ABB Group results - First three months 1998

Operating margins improved, net income higher · Growth in Middle East & Africa and Latin America more than compensates for lower demand in Asia · Net income up 9 percent · Parent companies’ earnings per share up 20 percent for ABB AB and 10 percent for ABB AG

Zurich, Switzerland, April 23, 1998 - ABB, the international electrical engineering company, said today its results for the first three months of 1998 showed good volume development. Orders received in the first three months of 1998 amounted to US$ 9,008 million, a decrease of 1 percent compared to the first quarter of 1997 (19971): US$ 9,092 million). Expressed in local currencies, orders received increased by 7 percent. Compared to the fourth quarter of 1997, orders received showed a growth of 16 percent.

Growth in certain emerging markets, especially in the Middle East and Africa and Latin America, more than compensated for lower demand in Asia. In Western Europe, markets for standard products maintained their positive trend while demand remained low as expected for large projects. Demand in Central and Eastern Europe was unchanged in the first quarter compared to last year. North American markets showed good growth for ABB products and systems.

Large orders received increased in the first quarter of 1998 compared to the same period last year. A large order in the first quarter of 1998 was a power and desalination plant for the United Arab Emirates. Order volumes in local currencies and comparable scope were above last year’s level for all business segments.

1) 1997 figure adjusted for the indefinite delay of the Bakun hydro-power project in Malaysia.


The order backlog at the end of March, 1998, was US$ 32,598 million, an increase of 4 percent compared to the corresponding period last year (end of March, 1997: US$ 31,474 million). In local currencies, the order backlog increased 10 percent.

Revenues for the first quarter of 1998 totaled US$ 6,513 million, down 7 percent from last year (first three months 1997: US$ 7,018 million). Expressed in local currencies, revenues remained unchanged.

Taking into account the net effect of changes in scope from divestitures and acquisitions, the order volume increased by 10 percent and revenues by 3 percent expressed in local currencies compared to the same period last year.

Operating earnings after depreciation amounted to US$ 454 million in the first quarter of 1998 (first three months 1997: US$ 453 million). Expressed in local currencies, earnings increased 6 percent. The operating margin improved to 7.0 percent from 6.5 percent for the same period in the previous year. Operating earnings showed good improvement in the Power Generation segment. The Power Transmission and Distribution and the Industrial and Building Systems segments reported improved operating earnings. Financial Services and Adtranz reached operating earnings at last year’s level.

Income before taxes in the first three months of 1998 amounted to US$ 380 million, an increase of 2 percent compared to the first three months of 1997 (19972): US$ 372 million). Expressed in local currencies, income before taxes increased 7 percent. Net income of US$ 258 million in the first three months represents an increase of 9 percent over the same period last year (first three months 1997: US$ 236 million). Expressed in local currencies, net income increased 12 percent.

ABB’s net cash position at the end of March, 1998, was higher compared to the same date last year.

The interim report for the first six months of 1998 will be published on July 23, 1998.

2) 1997 adjusted for inclusion of other taxes than on income, such as on capital and property, in Other expenses. See footnote to Income Statement.

ABB Group

Consolidated Income Statement

(US$ in millions)1-3/981-3/971997

Revenues6,5137,01831,265

Material expenses-2,952-2,992-14,232
Personnel expenses-2,311-2,387-9,498
Other expenses (1)-1,102-1,103-4,973
Changes in work in progress and finished goods538150180
Depreciation of fixed assets-235-248-997
Unusual items 315-608

Operating Earnings after Depreciation (1)4544531,137

Earnings from equity accounted companies-112
Dividend income1110
Interest income9680325
Interest expense-170-164-616
Exchange differences01 -5

Income before Taxes (1)380372853

Taxes (1)-123-135-258

Net Income before Minority Interest257237595

Minority Interest1-1 -23

Net Income258236572


1) As reported before, as of 1997, the line “Taxes” in the ABB Group income statement contains only income taxes while other taxes than on income, such as on capital and property, are included in Other expenses. This change, following International Accounting Standards (IAS), reduces both Operating Earning after Depreciation and Income before Taxes but has no effect on Net Income. Previous year’s figures have been restated accordingly. The comparison is:
New: Old:
1-3/1997 as restated 1998 1-3/1997 as reported 1997
Operating Earnings after Depreciation $453 million $472 million
Income before Taxes $372 million $391 million
Net Income $236 million $236 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, German Mark and European Currency Unit are stated below:


1-3/981-3/971997
US$ 1.00 = SFr.:1.481.421.44
US$ 1.00 = SKr.:7.997.307.61
US$ 1.00 = DM.:1.821.641.72
US$ 1.00 = ECU:0.920.850.88



For the first three months of 1998, changes in average exchange rates had a significant effect on reported results. The strong appreciation of the U.S. dollar against many major currencies during the first three months of 1998 compared to the first three months of 1997 reduced ABB’s orders received, revenues and result figures by 3 to 8 percent.


Parent Companies Financial Results


ABB AB (Sweden) and ABB AG (Switzerland) are the two sole owners in equal parts of ABB Asea Brown Boveri Ltd, Zurich (Switzerland), which is the holding company of the ABB Group with approximately 1,000 companies around the world. The two parent companies each provide a transparent vehicle for investing in ABB as virtually all of their income and stockholder’s equity comes from their respective 50-percent shares of the ABB Group income and equity. For a full report on the development, please refer to the first part of this Press Release.

ABB companies throughout the world report their income and financial position in local currencies, which are then translated to U.S. dollars to establish the ABB Group’s consolidated accounts. In order to compute the income of the two parent companies, ABB AB (Sweden) and ABB AG (Switzerland), their 50-percent shares of ABB Group income are translated from U.S. dollars to Swedish Krona (SKr) and Swiss Francs (SFr), respectively.


Parent Companies Financial Results

ABB AB (Sweden) and associated company



ABB AB and associated company

ABB AB’s share of ABB Group income before taxes and after minority interests for the first three months of 1998 was US$ 190 million, an increase of 3 percent (first three months of 1997: 185 million). The average rate of the U.S. dollar has strengthened against the Swedish Krona which had a positive effect when translating ABB AB’s share in ABB Group earnings into Swedish Krona. After translation, ABB AB’s share of ABB Group earnings before taxes and after minority interests for the first three months of 1998 increased to SKr 1,518 million (first three months 1997: SKr 1,347 million). ABB AB’s income before taxes, including associated company, amounted to SKr 1,517 million for the first three months of 1998, an increase of 12 percent (first three months of 1997: SKr 1,347 million). Net income for the first three months of 1998 amounted to SKr 1,029 million, an increase of 20 percent (1997: SKr 861 million).

ABB AB’s net income per share for the first three months of 1998 amounted to SKr 1.10 (first three months of 1997: SKr 0.92).


ABB AB, parent company

Net income for the first three months of 1998 amounted to SKr -1 million (first three months of 1997: SKr 0 million).



ABB AB Income Statements

Swedish Krona in millions

ABB AB and associated company(1)ABB AB, parent company
1-3/981-3/971-3/981-3/97
Administrative expenses-3-2-3-2
Share in ABB Group earnings before taxes and after minority interests1,5181,347 (2)--
Dividend income ----
Interest income2222
Interest expense0000
Income before taxes1,5171,347-10
Taxes (2)-488-486--
Net income1,029861-10


1) ABB AB’s share in the ABB Group results recognized according to the equity method.
2) As reported before, as of 1997, the line “Taxes” in the ABB Group income statement contains only income taxes while other taxes than on income, such as on capital and property, are included in Other expenses. This change, following International Accounting Standards (IAS), reduces Income before Taxes but has no effect on Net Income. Previous year’s figures have been restated accordingly.




Parent Companies Financial Results

ABB AG (Switzerland) and associated company



ABB AG and associated company

ABB AG’s share of ABB Group income before taxes and after minority interests for the first three months of 1998 was US$ 190 million, an increase of 3 percent (first three months of 1997: US$ 185 million). The average rate of the U.S. dollar has strengthened against the Swiss Franc which had a positive effect when translating ABB AG’s share in ABB Group earnings into Swiss Franc. After translation, ABB AG’s share of ABB Group earnings before taxes and after minority interests for the first three months of 1998 increased to SFr 281 million (first three months 1997: SFr 262 million). ABB AG’s income before taxes, including associated company, amounted to SFr 286 million for the first three months of 1998, an increase of 5 percent (first three months of 1997: SFr 273 million). Net income for the first three months of 1998 amounted to SFr 195 million, an increase of 10 percent (1997: SFr 178 million).

ABB AG’s net income per bearer share for the first three months of 1998 amounted to SFr 21.10 (first three months of 1997: SFr 19.25).


ABB AG, parent company

Net income for the first three months of 1998 amounted to SFr 4 million (first three months of 1997: SFr 10 million).





ABB AG Income Statements

Swiss Francs in millions

ABB AG and associated company(1)ABB AG, parent company
1-3/981-3/971-3/981-3/97
Share in ABB Group earnings before taxes and after minority interests281262 (2)--
Dividend income --00
Other operating income0202
Administrative expenses-1-1-1-1
Interest income711711
Interest expense-1-1-1-1
Income before taxes286273511
Taxes (2)-91-95-1-1
Net income195178410



1) ABB AG’s share in the ABB Group results recognized according to the equity method.
2) As reported before, as of 1997, the line "Taxes" in the ABB Group income statement contains only income taxes while other taxes than on income, such as on capital and property, are included in Other expenses. This change, following International Accounting Standards (IAS), reduces Income before Taxes but has no effect on Net Income. Previous year’s figures have been restated accordingly.


(End)

    •   Cancel
      • Twitter
      • Facebook
      • LinkedIn
      • Weibo
      • Print
      • Email
    •   Cancel

    Contact us

    • Mr. John Fox
      ABB Corporate Communications, Zürich
      Tel. +41 1 317 7371
      Fax. +41 1 317 7958
    • Mr. Manfred Ebling
      ABB Investor Relations, Zurich
      Tel. +41 1 317 7266
      Fax. +41 1 311 9817
    seitp222 c1256c290031524bc12567310024e1ec