HIGHER THAN PREDICTED RAW MATERIAL PRICE INFLATION IN 2005 PROMPTS ACTION

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HIGHER THAN PREDICTED RAW MATERIAL PRICE INFLATION IN 2005 PROMPTS ACTION
23 May 2005 - ABB (Power Technologies)

ABB, the leading power and automation technology group, announced today that its Power Technologies division is to increase the average price of its transformers by up to ten percent immediately, following a sharp increase in raw material prices since the start of 2005.

Over the past year, ABB has experienced costs increases of between 30 and 100 percent for raw materials such as steel, copper and oil, while normal annual cost fluctuations are below ten per cent. These materials are used in the construction of transformers and account for about one third of transformer revenues.

ABB had to increase prices several times in 2004 to offset higher material prices. In the course of the first quarter of 2005, however, the price increase for raw material accelerated.

'These additional and unprecedented commodity cost increases are of such magnitude that we have no choice but to pass them on to our end users again,' said Peter Smits, head of the ABB Power Technologies division.

'ABB remains committed to delivering the highest value and product quality to our customers,' said Smits. 'Competitive price and quality levels are in the interest of manufacturers as well as users of transformers.'

Transformers are a key component of power transmission and distribution grids. In its Transformers business unit, ABB employs about 12,000 people and achieved revenues of nearly $2.5 billion in 2004. With more than 50 production sites, ABB is the world market leader in transformers.

http://abb.com/uk

About: ABB (Power Technologies)
ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impacts. ABB in the UK operates from more than 20 locations nationally and employs around 2,500 people. The ABB Group of companies operates in around 100 countries and employs about 105,000 people.

Power Technologies
The Power Technologies division serves industrial and commercial customers, as well as electric, gas and water utilities, with a broad range of products, services and solutions for power transmission and distribution. The portfolio includes transformers, switchgear, breakers, capacitors and cables, as well as high- and medium-voltage applications, many of which are also sold through external channel partners like distributors, system integrators, contractors and original equipment manufacturers.

Automation Technologies
The Automation Technologies division serves the automotive, building, chemicals, consumer, electronics, life sciences, manufacturing, marine, metals, minerals, paper, petroleum, transportation, turbocharging and utility industries. Key technologies include control, drives, enterprise software, instrumentation, low-voltage products, motors, robots and turbochargers. These offerings are supported by field maintenance and asset management services, and are sold both directly and through channel partners.

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