Page 1

Electrical Products Group Conference Peter Voser CFO

May 6, 2003


Safe-harbor statement This presentation includes forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for ABB Ltd and ABB Ltd’s lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates” or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are major markets for ABB’s businesses, market acceptance of new products and services, changes in governmental regulations, interest rates, and fluctuation in currency exchange rates. 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.

2


ABB Group

?

Headquarters: Zurich, Switzerland

?

About 135,000 employees in more than 100 countries

?

Orders in 2002: US$ 18.1 billion

?

Revenues in 2002: US$ 18.3 billion

?

Listed on stock exchanges in London/Zurich, Stockholm, Frankfurt and New York

3

?

A leading power and automation technology company with strong market positions in its core businesses

?

Two core divisions: Automation Technologies, Power Technologies

?

Oil, Gas and Petrochemicals, Building Systems, to be divested in 2003


ABB Automation Technologies An integrated automation business, focused on core activities Former Automation BAs Control and Force Measurement Drives and Power Electronics

New Automation Technologies division

Business Areas with market position

Electrical Machines

Drives and Motors

#1

Control & Enterprise Products

#1

Low-Voltage & Instruments

#2-3

Paper, Minerals, Marine, Turbo.

#1

Former Industries BAs

Robotics, Automotive & Mfg.

#1-2

Automotive Industries

Petroleum, Chemical, Consumer

#2-3

Instrumentation and Metering Low-Voltage Products Robotics

Manufacturing, Electronics and Consumer Marine and Turbocharging Paper, Printing, Metals and Minerals Petroleum, Chemical, Life Sciences

4

?

150 manufacturing, ? 56,200 employees software and application centers


Automation Technologies: Strategic priorities Adapting to the needs of a cautious business enivronment ?

?

?

5

Optimizing our business ?

Cost structure (A global Step Change in the way we work)

?

Portfolio (Rationalize overlapping products and processes)

?

Productivity (Focused factories and engineering centers)

Leveraging our strong base ?

Penetration through account and channel management

?

Performance-based selling for double-digit service growth

Differentiating our offer ?

Innovation to maintain our leading edge

?

Industrial IT for added value and cross selling


Services: Driving profitable growth 2002 service revenue

17%

2005 service revenue

25%

Double-digit service revenue and EBIT growth for each of the last two years

6


Our strategy pays off in customer confidence Products: ?

ABB power electronics won every major rectifier/converter contract in 2002 Kestrel (Dubai) – US$ 19 million Hillside (S.Africa) – US$ 7 million

Aloutte (Canada) – US$ 8 million Tomago (Australia) – US$ 4 million

Services: ?

International Paper, New Zealand. US$ 50 million, 5-year contract for asset management services

?

Bobingen Industrial Park, Germany. US$ 135 million, 5-year contract for asset management services

Solutions:

7

?

BP, Azerbaijan. US$ 34 million control and data management for the world’s longest oil pipeline

?

DaimlerChrysler, U.S. US$ 15 million for power-train automation


Power Technologies

High Voltage Products

8

Medium Voltage Power Distribution Products Transformers Transformers

Utility Automation Systems

Power Systems

?

ABB is the world’s no. 1 in power technologies

?

Global presence with about 40,000 employees in more than 70 countries


2003 strategic priorities ?

Continue to focus on cost reductions

?

Speed in processes

?

?

Focused Factories plus Focused Engineering

?

Continued site and product rationalization

Speed in systems ?

?

9

Continued push on product and system configurators to increase speed

Build on strong base and expansion ?

Take advantage of #1 market position

?

Capitalize on complete portfolio of products, systems, services

?

Boost channel partner business by more than 10%

?

Grow service business by more than 10%

?

Continue strong growth in India and China


Strategy: Speed

Fully implement Focused Factory concept

?

Transformation of a confederation of local volume units to highly efficient Focused Factories

?

Focus on specific product ranges to achieve cost savings through economies of scale

?

Compete on speed and efficiency:

?

?

Short total cycle time

?

Advanced manufacturing technology

?

Factory automation

?

Demand flow systems from push to pull

?

Lean overhead structure

Deploy Industrial IT as next step of Focused Factories Focused Factory concept started in distribution transformers and is being deployed in all Business Areas

10


Strategy: Speed

Speed in design

?

PowerIT MV Air Insulated Switchgear, UniGear for IEC mass market applications (up to 24kV)

18

80,000

47

10

45,000

22

1

5,000

12

2003

1

5,000

12

2004

1

5,000

9

?

Platform development ? Functionality implementation ? Phase in of global platform ? Product substitution

Q4 2001 2002

2005

11

Products

Production lines

Example: Product portfolio rationalization in MV switchgear

Parts

?

For this product line an EBIT improvement of 18% was achieved in 2002


Strategy: Speed

?

Speed in manufacturing systems

Example: Increase automation in Focused Factories e.g. MV breaker factory, Dalmine, Italy

Fully-automated Assembling and test line with automatic material handling

Mechanical test

Improvements in the last two years: ? Inventory: from 18.7% to 8.2% ? Throughput time: from 1 week to 1 day ? Test hours: from 2.5 h to 35 minutes ? Cost of poor quality (COPQ): from 3.2% to 0.9% ? On time delivery: from 68% to 96%

For this product line an EBIT improvement of 20% was achieved in 2002 12


Building on strong base

Expand market position

?

Tap leading market position and large installed base to grow in high margin service business ?

13

Service business being implemented at the core of every business area

?

Accelerated targeting of key channel partners like OEMs* and EPCs*

?

Extend lead in high-growth regions, high-end technologies ?

Further double-digit growth in Asia 2003

?

Capitalize on HVDC* market opportunities

* OEM: Original Equipment Manufacturer EPC: Engineering, Procurement, Construction HVDC: High-voltage Direct Current


Core divisions Q1 2002 and Q1 2003 Power Technologies and Automation Technologies divisions (MUS$) Revenues 4'014 3'388

Q1

Q1

2002

2003

EBIT

EBIT margins 290

6.4%

218

Q1

2002 14

7.2%

Q1

2003

Q1

Q1

2002

2003


Power Technologies - first quarter highlights ?

15

Orders up 6% ?

Double digit growth in Medium-Voltage Products business area

?

Largest export order from ABB India

?

Order intake improvements in Asia, Middle East, Eastern Europe

?

Revenues up 17%

?

EBIT up from US$ 110 to US$ 128 million

?

EBIT margin remained at 7.2%


Automation Technologies - first quarter highlights ?

16

Orders up 15% ?

Orders increased in Petroleum, Chemical and Consumer business areas

?

Two major service orders Italy and Germany, total value US$ 217 million

?

Order growth from Europe and Asia (China and India)

?

Revenues up 20%

?

EBIT up from US$ 108 to US$ 162 million

?

EBIT margin up from 5.8% to 7.3%


EBIT (MUS$)

First quarter 2002

Power Technologies

128

110

AutomationTechnologies

162

108

Core businesses

290

218

Non-core activities

-64

39

-134

15

Group EBIT

92

272

EBIT margin

2.0%

6.9%

Corporate

17

First quarter 2003


Group – first quarter key figures First quarter 2003

First quarter 2002

Orders

5,081

4,695

Revenues

4,495

3,951

92

272

-130

-58

Discontinued operations

-10

22

Net loss/income

-45

155

-928

-181

8,156

7,952*

(MUS$)

EBIT Net interest expense

Net cash from operations Gross debt

* At December 31, 2002 18


Group - first quarter highlights ?

Divestments ? ?

?

Cost reduction program realized ? ?

?

Step Change program realized net cost savings of app. US$ 70 million (restructuring costs US$ 33 million) Step Change job reductions of ~1,700 (overall ~ 4,000 jobs fewer)

Progress on asbestos settlement ? ?

19

Aircraft leasing portfolio ABB Export Bank’s car leasing assets sold

Well above 75 percent of claimants in favor Pre-packaged Chapter 11 filed

?

Confirmation court hearing started on April 24, continued on May 1-2 and will continue on May 11-13

?

ABB remains confident that the plan will be approved


Medium-term financing goals 2003 ?

Reduce total debt from US$ 8.2 billion at March 2003 to about US$ 6.5 billion, gearing [total debt/(total debt + equity)] to approximately 70 percent ?

Proceeds from divestment of Oil, Gas and Petrochemicals division, Building Systems and other businesses will significantly reduce debt by year-end 2003

2005 ?

Reduce total debt to approximately US$ 4 billion, gearing to approximately 50 percent ?

20

Debt reduction to come primarily through increased operational cash-effective earnings


Priorities 2003

21

?

Further strengthen core divisions

?

Continue to cut costs and losses in non-core and corporate activities

?

Execute planned divestments in 2003 to reduce debt with expected gross proceeds in excess of US$ 2 billion

?

Reduce volatility in core divisions’ quarterly cash flow

?

Solve the asbestos issue


ABB 2003 - 2005 Outlook

2003

2005E

Group

AT

PT

Group

AT

PT

Revenues (local currencies)

4%

3%

5.3%

*4%

*3.3%

*5.3%

EBIT margin (nominal currency)

4%

7.1%

7%

8%

10.7%

10%

Excluding major acquisitions/divestments 2005 EBIT margin target on estimated revenues of approximately US$ 17.5 billion

*Annual average growth rate 2002 - 2005 22

test file  

test file for converting the pdf to page turn view

Read more
Read more
Similar to
Popular now
Just for you