ABB Group results - First three months 1997

ABB reports double-digit increase in Orders and good improvement in Net Income · Orders received increased 16 percent · Net Income improved 8 percent

Zurich, Switzerland, April 22, 1997 - ABB, the international electrical engineering company, today announced a double-digit increase in orders received and a good improvement in net income for the first three months.

Orders received in the first three months of 1997 were US$ 10,076 million, 16 percent higher than the corresponding period last year (first three months 1996: US$ 8,720 million). The stronger U.S. dollar in 1997 had a negative effect when European currencies are translated into U.S. dollars, which means that when expressed in local currencies, orders received increased by 22 percent. The improvement in orders received was driven primarily by the growth in large projects and increased demand from emerging markets. Orders for standard products and industrial goods were down slightly compared to last year reflecting a second year of slowdown in West European markets.

Additional specified parts of the Bakun, Malaysia, hydroelectric project were included in orders received in the first quarter and contributed to the increase in the Transmission and Distribution segment. ABBs growing presence in oil, gas and petrochemical markets was reflected in higher orders received for the Industrial and Building Systems segment. Orders also improved in the Power Generation segment and transportation activities.

The order backlog at the end of March, 1997 was US$ 34.2 billion, an increase of one percent compared to the corresponding period last year (end of March, 1996: US$ 33.9 billion). Expressed in local currencies, the order backlog increased 9 percent.

Revenues for the first quarter of 1997 totaled US$ 7,018 million, a decrease of 3 percent compared to last year (first three months 1996: US$ 7,256 million). Expressed in local currencies, revenues increased by 2 percent.

Effective this quarter, orders received, revenues, and operating earnings no longer include imputed interest income on customer advances. While this does reduce reported operating earnings for the Group, it has no effect on pretax or net income. Results for 1996 have been restated to reflect this change (see note 1 to the financial statements).

Operating earnings after depreciation amounted to US$ 472 million in the first quarter of 1997 (first three months 1996: US$ 425 million) an increase of 11 percent. Expressed in local currencies, earnings increased 17 percent. Improved operating earnings were reported by the Power Generation, Financial Services, and Power Transmission and Distribution segments and also for transportation activities. Earnings in the Industrial and Building Systems segment were somewhat below last year.

Income before taxes in the first three months of 1997 increased 6 percent to US$ 391 million (first three months 1996: US$ 370 million). Expressed in local currencies, income before taxes increased 12 percent.

Net income of US$ 236 million in the first three months of 1997 represents an increase of 8 percent over the same period last year (first three months 1996: US$ 219 million).
Expressed in local currencies, net income increased 14 percent.

ABBs net cash position at the end of March 1997, was lower when compared to the same date last year.

As expected, the second year of economic slowdown in Western Europe continues to affect demand for many of the Groups industrial and investment goods. Good growth in emerging markets and the favorable effects of cost reduction programs again benefits the Groups results positively.

As stated previously, net income for the full year of 1997 is expected to reach at least the same level as 1996.

ABB Asea Brown Boveri Group

Consolidated Income Statement

(US$ in millions) 1-3/97 1-3/96 1996

Revenues (1) 7,018 7,256 33,767

Material expenses -2,992 -3,315 -15,309
Personnel expenses -2,387 -2,532 -10,254
Other expenses -1,084 -1,186 -5,232
Changes in work in progress and
finished goods 150 448 255
Depreciation of fixed assets -248 -260 -1,044
Unusual items (2) 15 14 36

Operating Earnings after Depreciation(1) 472 425 2,219

Earnings from equity accounted companies 1 1 6
Dividend income 1 0 15
Interest income 80 159 362
Interest expense -164 -215 -618
Exchange differences 1 0 23

Income before Taxes 391 370 2,007

Taxes -154 -149 -765

Net Income before Minority Interest 237 221 1,242

Minority Interest -1 -2 -9

Net Income 236 219 1,233

(1) For external reporting, ABB no longer includes imputed interest income on advances received from customers on construction contracts in orders received and revenues.
Prior to 1997 ABB calculated the interest earned on these advances and added it to revenues when sales were recorded on the project. The same amount was then subtracted under the Interest on advances line in the consolidated income statement. For internal measurement, imputed interest income on advances will continue to be utilized. Group orders received, revenues, operating earnings, net financial items, income before taxes, and net income with imputed interest income included, would be:

1-3/97 1-3/96 1996
(Mil. US$)
Orders 10,178 8,903 36,349
Revenues 7,152 7,436 34,574
Operating Earnings after Depreciation 606 605 3,026
Net Financial Items -215 -235 -1,019
Income before Taxes 391 370 2,007
Net Income 236 219 1,233

This change has no effect on the income before taxes or net income of the Group.

(2) Includes all items related to:
· Capital gains/losses on sales of participations, land and buildings
· Discontinued operations/restructuring

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:


1-3/97 1-3/96 1996

US$ 1.00 = SFr.: 1.42 1.19 1.23

US$ 1.00 = SKr.: 7.30 6.77 6.71

US$ 1.00 = DM: 1.64 1.47 1.50

US$ 1.00 = ECU: 0.85 0.79 0.80

Parent Companies Financial Results
ABB AB (Sweden) and associated company

ABB ABs main asset is its 50-percent ownership interest in the ABB Group held via ABB Asea Brown Boveri Ltd, Zurich, Switzerland. ABB AB is solely a management company, with ABB Asea Brown Boveri Ltd as an associated company. For a full report on the development of the ABB Group refer to the first part of this Press Release.

ABB AB and associated company
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 Groups consolidated accounts. In order to compute ABB AB and associated companys earnings, its 50-percent share of ABB Group earnings is translated from U.S. dollars to Swedish Krona (SKr).

ABB ABs share of ABB Group earnings before taxes and after minority interests for the first three months of 1997 was US$ 194 million (US$ 183 million for the corresponding period in 1996), an increase of 6 percent. The U.S. dollar has firmed from 1996 to 1997 against the Swedish Krona which had a positive effect when translating ABB ABs share in ABB earnings. After translation, ABB ABs share of earnings before taxes and after minority interests from the ABB Group increased from SKr 1,239 million to SKr 1,416 million. ABB ABs income before taxes, including associated company, amounted to SKr 1,416 (1,242 million) for the first three months of 1997, an increase of 14 percent. After taxes of SKr 555 million (498 million), net income amounted to SKr 861 million (744 million) for the the period, an increase of 16 percent.
ABB ABs net income per share for the first three months of 1997 amounted to SKr 0.92 (0.79).

ABB AB, parent company
Income before taxes amounted to SKr 0 million (10 million). Included in 1996 income before taxes is a SFr 260 million dividend received from ABB Asea Brown Boveri Ltd, which corresponds to SKr 1,497 million, of which SKr 1,490 million was anticipated in the financial statement of 1995.

Stock split in ABB AB shares
On April 3, 1997 the Annual General Meeting of ABB AB approved a 10:1 split of the ABB AB A and B shares thereby lowering the par value of the shares from SKr 50 to SKr 5. Each old share confered the right to 10 new shares of the same class. The total number of shares now amounts to 937,913,020. Trading in the new shares started on April 21, 1997.

ABB AB Income Statement
(Swedish Krona in millions)
ABB AB and ABB AB,
associated company 1) parent company
1-3/97 1-3/96 1-3/97 1-3/96
Share in ABB Group earnings before
taxes and after minority interests 1,416 1,239 - -
Dividend income 2) - - 0 7
Administrative costs -2 -5 -2 -5
Interest income 2 9 2 9
Interest expense 0 -1 0 -1
Income before taxes 1,416 1,242 0 10
Taxes -555 -498 0 0
Net income 861 744 0 10

1) ABB ABs share in the ABB Group results recognized according to the equity method.
2) Dividend for fiscal year 1996 has not been received during the first three months of 1997.
Included in income before taxes during the first three months of 1996 is a SFr 260 million
dividend received from ABB Asea Brown Boveri Ltd, which corresponds to SKr 1,497
million, of which Skr 1,490 was anticipated in the financial statement of 1995.

Parent Companies Financial Results
ABB AG (Switzerland) and associated company

ABB AGs main asset is its 50-percent ownership interest in the ABB Group held via ABB Asea Brown Boveri Ltd, Zurich, Switzerland. ABB AG is solely a management company, with ABB Asea Brown Boveri Ltd as an associated company. For a full report on the development of the ABB Group refer to the first part of this Press Release.

ABB AG and associated company
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 Groups consolidated accounts. In order to compute ABB AG and associated companys earnings, its 50-percent share of ABB Group earnings is translated from U.S. dollars to Swiss francs (SFr).
ABB AGs share of ABB Group earnings before taxes and after minority interests for the first three months of 1997 was US$ 194 million (US$ 183 million for the corresponding period in 1996), an increase of 6 percent. The U.S. dollar has firmed from 1996 to 1997 against the Swiss franc which had a positive effect when translating ABB AGs share in ABB earnings. After translation, ABB AGs share of earnings before taxes and after minority interests from the ABB Group increased from SFr 218 million to SFr 276 million. ABB AGs income before taxes, including associated company, amounted to SFr 287 (223 million) for the first three months of 1997, an increase of 29 percent. After taxes of SFr 109 million (88 million), net income amounted to SFr 178 million (135 million) for the period, an increase of 32 percent.
ABB AGs net income per bearer share for the first three months of 1997 amounted to SFr 19.25 (14.80).

ABB AG, parent company
Income before taxes amounted to SFr 11 million (265 million). Included in 1996 income before taxes is a SFr 260 million dividend from ABB Asea Brown Boveri Ltd. The dividend of Sfr 325 million will be included in the second quarter 1997.

Reduction of share capital through lowering the par value
The proposed capital reduction via a lowering of the nominal share value was approved at the annual general meeting. This will lead to a repayment of SFr 50 per bearer share and SFr 10 per registered share. Wednesday, July 9, 1997 is the final day for trading in shares carrying the right to receive this repayment. A total of SFr 463 million will be paid back to the shareholders on July 10, 1997.

ABB AG Income Statement
(Swiss Francs in millions)
ABB AG and ABB AG
associated company 1) parent company
1-3/97 1-3/96 1-3/97 1-3/96
Share in ABB Group earnings before
taxes and after minority interests 276 218 - -
Dividend income - - 0 260
Other operating income 2 1 2 1
Administrative costs -1 -2 -1 -2
Interest income 11 9 11 9
Interest expense -1 -3 -1 -3

Income before taxes 287 223 11 265
Taxes -109 -88 -1 -1
Net income 178 135 10 264



1) ABB AGs share in the ABB Group results recognized according to the equity method.

(End)

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

    Contact us

    • Mr. John Fox
      ABB Corporate Communications, Zurich
      Tel: +41 1 317 7371
      Fax: +41 1 317 7958
    • Ms. Ann-Sophie Joensson
      ABB Investor Relations, Zurich
      Tel: +41 1 317 7338
      Fax.+41 1 311 9817
    seitp222 c1257cd9004cb69c412567ba002d0fbf