Process Automation

The financial results of our Process Automation 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

8,726

7,383

6,684

18

10

Order backlog at Dec. 31,

5,771

5,530

5,523

4

Revenues

8,300

7,432

7,839

12

(5)

Operational EBITDA

1,028

925

861

11

7

Operational EBITDA margin %(1)

12.4

12.5

11.1

n.a.

n.a.

EBIT

963

759

626

27

21

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

8,318

7,427

7,785

FX/commodity timing differences on revenues(1)

(18)

5

54

Revenues (as per Financial Statements)

8,300

7,432

7,839

Operational EBITDA

1,028

925

861

FX/commodity timing differences on EBIT(1)

26

(46)

(41)

Restructuring-related costs

(8)

(44)

(114)

Reversal of depreciation and amortization

(83)

(76)

(80)

EBIT (as per Financial Statements)

963

759

626

Operational EBITDA margin %

12.4

12.5

11.1

Orders

Orders in 2011 grew 18 percent, led by oil and gas, marine, metals and pulp and paper sectors. Large orders were strong, mainly in marine, and oil and gas, where major automation and offshore projects were noted, while base orders also recorded growth. Product orders were also strong, led by measurement products. Life-cycle services grew strongly driven by several small and medium size upgrade projects.

Orders grew in 2010 despite continued uncertainty in the market regarding the strength of the industrial recovery. Base orders grew significantly recording double-digit growth compared to 2009. Order growth was led by marine, minerals, and pulp and paper reflecting ongoing investments in the energy- and commodity-based sectors. Orders in oil and gas were down as large orders booked in 2009 were not repeated, while the base order business remained at a similar level. Life-cycle services orders also increased as customers brought existing capacity back online following the business downturn of 2009.

The geographic distribution of orders for our Process Automation division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

39

39

40

The Americas

23

22

19

Asia

30

29

22

Middle East and Africa

8

10

19

Total

100

100

100

From a regional demand perspective, Asia and the Americas recorded strong growth. In Asia, the growth was led by large projects in South Korea in the shipbuilding sector, and investments in the metals industry in China. In the Americas, several large projects in oil and gas, minerals, and pulp and paper sectors were recorded in South America, while growth in the U.S. was driven by our products and services business. Orders in Europe were also at a high level, driven by oil and gas investment in an offshore gas platform for Statoil in Norway. In MEA, orders were lower as fewer large projects were recorded.

In 2010, order growth was led by the emerging markets in Asia and the Americas. In South America, order growth was led by investments in the minerals sector in Chile and Peru, whereas in Asia, demand increased from the minerals sector in China and the marine sector in South Korea. Orders also increased in mature markets in Europe and North America.

Order backlog

Order backlog at December 31, 2011, increased 4 percent (8 percent in local currencies) compared to 2010. Order backlog growth was primarily driven by our marine, and pulp and paper business. Order backlog at December 31, 2010, remained at the same level as the previous year.

Revenues

Revenues increased driven by our products and services businesses. Life cycle services recorded strong growth in 2011. Systems revenues were also higher, driven by our oil and gas, pulp and paper, and metals and minerals businesses, while revenues in our marine business were lower as a result of lower backlog to execute.

Revenues in 2010 were down significantly in the systems business as a result of a lower backlog, whereas revenues in products and life cycle services grew. In the systems business, revenues were down in the metals, marine and minerals sectors, whereas the pulp and paper sector recorded an increase, reflecting the ongoing execution of projects from order backlog.

The geographic distribution of revenues for our Process Automation division was as follows:

(XLS:)

(in %)

2011

2010

2009

Europe

39

39

42

The Americas

22

19

19

Asia

27

27

27

Middle East and Africa

12

15

12

Total

100

100

100

In 2011, revenues increased across all regions, with the exception of MEA. Revenue growth was strongest in the Americas driven by the U.S., Canada and Brazil. Europe remained at a high level, while in Asia high growth in several economies was partly offset by lower revenues in South Korea due to the lower opening order backlog to execute. MEA declined as revenues in Congo and Algeria were lower than in the prior year.

In 2010, revenues were lower in most parts of Europe with the exception of Italy. In the Americas, the United States recorded revenue growth, although the region overall recorded a decline. In Asia, South Korea recorded double-digit growth, while India and China recorded a decrease. MEA recorded growth in revenues primarily reflecting ongoing execution of the El Merk project in Algeria.

Operational EBITDA

In 2011, Operational EBITDA was higher compared to 2010, as a result of higher revenues. Operational EBITDA margin remained flat compared to 2010. The margin was stronger in products, led by measurement products, and life cycle services, while it was slightly lower in our systems business.

Despite lower revenues, Operational EBITDA and Operational EBITDA margin increased in 2010, partly reflecting the successful implementation of cost reduction measures and a higher share of revenues from products and services businesses, which usually carry higher margins than the systems business. Improved project execution and project cost control also contributed to the strong result.

Fiscal year 2012 outlook

The global economy continues to be highly uncertain. Although the underlying demand is still robust in most of our end markets, we expect a continued challenging market in 2012, with customer decision-making being slow and price pressure high.

Financial review

© Copyright 2012 ABB.