ABB Ltd has published its 2014 annual report. 2014 was a demanding and difficult year, in which the company had to navigate in an uncertain, volatile market environment and to overcome internal challenges in the Power Systems division. Geopolitical tensions in the Ukraine and the Middle East, a slow world economy, turbulence in energy markets and the health crisis in West Africa made 2014 a particularly challenging year for global businesses.
In 2014, ABB delivered robust growth in orders of 10% on a like for like basis to US$41.5 billion. Orders were steady to higher in all regions and divisions, driven by organic growth initiatives and continued focused investments in innovation, customer service and sales. Base orders grew every quarter on a like for like basis and the company finished the year with an increased order backlog (in local currencies) that will support revenues in the years ahead.
In Power Systems, ABB made solid progress in turning the division around by reducing its risk profile, changing the business model and setting it back on a path to long term growth and profitability. This involved a number of engineering, procurement and construction (EPC) projects in the solar power generation sector and changing the business model in the offshore wind sector. The company dealt with operational legacy issues and adjusted the focus of the division towards projects suited to its core competencies of power transmission and conversion. ABB delivered on its ambition of breaking even for the full year. The Power Systems division increased base orders and won significant milestone orders, e.g., two major orders worth US$800 million and US$400 million in Scotland and Canada respectively, for power transmission links to integrate renewable energy into the grid.
The other four divisions continued to execute their businesses successfully, generating steady comparable margins. ABB improved cash generation and, for the sixth consecutive year, took out more than US$1 billion in costs. The company also raised more than US$1 billion in 2014 from pruning non-core businesses that had no substantial synergies with the rest of the portfolio.
ABB returned more than US$2.8 billion to shareholders through share repurchases and the annual dividend. For the sixth consecutive year, ABB is proposing a dividend increase at its 2015 annual general meeting.
Investing in growth
In 2014, ABB unveiled new technologies, expanded its global presence with new manufacturing facilities and sales and service capabilities in high growth markets, and forged partnerships with other leading global companies to increase value for customers and enhance growth momentum as part of its new strategy.
Read the 2014 Annual Report in full here.
Adapted from report by Rosalie Starling
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