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ABB Strategy 2005-2009Power and productivity for a better world

September 2005

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Safe harbor statement

This presentation includes forward-looking information and statements including statements concerning the outlook, and revenue and margin targets for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including 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,” “targets,” “plans” or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release. The important factors that could cause such differences include, among others, ABB’s ability to dispose of certain of our non-core businesses on terms and conditions acceptable to it, the terms and conditions on which asbestos claims can be resolved, trends in raw materials prices, market acceptance of new products and services, changes in governmental regulations and costs associated with compliance activities, 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, including its Annual Reports on Form 20-F. 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.

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Agenda

Introduction ABB strategy 2005-2009

Strategic priorities in historical context ABB mission and vision Divisional strategies Regional opportunities Acquisition priorities

Organization and management Financial targets Summary

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Putting the future into historical context

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10,000

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1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

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* 1999 profit contains major gains from divestitures

Source: 1988-1993 and 1998-1999 as per respective annual reports; 1994-1997 as per 1997 annual report; 2000 to 2004 as per the 2004 Form 20-F filing with the U.S. Securities and Exchange Commission.

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Post-mergeracquisition drive

1

Stage 1: Post-merger acquisition drive Massive expansion through acquisitions (e.g., Combustion Engineering,

Westinghouse T&D) Extreme decentralization (5’000 profit centers, “matrix”) EBIT margin stagnant below 5%



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New Economy-related portfolio transactions

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Stage 2: New Economy-related portfolio transactions Large scale JVs and divestitures (e.g., ADtranz, ABB Alstom Power) ABB follows New Economy theme EBIT very volatile, includes significant divestiture gains, underlying performance

deteriorates



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Crisis Years /Turnaround

Stage 3: Crisis years and turn-around Volume, EBIT and cash flow plummet at same time Asbestos and share buy-back further aggravate the situation Turn-around initiated and swiftly executed (balance sheet, portfolio, cost

structure and corporate governance)

3



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Lessons learned – Strategy 2009

Strategy 2009 Build on ABB’s power and automation

core Drive culture of operational

excellence and execution Maintain growth momentum with solid

margins Further strengthen worldwide market

presence and global culture – ”At home everywhere”

Continued technology innovation for utility and industry customers Grid reliability and availability of power Industrial productivity Energy savings and environmental

benefits

Lessons learned ABB strategy and organization can’t be

modeled on the ’90s Operating profitability at core of ABB’s

portfolio and business strategy Growth momentum important, but

margin comes first Solid foundation built in last three years Performance going in the right direction

Evolution – not revolution

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Shifting focus in value creation

ValueCreation

Operating Margin

Capital Efficiency

Credibility/Consistency

Growth

ValueCreation

Operating Margin

Capital Efficiency

Growth

Focus 1990s: Superior growth through acquisitions Operating profit propped up by non-

operational items Very high debt leverage to drive ROE Extreme decentralization as corporate

architecture

Focus 2005-2009: Drive operating margin, consistent EPS growth Maintain organic growth momentum Improve capital efficiency via operating

measures Disciplined acquisitions approach Focus corporate architecture on execution

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Agenda




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ABB: A focused engineering company

Customer-sharing and pull-through

Technology- and cost-sharing

PowerProducts

PowerSystems

ProcessAutomation

Mfg.Automation

AutomationProducts

Interlinked businesses

Cost leadership Exploiting economies of scale Taking advantage of low-cost

opportunities

Technology Innovation deeply ingrained in ABB

DNA $900 mill. per year in R&D*

Customer positioning Global reach, at home everywhere

(geographically and culturally) Service and solutions offering to

complement products Group Account Management

Similar success factors

* Combined 2004 R&D and order-related development investments in the AT and PT divisions

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ABB’s Mission

As one of the world’s leading engineering companies, we help our customers to use electrical

power effectively and to increase industrial productivity in a sustainable way.

Power and productivity for a better world

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ABB Vision

ABB delivers attractive profitable growth by providing leading power and automation technologies to customers throughout the world. We help them improve their performance and productivity, save energy and lower environmental impact.

ABB’s technology competence, broad application know-how and global presence offer customers easy access to leading electrical engineering and industry automation solutions. Innovation and quality are key characteristics of our service and product offering. We build on long-lasting, value-creating partnerships with customers and suppliers.

As one of the world’s most global and dynamic companies, ABB is unique in its multicultural environment and attitude. We are committed to attracting and retaining dedicated and skilled people and offering employees an attractive working environment and excellent development opportunities.

By 2009, ABB will be recognized as the top global engineering company in terms of market impact, growth and profitability, value

creation, sustainability and ethical behavior.

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Agenda




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ABB’s business portfolio

* 2004 numbers include internal sales to other divisions

ABBSales: $20.7 bn

Employees: 103’000

Automation Products

Sales*: $5.4 bnEmployees: 28,500

ManufacturingAutomationSales*: $1.4 bn

Employees: 6,000

Process AutomationSales*: $4.7 bn

Employees: 20,500

Power TechnologyProducts


Power TechnologySystems


Low-voltage products and systems, drives, motors, power electronics, etc.

Mainly a product business ”shipping one million products a day”

Wide variety of customers

Robots, robotic systems and services

Mainly for the automotive industry, but also for other segments

Automation solutions for the process industries (DCS, SCADA, controllers)

Oil & gas, chemicals, pharmaceuticals, pulp & paper, metals, minerals, marine, etc.

High- and medium-voltage switchgear, breakers, transformers, etc.

Mainly for utilities and industrial plants

HVDC and HVDC light, FACTS, power plant and network automation, substations, etc.

Mostly for utilities and industrial plants

Power Systems


Robotics


Power Products


New nameseffective Jan 1, 2006

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Power Products overview

Key products: High- and medium-voltage products, power and distribution transformers, product service

Key applications: Switching, protecting, transforming, measuring, and automating in power transmission & distribution, industrial electrification, power generation systems

2004: $6.0 bn revenues, 8.3% EBIT margin, 27,500 employees

Market outlook/drivers Further enlargement, reinforcement of grids in

emerging markets Service and replacement demand in North

America, Europe

Market position 2004

Source: ABB, Goulden Reports, ABS, Bear Stearns

Business line 1 2 3High-voltage products ABB Siemens Areva

Medium-voltage products ABB Schneider Siemens

Transformers ABB Siemens Areva

World market: $29 bnAvg. market growth (03-06): 3-4%

OEM11%

Utilities48%

Industry9%

EPC11%

Re-sellers6%

ABB systems

15%

Channels to market*

* Expressed as percentage of total 2004 Power Products revenues

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Power Products strategy and targets

Main strategic actions Fix transformer business Continue cost migration Streamline product portfolio (for

mass customization) Update high-voltage product

platform Strengthen indirect channels to

market

Build on No. 1 position to increase share and margins in growth markets Focus on margin improvement and organic growth in transformers,

accelerated growth (organic and acquisitions) in high- and medium-voltage

Summary

TargetsRevenue growth

2004: $6.0 bn. CAGR 2005-09: >6%

8.3%>11%

2004 2009

EBIT margin

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Power Systems overview

Key products: Grid systems (HVDC, HVDC Light®, FACTS, etc.), network management systems, electrical and control systems for power plants, substation automation products, systems and complete turnkey substations, services

Key applications: Transmitting and distributing power, management and control of electrical networks and power plants, optimizing power generation and flow


Market outlook/drivers GDP growth in emerging markets Increasing demand in North America, Europe and

Middle East

Market position 2004Business line 1 2 3

Grid systems ABB Siemens Areva

Substations ABB Siemens Areva

Network management ABB Siemens Areva

Power generation ABB Siemens Areva

Utilities79%

EPC11%

Indus-trial10%

Channels to market*

Source: ABB, Goulden, ABS, ARC, Bear Stearns

World market: $23 bnAvg. market growth 03-06: ~4%

* Expressed as percentage of total 2004 Power Systems revenues

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Power Systems strategy and targets

Use strong position to focus on higher margin opportunities Focus on margin improvement and organic growth

Summary

Focus on higher margin projects, strengthen project execution

Leverage installed base for service Further process and system

standardization Push new applications and products

Main strategic actions

3.2%

>6%

2004 2009

Revenue growth

2004: $3.7 bn CAGR 2005-09: >5%

Targets

EBIT margin

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Automation Products overview

Key products: Low-voltage products and systems, drives, power electronics, motors, machines, instrumentation, product service

Key applications: Power distribution, protection and control, energy conversion, data acquisition and processing, actuation


Market outlook/drivers Industrial growth, electricity consumption, degree of

automation, construction investments General GDP development

Business line 1 2 3Drives and power electronics ABB Siemens Mitsubishi

Low-voltage systems2 ABB Siemens Schneider

Motors and machines ABB Siemens Baldor

Industrial low-voltage products Schneider Siemens ABB

Installation material2 Schneider Legrand ABB

Instrumentation Rosemount Yokogawa ABB

Market position1 2004

1 ABB estimates 2 IEC standard

World market: ca. $60 bnAvg. market growth (03-06): 3-4 %

EPC12%

OEM40%

End-users20%

Re-sellers20%

ABB Systems

8%

Channels to market*

* Expressed as percentage of total 2004 Automation Products revenues

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Automation Products strategy and targets

Exploit opportunities in regional growth, e.g., China and India, and application areas, e.g., rail, water, power generation (incl. wind)

Continue with cost migration and operational excellence

Keep technology leadership, push “smart” design of standardized products (functionality and cost)

Tap service opportunities


Drive growth and sustain high profitability Focus on accelerated growth (organic and acquisitions)

Summary

Revenue growth

2004: $5.4 bn CAGR 2005-09: >5%

12.4%>14%

2004 2009

EBIT margin

Targets

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Process Automation overview

Key products: Integrated process control and information management systems (SCADA, DCS), industry-specific applications, component controls, instrumentation, services

Key applications: Control, automation, and optimization for pulp & paper, minerals, metals, chemicals, pharma, oil & gas, marine


Market outlook/drivers Systems demand growth primarily in Asia,

Middle East, eastern Europe Services to drive growth in North America,

Western Europe

Market Position 2004

Source: ABB, ARC Advisory Group 2001, 2002; Clarkson Research, Diesel and Gas Turbine & Motorship magazine

Business line 1 2 3Pulp & paper ABB Honeywell METSO

Marine ABB Alstom Siemens

Oil & gas ABB Honeywell Emerson

Pharmaceuticals Invensys ABB Honeywell

Turbocharging ABB MAN MET

Minerals ABB Rockwell Siemens

Metals Siemens ABB Via

Chemicals Honeywell ABB Yokogawa

End markets*

Pulp & paper11%

Oil & gas23%

Metals &minerals

17%Marine

9%

Chemicalpharma

9%

Others31%

World market: $21 bn (PAS & DCS)Avg. market growth (03-06): 3-4 %

* Expressed as percentage of total 2004 Process Automation revenues

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Process Automation strategy and targets

Further improve risk management and project execution in systems business

Fully exploit state-of-the-art 800xA technology platform

Tap installed base to increase service revenues Expand full-service contracts, specifically in

Americas Utilize low-cost engineering and global sourcing

in systems business Widen product offering in control and analytical

products


6.0%

>9%

2004 2009

Reap benefits from System 800xA, lift margins with technology and installed base advantages

Focus on selective profitable growth (primarily organic with opportunistic acquisitions)

Summary

EBIT margin

Revenue growth

2004: $4.7 bn CAGR 2005-09: >5%

Targets

Division to be based in Norwalk, Ct, USA

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Robotics overview Key products: Robots (4-6 axis), robotic

systems, service Key applications: Material handling,

picking, packing, palletizing, welding, painting, gluing, sealing, and assembling in various industries


Market outlook/drivers Ca. 80% of revenues automotive-related (no.

of new models) Increased use of robots for more flexible

production and improved process quality

Market position 2004

Business line(Products)

1 2 3

Foundry ABB Fanuc Kuka

Painting ABB Yaskawa Fanuc

Plastics Fanuc ABB Kuka

Metal fabrication Yaskawa ABB Fanuc

Packaging Fanuc ABB Kuka

Body-in-white Kuka/Fanuc ABB

Source: ABB, McKinsey, IFR, Company Reports

World market: $10 bnAvg. market growth (03-06): 5-6 %

Auto parts36%

Plastic9%

Foundry13%

Auto OEMs23%

Foodbeverage

5%

Other14%

End markets*

Business line(Systems)

1 2 3

Process automation ABB

Kuka, Fanuc, Comau

Paint process automation Durr ABB Fanuc

Powertrain assembly Krause ABB Comau

Body-in-white Comau Kuka ABB

* Expressed as percentage of total 2004 Robotics revenues

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Robotics strategy and targets

Simplify product portfolio and implement product re-design to cost

Accelerate cost migration Take advantage of global

opportunities and trends, e.g. in China

Expand further into non-automotive sectors


5.9%>9%

2004 2009

Lift margins through operational excellence and cost focus Focus on selective growth (primarily organic with

opportunistic acquisitions)

Summary

Revenue growth

2004: $1.4 bn CAGR 2005-09: >4%

EBIT margin

Targets

Division to be based in Shanghai

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Non-core portfolio

ABB Lummus Global Successful turnaround Strong positions in growth markets, e.g., China, Russia,

Middle East, eastern Europe Premium international and local customer base 2004 revenues of $1.1 bn, EBIT loss of $4 mill.

Building Systems German business near break-even after significant

restructuring 2004 revenues of $508 mill., EBIT loss of $70 mill.

Equity Ventures Investments mainly in power infrastructure projects Provides steady earnings stream 2004 revenues of $7 mill., EBIT of $69 mill. Opportunistic portfolio

clean-up

Managed on a

going concern

basis

Prepare for

divestiture

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Agenda




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ABB regional opportunities

ABB present in ~100 countries At home with customers anywhere

Long history in all major markets Strong installed base and

manufacturing footprint

Proven track record in all regions Technologies and project delivery

Strong brand and customer loyalty Premium products at premium prices

Optimize functional and operating cost across regions

Improve global sourcing

Capture growth opportunities for full-portfolio ABB offering

Drive account management, simplify customer interfaces

Tap local service opportunities, supported by global products

Pole position 2005 Further opportunities

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Optimizing global reach with regional synergy

USA

India

Regions

Germany

China

Italy

Brazil

Regional hub

Sweden

UAE

NorthAsia

SouthAsiaMiddle East

and Africa

Southern Europe

North America

South America

Central Europe

Northern Europe

Eight regions with “borderless” ABB teams

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Established countries under pressure for productivity and efficiency gains

Power constraints leading slowly to new investments

Strong GDP growth in Central and Eastern Europe countries

Europe

0

4

8

12

16

20

1950 1960 1970 1980 1990 2000 2010

Planned increase in interconnections (as % installed generation capacity)

Source: EU Directorate General for Energy & Transport, 2000

EU 2010 target for cross-border interconnection is 20% of grid capacity (today’s avg only 7%)

Renewable energy build-up demands additional grid capacity

Demand drivers

Huge installed base = service opportunity Strong manufacturing base, gaining efficiency Excellent brand and customer recognition

ABB’s position

Build on our historical strengths and huge installed base

52%* of world sales

Gradual but encouraging economic recovery

EU expansion and energy trading

Skilled resources and relationships across Northern, Central and Southern Europe

* Based on 2004 revenues

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Manufacturers under pressure to compete with new productivity and energy efficiency

North America

Demand drivers

ABB’s position Largest installed base of automation

products and systems Two-thirds of the region’s electric power

delivered with help from ABB technologies ABB has reversed top and bottom line

decline and grown 4x GDP

Aiming to match Europe in market penetration

ABB North America footprint

Manufacturing

Offices

14%* of world sales


Largest world market, withlargest ABB opportunity

New US Energy Bill will accelerate delayed power sector investments

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~ $2 trillion GDP and 500 million people Financial and economic stability returning,

GDP growth above 5% in key countries Need for grid expansion and interconnection

to make better use of hydro resources Increasing pressure to improve international

competitiveness via higher industrial productivity and efficiency

South America

Demand drivers

ABB’s position Long history, strong presence in the region Important element in global sourcing

initiatives More than 5,000 employees with more than

10 key manufacturing plants

Build on strong local brand to support infrastructure growth

3%* of world sales


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Oil & gas investments driving high demand for power and automation

Higher value-added chemical products

High-end residential areas with advanced building automation and power systems

New Gulf Grid, connecting Kuwait, Saudi Arabia, Bahrain, UAE, Oman in tender phase

Countries moving to balance GDP beyond oil

Middle East and Africa

Demand drivers

ABB has proven project reputation and local resources who understand the local cultures

Well-established working relationships with major global energy and EPC players

ABB’s position

Market nearly as large as China . . . and growing


10%* of world sales

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India and South Asia

India GDP growth 7%, industrial growth 7-7.5% Steel production doubling to 75 million tpy Aluminum capacity expansion to 400,000 tpy Construction/housing expected to grow ~20% Strong demand in pharmaceuticals, textiles,

automotive to support rapid lifestyle growth

100,000 MW greater power capacity by 2012 $200 bn investment for national power grid

More than 40 manufacturing plants in South Asia More than 30% year-over-year growth during last 4 years in India Recent local expansion in low-voltage products, transformers, high-voltage machines,

frequency converters, control product components, engineering footprint

Demand drivers

ABB’s position

DELHI

BANGALORE

CHENNAI

MUMBAI

VADODARA

KOLKATANASHIK

FARIDABAD

ABB India footprint

Electrification of 25 million new households next 5 years

Strong ABB footprint in place to support new growth


8%* of world sales

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China and North Asia

9 -10% GDP growth expected to continue 10%+ annual growth in power consumption,

China planning world’s 1st “super grid” Rapid growth in transportation and building

infrastructure Low industrial, environmental, and energy

efficiency

ABB has grown >30% year-over-year in China since 2000

More than 30 manufacturing plants, 8,000+ employees in China

Demand drivers

ABB’s position

Continuing immediate and long-term opportunities


13%* of world sales

Respected track record for implementation with local and global customers

144 new power plants (2x capacity) by 2020 Olympic Games 2008, World Expo 2010

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Catalyst: Group Account Management

ABB’s position 30 global accounts with executive sponsors

Strategic selection of customers for cross-ABB portfolio opportunities

Program benefits Early identification of project opportunities, trends and market drivers

Raises visibility of cross-business opportunities, higher value-added offering

Key customer stake in ABB technology development, lifecycle support and industry-specific solutions

Group account order growth in first 6 months of 2005 up 15% compared to year-earlier period, versus 8% for Group

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Catalyst: World-class ABB technology

Leading differentiators

Wide area power management Preventing future blackouts

High-Voltage Direct Current Flexible and reliable power transmissionand interconnections

System 800xA Unified platform for process automation

Automation products portfolio Best-in-class building blocks

A global technology leader in power and automation

ABB’s position Almost $1 bn in research, product- and order-

related development annually More than 6,000 researchers and developers

across 9 global R&D centers Research partnerships with leading universities More than 18,000 active patents worldwide

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Market growth opportunities go beyond GDP

High structural need for energy and industry infrastructure New power, industrial plants and efficiency in emerging countries Strong upgrade and service opportunities in OECD markets

Group Account Management for strategic global customers

Respected technology offering, supported by customer needs

Strong ABB footprint and balance across all key regions

Regional business approach proven in North America

ABB is well positioned for profitable growth

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PowerProducts(Transformers)

Growth and margin ambitions

Focus Selective Growth Accelerated Growth

Mar

gin

impr

ovem

ent a

mbi

tions

0%

>6%

PowerSystems

* versus 2004 performance

*

Organic growth only, possibly some further focusing

Primarily organic growth, with opportunistic acquisitions

Organic growth and acquisitions

RoboticsPower

Products(HV, MV)

ProcessAutomation

AutomationProducts

Disciplined acquisition approach(strategy / operations / financial)

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Acquisition guidelines 2005 - 2009

2005 2006 2007 2008 2009

Acquisitions

< $100 mn: likely

$100-300 mn: possible

$300-700 mn: only if “very convincing”

>$700 mn: unlikely

Any size considered within ABB’s strategic criteria and financing

capability

Net income > $1 bn Steady-state operations with sound profit, cash flow

Healthy balance sheet

Possible portfolio expansion into new,

but related areas

AssumptionsRe-establish investment grade

rating

Focus on execution and margin

improvement

Assumptions

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ABB’s current organization

CEO

Automation Products

Manufacturing Automation

Process Automation

Power Technology

Products

Power Technology

Systems

Power Technologies

Division

Automation Technologies

Division

Corporate Center

CFOHR

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Organization 2006: Driving execution

Simplify organization by removing one layer Current divisions serve mainly as “span breakers” Current Business Areas are true business lines Action: Dissolve PT and AT divisions, former business areas as the new

divisions

Better integrate geographic units into execution framework New head of Global Markets and Technology (GMT) to manage geographic

units through regional sub-structure GMT to act as “extended arm of CEO”

Use opportunities to further cut cost Divisional staff integrated and partly reduced Geographic structure to consolidate support functions Potential for further cost savings and efficiency gains

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ABB’s current organization

CEO

Automation Products

Manufacturing Automation

Process Automation

Power Technology

Products

Power Technology

Systems

Power Technologies

Division

Automation Technologies

Division

Corporate Center

CFOHR

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ABB’s organizational structure 2006

CEOCorporate Center

CFOHR

Automation Products RoboticsProcess

AutomationPower

ProductsPower

Systems

Global Markets &

Technology

Five divisions, each with P&LGeographic P&L

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ABB Executive Committee 2006

CEOCorporate CenterCFO

CFO HR

Automation Products RoboticsProcess

AutomationPower Products

PowerSystems

Global Markets& Technology

Five divisions, each with P&LGeographic P&L

Fred Kindle (46, CH/FL)

Dinesh Paliwal (47, IN/US)

Michel Demaré (49, BE)

Gary Steel (52, UK)

Bernhard Jucker (51, CH)

Samir Brikho (47, LE/SE)

Tom Sjoekvist (57, SE)

Veli-Matti Reinikkala (48, FI)

Anders Jonsson (55, SE)

President and Chief Executive Officer

President, Global Markets & Technology

Chief Financial Officer

Head of Human Resources

Head of Power Products division

Head of Power Systems division

Head of Automation Products division

Head of Process Automation division

Head of Robotics division

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Agenda




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Rationale behind the 2002-05 targets

Strategy: ABB turnaround

Simplify organization

Re-focus on core activities

Regain financial flexibility

Revenue growth

EBIT margins

Gross debt

2002-05 targets:

Simple

Focused on key indicators

Aimed at exposing ABB’s underlying potential

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Strategy: Drive execution, strengthen financial foundation Continued focus on growing our core activities Consistent growth of bottom line Additional emphasis on balance sheet and cash flow generation

Rationale behind the 2005-09 targets

Revenuegrowth

EBIT margin

Net margin

Capitalefficiency(ROCE)

Cash flowgeneration

2005-09 targets: Broaden management

focus beyond growth and EBIT

Confidence in execution with upside potential

Plan used to identify potential debt capacity for future strategic moves

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2009 Targets

Revenue Growth and EBIT margin remain key targets

New targets : Net Margin to progressively focus stakeholders on bottom line

profitability, not just EBIT

Cash Flow Generation, to focus on the Company’s ability to convert Net Income into Free Cash Flow

Return on Capital Employed (ROCE after-tax) to optimize efficient use of ABB’s balance sheet and enhance value creation

Other financial considerations Investment Grade status

Balance Sheet structure

Dividend policy

Tax Rate

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Divisional target rates of return on new investment

The ROCE approach is intended to increase value creation through better focus on the balance sheet Reduce low return assets (Non-core, real estate, etc.)

Drive incremental value creation on new investments in core businesses

Target rates of return on new investment help achieve this objective Combine EBIT expectation, capital intensity and risk into one return target

Better reflect true economic return for project businesses

Allow differentiated return expectations on new investments

Power Products, Automation Products 10-12% (higher margins, stable, high intensity)

Power Systems, Process Automation 15-20% (lower margins, volatile, higher risk, low intensity)

Robotics 12-15% (mix of both)

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Overview of Group targets 2009

Criteria Target

Revenue growth1 >5%

EBIT margin >10%

Net margin >5%

ROCE2 Mid-teens

Free cash flow (FCF) 100% of Net Income

1 Compound average growth rate (CAGR) 2005-2009 at constant exchange rates and excluding major acquisitions and divestitures2 Return on capital employed (after tax)

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Overview of division 2009 targets

Revenue

growth1EBIT margin

2009

EBIT margin2004

Power Products > 6% > 11% 8.3%

Power Systems > 5% > 6% 3.2%

Automation Products > 5% > 14% 12.4%

Process Automation > 5% > 9% 6.0%

Robotics > 4% > 9% 5.9%

1 Compound average growth rate (CAGR) 2005-2009 at constant exchange rates and excluding major acquisitions and divestitures

Five divisions will be segments according to US GAAP

Reporting in line with new structure to start January 1, 2006

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Targets remain as communicated on June 30

PT EBIT* margin 6.8 – 7.3%

AT EBIT margin 10.7%

Non-core operating profit zero

Corporate costs $450 mill. or less

Group EBIT margin 6.6 – 7.1%

* Earnings before interest and taxes

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Agenda




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Key points I

Strategy evolution More balanced approach to value creation (mainly organic growth,

higher margins through better execution, improved capital efficiency) Future strategy represents evolution, not revolution

ABB is a focused engineering company with attractive prospects Clear mission/vision: “Power and productivity for a better world” Interlinked, mutually-benefiting businesses Each business with attractive opportunities for profitable growth and the

necessary position to exploit them Clear divisional strategies, ambitious but realistic Geographic opportunities abound, ABB set to capture them Disciplined approach to acquisitions

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Key points II

More focused ABB organization to execute strategy Simplified by eliminating one layer

Tighter integration of country management (GMT)

Strong, experienced, diverse team in Executive Committee

Financial and group targets 2009: Ambitious and realistic

Criteria Target

Revenue growth1 >5%

EBIT margin >10%

Net margin >5%

ROCE2 Mid-teens

Free cash flow (FCF) 100% of Net Income

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Power and productivity for a better world

ABB

Documents

abb alstom power abb

divestitures ebit margin

historical context abb

respective annual reports

exchange commission

abb ltds lines of business

major gains

margin targets