Senior Vice President

John Sullivan

Power Technologies, N.A.

ABB Power Transmission and Distribution in North America
Merrill Lynch, June 15, 2006

© ABB Group 22-Jun-06

Safe-harbor statement
This presentation 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, and fluctuation in currency exchange rates. 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.
© ABB Group - 2 22-Jun-06

thermal -.hydro -.3 22-Jun-06 Broadest offering in the industry .wind Power transformers Overhead lines FACTS Communications Energy Markets WAMS Network Management HVDC converter stations Reactive power control Cable HVDC Transmission substations High voltage switchgear Gas Insulated Substations Commercial Facilities Distribution Management Manufacturing Plants Distribution substations © ABB Group .Power Delivery Infrastructure Power Generation -.

network management systems.000 . OEMs and product distributors 2005: Revenues $6.6% Employees: 13. power plant control systems.4bn.Power technologies today Power Products $6. industries and EPCs 2005: Revenues $4. EBIT margin 9.1 bn HV Products MV Products Transformers Grid Systems Substations Management Network Power Generation High-voltage and medium-voltage products. EPCs. service Main customers: Utilities.4 bn Power Systems $4. EBIT margin 4.4% Employees: 27. grid systems.1bn. industries.4 22-Jun-06 Turnkey substations.500 © ABB Group . distribution and power transformers Main customers: Utilities.

000 employees ~150 focused factories. gas and water utilities Industrial and commercial customers Channel partners North America presence © ABB Group . engineering and service centers In more than 70 countries Our markets Electric.World’s No. 1 in Power Technology Power Products Power Systems Service Global presence 41. engineering and service centers .300 employees ~45 focused factories.5 22-Jun-06 5.

: Refurbish aging infrastructure Asia: Continued economic growth in China Revenues higher in all businesses Strong EBIT increase on revenue growth.5% 61 Q1 05 1.335 1.804 1.1% (48) Change Nominal Local Orders Revenues EBIT EBIT margin Cash flow from operations 29% 8% 37% 34% 12% Orders up in all regions Europe: Strengthen electricity grids and improve inter-connections U.379 125 9.Q1 2006 summary – Power Products $ millions unless otherwise stated Q1 06 2.6 22-Jun-06 EBIT includes $17 million for transformer consolidation program Higher cash flow from operations driven by higher earnings and customer advances .S.488 171 11. productivity increases and supply chain savings © ABB Group .

012 48 4.7% 4 Q1 05 974 886 39 4. large orders more than doubled Revenues up on execution of major projects in the order backlog EBIT and EBIT margin improvements driven by higher revenues.4% (14) Change Nominal Local Orders Revenues EBIT EBIT margin Cash flow from operations 34% 14% 23% 41% 20% © ABB Group .7 22-Jun-06 Orders up across all regions. greater capacity utilization and improved project execution Cash flow from operations reflected higher earnings and the timing of project payments .Q1 2006 summary – Power Systems $ millions unless otherwise stated Q1 06 1.306 1.

or 3 in all areas © ABB Group . private grid operators. 2. reliability. asset management Utilities. asset utilization. GE No. aging infrastructure. privatization. or 3 in all areas Customer base Competitors Market position Utilities. Waukesha. locals Siemens. 1.8 22-Jun-06 Growth area . reliability.North America market overview . 1.PT Products Service Aging infrastructure. Areva T&D. Energy Bill. transmission grid policy. 2. Cooper. large industrial businesses GE. grid policy Utilities. customer outsourcing Systems Deregulation. GE No. Areva T&D. power generators Market drivers Deregulation. industrial and commercial businesses Siemens. industrial growth.

9 22-Jun-06 . 2005 Focus now shifts to the agencies responsible for implementing the legislation Studies. and rulemaking will begin by FERC and other agencies Titles and provisions include: Electricity Alternative & Renewable Fuels Natural Gas Climate Change Nuclear Power Hydropower Energy research incentives for innovative technologies Tax Incentives © ABB Group . analysis reports.Energy Policy Act of 2005 The Energy Policy Act of 2005 was signed by the President on August 8.

Customers’ Perspective The 2005 Edison Electric Institute (EEI) Survey of Transmission Investment conducted with 55 investor-owned utilities indicates the industry is investing at significantly higher levels than in the past 30 years.10 22-Jun-06 Source: EEI 2005 . © ABB Group .

ABB Impact Immediate Leverage ABB expertise to advise government agencies and utilities. asset management tools. Expect increase in power system studies and consulting services. Short Term – Minimal transmission investment Customers expect state resistance to federal oversight which may delay implementation of the electricity title provisions. Reliability standards development and enforcement by a federal electric reliability organization (ERO) will take up to two years to implement. Advanced transmission technologies potential due to tax incentives.11 22-Jun-06 Increase in service business to maintain and upgrade aging substations due to mandatory reliability standards. Long Term – Significantly increased transmission investment Faster line siting procedures for federal and cross-state lands. and substation automation has high potential for growth. Rules for tax benefits and accelerated depreciation on new transmission assets will take up to 12 months to be established. Real-time information systems. . © ABB Group .

Distributors and Wholesalers Expected to continue following overall GDP trends © ABB Group . Oil & gas and metals & minerals sectors expected to remain robust Utilities Industries EPCs / System Integrators Middle East seen as major growth driver OEMs. Growth mainly due to continuing high energy demand in emerging markets. led by Asia and Americas.12 22-Jun-06 .Market outlook for the rest of 2006 Customer segment Continued investment in power T&D infrastructure expected in most regions. High fuel prices drove further demand in the Middle East.

Macro trends for 2006 and beyond North America (market size: $10 bn) Aged infrastructure needs to be refurbished Reliability concerns trigger T&D investments Europe (market size: $11.4 bn) Rural electricity delivery seen lifting demand for power distribution products and systems Middle East/Africa (market size: $8.2 bn) Oil and gas sector expected to drive demand for power transmission.7 bn) Latin America and Asia excl.3 bn) Continued strong government commitment to power infrastructure Prospect of the world’s most modern power grid India (market size: $1. distribution Rest of world (market size: $4.13 22-Jun-06 . China and India Market size figures as of 2004 © ABB Group .4 bn) Need for interconnections and power grid upgrades in new and potentially future EU member states China (market size: $10.


power generation systems Orders Revenues EBIT EBIT margin Cash flow from ops R&D as % of revenues** * Compound annual growth rate. market growth (05-09): 3-4% $ millions 2005 6. transforming.882 6. reinforcement of grids in emerging markets Service and replacement demand in N. protecting.4% 582 3.15 22-Jun-06 Expressed as percentage of 2005 revenues . product service World market: $31 bn Avg. measuring. industrial electrification. power and distribution transformers.0% Target 2005-09 > 6%* > 11% Key applications Switching. western Europe Distributors OEMs 8% 9% Utilities EPC 13% 13% 47% ABB other divisions 10% Industries © ABB Group .308 596 9. America. ** Non-order and order-related R&D Key market drivers Further enlargement.Power Products overview Key products High.and medium-voltage products. and automating in power transmission & distribution.

Europe. led by Germany and Switzerland Growth in E. Europe driven by Russia Americas Growth driven by US and Brazil 408 597 Q1 05 Q1 06 Q1 05 Q1 06 + 41% local currency + 43% local currency Asia Middle East & Africa 608 693 Growth driven by China Increase in both large and base orders 156 © ABB Group .Q1 regional order development – Power Products Orders by region in $ million Europe 632 815 Significant growth in W.16 22-Jun-06 230 Q1 05 Q1 06 Q1 05 Q1 06 + 17% local currency + 55% local currency .

partly due to factory closures linked to the transformer consolidation program .S. led by China and India Revenues in Europe were flat. America.17 22-Jun-06 N..Q1 revenues by region – Power Products Percentage of total divisional revenues by region (nominal) Q1 2005 Middle East & Africa 10% 35% Q1 2006 Middle East & Africa Europe 8% Europe 33% Asia 30% Asia 30% 25% 29% Americas Americas Total: $1. led by Brazil Revenue share from Asia continued to increase. America growth driven by U.4 billion Total: $1. significant increase in S.5 billion + 12% local currency © ABB Group .

18 22-Jun-06 . Distributors and Wholesalers © ABB Group .Q1 demand by customer segment – Power Products Customer segment Utilities Continued investment in infrastructure. integration of networks and refurbishment of aging components. highvoltage substation orders continued in Middle East Oil & gas and metals & minerals were the strongest sectors in the quarter EPC projects continued strong in Middle East linked to oil & gas Underlying GDP development continues to be the key driver Industries EPCs/System integrators OEMs.

4% Target 2005-09 > 5%* > 6% Orders Revenues EBIT EBIT margin Cash flow from ops R&D as % of revenues** * Compound average growth rate **Non-order and order related R&D Key market drivers GDP growth in emerging markets Record-high fuel prices Aging infrastructure Reliability concerns © ABB Group . FACTS. Semiconductors) Network management and utility communications Electrical and control systems for power plants Substation automation and complete turnkey substations and services World market: $25 bn Avg. HVDC Light®. HV Cables. market growth* 05-09: ~8% $ millions 2005 4.085 187 4.19 22-Jun-06 Industries 14% EPC 16% Utilities 70% Environmental requirements and integration of renewables Deregulation * Expressed as percentage of 2005 revenues .Power Systems overview Key offering Grid systems (HVDC.6% 122 3.468 4.

20 22-Jun-06 236 Continued strong growth in China and India 264 367 Q1 05 Q1 06 Q1 05 Q1 06 + 71% local currency + 44% local currency .and large orders in Western Europe Single digit growth in Central and Eastern Europe Significant growth in the US. growth led by large projects 141 © ABB Group . large substation order in California Growth in South America led by Venezuela 457 112 180 Q1 05 Q1 06 Q1 05 Q1 06 + 25% local currency + 55% local currency Asia Middle East & Africa Continued strong demand.Q1 regional order development – Power Systems Orders by region in US$ million Europe 523 Americas Double digit growth of base.

9 billion Total: $1. mainly Brazil .0 billion + 20% local currency © ABB Group . particularly in China Growth in Europe led by Central and Eastern Europe Americas growth driven by South America.21 22-Jun-06 Regional pattern in individual quarters influenced by projects execution Asia growth driven by the execution of major projects.Q1 revenues by region – Power Systems Percentage of total divisional revenues by region (nominal) Q1 2005 Middle East & Africa 26% 41% Q1 2006 Middle East & Africa Europe 20% 34% Europe Asia 19% 14% Asia 29% 17% Americas Americas Total: $0.

High fuel prices drove further demand in the Middle East. Strong growth due to demand in Middle East and Asia Pacific.Q1 demand by customer segment Customer segment Utilities Industries EPCs Growth mainly due to continuing high energy demand in emerging markets. Strong growth in oil & gas and metals & minerals led by Middle East.22 22-Jun-06 . Growth in Western Europe and North America due to aging infrastructure. © ABB Group .

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