Low Voltage Products

The financial results of our Low Voltage Products 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

5,364

4,686

4,079

14

15

Order backlog at Dec. 31,

887

838

734

6

14

Revenues

5,304

4,554

4,071

16

12

Operational EBITDA

1,059

926

679

14

36

Operational EBITDA margin %(1)

19.9

20.3

16.7

n.a.

n.a.

EBIT

904

788

518

15

52

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

5,315

4,554

4,059

FX/commodity timing differences on revenues(1)

(11)

-

12

Revenues (as per Financial Statements)

5,304

4,554

4,071

Operational EBITDA

1,059

926

679

FX/commodity timing differences on EBIT(1)

(19)

3

6

Restructuring-related costs

(20)

(36)

(67)

Reversal of depreciation and amortization

(116)

(105)

(100)

EBIT (as per Financial Statements)

904

788

518

Operational EBITDA margin %

19.9

20.3

16.7

Orders

Orders increased 14 percent (9 percent in local currencies) in 2011 and increased 15 percent (15 percent in local currencies) in 2010.

The order growth in 2011 was driven by demand from both the industrial and construction markets. Order growth was recorded across most product businesses, with a strong recovery in the systems business as market conditions improved. The renewables sector (mainly solar and wind) weakened as governmental subsidies expired in several countries reducing the demand for such investments.

In 2010, orders grew on higher demand from industrial customers, the solar energy market and construction-related sectors. Strong order growth was recorded across all product businesses, whereas the system business was affected by weaker market conditions in the beginning of 2010 which gradually recovered during the second half of 2010.

The geographic distribution of orders for our Low Voltage Products division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

55

56

60

The Americas

9

9

8

Asia

28

26

23

Middle East and Africa

8

9

9

Total

100

100

100

In 2011, orders continued to grow across all regions in absolute terms. The share of orders from Asia continued to grow, driven by product demand in China and strong growth in the systems business in South Asia. The Americas’ share of orders remained fairly stable, with growth in South America, and despite difficult market conditions in the United States. Although its share of orders decreased, Europe remains the largest region in absolute terms.

In 2010, orders grew across all regions as market conditions improved. The share of orders from Europe, the largest region, continued to decrease as the share from Asia increased, led by strong growth in China. Orders from the Americas increased as South America continued to grow strongly, particularly from the key market of Brazil. The share of orders from MEA remained stable, although orders grew in absolute terms.

Order backlog

In 2011, order backlog, compared to 2010, increased by 6 percent (9 percent in local currencies). The higher backlog was mainly driven by a strong market recovery in the systems business.

Order backlog in 2010 increased 14 percent (14 percent in local currencies) as orders were higher than revenues across all businesses, especially in the LV systems business, which typically has longer delivery schedules than the product business.

Revenues

In 2011, revenues increased 16 percent (11 percent in local currencies) due to the fast conversion cycle of the high orders received in the product business and due to the conversion of the stronger opening backlog in the LV systems business.

Revenues in 2010 increased 12 percent (13 percent in local currencies), as the strong order growth and the short execution cycle in the product business was converted to revenues. Revenues grew across all product businesses, whereas revenues in the LV systems business decreased due to a weak opening backlog.

The geographic distribution of revenues for our Low Voltage Products division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

56

57

60

The Americas

9

9

8

Asia

28

26

24

Middle East and Africa

7

8

8

Total

100

100

100

In 2011, the geographic distribution of revenues followed a similar trend to orders. The share of revenues from Asia continued to increase as a result of our global footprint shift to sourcing and producing locally in the emerging markets, thereby maintaining our competitiveness and ensuring shorter delivery times. Revenues in all regions grew compared to the previous year. Europe remained the largest region, despite economic downturn in several European countries.

In 2010, all regions recorded growth in revenues compared to the previous year, as the demand from the construction market started to recover from low levels. Despite positive growth, the share of revenues from Europe continued to decrease as growth rates were higher in Asia and the Americas. The increased share of revenues from Asia was the result of order growth and the build-up of local resources in sales, service and production in this region.

Operational EBITDA

In 2011, Operational EBITDA increased by 14 percent (8 percent in local currencies). Higher revenues and price increases offset negative impact from commodity price increases, the change in product mix and additional R&D investments. The higher share of systems revenues (which have lower margins) during the year resulted in a declining Operational EBITDA margin.

In 2010, Operational EBITDA increased 36 percent (39 percent in local currencies) as a result of higher revenues, a favorable product mix and the positive effects of cost reduction initiatives including restructuring measures.

Fiscal year 2012 outlook

We have experienced a slowdown of order growth in many markets during the second half of 2011. However, we expect continued growth in Asia and South America in 2012. We believe that key market drivers for the Low Voltage Products division will be renewable energy, energy efficiency applications and data centers.

Financial review

© Copyright 2012 ABB.