Top-line growth in a challenging environment

• Orders up 2%¹ (unchanged organic²), revenues up 8% (6% organic) vs Q1 2011
• Order backlog at a near-record $29.9 billion
• Operational EBITDA³ 7% lower on negative mix and pricing
• Net income up 5%

Zurich, Switzerland, April 25, 2012 - ABB reported higher orders and revenues in the first quarter of 2012, led by growth in North America. Operational EBITDA declined 7 percent compared to the same quarter a year earlier while net income was up 5 percent.

Orders were 2 percent above the very high levels in the first quarter of 2011, driven mainly by utility investments in power distribution and industrial demand for automation solutions that increase productivity. Order growth mirrored regional economic trends and was weakest in China and southern Europe. Service orders were up 9 percent and represented 20 percent of total orders, reflecting progress in implementing the service growth strategy.

Revenues increased in all divisions and were 8 percent higher than the same quarter a year earlier, led by 21-percent growth in Discrete Automation and Motion (15 percent organic) and 9 percent in Power Products. Revenues were also supported by the strong order backlog, which continued to grow in the first quarter and is now at a near-record $29.9 billion. Service revenues grew 12 percent.

Operational EBITDA was $1.2 billion with an operational EBITDA margin of 13.9 percent, down 1.8 percentage points versus Q1 2011 on continuing mix and price pressure that were partly offset by positive volume impacts and cost savings of approximately $260 million.

"ABB once again demonstrated its resilience, with good growth despite the tough comparison with a great first quarter last year and continued macroeconomic uncertainty in many markets," said ABB Chief Executive Officer Joe Hogan. "Our diverse business and geographic scope and growing service business helped mitigate that uncertainty, while our strong order backlog supported revenues.

"As we guided after Q4, there was continued price pressure on revenues coming out of the order backlog and mix effects that impacted profitability, but we could mitigate most of that through cost savings," Hogan said. "We saw improved profitability in several businesses compared to the end of last year, and we intend to build on that momentum to tap the many opportunities we see for profitable growth over the rest of the year."

¹ Management discussion of orders and revenues focuses on local currency changes. U.S. dollar changes are reported in the results tables.
² Organic changes exclude the acquisition of Baldor at the end of January, 2011
³ See reconciliation of operational EBITDA in Note 13 to the Interim Consolidated Financial Information (unaudited)

Summary of Q1 2012 results

Orders received and revenues
Orders grew modestly in the first quarter compared to a strong first quarter in 2011 in a demand environment that varied widely by business and region.

Power Products orders increased 11 percent, driven largely by demand from the power distribution and industrial sectors, while orders were 3 percent higher in Power Systems on continued demand from both utility and process industry customers. Macroeconomic uncertainty, mainly in Europe, continues to impact the timing of large project investments in the power transmission sector.

Orders in the Discrete Automation and Motion division grew 15 percent (9 percent organic) compared to the same quarter in 2011 and were up in all regions, fuelled by customer needs to increase industrial productivity and a strong contribution from Baldor. Low Voltage Products orders declined 3 percent, reflecting this business's exposure to weak short-term economic cycles in several key country markets. Process Automation orders were steady versus a strong first quarter in 2011. Demand growth in sectors like oil and gas, mining and marine remained resilient at high levels.

Regionally, orders rose 27 percent in the Americas (23 percent organic), including orders for a mining development in South America and power quality equipment in the U.S. Orders were also slightly higher in the Middle East and Africa and flat in Europe versus a strong first quarter in 2011. European orders were mixed, with robust demand in northern and central European offset by weakness in the Mediterranean region, especially Italy. Orders declined in Asia, mainly China. This was partly a reflection of several large power orders with a total value of more than $300 million in the prior-year period, and partly of weaker demand in key end markets, such as construction and transportation.

Base orders (below $15 million) rose 4 percent (2 percent organic) in the quarter compared to the same quarter a year ago. Large orders (above $15 million) decreased 11 percent and represented 14 percent of the total orders in the quarter, compared to 16 percent in the year-earlier period.

For the Group, service orders grew by 9 percent in the quarter and comprised 20 percent of total orders, a slight increase compared to the same period a year ago.

The order backlog at the end of March was $29.9 billion, a local-currency increase of 6 percent compared with both the end of the first quarter in 2011 and the end of the fourth quarter of 2011.

Revenues grew in all divisions, supported in large part by execution of the order backlog. Organic revenue growth was 6 percent. Service revenues grew 12 percent and represented 17 percent of total revenues compared to 16 percent in the year-earlier period.

Earnings and net income
The decrease in operational EBITDA and operational EBITDA margin in the first quarter was due to the delivery of lower-margin products and projects out of the order backlog-reflecting mainly the weak pricing environment in power-and the lower share of sales from early-cycle products that typically carry higher margins, especially in some large markets in Asia and Europe. More than half of the Group's profitability decline versus the first quarter of 2011 was attributable to the challenging demand environment in China, especially in the construction and transportation sectors.

As part of the company's ongoing cost management initiative, savings of approximately $260 million were achieved in the quarter, of which about 60 percent were derived from optimized sourcing, approximately 35 percent from productivity and quality improvements, and the remainder from measures to adjust ABB's global manufacturing and engineering footprint to shifts in customer demand. Costs associated with the program in the first quarter were approximately $20 million.

Net income for the quarter increased 5 percent to $685 million. Basic earnings per share were $0.30.

Balance sheet and cash flow
In January 2012, ABB Ltd issued a CHF 350-million six-year bond. In March, a subsidiary of ABB Ltd issued a €1.25 billion seven-year bond. This bond was guaranteed by ABB Ltd, which also intends to guarantee the two U.S.-dollar bonds issued last year by a U.S. subsidiary with the benefit of a keep-well agreement.

As a result, total debt amounted to $6.2 billion at the end of March 2012 compared to $4.0 billion at the end of 2011.

Net cash at the end of the first quarter was $1.4 billion compared with $1.8 billion at the end of 2011. Cash out from operations amounted to about $20 million, mainly the result of an increase in net working capital and higher tax payments pertaining to the previous year's income.

Acquisitions
ABB announced in January 2012 an agreed offer to acquire U.S. low-voltage equipment manufacturer Thomas & Betts for a total cash consideration of $3.9 billion. The transaction is expected to be closed in the second quarter of 2012, pending approval of the deal by Thomas & Betts shareholders and customary regulatory approvals.

In accordance with the terms of the $4-billion bridge financing arranged for the planned acquisition, the bond issued in March 2012 reduced the available commitments under the bridge financing to about $3.9 billion. The company intends to make a voluntary cancellation to further reduce the commitments to $2 billion.

Management changes
In April 2012, ABB announced the appointment of Prith Banerjee to ABB's Executive Committee (EC) as Chief Technology Officer, starting midyear 2012. As previously communicated, Greg Scheu will join ABB's EC as head of Marketing and Customer Solutions effective May 1, 2012.

Outlook
The long-term outlook for ABB remains positive, with utilities continuing to invest in grid upgrades and industries spending more on automation solutions to increase energy efficiency and productivity.

The macroeconomic volatility seen in late 2011 is continuing and makes short-term forecasts more challenging. There are clearer signs of recovery in the North American economy since the fourth quarter of 2011, but uncertainty around government budget deficits in Europe remains high, which weighs on demand in markets like Italy and Spain. Emerging markets continue to outgrow mature markets overall, but demand in certain sectors that are important for ABB, such as construction and transportation in China, remains at low levels and it is unclear when this demand will recover.

Against this background, management expects revenues in most of its early-cycle businesses to remain steady or to grow at low single-digit rates compared to 2011 levels until confidence in the macroeconomic outlook improves. Revenues in mid- to later-cycle businesses with strong order backlogs and exposure to sectors with continuing good demand, such as oil and gas, minerals, power distribution and discrete automation, are expected to continue to grow. The company's exposure to faster-growing emerging markets is also expected to support growth, while the businesses in North America and north and central Europe should benefit from the ongoing positive economic developments in those regions.

Price pressure is expected to continue in parts of the power business, in line with the company's previous guidance, but ABB aims to offset this with ongoing cost and productivity improvements. The continuation of the unfavorable mix seen in recent quarters will depend mainly on economic developments in China, as well as in southern Europe. However, management believes that overall demand will provide ample opportunities for profitable growth in 2012 and confirms its longer-term Group and divisional targets.

Divisional performance

Orders increased across all business units compared to a strong first quarter in 2011. Growth was driven primarily by demand from the power distribution and industrial sectors. This was supported by a selective approach to projects in power transmission, where uncertainty continues to impact the timing of capital investments by utilities. Orders were higher in the Americas and the Middle East and Africa but declined in southern Europe on ongoing economic challenges. Orders in China were impacted by the weak rail, nuclear and real-estate sectors.

Revenues saw continued growth in all business units driven by the order backlog and higher service volumes.

The lower operational EBITDA and operational EBITDA margin for the quarter resulted mainly from the execution of lower margin orders from the backlog, reflecting the pricing environment. Margins were also affected by a less favorable product mix. Cost savings from ongoing sourcing initiatives, operational improvements and footprint efforts partially compensated the margin pressure.

An increase in large orders supported by a number of substation projects and an HVDC contract in the U.S. resulted in higher order intake than in the first quarter of 2011. Regionally, orders increased in the Americas and the Middle East and Africa, mainly from grid upgrades. Asia and Europe saw lower activity due to market uncertainty which impacted the timing of utility investments.

Revenues were stable, reflecting the execution of projects from the order backlog.

Operational EBITDA and operational EBITDA margin in the first quarter declined mainly as a result of higher R&D spending and execution of lower margin orders from the backlog. Cost savings largely offset this impact.

Orders were steady to higher across all businesses compared to the same quarter in 2011, and increased in all regions. The improvement was driven by demand for industrial products to increase energy efficiency and productivity-such as industrial motors and robots-mainly in North America and emerging markets. Order growth reached a double-digit pace in Europe. Orders excluding Baldor, which was consolidated from the end of January 2011, grew approximately 9 percent in local currencies compared with the same period a year ago.

Strong revenue growth in the quarter mainly reflects execution of the strong order backlog in robotics, motors and generators, and power electronics.

Operational EBITDA increased on higher revenues and the contribution from Baldor. Operational EBITDA margin declined compared to first quarter 2011 due to less favorable product and business mix and continued high investments in business development, sales, and R&D.

Orders declined compared to a near-record first quarter in 2011 on weaker demand in industrial and construction sectors in several of ABB's largest markets, such as China and Italy. Orders improved in northern Europe, Asia excluding China, and the Americas. Orders in most product businesses decreased but continued to grow at a double-digit pace (up 29 percent in the quarter) in the low-voltage systems business which produces large electrical panels used in a variety of industrial applications. Service orders grew at a high single-digit pace.

Revenues increased, reflecting execution of the strong order backlog in the low-voltage systems business, which more than compensated for lower revenues in the product businesses.

Operational EBITDA and operational EBITDA margin both declined in the quarter as a result of the lower share of product revenues as a proportion of total revenues, and from lower volumes, especially in China.

Orders were steady compared to the very high levels of the previous year on an increase in customer spending in the oil and gas, mining and marine sectors, plus strong demand for lifecycle services and measurement products. This was offset by a decline in total service orders as ABB continued to refocus its full service portfolio.

Regionally, growth was led by South America on higher customer investments in minerals and oil and gas, followed by Europe where demand increased in the marine and minerals sectors. Orders decreased slightly in Asia as growth in China was offset by lower orders in India and the timing of large order awards compared to the year-earlier period. The Middle East and Africa was lower compared to the strong first quarter in 2011 that included a $150-million oil and gas order in Africa.

The revenue increase was driven by the execution of the strong order backlog, mainly in the systems businesses, as well as higher sales of products and lifecycle services.

The lower operational EBITDA and operational EBITDA margin reflects a higher share of lower margin systems orders executed out of the backlog, as well as the impact of the strong Swiss franc on the turbocharging business.


More information
The 2012 Q1 results press release is available from April 25, 2012, on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations, where a presentation for investors will also be published.

A video from Chief Executive Officer Joe Hogan on ABB's first-quarter 2012 results will be available at 06:30 am today at www.youtube.com/abb.

ABB will host a media call starting at 12:00 noon Central European Time (CET). U.K. callers should dial +44 203 059 58 62. From Sweden, +46 8 5051 00 31, and from the rest of Europe, +41 91 610 56 00. Lines will be open 15 minutes before the conference starts. Playback of the call will start 1 hour after the call ends and will be available for 24 hours: Playback numbers: +44 20 7108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 866 416 2558 (U.S./Canada). The code is 15871, followed by the # key. The recorded session will also be available as a podcast 1 hour after the end of the call and can be downloaded from www.abb.com/news.

A conference call for analysts and investors is scheduled to begin today at 2:00 p.m. CET (1:00 p.m. in the UK, 8:00 a.m. EDT). Callers should dial +1 866 291 4166 from the U.S./Canada (toll-free), +44 203 059 5862 from the U.K., or +41 91 610 56 00 from the rest of the world. Callers are requested to phone in 15 minutes before the start of the call. The recorded session will be available as a podcast one hour after the end of the conference call and can be downloaded from our website. You will find the link to access the podcast at www.abb.com.

ABB (www.abb.com) is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 130,000 people.

Zurich, April 25, 2012
Joe Hogan, CEO

Important notice about forward-looking information
This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects," "believes," "estimates," "targets," "plans," "intends" or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others, business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, raw materials availability and prices, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd's filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.


You can download/view the PDF format of this press release, the financial statements (only available in English) and the Notes to the Interim Consolidated Financial Information (financial statement notes) also only available in English. Appendices are not included in this Web page.