local

 

Europe

 

3’490

 

2’866

 

22

%

6

%

3’779

 

2’872

 

32

%

15

%

Americas

 

2’564

 

1’462

 

75

%

68

%

2’228

 

1’481

 

50

%

44

%

Asia

 

2’902

 

2’165

 

34

%

24

%

2’579

 

2’175

 

19

%

10

%

Middle East and Africa

 

911

 

1’172

 

-22

%

-27

%

1’094

 

1’045

 

5

%

-2

%

Group total

 

9’867

 

7’665

 

29

%

18

%

9’680

 

7’573

 

28

%

17

%

 

 

Half-year 2011 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions 

 

H1 11

 

H1 10

 

US$

 

Local

 

H1 11

 

H1 10

 

US$

 

Local

 

Europe

 

7’580

 

6’299

 

20

%

12

%

7’070

 

5’647

 

25

%

15

%

Americas

 

4’728

 

2’959

 

60

%

54

%

4’236

 

2’795

 

52

%

46

%

Asia

 

5’999

 

4’266

 

41

%

32

%

4’692

 

4’085

 

15

%

8

%

Middle East and Africa

 

1’917

 

2’208

 

-13

%

-17

%

2’084

 

1’980

 

5

%

1

%

Group total

 

20’224

 

15’732

 

29

%

21

%

18’082

 

14’507

 

25

%

17

%

 

 

Operational EBIT and operational EBITDA by division Q2 2011 vs Q2 2010

 

 

 

ABB

 

Power
Products

 

Power
Systems

 

Discrete
Automation
& Motion

 

Low Voltage
Products

 

Process
Automation

 

 

 

Q2 11

 

Q2 10

 

Q2 11

 

Q2 10

 

Q2 11

 

Q2 10

 

Q2 11

 

Q2 10

 

Q2 11

 

Q2 10

 

Q2 11

 

Q2 10

 

Revenues (as per Financial Statements)

 

9’680

 

7573

 

2’783

 

2528

 

2’025

 

1635

 

2’248

 

1287

 

1’397

 

1’102

 

2’095

 

1’737

 

Derivative impact

 

(37

)

26

 

(28

)

12

 

(14

)

1

 

(8

)

 

(1

)

2

 

14

 

11

 

Operational revenues

 

9’643

 

7’599

 

2’755

 

2’540

 

2’011

 

1’636

 

2’240

 

1’287

 

1’396

 

1’104

 

2’109

 

1’748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT (as per Financial Statements)

 

1’337

 

975

 

417

 

421

 

194

 

17

 

349

 

200

 

234

 

205

 

223

 

189

 

Derivative impact

 

(58

)

57

 

(14

)

34

 

(42

)

8

 

(4

)

6

 

 

3

 

3

 

9

 

Restructuring-related costs

 

27

 

70

 

1

 

18

 

10

 

18

 

12

 

19

 

3

 

2

 

2

 

12

 

Charges (non-recurring) related to significant acquisitions

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

including non-recurring amortization

 

2

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

Operational EBIT

 

1’307

 

1’102

 

404

 

473

 

162

 

43

 

358

 

225

 

237

 

210

 

228

 

210

 

Operational EBIT margin

 

13.6

%

14.5

%

14.7

%

18.6

%

8.1

%

2.6

%

16.0

%

17.5

%

17.0

%

19.0

%

10.8

%

12.0

%

Depreciation

 

167

 

129

 

43

 

36

 

14

 

10

 

31

 

16

 

29

 

24

 

15

 

13

 

Amortization

 

75

 

33

 

7

 

6

 

13

 

6

 

32

 

2

 

2

 

2

 

6

 

5

 

Amortization (non-recurring) related to significant acquisitions

 

(2

)

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

Operational EBITDA

 

1’547

 

1’264

 

454

 

515

 

189

 

59

 

419

 

243

 

268

 

236

 

249

 

228

 

Operational EBITDA margin

 

16.0

%

16.6

%

16.5

%

20.3

%

9.4

%

3.6

%

18.7

%

18.9

%

19.2

%

21.4

%

11.8

%

13.0

%

 

12



 

Appendix I

 

Reconciliation of non-GAAP measures

 

($ millions, unaudited)

 

 

 

Three months ended June 30,

 

 

 

2011

 

2010

 

EBIT Margin (= EBIT as % of revenues)

 

 

 

 

 

Earnings before interest and taxes (EBIT)

 

1’337

 

975

 

Revenues

 

9’680

 

7'573

 

EBIT Margin

 

13.8

%

12.9

%

 

 

 

 

 

 

EBIT as per financial statements

 

1337

 

975

 

reversal of:

 

 

 

 

 

Unrealized gains and losses on derivatives (FX, commodities, embedded derivatives)

 

(32

)

91

 

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

7

 

12

 

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

 

(33

)

(46

)

Restructuring and restructuring-related expenses

 

27

 

70

 

Charges related to significant acquisitions (1)

 

1

 

 

Operational EBIT

 

1307

 

1102

 

reversal of:

 

 

 

 

 

Depreciation

 

167

 

129

 

Amortization

 

75

 

33

 

Backlog amortization related to significant acquisitions

 

(2

)

 

Operational EBITDA

 

1547

 

1264

 

 

 

 

 

 

 

Revenues as per financial statements

 

9680

 

7573

 

reversal of:

 

 

 

 

 

Unrealized gains and losses on derivatives

 

1

 

74

 

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

 

(6

)

1

 

Unrealized foreign exchange movements on receivables (and related assets)

 

(32

)

(49

)

Operational Revenues

 

9643

 

7599

 

 

 

 

 

 

 

Operational EBITDA Margin (= Operational EBITDA as % of Operational Revenues)

 

16.0

%

16.6

%

 


(1) includes $2 million backlog amortization related to acquisitions in the 3 months ended June 30, 2011

 

 

 

June 30,

 

Dec. 31,

 

 

 

2011

 

2010

 

Net Cash (= Cash and equivalents plus marketable securities and short-term investments, less total debt)

 

 

 

 

 

Cash and equivalents

 

4’552

 

5’897

 

Marketable securities and short-term investments

 

359

 

2’713

 

Cash and marketable securities

 

4911

 

8610

 

Short-term debt and current maturities of long-term debt

 

1’191

 

1’043

 

Long-term debt

 

2’471

 

1’139

 

Total debt

 

3662

 

2182

 

Net Cash

 

1249

 

6428

 

 

 

 

June 30,

 

Dec. 31,

 

 

 

2011

 

2010

 

Net Working Capital

 

 

 

 

 

Receivables, net

 

10’984

 

9’970

 

Inventories, net

 

6’628

 

4’878

 

Prepaid expenses

 

256

 

193

 

Accounts payable, trade

 

(5’187

)

(4’555

)

Billings in excess of sales

 

(1’797

)

(1’730

)

Employee and other payables

 

(1’444

)

(1’526

)

Advances from customers

 

(1’935

)

(1’764

)

Accrued expenses

 

(1’692

)

(1’644

)

Net Working Capital

 

5813

 

3822

 

 

13



 

ABB Ltd Interim Consolidated Income Statements (unaudited)

 

 

 

Six months ended

 

Three months ended

 

($ in millions, except per share data in $)

 

Jun. 30, 2011

 

Jun. 30, 2010

 

Jun. 30, 2011

 

Jun. 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Sales of products

 

15,207

 

12,062

 

8,154

 

6,309

 

Sales of services

 

2,875

 

2,445

 

1,526

 

1,264

 

Total revenues

 

18,082

 

14,507

 

9,680

 

7,573

 

Cost of products

 

(10,673

)

(8,486

)

(5,700

)

(4,428

)

Cost of services

 

(1,815

)

(1,625

)

(959

)

(835

)

Total cost of sales

 

(12,488

)

(10,111

)

(6,659

)

(5,263

)

Gross profit

 

5,594

 

4,396

 

3,021

 

2,310

 

Selling, general and administrative expenses

 

(2,619

)

(2,212

)

(1,356

)

(1,081

)

Non-order related research and development expenses

 

(640

)

(502

)

(334

)

(256

)

Other income (expense), net

 

15

 

2

 

6

 

2

 

Earnings before interest and taxes

 

2,350

 

1,684

 

1,337

 

975

 

Interest and dividend income

 

43

 

50

 

25

 

26

 

Interest and other finance expense

 

(92

)

(87

)

(41

)

(45

)

Income from continuing operations before taxes

 

2,301

 

1,647

 

1,321

 

956

 

Provision for taxes

 

(679

)

(486

)

(395

)

(285

)

Income from continuing operations, net of tax

 

1,622

 

1,161

 

926

 

671

 

Loss from discontinued operations, net of tax

 

(1

)

(1

)

(1

)

(2

)

Net income

 

1,621

 

1,160

 

925

 

669

 

Net income attributable to noncontrolling interests

 

(73

)

(73

)

(32

)

(46

)

Net income attributable to ABB

 

1,548

 

1,087

 

893

 

623

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

1,549

 

1,088

 

894

 

625

 

Net income

 

1,548

 

1,087

 

893

 

623

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.68

 

0.48

 

0.39

 

0.27

 

Net income

 

0.68

 

0.47

 

0.39

 

0.27

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.68

 

0.47

 

0.39

 

0.27

 

Net income

 

0.68

 

0.47

 

0.39

 

0.27

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding (in millions) used to compute:

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders

 

2,286

 

2,289

 

2,288

 

2,288

 

Diluted earnings per share attributable to ABB shareholders

 

2,290

 

2,294

 

2,292

 

2,293

 

 

See Notes to the Interim Consolidated Financial Information

 

14



 

ABB Ltd Interim Consolidated Balance Sheets (unaudited)

 

($ in millions, except share data)

 

Jun. 30, 2011

 

Dec. 31, 2010

 

 

 

 

 

 

 

Cash and equivalents

 

4,552

 

5,897

 

Marketable securities and short-term investments

 

359

 

2,713

 

Receivables, net

 

10,984

 

9,970

 

Inventories, net

 

6,628

 

4,878

 

Prepaid expenses

 

256

 

193

 

Deferred taxes

 

1,067

 

896

 

Other current assets

 

689

 

801

 

Total current assets

 

24,535

 

25,348

 

 

 

 

 

 

 

Property, plant and equipment, net

 

5,019

 

4,356

 

Goodwill

 

6,888

 

4,085

 

Other intangible assets, net

 

2,002

 

701

 

Prepaid pension and other employee benefits

 

238

 

173

 

Investments in equity-accounted companies

 

20

 

19

 

Deferred taxes

 

283

 

846

 

Other non-current assets

 

884

 

767

 

Total assets

 

39,869

 

36,295

 

 

 

 

 

 

 

Accounts payable, trade

 

5,187

 

4,555

 

Billings in excess of sales

 

1,797

 

1,730

 

Employee and other payables

 

1,444

 

1,526

 

Short-term debt and current maturities of long-term debt

 

1,191

 

1,043

 

Advances from customers

 

1,935

 

1,764

 

Deferred taxes

 

403

 

357

 

Provisions for warranties

 

1,441

 

1,393

 

Provisions and other current liabilities

 

2,723

 

2,726

 

Accrued expenses

 

1,692

 

1,644

 

Total current liabilities

 

17,813

 

16,738

 

 

 

 

 

 

 

Long-term debt

 

2,471

 

1,139

 

Pension and other employee benefits

 

828

 

831

 

Deferred taxes

 

568

 

411

 

Other non-current liabilities

 

1,674

 

1,718

 

Total liabilities

 

23,354

 

20,837

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Capital stock and additional paid-in capital (2,314,743,264 and 2,308,782,064 issued shares at June 30, 2011, and December 31, 2010, respectively)

 

1,614

 

1,454

 

Retained earnings

 

15,368

 

15,389

 

Accumulated other comprehensive loss

 

(573

)

(1,517

)

Treasury stock, at cost (24,569,324 and 25,317,453 shares at June 30, 2011, and December 31, 2010, respectively)

 

(428

)

(441

)

Total ABB stockholders’ equity

 

15,981

 

14,885

 

Noncontrolling interests

 

534

 

573

 

Total stockholders’ equity

 

16,515

 

15,458

 

Total liabilities and stockholders’ equity

 

39,869

 

36,295

 

 

See Notes to the Interim Consolidated Financial Information

 

15



 

ABB Ltd Interim Consolidated Statements of Cash Flows (unaudited)

 

 

 

Six months ended

 

Three months ended

 

($ in millions)

 

Jun. 30, 2011

 

Jun. 30, 2010

 

Jun. 30, 2011

 

Jun. 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

1,621

 

1,160

 

925

 

669

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

473

 

326

 

242

 

162

 

Pension and other employee benefits

 

(66

)

30

 

(59

)

8

 

Deferred taxes

 

(6

)

70

 

(3

)

46

 

Net gain from sale of property, plant and equipment

 

(16

)

(14

)

(7

)

(8

)

Income from equity-accounted companies

 

(1

)

(2

)

(1

)

(3

)

Other

 

47

 

36

 

27

 

22

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

(260

)

(300

)

(275

)

(383

)

Inventories, net

 

(899

)

(407

)

(399

)

(127

)

Trade payables

 

257

 

320

 

122

 

295

 

Billings in excess of sales

 

(12

)

44

 

88

 

2

 

Provisions, net

 

(265

)

(127

)

(87

)

(34

)

Advances from customers

 

81

 

(96

)

117

 

(133

)

Other assets and liabilities, net

 

173

 

36

 

201

 

133

 

Net cash provided by operating activities

 

1,127

 

1,076

 

891

 

649

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

Purchases of marketable securities (available-for-sale)

 

(618

)

(1,678

)

(32

)

(1,434

)

Purchases of marketable securities (held-to-maturity)

 

 

(65

)

 

(50

)

Purchases of short-term investments

 

(140

)

(1,576

)

 

(138

)

Purchases of property, plant and equipment and intangible assets

 

(343

)

(280

)

(204

)

(132

)

Acquisition of businesses (net of cash acquired) and changes in cost and equity investments

 

(3,186

)

(1,154

)

(84

)

(1,101

)

Proceeds from sales of marketable securities (available-for-sale)

 

2,399

 

550

 

315

 

479

 

Proceeds from maturity of marketable securities (available-for-sale)

 

220

 

220

 

86

 

83

 

Proceeds from maturity of marketable securities (held-to-maturity)

 

 

240

 

 

54

 

Proceeds from short-term investments

 

525

 

2,945

 

147

 

1,302

 

Proceeds from sales of property, plant and equipment

 

15

 

24

 

9

 

10

 

Proceeds from sales of businesses and equity-accounted companies (net of cash disposed)

 

3

 

65

 

3

 

66

 

Changes in financing and other non-current receivables, net

 

(75

)

(20

)

(66

)

(13

)

Net cash provided by (used in) investing activities

 

(1,200

)

(729

)

174

 

(874

)

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Net changes in debt with original maturities of 90 days or less

 

97

 

36

 

46

 

14

 

Increase in debt

 

1,317

 

167

 

1,280

 

86

 

Repayment of debt

 

(1,339

)

(267

)

(40

)

(203

)

Issuance of shares

 

105

 

 

105

 

 

Transactions in treasury shares

 

5

 

(104

)

1

 

(104

)

Dividends paid

 

(1,569

)

 

(1,569

)

 

Acquisition of noncontrolling interests

 

(11

)

 

(11

)

 

Dividends paid to noncontrolling shareholders

 

(110

)

(117

)

(109

)

(101

)

Other

 

63

 

9

 

100

 

15

 

Net cash used in financing activities

 

(1,442

)

(276

)

(197

)

(293

)

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and equivalents

 

170

 

(654

)

35

 

(354

)

 

 

 

 

 

 

 

 

 

 

Net change in cash and equivalents - continuing operations

 

(1,345

)

(583

)

903

 

(872

)

 

 

 

 

 

 

 

 

 

 

Cash and equivalents, beginning of period

 

5,897

 

7,119

 

3,649

 

7,408

 

Cash and equivalents, end of period

 

4,552

 

6,536

 

4,552

 

6,536

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid

 

65

 

46

 

32

 

24

 

Taxes paid

 

727

 

499

 

429

 

271

 

 

See Notes to the Interim Consolidated Financial Information

 

16



 

ABB Ltd Interim Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

($ in millions)

 

Capital stock
and
additional
paid-in capital

 

Retained
earnings

 

Foreign currency
translation
adjustment

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