ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

The geographic distribution of revenues for our PowerProducts division was as follows:(in %) 2012 2011 2010Europe 32 34 34The Americas 27 27 26Asia 32 30 31Middle East and Africa 9 9 9Total 100 100 100In 2012, Asia increased its share of revenues reflecting thetiming of order execution. The share of Europe declined dueto continued economic uncertainty and selective capital investmentsby customers. The Americas maintained its shareof revenues due to higher demand in the U.S.In 2011, the regions maintained their share of total revenues.The Americas showed a small increase due to growthin the U.S. Asia’s share was slightly lower due to a lowertransmission related backlog.(1)Power SystemsThe financial results of our Power Systems division were asfollows:($ in millions, % Changeexcept OperationalEBITDA margin %) 2012 2011 2010 2012 2011Orders 7,973 9,278 7,896 (14) 18Order backlog at Dec. 31, 12,107 11,570 10,929 5 6Revenues 7,852 8,101 6,786 (3) 19Operational EBITDA 290 743 304 (61) 144Operational EBITDAmargin % (1) 3.7 9.1 4.5 n.a. n.a.EBIT 7 548 114 (99) 381Operational EBITDA margin % is calculated as Operational EBITDA dividedby Operational revenues.Reconciliation to Financial StatementsOperational EBITDAIn 2012, Operational EBITDA and Operational EBITDA marginwere lower, reflecting the execution of lower-margin orderbacklog as a result of pricing pressure. Cost saving initiativeshelped to partially reduce the impact.In 2011, Operational EBITDA and Operational EBITDAmargin were lower primarily due to the execution of lowermargin orders from the backlog, reflecting the continuedpricing pressure in an extremely competitive market acrossall businesses. However, cost savings partly mitigated thisprice impact.EBITIn 2012, EBIT was lower than 2011, primarily due to theexplanations in the “Operational EBITDA” section above. Inpart this was offset by lower restructuring-related chargesand a positive effect from FX/commodity derivatives timingdifferences.In 2011, EBIT was lower than 2010. In addition to the effectsdescribed in the “Operational EBITDA” section, EBITwas lower as a result of higher restructuring-related charges,depreciation and amortization and a negative effect fromFX/commodity derivatives timing differences.Fiscal year 2013 outlookThe overall investment climate remains cautious with severalmajor geographical areas still experiencing economicchallenges. Emerging markets are still growing, although at aslower pace. The outlook for China continues to be somewhatuncertain with some optimistic signs emerging. Industrialinvestment remains largely focused in sectors like oil andgas and mining. The power transmission utility sector is stillseeing selective project investments while distribution demandseems to be leveling out in some regions driven by a decelerationin electricity consumption growth rates. Based on thecurrent level of demand and the overall capacity situation inthe transmission sector, pricing pressure persists, but ishigher in some markets and leveling out in others.(1)($ in millions) 2012 2011 2010Operational revenues 7,812 8,128 6,783FX/commodity timing differenceson revenues (1) 40 (27) 3Revenues (as per FinancialStatements) 7,852 8,101 6,786Operational EBITDA 290 743 304FX/commodity timing differenceson EBIT (1) 13 3 (58)Restructuring-related costs (52) (54) (48)Acquisition-related expenses andcertain non-operational items (70) – –Depreciation and amortization (174) (144) (84)EBIT (as per FinancialStatements) 7 548 114For further details of FX/commodity derivative timing differences, see “Note 23 Operatingsegment and geographic data.”OrdersOrder intake in 2012 decreased 14 percent (10 percent in localcurrencies) mainly due to a lower volume of large orderscompared with 2011, which had included a $1 billion offshorewind farm order in Germany and an Ultrahigh Voltage DirectCurrent (UHVDC) power transmission order in India of around$900 million. The level of base orders was slightly lowerthan 2011, with decreases in all businesses except NetworkManagement where software orders increased. Power infrastructurespending was restrained due to economic uncertainties,especially in some mature economies with high debtlevels. Transmission utilities continue to invest selectively, withemerging markets focusing on capacity addition and maturemarkets mainly on grid upgrades. Large orders secured in2012 included a $260 million converter station upgrade fromthe U.S. to improve power reliability in Oregon, a $170 millioncontract for a power link between an oil and gas field inthe North Sea and the Norwegian grid, and multiple powerinfrastructure-related orders in Saudi Arabia and Iraq with acombined value of around $700 million.ABB Annual Report 2012 | Financial review 63