ABB Completes EPC Business Model Change

Actions across three divisions to shift the center of gravity towards
strengthened competitiveness, higher growth segments and lower risk in
line with Next Level strategy

• Power Grids: joint venture agreement for electrical substations
  infrastructure project business with SNC-Lavalin signed, closing
  expected 2018
• Industrial Automation: oil & gas EPC activities to be moved into joint
  venture together with Arkad; closing of transaction now expected by
  December 31, 2017
• Robotics and Motion: turnkey full train retrofit business to be wound
  down
• Fourth quarter 2017 results expected to be impacted by approximately
  $150 million of operational EBITA and additionally $75 million of
  non-operational pre-tax charges on net income
• Management and ongoing project continuity assured in all cases

ZURICH–(BUSINESS WIRE)–ABB today announced actions across three divisions to complete the
business model change for engineering, procurement and construction
(EPC) as it ends its transition year 2017. These decisions are fully in
line with ABB’s strategy to shift the center of gravity towards
strengthened competitiveness, higher growth segments and lower risk.

In the Power Grids division, ABB has signed an agreement to form a joint
venture with SNC-Lavalin for electrical substation EPC projects;
SNC-Lavalin will have majority and controlling interest. The new entity
will leverage ABB’s power technology leadership and SNC-Lavalin project
expertise to capture opportunities for profitable growth. These actions
complement the ongoing ”Power Up” program; as part of this program, ABB
started to shift its focus towards solutions and service-based customer
offerings.

In the Industrial Automation division, ABB has previously announced the
oil & gas EPC joint venture with Arkad Engineering and Construction
Ltd., a fully integrated EPC contractor for the energy sector based in
Saudi Arabia; the closing of the transaction is now expected by December
31, 2017.

ABB’s current oil & gas EPC business will be transferred into the new JV
company, in which, Arkad will have majority and controlling interest.
The new JV company, Arkad-ABB S.p.A., will provide the full range of
integrated EPC services for oil & gas plants. It will build on more than
50 years of experience in oil & gas EPC and the successful delivery of
more than 300 projects globally.

In the Robotics and Motion division, ABB has decided to wind down its
turnkey full train retrofit business, beyond meeting current contractual
commitments. Robotics and Motion will continue its strong role as
innovation partner for the rail industry.

“We are taking decisive actions to complete our EPC business model
change as we end our transition year. These actions are in line with our
strategy to shift our center of gravity towards strengthened
competitiveness, higher growth segments and lower risk,” said ABB CFO
Timo Ihamuotila “We will book the related charges in Q4 2017 and report
the divisions starting in 2018 excluding these legacy businesses.”

The fourth quarter 2017 results of Power Grids and Robotics and Motion
are each expected to be impacted by approximately $75 million on
operational EBITA. The transfer of the turnkey oil & gas EPC business
into the JV with Arkad is expected to result in a non-operational
pre-tax charge to net income of approximately $75 million.

ABB will report these businesses as a non-core operating unit within
Corporate & Other. This unit is expected to retain and execute parts of
the existing legacy backlog until the transition out of these businesses
is complete. The new unit will report to ABB’s CFO Timo Ihamuotila
effective January 1, 2018. Group and divisional proforma data for 2016
and 2017 year-to-date excluding the transferred activities will be made
available December 21, 2017 on our website www.abb.com/investorrelations.

ABB (ABBN: SIX Swiss Ex) is a pioneering technology leader in
electrification products, robotics and motion, industrial automation and
power grids, serving customers in utilities, industry and transport &
infrastructure globally. Continuing a history of innovation spanning
more than 125-years, ABB today is writing the future of industrial
digitalization and driving the Energy and Fourth Industrial Revolutions.
ABB operates in more than 100 countries with about 136,000 employees. www.abb.com

Important notice about forward-looking information
This
press release includes forward-looking information and statements as
well as other statements concerning the outlook for our business. 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. These expectations,
estimates and projections are generally identifiable by statements
containing words such as “expects,” “believes,” “estimates,” “targets,”
“plans,” “is likely”, “intends” 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
and which could affect our ability to achieve any or all of our stated
targets. The important factors that could cause such differences
include, among others, business risks associated with the volatile
global economic environment and political conditions, costs associated
with compliance activities, market acceptance of new products and
services, changes in governmental regulations and currency exchange
rates and such other factors as may be discussed from time to time in
ABB Ltd’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.

This is information that ABB Ltd is obliged to make public pursuant to
the EU Market Abuse Regulation. The information was submitted for
publication, through the agency of the contact persons set out below, at
6:45 am CET, on December 20, 2017.

Contacts

ABB Ltd
Media Relations
Saswato Das, Head of
External Communications
+41 43 317 71 11
[email protected]
or
Investor
Relations
Jessica Mitchell, Head of Investor Relations
+41
43 317 71 11
[email protected]