Solid Operational Results in a Demanding Market
o Record revenues, EBIT and cash from operations for the full year 2008
o Q4 EBIT and net income substantially lower on previously announced provisions
o Q4 orders down mainly on fewer large projects
o Cost take-out program to achieve $1.3 billion in savings by 2010
o Board proposes an unchanged dividend of CHF 0.48 per share
Zurich, Switzerland, February 12, 2009 - ABB reported solid operational results in the fourth quarter on strong revenue growth and steady cash flow, despite a difficult global market that impacted orders. Earnings before interest and taxes (EBIT) and net income in the quarter were reduced by previously-announced provisions, but full-year EBIT nevertheless reached a record $4.6 billion.
Orders decreased 19 percent in the fourth quarter (local currencies: 11 percent) to $7.2 billion, mainly the result of lower orders for large new power infrastructure projects, especially in emerging markets, and reduced investments in new industrial capacity. Orders to upgrade power grids and replace equipment continued to grow in mature markets. Demand for energy efficient technologies also increased.
Revenues rose 5 percent (local currencies: 15 percent) to $9.1 billion as the company continued to successfully execute the order backlog, which included no significant order cancellations.
EBIT in the quarter was $459 million, a decrease of 60 percent versus the same quarter a year earlier. Included in EBIT are provisions of approximately $870 million related to ongoing compliance investigations, a value-added tax (VAT) charge and restructuring-related charges. Fourth-quarter net income amounted to $213 million. Full-year net income was $3.1 billion.
Cash flow from operations was $1.4 billion in the quarter and reached a record $4 billion for the full year, while free cash flow for the full year amounted to $2.9 billion.
"Our solid revenue growth and cash flow in the quarter show the underlying operational strength of the company," said Joe Hogan, ABB's Chief Executive Officer. "Orders were down as customers delayed projects or cut capital expenditures. But the long-term drivers of our business - to increase energy efficiency, secure reliable power and improve industrial productivity - have not changed.
"The outlook for 2009 remains uncertain," Hogan said. "We are taking steps now to ensure that we remain competitive, no matter how the market develops. With our leading market positions and technology, combined with a flexible global production base, we aim to come out of this downturn in a stronger competitive position and we confirm our 2011 targets."
ABB Group Corporate Communications, Zurich
Thomas Schmidt, Wolfram Eberhardt
Tel: +41 43 317 6568
Fax: +41 43 317 7958
media.relations@ch.abb.com
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