ABB sets new targets

ABB Ltd
08 November 2002

ABB sets new short- and medium-term business targets

Zurich, Switzerland, November 8, 2002 - ABB, the leading power and automation
technology group, said today it expects earnings before interest and taxes in
2002 to reach a margin of 1.5 percent, with revenues flat or slightly down.

ABB also gave further details of future targets, as well as the structural
changes and restructuring program designed to cut its cost base and improve
operational performance.

The key points, being announced today at a briefing for financial analysts and
investors in Zurich, include:

  • EBIT margin expected to be 1.5 percent for 2002; target of 4 percent in
    2003 and 8 percent for 2005
  • Group revenues expected to be flat or slightly down in 2002; annual
    revenue growth of about 4 percent from 2002 through 2005
  • Automation Technologies and Power Technologies divisions set EBIT targets
    of 10.7 and 10 percent respectively for 2005
  • Management of Automation Technologies and Power Technologies streamlined;
    Business Areas cut from 18 to 12; key country and region managers integrated
    into divisional management teams to increase management efficiency
  • New program to lower cost base by 4 percent of revenues, announced on
    October 24, to start on January 1, 2003, and be completed in 18 months.
    Two-thirds of cost reductions to come from job cuts, one-third from other
    actions, but not possible yet to give job reduction figures
  • Current US$ 500 million cost reduction program to be completed by mid-2003
  • Oil, Gas and Petrochemicals division, as well as Building Systems, to be
    divested in 2003

The new EBIT margin targets follow the announcement on October 21, 2002 that ABB
was revising its earnings outlook because of lingering market weakness and
slower than expected benefits from its cost reduction program.

'The streamlining of our structure and the program to lower the cost base by
four percent of revenues demonstrate our commitment to restoring profitability,
'said chairman and CEO Jurgen Dormann. 'We are taking forceful action to improve
operational performance and cash flow.'

'We need a rapid and radical change. We are taking the measures needed to
optimize the business, build on our strong product and customer base, and
technological leadership positions. Over time, the aim is real expansion with
increased market share and profitable growth,' said Dormann.

'The underlying strengths in our core businesses of automation and power
technologies are reflected by the EBIT margins set for 2005,'he added.

Revised structure and cost reductions

Actions are being taken to cut Corporate/Other costs. They include cutting
headquarter costs by about US$ 20 million to an estimated US$ 130 million in
2005, and eliminating losses from non-core activities by 2005.

The head of the Automation Technologies division, Dinesh Paliwal, set an annual
revenue growth target of 3.3 percent from 2002 through 2005, and an EBIT target
margin of 10.7 percent for 2005. For 2003, divisional revenues are expected to
grow by 3 percent with an EBIT margin of 7.1 percent.

For the full year 2002, Automation Technologies' divisional revenues are
expected to decline 3 percent, and EBIT margin is expected at 6.5 percent.

The head of the Power Technologies division, Peter Smits, set an annual revenue
growth target of 5.3 percent from 2002 through 2005, and an EBIT margin of 10
percent for 2005. For 2003, divisional revenues are expected to also grow by 5.3
percent, with an EBIT margin of 7 percent.

For the full year 2002, Power Technologies' divisional revenues are expected to
increase 2.2 percent, and EBIT margin is expected at 6 percent.

Managements in both divisions have been simplified to increase efficiency, and
more cohesive management teams now include Country Managers, Region Managers and
Local Division Managers from key countries.

Automation Technologies has about 63,000 employees and revenues of around 
US$8.4 billion. The divisional management team:

Dinesh Paliwal       Division Head

Herbert Parker       CFO

Don Aiken            Country Manager, U.S.

China                Local Division Manager

Martinus Brandal     Paper, Metals, Minerals & Marine

Frank Duggan         Petroleum, Chemicals & Consumer

Bo Elisson           Robotics, Automotive & Manufacturing

Germany              Local Division Manager

Sten Jakobsson       Country Manager, Sweden

Bernhard Jucker      Drives, Motors & Turbochargers

Tom Sjokvist         Low Voltage Products & Instruments

Teemu Tunkelo        Control Platform Products





Power Technologies has about 43,000 employees and annual revenues of around 
US$7.5 billion.

The division management team:

Peter Smits           Division Head and member of the ABB Group Executive
                      Committee

Victor Bolt           CFO

Max Abitbol           Region Manager, Middle East and Africa

Jens Birgersson       High-Voltage Products

Josef A. Durr         Power Systems

Michael Hirth         Utility Automation Systems

Brice Koch            Distribution Transformers

Peter Leupp           Country Manager, China

Benny Olsson          Region Manager, Latin America

Joakim Olsson         Power Transformers

John Sullivan         Local Division Manager, U.S.

Guido Traversa        Medium-Voltage Products



Further balance sheet improvements

ABB remains on track to reduce net debt by at least US$ 1.5 billion in 2002,
from US$ 4.1 at the end of December 2001.

Going forward, ABB will communicate its target for total debt instead of net
debt (net debt is defined as total debt minus marketable securities). This is
more appropriate to ABB's industrial core businesses.

The Group expects to reduce total debt to approximately US$ 6.5 billion in 2003,
with a gearing (total debt as a percentage of total capitalization) of about 70
percent.

The target for 2005 is to reduce total debt to about US$ 4 billion with a
gearing of about 50 percent.

Debt reductions will be achieved using proceeds from the divestment of non-core
activities and higher operational cash-effective earnings.

ABB (www.abb.com) is a leader in power and automation technologies that enable
utility and industry customers to improve performance while lowering
environmental impacts. The ABB Group of companies operates in more than 100
countries and employs about 146,000 people.



This press release includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ.
These statements are based on current expectations, estimates and projections
about global economic conditions, the economic conditions of the regions and
industries that are major markets for ABB Ltd and ABB Ltd's lines of business.
These expectations, estimates and projections are generally identifiable by
statements containing words such as 'expects', 'believes', 'estimates' or
similar expressions. Important factors that could cause actual results to differ
materially from those expectations include, among others, economic and market
conditions in the geographic areas and industries that are major markets for
ABB's businesses, market acceptance of new products and services, changes in
governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in ABB's
filings with the U.S. Securities and Exchange Commission. Although ABB Ltd
believes that its expectations reflected in any such forward-looking statement
are based upon reasonable assumptions, it can give no assurance that those
expectations will be achieved.


                      This information is provided by RNS
            The company news service from the London Stock Exchange