ABB announces mid-term target

ABB Ltd
06 September 2005


ABB announces mid-term targets to 2009

Greater focus on business execution and value creation

Zurich, Switzerland, September 6, 2005 - ABB, the leading power and automation
technology group, today announced its new mid-term targets for the five-year
period from 2005 to 2009. The company also outlined a strategy that emphasizes
improved business execution and a broader approach to value creation, including
focus on growth, operating margin, use of capital and cash generation.

'ABB today is in a strong position and we can look forward to sustainable and
profitable growth,' said Fred Kindle, ABB's President and CEO. 'The targets and
actions we are announcing today are designed to build on our strength and secure
our competitive success over the next five years and beyond.'

The new group targets reflect the company's continuing focus on revenue growth
and operational profitability as measured by earnings before interest and taxes
(EBIT). In addition, the targets include net margin, return on capital employed
and cash flow generation.

To support the execution of the strategy, the organization will be adjusted as
of January 1, 2006. One layer of management is being removed, with the two core
divisions replaced by their respective five business areas. A new function is
being introduced at the executive committee level to integrate the regional
organization more strongly.

'This is an evolution of our strategy, not a revolution,' Kindle said. 'We
remain focused on our core power and automation businesses. The strategy
involves a balanced approach to value creation by widening our focus beyond
growth to higher margins, greater return on capital, and cash generation. Above
all, the emphasis will be on better execution to deliver results more
consistently and reliably.'

Summary of 2009 group targets1
Revenue growth 2005-2009                                          > 5% (CAGR2)
---------------------------                                   ------------------
EBIT margin                                                              > 10%
---------------------------                                   ------------------
Net margin                                                                > 5%
---------------------------                                   ------------------
Return on capital employed (after tax) (ROCE)                        Mid-teens
---------------------------                                   ------------------
Free cash flow as share of net income                                      100%
---------------------------                                   ------------------
1 Targets are defined in Appendix I of this release. 2 Compound annual growth
rate over five years from 2005 to 2009, excluding major acquisitions and
divestitures and assuming constant exchange rates.

'Our new targets for net income and cash flow are intended to put more emphasis
on our bottom line and our ability to convert profit into cash,' said Michel
Demare, Chief Financial Officer. 'The group target for return on capital
employed will provide a more complete picture of how we use capital resources in
the company and become a dynamic management tool to enhance value creation.'
ROCE will also be used at the divisional level to establish target rates of
return for new investments, taking into account each business' EBIT expectation,
risk profile, volatility and capital intensity.

New organizational structure

The current two core divisions, Power Technologies and Automation Technologies,
will be eliminated, and their respective business areas will become the new
divisions as of January 1, 2006: Power Products (formerly the Power Technology
Products business area), Power Systems (formerly the Power Technology Systems
business area), Automation Products (as at present), Process Automation (as at
present), and Robotics (formerly the Manufacturing Automation business area). A
new function at the group level, Global Markets and Technology, will help to
drive execution of the strategy across national and regional borders.

Division targets

Division                    Revenue growth 2005-09*        EBIT margin 2009
--------------                   ---------------             --------------
Power Products                       > 6%                        > 11%
--------------                   ---------------             --------------
Power Systems                        > 5%                        > 6%
--------------                   ---------------             --------------
Automation Products                  > 5%                        > 14%
--------------                   ---------------             --------------
Process Automation                   > 5%                        > 9%
--------------                   ---------------             --------------
Robotics                             > 4%                        > 9%
--------------                   ---------------             --------------

* Compound annual growth rate for the five years from 2005 to 2009, excluding
major acquisitions and divestitures and assuming constant exchange rates

As of January 1, 2006, the Power Products, Power Systems and Automation Products
divisions will be headquartered in Zurich, Switzerland. The Process Automation
division will be based in Norwalk, Connecticut in the U.S., while the Robotics
division will be based in Shanghai, China.

Management appointments

As a result of the change in divisional structure, the membership of ABB's
Executive Committee will change. As of January 1, 2006, the Executive Committee
will comprise Fred Kindle (President and CEO), Dinesh Paliwal (President, Global
Markets and Technology), Michel Demare (CFO), Gary Steel (head of Human
Resources), as well as new members Bernhard Jucker (head of Power Products),
Samir Brikho (head of Power Systems), Tom Sjoekvist (head of Automation
Products), Veli-Matti Reinikkala (head of Process Automation), and Anders
Jonsson (head of Robotics).

Jucker is currently ABB's country manager and head of the Automation
Technologies division in Germany. Brikho is the head of the ABB Lummus Global
downstream oil, gas and petrochemicals business and will retain this role in
addition to his new responsibilities. Sjoekvist is the head of the Automation
Products business area and Reinikkala is head of the Process Automation business
area. Jonsson is currently head of the Automation Technologies division in China
and is the operational excellence manager for the division worldwide. Brikho and
Jonsson will take on the leadership of their respective businesses starting
October 1, 2005.

In his new role as President of Global Markets and Technology, Paliwal -
currently head of the Automation Technologies division - will focus on tapping
the growth and profitability opportunities in key regions and trading areas. His
responsibilities will include ensuring ABB expertise and resources are applied
across national borders and that existing local support resources are used as
efficiently as possible. Paliwal will continue to be country manager in the U.S.
and regional manager in North America.

Peter Smits, currently head of the Power Technologies division, will assume the
role as country manager in Germany and regional manager of Central Europe.

Impact on financial reporting

The company will report its financial results according to the new divisional
structure starting in the first quarter of 2006 (historical divisional data for
full years 2003 and 2004 are provided in Appendix I of this press release). Also
starting with its 2005 annual financial statements, additional disclosures will
be made on the group's balance sheet to allow the calculation of return on
capital employed.

ABB (www.abb.com) is a leader in power and automation technologies that enable
utility and industry customers to improve performance while lowering
environmental impact. The ABB Group of companies operates in around 100
countries and employs about 103,000 people.

More information

ABB's mid-term targets press release and presentation slides are available from
September 6, 2005 on the ABB News Center at www.abb.com/news and on the Investor
Relations homepage at www.abb.com/investorrelations.

ABB will host a press conference and conference call for journalists, which will
also be Webcast, starting at 10:00 a.m. Central European Time (CET) today.
Callers from the UK should dial [phone]. From Sweden, dial +46 8 5069
2105, and from the rest of Europe, please dial [phone]. Lines will be
open 15 minutes before the start of the conference. The audio playback of the
conference call will start one hour after the end of the call and be available
for 72 hours: Playback numbers: [phone] (U.K.), [phone] (rest
of Europe) or [phone] (U.S./Canada). The code is 354, followed by the #
key.

A meeting, conference call and live Webcast for analysts and investors is
scheduled to begin today at 2:00 p.m. CET (8:00 a.m. EST). Callers should dial
[phone] (from the U.S./Canada) or [phone] (Europe and the rest
of the world). Callers are requested to phone in ten minutes before the start of
the conference call. The audio playback of the conference call will start one
hour after the end of the call and be available for 96 hours. Playback numbers:
[phone] (U.S./Canada) or [phone] (Europe and the rest of the
world). The code is 642, followed by the # key.

Important notice about forward-looking information

This press release 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.
                                   Appendix I

Targets defined
Revenue growth    Compound annual growth rate for the five years from 2005 to
CAGR              2009, excluding major acquisitions and divestitures and
----------------- assuming constant exchange rates
                  ---------------------------------
EBIT margin       Earnings before interest and taxes as a percentage of
----------------- revenues
                  ---------------------------------
Net margin        Net income as a percentage of revenues
----------------- ---------------------------------
Free cash flow    Free cash flow (cash flow from operating activities adjusted
----------------- for changes in financing receivables as well as net
                  investments in property, plant and equipment) as a percentage
                  of net income
                  ---------------------------------
Return on capital EBIT (less tax), divided by the sum of fixed assets plus net
employed          working capital*
----------------- EBIT (less tax) = EBIT x (1 - tax rate)
                  Tax rate = Provision for taxes / Income from continuing
                  operations before taxes and minority interest
                  ---------------------------------
* The published financial statements for the full years 2004 and 2003 do not
present information in a manner that would allow the calculation of return on
capital employed as calculated by ABB above. Starting with the 2005 annual
financial statements, additional disclosures will be made on the group's balance
sheet to allow the above calculation.

Key divisional data 2003-20041
Pro-forma and unaudited

(US$, millions)
Division                          Revenues        EBIT           EBIT margin
                                 2004     2003     2004   2003   2004   2003
Power Products                  5,958    4,927      493    448    8.3%   9.1%
Power Systems                   3,691    3,516      119    147    3.2%   4.2%
Automation Products             5,378    4,582      667    490   12.4%  10.7%
Process Automation              4,675    4,046      279    181    6.0%   4.5%
Robotics                        1,382    1,417       81     66    5.9%   4.7%
Non-core activities and other2  2,091    4,712      -30   -462    n/a    n/a
Corporate2 / consolidation     -2,454   -2,773     -525   -513    n/a    n/a
Total Group                    20,721   20,427    1,084    357    5.2%   1.7%

1 Data for the five divisions shown in this table are not directly comparable
with previously published data because certain internal sales were previously
eliminated at the divisional level. In the table above, those sales have been
eliminated at the group level. 2 Real estate activities, previously reported
under Corporate, are now being accounted for in Non-core activities and Other.


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