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 -.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 .hydro -.Power Delivery Infrastructure Power Generation -.3 22-Jun-06 Broadest offering in the industry .

power plant control systems. distribution and power transformers Main customers: Utilities.Power technologies today Power Products $6.1 bn HV Products MV Products Transformers Grid Systems Substations Management Network Power Generation High-voltage and medium-voltage products. EBIT margin 9.4bn. industries.4 bn Power Systems $4. network management systems. industries and EPCs 2005: Revenues $4. EBIT margin 4. OEMs and product distributors 2005: Revenues $6.1bn. grid systems.500 © ABB Group .6% Employees: 13.000 .4 22-Jun-06 Turnkey substations. service Main customers: Utilities. EPCs.4% Employees: 27.

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

804 1.5% 61 Q1 05 1.379 125 9.1% (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. productivity increases and supply chain savings © ABB Group .488 171 11.: Refurbish aging infrastructure Asia: Continued economic growth in China Revenues higher in all businesses Strong EBIT increase on revenue growth.Q1 2006 summary – Power Products $ millions unless otherwise stated Q1 06 2.S.335 1.6 22-Jun-06 EBIT includes $17 million for transformer consolidation program Higher cash flow from operations driven by higher earnings and customer advances .

012 48 4.Q1 2006 summary – Power Systems $ millions unless otherwise stated Q1 06 1. 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. greater capacity utilization and improved project execution Cash flow from operations reflected higher earnings and the timing of project payments .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.7% 4 Q1 05 974 886 39 4.306 1.

industrial and commercial businesses Siemens. asset utilization. GE No. GE No. 1. industrial growth. grid policy Utilities.North America market overview . reliability. 2. 2. Cooper. large industrial businesses GE. aging infrastructure. 1. or 3 in all areas © ABB Group . privatization. Energy Bill. Areva T&D. locals Siemens. asset management Utilities. transmission grid policy. reliability. Waukesha. power generators Market drivers Deregulation.PT Products Service Aging infrastructure. customer outsourcing Systems Deregulation. private grid operators.8 22-Jun-06 Growth area . Areva T&D. or 3 in all areas Customer base Competitors Market position Utilities.

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 .Energy Policy Act of 2005 The Energy Policy Act of 2005 was signed by the President on August 8. analysis reports.

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 .

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

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

4 bn) Need for interconnections and power grid upgrades in new and potentially future EU member states China (market size: $10.7 bn) Latin America and Asia excl. distribution Rest of world (market size: $4.2 bn) Oil and gas sector expected to drive demand for power transmission.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. China and India Market size figures as of 2004 © ABB Group .3 bn) Continued strong government commitment to power infrastructure Prospect of the world’s most modern power grid India (market size: $1.4 bn) Rural electricity delivery seen lifting demand for power distribution products and systems Middle East/Africa (market size: $8.13 22-Jun-06 .


western Europe Distributors OEMs 8% 9% Utilities EPC 13% 13% 47% ABB other divisions 10% Industries © ABB Group .15 22-Jun-06 Expressed as percentage of 2005 revenues . America.308 596 9.and medium-voltage products. reinforcement of grids in emerging markets Service and replacement demand in N.0% Target 2005-09 > 6%* > 11% Key applications Switching. and automating in power transmission & distribution. protecting.Power Products overview Key products High. ** Non-order and order-related R&D Key market drivers Further enlargement.4% 582 3. power and distribution transformers.882 6. market growth (05-09): 3-4% $ millions 2005 6. industrial electrification. transforming. measuring. power generation systems Orders Revenues EBIT EBIT margin Cash flow from ops R&D as % of revenues** * Compound annual growth rate. product service World market: $31 bn Avg.

Q1 regional order development – Power Products Orders by region in $ million Europe 632 815 Significant growth in W. Europe.16 22-Jun-06 230 Q1 05 Q1 06 Q1 05 Q1 06 + 17% local currency + 55% local currency . 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 .

America. America growth driven by U.S.4 billion Total: $1.17 22-Jun-06 N. partly due to factory closures linked to the transformer consolidation program .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. significant increase in S. led by China and India Revenues in Europe were flat. led by Brazil Revenue share from Asia continued to increase.5 billion + 12% local currency © ABB Group ..

Distributors and Wholesalers © ABB Group . integration of networks and refurbishment of aging components.Q1 demand by customer segment – Power Products Customer segment Utilities Continued investment in infrastructure.18 22-Jun-06 . 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.

HVDC Light®.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 .468 4. 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 . HV Cables.Power Systems overview Key offering Grid systems (HVDC. 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.6% 122 3. FACTS.

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.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.

mainly Brazil .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: $0.0 billion + 20% local currency © ABB Group . particularly in China Growth in Europe led by Central and Eastern Europe Americas growth driven by South America.9 billion Total: $1.21 22-Jun-06 Regional pattern in individual quarters influenced by projects execution Asia growth driven by the execution of major projects.

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