TIDMANN
RNS Number : 0306R
ABB Ltd
23 April 2009
Q1 revenues steady despite economic challenges
* Large order growth offset by strong decline in base orders - order backlog up
$1.2 billion vs the end of Q4 2008
* Local-currency revenues up on backlog execution, base business decreases
* EBIT at $862 million, cost take-out target increased to $2 billion by 2010
* Net income at $652 million
Zurich, Switzerland, April 23, 2009 - ABB's first-quarter 2009 revenues rose 3
percent in local currencies as execution of the solid order backlog offset lower
sales of standard products and declining base business compared to the same
quarter in 2008.
Orders decreased by 3 percent (16 percent in U.S. dollar terms) to $9.2 billion
compared to the very high levels a year earlier as large orders (more than $15
million) in the power and oil and gas sectors could not compensate for lower
base orders (less than $15 million) across all divisions. The order decline also
reflects lower prices resulting from decreased raw material costs.
Revenues amounted to $7.2 billion (up 3 percent in local currencies, down 9
percent in U.S. dollars). The sale of standard products and base orders that
convert into revenues within the same quarter declined significantly compared to
the same quarter in 2008.
EBIT was $862 million with an EBIT margin of 12.0 percent. Excluding the
mark-to-market treatment of hedging transactions in the respective quarters and
certain other items, the EBIT margin deteriorated by approximately 3 percentage
points versus the same quarter a year ago. The main driver of the deterioration
was lower capacity utilization compared to the very high levels of a year ago,
as well as a change in product mix and some price erosion in the short-cycle
businesses.
Net income was $652 million, while cash from operations was negative $104
million, declining in line with EBIT.
"Demand in the power, oil and gas sectors was relatively resilient in the
quarter, which allowed us to maintain orders close to the near-record level of a
year ago," said Joe Hogan, ABB's CEO. "Revenues benefited from our order backlog
but earnings declined, partly on lower capacity utilization versus the very high
levels of a year ago as well as some non-operational items such as asset
write-offs and the mark-to-market of hedging transactions.
"We saw good momentum with our cost-out program in the first quarter and
we're expanding the program to $2 billion with continued focus on optimized
sourcing, global footprint, G&A and operational excellence," Hogan added. "We
are determined to stay ahead of the market on cost while remaining alert for
opportunities to grow the business."
+----------------------------------+----------+---------+------------+-------+
| 2009 Q1 key figures | Q1 09 | Q1 08 | Change |
| key figures | | | |
+----------------------------------+----------+---------+--------------------+
| $ millions unless otherwise | | | US$ |Local |
| indicated | | | | |
+----------------------------------+----------+---------+------------+-------+
| Orders | 9,150 | 10,943 | -16% | -3% |
+----------------------------------+----------+---------+------------+-------+
| Order backlog (end March) | 25,017 | 26,820 | -7% | 10% |
+----------------------------------+----------+---------+------------+-------+
| Revenues | 7,209 | 7,956 | -9% | 3% |
+----------------------------------+----------+---------+------------+-------+
| EBIT | 862 | 1,353 | -36% | |
+----------------------------------+----------+---------+------------+-------+
| as % of revenues | 12.0% | 17.0% | | |
+----------------------------------+----------+---------+------------+-------+
| Net income | 652 | 1,003 | -35% | |
+----------------------------------+----------+---------+------------+-------+
| Basic net income per share ($) | 0.29 | 0.44 | -34% | |
+----------------------------------+----------+---------+------------+-------+
| Cash flow from operating | (104) | 464 | | |
| activities | | | | |
+----------------------------------+----------+---------+------------+-------+
Summary of Q1 2009 results
Orders received and revenues1
Orders received were modestly lower in local currencies compared to the
near-record levels of the first quarter in 2008, despite the significant
deterioration in most markets over the past 12 months.
Demand from utilities for new and upgraded power infrastructure remained steady
in most markets. ABB won two large power transmission orders in the first
quarter of 2009 - a subsea high-voltage link in western Europe and a substation
award in the Middle East - with a combined value of almost $1 billion. However,
the limited availability of financing for large power projects, especially in
the private sector, and the uncertainty over raw material prices and other
project costs continued to delay the award of new projects.
Demand for ABB's industrial products and systems deteriorated in the quarter as
global industrial production continued to contract and demand in the
construction industry decreased further. The oil and gas business remained
relatively resilient and ABB won a $490-million order in the sector in Algeria
during the quarter. However, base orders for the Group decreased by 18 percent
(28 percent in U.S. dollars) and were down in all divisions. Lower prices,
primarily the result of the declining cost of raw materials, also contributed to
the order decrease.
Regionally, orders doubled in local currencies in the Middle East and Africa as
large orders increased. In Europe, higher orders in Power Systems were more than
offset by decreases in the other divisions. Orders decreased in the Americas,
mainly the result of lower orders in the U.S. In Asia, orders also decreased in
a mixed environment, with a broad decline in the systems businesses partly
offset by order growth for Power Products in China and for Automation Products
in India.
Service orders increased by 14 percent in local currencies (U.S. dollars: down 1
percent) compared to the prior-year period.
The volume of large orders rose 82 percent (47 percent in U.S. dollars) in the
first quarter to $2.5 billion. Large orders accounted for 27 percent of total
orders received in the quarter compared to 16 percent in the first quarter of
2008.
The order backlog at the end of March amounted to $25 billion, a local-currency
increase of 10 percent (7 percent lower in U.S. dollar terms) compared to the
end of the first quarter in 2008 and a 9-percent local-currency increase
compared to the end of the fourth quarter of 2008 (up 5 percent in U.S.
dollars).
Total revenues in local currencies continued to grow as execution of the order
backlog more than offset lower sales of products and base business during the
quarter. In divisions with longer business cycles and order backlogs, revenues
were higher (Power Products and Process Automation) or flat (Power Systems),
while revenues decreased in Automation Products and Robotics, which have shorter
backlogs. Revenues were also affected by delays in project execution and
postponements by customers in taking delivery of some products. These trends
reflect the difficult financing environment that still prevails in most markets.
Service revenues were 6 percent higher in the quarter in local currencies (U.S.
dollars: down 10 percent) compared to the first quarter of 2008.
__________________________
1. Excluding the impact of acquisitions, orders in Q1 2009 declined 3 percent in
local currencies (down 17 percent in U.S. dollars) compared to Q1 in 2008;
revenues grew 2 percent in local currencies (U.S. dollars: down 11 percent).
Earnings before interest and taxes
EBIT and EBIT margins in the first quarter of 2009 were substantially lower
across most divisions. The decline resulted from a number of factors, including
lower capacity utilization compared to the very high levels in the first quarter
of 2008 as well as a lower share of revenues from higher-margin products and
base business, reflecting the significant weakening of industrial markets.
EBIT was also reduced by the write-off of approximately $35 million of assets,
mainly from operations in Russia, and to some extent by a weaker pricing
environment in some short-cycle businesses.
EBIT was further impacted by the mark-to-market treatment of hedging
transactions which did not qualify for hedge accounting, which had a negative
impact equivalent to approximately 0.5 percentage point of EBIT margin in the
first quarter of 2009 compared to a positive impact of approximately 1
percentage point in the same quarter a year earlier.
Net income
Net income for the quarter developed in line with EBIT. The effective tax rate
in the quarter was 26 percent, compared to 25 percent in the same quarter of
2008 resulting mainly from a favorable tax ruling in the prior year.
Balance sheet and cash flow
Net cash at the end of the first quarter was $4.8 billion compared to $5.4
billion at the end of the previous quarter. Approximately half of the change is
attributable to currency translation effects. In addition, cash from operating
activities decreased, reflecting both lower earnings and a seasonal weakness in
net working capital, which was impacted primarily by the timing of large project
payments and a build up of inventories. Net working capital as a share of
revenues was 13.7 percent in the first quarter, up from 12.3 percent in the same
quarter a year earlier.
Compliance
As previously announced, ABB has disclosed to the U.S. Department of Justice and
the U.S. Securities and Exchange Commission various suspect payments. In
addition, ABB has continued to cooperate with various anti-trust authorities,
including the European Commission, regarding certain allegedly anti-competitive
practices in the power transformer business. With regard to one of the
anti-trust matters, ABB received in December 2008 from the European Commission a
Statement of Objections, which is a preliminary assessment of alleged
anti-competitive practices.
ABB's cables business is also under investigation for alleged anti-competitive
practices.
With respect to these matters, there could be adverse outcomes beyond our
provisions.
Cost reductions
ABB announced in December 2008 a cost take-out plan to adjust the company's cost
base to rapidly changing market conditions and protect its profitability. The
program aims to sustainably reduce ABB's costs - comprising both cost of sales
as well as general and administrative expenses - from 2008 levels by a total of
$1.3 billion by the end of 2010. As a result of the ongoing deterioration of
ABB's markets, the cost take-out goal has been expanded to $2 billion. The
additional savings will remain focused on the acceleration of ongoing
initiatives, such as low-cost sourcing, internal process improvements and
further measures to adjust ABB's global manufacturing and engineering footprint
to shifts in customer demand.
The total cost of the program is expected to increase from approximately $600
million - of which approximately $100 million was already recorded in 2008 -
towards $1 billion. Costs associated with the program in the first quarter of
2009 were not material.
Outlook
Visibility in ABB's markets for the remainder of 2009 remains limited.
Significant uncertainty remains surrounding the key demand drivers for the
company's products and systems. The business environment in March improved but
it is too early to say whether this represents a bottom to the market downturn.
In addition, the year-on-year comparison of results in the second quarter of
2009 will be particularly challenging because of the very high levels of growth
and earnings reported in the prior-year period.
The need for power transmission infrastructure in all regions - both equipment
replacement and new transmission projects - has not changed in recent quarters.
However, the cost and scarcity of project funding have delayed many power
investment decisions, and ABB is unable to precisely forecast when the various
government stimulus programs will have an impact or when the availability of
funding will improve.
Demand in ABB's industrial end markets depends to a large extent on GDP growth
and capital spending, together with commodity prices. Our customers' need to
steadily improve efficiency and productivity to meet increasing competition also
drives orders, along with demand in construction and in general industry.
Therefore, management's priority for 2009 will be to ensure that the company has
the flexibility to respond quickly to changing market conditions, taking
advantage of its global footprint, strong balance sheet and leading technologies
to improve its cost competitiveness while simultaneously tapping further
opportunities for profitable growth.
ABB also confirms its previously published targets for the period 2007 to 2011,
with the exception of the Robotics business which requires further restructuring
before re-assessing whether the targets fixed in 2007 can be achieved.
Divisional performance Q1 2009
+--------------------------------+----------+---------+----------+---------+
| Power Products division | Q1 09 | Q1 08 | Change |
| | | | |
+--------------------------------+----------+---------+--------------------+
| $ millions unless otherwise | | | US$ | Local |
| indicated | | | | |
+--------------------------------+----------+---------+----------+---------+
| Orders | 2,960 | 4,011 | -26% | -15% |
+--------------------------------+----------+---------+----------+---------+
| Order backlog (end March) | 8,178 | 8,670 | -6% | 10% |
+--------------------------------+----------+---------+----------+---------+
| Revenues | 2,468 | 2,622 | -6% | 6% |
+--------------------------------+----------+---------+----------+---------+
| EBIT | 442 | 534 | -17% | |
+--------------------------------+----------+---------+----------+---------+
| as % of revenues | 17.9% | 20.4% | | |
+--------------------------------+----------+---------+----------+---------+
| Cash flow from operating | 97 | 194 | | |
| activities | | | | |
+--------------------------------+----------+---------+----------+---------+
Underlying demand for power infrastructure remained steady in the quarter but
orders were lower than last year's very high levels, partly due to reduced
demand in industrial and construction-related sectors. Lower prices in some
product lines, reflecting the decrease in raw material costs, also contributed
to the order decline.
Demand in emerging markets held up better than in mature economies. Orders in
local currencies grew at a double-digit pace in the Middle East and Africa and
were flat in Asia. Orders were down in the Americas by 22 percent in local
currencies. In Europe, higher orders in Germany were more than offset by
decreases in all other major markets.
Local-currency revenues were higher in the quarter as execution of the strong
order backlog continued. The revenue improvement was led by a double-digit
increase in transformers. Service revenues increased faster than total revenues.
The rate of revenue growth also reflects slower execution of some large projects
and customer delays in accepting product delivery.
EBIT and EBIT margin were lower than the same period a year earlier, primarily
due to a write-down of assets amounting to approximately $35 million, mainly in
Russia.
Cash flow from operations was impacted by an increase in net working capital
related to more challenging market conditions.
+--------------------------------+----------+---------+----------+---------+
| Power Systems division | Q1 09 | Q1 08 | Change |
+--------------------------------+----------+---------+--------------------+
| $ millions unless otherwise | | | US$ | Local |
| indicated | | | | |
+--------------------------------+----------+---------+----------+---------+
| Orders | 2,279 | 2,048 | 11% | 36% |
+--------------------------------+----------+---------+----------+---------+
| Order backlog (end March) | 8,332 | 8,930 | -7% | 12% |
+--------------------------------+----------+---------+----------+---------+
| Revenues | 1,417 | 1,673 | -15% | 0% |
+--------------------------------+----------+---------+----------+---------+
| EBIT | 83 | 175 | -53% | |
+--------------------------------+----------+---------+----------+---------+
| as % of revenues | 5.9% | 10.5% | | |
+--------------------------------+----------+---------+----------+---------+
| Cash flow from operating | (150) | 74 | | |
| activities | | | | |
+--------------------------------+----------+---------+----------+---------+
Large orders more than doubled during the first quarter, led by a high-voltage
subsea link between Ireland and the U.K. and a major substation project in
Kuwait that together contributed almost $1 billion to the order intake. This
more than offset a decrease in base orders resulting primarily from lower demand
from the industrial sector.
Orders were up in all regions except Asia. In Europe, order growth was driven by
the Ireland-U.K. project and double-digit growth in Germany. Stable orders in
the U.S. plus increases in Canada and Mexico led to an order improvement in the
Americas. Orders were lower in China and India, leading to a decrease in Asia.
Revenues were steady in local currencies compared to the high level reported in
the same quarter in 2008 as execution of large projects in the order backlog
helped offset the lower level of base orders received in recent quarters.
The lower EBIT and EBIT margin mainly reflect a less favorable project mix
compared to the same quarter in 2008. In addition, EBIT was affected by higher
selling costs required to meet the increased tendering activity as well as a
negative impact from the mark-to-market treatment of hedging transactions.
The development of cash flow from operations reflects the timing of large
project payments during the quarter.
+-----------------------------+----------+------------+----------+---------+
| Automation Products | Q1 09 | Q1 08 | Change |
| division | | | |
| | | | |
+-----------------------------+----------+------------+--------------------+
| $ millions unless otherwise | | | US$ | Local |
| indicated | | | | |
+-----------------------------+----------+------------+----------+---------+
| Orders | 2,213 | 3,070 | -28% | -19% |
+-----------------------------+----------+------------+----------+---------+
| Order backlog (end March) | 3,839 | 4,360 | -12% | 2% |
+-----------------------------+----------+------------+----------+---------+
| Revenues | 2,042 | 2,403 | -15% | -3% |
+-----------------------------+----------+------------+----------+---------+
| EBIT | 310 | 457 | -32% | |
+-----------------------------+----------+------------+----------+---------+
| as % of revenues | 15.2% | 19.0% | | |
+-----------------------------+----------+------------+----------+---------+
| Cash flow from operating | 2 | 194 | | |
| activities | | | | |
+-----------------------------+----------+------------+----------+---------+
Industrial and construction markets weakened significantly compared to the same
quarter in 2008 as the severe economic slowdown reduced demand for most
products. Both base and large orders were down in the quarter. Demand improved
in some emerging markets and local-currency orders were up in Asia and in the
Middle East and Africa. These increases were more than offset by a decline in
orders in the Americas and Europe. Compared to the fourth quarter of 2008, total
orders were higher.
Revenues declined less than orders, mainly the result of the solid order
backlogs in longer-cycle businesses, such as power electronics and low-voltage
systems. Decreased revenues and lower factory loadings compared to the very high
levels of the prior year period were the main factors leading to the decline in
EBIT and EBIT margin in the quarter.
Cash flow from operations was lower than last year's quarter mainly due to the
reduced EBIT.
+-----------------------------+----------+------------+----------+---------+
| Process Automation division | Q1 09 | Q1 08 | Change |
| | | | |
+-----------------------------+----------+------------+--------------------+
| $ millions unless otherwise | | | US$ | Local |
| indicated | | | | |
+-----------------------------+----------+------------+----------+---------+
| Orders | 2,425 | 2,555 | -5% | 10% |
+-----------------------------+----------+------------+----------+---------+
| Order backlog (end March) | 6,645 | 7,135 | -7% | 11% |
+-----------------------------+----------+------------+----------+---------+
| Revenues | 1,765 | 1,749 | 1% | 17% |
+-----------------------------+----------+------------+----------+---------+
| EBIT | 149 | 225 | -34% | |
+-----------------------------+----------+------------+----------+---------+
| as % of revenues | 8.4% | 12.9% | | |
+-----------------------------+----------+------------+----------+---------+
| Cash flow from operating | 55 | 139 | | |
| activities | | | | |
+-----------------------------+----------+------------+----------+---------+
Orders received in local currencies increased in the first quarter, largely the
result of a $490-million oil and gas project award in Algeria. Demand in most
other end markets was significantly weaker than the same quarter in 2008,
especially in pulp and paper, marine and metals. The reduced demand reflects the
sharp decline in commodity prices and the rapid deterioration of global
industrial production over the past nine months.
Regionally, orders were sharply higher in the Middle East and Africa on the
large project in Algeria. Orders were down approximately 10 percent in local
currencies in the Americas and Europe, while orders in Asia decreased by almost
50 percent compared to the very high levels in the region a year ago.
The revenue increase in the quarter mainly reflected execution of the strong
order backlog, especially in the metals and minerals businesses. EBIT and EBIT
margin declined, however, largely due to a reduction in the share of total
revenues from higher-margin service activities in the quarter. The
mark-to-market treatment of hedging transactions had a negative impact on EBIT
margin in the first quarter of 2009 compared to a positive impact in the same
quarter in 2008.
Cash flow from operations developed in line with EBIT.
+--------------------------------+----------+----------+---------+---------+
| Robotics division | Q1 09 | Q1 08 | Change |
+--------------------------------+----------+----------+-------------------+
| $ millions unless otherwise | | | US$ | Local |
| indicated | | | | |
+--------------------------------+----------+----------+---------+---------+
| Orders | 206 | 456 | -55% | -49% |
+--------------------------------+----------+----------+---------+---------+
| Order backlog (end March) | 438 | 662 | -34% | -25% |
+--------------------------------+----------+----------+---------+---------+
| Revenues | 294 | 387 | -24% | -15% |
+--------------------------------+----------+----------+---------+---------+
| EBIT | (21) | 25 | n/a | |
+--------------------------------+----------+----------+---------+---------+
| as % of revenues | -7.1% | 6.5% | | |
+--------------------------------+----------+----------+---------+---------+
| Cash flow from operating | (45) | 10 | | |
| activities | | | | |
+--------------------------------+----------+----------+---------+---------+
Demand remained very weak in the Robotics business. Both automotive and general
industry customers significantly reduced expenditures on manufacturing
automation solutions. Orders were significantly lower in all regions compared to
the first quarter of 2008.
Revenues decreased on the combination of both a lower opening order backlog and
reduced base business. Earnings were negative due to the significantly lower
volumes and resulting sharp decrease in capacity utilization. Service revenues
and margins also declined in the quarter as customers postponed some operating
expenses. The $70-million restructuring begun in the fourth quarter last year is
on target and a positive impact on earnings is expected by the end of the fourth
quarter of 2009.
Cash flow was negative, reflecting some project delays and the very weak
financing environment within the automotive industry.
More information
To access a full version of this pressrelease, including financial statements,
please visit www.abb.om/news or the investor relations webpage at
www.abb.com/investorrelations, where a presentation for investors also will 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 72 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 18027, followed by the # key.
A conference call for analysts and investors is scheduled to begin today at 3:00
p.m. CET (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 two weeks. Playback numbers: +1 866 416 2558 (U.S./Canada) or +41
91 612 4330 (Europe and the rest of the world). The code is 19281, followed by
the # key.
+--------------------------------------------+---------------------------+
| Investor calendar 2009 | |
| | |
+--------------------------------------------+---------------------------+
| ABB Ltd Annual General Meeting | May 5, 2009 |
+--------------------------------------------+---------------------------+
| Q2 2009 results | July 23, 2009 |
+--------------------------------------------+---------------------------+
| Q3 2009 results | Oct. 29, 2009 |
+--------------------------------------------+---------------------------+
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 120,000 people.
Zurich, April 23, 2009
Joe Hogan, CEO
Important notice about forward-looking information
This press release includes forward-looking information and statements including
the sections entitled "Cost reductions," "Outlook, and "Compliance," 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 related to the financial
crisis and economic slowdown, costs associated with compliance activities, the
amount of revenues we are able to generate from backlog and orders received, raw
materials 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.
ABB first-quarter (Q1) 2009 key figures
+-------------+--------------------------------+--------------+--------------+------------+------------+
| $ millions unless otherwise indicated | Q1 09 | Q1 08 | Change |
+----------------------------------------------+--------------+--------------+-------------------------+
| | | | | US$ | Local |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| Orders | Group | 9,150 | 10,943 | -16% | -3% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Products | 2,960 | 4,011 | -26% | -15% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Systems | 2,279 | 2,048 | 11% | 36% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Automation Products | 2,213 | 3,070 | -28% | -19% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Process Automation | 2,425 | 2,555 | -5% | 10% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Robotics | 206 | 456 | -55% | -49% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Corporate and other | (933) | (1,197) | | |
| | (Inter-division eliminations) | | | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| Revenues | Group | 7,209 | 7,956 | -9% | 3% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Products | 2,468 | 2,622 | -6% | 6% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Systems | 1,417 | 1,673 | -15% | 0% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Automation Products | 2,042 | 2,403 | -15% | -3% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Process Automation | 1,765 | 1,749 | 1% | 17% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Robotics | 294 | 387 | -24% | -15% |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Corporate and other | (777) | (878) | | |
| | (Inter-division eliminations) | | | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| EBIT | Group | 862 | 1,353 | -36% | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Products | 442 | 534 | -17% | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Systems | 83 | 175 | -53% | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Automation Products | 310 | 457 | -32% | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Process Automation | 149 | 225 | -34% | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Robotics | (21) | 25 | n/a | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Corporate and other | (101) | (63) | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| EBIT margin | Group | 12.0% | 17.0% | | |
| (%) | | | | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Products | 17.9% | 20.4% | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Power Systems | 5.9% | 10.5% | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Automation Products | 15.2% | 19.0% | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Process Automation | 8.4% | 12.9% | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
| | Robotics | -7.1% | 6.5% | | |
+-------------+--------------------------------+--------------+--------------+------------+------------+
ABB Q1 2009 orders received and revenues by region
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| $ millions |Orders received | Change | Revenues | Change |
+----------------+-----------------+--------------+----------------+---------------+
| | Q1 09 | Q1 08 | US$ | Local | Q1 09 | Q1 08 | US$ | Local |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| Europe | 3,662 | 5,151 | -29% | -14% | 3,002 | 3,652 | -18% | -2% |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| Americas | 1,355 | 1,781 | -24% | -14% | 1,493 | 1,432 | 4% | 15% |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| Asia | 2,221 | 3,008 | -26% | -17% | 1,897 | 1,976 | -4% | 6% |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| Middle East | 1,912 | 1,003 | 91% | 119% | 817 | 896 | -9% | 1% |
| and Africa | | | | | | | | |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
| Group total | 9,150 | 10,943 | -16% | -3% | 7,209 | 7,956 | -9% | 3% |
+----------------+--------+--------+------+-------+--------+-------+-------+-------+
Appendix I - Notes
Equity securities transactions
On February 13, 2008, the Company announced a share-buyback program up to a
maximum value of CHF 2.2 billion (equivalent to $2 billion at then-current
exchange rates) with the intention of completing the buyback program prior to
the Annual General Meeting of Shareholders in 2010 and of proposing the
cancellation of the shares at that meeting. A total of 22.675 million shares
were repurchased under the program up to the end of December 2008, at a total
cost of CHF 652 million ($619 million, using exchange rates effective at the
respective repurchase dates). No repurchases took place in the first quarter of
2009. The repurchased shares are included in treasury stock in the consolidated
balance sheet at March 31, 2009. As announced in February 2009, given the
current market uncertainty, the Company is not actively pursuing new purchases
under this program.
Accounting pronouncements
As of January 1, 2009, the Company adopted Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51 (SFAS 160). SFAS 160 changes the
accounting and reporting for minority interests, which are recharacterized as
noncontrolling interests and classified as a component of equity. SFAS 160 is
effective prospectively as of January 1, 2009, except for the presentation and
disclosure requirements which apply retrospectively for all periods presented.
As a result of the adoption, noncontrolling interests of $612 million
were reclassified to stockholders' equity in 2008. Income attributable
to noncontrolling interests of $41 million, and $64 million for the three months
ended March 31, 2009 and 2008, respectively, is included in net income and is
deducted to arrive at net income attributable to ABB.
The Company applies the provisions of Financial Accounting Standards No. 141,
Business Combinations (SFAS 141R) to business combinations in which the
acquisition date is on or after January 1, 2009. Under SFAS 141R an entity is
required to recognize the assets acquired, liabilities assumed, contractual
contingencies and contingent consideration at their fair value on the
acquisition date. It further requires that acquisition related costs are
recognized separately from the acquisition and expensed as incurred;
restructuring costs generally are expensed in periods subsequent to the
acquisition date. Further, SFAS 141R requires that changes in accounting for
deferred tax asset valuation allowances and acquired income tax uncertainties
after the measurement period impact income tax expense in periods subsequent to
the acquisition date. In addition, under SFAS 141R, acquired in-process research
and development is capitalized as an intangible asset and amortized over its
estimated useful life.
As of January 1, 2009, the Company adopted Financial Accounting Standards Board
Staff Position on APB 14-a Accounting for Convertible Debt Instruments That May
Be Settled in Cash upon Conversion (including Partial Cash Settlement) (FSP APB
14-a). FSP APB 14-a requires the issuer of such instruments to separately
account for the liability and equity components of the convertible instrument in
a manner that reflects the issuer's nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP APB 14-a requires
bifurcation of a component of the debt, classification of that component in
equity, and then accretion of the resulting discount on the debt as part of
interest expense being reflected in the income statement. As of December 31,
2008 and 2007, the Company did not have any convertible debt instruments
outstanding. The Company adopted the provisions of the guidance on a retroactive
basis to January 1, 2007 as they relate to the CHF 1 billion convertible bonds
fully converted by bondholders in 2007. The total impact on the Company's 2007
Consolidated Income Statement was a loss of $146 million. Consequently, as of
January 1, 2008, retained earnings were reduced by $146 million and there was a
corresponding increase in capital stock and additional paid-in capital, with
total stockholders' equity remaining unchanged.
Employee benefits funding
In the first quarter of 2009, the Company made standard contributions of
approximately $53 million to its pension plans and approximately $4 million in
contributions to its other postretirement plans. In addition, the Company made
discretionary contributions of approximately $16 million in Switzerland. The
planned standard contributions for the full year 2009, based on current plan
structures, are approximately $232 million to defined benefit pension plans and
approximately $14 million to other postretirement plans. The Company expects
that additional discretionary contributions will be made in the remaining part
of the year.
Local currencies
The results of operations and financial position of many of the Company's
subsidiaries are recorded in the currencies of the countries in which those
subsidiaries reside. The Company refers to these as "local currencies." However,
the Company reports its operational and financial results in U.S. dollars.
Differences in our results in local currencies as compared to U.S. dollars are
caused exclusively by changes in currency exchange rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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