Date: 2013-08-01

ABB - Steady top line growth in a mixed market

Steady top line growth in a mixed market
•Orders and revenues increased1, orders steady to higher in all regions
•Operational EBITDA2 and margin lower vs Q2 2011, margin up 1% point vs Q1 2012
•Thomas & Betts acquisition completed, solid first contribution to operational EBITDA
•Significant foreign exchange translation negatively impacts top line and earnings

ABB reported higher orders and revenues in the second quarter of 2012 despite short-term macroeconomic volatility as customers in almost all regions continued to invest in power grid upgrades and improved industrial productivity.

Orders received grew 9 percent (6 percent organic3) to $10.1 billion while revenues rose to $9.7 billion, representing a 6 percent increase (3 percent organic). Utilities continued to invest in transmission grids, while industrial customers, especially in oil and gas, increased spending to secure reliable power and improve productivity.

Operational EBITDA amounted to $1.5 billion, a 5 percent decrease compared to the same quarter in 2011 (-9 percent organic). The operational EBITDA margin was 15.1 percent versus 16.0 percent the previous year. Cost savings of about $280 million offset the impact of lower prices and project margin slippages, while growth investments in selling and R&D supported volume increases. An unfavorable business mix also impacted the operational EBITDA margin, while significant differences in foreign exchange rates compared with the second quarter of 2011 reduced our US-dollar reported revenues by approximately $600 million and operational EBITDA by approximately $100 million.

Cash flow from operations was approximately $300 million lower than Q2 last year. Total divisional cash from operations increased by $40 million. Group cash flow reflects lower cash generation from hedging of corporate exposures as a result of the strengthening US dollar.

Net income amounted to $656 million, including the negative impact of the strengthening US dollar and transaction and amortization-related charges4 of approximately $100 million related to the acquisition of US low voltage product manufacturer Thomas & Betts, which was completed on May 16 of this year.

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