ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

In 2011, Operational EBITDA increased 62 percent(54 percent in local currencies) while the Operational EBITDAmargin of 18.9 percent increased compared to 18.3 percentin 2010. The increase is based on a combination of higherrevenues and the positive contribution from Baldor (approximately23 percent of the division’s Operational EBITDA).All businesses, except Power Electronics and Medium VoltageDrives, improved, with the largest increase in the Roboticsbusiness due to the continued turnaround from the low levelof 2009. The Motors and Generators business benefited fromthe Baldor integration, while higher revenues in the Low VoltageDrives business further increased Operational EBITDA.EBITIn 2012, EBIT grew 14 percent compared to 2011. Acquisitionrelatedexpenses and certain non-operational items weremainly transaction costs relating to the acquisition of Newavein Switzerland. Such acquisition-related expenses were substantiallylower than in 2011, which included expenses relatedto the acquisition of Baldor. Depreciation and amortizationincreased mainly due to the acquisition of Newave.In 2011, the difference between Operational EBITDAand EBIT was substantially higher than in 2010 due to acquisition-relatedexpenses and certain non-operational itemsrelated to the acquisition of Baldor. These costs primarily includedadditional cost of sales resulting from the fair valueadjustments of acquired inventories and transaction costs.Depreciation and amortization was substantially higherin 2011, compared to 2010, impacted by the acquisition ofBaldor.Fiscal year 2013 outlookThe uncertainty around the short-term prospects for WesternEurope, the U.S. and China, which has influenced the shortcyclebusiness growth in the latter part of 2012, is also likelyto impact demand during 2013. We expect most marketsto continue on lower growth rates in 2013. Despite this, weexpect growth in orders and revenues, especially in emergingmarkets in Asia and South America. Furthermore, the needfor improved energy efficiency and productivity in a wide rangeof industries will support the demand for automation solutionsand energy efficient products provided by the DiscreteAutomation and Motion division.(1)(1)Low Voltage ProductsThe financial results of our Low Voltage Products divisionwere as follows:($ in millions, % Changeexcept OperationalEBITDA margin %) 2012 2011 2010 2012 2011Orders 6,720 5,364 4,686 25 14Order backlog at Dec. 31, 1,117 887 838 26 6Revenues 6,638 5,304 4,554 25 16Operational EBITDA 1,219 1,059 926 15 14Operational EBITDAmargin % (1) 18.4 19.9 20.3 n.a. n.a.EBIT 856 904 788 (5) 15Operational EBITDA margin % is calculated as Operational EBITDA dividedby Operational revenues.Reconciliation to Financial Statements($ in millions) 2012 2011 2010Operational revenues 6,626 5,315 4,554FX/commodity timing differenceson revenues (1) 12 (11) –Revenues (as per FinancialStatements) 6,638 5,304 4,554Operational EBITDA 1,219 1,059 926FX/commodity timing differenceson EBIT (1) 16 (19) 3Restructuring-related costs (23) (20) (36)Acquisition-related expenses andcertain non-operational items (106) – –Depreciation and amortization (250) (116) (105)EBIT (as per FinancialStatements) 856 904 788For further details of FX/commodity derivative timing differences, see “Note 23 Operatingsegment and geographic data.”OrdersOrders increased 25 percent (29 percent in local currencies)in 2012 and increased 14 percent (9 percent in local currencies)in 2011.Order growth in 2012 was driven by the contribution fromThomas & Betts, which was acquired in May 2012. ExcludingThomas & Betts, orders decreased 4 percent (flat in localcurrencies). There was moderate growth in the systems business,while the product businesses decreased.The order growth in 2011 was driven by demand fromboth the industrial and construction markets. Order growth wasrecorded across most product businesses, with a strong recoveryin the systems business as market conditions improved.The renewables sector (mainly solar and wind) weakened asgovernmental subsidies expired in several countries reducingthe demand for such investments.ABB Annual Report 2012 | Financial review 67