Low Voltage Products

The financial results of our Low Voltage Products division were as follows:

Download XLS (17 kB)

 

 

 

 

% Change

($ in millions, except Operational EBITDA margin %)

2012

2011

2010

2012

2011

(1)

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

Orders

6,720

5,364

4,686

25

14

Order backlog at Dec. 31,

1,117

887

838

26

6

Revenues

6,638

5,304

4,554

25

16

Operational EBITDA

1,219

1,059

926

15

14

Operational EBITDA margin %(1)

18.4

19.9

20.3

n.a.

n.a.

EBIT

856

904

788

(5)

15

Reconciliation to Financial Statements

Download XLS (17 kB)

($ in millions)

2012

2011

2010

(1)

For further details of FX/commodity derivative timing differences, see “Note 23 Operating segment and geographic data.

Operational revenues

6,626

5,315

4,554

FX/commodity timing differences on revenues(1)

12

(11)

Revenues (as per Financial Statements)

6,638

5,304

4,554

Operational EBITDA

1,219

1,059

926

FX/commodity timing differences on EBIT(1)

16

(19)

3

Restructuring-related costs

(23)

(20)

(36)

Acquisition-related expenses and certain non-operational items

(106)

Depreciation and amortization

(250)

(116)

(105)

EBIT (as per Financial Statements)

856

904

788

Orders

Orders increased 25 percent (29 percent in local currencies) in 2012 and increased 14 percent (9 percent in local currencies) in 2011.

Order growth in 2012 was driven by the contribution from Thomas & Betts, which was acquired in May 2012. Excluding Thomas & Betts, orders decreased 4 percent (flat in local currencies). There was moderate growth in the systems business, while the product businesses decreased.

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.

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

Download XLS (16 kB)

(in %)

2012

2011

2010

Europe

43

55

56

The Americas

26

9

9

Asia

24

28

26

Middle East and Africa

7

8

9

Total

100

100

100

In 2012, orders in North America increased significantly due to Thomas & Betts, resulting in a more balanced geographic distribution of orders worldwide. Excluding Thomas & Betts, orders increased in Northern Europe and South Asia, but at the same time the division faced weaker demand in industrial and construction sectors in several of ABB’s largest markets, such as Central and Southern Europe.

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.

Order backlog

Excluding Thomas & Betts, order backlog increased 5 percent (4 percent in local currencies) in 2012. The higher backlog was driven by both product and systems businesses.

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

Revenues

In 2012, revenues increased by 25 percent (29 percent in local currencies). Excluding Thomas & Betts, revenues decreased 4 percent (flat in local currencies), as lower revenues from the product businesses were not fully offset by increased systems 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 Low Voltage Systems business.

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

Download XLS (16 kB)

(in %)

2012

2011

2010

Europe

43

56

57

The Americas

26

9

9

Asia

24

28

26

Middle East and Africa

7

7

8

Total

100

100

100

In 2012, the share of revenues from the Americas increased significantly due to Thomas & Betts. Excluding Thomas & Betts, the geographical distribution of revenue reflects the weaker demand in certain key markets, such as Central and Southern Europe.

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.

Operational EBITDA

In 2012, Operational EBITDA increased 15 percent (18 percent in local currencies), primarily due to the contribution from Thomas & Betts. Excluding Thomas & Betts, Operational EBITDA declined 11 percent (7 percent in local currencies) due to an increased proportion of revenues from the lower margin system business, and lower volumes in certain key markets.

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

EBIT

In 2012, EBIT decreased 5 percent (2 percent in local currencies). Acquisition-related expenses and certain non-operational items (which included mainly certain employee-related expenses and transaction costs) related to Thomas & Betts negatively impacted EBIT. Depreciation and amortization expense was substantially higher in 2012, compared to 2011, due to Thomas & Betts.

In 2011, EBIT increased 15 percent (8 percent in local currencies), which was mainly driven by a revenues increase of about the same magnitude.

Fiscal year 2013 outlook

The outlook for 2013 continues to be uncertain, depending on the market. Despite an improvement in Asia, it is unclear how sustainable the current order rates will be in 2013. Certain key markets in Europe remain challenging, especially the Mediterranean countries.