Ladies and gentlemen,
Welcome to this presentation of ABB’s third quarter results 2003 and the announcement of our capital strengthening program.
Let me say that I am very pleased with the news that Peter Voser and I can share with you today.
First two highlights from the third quarter.
Our results show that our core divisions have improved their results for the fourth consecutive quarter with double-digit order and EBIT growth, higher revenues and higher cash flow.
In challenging markets we have picked up profitable market share in many areas.
The net group loss in this quarter is mainly due to non-cash losses in businesses that we are divesting.
I am also pleased to be able to inform you that we have signed a preliminary agreement to sell the upstream business of the Oil, Gas and Petrochemicals division.
The good performance of our core divisions and the preliminary agreement to sell our upstream business are key milestones on the road to sustainable success.
Looking back over the past 12 months we have made steady progress.
We have seen significant performance improvements in our core divisions.
We have cut costs sharply, we have stabilized operating cash flow in our core divisions, we have sold non-core businesses and we have taken key steps towards resolving the asbestos issue.
The time has come to take another decisive step, and that’s why we have announced a financial restructuring program designed to strengthen our balance sheet and cover all our finance needs through 2006.
As you know, we returned to the capital market successfully with the convertible bond in August this year.
On the back on our performance improvements, ABB is now ready to take the next step and lay the foundation for long-term profitable growth.
The capitalization program rests on three pillars.
First, we are seeking to raise 2.5 billion dollars in equity through the issue of new shares.The funds will be used to grow our core businesses and refinance the balance sheet.
The final terms will be communicated at the latest on the 20th of November - the day of our extraordinary general meeting of shareholders.
The second part of the program is a new 1 billion dollar 3-year credit facility with our banks improving our credit arrangements.
Ladies and Gentlemen
This facility is only intended as a standby, which means that we don’t expect to draw on it.
But it will provide us with greater financial flexibility.
Third, we plan to issue a new straight bond to raise an additional 650 million Euro. The timing of the issue depends on favorable conditions in the financial markets. The bond will contribute to a stable annual debt maturity profile in coming years.
The rights issue and the credit facility are fully underwritten by our banks.
Ladies and Gentlemen
Our divestment program is well advanced.
We have received around 860 million dollars for completed divestments during 2003.
Still to come are the divestments of the Swiss and the German parts of Building Systems, some Equity Ventures holdings and the remainder of Structured Finance.
In the preliminary agreement for the sale of the upstream business of the Oil, Gas and Petrochemicals division there is a price range of between 925 and 975 million dollars.
The timing of the signing of the final sales agreement is subject to the progress of a legal compliance review undertaken by us and the buyers.
We expect that we will sign this sales agreement before the end of this year.
Once our entire divestment plan is completed, we will have reached our target of more than 2 billion dollars.
Ladies and Gentlemen,
Our efforts to focus ABB on our core strengths are proceeding well.
We are close to having only two core divisions, where at the beginning of 2002, we had eight divisions in a too broad portfolio.
This push for greater focus is only one of many measures, paving the way for a new, healthy and profitable ABB known for its technologies and market leadership.
Ladies and Gentlemen
We have made steady progress over the past 12 months and the capital strengthening program will help to ensure that ABB has both financial stability and flexibility, and that our core businesses can continue to grow successfully.
What we see today is more than just light at the end of the tunnel.
This is the end of the tunnel.
With that I would like to hand over to Peter Voser.
Peter Voser
Thanks Jürgen!
Let’s look at some highlights from the third quarter.
Our core divisions continue to show strong performance.
Orders were up 18 percent and revenues up 13 percent compared to the same period last year.
EBIT was up 24 percent from 238 to 294 million dollars.
Cash flow from operations improved significantly in the quarter with the core divisions, contributing some 307 million dollars in cash.
For the group as a whole, our cost efficiency is also improving as planned.
In Q3 net cost savings amounted to 190 million.
The total saved in the first nine months of this year is 420 million, and we are well on track to reaching our target of annual savings of 900 million dollars by mid-2004.
In the third quarter, net income was again burdened by activities which will not belong to ABB in the future, resulting in a mainly non-cash net loss of 279 million dollars for ABB as a whole.
Total gross debt remained steady at 8.3 billion dollars.
We are maintaining our 2005 revenue growth, EBIT margin and debt targets, but we have slightly revised the 2003 local currency revenue growth targets for our core divisions, Power Technologies and Automation Technologies.
As Jürgen said, with our capital structure program - on the back of another strong quarter and the preliminary agreement to sell the upstream business - ABB is taking a decisive step forward towards becoming a focussed performing company that can act as a positive contributor wherever we do business.
Thank you.