ABB Group results - first half 1995; ABB: First six months see earnings and net income sharply improved; Good demand for industrial products; Orders received and revenues up.ZURICH, Switzerland--(BUSINESS WIRE)--Aug. 11, 1995--ABB, the international electrical engineering electrical engineering: see engineering. electrical engineering Branch of engineering concerned with the practical applications of electricity in all its forms, including those of electronics. group, today announced its results for the first half of 1995. Orders received were up by 16 percent to US $17,970 million compared to the corresponding period of 1994 (expressed in local currencies, an increase of 7%). Revenues increased 17% to US $15,330 million. The order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of June 1995 increased to US $35.3 billion compared to US $32.3 billion in June 1994, an increase of over 9%. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before climbed by 24% to US $1,386 million (expressed in local currencies, an increase of 14%). Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: reached 9%. Income before taxes rose by 32% to US $804 million (in local currencies, an improvement of 20%). Net income increased substantially by 41% to US $454 million (in local currencies, up 27%). Group Review Market Conditions and Sales Demand for investment goods In economics, investment goods are the plant, machinery, and equipment that enable production, and are the main input into new installed capital. External sources Any goods used by an organization to produce other goods. Notes: Examples of capital goods include office buildings, equipment, and machinery. See also: Capital Expenditure, Disinvestment Capital goods have increased significantly. Economic growth in most Latin American countries List of American countries Nations:
Orders received by the ABB n. 1. Among weavers, yarn for the warp. Hence, Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s Group for the first six months of 1995 were US $17,970 million, an increase of 16% compared to the corresponding period in 1994 (US $15,475 million). Expressed in local currencies, orders received increased by 7%. This difference is primarily attributed to the weakness of the U.S. dollar against some European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. currencies in the first half of 1995 compared to the same period in 1994. The increase in orders received was led by demand for standard industrial products and capital goods which have experienced significant growth in each of the last three quarters. Large orders received in the first six months included two 815 MW coal-fired boilers for an Indonesian power plant, design and construction contracts for petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. facilities in Nigeria and the U.S. Gulf coast, generation equipment for an oil-fired power plant in Jordan, and large transportation contracts for Sweden and Norway. Revenues totaled US $15,330 million, an increase of 17% compared to the same period in 1994 (US $13,100 million). Expressed in local currencies, revenues increased 8%. The order backlog at the end of June 1995 was US $35.3 billion compared to US $32.3 billion a year ago. Earnings Operating earnings after depreciation for the ABB Group increased by 24% to US $1,386 million (first six months in 1994; US $1,118 million). Expressed in local currencies, the increase was 14%. Operating margin reached 9.0% (first six months 1994: 8.5%) in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite continued price pressure in certain product areas. This reflects the positive impact of productivity improvements, the build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of capacity in low-cost countries, and the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). undertaken in recent years. The improvement in operating earnings was led by the Industrial and Building Systems segment. Higher earnings were also reported by the Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Power Transmission and Distribution, and Transportation segments. As expected, Power Generation earnings were about the same as last year. On a regional basis, the strongest incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. growth in operating earnings was reported by Sweden and several other Nordic countries, reflecting not only a higher level of exports but also an improving domestic economy. Despite the stronger D-Mark, results also improved in Germany. As a result of the strength of the local currency, Switzerland was unable to match last year's strong performance. Operational performance continued to improve in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. which also benefited from increased demand for industrial products. Asia Pacific region earnings kept up despite major business development costs in connection with new ventures. Income before taxes increased by 32% to US$ 804 million (first six months 1994: US $608 million). Expressed in local currencies, the improvement was 20%. Reflecting the cash freed up late in 1994, net interest expense improved from last year. Interest on customer advances was higher in the first six months of 1995 versus the same period last year. Net income improved 41% to US $454 million (first six months 1994: US $322 million). Expressed in local currencies, the increase was 27%. The tax rate for the first six months of 1995 was 42%, compared to a 45% rate for the same period of 1994. Investments, Divestitures and Capital Expenditure Expenditures for acquisitions in the first half of 1995 were only US $82 million, down from the $130 million reported in the first six months of 1994. Majority joint ventures were announced for power distribution in Tanzania, boiler boiler, device for generating steam. It consists of two principal parts: the furnace, which provides heat, usually by burning a fuel, and the boiler proper, a device in which the heat changes water into steam. manufacturing in Turkey, transformer transformer, electrical device used to transfer an alternating current or voltage from one electric circuit to another by means of electromagnetic induction. bushings in Russia, and power plant manufacturing in Indonesia. In the U.K. the acquisition of rail servicing capabilities was completed. Divestitures amounted to US $68 million reflecting the sale of the remaining shares in Nera A/S. In addition, several minor real estate holdings were sold in Italy, Brazil, and other countries. Capital expenditure for tangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → totaled US $450 million (first six months 1994: US $328 million). Much of the incremental spending for 1995 was directed to projects that will enable ABB to improve productivity in industrialized in·dus·tri·al·ize v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es v.tr. 1. To develop industry in (a country or society, for example). 2. countries and expand capacity in developing areas. The net effect on revenues and profits of changes in companies included in the ABB consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge was not significant in the first six months of 1995. Personnel and Organization The number of ABB employees at the end of the first half of 1995 was 211,700. While selective downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing activities continued through the first six months of 1995. Improving economic conditions and increased orders received led to staffing additions in some industrialized nations. In addition, ABB continued to aggressively recruit in the Asia Pacific region. Excluding the impact of acquisitions and divestitures, permanent employees for the Group increased 1,400 during the first six months of 1995. Outlook After four years of streamlining and restructuring in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). and North America, and increasing its manufacturing presence in low-cost countries, ABB is now well positioned for growth. Increased industrial demand in OECD OECD: see Organization for Economic Cooperation and Development. countries is expected to continue, with the full impact to be reflected in ABB's performance through this year and 1996. The market for new power generation equipment will continue to expand in the developing countries, but is expected to remain low in OECD countries. The forecast to achieve an operating margin of 10% in 1995 or 1996 remains intact and net income is expected to increase in 1995. -0- ABB Asea Brown Boveri Group
Consolidated Income Statement
(US dollars in millions)
1-6/95 1-6/94 1994
Revenues 15,330 13,100 29,718 Material expenses -6,522 -5,413 -12,110 Personnel expenses -5,048 -4,371 -9,006 Other expenses -2,415 -2,062 -4,707 Changes in work in progress and finished goods 528 269 -399 Depreciation of fixed assets -500 -420 -893 Unusual items(1) 13 15 16 Operating Earnings after Depreciation 1,386 1,118 2,619 Earnings from equity accounted companies 4 7 11 Dividend income 8 10 10 Interest income 271 183 401 Interest on advances -470 -393 -960 Interest expense -389 -307 -618 Exchange differences -6 -10 -16 Income before Taxes 804 608 1,447 Taxes -337 -275 -652 Net Income before Minority Interest 467 333 795 Minority Interest -13 -11 -35 Net Income 454 322 760
(1) All items related to:
-- capital gains/losses on sales of participations, land and
buildings
-- discontinued operations
-- one-time effects of changes in accounting principles are
recorded under "Unusual items" and included in operating earnings
after depreciation. In the first six months of 1995 these items
amounted to $13 million (first six months 1994: $15 million)
Note: The exchange rates used in the above income statement are average
for the periods shown. The average exchange rates for the Swiss
Franc, Swedish Krona and the Deutschmark are stated below:
1-6/95 1-6/94 1994
US$ 1.00 equals SFr.: 1.20 1.42 1.37 US$ 1.00 equals SKr.: 7.36 7.88 7.71 US$ 1.00 equals DM: 1.44 1.68 1.62 ABB Group Revenues per Region(a) (US$ in millions) 1-6/95 % of total 1-6/94 % of total Europe 8,897 58 7,273 55 The Americas 2,859 19 2,607 20 Asia/Australasia/Africa 3,574 23 3,220 25 Total 15,330 100 13,100 100 (a) Total third-party revenues in each region, excluding exports, which are accounted for in the revenue figures of the importing region.
Orders Received and Revenues per Business Segment
(US$ in millions) Orders Received Revenues
1-6/95 1-6/94 1-6/95 1-6/94
Power generation 4,119 4,883 4,228 3,882 Power transmission and distribution 4,220 3,837 3,742 3,171 Industrial and building systems 8,589 6,518 6,858 5,732 Transportation 2,072 1,338 1,441 1,429 Financial services 201 154 201 154 Various activities/ corporate 1,803 1,533 1,615 1,473 Group Total 21,004 18,263 18,085 15,841 Intra-group transaction -3,034 -2,788 -2,755 -2,741 Net Total 17,970 15,475 15,330 13,100 Business Segment Review Power Generation Orders received in this segment for the first half of 1995 were lower in comparison to the same period last year when several large projects were booked, which included an award for a one billion dollar combined-cycle plant in Malaysia. Orders received improved in the second quarter of 1995 with large awards coming from Indonesia for boilers and an oil-fired plant in Jordan. While the overall orders received for large projects are down from last year, service related volumes have increased. This reflects ABB initiatives to increase its participation in service and retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in work in mature markets where we have a significant installed base. The Asia Pacific market remains the fastest growing for new power generation equipment and ABB continues to position itself in this important area. In Indonesia ABB is building new boiler manufacturing facilities and a turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. shop for service and retrofit. The engineering center in Malaysia is being expanded to represent the complete product line. In India a new plant for turbines and generators is being built and a major boiler company was recently acquired. In Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. , ABB in Poland and the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. is serving its domestic service and retrofit market well and is increasing exports gradually. Operating earnings for Power Generation were about at the same level as last year, and in line with previously communicated expectations for this segment. The first half of 1995 increasingly reflected revenues and earnings on projects booked in 1993-94, a period of substantially reduced global pricing. In addition, research and development spending has increased in 1995. Major cost reduction efforts have enabled ABB to offset much of this price decline and to absorb the higher R & D. Power Transmission and Distribution Orders received in the first half of 1995 improved 10% compared to the same period in 1994. Increased demand for shorter-cycle business offset the impact of lower orders received in Power Systems and Power Lines when compared to the high level reported by these business areas in the same period in 1994. Improved demand from Western and Central Europe led to increased orders received. Significant orders for switchgear The term switchgear, used in association with the electric power system, or grid, refers to the combination of electrical disconnects, fuses and/or circuit breakers used to isolate electrical equipment. and conventional as well as gas-insulated (GIS (1) (Geographic Information System) An information system that deals with spatial information. Often called "mapping software," it links attributes and characteristics of an area to its geographic location. ) substations, were received from customers in the Philippines, Indonesia, and the Middle East. While low demand and price competition have continued to impact the results of Power Transformers, improved earnings were reported by the Medium Voltage Switchgear, High Voltage Switchgear According to IEC, high voltage switchgear is any switchgear and switchgear assembly of rated voltage higher than 1000 volts. 245 kV Circuit breaker in air insulated substation 420 kV Gas insulated switchgear 145 kV 40 kA Compact switchgear assembly See also
Operating earnings improved in this segment for the first six months of 1995 compared to the corresponding period in 1994. Industrial and Building Systems The Industrial and Building Systems segment benefited from the positive demand for investment goods throughout Europe and North America and orders received continued to grow significantly. Market improvement for pulp and paper and other important process industry customers enabled the Automation and Drives business area to report a significant increase in orders received and higher earnings. Flexible Automation and Motors business areas also reported increased orders and operating earnings. The Oil, Gas, and Petrochemical business area benefited from two large design and construction awards from customers in Nigeria and the United States. This was offset in part by lower orders received by the General Contracting business area. The market improved for our construction-related activities and provided double-digit gains in orders received and higher earnings for Electrical and Mechanical installations, Installation Material, Low Voltage Low voltage is an electrical engineering term that broadly identifies safety considerations of an electricity supply system based on the voltage used. While different definitions exist for the exact voltage range covered by "low voltage", the most commonly used ones include "mains Systems, and Low Voltage Apparatus business areas. Service business areas also benefited from these better economic conditions, while Superchargers improved upon their already high level of profitability. Cost reduction and productivity improvement programs continued to strengthen the operational performance of this segment in the first half of 1995. These programs in combination with higher volume enabled this segment to strongly improve earnings in the first six months of 1995. Transportation In March ABB and Daimler-Benz announced the merger of their worldwide transportation activities into a 50-50 joint venture to be called ABB Daimler-Benz Transportation. This proposed merger is currently being reviewed by the European regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities and a ruling is expected in the fall of this year. Orders received for the Transportation segment increased 55% to $2,072 million in the first six months of 1995 compared to the same period last year. Several large orders were received in the first half of 1995, including a $240 million award from Stockholm Transport for 75 advanced design metro cars, sixteen train sets worth $120 million for the Gardermoen line in Norway, and electrical equipment A piece of electrical equipment is a machine, powered by electricity and usually consists of an enclosure, a variety of electrical components and often a power switch. Examples of Electrical Equipment
British Rail n → compagnie ferroviaire britannique, SNCF f depots. Operating earnings improved in the first six months of 1995 compared to the same period of 1994. Financial Services Total segment earnings were above the level for the same period of 1994. Earnings for the insurance business area were well above last year and reflect improved investment returns. The Leasing and Financing business area also reported improved earnings. Operating earnings for the ABB Treasury Centers remained at a good level and were well distributed geographically, but somewhat below the comparable period of 1994. Various Activities These activities include mainly local businesses (like electrical wholesaling), internal services, corporate functions, and the District Heating District heating (less commonly called teleheating) is a system for distributing heat generated in a centralized location for residential and commercial heating requirements. business area. The improved business climate in Europe was reflected in a higher level of orders received and improved earnings for these local businesses. CONTACT: ABB Investor Relations Investor relations The process by which the corporation communicates with its investors. , Zurich John Kechejian Tel. +41 1 317 7313 Fax. +41 1 311 9817 or Oliver Roth Tel. +41 1 317 7359 or Jan Allde Tel. +41 1 317 7338 |
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