ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

In 2011, revenues increased, driven by our products andservices businesses. Life-cycle services recorded stronggrowth. Systems revenues were also higher, driven by ourOil and Gas, Pulp and Paper, and Metals and Mineralsbusinesses, while revenues in our Marine business werelower as a result of lower backlog to execute.The geographic distribution of revenues for our ProcessAutomation division was as follows:(in %) 2012 2011 2010Europe 37 39 39The Americas 23 22 19Asia 30 27 27Middle East and Africa 10 12 15Total 100 100 100In 2012, revenue growth was led by Asia and the Americas.In Asia, strong growth was recorded in South Korea, drivenby the Marine business, as well as growth in Singapore andAustralia. China and India however declined. In the Americas,revenue growth was driven by the mining sector in Chile, aswell as the oil and gas sector in Canada. Europe’s share ofrevenues decreased, although still at high levels, as growth inthe Oil and Gas, and Marine businesses in Northern Europewas offset by lower growth in Central Europe.In 2011, revenues increased across all regions, withthe exception of MEA. Revenue growth was strongest in theAmericas driven by the U.S., Canada and Brazil. Europeremained at a high level, while in Asia high growth in severaleconomies was partly offset by lower revenues in SouthKorea, due to the lower opening order backlog to execute.MEA declined as revenues in Congo and Algeria were lowerthan in the prior year.Operational EBITDAIn 2012, Operational EBITDA and operational EBITDA margindeclined slightly. The biggest driver of the decline waslower profitability in the Turbocharging business which wasimpacted by difficult market conditions. In the systems business,the margin was on the same level as in 2011, whilein the services business, life-cycle services continued to bestrong and improved their margin.In 2011, Operational EBITDA was higher compared to2010, as a result of higher revenues, while Operational EBITDAmargin remained flat. The margin was stronger in products,led by Measurement Products, and life-cycle services, whileit was slightly lower in our systems business.EBITIn 2012, EBIT and EBIT margin declined compared to theprevious year. The biggest driver for the decline was lowerprofitability in the Turbocharging business which was impactedby tough market conditions, as well as additional restructuringexpenses to further align our business structure to prevailingmarket conditions. Most of the restructuring expenseswere recorded in the Turbocharging and Full Service businesses,as well as Metals, and Pulp and Paper businesses.In 2011, EBIT and EBIT margin improved significantly,partly due to operational improvements in our productsbusiness, particularly Measurement Products, as well as afavorable currency impact compared to the previous year.Restructuring expenses were also lower.Fiscal year 2013 outlookWe expect 2013 to be a challenging year. Activity is stillquite strong in the key Oil and Gas, Mining and Marine businesses,however some investment decisions and tenderawards are being delayed by customers. The Pulp and Paper,and Metals businesses continue to be weak, especially inEurope, China and India. Some of our short-cycle productbusinesses are experiencing lower volumes in recentquarters which can potentially indicate further weakeningin market demand.Corporate and OtherEBIT for Corporate and Other was as follows:($ in millions) 2012 2011 2010Corporate headquartersand stewardship (323) (331) (284)Corporate researchand development (192) (202) (120)Corporate real estate 50 56 48Equity investments – – (11)Other (49) (41) (23)Total Corporate and Other (514) (518) (390)In 2012, corporate headquarters and stewardship costsdecreased $8 million, mainly resulting from the release ofcompliance-related provisions, partially offset by a provisionfor certain pension claims in the U.S. In 2011, Corporateheadquarters and stewardship costs increased driven bycharges related to the deconsolidation of a Russian subsidiaryand the sale of another subsidiary in Russia, certainexpenses in the countries and higher spending to strengthencorporate functional areas as business volumes increased.Corporate research and development costs decreased$10 million in 2012, as the amount spent on the specialgrowth fund was lower in 2012 than in 2011, when corporateresearch and development costs increased $82 million mainlydue to the establishment of the growth fund to finance theacceleration of the research and development programs.Corporate real estate consists primarily of rental incomeand gains from the sale of real estate properties. In 2012,Corporate real estate reported $50 million EBIT including gainsof $26 million from the sales of real estate properties mainlyin Switzerland, Austria, Sweden and the Netherlands. In 2011,the Corporate real estate result included $37 million gainsfrom the sale of real estate properties mainly in Venezuela,Sweden, Brazil and Switzerland. In 2010, Corporate real estatereported gains of $33 million from the sale of land andbuildings, mainly in Sweden, Norway, Austria and Venezuela.In 2012, EBIT from “Other” was primarily related tocharges from the impairments of investments in technologyventures, the closure of business lines in certain countriesand operational costs of our Global Treasury Operations. In70 Financial review | ABB Annual Report 2012