Restructuring programs

Cost savings initiative

In February 2011, we announced a $1 billion cost savings initiative for 2011 to be achieved mainly through supply management, footprint optimization and operational excellence measures.

Cost reductions for 2011 were in line with the plan and amounted to $1.1 billion. Approximately 50 percent of these savings were achieved by optimizing global sourcing (excluding changes in commodity prices). The remainder was achieved through reductions to general and administrative expenses, as well as adjustments to our global manufacturing and engineering footprint.

The total costs associated with the program were substantially below the expected level of 0.8 percent of 2011 revenues, and amounted to $164 million.

The following table outlines the total costs associated with the program incurred in 2011:

(XLS:)

($ in millions)

Costs incurred in 2011

Power Products

70

Power Systems

54

Discrete Automation and Motion

10

Low Voltage Products

20

Process Automation

8

Corporate and Other

2

Total

164

We intend to continue the cost saving measures in 2012 to sustainably reduce ABB’s costs and protect our profitability.

For details of the nature of the costs incurred and their impact on the Consolidated Financial Statements, see “Note 21 Restructuring and related expenses” to our Consolidated Financial Statements.

Financial review

© Copyright 2012 ABB.