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 October 2016

 

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 ☒ 

Form 40-F ⬜ 

 

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): ⬜ 

 

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): ⬜ 

 

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 ⬜ 

No ☒ 

 

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 October 27, 2016 titled “Continued margin growth in tough markets”.

2.              Q3 2016 Financial Information.

3.     Press release issued by ABB Ltd dated October 27, 2016 titled “ABB names Timo Ihamuotila as new Chief Financial Officer”.

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

 

The information provided by Item 2 above is incorporated by reference into ABB Ltd's registration statement on Form F-3 (File No. 333-180922) and registration statements on Form S-8 (File Nos. 333-190180, 333-181583, 333-179472, 333-171971 and 333-129271) each of which was previously filed with the Securities and Exchange Commission.

 

  

 


 

 

Zurich, Switzerland, October 27, 2016: Third-quarter highlights 

Continued margin growth in tough markets

          Operational EBITA margin1 increased to 12.6%

          White Collar Productivity on track towards $1.3 bn savings; expected total costs reduced by $100 mn

          Net Income $568 million; basic earnings per share up 2%

          Base orders -6%2; total orders -13%; reflect Q3 uncertainty

          Revenues steady

          Cash flow from operating activities $1,081 million, more consistent quarterly cash generation

          Timo Ihamuotila to succeed Eric Elzvik as Chief Financial Officer effective April 1, 2017

          ABB launched Stage 3 of its Next Level Strategy – committed to unlocking value

________________________________________________________________________________________________________

 

“We delivered the eighth consecutive quarter of margin accretion through our continued focus on execution,” said CEO Ulrich Spiesshofer. “In the third quarter, we experienced significant macro uncertainties around Brexit and the US elections as reflected in the low order pattern. Orders in Power Grids were additionally dampened by the hesitation of customers prior to the Capital Markets Day. However, the Power Grids transformation is on track as clearly demonstrated by the 170 basis points margin accretion,” he said. “With our enhanced cash culture, we have delivered more than 30 percent higher cash flow so far this year with a much steadier cash generation profile.”

“We continue to run the company with discipline, realizing growth opportunities where possible whilst driving earnings and cash growth. We are committed to unlocking value for all shareholders as a more focused, agile company building on our industry-leading digital offering.”

 

Key figures

 

 

Change

 

 

Change

($ in millions, unless otherwise
indicated)

Q3 2016

Q3 2015

US$

 

Comparable1

9M 2016

9M 2015

US$

 

Comparable1

Orders

7,533

8,767

-14%

-13%

25,102

28,167

-11%

-8%

Revenues

8,255

8,519

-3%

0%

24,835

26,239

-5%

-1%

Operational EBITA1

1,046

1,081

-3%

-2%3

3,095

3,088

0%

+3%3

as % of operational revenues1

12.6%

12.5%

+0.1pts

 

12.4%

11.8%

+0.6pts

 

Net income

568

577

-2%

 

1,474

1,729

-15%

 

Basic EPS ($)

0.27

0.26

+2%4

 

0.68

0.77

-12%4

 

Operational EPS1 ($) 

0.32

0.32

-1%4

0%4

0.95

0.90

+5%4

+7%4

Cash flow from operating activities

1,081

1,173

-8%

 

2,415

1,824

+32%

 

Short-term outlook

Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2015. The market remains impacted by modest growth and increased uncertainties, e.g., Brexit in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.

 

1 For a reconciliation of non-GAAP measures, see “Supplemental Reconciliations and Definitions” in the attached Q3 2016 Financial Information

2 Growth rates for orders, revenues and order backlog are on a comparable basis (local currency adjusted for acquisitions and divestitures), previously referred to as ‘like-for-like’. US$ growth rates are presented in Key Figures table

3 Constant currency (not adjusted for portfolio changes)

4 EPS growth rates are computed using unrounded amounts. Comparable operational earnings per share is in constant currency (2014 exchange rates and not adjusted for changes in the business portfolio

 

1


 

 

 

 

 

Q3 2016 Group results

 

Orders

Total orders declined 13 percent (14 percent in US dollars) compared with the third quarter of 2015, reflecting timing of large order awards and lower short cycle volumes. Base orders (below $15 million) decreased 6 percent (7 percent in US dollars), while large orders ($15 million and above) were lower in all divisions and represented 11 percent of total orders compared with 17 percent a year earlier. Orders for services and software were 3 percent lower (5 percent in US dollars) and represented 17 percent of total orders compared with 16 percent a year ago.

 

Market overview

Demand patterns in ABB’s three regions:

          Demand in Europe was subdued primarily due to moderate overall growth, uncertainties in the UK following Brexit and political events in Turkey.  Total orders declined 18 percent (20 percent in US dollars) while base orders were stable (2 percent lower in US dollars). Base order demand was positive in Germany, Italy, Sweden and Switzerland, and weak in the UK and Norway.

          The Americas was weaker due to considerable investment delays triggered by the US election and lagging industrial demand. Total orders declined 16 percent (17 percent in US dollars) on weaker large orders; base orders were 8 percent lower (9 percent in US dollars) on weak demand in the US, Canada and Brazil.

          Demand in Asia, the Middle East and Africa (AMEA) was mixed. India continued to grow and China continued its investment activities in power transmission and robotics. Total orders for the region were down 5 percent (7 percent in US dollars) as strong order development in India could not offset declines in China and the UAE. Base orders declined 9 percent (10 percent in US dollars).

 

Demand patterns in ABB’s three major customer sectors:

          Utilities continued their investment activities to integrate renewable energy and foster grid reliability and efficiency.

          In industry: investments in discrete and hybrid industries such as automotive, food and beverage and machinery remained positive while demand from the process industries, specifically mining and oil and gas remain subdued.

          Transport and infrastructure demand has been mixed. Demand for specialty vessels solutions remained strong as well as solutions involving energy efficiency for rail transport. Construction has been mixed.

 

The book-to-bill1 ratio in the third quarter decreased to 0.91x from 1.03x in the same quarter a year earlier. For the first nine months, book-to-bill1 is 1.01x. The order backlog at the end of September 2016 amounted to $24,554 million, a decrease of 2 percent (3 percent in US dollars) compared with the end of the third quarter in 2015.

 

Revenues

Revenues were flat (3 percent lower in US dollars) in the third quarter. Revenues were steady in the Electrification Products and Discrete Automation and Motion divisions and increased slightly in Power Grids, which offset a decline in Process Automation. Total services and software revenues increased 5 percent (4 percent in US dollars) and represented 18 percent of total revenues compared with 17 percent a year ago.

 

Operational EBITA

Operational EBITA decreased 2 percent in local currencies (3 percent in US dollars) to $1,046 million and included the impact of negative mix. Operational EBITA margin improved 10 basis points to 12.6 percent compared with the same quarter a year ago, reflecting margin accretion in Electrification Products, Process Automation and Power Grids as well as ongoing productivity and cost savings measures, such as the white collar productivity program.

 

 

2


 

 

 

 

 

Operational EPS and net income

Operational EPS was steady at $0.32 in constant currency compared with the same period a year earlier. The reduction in the weighted-average number of shares outstanding compensated for a slightly lower operational EBITA, higher interest expense and higher tax rate. Net income decreased 2 percent to $568 million and basic earnings per share was $0.27 compared with $0.26 for the same quarter of 2015, an increase of 2 percent.

 

Cash flow from operating activities

Cash flow from operating activities was $1,081 million, $92 million lower compared with the third quarter of 2015, mainly due to lower net income. In the first nine months of 2016, cash flow from operating activities increased
32 percent compared with the same period a year ago, primarily due to stronger working capital management and timing of income tax payments.

 

Shareholder returns

On September 30, 2016, ABB announced the completion of the share buyback program that was introduced in September 2014. During the buyback program, ABB repurchased a total of 171.3 million registered shares (equivalent to 7.4 percent of its issued share capital at the launch of the buyback program) for a total amount of approximately $3.5 billion.

At its Capital Markets Day on October 4, 2016, ABB announced its plans for a new share buyback program of up to $3 billion from 2017 through 2019. This reflects the company’s confidence and the continued strength of ABB’s cash generation and financial position.

Divestitures

In line with its strategy to continuously optimize the portfolio, ABB announced in September the planned sale of its global high-voltage cables systems business to NKT Cables. The transaction is expected to close in the first quarter of 2017 subject to regulatory clearances. ABB and NKT also signed an agreement for a long-term strategic partnership that will serve future projects globally.

Management changes

Today, ABB announced the appointment of Timo Ihamuotila as Chief Financial Officer and member of the Executive Committee, effective April 1, 2017. Ihamuotila succeeds current CFO Eric Elzvik in an orderly transition process, who will pursue career opportunities outside of ABB after a thorough handover in the second quarter of 2017. Ihamuotila joins ABB from Nokia, “a global leader in the technologies that connect people and things,” where he has been the Chief Financial Officer for the last seven years. Ihamuotila is a proven CFO with deep experience in communications, software and services industries, active portfolio management and operational performance improvement. He brings a deep understanding of corporate transformation and digital business models.

 

“Timo is a seasoned CFO with an impressive global track record,” said CEO Ulrich Spiesshofer. “He has extensive and deep experience in all aspects of finance as well as in transforming businesses in times of industrial digitalization. With his wide expertise, ranging from financial to commercial to general management, he is the ideal person to lead our finance organization and partner to drive ABB’s ongoing transformation as a leader in the digital industry. I am delighted to welcome Timo to our Executive Committee in these exciting times, as we focus on unlocking maximum value for all shareholders,” Spiesshofer said. “At the same time I would like to warmly thank Eric Elzvik already now for his long, outstanding commitment and many valuable contributions to ABB over more than three decades. During Eric’s CFO tenure, a new cash culture together with a significant improvement of our Net Working Capital, a fundamental productivity improvement of the finance function and many portfolio actions were successfully established and delivered. We wish Eric all the best for the next step of his professional career which he will pursue after the orderly handover process is completed in Q2 2017.”

 

3


 

 

 

 

 

Q3 divisional performance

 

($ in millions,
unless otherwise indicated)

Orders

Change

Revenues

Change

Operational EBITA %

Change

US$

Comparable1

US$

Comparable1

Electrification Products

2,223

-6%

-4%

2,308

-2%

0%

17.8%

+0.4pts

Discrete Automation
& Motion

2,123

-5%

-4%

2,203

-1%

0%

14.1%

-0.7pts

Process Automation

1,193

-22%

-21%

1,523

-8%

-7%

12.2%

+1.5pts

Power Grids

2,391

-22%

-21%

2,636

-6%

+1%

9.5%

+1.7pts

Corporate & other (incl. inter-division elimination)

-397

 

 

-415

 

 

 

 

ABB Group

7,533

-14%

-13%

8,255

-3%

0%

12.6%

+0.1pts

 

Electrification Products

Total orders were down as positive order development in Europe could not offset a decline in the Americas and AMEA. In particular, markets including China, Saudi Arabia, Brazil and Turkey were challenging, while Italy, Switzerland and India were stronger. Revenues were steady, and operational EBITA margin improved 40 basis points to 17.8 percent, due to additional cost savings, capacity adjustments and supply chain management. 

 

Discrete Automation and Motion

Continued strong demand patterns in robotics and in food and beverage could not offset the capex declines in process industries such as oil and gas, which negatively impacted order development. Revenues were steady, reflecting strong order execution. Operational EBITA margin declined 70 basis points compared with the same quarter a year ago primarily due to unfavorable mix and lower capacity utilization. Continued capacity adjustments and productivity improvements are underway.

 

Process Automation

Total orders were 21 percent lower (22 percent in US dollars) as reduced capital expenditure and cautious discretionary spending in process industries continued to impact large as well as base orders (13 percent lower, 13 percent in US dollars). Revenues declined 7 percent (8 percent in US dollars) as steady demand for specialty vessels could not compensate for declines in such segments as mining and oil and gas. Operational EBITA margin increased 150 basis points to 12.2 percent due to successful project execution and implemented cost reduction and productivity measures.

 

Power Grids

Total orders were lower compared with the same quarter a year ago primarily due to the timing of large order awards. Lower base orders reflected sluggishness in some markets such as the US, Saudi Arabia and Brazil while Europe remained supportive. Revenues were slightly higher due to steady execution of a healthy order backlog. Operational EBITA margin increased by 170 basis points to 9.5 percent. This solid performance was driven by sustained project execution, improved productivity and continued cost savings.

 

 

4


 

 

 

 

 

Next Level strategy – Stage 3

On October 4, 2016, ABB launched Stage 3 of its Next Level strategy to unlock value for customers and shareholders. The core elements of this include: shaping ABB’s divisions into four market-leading, entrepreneurial units; realizing ABB’s full digital potential; accelerating momentum in operational excellence; and strengthening ABB’s brand.

Driving growth in four market-leading entrepreneurial divisions

ABB is shaping and focusing its divisional structure into four market-leading divisions: Electrification Products, Robotics and Motion, Industrial Automation and Power Grids, effective January 1, 2017. The divisions will be empowered as entrepreneurial units within ABB, reflected in an enhancement of ABB’s performance and compensation model focusing on individual accountability and responsibility. They will benefit from sales collaboration orchestrated by regions and countries as well as from the group-wide digital offering, ABB’s leading G&A structure and costs, common supply chain management, and corporate research centers.

ABB announced two important partnerships in line with transforming the Power Grids offering. The agreements with Fluor and Aibel are examples in which ABB will bring its leading technology in power transmission and distribution. Fluor and Aibel provide execution of turnkey Engineering, Procurement and Construction (EPC) responsibilities for substations and offshore wind connections, respectively.

A quantum leap in digital with ABB AbilityTM

ABB is a hidden digital champion today. It is ideally positioned to win in the digital space with new and existing end-to-end digital solutions. The newly launched ABB Ability offering combines ABB’s portfolio of digital solutions and services across all customer segments, cementing the group’s leading position in the Fourth Industrial Revolution and supporting the competitiveness of ABB’s four entrepreneurial divisions.

The company has announced a far-reaching strategic partnership with Microsoft, the world’s largest software company, to develop next-generation digital solutions on an integrated open cloud platform. Customers will benefit from the unique combination of ABB’s deep domain knowledge and extensive portfolio of industrial solutions and Microsoft’s Azure intelligent cloud as well as B2B engineering competence. Together, the partners will drive digital transformation in customer segments across ABB’s businesses in utilities, industry and transport and infrastructure.

Accelerating momentum in operational excellence

ABB continues to build on its existing momentum and is further accelerating its operational excellence.

The company’s White-Collar Productivity savings program has outperformed expectations since its launch last year. As a result, ABB has increased the program’s cost reduction target by 30 percent to $1.3 billion. ABB will achieve these additional savings within the initially announced timeframe and for $100 million lower of total combined restructuring program and implementation costs. ABB is continuing its regular cost-savings programs, leveraging operational excellence and world-class supply chain management to achieve savings equivalent to 3-5 percent of cost of sales each year.

ABB reaffirms the target of its Net Working Capital program to free up approximately $2 billion by the end of 2017. The program is well on track and focuses on improving inventory management by optimizing the entire value chain, from product design to manufacturing, and by optimizing other net working capital measures.

Strengthening the global ABB brand

ABB will adopt a single corporate brand, consolidating all its brands around the world under one umbrella. ABB’s portfolio of companies will be unified, showcasing the full breadth and depth of the company’s global offering under one master brand. This transition is expected to take up to two years.

ABB reaffirmed its Group 2015-2020 financial targets.

 

5


 

 

 

 

 

Outlook

Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2015. The market remains impacted by modest growth and increased uncertainties relating to Brexit in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.

 

The attractive long-term demand outlook in ABB’s three major customer sectors — utilities, industry and transport & infrastructure — is driven by the Energy and Fourth Industrial Revolutions.

 

ABB is well-positioned to tap into these opportunities for long-term profitable growth with its strong market presence, broad geographic and business scope, technology leadership and financial strength.

 

 

 

6


 

 

 

 

 

 

More information

The Q3 2016 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.

 

ABB will host a press conference today starting at 9:00 a.m. Central European Time (CET) (8:00 a.m. BST, 3:00 a.m. EDT). The event will be accessible by conference call. Callers from the UK should dial +44 203 059 58 62. From Sweden, the number to dial is +46 85 051 00 31, and from the rest of Europe, +41 58 310 50 00. Callers from the US and Canada should dial +1 866 291 41 66 (toll-free) or +1 631 570 56 13 (long-distance charges apply). Lines will be open 10 to 15 minutes before the start of the conference. A podcast of the media conference will be available for one week afterwards. The podcast will be accessible at: http://new.abb.com/media/events

 

A conference call for analysts and investors is scheduled to begin today at 2:00 p.m. CET (1:00 p.m. BST, 8:00 a.m. EDT). Callers from the UK should dial +44 203 059 58 62. From Sweden, the number to dial is +46 85 051 00 31, and from the rest of Europe, +41 58 310 50 00. Callers from the US and Canada should dial +1 866 291 41 66 (toll free) or +1 631 570 56 13 (long-distance charges apply). Callers are requested to phone in 10 minutes before the start of the call. The call will also be accessible on the ABB website and a recorded session will be available as a podcast one hour after the end of the conference call and can be downloaded from our website www.abb.com.

 

 

ABB (ABBN: SIX Swiss Ex) is a pioneering technology leader in electrification products, robotics and motion, industrial automation and power grids, serving customers in utilities, industry and transport & infrastructure globally. Continuing more than a 125-year history of innovation, ABB today is writing the future of industrial digitalization and driving the Energy and Fourth Industrial Revolutions. ABB operates in more than 100 countries with about 135,000 employees. www.abb.com 

 

 

Investor calendar 2016/2017

 

 

Fourth-quarter and full-year 2016 results

February 8, 2017

Annual General Meeting (Zurich)

April 13, 2017

First quarter 2017 results

April 20, 2017

Second quarter 2017 results

July 20, 2017

Third quarter 2017 results

October 26, 2017

 

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, including those in the sections of this release titled “Short-term outlook”, “Outlook”, “Shareholder Returns”, “Divestitures”, “Management Changes” and “Next Level strategy - Stage 3”. 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,” “is likely”, “intends” 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

 

7


 

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, 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.

 

Zurich, October 27, 2016

Ulrich Spiesshofer, CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For more information please contact:

 

Media Relations

Tel: +41 43 317 65 68

media.relations@ch.abb.com

 

Investor Relations

Tel. +41 43 317 71 11

investor.relations@ch.abb.com

 

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

 

  

 

8


 

  

 

1              Q3 2016 Financial Information 


 

 

Financial  Information

 

 

 

 

 

 

 

 

 

3     Key Figures

 

 

8     Interim  Consolidated  Financial  Information  (unaudited)

 

8           Interim  Consolidated  Income  Statements

9           Interim  Condensed  Consolidated  Statements  of Comprehensive  Income 

10         Interim  Consolidated  Balance  Sheets

11          Interim  Consolidated  Statements  of Cash  Flows 

12         Interim  Consolidated  Statements  of Changes  in  Stockholders’  Equity 

13         Notes  to  the  Interim  Consolidated  Financial  Information

 

 

 

32       Supplemental Reconciliations and Definitions

 

 

 

 

  

2              Q3 2016 Financial Information 


 

Financial Information

Key Figures

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q3 2016

Q3 2015

US$

Comparable(1)

 

Orders

7,533

8,767

-14%

-13%

 

Order backlog (end September)

24,554

25,371

-3%

-2%

 

Revenues

8,255

8,519

-3%

0%

 

Operational EBITA(1)

1,046

1,081

-3%

-2%(2)

 

 

as % of operational revenues(1)

12.6%

12.5%

+0.1 pts

 

 

Net income

568

577

-2%

 

 

Basic earnings per share ($)

0.27

0.26

2%(3)

 

 

Operational earnings per share(1) ($)

0.32

0.32

-1%(3)

0%(3)

 

Cash flow from operating activities

1,081

1,173

-8%

 



 

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

9M 2016

9M 2015

US$

Comparable(1)

 

Orders

25,102

28,167

-11%

-8%

 

Revenues

24,835

26,239

-5%

-1%

 

Operational EBITA(1)

3,095

3,088

0%

3%(2)

 

 

as % of operational revenues(1)

12.4%

11.8%

+0.6pts

 

 

Net income

1,474

1,729

-15%

 

 

Basic earnings per share ($)

0.68

0.77

-12%(3)

 

 

Operational earnings per share(1) ($)

0.95

0.90

5%(3)

7%(3)

 

Cash flow from operating activities

2,415

1,824

32%

 

(1)  For a reconciliation of non-GAAP measures see “Supplemental Reconciliations and Definitions” on page 32.

(2)  Constant currency (not adjusted for portfolio changes).

(3) Earnings per share growth rates are computed using unrounded amounts. Comparable Operational earnings per share growth is in constant currency (2014 foreign exchange rates and not adjusted for changes in the business portfolio).

3              Q3 2016 Financial Information 


 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q3 2016

Q3 2015

US$

Local

Comparable

 

Orders

ABB Group

7,533

8,767

-14%

-13%

-13%

 

 

Electrification Products

2,223

2,365

-6%

-4%

-4%

 

 

Discrete Automation and Motion

2,123

2,241

-5%

-4%

-4%

 

 

Process Automation

1,193

1,529

-22%

-21%

-21%

 

 

Power Grids

2,391

3,082

-22%

-21%

-21%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(397)

(450)

 

Third-party base orders

ABB Group

6,727

7,272

-7%

-6%

-6%

 

 

Electrification Products

2,095

2,173

-4%

-1%

-1%

 

 

Discrete Automation and Motion

1,899

1,983

-4%

-3%

-3%

 

 

Process Automation

1,128

1,316

-14%

-13%

-13%

 

 

Power Grids

1,588

1,782

-11%

-10%

-9%

 

 

Corporate and Other

17

18

 

 

 

 

Order backlog (end September)

ABB Group

24,554

25,371

-3%

-3%

-2%

 

 

Electrification Products

3,093

3,038

2%

3%

3%

 

 

Discrete Automation and Motion

4,458

4,601

-3%

-2%

-2%

 

 

Process Automation

5,675

6,322

-10%

-11%

-11%

 

 

Power Grids

13,063

13,117

0%

1%

2%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,735)

(1,707)

 

Revenues

ABB Group

8,255

8,519

-3%

-2%

0%

 

 

Electrification Products

2,308

2,353

-2%

0%

0%

 

 

Discrete Automation and Motion

2,203

2,220

-1%

0%

0%

 

 

Process Automation

1,523

1,659

-8%

-7%

-7%

 

 

Power Grids

2,636

2,791

-6%

-4%

1%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(415)

(504)

 

Operational EBITA

ABB Group

1,046

1,081

-3%

-2%

 

 

 

Electrification Products

411

410

0%

2%

 

 

 

Discrete Automation and Motion

311

335

-7%

-6%

 

 

 

Process Automation

187

181

3%

4%

 

 

 

Power Grids

254

221

15%

17%

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(117)

(66)

 

Operational EBITA %

ABB Group

12.6%

12.5%

 

 

 

 

 

Electrification Products

17.8%

17.4%

 

 

 

 

 

Discrete Automation and Motion

14.1%

14.8%

 

 

 

 

 

Process Automation

12.2%

10.7%

 

 

 

 

 

Power Grids

9.5%

7.8%

 

 

 

 

Income from operations

ABB Group

878

882

 

 

 

 

 

Electrification Products

389

390

 

 

 

 

 

Discrete Automation and Motion

276

264

 

 

 

 

 

Process Automation

170

159

 

 

 

 

 

Power Grids

222

159

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(179)

(90)

 

Income from operations %

ABB Group

10.6%

10.4%

 

 

 

 

 

Electrification Products

16.9%

16.6%

 

 

 

 

 

Discrete Automation and Motion

12.5%

11.9%

 

 

 

 

 

Process Automation

11.2%

9.6%

 

 

 

 

 

Power Grids

8.4%

5.7%

 

 

 

 

Cash flow from operating activities

ABB Group

1,081

1,173

 

 

 

 

 

Electrification Products

373

372

 

 

 

 

 

Discrete Automation and Motion

322

386

 

 

 

 

 

Process Automation

234

197

 

 

 

 

 

Power Grids

189

189

 

 

 

 

 

Corporate and Other

(37)

29

 

 

 

4              Q3 2016 Financial Information 


 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

9M 2016

9M 2015

US$

Local

Comparable

 

Orders

ABB Group

25,102

28,167

-11%

-8%

-8%

 

 

Electrification Products

7,001

7,493

-7%

-3%

-3%

 

 

Discrete Automation and Motion

6,641

7,238

-8%

-6%

-6%

 

 

Process Automation

4,346

5,551

-22%

-19%

-19%

 

 

Power Grids

8,353

9,577

-13%

-11%

-10%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,239)

(1,692)

 

 

 

 

Third-party base orders

ABB Group

22,027

23,180

-5%

-2%

-2%

 

 

Electrification Products

6,606

6,948

-5%

-2%

-2%

 

 

Discrete Automation and Motion

5,957

6,267

-5%

-3%

-3%

 

 

Process Automation

3,809

4,246

-10%

-7%

-7%

 

 

Power Grids

5,612

5,663

-1%

2%

3%

 

 

Corporate and Other

43

56

 

 

 

 

Order backlog (end September)

ABB Group

24,554

25,371

-3%

-3%

-2%

 

 

Electrification Products

3,093

3,038

2%

3%

3%

 

 

Discrete Automation and Motion

4,458

4,601

-3%

-2%

-2%

 

 

Process Automation

5,675

6,322

-10%

-11%

-11%

 

 

Power Grids

13,063

13,117

0%

1%

2%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,735)

(1,707)

 

Revenues

ABB Group

24,835

26,239

-5%

-2%

-1%

 

 

Electrification Products

6,830

7,088

-4%

0%

0%

 

 

Discrete Automation and Motion

6,503

6,839

-5%

-3%

-3%

 

 

Process Automation

4,861

5,298

-8%

-5%

-5%

 

 

Power Grids

7,933

8,514

-7%

-4%

0%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,292)

(1,500)

 

Operational EBITA

ABB Group

3,095

3,088

0%

3%

 

 

 

Electrification Products

1,143

1,161

-2%

1%

 

 

 

Discrete Automation and Motion

896

992

-10%

-8%

 

 

 

Process Automation

593

624

-5%

-2%

 

 

 

Power Grids

706

581

22%

24%

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(243)

(270)

 

Operational EBITA %

ABB Group

12.4%

11.8%

 

 

 

 

 

Electrification Products

16.7%

16.4%

 

 

 

 

 

Discrete Automation and Motion

13.8%

14.5%

 

 

 

 

 

Process Automation

12.1%

11.8%

 

 

 

 

 

Power Grids

8.9%

6.8%

 

 

 

 

Income from operations

ABB Group

2,309

2,702

 

 

 

 

 

Electrification Products

1,016

1,089

 

 

 

 

 

Discrete Automation and Motion

742

857

 

 

 

 

 

Process Automation

452

580

 

 

 

 

 

Power Grids

554

468

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(455)

(292)

 

 

 

 

Income from operations %

ABB Group

9.3%

10.3%

 

 

 

 

 

Electrification Products

14.9%

15.4%

 

 

 

 

 

Discrete Automation and Motion

11.4%

12.5%

 

 

 

 

 

Process Automation

9.3%

10.9%

 

 

 

 

 

Power Grids

7.0%

5.5%

 

 

 

 

Cash flow from operating activities

ABB Group

2,415

1,824

 

 

 

 

 

Electrification Products

770

774

 

 

 

 

 

Discrete Automation and Motion

694

834

 

 

 

 

 

Process Automation

542

316

 

 

 

 

 

Power Grids

561

135

 

 

 

 

 

Corporate and Other

(152)

(235)

 

 

 

5              Q3 2016 Financial Information 


 

Operational EBITA

 

  

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions, unless otherwise indicated)

ABB

Products

and Motion

Automation

Grids

 

 

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

 

Revenues

8,255

8,519

2,308

2,353

2,203

2,220

1,523

1,659

2,636

2,791

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in total revenues

43

113

5

4

37

8

32

25

43

 

Operational revenues

8,298

8,632

2,313

2,353

2,207

2,257

1,531

1,691

2,661

2,834

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

878

882

389

390

276

264

170

159

222

159

 

Acquisition-related amortization

70

74

24

25

30

31

3

3

9

10

 

Restructuring and

 

 

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

39

59

(7)

10

(4)

16

7

3

12

13

 

Gains and losses from sale of businesses,

 

 

 

 

 

 

 

 

 

 

 

acquisition-related expenses and certain

 

 

 

 

 

 

 

 

 

 

 

non-operational items

35

(6)

1

(1)

4

1

2

5

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in income from operations

24

72

4

(14)

5

24

7

15

9

34

 

Operational EBITA

1,046

1,081

411

410

311

335

187

181

254

221

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

12.6%

12.5%

17.8%

17.4%

14.1%

14.8%

12.2%

10.7%

9.5%

7.8%



 

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions, unless otherwise indicated)

ABB

Products

and Motion

Automation

Grids

 

 

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

 

Revenues

24,835

26,239

6,830

7,088

6,503

6,839

4,861

5,298

7,933

8,514

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in total revenues

61

(24)

(7)

(2)

32

30

(17)

 

Operational revenues

24,896

26,215

6,830

7,081

6,501

6,839

4,893

5,298

7,963

8,497

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

2,309

2,702

1,016

1,089

742

857

452

580

554

468

 

Acquisition-related amortization

212

237

72

76

91

96

9

9

27

42

 

Restructuring and

 

 

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

475

143

48

20

57

44

100

24

106

38

 

Gains and losses from sale of businesses,

 

 

 

 

 

 

 

 

 

 

 

acquisition-related expenses and certain

 

 

 

 

 

 

 

 

 

 

 

non-operational items

46

44

1

4

19

6

38

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

 

 

differences in income from operations

53

(38)

6

(24)

2

(5)

32

(8)

13

(5)

 

Operational EBITA

3,095

3,088

1,143

1,161

896

992

593

624

706

581

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

12.4%

11.8%

16.7%

16.4%

13.8%

14.5%

12.1%

11.8%

8.9%

6.8%

(1) Amounts also include the incremental implementation costs in relation to the White Collar Productivity program.



 

Depreciation and Amortization

 

  

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions)

ABB

Products

and Motion

Automation

Grids

 

 

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

Q3 16

Q3 15

 

Depreciation

195

188

50

51

40

37

15

14

51

49

 

Amortization

91

96

27

27

34

37

4

5

16

15

 

including total acquisition-related amortization of:

70

74

24

25

30

31

3

3

9

10



 

 

 

 

Electrification

Discrete Automation

Process

Power

 

($ in millions)

ABB

Products

and Motion

Automation

Grids

 

 

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

9M 16

9M 15

 

Depreciation

576

572

150

155

118

110

44

45

151

153

 

Amortization

277

300

80

83

103

110

13

14

49

59

 

including total acquisition-related amortization of:

212

237

72

76

91

96

9

9

27

42



 

6              Q3 2016 Financial Information 


 

Orders received and revenues by region

 

  

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

Q3 16

Q3 15

US$

Local

parable

Q3 16

Q3 15

US$

Local

parable

 

Europe

2,336

2,909

-20%

-19%

-18%

2,733

2,821

-3%

-1%

3%

 

The Americas

2,208

2,660

-17%

-16%

-16%

2,456

2,569

-4%

-3%

-3%

 

Asia, Middle East and Africa

2,989

3,198

-7%

-5%

-5%

3,066

3,129

-2%

0%

0%

 

ABB Group

7,533

8,767

-14%

-13%

-13%

8,255

8,519

-3%

-2%

0%



 

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

9M 16

9M 15

US$

Local

parable

9M 16

9M 15

US$

Local

parable

 

Europe

8,684

9,680

-10%

-8%

-8%

8,299

8,574

-3%

-1%

3%

 

The Americas

6,864

8,014

-14%

-12%

-12%

7,272

7,927

-8%

-5%

-5%

 

Asia, Middle East and Africa

9,554

10,473

-9%

-5%

-5%

9,264

9,738

-5%

-2%

-2%

 

ABB Group

25,102

28,167

-11%

-8%

-8%

24,835

26,239

-5%

-2%

-1%

7              Q3 2016 Financial Information 


 

 

 

 

Financial Information

Interim Consolidated Financial Information

 

 

  

 

 

ABB Ltd Interim Consolidated Income Statements (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

Three months ended

 

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

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

 

Sales of products

20,477

21,878

6,802

7,116

 

Sales of services and software

4,358

4,361

1,453

1,403

 

Total revenues

24,835

26,239

8,255

8,519

 

Cost of sales of products

(14,980)

(15,874)

(4,911)

(5,163)

 

Cost of services and software

(2,623)

(2,626)

(885)

(838)

 

Total cost of sales

(17,603)

(18,500)

(5,796)

(6,001)

 

Gross profit

7,232

7,739

2,459

2,518

 

Selling, general and administrative expenses

(3,955)

(3,994)

(1,280)

(1,307)

 

Non-order related research and development expenses

(951)

(998)

(303)

(322)

 

Other income (expense), net

(17)

(45)

2

(7)

 

Income from operations

2,309

2,702

878

882

 

Interest and dividend income

54

56

16

18

 

Interest and other finance expense

(230)

(223)

(84)

(64)

 

Income from continuing operations before taxes

2,133

2,535

810

836

 

Provision for taxes

(587)

(722)

(237)

(229)

 

Income from continuing operations, net of tax

1,546

1,813

573

607

 

Income from discontinued operations, net of tax

14

2

16

 

Net income

1,560

1,815

589

607

 

Net income attributable to noncontrolling interests

(86)

(86)

(21)

(30)

 

Net income attributable to ABB

1,474

1,729

568

577

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

1,460

1,727

552

577

 

Net income

1,474

1,729

568

577

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.68

0.77

0.26

0.26

 

Net income

0.68

0.77

0.27

0.26

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.68

0.77

0.26

0.26

 

Net income

0.68

0.77

0.27

0.26

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders

2,155

2,234

2,135

2,219

 

Diluted earnings per share attributable to ABB shareholders

2,159

2,239

2,139

2,223

 

 

 

 

 

 

 

See Notes to the Interim Consolidated Financial Information

 

 

 

 

8              Q3 2016 Financial Information 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABB Ltd Interim Condensed Consolidated Statements of Comprehensive

 

Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

Three months ended

 

($ in millions)

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

 

Total comprehensive income, net of tax

1,767

1,162

592

303

 

Total comprehensive income attributable to noncontrolling interests, net of tax

(87)

(73)

(22)

(21)

 

Total comprehensive income attributable to ABB shareholders, net of tax

1,680

1,089

570

282

 

 

 

 

 

 

 

See Notes to the Interim Consolidated Financial Information

 

 

 

 

9              Q3 2016 Financial Information 


 

 

 

 

 

ABB Ltd Interim Consolidated Balance Sheets (unaudited)

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except share data)

Sep. 30, 2016

Dec. 31, 2015

 

Cash and equivalents

3,538

4,565

 

Marketable securities and short-term investments

1,827

1,633

 

Receivables, net

10,155

10,061

 

Inventories, net

5,017

4,757

 

Prepaid expenses

242

225

 

Deferred taxes

858

881

 

Other current assets

631

638

 

Assets held for sale

634

 

Total current assets

22,902

22,760

 

 

 

 

 

Property, plant and equipment, net

4,861

5,276

 

Goodwill

9,639

9,671

 

Other intangible assets, net

2,102

2,337

 

Prepaid pension and other employee benefits

69

68

 

Investments in equity-accounted companies

173

178

 

Deferred taxes

490

423

 

Other non-current assets

573

643

 

Total assets

40,809

41,356

 

 

 

 

 

Accounts payable, trade

4,458

4,342

 

Billings in excess of sales

1,330

1,375

 

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

1,402

1,454

 

Advances from customers

1,591

1,598

 

Deferred taxes

228

249

 

Provisions for warranties

1,104

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