ABB LTD, ZURICH, SWITZERLAND, JULY 9, 208 Continued profitable growth Q2 208 results Ulrich Spiesshofer, CEO; Timo Ihamuotila, CFO
Important notices This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, and the economic conditions of the regions and industries that are major markets for ABB Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as expects, believes, estimates, targets, plans, outlook, on track, 208 framework or similar expressions. There are numerous risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this presentation and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others: business risks associated with the volatile global economic environment and political conditions costs associated with compliance activities market acceptance of new products and services changes in governmental regulations and currency exchange rates, and such other factors as may be discussed from time to time in ABB Ltd s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. 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. This presentation contains non-gaap measures of performance. Definitions of these measures and reconciliations between these measures and their US GAAP counterparts can be found in the Supplemental reconciliations and definitions section of Financial Information under Quarterly results and annual reports on our website at www.abb.com/investorrelations Slide 2
Agenda Q2 208 financial performance 208 update Slide 3
Q2 208 continued profitable growth Profitable Growth Total orders +8%, base orders +9% Order growth up in all divisions and regions Book to bill.07x, >x in all divisions ABB Ability solutions driving growth GEIS integration process well underway Relentless Execution Operational EBITA margin +60 bps to 3.0% Operating EPS growth +27% 2 Ongoing net cost savings Business-led Collaboration Global Strategic Alliance with HPE, Rittal for edge data center solutions Strategic brand migration; ABB Formula-E Slide 4 On a comparable basis, % yoy; 2 Operational EPS growth is in constant currency (204 foreign exchange rates)
Q2 208 financial summary Orders Base orders Revenues $9.5 bn $8.8 bn $8.9 bn +8% +9% +% Operational EBITA margin Operational EPS Cash flow from operating activities 3.0% $0.38 +60 bps +27% 2 $,00 mn Slide 5 On a comparable basis, % yoy; 2 Operational EPS growth is in constant currency (204 foreign exchange rates)
Q2 208 orders Order growth in all regions Total orders +8% yoy Base orders +9% yoy Growth by region and top 3 country markets in $ terms 9.8 9.5 8.4 8.3 8.2 7.6 7.7 7.4 8.5 7.9 8.8 8.8 USA +7% Canada +0% Brazil -3% China +23% India +% S. Korea -7% AMERICAS +7% AMEA 3 +7% EUROPE +2% Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Germany +2% Italy +9% Sweden -7% Base orders ($ bn) Large orders ($ bn) 2 Slide 6 Change on a comparable basis; 2 Defined as orders above $5 mn; 3 AMEA: Asia, Middle East and Africa
Q2 208 Power Grids Order growth $ mn 2,500 5 % 0 5 6 2,000,500-7 -4-9 -8 0-5 -0-5 0% -5-4 -8 9.9 0. 0.6 0.4 9.7 9.7,000 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Large orders 3rd party base orders Comparable total orders (% yoy) -20 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Comparable revenues (% yoy) Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Operational EBITA margin (%) Target corridor 205-7, 208-20 Target corridor to end 207 Target corridor from 208 Orders $2,577 mn Third-party base orders +7% yoy Growth from digital grid solutions, renewables integration Power Up initiatives gaining traction 2 Revenues $2,354 mn Order backlog end Q -7% yoy, weighed on revenues Backlog to -4% yoy end Q2 Operational EBITA $232 mn Margin yoy -40 bps Impacted by lower revenues Cost management initiatives in place Slide 7 Large orders in the chart above includes large orders (defined as orders above $5 mn) and internal Group orders; 2 On a comparable basis
Q2 208 Electrification Products Continued operational leverage $ mn % 2,800 2,600 2,400 4-7 0 3 6 5 0 5 0 0% 3 2 5-2 4 4. 5.0 6. 4.7 5.2 6.0 2,200-5 2,000 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8-0 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Large orders 3rd party base orders Comparable total orders (% yoy) Comparable revenues (% yoy) Operational EBITA margin (%) Target corridor 205-20 Orders $2,727 mn Third-party base orders +4% yoy Broad based growth Growth for data center, e-mobility solutions 2 Revenues $2,673 mn Order backlog end Q2 +5% yoy Operational EBITA $430 mn Margin yoy +00 bps Operating leverage, pricing measures Slide 8 Large orders in the chart above includes large orders (defined as orders above $5 mn) and internal Group orders; 2 On a comparable basis
Q2 208 Industrial Automation Exceptional order growth $ mn % 2,000,750,500,250-5 8 0-4 5 20 5 0 5 0-5 -0 0% -5-7 0 0 0 3.7 3.4 3.4 4.9 4. 4.,000 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8-5 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Large orders 3rd party base orders Comparable total orders (% yoy) Comparable revenues (% yoy) Operational EBITA margin (%) Target corridor 205-20 Orders $2,005 mn Total orders +30% yoy 2 reflects strong B&R contribution Third-party base orders +9% yoy 3 Broad based growth across business units and regions Signs of recovery in process industries Revenues $,839 mn Order backlog end Q -8% yoy; end Q2-4% yoy Strong book-and-bill offsets lower backlog Operational EBITA $260 mn Margin yoy +70 bps Positive mix, strong project execution, some one-time effects Slide 9 Large orders in the chart above includes large orders (defined as orders above $5 mn) and internal Group orders; 2 Reported orders in local currency terms including portfolio changes; 3 On a comparable basis
Q2 208 Robotics and Motion Strong execution $ mn % 3,000 2,500 2,000,500 7 5 4 6 20 5 0 5 5 5 8 6 8 8 4.8 5. 6.4 3.8 5.3 6.,000 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 0 0% Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Q 7 Q2 7 Q3 7 Q4 7 Q 8 Q2 8 Large orders 3rd party base orders Comparable total orders (% yoy) Comparable revenues (% yoy) Operational EBITA margin (%) Target Corridor 205-20 Orders $2,540 mn Third-party base orders +6% yoy 2 Growth across all business units and regions Recovery in process industries Revenues $2,36 mn Order backlog end Q2 +6% yoy Solid execution of order backlog and book-and-bill Operational EBITA $374 mn Margin yoy +00 bps Positive volume and mix, continued productivity efforts Slide 0 Large orders in the chart above includes large orders (defined as orders above $5 mn) and internal Group orders; 2 On a comparable basis
Q2 208 Operational EBITA Operational EBITA bridge Q2 207 to Q2 208 ($ mn) 2.4% op. EBITA margin 3.0% op. EBITA margin +94-35 +9-56 +27 0 +42 +34,042,67 Op. EBITA Q2 207 Net savings Commodities Net Volume Invest growth, incl. digital Mix Other Acq./Div. Forex Op. EBITA Q2 208 Slide
Other financial items $ mn unless otherwise stated H 208 FY 208 framework H 208 H2 208 framework Corporate Operational EBITA (278) ~(550) Net finance expense (02) ~(20) Cash flow from operating activities 492 Solid cash delivery Non-operating items Normal restructuring (7) ~(200) Power Up program ~(20) ~(20) Capital expenditure (465) ~(,000) Effective tax rate 27.5% 27% PPA-related amortization (45) ~(45) GEIS PPA-related amortization n.a. ~(25) GEIS inventory revaluation n.a. ~(25) GEIS integration costs (62) ~(20) Slide 2
Driving profitable growth in four entrepreneurial divisions Q2 highlights penetration, innovation, expansion Power Grids Electrification Products Industrial Automation Robotics and Motion Power Up driving growth and market expansion Penetration across high growth markets Selective recovery in process industries Expansion of robotics automotive solutions Grid integration and automation solutions Data center solutions, including edge partnership with HPE, Rittal Digitalization of industrial operations Additional expertise in robotics welding solutions 5-year frame agreement, Ørsted, offshore wind, UK Commissioning of Lefdal Mine data center, Norway Partner for greenfield coal to chemical plants for Yitai, China Acquisition of AB Rotech, specialist OEM supplier across Turkey, SE Europe Slide 3
ABB Ability making a quantum leap in digital Q2 growth highlights Power Grids Electrification Products Industrial Automation Robotics and Motion ABB Ability Network Manager DERMS ABB Ability MNS Digital 2 ABB Ability MineOptimize ABB Ability Connected Services Smart distribution network software for renewables Scalable, modular LV smart switchgear solution Software solutions for efficient design, build and operation of mining assets Machine-learning / AI based condition diagnostics Up to 25% reduction in total energy supply cost 30% operating cost savings Enhanced productivity, safety, e.g. 24% reduction in downtime Improves security of supply 20% reduction in infrastructure investment >50% reduction in ventilation energy costs 60% faster turnaround Slide 4 DERMS = distributed energy resource management system; 2 MNS = registered trademark for ABB s low voltage switchgear solution
Leading position in e-mobility Attractive market Number of EV charging points installed (millions per year) ~2 EV charge points % EV of car sales 208 2030 ABB # OEMs Renewables integration Grid reinforcements EV charging EV manufacturing ~23 24% ABB s position Early mover (start up 20) Technology leadership 350kW DC fast chargers ABB Ability Connected Services Large installed base 7,000+ fast chargers; 60+ countries Unique reach 00+ countries; 30,000+ global service employees 00+ years of customer relationships Global end-to-end electrification leadership Branding reinforced through 4 KEY BUILDING BLOCKS Slide 5 Source: Bloomberg New Energy Finance, ABB assumptions
Ongoing portfolio management Shifting ABB s center of gravity Strengthening competitiveness Solutions & service Partnerships: IBM, Azure, HPE, Rittal, Kawasaki, Ballard GEIS Expand in earlier cycle industries Business model change Cable, terminal block, EPC divestitures KEYMILE acquisition Robotics acquisitions, e.g. NUB3D, AT Rotech Discrete B&R acquisition PIE : Expansion in highgrowth markets Lowering risk Driving organic growth Slide 6 PIE: Penetration, Innovation and Expansion
ABB completes acquisition of GE Industrial Solutions (GEIS) Global #2 position in electrification strengthened Deal rationale Market access Expanded access to North America Significant installed base globally Performance improvement Non-core business for GE Significant value creation potential: ABB technology leadership Cost synergies Comprehensive electrification portfolio Complementary portfolio and solutions Strategic supply partnership GE to tap ABB s leading portfolio through long-term supply partnership Slide 7
GEIS integration process well under way Future Signing Closing Value creation Process Integration Best practice Regulatory approvals completed New EP business unit established Key staff retained Leadership structure in place Clean team drove accelerated road-map and business structure Transition plan in place from Day Resources identified to secure synergies Plans for infusion of ABB technology readied Operating model, ways of working agreed Clear performance targets set, inline with acquisition business case First joint order received Build on strong cultural alignment Expand access to North American market Leverage ABB technology leadership, ABB Ability Create leading global electrification business Product and technology portfolio harmonization Footprint optimization Supply chain savings SG&A cost reduction Build on deep customer relationships and strong brand Raise GEIS performance to peer levels Slide 8
GEIS synergy capture update Expected annual cost synergies ($mn) ~200 ~20 H2 8 209 2020 202 2022 Expected annual costs ($mn) Sources of synergies Approximately $200 mn run-rate by 2022 Product and technology portfolio harmonization Footprint optimization Supply chain savings SG&A cost reduction Post-closing integration costs, H2 8 to 2022 ~$480 mn pre-tax one-off costs 2 of which ~80% non-operational ~$30 mn lower cash taxes versus prior estimate H2 8 209 2020 202 2022 Slide 9 Pre-tax; 2 Cumulative, pre-tax
Relentless execution Driving performance and productivity through Lean Six Sigma Power Grids Electrification Products Industrial Automation Robotics and Motion HV factory, Sweden Protection & Connection products across 2 sites Measurement & Analytics factory, Italy Motor factory, U.S.A Resolving SCM issues Raising standards Full site upgrade Moving to best-in-class 67% reduction in leadtime to customers +50% improvement in quality performance 49% cut in inventory +22% increase in productivity +30% lowered lead-time Tripled customer satisfaction score +40% increase in delivery performance months consecutive ontime delivery Supporting ongoing savings equivalent to 3-5% of COGS p.a. Slide 20
Strengthening the global ABB brand Brand migration >,000 trademarks under one masterbrand Strategic brand positioning Impact Increase in brand equity >$2.5 bn Recognition as digital leader 2 #2 Employer of choice in the technological sector 3 # Q2: ROME, PARIS, BERLIN, ZURICH Number of job applications 4 +00% Slide 2 Brand Finance reports 25 most valuable engineering and construction brands 208 and 207 combined; 2 Ipsos, Brand Reputation Study 207, global data: survey ranking for digital reputation, digital leadership and association with digitalization versus peers; 3 Universum Student Research 208, Switzerland s most attractive employers in the field of engineering; 4 Source: ABB internal
ABB better positioned in a better market Summary Market outlook Q2 highlights Utilities Industry Transport & Infrastructure Renewables Transmission & distribution Conventional power generation O&G upstream Mining Hybrid & discrete O&G mid/downstream, chemicals Metals Other process Data centers Buildings Marine Rail 208 2020 Total orders +8%, base orders +9% 2 Order growth up in all divisions and regions ABB Ability solutions driving growth GEIS integration process well underway Operational EBITA margin +60 bps to 3% Operating EPS growth +27% 3 Key Slide 22 >3% -3% 0-% <0% Source: Bloomberg, Rystad, IMS, AME and others; 2 On a comparable basis; 3 Operational EPS growth is in constant currency (204 foreign exchange rates)
Key figures Q2 208 Q2 8 Q2 7 Change yoy in $ mn unless stated otherwise $ Local currency Comparable Orders 9,483 8,349 +4% +% +8% Order backlog (end June) 24,24 23,553 +3% +4% -% Revenues 8,889 8,454 +5% +3% +% Operational EBITA,67,042 +2% +8% as % of operational revenues 3.0% 2.4% +0.6 pts Income from operations 962 877 +0% as % of revenues 0.8% 0.4% +0.4 pts Net income attributable to ABB 68 525 +30% Basic earnings per share ($) 0.32 0.25 +30% Operational earnings per share ($) Cash flow from operating activities 0.38 0.30 +28% +27% 2,00 467 +6% Slide 24 Calculated on earnings per share before rounding; 2 Operational EPS growth rate is in constant currency (204 foreign exchange rates)
Total and base orders By division Q2 8 Q2 7 Change yoy in $ mn unless stated otherwise Comparable Power Grids Total orders 3 rd party base orders 2,577 2,28 2,427,96 +5% +7% Electrification Products Total orders 3 rd party base orders 2,727 2,553 2,52 2,393 +6% +4% Industrial Automation Total orders 3 rd party base orders 2,005,75,492,32 +5% +9% Robotics and Motion Total orders 3 rd party base orders 2,540 2,363 2,28,966 +% +6% Corporate and Other Total orders 3 rd party base orders (366) 35 (300) 40 n.a. n.a. ABB Group Total orders 3 rd party base orders 9,483 8,749 8,349 7,68 +8% +9% Slide 25
Q2 208 orders Total orders +8% yoy Base orders +9% yoy,2 Growth by region and top 3 country markets in $ terms Growth by region and top 3 country markets in $ terms USA +6% Canada +0% Brazil -2% China +20% India +2% UAE +33% USA +7% Canada +0% Brazil -3% China +23% India +% S. Korea -7% AMERICAS +7% AMEA 3 +7% AMERICAS +7% AMEA 3 +7% EUROPE +0% Germany +2% Italy +66% UK +29% EUROPE +2% Germany +2% Italy +9% Sweden -7% Slide 26 Change on a comparable basis; 2 Defined as orders below $5 mn; 3 AMEA: Asia, Middle East and Africa
Order backlog by division End June 208 End June 207 Change yoy in $ mn unless stated otherwise $ Comparable Power Grids 0,47,085-6% -4% Electrification Products 4,449 3,220 +38% +5% Industrial Automation 5,496 5,578 -% -4% Robotics and Motion 4,262 4,056 +5% +6% Corporate and Other (464) (386) n.a. n.a. ABB Group 24,24 23,553 +3% -% Year of revenue capture for end June 208 backlog 208 209 Thereafter Backlog conversion estimate 53% 29% 8% Slide 27 including GEIS acquisition
Cash flow from operating activities by division in $ mn unless stated otherwise Q2 8 Q2 7 Change yoy Power Grids 228 77 +96% Electrification Products 297 259 +5% Industrial Automation 208 53 +36% Robotics and Motion 35 22 +59% Corporate and Other (74) (243) n.a. ABB Group,00 467 +6% Slide 28
Operational EPS analysis Q2 8 Q2 7 In $ mn, except per share data in $ EPS EPS Change yoy Net income (attributable to ABB) 68 0.32 525 0.25 +30% Operational adjustments: Acquisition-related amortization 72 56 Restructuring and restructuring-related expenses 2 6 84 Non-operational pension cost (credit) -29-7 Changes in retained obligations of divested businesses 0 0 Changes in pre-requisition estimates 2 Gains and losses on sale of businesses - 7 Acquisition-related expenses and non-operational integration costs 5 8 Certain non-operational items 30 48 FX / commodity timing differences in income from operations 46-40 Tax on operational adjustments 3-47 -46 Operational net income / Operational EPS 80 0.38 637 0.30 +27% 4 Slide 29 Calculated on earnings per share before rounding; 2 Including White Collar Productivity implementation costs; 3 Tax amount is computed by applying the Adjusted Group effective tax rate to the operational adjustments, except for gains and losses from sale of businesses for which the actual provision for taxes resulting from the gain or loss has been computed; 4 Operational EPS growth rate is in constant currency (204 foreign exchange rates)
Regional share of total orders and revenues by division Q2 208, in % terms Power Grids Electrification Products Industrial Automation Robotics and Motion Orders 3 39 35 38 32 50 34 37 30 27 8 29 Revenues 29 40 36 37 3 27 35 34 35 43 22 3 Slide 30 Key: Europe Americas Asia, Middle East and Africa
End-customer and product type revenues by division Q2 208, in % terms Power Grids Electrification Products Industrial Automation Robotics and Motion Orders endcustomer market 24 9 67 3 44 25 23 6 6 7 9 74 Orders Product type 24 9 57 6 7 87 42 25 33 3 5 72 Slide 3 Key: Utilities Industry Transport & Infrastructure Products Systems Services & other