6-K 1 a19-5629_16k.htm 6-K  

 

 

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 February 2019

 

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 February 28, 2019 titled “Solid growth”.

2.              Q4 2018 Financial Information.

3.              Press release issued by ABB Ltd dated February 28, 2019 titled “Strategy update: Shaping a leader focused in digital industries”.

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 hereby incorporated by reference into the Registration Statements on Form F-3 of ABB Ltd and ABB Finance (USA) Inc. (File Nos. 333-223907 and 333-223907-01) 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.

2 

  

 

 

 

 

 

—

ZURICH, SWITZERLAND, FEBRUARY 28, 2019

Solid growth

 

FULL YEAR 2018 HIGHLIGHTS

–        Total orders +8%1, up in all divisions and regions

–        Revenues +4%, strong growth in Robotics and Motion

–        Order backlog +6% at end of year, book-to-bill ratio2 at 1.03x

–        ABB Ability™ drives growth across all divisions

–        Operational EBITA margin 10.9%2, impacted by a combined 250 basis points due to stranded costs, charges for legacy non-core projects and GEIS dilution

–        Reported net income at $2,173 million, -2%

–        Cash flow from operating activities at approx. $3 billion

–        New ABB announced

•     Focus of portfolio on digital industries through divestment of Power Grids

•     Simplification of business model and structure

•     Shape four leading businesses aligned with customer patterns

–        Acquisition of GEIS completed on June 30, 2018

–        CHF 0.80 per share dividend proposed

 

FOURTH QUARTER HIGHLIGHTS

–        Total orders +7%, higher in all divisions and regions

–        Revenues +5%

–        Operational EBITA margin 7.9%, impacted by a combined 400 basis points due to stranded costs, legacy non-core charges and GEIS dilution

–        Solid cash flow from operating activities at approx. $1.9 billion

 

–    Sylvia Hill to succeed Jean-Christophe Deslarzes as Chief Human Resources Officer and member of the Executive Committee, effective June 1, 2019

 

Key Figures

 

 

Change

 

 

Change

($ in millions, unless otherwise indicated)

Q4 2018

Q4 2017 Recast

US$

Comparable1

FY 2018

FY 2017 Recast

US$

Comparable1

Orders

6,985

6,328

+10%

+7%

28,590

25,034

+14%

+8%

Revenues

7,395

6,804

+9%

+5%

27,662

25,196

+10%

+4%

Income from operations

275

324

-15%

 

2,226

2,230

0%

 

Operational EBITA2

584

664

-12%

-10%3

3,005

2,817

+7%

+5%3

as % of operational revenues

7.9%

9.7%

-1.8pts

 

10.9%

11.2%

-0.3pts

 

Income from continuing operations, net of tax

210

214

-2%

 

1,575

1,519

4%

 

Net income attributable to ABB

317

393

-19%

 

2,173

2,213

-2%

 

Basic EPS ($)

0.15

0.18

-19%4

 

1.02

1.04

-2%4  

 

Operational EPS ($)2

0.30

0.33

-9%4  

-6%4

1.33

1.25

+7%4  

+8%4  

Cash flow from operating activities

1,867

1,869

0%

 

2,924

3,799

-23%

 

On December 17, 2018, ABB announced an agreed sale of its Power Grids division. Consequently, the results of the Power Grids business are presented as discontinued operations. The company’s results for all periods have been adjusted accordingly.

 

 

_______

1 Growth rates for orders, third-party base orders and revenues are on a comparable basis (local currency adjusted for acquisitions and divestitures). US$ growth rates are presented in Key Figures table.

2 For non-GAAP measures, see the “Supplemental Financial Information” attachment to the press release.

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 not adjusted for changes in the business portfolio).

 

 

1/8

 

 

 

 

“In 2018, we brought the company back to growth and delivered solid order and revenue growth. We drove topline momentum with our leading Robotics and Motion offering and played a strong role in the ongoing recovery of process industries with our industrial automation business and ABB Ability™ digital solutions. We will continue to drive the operational improvements in Electrification Products and our company overall”, said ABB CEO Ulrich Spiesshofer.

“At the end of 2018, we set the course for a new ABB as a pioneering technology leader in digital industries. We announced three transformational actions to focus our portfolio, simplify and fundamentally reset our business model as well as strengthen the leading business positions of our company. Our confidence in ABB’s future is reflected in the proposed 10th consecutive dividend increase to CHF 0.80.”

Short-term outlook

Macroeconomic signs are mixed in Europe and trending positively in the United States, with growth expected to continue in China. The overall global market is growing, with rising geopolitical uncertainties in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.

Full-year 2018 Group results

ABB delivered strong order and revenue performance in 2018. The group’s digital solutions offering, ABB Ability™, continued to build its leading market position. Total orders were 8 percent higher (14 percent in US dollars) with strong positive contributions from Robotics and Motion and Industrial Automation as well as solid performance from Electrification Products. Total orders exhibited similar growth trends across all regions. Base orders (classified as orders below $15 million) improved 6 percent (14 percent in US dollars) in 2018, rising in all divisions and regions. Large orders increased 45 percent (20 percent in US dollars), albeit off a low comparative base, and represented 7 percent of total orders, compared to 6 percent in the prior year. Service orders were 7 percent higher (12 percent in US dollars) and now stand at 19 percent of total orders.

Revenues improved 4 percent (10 percent in US dollars) to $27,662 million. Revenues grew across all divisions, with strong performance from Robotics and Motion and robust contributions from Electrification Products and Industrial Automation. Service revenues were up 7 percent (11 percent in US dollars) to 19 percent of group revenues. The book-to-bill ratio stood at 1.03x in 2018 compared with 0.99x in the previous year.

ABB continued to shift its center of gravity, de-risking the portfolio and improving organic growth prospects. The exit from EPC (Engineering, Procurement and Construction) activities progressed as ABB transferred its turnkey AC Substation business to Linxon, a new joint-venture with SNC Lavalin. ABB continues to unwind the remaining legacy EPC contracts, which impacted results reported through the period for the non-core business unit in Corporate and other. ABB strengthened the competitiveness of its Electrification Products division through the acquisition of GE Industrial Solutions (“GEIS”) on June 30, 2018. Integration efforts are well underway. GEIS’ performance in the second half of 2018 has been in line with managements expectations.

ABB announced fundamental actions to focus, simplify and lead in digital industries on December 17, 2018. The group’s actions included the divestment of the Power Grids business. As a consequence of the announced sale, the results of the Power Grids business are now presented as discontinued operations and the group has reflected stranded costs in its operational EBITA result for both the 2017 and 2018 periods, in line with the guidance provided as part of the announcement on December 17, 2018. Stranded costs are services provided by the group to Power Grids that do not qualify to be reported as discontinued operations. These services include real estate, IT, and other shared corporate services. The company expects the vast majority of these costs to either be transferred to Power Grids or eliminated by the closing of the transaction, which is anticipated in the first half of 2020.

SOLID GROWTH

2/8

 

 

 

 

The company’s operational EBITA in 2018 reached $3,005 million, an increase of 7 percent in US dollars (5 percent in local currencies), including stranded costs of $297 million. The operational EBITA margin was 10.9%, including 110 basis points related to stranded costs as well as an 100 basis point charge related to legacy non-core business activities, and 40 basis points dilution from GEIS.

Net income attributable to ABB of $2,173 million was 2 percent lower compared to 2017. Basic EPS was 2 percent lower at $1.02. Operational EPS2 was $1.33, up 8 percent in constant currency2.

Cash flow from operating activities5 of $2,924 million for the full year was 23 percent lower year on year. This is mainly due to lower cash from discontinued operations as well as less favorable timing of tax payments. Net working capital of $2,584 million stood at 9 percent of revenues at the end of 2018, compared to 10 percent at the end of the prior year period. Capital expenditures for the group were $772 million during the year, at the same level as in 2017. Adjusted free cash flow2 of $2,024 million was 31 percent below the prior year.

Dividend

ABB’s board has proposed an ordinary dividend of 0.80 Swiss francs per share for 2018, subject to shareholder approval at the company’s annual general meeting on May 2, 2019. The proposal is in line with ABB’s dividend policy to pay a rising, sustainable dividend over time. The ex-dividend and payout dates in Switzerland are expected to be in May 2019. Further information will be available on ABB’s website.

Q4 2018 Group results

Orders

Total orders rose 7 percent (10 percent in US dollars), up in all divisions and regions compared to a year ago. Base orders increased 5 percent (11 percent in US dollars), higher in all divisions during the quarter. Large orders represented 5 percent of total orders, steady compared to the prior year period. The order backlog rose 6 percent (5 percent in US dollars) compared to a year ago, improving in all divisions, to end the year at $13.1 billion.

Service orders were up 5 percent (7 percent in US dollars). Service orders represent 20 percent of total orders, compared to 21 percent in the prior year period.

Changes in the business portfolio, including the acquisition of GEIS resulted in a net positive impact of 8 percent on total reported orders. Foreign exchange translation effects had a 5 percent negative impact on reported orders.

Market overview 

ABB saw positive order trends across its three regions in the quarter:

─         Total orders from Europe rose 4 percent (5 percent in US dollars), with positive contributions from Italy, Sweden, the Netherlands and France outpacing lower contributions from Germany, Norway and Spain. Base orders rose 2 percent (2 percent in US dollars).

─         Total orders from the Americas increased 11 percent (32 percent in US dollars). Orders from the United States rose 8 percent (38 percent in US dollars) and also improved in Mexico and Brazil. Base orders from the Americas increased 13 percent (37 percent in US dollars).

─        In Asia, Middle East and Africa (AMEA), total orders grew 7 percent (steady in US dollars), supported by growth in China, India and Japan. In China, demand was softer in select end-markets, but remained positive, with total orders rising 6 percent (6 percent in US dollars). Base orders for AMEA were steady (1 percent lower in US dollars).

 

_______

5  Cash flow from operating activities is presented in the Consolidated Statement of Cashflows and includes both cash flows from continuing and discontinued operations.

 

SOLID GROWTH

3/8

 

 

 

 

Demand was supportive across the majority of ABB’s key customer segments:

─         ABB saw healthy demand from process industries, including oil and gas, mining, and pulp and paper, with customers continuing to invest in automation and digital solutions.

─         Demand across discrete industries remained solid, including continued growth from the food & beverage sector. Demand was strong in the automotive market, with customers seeking robotics solutions for both ICE and EV assembly lines, more than offsetting softer investments from customers in the consumer electronics sector.

─         Transport and infrastructure demand was healthy. Demand from construction and buildings related customers was robust. Data center growth continued with customer demand focused on combined automation and distribution solutions. ABB saw further activity in cruise ships and from rail customers.

 

Revenues

Revenues improved 5 percent to $7,395 million (9 percent in US dollars), with strong growth in Robotics and Motion, robust performance from Electrification Products and a steady result from Industrial Automation. Service revenues were up 4 percent (8 percent in US dollars), enhanced by ABB’s leading digital portfolio, ABB Ability™ solutions. Services represented 20 percent of total revenues, steady versus the prior year period.

Business portfolio changes, including the acquisition of GEIS, contributed a net positive of 8 percent to reported revenues. Changes in exchange rates resulted in a negative translation impact on reported revenues of 4 percent.

The book-to-bill ratio stood at 0.94x in the quarter compared with 0.93x in the previous year’s period.

Operational EBITA

Operational EBITA of $584 million in the fourth quarter was 12 percent lower in US dollars (10 percent in local currencies) compared to the prior year period. The operational EBITA margin of 7.9 percent, included $72 million, or a 100-basis point impact from stranded costs. As well, operational EBITA reflects 260 basis points impact from charges for legacy non-core activities, mainly related to substations, and a 40 basis points impact due to the acquisition of GEIS.

Net income, basic and operational earnings per share

Net income was $317 million, 19 percent lower year on year. Basic earnings per share of $0.15 also moved the same amount in percentage terms. Operational earnings per share of $0.30 was 9 percent lower, and 6 percent in constant currency4.

Cash flow from operating activities 

The group delivered solid cash flow from operating activities of $1,867 million, steady compared to the similarly strong cash flow delivered in the prior year period. Continued focus on working capital had a positive impact compared to the same period last year, offset by less favorable timing of tax payments and a lower contribution from discontinued operations.

 

 

SOLID GROWTH

4/8
 

 

 

 

 

 

Q4 divisional performance

 ($ in millions, unless otherwise indicated)

Orders

Change

3rd party base orders

Change

Revenues

Change

Op EBITA %

CHANGE

US$

Comparable1

US$

Comparable1

US$

Comparable1

Electrification Products

3,139

+23%

+2%

3,032

+27%

+3%

3,320

+23%

+3%

11.7%

-3.0pts

Industrial Automation

1,866

+4%

+8%

1,639

+0%

+4%

1,938

-4%

+0%

12.9%

-2.0pts

Robotics and Motion

2,175

+7%

+11%

1,872

+2%

+6%

2,341

+7%

+11%

15.0%

+1.2pts

Corporate & Other

(195)

 

 

11

 

 

(204)

 

 

 

 

ABB Group

6,985

+10%

+7%

6,554

+11%

+5%

7,395

+9%

+5%

7.9%

-1.8pts

Effective January 1, 2018, management responsibility and oversight of certain remaining engineering, procurement and construction (EPC) business, previously included in the Industrial Automation and Robotics and Motion operating segments and the former Power Grids business, were transferred to a new non-core operating business within Corporate and Other. The Power Grids division was moved from continuing to discontinued operations. All previously reported amounts have been adjusted consistent with these portfolio changes.

 

Electrification Products

Total orders rose 2 percent (23 percent in US dollars) and third-party base orders increased 3 percent (27 percent in US dollars). Good demand for products was dampened by a lower order volume for systems. Revenues improved 3 percent (23 percent in US dollars), driven by growth in our short-cycle businesses. Operational EBITA margin was 300 basis points lower year-on-year at 11.7 percent. The integration of GEIS diluted margins by 210 basis points, in line with expectations. Excluding GEIS, operating margins were impacted by negative contractual charges amounting to approximately 90 basis points, which outweighed positive mix, cost savings and pricing actions during the quarter.

Industrial Automation

Compared to the prior year period, total orders improved 8 percent (4 percent in US dollars), boosted by selective large order activity, while third-party base orders were up by 4 percent (steady in US dollars). Order activity for cruise ships and in process industries including mining and pulp and paper was strong during the quarter. Revenues were steady (4 percent lower in US dollars). The operational EBITA margin of 12.9 percent reflects change in the business mix as well as a one-time charge due to payment default by a customer that impacted the divisional margin by approximately 80 basis points.

Robotics and Motion

The division saw continued order momentum with total orders up 11 percent (7 percent in US dollars) and third-party base orders up 6 percent (2 percent in US dollars). Order growth was achieved across all regions, supported by large orders from automotive and rail customers and continued demand from process industries. Revenues increased 11 percent (7 percent in US dollars). Operational EBITA margin at 15.0 percent expanded 120 basis points year-on-year, driven by positive volumes and continued cost management.

 

 

SOLID GROWTH

5/8

 

 

 

 

 

2018 Highlights

During 2018, ABB recorded strong order momentum across all divisions and regions. The company’s pioneering technology leadership in digital industries advanced, with ABB Ability™ recognized by industry analysts as #1 globally in Distributed Control Systems and Enterprise Asset Management software. ABB Ability™ was launched in 2017 and offers more than 220 digital solutions, which enable enterprises to increase productivity and safety at lower costs. For example, ABB and Helsinki City Transport held at the end of 2018 a groundbreaking trial of a remotely operated passenger ferry, which was retrofitted with ABB’s new dynamic positioning system, ABB Ability™ Marine Pilot Control, and steered from a control center in Helsinki.

ABB continues to invest in its future. During 2018, the group announced a €100 million investment to build a cutting-edge R&D campus in Austria, and a $150 million investment to build a state-of-the-art flexible robotics manufacturing site, also including an Artificial Intelligence center of excellence, in Shanghai, China.

The acquisition of GEIS completed on June 30, 2018, strengthened the competitiveness of Electrification Products, particularly in the attractive North American market. ABB targets $200 million per annum synergies from GEIS by 2022.

On December 17, 2018, ABB announced the agreed sale of its Power Grids business, expanding its existing partnership with Hitachi. Alongside, ABB announced its intention to simplify the business structure and to shape four new leading businesses: Electrification, Industrial Automation, Motion, and Robotics and Discrete Automation. ABB expects a total of $500 million annual run-rate cost reductions across the group over the medium-term. Approximately $500 million of related non-operational restructuring and implementation charges are expected to be taken through 2020. ABB is targeting a medium-term group operational EBITA margin target of 13-16 percent. New margin targets for the four businesses are available today at ABB̕s strategy update (further details can be found under www.abb.com).

Management changes

ABB announced today the appointment of Sylvia Hill (59) as Chief Human Resources Officer and member of the Executive Committee, effective June 1, 2019. She succeeds Jean-Christophe Deslarzes (55), who has decided to step down to pursue a non-executive career. Sylvia Hill joined ABB’s Human Resources (HR) team in 1993 and has held positions of increasing responsibility within the HR function, including Head of HR for the Robotics and Motion division, country HR manager for France and the Czech Republic, and Head of HR of the Mediterranean Region. Currently, she is Group Function Head of Global HR Services and HR Transformation.

“Sylvia brings a wealth of experience in HR, change management and talent management to the role,” said ABB CEO Ulrich Spiesshofer. “I am delighted to welcome Sylvia to the Executive Committee. I would like to thank JC Deslarzes for his outstanding contribution as Chief Human Resources Officer over the past five years. Under his leadership, ABB has developed a world-class talent management and people development strategy for the digital era, and significantly improved its attractiveness to young talent.”

Deslarzes will continue to support ABB’s transformation until beginning of 2020 and report directly to CEO Ulrich Spiesshofer. He will remain non-executive Chairman of ABB India.

In December 2018, ABB announced the appointment of Morten Wierod, currently Managing Director Business Unit Drives, as business leader for the newly created Motion business. He will become a member of the Executive Committee effective April 1, 2019.

SOLID GROWTH

6/8

 

 

 

 

 

Short- and long-term outlook

Macroeconomic signs are mixed in Europe and are trending positively in the United States, with growth expected to continue in China. The overall global market is growing, with rising geopolitical uncertainties in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.

ABB’s businesses are either the global #1 or #2 player in attractive markets with strong secular drivers. The company’s addressable market for its new businesses Electrification, Industrial Automation, Motion, and Robotics and Discrete Automation is expected to grow long term by 3.5-4 percent per annum.

 

 

 

 

SOLID GROWTH

7/8

 

 

 

 

 

 

 

More information

The Q4 2018 results press release and financial information documents 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. EST). The event will be accessible by webcast on https://new.abb.com/media/media-event---strategy-update-2019.

ABB will host an analyst and investor conference today starting at 12:00 p.m. CET (11:00 a.m. GMT, 6:00 a.m. EST). The event will be webcast for approximately 90 minutes, covering Q4 and FY18 results and the group’s Strategy update presentation. The webcast and related materials will be accessible from 11:00 a.m. CET at: go.abb/strategy-update-2019 

A recorded session will be available as a webcast following the end of the conference call.

ABB (ABBN: SIX Swiss Ex) is a pioneering technology leader in power grids, electrification products, industrial automation and robotics and motion, serving customers in utilities, industry and transport & infrastructure globally. Continuing a history of innovation spanning more than 130 years, ABB today is writing the future of industrial digitalization with two clear value propositions: bringing electricity from any power plant to any plug and automating industries from natural resources to finished products. As title partner in ABB Formula E, the fully electric international FIA motorsport class, ABB is pushing the boundaries of e-mobility to contribute to a sustainable future. ABB operates in more than 100 countries with about 147,000 employees. www.abb.com

 

 

 

 

Investor calendar 2019

Annual General Meeting

May 2, 2019

First quarter 2019 results

May 2, 2019

Second quarter 2019 results

July 25, 2019

Third quarter 2019 results

October 23, 2019

 

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”, “Full-year 2018 Group Results”, “2018 Highlights” and “Short- and long-term outlook”. 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,” “intends”, “aims” or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others, business risks associated with the 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, February 28, 2019

Ulrich Spiesshofer, CEO

 

—
For more information, please contact:

Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com

Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com

ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland

 

 

 

 

 

 

 

SOLID GROWTH

8/8

 

 

  

 

 

1              Q4 2018 Financial Information 

 

  

2              Q4 2018 Financial Information 

 

—

Key Figures

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q4 2018

Q4 2017

US$

Comparable(1)

 

Orders

6,985

6,328

10%

7%

 

Order backlog (end December)

13,084

12,491

5%

6%

 

Revenues

7,395

6,804

9%

5%

 

Income from operations

275

324

-15%

 

 

Operational EBITA(1)

584

664

-12%

-10%(2)

 

 

as % of operational revenues(1)

7.9%

9.7%

-1.8 pts

 

 

Income from continuing operations, net of tax

210

214

-2%

 

 

Net income attributable to ABB

317

393

-19%

 

 

Basic earnings per share from continuing operations ($)

0.10

0.10

0%(3)

 

 

Basic earnings per share ($)

0.15

0.18

-19%(3)

 

 

Operational earnings per share(1) ($)

0.30

0.33

-9%(3)

-6%(3)

 

Cash flow from operating activities

1,867

1,869

0%

 

 

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

FY 2018

FY 2017

US$

Comparable(1)

 

Orders

28,590

25,034

14%

8%

 

Revenues

27,662

25,196

10%

4%

 

Income from operations

2,226

2,230

0%

 

 

Operational EBITA(1)

3,005

2,817

7%

5%(2)

 

 

as % of operational revenues(1)

10.9%

11.2%

-0.3 pts

 

 

Income from continuing operations, net of tax

1,575

1,519

4%

 

 

Net income attributable to ABB

2,173

2,213

-2%

 

 

Basic earnings per share from continuing operations ($)

0.71

0.67

5%(3)

 

 

Basic earnings per share ($)

1.02

1.04

-2%(3)

 

 

Operational earnings per share(1) ($)

1.33

1.25

7%(3)

8%(3)

 

Cash flow from operating activities

2,924

3,799

-23%

 

   

(1)  For a reconciliation of non-GAAP measures see “Supplemental Reconciliations and Definitions” on page 41.

(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              Q4 2018 Financial Information 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

Q4 2018

Q4 2017

US$

Local

Comparable

 

Orders

ABB Group

6,985

6,328

10%

15%

7%

 

 

Electrification Products

3,139

2,556

23%

27%

2%

 

 

Industrial Automation

1,866

1,795

4%

8%

8%

 

 

Robotics and Motion

2,175

2,039

7%

11%

11%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(195)

(62)

 

Third-party base orders

ABB Group

6,554

5,904

11%

16%

5%

 

 

Electrification Products

3,032

2,394

27%

31%

3%

 

 

Industrial Automation

1,639

1,642

0%

4%

4%

 

 

Robotics and Motion

1,872

1,837

2%

6%

6%

 

 

Corporate and Other

11

31

 

 

 

 

Order backlog (end December)

ABB Group

13,084

12,491

5%

10%

6%

 

 

Electrification Products

4,113

3,098

33%

39%

7%

 

 

Industrial Automation

5,148

5,301

-3%

2%

2%

 

 

Robotics and Motion

4,016

3,823

5%

10%

10%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(193)

269

 

Revenues

ABB Group

7,395

6,804

9%

13%

5%

 

 

Electrification Products

3,320

2,696

23%

28%

3%

 

 

Industrial Automation

1,938

2,011

-4%

0%

0%

 

 

Robotics and Motion

2,341

2,197

7%

11%

11%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(204)

(100)

 

Income from operations

ABB Group

275

324

 

 

 

 

 

Electrification Products

221

318

 

 

 

 

 

Industrial Automation

204

214

 

 

 

 

 

Robotics and Motion

326

247

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(476)

(455)

 

Income from operations %

ABB Group

3.7%

4.8%

 

 

 

 

 

Electrification Products

6.7%

11.8%

 

 

 

 

 

Industrial Automation

10.5%

10.6%

 

 

 

 

 

Robotics and Motion

13.9%

11.2%

 

 

 

 

Operational EBITA

ABB Group

584

664

-12%

-10%

 

 

 

Electrification Products

388

398

-3%

2%

 

 

 

Industrial Automation

251

299

-16%

-14%

 

 

 

Robotics and Motion

349

303

15%

20%

 

 

 

Corporate and Other

 

 

 

 

 

 

Non-core and divested businesses

(194)

(138)

 

Stranded corporate costs

(72)

(73)

 

Corporate and inter-division elim.

(138)

(125)

 

Operational EBITA %

ABB Group

7.9%

9.7%

 

 

 

 

 

Electrification Products

11.7%

14.7%

 

 

 

 

 

Industrial Automation

12.9%

14.9%

 

 

 

 

 

Robotics and Motion

15.0%

13.8%

 

 

 

 

Cash flow from operating activities

ABB Group

1,867

1,869

 

 

 

 

 

Electrification Products

636

590

 

 

 

 

 

Industrial Automation

372

356

 

 

 

 

 

Robotics and Motion

476

388

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

 

(incl. inter-division eliminations)

(78)

(9)

 

 

 

 

 

Discontinued operations

461

544

 

 

 

4              Q4 2018 Financial Information 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHANGE

 

($ in millions, unless otherwise indicated)

FY 2018

FY 2017

US$

Local

Comparable

 

Orders

ABB Group

28,590

25,034

14%

14%

8%

 

 

Electrification Products

11,867

10,143

17%

16%

4%

 

 

Industrial Automation

7,631

6,553

16%

15%

8%

 

 

Robotics and Motion

9,570

8,465

13%

12%

12%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(478)

(127)

 

 

 

 

Third-party base orders

ABB Group

26,448

23,189

14%

13%

6%

 

 

Electrification Products

11,240

9,559

18%

17%

4%

 

 

Industrial Automation

6,592

5,840

13%

12%

4%

 

 

Robotics and Motion

8,560

7,651

12%

11%

11%

 

 

Corporate and Other

56

139

 

 

 

 

Order backlog (end December)

ABB Group

13,084

12,491

5%

10%

6%

 

 

Electrification Products

4,113

3,098

33%

39%

7%

 

 

Industrial Automation

5,148

5,301

-3%

2%

2%

 

 

Robotics and Motion

4,016

3,823

5%

10%

10%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(193)

269

 

Revenues

ABB Group

27,662

25,196

10%

9%

4%

 

 

Electrification Products

11,686

10,094

16%

16%

3%

 

 

Industrial Automation

7,394

6,879

7%

7%

1%

 

 

Robotics and Motion

9,147

8,396

9%

8%

8%

 

 

Corporate and Other

 

 

 

 

 

 

(incl. inter-division eliminations)

(565)

(173)

 

Income from operations

ABB Group

2,226

2,230

 

 

 

 

 

Electrification Products

1,290

1,352

 

 

 

 

 

Industrial Automation

887

798

 

 

 

 

 

Robotics and Motion

1,346

1,126

 

 

 

 

 

Corporate and Other

 

 

 

 

(incl. inter-division eliminations)

(1,297)

(1,046)

 

Income from operations %

ABB Group

8.0%

8.9%

 

 

 

 

 

Electrification Products

11.0%

13.4%

 

 

 

 

 

Industrial Automation

12.0%

11.6%

 

 

 

 

 

Robotics and Motion

14.7%

13.4%

 

 

 

 

Operational EBITA

ABB Group

3,005

2,817

7%

5%

 

 

 

Electrification Products

1,626

1,510

8%

6%

 

 

 

Industrial Automation

1,019

953

7%

7%

 

 

 

Robotics and Motion

1,447

1,260

15%

14%

 

 

 

Corporate and Other

 

 

 

 

Non-core and divested businesses

(291)

(163)

 

Stranded corporate costs

(297)

(286)

 

Corporate and inter-division elim.

(499)

(457)

 

Operational EBITA %

ABB Group

10.9%

11.2%

 

 

 

 

 

Electrification Products

13.9%

15.0%

 

 

 

 

 

Industrial Automation

13.8%

13.9%

 

 

 

 

 

Robotics and Motion

15.8%

15.0%

 

 

 

 

Cash flow from operating activities

ABB Group

2,924

3,799

 

 

 

 

 

Electrification Products

1,389

1,358

 

 

 

 

 

Industrial Automation

833

865

 

 

 

 

 

Robotics and Motion

1,200

1,119

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

 

(incl. inter-division eliminations)

(1,070)

(754)

 

 

 

 

 

Discontinued operations

572

1,211

 

 

 

5              Q4 2018 Financial Information 

 

Operational EBITA

 

 

 

Electrification

Industrial

Robotics

 

($ in millions, unless otherwise indicated)

ABB

Products

Automation

and Motion

 

 

Q4 18

Q4 17

Q4 18

Q4 17

Q4 18

Q4 17

Q4 18

Q4 17

 

Revenues

7,395

6,804

3,320

2,696

1,938

2,011

2,341

2,197

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

differences in total revenues

(7)

47

4

16

7

(2)

(17)

6

 

Operational revenues

7,388

6,851

3,324

2,712

1,945

2,009

2,324

2,203

 

 

 

 

 

 

 

 

 

 

 

Income from operations

275

324

221

318

204

214

326

247

 

Acquisition-related amortization

75

65

35

22

20

22

15

16

 

Restructuring and

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

129

108

76

17

31

36

8

35

 

Changes in obligations related to

 

 

 

 

 

 

 

 

 

divested businesses

14

–

–

–

–

–

–

–

 

Changes in pre-acquisition estimates

6

8

17

8

(11)

–

–

–

 

Gains and losses from sale of businesses

4

78

–

–

–

–

4

–

 

Acquisition- and divestment-related expenses

 

 

 

 

 

 

 

 

 

and integration costs

56

41

40

12

1

27

1

2

 

Certain other non-operational items

25

28

–

8

2

–

4

–

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

differences in income from operations

–

12

(1)

13

4

–

(9)

3

 

Operational EBITA

584

664

388

398

251

299

349

303

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

7.9%

9.7%

11.7%

14.7%

12.9%

14.9%

15.0%

13.8%



 

 

 

 

Electrification

Industrial

Robotics

 

($ in millions, unless otherwise indicated)

ABB

Products

Automation

and Motion

 

 

FY 18

FY 17

FY 18

FY 17

FY 18

FY 17

FY 18

FY 17

 

Revenues

27,662

25,196

11,686

10,094

7,394

6,879

9,147

8,396

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

differences in total revenues

(2)

(15)

18

(11)

–

(32)

(10)

3

 

Operational revenues

27,660

25,181

11,704

10,083

7,394

6,847

9,137

8,399

 

 

 

 

 

 

 

 

 

 

 

Income from operations

2,226

2,230

1,290

1,352

887

798

1,346

1,126

 

Acquisition-related amortization

273

229

106

98

86

47

63

66

 

Restructuring and

 

 

 

 

 

 

 

 

 

restructuring-related expenses(1)

172

300

98

28

35

85

21

64

 

Changes in obligations related to

 

 

 

 

 

 

 

 

 

divested businesses

106

94

–

–

–

–

–

–

 

Changes in pre-acquisition estimates

8

8

19

8

(11)

–

–

–

 

Gains and losses from sale of businesses

(57)

(252)

(81)

–

3

(2)

4

–

 

Acquisition- and divestment-related expenses

 

 

 

 

 

 

 

 

 

and integration costs

204

81

168

23

4

52

2

2

 

Certain other non-operational items

40

161

(2)

21

3

1

11

–

 

FX/commodity timing

 

 

 

 

 

 

 

 

 

differences in income from operations

33

(34)

28

(20)

12

(28)

–

2

 

Operational EBITA

3,005

2,817

1,626

1,510

1,019

953

1,447

1,260

 

 

 

 

 

 

 

 

 

 

 

Operational EBITA margin (%)

10.9%

11.2%

13.9%

15.0%

13.8%

13.9%

15.8%

15.0%

 

(1) Amounts in 2017 also include the incremental implementation costs in relation to the White Collar Productivity program.





6              Q4 2018 Financial Information 

 

Depreciation and Amortization

 

 

 

Electrification

Industrial

Robotics

 

($ in millions)

ABB

Products

Automation

and Motion

 

 

Q4 18

Q4 17

Q4 18

Q4 17

Q4 18

Q4 17

Q4 18

Q4 17

 

Depreciation

149

145

64

53

17

18

34

36

 

Amortization

95

80

41

25

22

24

17

18

 

including total acquisition-related amortization of:

75

65

35

22

20

22

15

16



 

 

 

 

Electrification

Industrial

Robotics

 

($ in millions)

ABB

Products

Automation

and Motion

 

 

FY 18

FY 17

FY 18

FY 17

FY 18

FY 17

FY 18

FY 17

 

Depreciation

578

549

229

205

69

59

139

139

 

Amortization

338

287

126

110

91

53

69

77

 

including total acquisition-related amortization of:

273

229

106

98

86

47

63

66



Orders received and revenues by region

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

Q4 18

Q4 17

US$

Local

parable

Q4 18

Q4 17

US$

Local

parable

 

Europe

2,423

2,318

5%

9%

4%

2,650

2,512

5%

10%

7%

 

The Americas

2,358

1,793

32%

35%

12%

2,244

1,758

28%

31%

6%

 

Asia, Middle East and Africa

2,146

2,137

0%

5%

7%

2,439

2,453

-1%

3%

3%

 

Intersegment orders/revenues(1)

58

80

 

 

 

62

81

 

 

 

 

ABB Group

6,985

6,328

10%

15%

7%

7,395

6,804

9%

13%

5%



 

 

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

 

 

 

 

 

 

Com-

 

 

 

 

Com-

 

FY 18

FY 17

US$

Local

parable

FY 18

FY 17

US$

Local

parable

 

Europe

10,617

9,090

17%

14%

10%

10,013

9,032

11%

9%

4%

 

The Americas

8,205

6,964

18%

19%

7%

8,003

6,831

17%

19%

7%

 

Asia, Middle East and Africa

9,523

8,716

9%

8%

6%

9,403

9,070

4%

4%

4%

 

Intersegment orders/revenues(1)

245

264

 

 

 

243

263

 

 

 

 

ABB Group

28,590

25,034

14%

14%

8%

27,662

25,196

10%

9%

4%

 

(1)  Intersegment orders/revenues include sales to the Power Grids business which is presented as discontinued operations and are not eliminated from Total orders/revenues.

7              Q4 2018 Financial Information 

 

 

 

 

—

Consolidated Financial Information

 

 

  

 

 

ABB Ltd Consolidated Income Statements (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

Three months ended

 

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

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

 

Sales of products

22,366

20,438

5,888

5,411

 

Sales of services and other

5,296

4,758

1,507

1,393

 

Total revenues

27,662

25,196

7,395

6,804

 

Cost of sales of products

(15,961)

(14,485)

(4,388)

(3,938)

 

Cost of services and other

(3,157)

(2,865)

(920)

(864)

 

Total cost of sales

(19,118)

(17,350)

(5,308)

(4,802)

 

Gross profit

8,544

7,846

2,087

2,002

 

Selling, general and administrative expenses

(5,295)

(4,765)

(1,459)

(1,303)

 

Non-order related research and development expenses

(1,147)

(1,013)

(331)

(297)

 

Other income (expense), net

124

162

(22)

(78)

 

Income from operations

2,226

2,230

275

324

 

Interest and dividend income

72

73

11

20

 

Interest and other finance expense

(262)

(234)

(66)

(45)

 

Non-operational pension (cost) credit

83

33

6

4

 

Income from continuing operations before taxes

2,119

2,102

226

303

 

Provision for taxes

(544)

(583)

(16)

(89)

 

Income from continuing operations, net of tax

1,575

1,519

210

214

 

Income from discontinued operations, net of tax

723

846

135

209

 

Net income

2,298

2,365

345

423

 

Net income attributable to noncontrolling interests

(125)

(152)

(28)

(30)

 

Net income attributable to ABB

2,173

2,213

317

393

 

 

 

 

 

 

 

Amounts attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

1,514

1,441

204

204

 

Income from discontinued operations, net of tax

659

772

113

189

 

Net income

2,173

2,213

317

393

 

 

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.71

0.67

0.10

0.10

 

Income from discontinued operations, net of tax

0.31

0.36

0.05

0.09

 

Net income

1.02

1.04

0.15

0.18

 

 

 

 

 

 

 

Diluted earnings per share attributable to ABB shareholders:

 

 

 

 

 

Income from continuing operations, net of tax

0.71

0.67

0.10

0.09

 

Income from discontinued operations, net of tax

0.31

0.36

0.05

0.09

 

Net income

1.02

1.03

0.15

0.18

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic earnings per share attributable to ABB shareholders

2,132

2,138

2,132

2,136

 

Diluted earnings per share attributable to ABB shareholders

2,139

2,148

2,134

2,150

 

Due to rounding, numbers presented may not add to the totals provided.

 

 

 

 

 

 

 

 

 

 

 

See Notes to the Consolidated Financial Information

 

 

 

 

8              Q4 2018 Financial Information 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

ABB Ltd Condensed Consolidated Statements of Comprehensive

 

Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

Three months ended

 

($ in millions)

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

 

Total comprehensive income (loss), net of tax

1,326

3,232

(132)

505

 

Total comprehensive income attributable to noncontrolling interests, net of tax

(110)

(177)

(36)

(38)

 

Total comprehensive income (loss) attributable to ABB shareholders, net of tax

1,216

3,055

(168)

467

 

Due to rounding, numbers presented may not add to the totals provided.

 

 

 

 

 

 

 

 

 

 

 

See Notes to the Consolidated Financial Information

 

 

 

 

9              Q4 2018 Financial Information 

 

 

—

 

 

 

ABB Ltd Consolidated Balance Sheets (unaudited)

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except share data)

Dec. 31, 2018

Dec. 31, 2017

 

Cash and equivalents

3,445

4,526

 

Marketable securities and short-term investments

712

1,083

 

Receivables, net

6,386

5,861

 

Contract assets

1,082

1,141

 

Inventories, net

4,284

3,737

 

Prepaid expenses

176

159

 

Other current assets

616

585

 

Current assets held for sale

5,164

5,043

 

Total current assets

21,865

22,135

 

 

 

 

 

Property, plant and equipment, net

4,133

3,804

 

Goodwill

10,764

9,536

 

Other intangible assets, net

2,607

2,425

 

Prepaid pension and other employee benefits

83

143

 

Investments in equity-accounted companies

87

72

 

Deferred taxes

1,006

1,212

 

Other non-current assets

469

571

 

Non-current assets held for sale

3,427

3,560

 

Total assets

44,441

43,458

 

 

 

 

 

Accounts payable, trade

4,424

3,736

 

Contract liabilities

1,707

1,792

 

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

2,031

726

 

Provisions for warranties

948

909

 

Other provisions

1,372

1,277

 

Other current liabilities

3,780

3,509

 

Current liabilities held for sale

4,185

4,520

 

Total current liabilities

18,447

16,469

 

 

 

 

 

Long-term debt

6,587

6,682

 

Pension and other employee benefits

1,828

1,589

 

Deferred taxes

927

1,050

 

Other non-current liabilities

1,689

1,849

 

Non-current liabilities held for sale

429

470

 

Total liabilities

29,907

28,109

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock, CHF 0.12 par value

 

 

 

(2,168,148,264 issued shares at December 31, 2018 and 2017)

188

188

 

Additional paid-in capital

56

29

 

Retained earnings

19,839

19,594

 

Accumulated other comprehensive loss

(5,311)

(4,345)

 

Treasury stock, at cost

 

 

 

(36,185,858 and 29,541,775 shares at December 31, 2018 and 2017, respectively)

(820)

(647)

 

Total ABB stockholders’ equity

13,952

14,819

 

Noncontrolling interests

582

530

 

Total stockholders’ equity

14,534

15,349

 

Total liabilities and stockholders’ equity

44,441

43,458

 

Due to rounding, numbers presented may not add to the totals provided.

 

 

 

 

 

 

 

See Notes to the Consolidated Financial Information

 

 

10              Q4 2018 Financial Information 

 

 

—

 

 

 

 

 

ABB Ltd Consolidated Statements of Cash Flows (unaudited)

 

 

 

 

 

 

 

 

Year ended

Three months ended

 

($ in millions)

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

 

Operating activities:

 

 

 

 

 

Net income

2,298

2,365

345

423

 

Less: Income from discontinued operations, net of tax

(723)

(846)

(135)

(209)

 

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

 

 

 

 

 

Depreciation and amortization

916

836

244

225

 

Deferred taxes

(146)

(204)

(185)

(246)

 

Net loss (gain) from derivatives and foreign exchange

93

29

14

27

 

Net loss (gain) from sale of property, plant and equipment

(57)

(37)

–

(14)

 

Net loss (gain) from sale of businesses

(57)

(252)

4

78

 

Share-based payment arrangements

50

49

18

15

 

Other

(72)

9

(3)

(7)

 

Changes in operating assets and liabilities:

 

 

 

 

 

Trade receivables, net

(144)

(178)

114

112

 

Contract assets and liabilities

(18)

6

78

46

 

Inventories, net

(336)

(66)

125

142

 

Accounts payable, trade

454

474

306

204

 

Accrued liabilities

252

99

89

(4)

 

Provisions, net

87

(4)

111

55

 

Income taxes payable and receivable

(102)

202

(6)

151

 

Other assets and liabilities, net

(143)

106

287

327

 

Net cash provided by operating activities – continuing operations

2,352

2,588

1,406

1,325

 

Net cash provided by operating activities – discontinued operations

572

1,211

461

544

 

Net cash provided by operating activities

2,924

3,799

1,867

1,869

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchases of investments

(322)

(666)

(13)

(254)

 

Purchases of property, plant and equipment and intangible assets

(772)

(752)

(235)

(248)

 

Acquisition of businesses (net of cash acquired)

 

 

 

 

 

and increases in cost- and equity-accounted companies

(2,664)

(2,011)

(5)

(11)

 

Proceeds from investments

567

1,443

199

45

 

Proceeds from maturity of investments

160

100

–

–

 

Proceeds from sales of property, plant and equipment

72

61

23

15