ABB Grows Order Volume During the Fourth Quarter

By Bridget McCrea

ABB continued to drive its organic growth initiatives in 2014 and delivered 9-percent order growth (10 percent like-for-like). Orders were steady to higher in all regions and divisions despite a challenging market environment, according to the company. Large orders (above $15 million) grew 50 percent. Base orders were 4 percent higher (5 percent like-for-like) and grew in each quarter of the year.

“2014 was a demanding year where we had to overcome the challenges of power systems and a low order backlog,” said CEO Ulrich Spiesshofer, in a company press release. “We delivered on our ambition to achieve full-year profitability in power systems and took decisive actions to drive organic growth, cost-out and cash generation.”

“Our solid progress on the Next Level strategy puts us in a strong position to manage the global uncertainties heading into 2015,” Spiesshofer continud. “Our proposal to increase the dividend for the sixth consecutive year demonstrates our commitment to long-term sustainable value creation.”

ABB reported that its revenues and operational EBITDA were lower due to the lower opening order backlog and project-related charges in power systems, but strong business execution resulted in higher full-year operating cash flow generation, according to the press release. Successful implementation of the firm’s “step change” program to reposition the power systems division for a return to long-term consistent growth and profitability resulted in a full-year break-even operational EBITDA for the division. The operational EBITDA margin in the discrete automation and motion division was impacted by the dilutive effect of the Power-One acquisition completed in the second half of 2013. Excluding that effect, the comparable operational EBITDA margin was slightly higher.

“We delivered on our ambition to achieve a break-even result for power systems for the full year,” Spiesshofer said, in the release. “The other divisions all generated steady comparable margins. We improved cash generation, and for the 6th consecutive year took out more than $1 billion in costs which shows that our relentless execution focus is really paying off.”

ABB’s order pattern in its three major customer sectors remained largely unchanged during the fourth quarter of 2014. Utilities continued to be cautious in capital expenditures in response to regulatory uncertainties in Europe and lower electricity consumption related to GDP growth in most other regions. However, they continued to make selective investments in power transmission to link grids and to integrate renewable power sources.

According to the company, demand from industrial customers varied widely by sector and region. Overall, industrial demand for both power and automation solutions to improve the productivity and efficiency of existing assets remained steady. Demand in ABB’s upstream oil and gas sector remained strong and the potential impact of lower oil prices was not visible in the quarterly results. Demand in the mining sector remained at low levels.

ABB’s large markets of China and India recorded higher orders in the fourth quarter, leading to a 6-percent increase in Asia (7 percent like-for-like). Orders also grew strongly in Japan. Orders decreased in the Middle East and Africa, mainly the result of lower large orders in the oil and gas sector. Starting in the first quarter of 2015, ABB will begin reporting regional growth in three regions: Europe, the Americas, and Asia, the Middle East and Africa.

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at or visit her website at

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