Note 23 Operating segment and geographic data

The Chief Operating Decision Maker (CODM) is the Company’s Executive Committee. The CODM allocates resources to and assesses the performance of each operating segment using the information outlined below. The Company’s operating segments consist of Discrete Automation and Motion, Low Voltage Products, Process Automation, Power Products and Power Systems. The remaining operations of the Company are included in Corporate and Other.

A description of the types of products and services provided by each reportable segment is as follows:

  • Discrete Automation and Motion: manufactures and sells motors, generators, variable speed drives, programmable logic controllers, robots and robotics, solar inverters, wind converters, rectifiers, excitation systems, power quality and protection solutions, electric vehicle fast charging infrastructure, components and subsystems for railways, and related services for a wide range of applications in discrete automation, process industries, transportation and utilities.
  • Low Voltage Products: manufactures and sells products and systems that provide protection, control and measurement for electrical installations, as well as enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service. In addition, the segment manufactures products for wiring and cable management, cable protection systems, power connection and safety. The segment also makes intelligent building control systems for home and building automation.
  • Process Automation: develops and sells control and plant optimization systems, automation products and solutions, including instrumentation, as well as industry-specific application knowledge and services for the oil, gas and petrochemicals, metals and minerals, marine and turbocharging, pulp and paper, chemical and pharmaceuticals, and power industries.
  • Power Products: manufactures and sells a wide range of products across voltage levels, including circuit breakers, switchgear, capacitors, instrument transformers, power, distribution and traction transformers for electrical and other infrastructure utilities, as well as industrial and commercial customers.
  • Power Systems: designs, installs and upgrades high-efficiency transmission and distribution systems and power plant automation and electrification solutions, including monitoring and control products, software and services and incorporating components manufactured by both the Company and by third parties, for power generation, transmission and distribution utilities, other infrastructure utilities, as well as other industrial and commercial enterprises.
  • Corporate and Other: includes headquarters, central research and development, the Company’s real estate activities, Group treasury operations and other minor business activities.

The Company evaluates the profitability of its segments based on Operational EBITDA, which represents income from operations excluding depreciation and amortization, restructuring and restructuring-related expenses, gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items, as well as foreign exchange/commodity timing differences in income from operations consisting of: (i) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).

The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments. Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at the Company’s consolidated Operational EBITDA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at current market prices.

The following tables present segment revenues, Operational EBITDA, the reconciliations of consolidated Operational EBITDA to income from continuing operations before taxes, as well as depreciation and amortization, and capital expenditures for 2014, 2013 and 2012, as well as total assets at December 31, 2014, 2013 and 2012.

2014 ($ in millions)

Third-party revenues

Intersegment revenues

Total revenues

Discrete Automation and Motion

9,296

846

10,142

Low Voltage Products

7,117

415

7,532

Process Automation

7,745

203

7,948

Power Products

8,782

1,551

10,333

Power Systems

6,686

334

7,020

Corporate and Other

204

1,592

1,796

Intersegment elimination

(4,941)

(4,941)

Consolidated

39,830

39,830

 

 

 

 

 

 

 

 

2013 ($ in millions)

Third-party revenues

Intersegment revenues

Total revenues

Discrete Automation and Motion

8,909

1,006

9,915

Low Voltage Products

7,338

391

7,729

Process Automation

8,287

210

8,497

Power Products

9,096

1,936

11,032

Power Systems

8,025

350

8,375

Corporate and Other

193

1,583

1,776

Intersegment elimination

(5,476)

(5,476)

Consolidated

41,848

41,848

 

 

 

 

 

 

 

 

2012 ($ in millions)

Third-party revenues

Intersegment revenues

Total revenues

Discrete Automation and Motion

8,480

925

9,405

Low Voltage Products

6,276

362

6,638

Process Automation

7,946

210

8,156

Power Products

8,987

1,730

10,717

Power Systems

7,575

277

7,852

Corporate and Other

72

1,505

1,577

Intersegment elimination

(5,009)

(5,009)

Consolidated

39,336

39,336

($ in millions)

2014

2013

2012

Operational EBITDA:

 

 

 

Discrete Automation and Motion

1,760

1,783

1,735

Low Voltage Products

1,429

1,468

1,219

Process Automation

1,029

1,096

1,003

Power Products

1,519

1,637

1,585

Power Systems

5

419

290

Corporate and Other and Intersegment elimination

(342)

(328)

(277)

Consolidated Operational EBITDA

5,400

6,075

5,555

Depreciation and amortization

(1,305)

(1,318)

(1,182)

Restructuring and restructuring-related expenses

(235)

(252)

(180)

Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items

482

(181)

(199)

Foreign exchange/commodity timing differences in income from operations:

 

 

 

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

(223)

60

135

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

(42)

14

(28)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

101

(11)

(43)

Income from operations

4,178

4,387

4,058

Interest and dividend income

80

69

73

Interest and other finance expense

(362)

(390)

(293)

Income from continuing operations before taxes

3,896

4,066

3,838

 

Depreciation and amortization

Capital expenditure(1)

Total assets(1)
at December 31,

($ in millions)

2014

2013

2012

2014

2013

2012

2014

2013

2012

(1)

Capital expenditure and Total assets are after intersegment eliminations and therefore reflect third-party activities only.

Discrete Automation and Motion

309

285

263

192

214

197

10,123

10,931

9,416

Low Voltage Products

301

323

250

184

204

208

7,978

9,389

9,534

Process Automation

88

87

82

49

68

91

4,268

4,537

4,847

Power Products

217

223

209

220

252

259

7,396

7,669

7,701

Power Systems

175

183

174

92

101

194

6,855

7,905

8,083

Corporate and Other

215

217

204

289

267

344

8,258

7,633

9,489

Consolidated

1,305

1,318

1,182

1,026

1,106

1,293

44,878

48,064

49,070

Geographic information

Geographic information for revenues and long-lived assets was as follows:

 

Revenues

Long-lived assets
at December 31,

($ in millions)

2014

2013

2012

2014

2013

Europe

13,674

14,385

14,073

3,460

3,798

The Americas

11,482

12,115

10,699

1,215

1,450

Asia

10,874

11,230

10,750

789

850

Middle East and Africa

3,800

4,118

3,814

188

156

 

39,830

41,848

39,336

5,652

6,254

Revenues by geography reflect the location of the customer. Approximately 19 percent, 18 percent and 17 percent of the Company’s total revenues in 2014, 2013 and 2012, respectively, came from customers in the United States. Approximately 13 percent, 12 percent and 12 percent of the Company’s total revenues in 2014, 2013 and 2012, respectively, were generated from customers in China. In 2014, 2013 and 2012, more than 98 percent of the Company’s total revenues were generated from customers outside Switzerland.

Long-lived assets represent “Property, plant and equipment, net” and are shown by location of the assets. At December 31, 2014, approximately 16 percent, 16 percent and 15 percent were located in Switzerland, the U.S. and Sweden, respectively. At December 31, 2013, approximately 17 percent, 17 percent and 15 percent of the Company’s long-lived assets were located in Switzerland, the U.S. and Sweden, respectively.

The Company does not segregate revenues derived from transactions with external customers for each type or group of products and services. Accordingly, it is not practicable for the Company to present revenues from external customers by product and service type.