ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

In May 2012, the Low Voltage Products division expandedits product offering and geographic scope through the acquisitionof Thomas & Betts Corporation (Thomas & Betts), aNorth American leader in low-voltage products. The acquisitionsupports ABB’s strategy to strengthen its position inthe North American low-voltage market.The Low Voltage Products division had approximately30,800 employees as of December 31, 2012, and generated$6.6 billion of revenues in 2012.A majority of the division’s revenues comes from salesthrough distributors, wholesalers, OEMs, system integrators,and panel builders, although a portion of the division’srevenues comes from direct sales to end users and utilities.Process Automation divisionThe Process Automation division provides products, systems,and services for the automation and electrification of industrialprocesses. Our core industries are cement, paper, metals,mining, oil, gas, petrochemicals, chemicals and marine.Each industry has unique business drivers, yet share commonrequirements for operational productivity, safety, energy efficiency,minimized project risk and environment compliance.The division’s core competence is the application of automationand electrification technologies to solve these genericrequirements, but tailored to the characteristics of each ofits core industries. The division is organized around industryand product business along with a specialized businessfocusing on performance-based outsourced maintenancecontracts. The division had approximately 28,000 employeesas of December 31, 2012, and generated revenues of$8.2 billion in 2012.The Process Automation division offering is madeavailable as separately sold products or as part of a totalautomation system. The division’s technologies are soldboth through direct sales forces and third-party channels.Corporate and OtherCorporate and Other comprises corporate headquarters andstewardship, corporate research and development, corporatereal estate, equity investments, as well as other activities.Corporate headquarters and stewardship activities includethe operations of our corporate headquarters in Zurich,Switzerland, as well as corresponding subsidiary operationsin various countries. These activities cover staff functions withgroup-wide responsibilities, such as accounting and financialreporting, corporate finance and taxes, planning andcontrolling, internal audit, legal affairs and compliance, riskmanagement and insurance, corporate communications,information systems, investor relations and human resources.Corporate research and development primarily covers ourresearch activities, as our development activities are organizedunder the five business divisions. We have two globalresearch laboratories, one focused on power technologiesand the other focused on automation technologies, whichboth work on technologies relevant to the future of our fivebusiness divisions. Each laboratory works on new andemerging technologies and collaborates with universities andother external partners to support our divisions in advancingrelevant technologies and in developing cross-divisionaltechnology platforms. We have research operations in eightcountries, which consist of the United States of America(United States), Sweden, Switzerland, Poland, China, Germany,Norway and India.Corporate and Other had approximately 2,000 employeesat December 31, 2012.Management overviewDuring 2012, we continued to deliver power and automationsolutions that help our customers meet the challenges ofa rapidly-changing world. Foremost among these are climatechange and the need to use electrical energy more efficientlyand with less impact on the environment. We addressedthe challenges in several ways, as described below.One is a long-term commitment to technology leadershipin areas such as high-efficiency power transmission; automationand control systems to manage complex industrialprocesses using less energy; and technologies to capture thefull potential of renewable energies, such as wind and solarpower. In 2012, for example, we developed the world’s firstcircuit breaker for high voltage direct current (HVDC). Thebreakthrough removes a 100-year-old barrier to the developmentof direct current (DC) transmission grids, which willfacilitate the efficient integration and exchange of renewableenergy. DC grids will also improve grid reliability and enhancethe capability of existing alternating current (AC) networks.We also continued to develop new products that allow ourindustrial customers to use their production assets moreefficiently, such as our new synchronous reluctance motor,miniature circuit breakers and laser-cutting robots.Another is our presence in more than 100 countriesaround the world. This allows us to meet the needs of ourcustomers faster and with solutions that are better suitedto their local requirements. It positions us to benefit from therapid growth expected in the emerging markets in thecoming years while also supporting our large and importantmarkets in the world’s mature economies. In 2012, we tooksignificant actions to adjust our geographic and portfoliobalance, especially with the acquisition of Thomas & Betts tofurther build our position in the large and growing NorthAmerican market. Furthermore, our geographic scope providesus with access to a large pool of talented and highlyqualified people from very diverse cultural and businessbackgrounds – a key competitive advantage. In 2012, wegenerated approximately half of our revenues from emergingmarkets. In addition, we recorded order increases of morethan 10 percent in local currencies in large markets such asBrazil, Canada, the United States, Saudi Arabia and theUnited Kingdom.46 Financial review | ABB Annual Report 2012