ABB maintains strong A ratings with Moody’s - short-term Prime-1 ratings confirmed

Company committed to reducing its net debt position in 2001 and 2002

Zurich, Switzerland, Dec 19, 2001 – Moody’s Investors Services today reduced ABB’s long-term ratings from Aa3 to A2, while the short-term Prime-1 ratings were confirmed.

“The confirmation of our Prime-1 short-term debt ratings is a clear reflection of our solid liquidity position. We have substantial cash and liquid assets in our balance sheet,” said ABB President and CEO Jörgen Centerman in a comment.

He added that ABB remains committed to maintaining a strong financial profile. As announced in October 23, ABB aims to reduce net debt by up to US$ 1 billion in the fourth quarter of this year.

The debt reduction plan includes a rigorous cash flow generation initiative in all operating units, aimed at ensuring and accelerating the traditionally high cash flow generation in the fourth quarter. These efforts are being complemented by asset sales, such as financial receivables or real estate.

ABB said the company plans to reduce its net debt position further in 2002. The recently announced divestment of the air handling business for USD 225 million is expected to be closed early next year.

“Given the fundamental strength of our businesses, we also stick to our growth and EBIT margin targets,” Centerman said. Revenues are targeted to grow on average by 6 percent annually through 2005 (in local currencies, excluding major acquisitions and divestments). The EBIT margin is expected to reach 9-10 percent by 2005.

The implementation of the cost cutting program announced in July this year is progressing according to plan, ABB said. The company aims to reduce annual costs by approximately US$ 500 million on an annual basis.

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