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 2010

 

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 22, 2010.

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

 

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

 

2



 

Press Release

 

Short-cycle recovery, cost take-out lift ABB’s Q2 results

 

·                  Orders up 5%(1), base orders 15% higher

·                  Revenues down 5%, pace of decline slows versus previous quarter

·                  Operational performance lifted by more than $400 million savings in the quarter

 

Zurich, Switzerland, July 22, 2010 — ABB’s orders grew 5 percent in the second quarter of 2010, led by increases of more than 20 percent in each of the company’s automation divisions on the strength of the global economic recovery.

 

Industrial customers continued to invest in energy-efficient automation and power solutions to increase productivity and quality. Investments by utilities in large power transmission projects, however, remained cautious in most regions. As a result, base orders (below $15 million) grew 15 percent in local currencies while large orders (above $15 million) declined by 37-percent. The order backlog has grown 5 percent since the beginning of the year.

 

Revenues were 5 percent lower than the year-earlier period, mainly due to order declines in 2009 and the beginning of 2010 that flowed through to sales in the second quarter.

 

Earnings before interest and taxes (EBIT) decreased to $975 million, resulting in an EBIT margin of 12.9 percent. Included in EBIT are additional project costs in the Power Systems division of $80 million. Excluding net losses on derivative transactions and restructuring-related costs, the EBIT margin was 14.6 percent(2). Savings in the quarter of more than $400 million from the company’s cost take-out program played a key role in maintaining profitability.

 

Cash from operations in the quarter was $649 million, down versus the same quarter a year earlier, while net income amounted to $623 million.

 

“The strong second quarter results show how we are using our improved cost base and leading position in key industrial markets to take maximum advantage of the global economic recovery,” said Joe Hogan, ABB’s CEO. “It’s the great strength of ABB’s portfolio that automation can drive profitable growth during a period of lower power demand.

 

“We feel more confident about the recovery in most of our markets than three months ago and believe that our short-cycle businesses will continue to perform well over the rest of 2010. After the severe industrial recession of the last two years, customers have started again to invest in technologies for energy efficiency and productivity. We expect customer capital expenditures, especially on the power side, to recover later in 2010 and into 2011,” Hogan said.

 

2010 Q2 key figures

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Orders

 

7,665

 

7,309

 

5

%

5

%

Order backlog (end June)

 

24,437

 

25,913

 

-6

%

-3

%

Revenues

 

7,573

 

7,915

 

-4

%

-5

%

EBIT

 

975

 

1,047

 

-7

%

 

 

as % of revenues

 

12.9

%

13.2

%

 

 

 

 

Net income

 

623

 

675

 

-8

%

 

 

Basic net income per share ($)

 

0.27

 

0.30

 

 

 

 

 

Cash flow from operating activities

 

649

 

1,067

 

 

 

 

 

 


(1)  Management discussion of orders and revenues focuses on local currency changes. U.S. dollar changes are reported in the results tables.

(2)  Please refer to Appendix I

 

3



 

Summary of Q2 2010 results

 

Orders received and revenues

 

Demand for ABB’s industrial products and solutions continued to improve in the second quarter, reflecting the ongoing economic recovery in most regions. Capital spending by power utilities remained cautious. In both power and automation, most customer investments focused on improving the productivity and efficiency of their existing operations. Large capital expenditures to build new capacity remained at low levels.

 

Regionally, the largest order increase came in the Middle East and Africa (up 27 percent in local currencies) on higher demand mainly in the minerals and oil and gas sectors. Orders were also higher in Europe, led by a 7-percent increase in western Europe. Asia orders were higher, driven mainly by the need for industrial automation equipment. Orders in China were up 8 percent but declined 41 percent in India. Orders decreased in the Americas, where a 21-percent order increase in the U.S. — led by a 52-percent increase in Discrete Automation and Motion — was more than offset by lower power orders, mainly in Mexico and Brazil.

 

Orders in emerging markets were unchanged in local currencies in the second quarter compared to the same quarter a year ago and comprised 51 percent of total orders received.

 

Large orders as a share of total orders amounted to 11 percent, compared to 19 percent in the year-earlier period. Service orders grew in line with total orders and were up 6 percent in local currencies.

 

The order backlog at the end of June was $24 billion, a local-currency increase of 5 percent since the beginning of the year and unchanged compared to the end of the previous quarter.

 

Revenues decreased by 5 percent in local currencies as lower orders received during 2009 and the beginning of 2010, especially in ABB’s longer cycle businesses, were converted into sales. Compared to the first quarter of 2010, revenues increased 13 percent. Revenues were up 15 percent in Low-Voltage Products, reflecting the stronger recovery in its short-cycle end markets. Delays in the execution of some large projects contributed to the revenue decrease in the two power divisions. Service revenues were 5 percent higher in the quarter in local currencies compared to the second quarter of 2009.

 

Earnings before interest and taxes and net income

 

Included in EBIT in the second quarter is a negative impact of approximately $60 million from losses on derivatives and foreign exchange movements on receivables and payables. Restructuring-related costs amounted to approximately $70 million in the quarter.

 

Excluding these impacts in the respective periods, the EBIT margin in the second quarter of 2010 increased to 14.6 percent.

 

The improvement was driven primarily by higher margins in the automation businesses on a combination of volume growth, a favorable product mix and cost reduction benefits. Successful cost take-out measures allowed the Power Products division to maintain its EBIT margin — excluding net losses on derivative transactions and restructuring-related costs — at the same level as the year before. Power Systems EBIT margin was lower as the result of project costs related to a small number of subsea cable orders.

 

4



 

Net income for the quarter developed in line with EBIT and resulted in basic earnings per share of $0.27 compared to $0.30 in the year-earlier period.

 

Cost reductions

 

ABB continues to implement a cost take-out plan aimed at sustainably reducing ABB’s costs — comprising both cost of sales as well as general and administrative expenses — from 2008 levels by a total of $3 billion by the end of 2010. The program focuses on optimizing global sourcing, improving internal processes and adjusting ABB’s global manufacturing and engineering footprint to reduce costs, increase our competitiveness and better match shifts in customer demand.

 

Savings in the second quarter exceeded $400 million, bringing the total for the program to date to approximately $2.3 billion. Costs for the full year 2010 are now expected to reach $350-400 million, compared to earlier estimates of $500 million. Costs associated with the program in the second quarter of 2010 amounted to approximately $70 million and total program costs to date amount to approximately $700 million.

 

Balance sheet and cash flow

 

Net cash at the end of the second quarter was $5.9 billion compared to $7.1 billion at the end of the previous quarter and $5.7 billion at the end of the second quarter of 2009. Cash from operating activities decreased in the quarter but was slightly higher for the first six months compared to the previous year. Cash payments in the quarter related to the company’s cost take-out program amounted to approximately $60 million.

 

Net cash used in investing activities includes a payment of more than $1 billion for the acquisition during the second quarter of Ventyx, a U.S.-based software provider to global energy, utility, communications, and other asset-intensive businesses.

 

In May, ABB also announced an offer to shareholders of ABB Limited, its publicly-listed subsidiary in India, of Rs. 900 per share in order to increase its stake in the company from approximately 52 percent to 75 percent. The potential total value of the transaction, if accepted, is approximately Rs. 44 billion ($965 million based on foreign exchange rates at the time of the announcement). The offer began on July 8, 2010 and is expected to end on July 27, 2010, with payment for the shares expected to take place on August 10, 2010.

 

On April 26, ABB’s Annual General Meeting approved the payment of a dividend in the form of a nominal value reduction of Sfr. 0.51 per share. The dividend payment date was July 15 for shares purchased through the SIX Swiss Exchange, July 19 for shares purchased through the NASDAQ OMX Stockholm Exchange and July 22 for American Depositary Shares purchased through the New York Stock Exchange.

 

Also as approved at the Annual General Meeting, approximately 23 million shares were cancelled in July following the end of the share repurchase program launched in 2008.

 

5



 

Compliance

 

As previously announced, ABB has disclosed to the US Department of Justice and the US Securities and Exchange Commission various suspect payments. Also as previously announced, ABB has been cooperating with various antitrust authorities regarding their investigations into certain alleged anti-competitive practices. With respect to these matters, there could be adverse outcomes beyond our provisions.

 

Management changes

 

In June, ABB announced the retirement of Anders Jonsson, a member of the ABB Executive Committee since 2006, effective as of the end of July 2010, after 34 years with the company. In his current position, Jonsson has been responsible for monitoring and coordinating ABB’s overall cost reduction and global footprint programs. These responsibilities will be assumed by the company’s head of quality and operational excellence who reports directly to ABB’s CEO.

 

Outlook

 

The sequential quarterly growth of base orders since the middle of 2009 appears to confirm that ABB has seen the bottom of its short-cycle businesses. Industrial customers are spending more on automation and power equipment and solutions to increase the efficiency and productivity of their existing assets. Assuming a continuation of the current economic recovery in most regions, the company is confident that its short-cycle business will continue to support both top and bottom line growth over the remainder of the year.

 

For ABB’s late-cycle businesses, which make up the majority of the portfolio and which are driven by customer capital expenditure, the outlook for the remainder of 2010 remains mixed.

 

Upgrades and expansions of existing power infrastructure are needed in all regions, including renewables and smart grids. This is reflected in a near-record level of tendering activity in the Power Systems business. At the same time, lower electricity consumption in some regions has slowed the pace of power project awards in the short term. Furthermore, increased competition in the power sector continues to weigh on demand.

 

On the industrial side, ABB saw higher demand in the second quarter from some later-cycle sectors, such as minerals, pulp and paper and marine. Most customer spending in these industries, however, is focused on equipment upgrades, replacement and service rather than capital expenditures for new capacity.

 

The company believes it is well positioned to benefit from a sustained economic recovery. Growth initiatives are under way in selected business and countries, mainly in emerging markets. Significant fixed costs have been eliminated since the end of 2008, increasing the potential for incremental margin expansion as demand returns. Spending on research and development has remained steady through the downturn in order to secure the company’s technological leadership, and will continue.

 

Therefore, in the remainder of 2010 management will continue to focus both on adjusting costs and taking advantage of its global footprint, strong balance sheet and leading technologies to tap further opportunities for profitable growth.

 

6



 

Divisional performance Q2 2010

 

Power Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Orders

 

2,480

 

2,760

 

-10

%

-11

%

Order backlog (end June)

 

7,796

 

8,664

 

-10

%

-9

%

Revenues

 

2,528

 

2,839

 

-11

%

-12

%

EBIT

 

417

 

555

 

-25

%

 

 

as % of revenues

 

16.5

%

19.5

%

 

 

 

 

Cash flow from operating activities

 

384

 

534

 

 

 

 

 

 

Orders declined due to continued low spending by utilities on transmission projects, resulting in a decrease of more than 70 percent in large orders. This more than offset increased demand from industrial end-markets and some recovery in power distribution. Base orders decreased 5 percent versus the same period a year ago. Compared to the first quarter of 2010, however, base orders grew by 11 percent in local currencies.

 

Orders were lower in all regions, although early signs of recovery from low levels in the power distribution business supported steady order intake in western Europe and North America. Orders decreased in China as a result of lower utility spending on large projects and increased local competition.

 

Revenues decreased in the quarter, primarily as a result of lower order intake in the preceding quarters and continued delays by customers in accepting product delivery.

 

EBIT was lower than the same period a year earlier, reflecting lower revenues and a negative impact from net losses on derivatives. EBIT margin, adjusted for both derivatives and restructuring, was roughly the same in both years, as cost savings compensated for under absorption and price declines.

 

Power Systems

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10(1)

 

Q2 09

 

US$

 

Local

 

Orders

 

1,354

 

1,697

 

-20

%

-19

%

Order backlog (end June)

 

9,128

 

8,918

 

2

%

5

%

Revenues

 

1,635

 

1,612

 

1

%

0

%

EBIT

 

18

 

122

 

-85

%

 

 

as % of revenues

 

1.1

%

7.6

%

 

 

 

 

Cash flow from operating activities

 

-65

 

230

 

 

 

 

 

 


(1) Power Systems Q2 2010 results reflect the contribution from the Ventyx acquisition as of June 1, 2010

 

Increased base orders on higher demand from industrial customers in the quarter was offset by lower large orders, reflecting the timing of project awards. Project tendering activity in power transmission achieved new record levels, as the need remains in all regions for new grid capacity and upgrades, regional interconnections and the integration of renewable energies.

 

Revenues were stable compared to the same quarter a year ago, supported by the execution of the large order backlog.

 

EBIT was negatively impacted by costs of approximately $80 million associated with installation issues in a small number of cable projects. These charges more than offset savings from cost reduction measures.

 

The reduction in cash from operations primarily reflects the timing of customer payments.

 

7



 

ABB completed its acquisition of Ventyx in the second quarter and consolidated its financial results into the divisional results effective June 1, 2010. The impact of the acquisition on orders, revenues and EBIT in the quarter was not significant.

 

Discrete Automation & Motion(1)

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Orders

 

1,476

 

1,195

 

24

%

24

%

Order backlog (end June)

 

3,223

 

3,442

 

-6

%

-4

%

Revenues

 

1,287

 

1,354

 

-5

%

-5

%

EBIT

 

205

 

190

 

8

%

 

 

as % of revenues

 

15.9

%

14.0

%

 

 

 

 

Cash flow from operating activities

 

154

 

255

 

 

 

 

 

 


(1) Appendix II provides historical results for all divisions following the previously announced realignment of ABB’s automation business

 

Orders increased substantially in the quarter reflecting the industrial recovery in early cycle businesses across all regions. Base orders were almost 40 percent higher in local currencies versus the same quarter a year earlier, while large orders declined. Order growth was strongest in robotics and low-voltage drives and motors. Orders grew in all regions, led by strong double-digit local-currency growth in China, the U.S. and Germany.

 

Revenues declined in the quarter, although at a slower pace than in the first quarter of the year. This mainly reflects the low opening order backlog in the machines business, which serves later cycle markets. Revenues in most other businesses were close to the previous year’s level.

 

The improvement in EBIT and EBIT margin is mainly the result of a breakeven result in the robotics business compared to a loss in the same quarter of 2009. The EBIT margin also benefited from cost saving measures and a favorable product mix.

 

Low-Voltage Products(1)

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Orders

 

1,219

 

1,017

 

20

%

22

%

Order backlog (end June)

 

879

 

805

 

9

%

13

%

Revenues

 

1,102

 

977

 

13

%

15

%

EBIT

 

213

 

95

 

124

%

 

 

as % of revenues

 

19.3

%

9.7

%

 

 

 

 

Cash flow from operating activities

 

121

 

151

 

 

 

 

 

 


(1) Appendix II provides historical results for all divisions following the previously announced realignment of ABB’s automation business

 

The strong improvement in orders received in the quarter reflects continuing demand growth from both construction and industry customers across all regions. Orders were up in all product businesses. Orders grew at a double-digit pace in all regions, with the largest increase in the Americas. Orders were up more than 30 percent in Asia, including a strong double-digit increase in China in local currencies. Orders also grew at a strong double-digit pace in Italy, South Korea and Saudi Arabia.

 

Revenues grew in line with orders, as most sales are booked in the same quarter in which orders are placed. Service revenues grew by 30 percent in local currencies in the second quarter versus the second quarter in 2009.

 

EBIT and EBIT margin increased on higher revenues, a positive product mix and the impact of cost saving measures. The increase also reflects the non-recurrence of restructuring-related charges taken in the prior-year period of approximately $40 million. Excluding net losses on

 

8



 

derivative transactions and restructuring-related costs in both periods, the EBIT margin in the second quarter of 2010 was approximately 6 percentage-points higher than in the year-earlier quarter.

 

Process Automation

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09(1)

 

US$

 

Local

 

Orders

 

1,825

 

1,452

 

26

%

25

%

Order backlog (end June)

 

5,585

 

6,565

 

-15

%

-12

%

Revenues

 

1,737

 

1,981

 

-12

%

-12

%

EBIT

 

189

 

166

 

14

%

 

 

as % of revenues

 

10.9

%

8.4

%

 

 

 

 

Cash flow from operating activities

 

143

 

53

 

 

 

 

 

 


(1) Q2 2009 results include the instrumentation business transferred to Process Automation as part of the previously-announced realignment of ABB’s automation business

 

Orders increased in the quarter as demand improved, driven primarily by the developing economies. Base orders grew by more than 20 percent in local currencies while large orders increased by more than 30 percent from the low levels of the year-earlier period.

 

The strongest order growth was recorded in minerals, pulp and paper, marine and turbocharging. Oil, gas and petrochemicals orders remained at the same high level as the second quarter of 2009. Orders from the Middle East and Africa more than tripled in the quarter due to large customer investments in minerals and oil and gas. Asia grew by almost 40 percent on higher orders from metals, minerals and marine customers. Orders in the Americas increased by more than 10 percent in local currencies on higher demand from the minerals and oil and gas sectors.

 

Lower revenues reflect the decrease in orders in 2009. Lower revenues in the system business were partly offset by a double digit increase in turbocharging and industrial service revenues. EBIT and EBIT margin improved due to the cost take-out program and a larger proportion of higher-margin service and product sales in total revenues compared to the same quarter a year earlier.

 

9



 

More information

The 2010 Q2 results press release is available from July 22, 2010, 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.

 

ABB will host a media conference call starting at 10:00 a.m. Central European Time (CET). U.K. callers should dial +44 20 7107 0611. From Sweden, +46 8 5069 2105, 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 96 hours: Playback numbers: +44 20 7108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 (1) 866 416 2558 (U.S./Canada). The code is 10133, followed by the # key.

 

A conference call for analysts and investors is scheduled to begin today at 3:00 p.m. CET (2:00 p.m. in the UK, 9:00 a.m. EDT). Callers should dial +1 412 858 4600 (from the U.S./Canada) or +41 91 610 56 00 (Europe and the rest of the world). Callers are requested to phone in 15 minutes before the start of the call. The audio playback of the call will start one hour after the end of the call and be available for 24 hours commencing one hour after the conference call. Playback numbers: +1 866 416 2558 (U.S./Canada) or +41 91 612 4330 (Europe and the rest of the world). The code is 15754, followed by the # key.

 

Investor calendar 2010

 

 

 

Capital Markets Day 2010

 

Sept. 10, 2010

 

Q3 2010 results

 

Oct. 28, 2010

 

 

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 117,000 people.

 

Zurich, July 22, 2010

Joe Hogan, CEO

 

Important notice about forward-looking information

This press release includes forward-looking information and statements including the sections entitled “Cost reductions,” “Compliance,” and “Outlook,” 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 weakened global economy and political conditions, costs associated with compliance activities, raw materials availability and prices, 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, Wolfram Eberhardt

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 2010 key figures

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 10

 

Q2 09

 

US$

 

Local

 

H1 10

 

H1 09

 

US$

 

Local

 

Orders

 

Group

 

7’665

 

7’309

 

5

%

5

%

15’732

 

16’459

 

-4

%

-8

%

 

 

Power Products

 

2’480

 

2’760

 

-10

%

-11

%

4’881

 

5’720

 

-15

%

-19

%

 

 

Power Systems

 

1’354

 

1’697

 

-20

%

-19

%

3’112

 

3’976

 

-22

%

-26

%

 

 

Discrete Automation & Motion

 

1’476

 

1’195

 

24

%

24

%

2’884

 

2’480

 

16

%

12

%

 

 

Low Voltage Products

 

1’219

 

1’017

 

20

%

22

%

2’325

 

2’037

 

14

%

12

%

 

 

Process Automation

 

1’825

 

1’452

 

26

%

25

%

3’940

 

4’005

 

-2

%

-6

%

 

 

Corporate (consolidation)

 

-689

 

-812

 

15

%

15

%

-1’410

 

-1’759

 

20

%

23

%

Revenues

 

Group

 

7’573

 

7’915

 

-4

%

-5

%

14’507

 

15’124

 

-4

%

-7

%

 

 

Power Products

 

2’528

 

2’839

 

-11

%

-12

%

4’847

 

5’307

 

-9

%

-12

%

 

 

Power Systems

 

1’635

 

1’612

 

1

%

0

%

3’019

 

3’029

 

0

%

-4

%

 

 

Discrete Automation & Motion

 

1’287

 

1’354

 

-5

%

-5

%

2’500

 

2’655

 

-6

%

-9

%

 

 

Low Voltage Products

 

1’102

 

977

 

13

%

15

%

2’113

 

1’910

 

11

%

8

%

 

 

Process Automation

 

1’737

 

1’981

 

-12

%

-12

%

3’472

 

3’859

 

-10

%

-14

%

 

 

Corporate (consolidation)

 

-716

 

-848

 

16

%

15

%

-1’444

 

-1’636

 

12

%

15

%

EBIT

 

Group

 

975

 

1’047

 

-7

%

 

 

1’684

 

1’909

 

-12

%

 

 

 

 

Power Products

 

417

 

555

 

-25

%

 

 

765

 

997

 

-23

%

 

 

 

 

Power Systems

 

18

 

122

 

-85

%

 

 

4

 

205

 

-98

%

 

 

 

 

Discrete Automation & Motion

 

205

 

190

 

8

%

 

 

373

 

355

 

5

%

 

 

 

 

Low Voltage Products

 

213

 

95

 

124

%

 

 

363

 

222

 

64

%

 

 

 

 

Process Automation

 

189

 

166

 

14

%

 

 

348

 

312

 

12

%

 

 

 

 

Corporate

 

-67

 

-81

 

17

%

 

 

-169

 

-182

 

7

%

 

 

EBIT margin

 

Group

 

12.9

%

13.2

%

 

 

 

 

11.6

%

12.6

%

 

 

 

 

 

 

Power Products

 

16.5

%

19.5

%

 

 

 

 

15.8

%

18.8

%

 

 

 

 

 

 

Power Systems

 

1.1

%

7.6

%

 

 

 

 

0.1

%

6.8

%

 

 

 

 

 

 

Discrete Automation & Motion

 

15.9

%

14.0

%

 

 

 

 

14.9

%

13.4

%

 

 

 

 

 

 

Low Voltage Products

 

19.3

%

9.7

%

 

 

 

 

17.2

%

11.6

%

 

 

 

 

 

 

Process Automation

 

10.9

%

8.4

%

 

 

 

 

10.0

%

8.1

%

 

 

 

 

 

Q2 2010 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Q2 10

 

Q2 09

 

US$

 

Local

 

Europe

 

2,866

 

2,825

 

1

%

6

%

2,872

 

3,236

 

-11

%

-8

%

Americas

 

1,462

 

1,503

 

-3

%

-7

%

1,481

 

1,485

 

0

%

-4

%

Asia

 

2,165

 

2,033

 

6

%

3

%

2,175

 

2,231

 

-3

%

-6

%

Middle East and Africa

 

1,172

 

948

 

24

%

27

%

1,045

 

963

 

9

%

10

%

Group total

 

7,665

 

7,309

 

5

%

5

%

7,573

 

7,915

 

-4

%

-5

%

 

Half-year 2010 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

H1 10

 

H1 09

 

US$

 

Local

 

H1 10

 

H1 09

 

US$

 

Local

 

Europe

 

6,299

 

6,488

 

-3

%

-6

%

5,647

 

6,252

 

-10

%

-11

%

Americas

 

2,959

 

2,858

 

4

%

-3

%

2,795

 

2,979

 

-6

%

-11

%

Asia

 

4,266

 

4,253

 

0

%

-5

%

4,085

 

4,114

 

-1

%

-6

%

Middle East and Africa

 

2,208

 

2,860

 

-23

%

-25

%

1,980

 

1,779

 

11

%

9

%

Group total

 

15,732

 

16,459

 

-4

%

-8

%

14,507

 

15,124

 

-4

%

-7

%

 

11



 

Appendix I

Reconciliation of non-GAAP financial measures

($ millions, unaudited)

 

EBIT margin (for the 3 months ended June 30, 2010)

 

 

 

= EBIT as % of revenues

 

 

 

Earnings before interest and taxes (EBIT)

 

975

 

Revenues

 

7,573

 

EBIT margin

 

12.9

%

 

 

 

 

Adjustments to EBIT margin

 

 

 

EBIT

 

975

 

adjusted for the effects of

 

 

 

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

 

91

 

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

 

12

 

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

 

(46

)

Restructuring and restructuring-related expenses

 

70

 

EBIT after adjustments

 

1,102

 

Revenues

 

7,573

 

As % of revenues

 

14.6

%

 

 

 

 

Net cash (at June 30, 2010)

 

 

 

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

 

 

 

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

 

(237

)

Long-term debt

 

(1,887

)

Total debt

 

(2,124

)

Cash and equivalents

 

6,536

 

Marketable securities and short-term investments

 

1,478

 

Cash and marketable securities

 

8,014

 

Net cash

 

5,890

 

 

12



 

Appendix II

 

Key data by division based on realignment of automation divisions effective Jan.1, 2010

 

 

 

 

 

2007 FY

 

2008 FY

 

Q1-09

 

Q2-09

 

Q3-09

 

Q4-09

 

2009 FY

 

Orders

 

Group

 

34,348

 

38,282

 

9,150

 

7,309

 

7,060

 

7,450

 

30,969

 

 

 

PP

 

11,320

 

13,627

 

2,960

 

2,760

 

2,553

 

2,667

 

10,940

 

 

 

PS

 

7,744

 

7,408

 

2,279

 

1,697

 

1,991

 

1,863

 

7,830

 

 

 

DM

 

6,064

 

7,129

 

1,285

 

1,195

 

1,080

 

1,142

 

4,702

 

 

 

LP

 

4,199

 

4,865

 

1,020

 

1,017

 

1,015

 

1,027

 

4,079

 

 

 

PA

 

8,476

 

9,244

 

2,553

 

1,452

 

1,257

 

1,422

 

6,684

 

 

 

Corporate/other

 

-3,455

 

-3,991

 

-947

 

-812

 

-836

 

-671

 

-3,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

Group

 

29,183

 

34,912

 

7,209

 

7,915

 

7,910

 

8,761

 

31,795

 

 

 

PP

 

9,777

 

11,890

 

2,468

 

2,839

 

2,823

 

3,109

 

11,239

 

 

 

PS

 

5,832

 

6,912

 

1,417

 

1,612

 

1,612

 

1,908

 

6,549

 

 

 

DM

 

5,414

 

6,588

 

1,301

 

1,354

 

1,280

 

1,470

 

5,405

 

 

 

LP

 

4,125

 

4,747

 

933

 

977

 

1,052

 

1,109

 

4,071

 

 

 

PA

 

6,936

 

8,397

 

1,878

 

1,981

 

1,926

 

2,054

 

7,839

 

 

 

Corporate/other

 

-2,901

 

-3,622

 

-788

 

-848

 

-783

 

-889

 

-3,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

Group

 

4,023

 

4,552

 

862

 

1,047

 

1,419

 

798

 

4,126

 

 

 

PP

 

1,596

 

2,100

 

442

 

555

 

477

 

495

 

1,969

 

 

 

PS

 

489

 

592

 

83

 

122

 

117

 

66

 

388

 

 

 

DM

 

836

 

1,066

 

165

 

190

 

159

 

43

 

557

 

 

 

LP

 

696

 

819

 

127

 

95

 

148

 

149

 

519

 

 

 

PA

 

707

 

958

 

146

 

166

 

161

 

170

 

643

 

 

 

Corporate/other

 

-301

 

-983

 

-101

 

-81

 

357

 

-125

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT %

 

Group

 

13.8

%

13.0

%

12.0

%

13.2

%

17.9

%

9.1

%

13.0

%

 

 

PP

 

16.3

%

17.7

%

17.9

%

19.5

%

16.9

%

15.9

%

17.5

%

 

 

PS

 

8.4

%

8.6

%

5.9

%

7.6

%

7.3

%

3.5

%

5.9

%

 

 

DM

 

15.4

%

16.2

%

12.7

%

14.0

%

12.4

%

2.9

%

10.3

%

 

 

LP

 

16.9

%

17.3

%

13.6

%

9.7

%

14.1

%

13.4

%

12.7

%

 

 

PA

 

10.2

%

11.4

%

7.8

%

8.4

%

8.4

%

8.3

%

8.2

%

 

13



 

ABB Ltd Interim Consolidated Income Statements (unaudited)

 

 

 

Six months ended

 

Three months ended

 

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

 

Jun. 30, 2010

 

Jun. 30, 2009

 

Jun. 30, 2010

 

Jun. 30, 2009

 

 

 

 

 

 

 

 

 

 

 

Sales of products

 

12,062

 

12,809

 

6,309

 

6,693

 

Sales of services

 

2,445

 

2,315

 

1,264

 

1,222

 

Total revenues

 

14,507

 

15,124

 

7,573

 

7,915

 

Cost of products

 

(8,486

)

(9,013

)

(4,428

)

(4,670

)

Cost of services

 

(1,625

)

(1,563

)

(835

)

(816

)

Total cost of sales

 

(10,111

)

(10,576

)

(5,263

)

(5,486

)

Gross profit

 

4,396

 

4,548

 

2,310

 

2,429

 

Selling, general and administrative expenses

 

(2,714

)

(2,639

)

(1,337

)

(1,362

)

Other income (expense), net

 

2

 

 

2

 

(20

)

Earnings before interest and taxes

 

1,684

 

1,909

 

975

 

1,047

 

Interest and dividend income

 

50

 

68

 

26

 

30

 

Interest and other finance expense

 

(87

)

(33

)

(45

)

(55

)

Income from continuing operations before taxes

 

1,647

 

1,944

 

956

 

1,022

 

Provision for taxes

 

(486

)

(534

)

(285

)

(294

)

Income from continuing operations, net of tax

 

1,161

 

1,410

 

671

 

728

 

Income (loss) from discontinued operations, net of tax

 

(1

)

22

 

(2

)

11

 

Net income

 

1,160

 

1,432

 

669

 

739

 

Net income attributable to noncontrolling interests

 

(73

)

(105

)

(46

)

(64

)

Net income attributable to ABB

 

1,087

 

1,327

 

623

 

675

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

1,088

 

1,305

 

625

 

664

 

Income (loss) from discontinued operations, net of tax

 

(1

)

22

 

(2

)

11

 

Net income

 

1,087

 

1,327

 

623

 

675

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.48

 

0.57

 

0.27

 

0.29

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.01

 

 

0.01

 

Net income

 

0.47

 

0.58

 

0.27

 

0.30

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

0.47

 

0.57

 

0.27

 

0.29

 

Income (loss) from discontinued operations, net of tax

 

 

0.01

 

 

0.01

 

Net income

 

0.47

 

0.58

 

0.27

 

0.30

 

 

 

 

 

 

 

 

 

 

 

Average number of shares (in millions) used to compute:

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders

 

2,289

 

2,283

 

2,288

 

2,283

 

Diluted earnings per share attributable to ABB shareholders

 

2,294

 

2,285

 

2,293

 

2,286

 

 

See Notes to the Interim Consolidated Financial Information

 

14



 

ABB Ltd Interim Consolidated Balance Sheets (unaudited)

 

($ in millions, except share data)

 

Jun. 30, 2010

 

Dec. 31, 2009

 

 

 

 

 

 

 

Cash and equivalents

 

6,536

 

7,119

 

Marketable securities and short-term investments

 

1,478

 

2,433

 

Receivables, net

 

9,265

 

9,451

 

Inventories, net

 

4,551

 

4,550

 

Prepaid expenses

 

209

 

236

 

Deferred taxes

 

829

 

900

 

Other current assets

 

648

 

540

 

Total current assets

 

23,516

 

25,229

 

 

 

 

 

 

 

Financing receivables, net

 

421

 

452

 

Property, plant and equipment, net

 

3,766

 

4,072

 

Goodwill

 

3,940

 

3,026

 

Other intangible assets, net

 

699

 

443

 

Prepaid pension and other employee benefits

 

105

 

112

 

Investments in equity method companies

 

31

 

49

 

Deferred taxes

 

1,028

 

1,052

 

Other non-current assets

 

272

 

293

 

Total assets

 

33,778

 

34,728

 

 

 

 

 

 

 

Accounts payable, trade

 

3,891

 

3,853

 

Billings in excess of sales

 

1,565

 

1,623

 

Accounts payable, other

 

1,252

 

1,326

 

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

 

237

 

161

 

Advances from customers

 

1,604

 

1,806

 

Deferred taxes

 

306

 

327

 

Provisions for warranties

 

1,157

 

1,280

 

Provisions and other current liabilities

 

2,428

 

2,603

 

Accrued expenses

 

1,395

 

1,600

 

Total current liabilities

 

13,835

 

14,579

 

 

 

 

 

 

 

Long-term debt

 

1,887

 

2,172

 

Pension and other employee benefits

 

1,088

 

1,179

 

Deferred taxes

 

447

 

328

 

Other non-current liabilities

 

1,893

 

1,997

 

Total liabilities

 

19,150

 

20,255

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Capital stock and additional paid-in capital (2,329,324,797 issued shares at June 30, 2010 and December 31, 2009)

 

3,967

 

3,943

 

Retained earnings

 

13,915

 

12,828

 

Accumulated other comprehensive loss

 

(2,846

)

(2,084

)

Treasury stock, at cost (45,239,509 shares at June 30, 2010 and 39,901,593 shares at December 31, 2009)

 

(986

)

(897

)

Total ABB stockholders’ equity

 

14,050

 

13,790

 

Noncontrolling interests

 

578

 

683

 

Total stockholders’ equity

 

14,628

 

14,473

 

Total liabilities and stockholders’ equity

 

33,778

 

34,728

 

 

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, 2010

 

Jun. 30, 2009

 

Jun. 30, 2010

 

Jun. 30, 2009

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

1,160

 

1,432

 

669

 

739

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

336

 

298

 

167

 

150

 

Pension and postretirement benefits

 

30

 

9

 

8

 

21

 

Deferred taxes

 

70

 

(1

)

46

 

(7

)

Net gain from sale of property, plant and equipment

 

(14

)

(9

)

(8

)

(4

)

Income from equity accounted companies

 

(2

)

 

(3

)

(1

)

Other

 

26

 

(29

)

17

 

49

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

(300

)

35

 

(383

)

105

 

Inventories, net

 

(407

)

(15

)

(127

)

217

 

Trade payables

 

320

 

(505

)

295

 

(130

)

Billings in excess of sales

 

44

 

70

 

2

 

15

 

Provisions, net

 

(127

)

63

 

(34

)

84

 

Advances from customers

 

(96

)

(33

)

(133

)

(9

)

Other assets and liabilities, net

 

36

 

(352

)

133

 

(162

)

Net cash provided by operating activities

 

1,076

 

963

 

649

 

1,067

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

Changes in financing receivables

 

(20

)

(2

)

(13

)

(4

)

Purchases of marketable securities (available-for-sale)

 

(1,678

)

(62

)

(1,434

)

(42

)

Purchases of marketable securities (held-to-maturity)

 

(65

)

(561

)

(50

)

(339

)

Purchases of short-term investments

 

(1,576

)

(351

)

(138

)

(351

)

Purchases of property, plant and equipment and intangible assets

 

(280

)

(409

)

(132

)

(224

)

Acquisition of businesses (net of cash acquired)

 

(1,154

)

(55

)

(1,101

)

(7

)

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

 

550

 

42

 

479

 

21

 

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

 

220

 

855

 

83

 

 

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

 

240

 

 

54

 

 

Proceeds from short-term investments

 

2,945

 

92

 

1,302

 

 

Proceeds from sales of property, plant and equipment

 

24

 

18

 

10

 

10

 

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

 

65

 

7

 

66

 

7

 

Net cash used in investing activities

 

(729

)

(426

)

(874

)

(929

)

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Net changes in debt with maturities of 90 days or less

 

36

 

6

 

14

 

(15

)

Increase in debt

 

167

 

317

 

86

 

106

 

Repayment of debt

 

(267

)

(349

)

(203

)

(128

)

Purchase of treasury shares

 

(104

)

 

(104

)

 

Dividends paid to noncontrolling shareholders

 

(117

)

(106

)

(101

)

(92

)

Other

 

9

 

(34

)

15

 

(21

)

Net cash used in financing activities

 

(276

)

(166

)

(293

)

(150

)

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and equivalents

 

(654

)

52

 

(354

)

284

 

 

 

 

 

 

 

 

 

 

 

Net change in cash and equivalents - continuing operations

 

(583

)

423

 

(872

)

272

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents beginning of period

 

7,119

 

6,399

 

7,408

 

6,550

 

Cash and equivalents end of period

 

6,536

 

6,822

 

6,536

 

6,822

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid

 

46

 

85

 

24

 

40

 

Taxes paid

 

499

 

554

 

271

 

299

 

 

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

 

Unrealized
gain (loss)
on
available-for-sale
securities

 

Pension and
other
postretirement
plan
adjustments

 

Unrealized
gain (loss)
of cash
flow hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

Treasury
stock

 

Total ABB
stockholders’
equity

 

Noncontrolling
interests

 

Total
stockholders’
equity

 

Balance at January 1, 2009

 

4,841

 

9,927

 

(1,654

)

83

 

(978

)

(161

)

(2,710

)

(900

)

11,158

 

612

 

11,770

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

1,327

 

 

 

 

 

 

 

 

 

 

 

 

 

1,327

 

105

 

1,432

 

Foreign currency translation adjustments

 

 

 

 

 

221

 

 

 

 

 

 

 

221

 

 

 

221

 

(8

)

213

 

Effect of change in fair value of available-for-sale securities, net of tax

 

 

 

 

 

 

 

(75

)

 

 

 

 

(75

)

 

 

(75

)

 

 

(75

)

Unrecognized income (loss) related to pensions and other postretirement plans, net of tax

 

 

 

 

 

 

 

 

 

(25

)

 

 

(25

)

 

 

(25

)

1

 

(24

)

Change in derivatives qualifying as cash flow hedges, net of tax

 

 

 

 

 

 

 

 

 

 

 

76

 

76

 

 

 

76

 

 

 

76

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,524

 

98

 

1,622

 

Changes in noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

(21

)

Dividends paid to noncontrolling shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(147

)

(147

)

Treasury stock transactions

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

Share-based payment arrangements

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

35

 

Call options

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

22

 

Balance at June 30, 2009

 

4,895

 

11,254

 

(1,433

)

8

 

(1,003

)

(85

)

(2,513

)

(897

)

12,739

 

542

 

13,281

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

($ in millions)

 

Capital
stock and
additional
paid-in
capital

 

Retained
earnings

 

Foreign
currency
translation
adjustment

 

Unrealized
gain (loss)
on
available-for-sale
securities

 

Pension and
other
postretirement
plan
adjustments

 

Unrealized
gain (loss)
of cash
flow hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

Treasury
stock

 

Total ABB
stockholders’
equity

 

Noncontrolling
interests

 

Total
stockholders’
equity

 

Balance at January 1, 2010

 

3,943

 

12,828

 

(1,056

)

20

 

(1,068

)

20

 

(2,084

)

(897

)

13,790

 

683

 

14,473

 

Comprehensive income: