New ABB Shows Strong '99 Earnings, Cash Generation: Operating Earnings Up 16 Percent - Excluding Capital Gain: Operating Cash Flow 76 Percent Higher: Preparing For U.S. Listing.

Business Editors

ZURICH, Switzerland--(BUSINESS WIRE)--Feb. 3, 2000

ABB, the global technology company, said today earnings and cash flow showed significant growth in 1999, a milestone year of rapid change to its business portfolio and the introduction of a single-class ABB share.

As the shift to higher value-added, more knowledge-based businesses continues, the company expects 2000 to be a year of strong growth. The company is currently preparing for a U.S. listing.

US$ in millions unless
otherwise stated (1)                  1999       1998      Change (a)
----------------------------------------------------------------------
Revenues                             24,681     23,733        + 4%
Operating Earnings                    2,416      1,858        +30%
Net Income                            1,614      1,305        +24%
Net Operating Cash Flow               1,823      1,037        +76%
Net Income per Share (US$)             5.38       4.35        +24%
Dividend per Share (CHF)(2)            3.00       2.47        +21%
Dividend per Share (SEK)(2)           16.00      13.58        +18%
----------------------------------------------------------------------

(a)  In local currencies, revenues increased by 8 percent and earnings
     by 34 percent.

(1)  All figures reflect the &uot;new&uot; ABB composition following the
     contribution of most of the power generation business to the ABB
     ALSTOM POWER joint venture.

(2)  1999 dividend per share as proposed. 1998 pro forma dividend per
     share, based on new single-class share structure.

     &uot;We're facing a new world where speed, flexibility and brain
power are the keys to delivering greater value, and we're reinventing
ABB to be a leader in that world,&uot; said Goran Lindahl, ABB's President
and CEO. &uot;We're expanding into businesses where we can be leaders and
leaving businesses where we can't. Our 1999 results show that we're
heading in the right direction and that we can look forward to solid
growth in the future. Our target is to increase the Group's operating
margin to 12 percent within the next four years, based on an annual
revenue growth of six to seven percent.&uot;
     All of ABB's industrial segments reported higher operating
earnings and most showed stable or higher revenues, reflecting both
growing demand for ABB's complete technology and service solutions as
well as successful cost management. Operating cash flow, a key
indicator of ABB's ability to generate more value, was 76 percent
higher at $ 1,823 million. Net income reached an all-time high of
$ 1,614 million.
     ABB's 1999 earnings were lifted by a capital gain from the
transfer of most of its power generation business to a 50-50 joint
venture with ALSTOM of France, called ABB ALSTOM POWER. Excluding this
gain, operating earnings were 16 percent higher, leading to an
operating margin of 8.7 percent, up from 7.8 percent; net income was
up 11 percent.

Long-term Targets (1)

     ABB's improved position in knowledge- and service-related
technologies will drive growth in the coming years:

-    Major drivers for Power Transmission will be customers
     outsourcing service and retrofit, cross-border grid
     interconnection opportunities, advances in high-voltage
     technology and growing demand for electricity-trading systems.

-    Power Distribution will continue to target liberalized markets
     and focus on modular, intelligent products, systems and solutions
     for the electrical distribution industry, including distributed
     power.

-    In Automation, additional eCommerce applications and a single
     open software platform together with selected strategic alliances
     will allow us to create new solutions and further scale
     economies.

-    New subsea processing and smart well technologies in the upstream
     (development and production of oil and gas) market and new process
     technologies for the refining and petrochemical industries in the
     downstream market will be the focus for Oil, Gas and
     Petrochemicals.

-    Global sales of low-voltage products, integrated technology
     solutions for buildings, and full service will be the key growth
     areas for Building Technologies (the former &uot;Products and
     Contracting&uot; segment).

-    Financial Services will expand further in key regional markets,
     develop new financing packages to support ABB sales, and create
     additional eCommerce market channels.


ABB's long-term targets by segment are summarized in the table below.


----------------------------------------------------------------------
                         Average Annual
ABB Group                Compound Growth in      Operating Margin
and Segment Targets      Revenues 2000-2003      By 2003
----------------------------------------------------------------------
Power Transmission               6%                   12%
Power Distribution              10%                10-11%
Automation                       6%                14-15%
Oil, Gas and
 Petrochemicals                  7%                  7-8%
Building Technologies            7%                    9%
Financial Services             N/A            Earnings >$500 million
ABB Group                      6-7%                   12%
----------------------------------------------------------------------

For the ABB Group, revenues are expected to grow on average 6-7 percent annually during the next four years. With ABB's continued focus on profitable growth, operating margin is targeted to reach 12 percent by 2003.

(1) The statements in this release relating to matters that are not

historical facts are forward-looking statements that are not

guarantees of future performance and involve risks and

uncertainties, including but not limited to future global

economic conditions, foreign exchange rates, regulatory

approvals, market conditions, the actions of competitors and

other factors beyond the control of the Company.

The New ABB

From the very beginning of 1999, ABB continued its transformation by acquiring Elsag Bailey Process Automation to take market leadership in the automation industry. ABB divested its 50-percent share in Adtranz, formed the joint company ABB ALSTOM POWER, a new supplier to the global power generation industry, and agreed to sell its nuclear activities to British-based BNFL, pending regulatory approvals. ABB expanded in the high-growth area of full-service by acquiring a major player in Brazil. The company introduced its single-class ABB share and is now preparing for a U.S. listing. The former business segment &uot;Products and Contracting&uot; was renamed Building Technologies to better reflect its focus on delivering complete technology solutions, including products, service and maintenance for buildings and factories.

ABB launched a major value creation initiative with management focus on value drivers such as volume and margin growth, reduced working capital, and the elimination of non-performing assets. The company evaluates all of its investments to ensure they bring a return that is significantly higher than the average cost of capital in that particular business. Value creation principles also drive ABB's research and development (R&). R& investments reached 8.4 percent of revenues in 1999 (1998: 8.2 percent), with a number of important developments in molecular-level nanotechnologies, fully automated and robotized manufacturing processes, and powerful high-voltage semiconductors.

Alliances and long-term partnerships are also taking on a new importance in ABB as a vehicle for developing new technologies and delivering complete solutions. Partnerships with other technology companies allow us to achieve the economies of scale needed in product development to compete at the global level. In all of our business segments, we are teaming up with our customers, often through long-term supply agreements, to provide them with a broad range of technology, products, systems and services.

In the area of eCommerce, ABB will take further major steps in 2000 to harness its full potential, rapidly expanding its capability to serve customers online. Inside the decentralized Group, new IT-based tools and shared processes - such as administrative, finance and IT services - are being introduced worldwide to drive deeper efficiency gains, and to exploit economies of scale and scope.

ABB Group's total number of employees at year-end 1999 was 164,154 compared to 199,232 at the end of 1998. Excluding employees included in the ABB ALSTOM POWER joint venture, the number of employees in 1998 was 162,793. Employment in Automation, Building Technologies and Financial Services increased mainly due to acquisitions. Building Technologies also added employees at customer sites through new full-service contracts. On a comparable basis, adjusted for acquisitions and divestitures, the number of employees decreased by 4 percent.

Market Environment and Revenues

ABB's transformation comes at a time when world markets are improving. Industrial production growth is rebounding in most of the OECD countries, where ABB conducts more than 80 percent of its business. Economic growth improved throughout most of Europe, including Central and Eastern Europe. The economies of the U.S. and Canada showed high growth, which fuelled a recovery in South America. However, low commodity prices, especially in the first half of the year, slowed investments by ABB customers in several North American commodity-based industries, such as mining or pulp and paper. An economic recovery is also well under way throughout Asia and growth in China remained robust.

Revenues (2) increased by 4 percent, led by increases in Automation, Power Distribution and Oil, Gas and Petrochemicals.

Orders received increased 4 percent, with large orders (those exceeding $ 15 million) 14 percent higher. Base orders, now representing about 80 percent of Group revenues, were 2 percent up. Excluding currency effects (the effect of translating local currencies into the U.S. dollar, ABB's consolidation currency), base orders increased 6 percent and large orders by 17 percent. Large orders included the upgrade of a major U.S. power grid, high-voltage systems in China, significant full-service projects in the pulp and paper industry, robots for the U.S. postal service and gas compressor stations in Poland. The order backlog reached $ 14,886 million (1998: $ 14,934 million).

Both revenues and orders received increased by 8 percent when expressed in local currencies.

Earnings

ABB's expansion into higher margin businesses, rigorous cost control and improved internal processes led to further improvements of earnings and margins. Operating earnings after depreciation were up 30 percent at $ 2,416 million (1998: $ 1,858 million). Excluding the capital gain(3) from the formation of ABB ALSTOM POWER, operating earnings increased by 16 percent. The corresponding operating margin increased to 8.7 percent in 1999 from 7.8 percent last year. Personnel and material expenses decreased as a percent of revenues(4). Personnel expenses decreased to 30.0 percent (1998: 30.8 percent) and material expenses decreased to 41.2 percent (1998: 41.8 percent). Other expenses rose to 16.8 percent of revenues (1998: 16.6 percent) as outsourcing increased.

All industrial segments lifted operating earnings, with Power Transmission's operating margin exceeding 11 percent. Building Technologies and Power Distribution also increased their margins. Oil, Gas and Petrochemicals maintained its profitability in a difficult market environment. As expected, Automation did not reach last year's margin level because of integrating Elsag Bailey and carrying the major share of the Group's $ 150 million costs for Year 2000 preparations in 1999. Financial Services again reported a high operating result.

EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $ 3,234 million (1998: $ 2,592 million), another indication of the improved earnings and cash flow generation. Operating cash flow increased by 76 percent to $ 1,823 million (1998: $ 1,037 million). This increase was not influenced by the capital gain.

Net income amounted to $ 1,614 million (1998: $ 1,305 million). Excluding the capital gain, net income increased by 11 percent. Income taxes amounted to $ 665 million, corresponding to a tax rate of 28.8 percent (1998: 29.1 percent).

Return on equity reached 27.9 percent (1998: 23.2 percent) and return on capital employed was 21.8 percent, burdened by the recent acquisitions still under integration (1998: 21.1 percent).

(2) To facilitate comparison, ABB excluded the power generation

business contributed to the ABB ALSTOM POWER joint venture in

both 1998 and 1999 figures for revenues, expenses, and operating

earnings.

(3) Capital gain of $ 262 million at the operating earnings level or

$162 million at net income level after taxes.

(4) Revenues including changes in work in progress and finished

goods.

ABB ALSTOM POWER

The joint venture with ALSTOM of France reported strong growth in orders received during its first half year of operation, particularly for gas turbines. A major project was a 2x800 megawatt combined-cycle power plant in Spain. As previously stated, the company's targets are a net operating margin of 3-4 percent during 2000 (the first full year of operation) and a longer-term margin of 7-8 percent. ABB ALSTOM POWER's operating results from July through December 1999 reached EUR 26 million ($ 28 million). ABB's 50 percent share, net of financial items, amounted to $ 6 million and is recorded under &uot;Earnings from equity accounted companies.&uot;

Balance Sheet

ABB continued to reduce its dependence on heavy assets, with total machinery and equipment plus land and buildings in relation to total assets reaching 11.5 percent in 1999. It was the third year in a row with a two percentage-point reduction of these assets in relation to total assets. Acquisitions during 1999 totaled $ 1,745 million (1998: $ 274 million), the largest being the Elsag Bailey acquisition, valued at $ 2,204 million, including $ 648 million of debt. The goodwill related to the acquisition of Elsag Bailey amounted to $ 2,206 million. Capital expenditures for tangible fixed assets in 1999 reached $ 679 million (1998: $ 738 million), including $ 74 million for land and buildings and $ 475 million for machinery and equipment.

Dividends

ABB's dividend policy is to pay out between 30 and 50 percent of consolidated net income for the year. The Board of Directors proposes a dividend for 1999 of CHF 900 million (SEK 4,800 million). Translated into U.S. dollars at the time of the decision, the dividend corresponds to 38 percent of ABB net income for 1999 excluding the capital gain (1998: 40 percent).

Outlook for 2000 (1)

For 2000, recoveries in emerging markets are expected to increase orders and revenues for Power Transmission while earnings are expected to increase slightly. Ongoing deregulation and privatization as well as demand for system solutions should increase both volume and earnings for Power Distribution. A recovery in most of Automation's markets plus substantial cost reductions and synergies associated with Elsag Bailey, the newly acquired company, are expected to increase revenues and operating earnings in the Automation segment. Revenues of Oil, Gas and Petrochemicals are expected to increase slightly and operating earnings should remain at about the same level, although both will be weak in the first half due to lower orders in 1999. Revenues and earnings are expected to increase for Building Technologies. Income before taxes for Financial Services is expected to increase from the 1999 level.

The current economic upturn in basically all regions is expected to further support ABB's business. ABB expects the benefit from the upturn in Europe and other major regions to become visible by mid-2000.

ABB Group's revenues are expected to increase in 2000. Operating earnings are also expected to increase compared to 1999, excluding the capital gain. Cash flow will grow at least in line with earnings. Guided by clear value-creation targets, ABB will continue its strategic transformation in 2000 and beyond.

Consolidated Income Statement
----------------------------------------------------------------------

Year ended December 31                  1999        1998       1998

                                    Reflecting the new ABB
(US$ in millions)                        composition (1)
----------------------------------------------------------------------

Revenues                               24,681      23,733     30,872
Material expenses                     -10,120     -10,006    -13,606
Personnel expenses                     -7,381      -7,361     -9,044
Other expenses                         -4,127      -3,970     -5,085
Changes in work in progress
 and finished goods                       -93         182       -132
Depreciation of fixed assets             -819        -719       -926
Unusual items                             275          -1         32
Operating Earnings after Depreciation   2,416       1,858      2,111
Earnings from the defined power
 generation business                       51         253          -
Earnings from equity accounted companies   76           0          0
Dividend income                            14          21         25
Interest income                           399         469        462
Interest expense                         -698        -735       -734
Exchange differences                       50          -1          1
Income before Taxes                     2,308       1,865      1,865

Income taxes                             -665        -543       -543
Net Income before Minority Interests    1,643       1,322      1,322

Minority interests                        -29         -17        -17
Net Income                              1,614       1,305      1,305

Basic and diluted earnings
 per share, in US$ (a)                   5.38        4.35       4.35
----------------------------------------------------------------------
(1)  On June 30, 1999, ABB contributed most of its power generation
     business (except nuclear, some renewable power and distributed
     power businesses), herein called the &uot;defined power generation
     business,&uot; to a new joint venture named ABB ALSTOM POWER.

     To facilitate comparisons, the columns reflecting the new ABB
     composition exclude the defined power generation business from
     all positions except for income before taxes, income taxes, net
     income before minority interest and net income. In the 1999 ABB
     Group annual report, a complete set of figures will be presented,
     also including the defined power generation businesses through
     June 30, 1999.

     The corresponding key figures for 1999, including the defined
     power generation business through June 30, 1999, are: revenues
     $ 27,794 million and operating earnings after depreciation
     $ 2,463 million.

(a)  Calculation based on 300,002,358 registered shares.



Balance Sheet
----------------------------------------------------------------------
December 31 (US$ in millions)                    1999           1998
----------------------------------------------------------------------
Assets
Current Assets

Cash and cash equivalents                       6,288          7,790
Trade receivables                               4,360          6,173
Inventories                                     3,393          4,444
Other current assets                            4,025          4,463
Total Current Assets                           18,066         22,870

Fixed Assets

Financing receivables                           2,826          2,145
Shares and participations                       1,414            750
Intangible assets                               3,162          1,927
Construction in progress                          126            173
Machinery and equipment                         1,740          2,428
Land and buildings                              1,649          2,090
Deferred tax assets (a)                           533            511
Total Fixed Assets                             11,450         10,024

Total Assets                                   29,516         32,894

Liabilities and Equity
Current Liabilities

Trade payables                                  3,218          5,225
Provisions                                      4,287          4,286
Other current liabilities                       5,594          4,963
Short-term loans                                2,822          3,409
Total Current Liabilities                      15,921         17,883

Non-Current Liabilities

Advances from customers                         1,114          2,646
Medium- and long-term loans                     3,137          2,808
Employee benefits                               2,171          1,771
Deferred tax liabilities (a)                    1,248          1,512
Total Non-Current Liabilities                   7,670          8,737
Minority Interests                                317            315

Stockholders' Equity

Share capital                                   1,932          2,087
Restricted reserves                             1,183          1,103
Other reserves and retained earnings              879          1,464
Net income                                      1,614          1,305
Total Stockholders' Equity                      5,608          5,959
Total Liabilities and Equity                   29,516         32,894
----------------------------------------------------------------------

(a)  1998 figures restated for the separate disclosure of deferred tax
     assets and liabilities.





Statement of Cash Flows
----------------------------------------------------------------------
Year ended December 31                      1999      1998       1998

                                       Reflecting the new ABB
(US$ in millions)                          composition (1)
----------------------------------------------------------------------
Cash Flow from Operating Activities

Income before taxes (a)                    2,308    1,865       1,865
Adjustments for depreciation
 of fixed assets                             819      719         926
Adjustments for changes in provisions       -236     -502        -551
Adjustments for changes
 in employee benefits                       -303      106          35
Adjustments for other items                 -460     -380        -149

                                           2,128    1,808       2,126
Changes in current operating assets
 and liabilities:

Trade receivables                            -10      -64        -631
Other current assets                        -500     -281        -686
Inventories                                  -97      -30         168
Trade payables                               262       88         744
Other current liabilities
 (excl. income taxes due)                    315     -212         -46
Advances from customers                       33       77         857
                                               3     -422         406
Income Taxes Paid                           -308     -349        -428
Net Cash Flow from Operating Activities    1,823    1,037       2,104

Cash Flow Related to Investing Activities

Changes in financing receivables              -5     -696        -300
Acquisitions (net of cash acquired)       -1,724     -271        -274
Capital expenditure for
 tangible fixed assets                      -679     -738        -865
Proceeds from divestitures
 (net of cash disposed)                    1,870       60          60
Proceeds from disposal of
 tangible fixed assets                       456      277         288
Net Cash Flow Related to
 Investing Activities                        -82   -1,368      -1,091

Cash Flow Related to Financing Activities

Changes in short-term loans (b)           -2,996    2,556       1,672
Changes in medium- and
 long-term loans (b)                         376      631         286
Dividends paid                              -503     -507        -507
Other items                                  208     -394        -509
Net Cash Flow Related to
 Financing Activities                     -2,915    2,286         942
Effects of Translation Differences on
Cash and Cash Equivalents                   -328       45          45
Net Change in Cash and Cash Equivalents   -1,502    2,000       2,000
Cash and cash equivalents-
 beginning of year                         7,790    5,790       5,790
Cash and cash equivalents-
 end of year                               6,288    7,790       7,790
----------------------------------------------------------------------

(1)  Excludes the defined power generation businesses as described in
     footnote (1) of the Consolidated Income Statement.

(a)  Actual interest received/paid does not differ materially from
     &uot;Interest Income/Expenses&uot; as included in income before taxes,
     and is thus not explicitly shown in the above presentation.

(b)  Includes the effect of loans created through
     acquisitions/divestments.



Statement of Changes in Equity
----------------------------------------------------------------------
Year ended December 31                            1999          1998
(US$ in millions)

Equity as of December 31, previous year
 (1998 and 1997, respectively)                    5,959         5,283
Inclusion of ABB Ltd, ABB AB and ABB AG (a)          34             -
Changes in accounting principles
 and other items b)                                -935           -74
Dividend payments                                  -503          -460
Translation differences                            -561           -95
Net income                                        1,614         1,305
Equity as of December 31                          5,608         5,959


(a)  Net assets of ABB AB and ABB AG other than their holdings in the
     ABB group contributed to ABB Ltd at June 28, 1999, i.e. after
     pay-out of ordinary dividends to respective shareholders related
     to 1998 and a special dividend to ABB AG shareholders on June 25,
     1999.

(b)  Introduction in 1999 of revised IAS 19 on Employees Benefits and
     in 1998 of revised IAS 12 on Income Taxes.



Main exchange rates used in the
translation of the Financial Statements
----------------------------------------------------------------------
                            Average    Year-end   Average   Year-end
                            1999/US$   1999/US$   1998/US$  1998/US$
----------------------------------------------------------------------
 EURO (1998: ECU)             0.94      1.00        0.89      0.86
 German Mark                  1.83      1.95        1.76      1.68
 Swedish Krona                8.28      8.53        7.95      8.13
 Swiss Franc                  1.50      1.60        1.45      1.38
----------------------------------------------------------------------

     In 1999, changes in exchange rates had a negative effect of
approximately 4 percent on revenues, orders received and earnings
compared to the previous year. The balance sheet figures were reduced
on average by approximately 8 percent due to the strengthening of the
dollar compared to year-end 1998.



Data per Region (reflecting the new ABB composition)
----------------------------------------------------------------------
(US$ in millions)           Orders Received          Revenues
                            1999      1998        1999      1998
----------------------------------------------------------------------
Europe                     14,296    14,367     14,032    13,401
The Americas                5,391     5,597      5,797     5,377
Asia                        3,313     2,346      2,838     2,903
Middle East and Africa      2,379     2,201      2,014     2,052
Total                      25,379    24,511     24,681    23,733
----------------------------------------------------------------------
(1)  Includes the average capital employed relating to the defined
     power generation business.




Data per Region (reflecting the new ABB composition)
----------------------------------------------------------------------
                              Average Capital      Capital Expenditure

                              Employed
                              1999     1998 (1)      1999       1998
----------------------------------------------------------------------
Europe                        8,908    8,213         485        499

The Americas                  3,160    2,782         133        154

Asia                          1,067    1,010          37         63

Middle East and Africa          424      314          24         22

Total                        13,559   12,319         679        738
----------------------------------------------------------------------
(1)  Includes the average capital employed relating to the defined
     power generation business.




Segment Data (reflecting the new ABB composition)
----------------------------------------------------------------------
Data per Business Segment
(US$ in millions)                Orders Received       Order Backlog
                                 1999        1998      1999      1998
----------------------------------------------------------------------
Power Transmission               3,934       4,428     3,341    4,070
Power Distribution               3,034       2,672     1,875    1,409
Automation                       8,152       7,015     4,077    4,013
Oil, Gas and Petrochemicals      3,036       3,324     2,547    2,845
Building Technologies            6,629       6,464     2,265    2,231
Financial Services                 829         860         0        0
Various Activities/Corporate     2,461       2,434     1,523    1,431
Total                           28,075      27,197    15,628   15,999
Intra-Group transactions        -2,696      -2,686      -742   -1,065
Net Total                       25,379      24,511    14,886   14,934
----------------------------------------------------------------------




Segment Data (reflecting the new ABB composition)
----------------------------------------------------------------------
Data per Business Segment
(US$ in millions)                             Revenues
                                          1999        1998
----------------------------------------------------------------------
Power Transmission                       3,727        4,038

Power Distribution                       2,867        2,607
Automation                               8,269        7,036
Oil, Gas and Petrochemicals              3,092        2,860
Building Technologies                    6,323        6,385
Financial Services                         829          860
Various Activities/Corporate             2,280        2,544
Total                                   27,387       26,330
Intra-Group transactions                -2,706       -2,597
Net Total                               24,681       23,733
---------------------------------------------------------------------



Data per
Business Segment      Operating Earnings                   Capital
(US$ in millions)     after Depreciation       EBITDA    Expenditure

                        1999    1998     1999    1998    1999    1998
----------------------------------------------------------------------
Power Transmission      421      374      512    487      102     125
Power Distribution      209      179      268    234      112      76
Automation              553      521      846    697      164     179
Oil, Gas and
 Petrochemicals         185      175      240    228       48      55
Building
 Technologies           485      419      618    570      127     145
Financial Services      353      403      370    417       47      14
Various
 Activities/Corporate   210     -213      380    -41       79     144
Total                 2,416    1,858    3,234  2,592      679     738
----------------------------------------------------------------------





Data per Business Segment       Average                 Number
(US$ in millions)               Capital Employed(1)     of Employees
----------------------------------------------------------------------
                                1999       1998       1999       1998
----------------------------------------------------------------------
Power Transmission             1,689      1,723      22,338     26,927
Power Distribution             1,055        965      16,378     16,511
Automation                     4,540      2,574      49,554     43,384
Oil, Gas and Petrochemicals      699        709       8,941      8,774
Building Technologies          1,578      1,558      54,941     53,753
Financial Services               N/A        N/A       1,049        894
Various Activities/Corporate   3,998      4,790(1)   10,953     12,550
Total                         13,559     12,319     164,154    162,793
----------------------------------------------------------------------

(1)  Includes the average capital employed relating to the defined
     power generation business.

     The ABB 1999 annual report will be published on February 22. The
Annual General Meeting will take place on March 16 in Wettingen,
Switzerland with a live transmission to Vasteras, Sweden.