first nine month results, 2000 göran lindahl president and ceo
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First nine month results, 2000 Göran Lindahl President and CEO. Agenda - first nine month results, 2000. Highlights Financials Segments Key initiatives Outlook. Highlights - first nine months. Orders * and operating margins up in all business segments - PowerPoint PPT PresentationTRANSCRIPT
First nine month results, 2000
Göran LindahlPresident and CEO
CS-IR/ Q3, 2000Page 2
Agenda - first nine month results, 2000Highlights
Financials
Segments
Key initiatives
Outlook
CS-IR/ Q3, 2000Page 3
Highlights - first nine months Orders* and operating margins up in all business segments
Strong order growth in Americas, Middle East & Africa
Orders in Europe up 7 percent in local currencies
Demand continued to grow in Asia
Revenues flat*, strong order backlog
Increased earnings reflect continued expansion intohigh-knowledge areas and successful cost control
Cash flow up 27 percent
* In local currencies
CS-IR/ Q3, 2000Page 4
Highlights third quarter 2000
Key initiatives in- software / Industrial IT- telecom- petrochemicals
ABB to launch all employee share/option program
CS-IR/ Q3, 2000Page 5
Regional development first nine months 2000
Americas: continued growth driven by deregulationAmericas: continued growth driven by deregulation
Europe: continued improvement,demand varied by country and business
Europe: continued improvement,demand varied by country and business
Asia: Continued growth in all segments excl. TransmissionAsia: Continued growth in all segments excl. Transmission
Middle East and Africa:Orders increased sharplyMiddle East and Africa:Orders increased sharply
Middle East/AfricaMiddle East/Africa +55%+55%AmericasAmericas +27%+27%EuropeEurope +7%+7%AsiaAsia -2%-2%
Middle East/AfricaMiddle East/Africa +55%+55%AmericasAmericas +27%+27%EuropeEurope +7%+7%AsiaAsia -2%-2%
Regional developmentRegional developmentOrders received Orders received (in local currencies)(in local currencies)
Regional developmentRegional developmentOrders received Orders received (in local currencies)(in local currencies)
CS-IR/ Q3, 2000Page 6
First nine months 2000 vs 1999
2000 ChangeNominal Local currencies
Orders received 19,392 +6% +13%
Revenues 15,983 -8% -1%
Operating earnings (OEAD)* 1,414 +10% +17%
Net income from
continued operations 848 +16% +23%
Net Income per Share $4.17 +13%
* Consistent with the half year report, earnings and capital gains related to discontinued operations are reported on a separate line in the income statement and consequently are not included in operating earnings.
(MUS$)
CS-IR/ Q3, 2000Page 7
Orders received first nine months 2000
Automation 6,174 (+1%)
Building Technologies4,814 (-3%)
Power Transmission 2,955 (-3%)
Power Distribution2,356 (+13%)
Oil, Gas & Petrochemicals 3,225 (+41%)
Financial Services 545 (+7%)
15%15%
11%11%
29%29%15%15%
23%23%
(MUS$) Nominal percent change vs. 1999
3%3%
In local currencies approximately 6-10 percent higher
CS-IR/ Q3, 2000Page 8
1999 2000
Power Transmission 9.8% 11.2%
Power Distribution 6.3% 7.7%
Automation 5.7% 8.2%
Oil, Gas and Petrochemicals 5.2% 6.0%
Building Technologies 6.8% 7.7%
Operating margins by segment
First Nine Months
CS-IR/ Q3, 2000Page 9
Automation High order growth in Asia,
L. America and Middle East
Power Products highestgrowth rates, good growth also for Flexible Automation, Marine & Turbochargers
Synergies from integration of Elsag Bailey and reduced cost base increased earnings
1-9/00 1-9/99
Orders 6,174 6,093 +1% +9%
Revenues 5,419 5,890 -8% -1%
OEADmargin 8.2% 5.7%
EBITDAmargin 11.7% 8.0%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 10
Power Transmission
Orders continued to rebound Favorable business climate
in North America High demand in service &
support Revenues reflect last year's
divestiture of standard cables and low order intake
1-9/00 1-9/99
Orders 2,955 3,061 -3% +3%
Revenues 2,346 2,799 -16% -10%
OEADmargin 11.2% 9.8%
EBITDAmargin 13.9% 12.5%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 11
Power Distribution
Deregulation continued tofuel orders and revenues
Demand for distribution solutions increased significantly, especially in Western Europe
Productivity improvements driving earnings increasein all businesses
1-9/00 1-9/99
Orders 2,356 2,080 +13% +20%
Revenues 2,083 1,978 +5% +11%
OEADmargin 7.7% 6.3%
EBITDAmargin 9.9% 8.6%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 12
Oil, Gas and Petrochemicals
Business climate remained favorable
Growth in offshore systems, modification/maintenanceand downstream business
Orders will gradually flow through to revenues,starting in the fourth quarter 2000 and continuing throughout 2001
1-9/00 1-9/99
Orders 3,225 2,286 +41% +49%
Revenues 1,845 2,325 -21% -14%
OEADmargin 6.0% 5.2%
EBITDAmargin 8.4% 6.9%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 13
Building Technologies
Strong order growth in Asia,Middle East, Africa
Increased orders to build-up telecom and Internet networks
Move from general contractingand non-core service
Significant earnings increasein product business
1-9/00 1-9/99
Orders 4,814 4,951 -3% +7%
Revenues 4,274 4,551 -6% +4%
OEADmargin 7.7% 6.8%
EBITDAmargin 9.7% 9.0%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 14
Financial Services
Financing for several projects in India, Poland and China closed and the leasing volume increased strongly
1-9/00 1-9/99
Orders 545 510 +7% +14%
Revenues 545 510 +7% +14%
IBT 253 257 -2% +5%
(MUS$)Change in
nominal / local
CS-IR/ Q3, 2000Page 15
Current market conditions
Outsourcing - Focus on core businessOutsourcing - Focus on core businessOutsourcing - Focus on core businessOutsourcing - Focus on core business
Rapid development IT technologiesRapid development IT technologiesRapid development IT technologiesRapid development IT technologies
SustainabilitySustainabilitySustainabilitySustainability
Deregulation Deregulation Deregulation Deregulation
Transformation of global marketsTransformation of global marketsTransformation of global marketsTransformation of global markets
Performance based contractsPerformance based contractsPerformance based contractsPerformance based contracts
CS-IR/ Q3, 2000Page 16
Portfolio of businesses and technologies
Continued expansion in:Continued expansion in:
SoftwareSoftware
Industrial ITIndustrial IT
eBusinesseBusiness
Telecommunications Telecommunications infrastructureinfrastructure
Continued expansion in:Continued expansion in:
SoftwareSoftware
Industrial ITIndustrial IT
eBusinesseBusiness
Telecommunications Telecommunications infrastructureinfrastructure
Ensures ABB offering:Ensures ABB offering:
More intelligent More intelligent products, systems products, systems and solutionsand solutions
Solidifies portfolio geared to digital Solidifies portfolio geared to digital economy of the futureeconomy of the future
CS-IR/ Q3, 2000Page 17
AutomationAcquired pharmaceutical software technologiesAcquired international process automation companyIndustrial IT joint venture with SKYVA
AutomationAcquired pharmaceutical software technologiesAcquired international process automation companyIndustrial IT joint venture with SKYVA
Portfolio management - third quarter 2000
Heavy Asset Base Light
Power Transmission and DistributionAcquired U.S. software and service providerHigh-voltage transmission network service consortium
Power Transmission and DistributionAcquired U.S. software and service providerHigh-voltage transmission network service consortium
Oil, Gas & PetrochemicalsAcquisition of UMOE completedPartnership to acquire polypropylene technology Investing in China's Sinopec Corp. IPO
Oil, Gas & PetrochemicalsAcquisition of UMOE completedPartnership to acquire polypropylene technology Investing in China's Sinopec Corp. IPO
CS-IR/ Q3, 2000Page 18
ABB - Communication solutions
Planning, design, project
management, installation
System integration
Service, maintenance
Wireless, fixed networks Nordic, Germany, Austria,
Eastern Europe
Internet centers (PoPs) Germany, Netherlands,
Denmark
Enterprise networks Statoil, Microsoft
ABB has 2,000 people in this business today, ABB has 2,000 people in this business today, with annual revenues ca. US$ 500 millionwith annual revenues ca. US$ 500 million
ABB has 2,000 people in this business today, ABB has 2,000 people in this business today, with annual revenues ca. US$ 500 millionwith annual revenues ca. US$ 500 million
CS-IR/ Q3, 2000Page 19
Employee share ownership program
For all ABB employees
ABB to match with options
at no cost
For long-term, broad based
ownership
Details to be announced
in February
CS-IR/ Q3, 2000Page 20
7.8
6.46.55.5
3.73.3
2.41.72.12.2
2.93.8
0
1
2
3
4
5
6
7
8
9
10
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Transformation drives margin growth
%
2.6
Net Income Margin Trend
9M’99 9M’00
CS-IR/ Q3, 2000Page 21
ABB Group outlook 2000
For the full-year 2000, the rate of order growth will be in line with the first nine months. In local currencies, revenues will be above last year’s level.
Operating earnings are expected to increase from last year and net income from continuing operations will continue to be well above 1999's performance. Cash flow is expected to exceed the level of last year.
The company reconfirms its longer-term targets of6-7 percent average annual growth in revenues during 2000-2003 and an operating margin of 12 percentby 2003.
CS-IR/ Q3, 2000Page 22
Safe Harbor Statement
This presentation includes forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for ABB Ltd and ABB Ltd’s lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are major markets for ABB’s businesses, market acceptance of new products and services, changes in governmental regulations, interest rates, and fluctuation in currency exchange rates. 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.