Discrete Automation and Motion

The financial results of our Discrete Automation and Motion division were as follows:

(XLS:)

($ in millions,
except Operational EBITDA margin %)

 

 

 

% Change

2011

2010

2009

2011

2010

(1)

Operational EBITDA margin % is calculated as Operational EBITDA divided by Operational revenues.

Orders

9,566

5,862

4,702

63

25

Order backlog at Dec. 31,

4,120

3,350

3,046

23

10

Revenues

8,806

5,617

5,405

57

4

Operational EBITDA

1,664

1,026

773

62

33

Operational EBITDA margin %(1)

18.9

18.3

14.4

n.a.

n.a.

EBIT

1,294

911

574

42

59

Reconciliation to Financial Statements

(XLS:)

($ in millions, except Operational EBITDA margin %)

2011

2010

2009

(1)

For further details of FX/commodity timing differences, see “Note 22 Operating segment and geographic data.”

Operational revenues

8,817

5,613

5,374

FX/commodity timing differences on revenues(1)

(11)

4

31

Revenues (as per Financial Statements)

8,806

5,617

5,405

Operational EBITDA

1,664

1,026

773

FX/commodity timing differences on EBIT(1)

(19)

(2)

29

Restructuring-related costs

(10)

(35)

(154)

Acquisition-related expenses and certain non-recurring items

(90)

Reversal of depreciation and amortization

(251)

(78)

(74)

EBIT (as per Financial Statements)

1,294

911

574

Operational EBITDA margin %

18.9

18.3

14.4

Orders

In 2011, orders increased 63 percent (57 percent in local currencies) reflecting both increased demand for energy-efficient automation solutions, as well as the contribution from the U.S.-based industrial motor manufacturer Baldor, acquired in January 2011 (approximately half of the division’s order growth related to the Baldor acquisition). Highest order growth was achieved in Motors and Generators due to the Baldor integration while Robotics orders increased due to improving demand in automotive and general industry sectors.

Orders grew strongly in 2010, due to increased market demand compared to the low level of 2009. Orders in low-voltage (LV) drives and LV motors increased in 2010, as a result of increased demand in process industries segment and investments in renewable energy sectors such as wind and solar. The automotive industry recovered from the low level of 2009, and increased investments made by car manufacturers, as well as general industry customers, led to strong order growth for our Robotics business.

The geographic distribution of orders for our Discrete Automation and Motion division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

37

46

49

The Americas

32

16

13

Asia

28

34

33

Middle East and Africa

3

4

5

Total

100

100

100

All regions increased orders in 2011, with the highest growth in the Americas due to the Baldor acquisition. With Baldor’s substantial presence in the U.S., the Americas’ share of the total division’s orders doubled in 2011, compared to 2010, and therefore all other regions’ shares declined. The division has now a more balanced global presence with three equally strong regions – Europe, the Americas and Asia.

Orders grew in most of the regions in 2010, with the most significant increases being in Asia and the Americas. A strong recovery in the automotive and process industry markets in the United States contributed to the high increase in the Americas. Orders in China grew 44 percent, mainly driven by the Robotics and LV drives businesses. In Europe orders increased 18 percent due to improved market demand but Europe’s share of total orders decreased as other regions grew more.

Order backlog

Order backlog in 2011 increased as orders were higher than revenues during the year. The highest increase came from Robotics, due to the high level of orders which will be delivered in 2012 or later.

Order backlog in 2010 increased 10 percent as orders were higher than revenues for most businesses, especially in the LV drives, Robotics and LV motors businesses. Order backlog in the large motors and generators business decreased as large orders were delivered during the year.

Revenues

Revenues in 2011 increased at a similar pace to orders, on the solid execution of the strong order backlog and due to the Baldor acquisition (which accounted for approximately 60 percent of the division’s revenue growth). Highest growth was achieved in motors and generators, due to the acquisition of Baldor, and Robotics as a result of the strong order growth.

Revenues in 2010 increased 4 percent as a result of the high order growth for products such as LV drives, Robotics and LV motors. Longer-cycle businesses such as power electronics and large motors and generators reported lower revenues due to a weak backlog at the beginning of the year.

The geographic distribution of revenues for our Discrete Automation and Motion division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

38

48

54

The Americas

32

14

14

Asia

27

34

29

Middle East and Africa

3

4

3

Total

100

100

100

The geographic distribution of revenues changed substantially in 2011 with the integration of Baldor causing the share of the Americas to more than double compared to 2010. All regions increased revenues on higher orders as demand increased in most markets.

A favorable market development and a focused build-up of local activities have contributed to the increased share from Asia. Europe’s share declined in 2010, due to low order backlog at the beginning of the year, caused by the weak order intake in 2009.

Operational EBITDA

In 2011, Operational EBITDA increased 62 percent (54 percent in local currencies) while Operational EBITDA margin of 18.9 percent increased compared to 18.3 percent in 2010. The increase is based on a combination of higher revenues and the positive contribution from Baldor (approximately 23 percent of the division’s Operational EBITDA). All businesses, except power electronics and medium-voltage drives improved, with the largest increase in Robotics due to the continued turnaround from the low level of 2009. Motors and generators benefited from the Baldor integration, while higher revenues in LV drives further increased Operational EBITDA.

In 2010, Operational EBITDA improved substantially as a result of cost savings and a turnaround in the Robotics business. The Robotics business returned to profitability in 2010, on the basis of higher revenues, supported by executed restructuring initiatives and cost saving measures.

Fiscal year 2012 outlook

Due to the financial turbulence in the eurozone there is increasing uncertainty about global market development in 2012. We expect most markets will have lower growth rates in 2012 compared to 2011 and some countries might even fall into a recession. Despite this we expect continued growth in orders and revenues, especially in emerging markets such as Asia and South America. Furthermore, the need for improved energy efficiency and productivity in a wide range of industries will support the demand for automation solutions and energy-efficient products provided by the Discrete Automation and Motion division.

Financial review

© Copyright 2012 ABB.