Discussion of ABB Group 2002 Q4 results

Fourth quarter performance - key figures in detail

Oil, Gas and Petrochemicals (for comparison *)

* Results from the Oil, Gas and Petrochemicals division are reported under discontinued operations and do not contribute to ABB's 2002 full-year orders, revenues and EBIT.

Fourth quarter performance - key figures in detail
(Unaudited based on new division structure)

Fourth quarter 2002

(Discussion based on previous division structure)

Income statement
Fourth quarter orders decreased 14 percent in local currencies and 8 percent in nominal currencies to US$ 4,501 million, compared to Q4 2001. Divisions reporting increased orders expressed in local currencies included Industries (+2 percent), Power Technology Products (+6 percent) and Automation Technology Products (+15 percent). Growth was offset, however, by fewer large orders and deferred bid awards in the Utilities division, resulting in a 52 percent order drop, and a 27 percent order reduction in non-core activities.

Base orders (orders below US$ 15 million) amounted to US$ 4,317 million, slightly below last year (2001: US$ 4,439 million). In Q4 2002, base orders represented 96 percent of fourth quarter orders, up from 91 percent for Q4 2001.

Fourth quarter revenues declined 10 percent in local currencies and 5 percent in nominal terms to US$ 5,268 million, compared to Q4 2001. All divisions reported lower revenues in local currency terms except Automation Technology Products, which increased by 8 percent. The order backlog was US$ 13,408 million, down about 6 percent from September 30, 2002.

EBIT for the fourth quarter was zero compared to a loss of US$ 438 million in the fourth quarter of 2001. Utilities and non-core activities recorded losses, and EBIT fell in the Industries division. These were offset by EBIT increases in Power Technology Products and Automation Technology Products, combined with lower restructuring charges and reduced asset write-downs. Fourth quarter EBIT for the core operational businesses (before non-core activities and Corporate) increased to US$ 198 million (Q4 2001: US$ 144 million).

Power Technology Products and Automation Technology Products both posted significant margin increases – to 8.6 percent and 6.5 percent, respectively – as cost-cutting and productivity improvements began to show. Industries’ margin declined to 1.2 percent.

Losses in non-core activities were sharply reduced to US$ 110 million (Q4 2001 loss: US$ 480 million), as were costs for Corporate, which were US$ 88 million (Q4 2001 costs: US$ 102 million).

EBIT included Other Expense of US$ 83 million (Q4 2001: US$ 206 million), comprised of:
- Restructuring charges of US$ 116 million (Q4 2001: US$ 193 million)
- Capital gains of US$ 37 million (Q4 2001: US$ 50 million)
- Write-downs of assets US$ 30 million (Q4 2001: US$ 87 million)
- Income from equity accounted companies, licenses and other of US$ 26 million (Q4 2001: US$
24 million).

Finance net was US$ 161 million compared to US$ 57 million in the fourth quarter of 2001.

Discontinued operations reported a loss of US$ 710 million compared to a loss of US$ 525 million in the fourth quarter of 2001. This amount mainly comprises US$ 420 million in asbestos-related provisions, operational losses after provisions for Downstream projects in the former Oil, Gas and Petrochemicals division (US$ 93 million), as well as a disposal loss on the divestment of Structured Finance).

As a result, ABB reported a fourth quarter net loss of US$ 838 million, compared to a loss of US$ 980 million for the same period in 2001.

Cash flow and balance sheet
Net cash provided by operating activities was US$ 361 million in the fourth quarter, after asbestos cash payments of US$ 45 million. Cash flow was lifted by working capital (net operating assets and liabilities) of US$ 587 million.

Cash and marketable securities totalled US$ 4,690 million at December 31, 2002 (US$ 3,493 million at the end of the previous quarter, September 30, 2002). After the reclassification of the former Oil, Gas and Petrochemicals division to discontinued operations, and the asbestos settlement, net debt (defined as short, medium and long-term debt less cash and marketable securities) amounted to US$ 3,262 million compared to US$ 5,623 million three months previously. Net debt was mainly reduced by proceeds from the divestments of the Structured Finance and Metering businesses that were cash-effective in the fourth quarter.

Long-term debt at December 31, 2002 as a percentage of total debt was 68 percent compared to 60 percent at the end of September 2002.

Mainly as a result of the fourth quarter net income loss, stockholders’ equity was reduced to US$ 1,052 million at December 31, 2002 from US$ 1,932 million three months previously.

Last edited 2003-02-27
    •   Cancel
      • Twitter
      • Facebook
      • LinkedIn
      • Weibo
      • Print
      • Email
    •   Cancel
    abbzh250 3d6533bd21225089c1256cda002c6e2f