Transformer business

ABB Ltd
30 June 2005


ABB consolidates global transformer business

• ABB adapts to overcapacity and higher costs to lift profitability of
key business

• $240 million, four-year program includes some $120 million in charges
in 2005

• Approximately 1,300 jobs affected

• Company revises 2005 Power Technologies division and Group margin
targets

• Group net income for Q2 expected to be significantly lower than Q1

Zurich, Switzerland, June 30, 2005 - ABB, the leading power and automation
technology group, said today it is consolidating its global transformer business
in response to overcapacity, increasing raw material costs and a regional shift
in demand.

The consolidation program, aimed at significantly improving the profitability of
the transformer business, is expected to run until the end of 2008 and cost
approximately $240 million. Approximately $120 million will be recorded as a
charge to earnings from continuing operations in 2005, most in the second
quarter of 2005.

ABB said the focus is on increasing productivity and operational efficiencies.
The consolidation will close a small number of plants in high-cost countries and
cut about 1,300 jobs in the transformer business, or roughly ten percent of the
total global workforce of 13,500 people.

The company is in discussions, or will begin talks shortly, with employee
representatives to ensure the program is carried out in a socially responsible
manner. The business today operates 57 plants in 28 countries.

ABB is the world's leading producer of transformers used in substations, power
plants, electrical locomotives, as well as systems to manage electricity grids
and other applications. The business had revenues of approximately $2.5 billion
in 2004, representing 26 percent of total Power Technologies division revenues.
ABB expects to increase the EBIT margin (earnings before interest and taxes as a
share of revenues) in the transformers business from less than four percent in
2004 to more than eight percent by 2009.

'Overcapacity has been the biggest problem in the transformer industry in recent
years, mainly the result of deregulation in the power sector,' said Fred Kindle,
ABB President and CEO. 'The situation has been made worse, however, by the
unprecedented increase in raw material prices we've seen since 2004. As a
result, we must take further steps now to improve the profitability of this
important business and to strengthen our leading market position.'

As a result of the significant additional charges for 2005 and higher raw
material costs, ABB is issuing a revised 2005 EBIT margin target for the Power
Technologies division in the range of 6.8-7.3 percent. As a consequence, the
company is also lowering its 2005 Group EBIT margin target to 6.6-7.1 percent
from 7.7 percent.

In the announcement of its first-quarter earnings in April 2005, ABB dropped the
2005 EBIT margin target of 10 percent for its Power Technologies division, first
set in late 2002, saying rapidly increasing raw materials costs, mainly in the
transformers business, and other operational challenges made achieving the
target unrealistic.

The consolidation program announced today has no impact on the 2005 EBIT margin
target for the Automation Technologies division, which remains unchanged at 10.7
percent. Progress remains on track towards the published targets in corporate
cost reduction and performance of non-core operations.

Group net income in Q2 2005 will be significantly lower than in Q1. In addition
to the impact of the above-described charges, negative effects to net income are
expected from the 'mark-to-market' accounting treatment of shares reserved for
the asbestos trust, some losses in discontinued businesses, and non-asbestos
related litigation charges.

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 more than 100
countries and employs about 102,000 people.

* * *

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 and statements. 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' 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, ABB's ability to
further reduce its indebtedness, the terms and conditions on which asbestos
claims can be resolved, the amount of revenues we are able to generate from
backlog and orders received, trends in raw materials prices, 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 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 targets and the expectations reflected in any such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that those targets and expectations will be achieved.

* * *

More information

ABB will host a telephone conference for journalists today starting at 1000
Central European Time (CET). Callers from the UK should dial [phone].
From Sweden, dial [phone], and from the rest of Europe, please dial +41
91 610 56 00. 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.). The code is
036, followed by the # key.

A conference call for analysts and investors is scheduled to begin at 1500 CET.
Callers should dial [phone] (from the U.S.) 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.) or [phone] (Europe and the rest of the
world). The code is 015 followed by the # key. A presentation accompanying the
call will be available on ABB's website shortly before the call begins.






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