===== SIDA 1 ===== — ZURICH, SWITZERLAND, JULY 20, 2023 Q2 2023 results Comparable order growth from a high base and record-high Operational EBITA margin1 • Orders $8,667 million, -2%; comparable1 +2% • Revenues $8,163 million, +13%; comparable +17% • Income from operations $1,298 million; margin 15.9% • Operational EBITA1 $1,425 million; margin1 17.5% • Basic EPS $0.49; +145%2 • Cash flow from operating activities4 $760 million — “The positive book-to-bill ratio and new record-high Operational EBITA earnings and margin add to our confidence about ABB's 2023 outcome allowing us to sharpen our margin expectations.” Björn Rosengren, CEO KEY FIGURES CHANGE CHANGE ($ millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable1 H1 2023 H1 2022 US$ Comparable1 Orders 8,667 8,807 -2% 2% 18,117 18,180 0% 6% Revenues 8,163 7,251 13% 17% 16,022 14,216 13% 19% Gross Profit 2,888 2,290 26% 5,604 4,571 23% as % of revenues 35.4% 31.6% +3.8 pts 35.0% 32.2% +2.8 pts Income from operations 1,298 587 121% 2,496 1,444 73% Operational EBITA1 1,425 1,136 25% 26% 3 2,702 2,133 27% 29% 3 as % of operational revenues1 17.5% 15.5% +2 pts 16.9% 14.9% +2 pts Income from continuing operations, net of tax 932 406 130% 1,997 1,049 90% Net income attributable to ABB 906 379 139% 1,942 983 98% Basic earnings per share ($) 0.49 0.20 145%2 1.04 0.51 104%2 Cash flow from operating activities4 760 382 99% 1,042 (191) n.a. 1 For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q2 2023 Financial Information. 2 EPS growth rates are computed using unrounded amounts. 3 Constant currency (not adjusted for portfolio changes). 4 Amount represents total for both continuing and discontinued operations. Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange — Q2 2023 First six months Press Release ===== SIDA 2 ===== AB B IN TE RIM RE P ORT I Q2 20 23 2 To summarize the outcome in the second quarter, I would first highlight the 2% comparable order growth which was up from last year's already high level, and the positive book- to-bill. It was good to see that the customer activity remained robust throughout the period. Secondly, the high revenue growth of 13% (17% comparable) supported by backlog execution. Thirdly, the record-high achievements on both absolute Operational EBITA of $1.4 billion and Operational EBITA margin of 17.5%, up 200 basis points from last year, with all four business areas above 15%. This was supported by a strong price contribution which more than offset labor inflation as well as some limited cost inflation related to commodities, with additional support from operational leverage on increased volumes in production. And lastly, the solid cash flow from operating activities of $760 million. All the while we executed on portfolio optimization and continued to introduce leading new technology to help our customers become more sustainable and resource efficient. In my view, the quarter is an additional indication that we are establishing ABB's operational performance at a higher level. Order momentum was strongest in the systems- and project-related businesses, driven predominantly by the medium voltage segment and process-related industries. This offset some softening from last year's high order level in the short-cycle business, mainly evident in the residential construction segment and across the board in discrete manufacturing where customers normalize order patterns in the face of shortening delivery lead times. In total, the book-to-bill ratio was 1.06 driven by three out of four business areas, and we further increased order backlog. It was good to see our cash flow from operating activities improve by $378 million from last year and I expect us to improve cash conversion from here onwards. Over the first six months we have generated just over $1 billion in Cash flow from operating activities, which helps position us well for what I expect to be a good cash delivery this year. As announced earlier in the quarter, we experienced an IT security incident. I am grateful to our teams for the handling of the challenge and containment of the incident, and as a result we have had no consequential material financial impact in the quarter. Just after the end of the second quarter, we successfully closed the divestment of the Power Conversion division at around $500 million. As a result, we expect to record a non- operational book gain estimated at approximately $50 million in Income from operations in the third quarter of 2023. With this transaction, we have completed all divisional portfolio divestments announced at the end of 2020. That said, we continuously review the product groups within all divisions to optimize the portfolio. The small acquisition of Eve Systems is another example of our portfolio actions, this time by the Smart Buildings division in business area Electrification. With around 50 employees, Eve generated approximately $20 million in revenues in 2022. It is a pioneer in the new Matter connectivity standard which enables smart home products to be fully interoperable, irrespective of the manufacturer and user operating system, via Thread wireless technology for consumer-facing products tailored to the retrofit market. I was pleased to see Process Automation unveil its new revolutionary propulsion concept initially aimed primarily at small- to medium-sized vessels, complementing its current market leading Azipod® offering for larger vessels. This industry-first electric propulsion concept ABB Dynafin™ mimics the movements of a whale tail for ultimate efficiency and emissions avoidance as it is set to reduce propulsion energy consumption by up to 22% compared to conventional shaftlines. The first commercial prototype is expected to be available in 2025. Björn Rosengren CEO In the third quarter of 2023, we anticipate a low double- digit comparable revenue growth and the Operational EBITA margin to be slightly up from the 16.6% reported in the third quarter last year. In full-year 2023, despite current market uncertainty, we anticipate comparable revenue growth to be at least 10% and we expect Operational EBITA margin to be above 16%. CEO summary Outlook ===== SIDA 3 ===== AB B IN TE RIM RE P ORT I Q2 20 23 3 Order intake declined by 2% (up 2% comparable) year-on- year, hampered by changes in exchange rates and in the portfolio, while the comparable orders increased from last year's high base. The strongest order momentum was recorded in the systems- and project-related business, linked to the medium voltage customer offering. The short-cycle business softened somewhat from last year's high level, impacted by inventory adjustments and normalizing order patterns under the presumption of further shortening delivery lead times. Two out of four business areas recorded single digit order growth, with Process Automation declining due to portfolio changes and Robotics and Discrete Automation down from last year's level which benefited from pre-buys in a period of significant component shortages. Order intake increased in the Americas by 5% (6% comparable), supported by mid-single digit growth in the United States. Portfolio changes weighed on the year-on- year development in Europe while a low comparable growth was recorded for a total decline of 1% (up 1% comparable) despite declines in key countries like Germany and Italy. Asia, Middle East and Africa declined by 10% (1% comparable) as the positive development in countries like India and Saudi Arabia did not quite offset declines in other countries such as China with a drop of 15% (9% comparable). Automotive remained broadly stable while the general industry and consumer-related robotics segments declined. In transport & infrastructure, there were positive developments in marine & ports and renewables. In buildings there was weakness in all three regions in residential-related demand. In the commercial construction segment weakness was noted in China and Germany, while demand was solid in the US. Demand in the process-related business was strong across the board, with particular strength in oil & gas, and it held up well also for ports, refining, petrochemicals and the energy-related low carbon segments. Revenues increased by 13% (17% comparable) to $8,163 million and benefitted primarily from increased volumes through execution of the order backlog, combined with a robust price contribution in the mid- single digit range. These benefits more than offset the adverse impacts from changes in exchange rates and portfolio changes. Revenues increased in all business areas, supported by comparable growth in virtually all divisions. Orders and revenues -16% -8% 0% 8% 16% 24% 32% 5’500 6’500 7’500 8’500 9’500 2021 2022 2023 Orders Comparable growth % Orders $ in millions 0% 4% 8% 12% 16% 20% 24% 6’000 6’500 7’000 7’500 8’000 8’500 2021 2022 2023 Revenues Comparable growth % Revenues $ in millions Growth Q2 Q2 Change year-on-year Orders Revenues Comparable 2% 17% FX -2% -1% Portfolio changes -2% -3% Total -2% 13% Orders by region ($ in millions, unless otherwise indicated) CHANGE Q2 2023 Q2 2022 US$ Comparable Europe 2,931 2,958 -1% 1% The Americas 3,209 3,050 5% 6% Asia, Middle East and Africa 2,527 2,799 -10% -1% ABB Group 8,667 8,807 -2% 2% Revenues by region ($ in millions, unless otherwise indicated) CHANGE Q2 2023 Q2 2022 US$ Comparable Europe 2,935 2,508 17% 20% The Americas 2,815 2,397 17% 19% Asia, Middle East and Africa 2,413 2,346 3% 13% ABB Group 8,163 7,251 13% 17% ===== SIDA 4 ===== AB B IN TE RIM RE P ORT I Q2 20 23 4 Gross profit Gross profit increased strongly by 26% (28% constant currency) to $2,888 million, supported by a significant gross margin improvement of 380 basis points to 35.4%. Gross margin improved in all business areas, with three showing significant increases. Income from operations Income from operations amounted to $1,298 million and more than doubled year-on-year, and margin on Income from operations reached 15.9%. Earnings were mainly supported by the improved operational performance as well as by lower adverse impacts from commodity timing differences. Some additional tailwind to the strong year-on-year improvement was due to last year's period being weighed down by non- operational items, including approximately $250 million triggered by the exits of a legacy project and the Russia business. Operational EBITA Operational EBITA increased by 25% (26% constant currency) year-on-year to $1,425 million and the margin was up by 200 basis points to 17.5%. A key driver for the increased result was the positive price development in all business areas, which more than offset labor inflation as well as some limited cost inflation related to commodities. Additional support was provided by higher volume output triggered by execution of the order backlog. Selling, general and administrative expenses declined in relation to revenues to 17.0%, from 18.2% last year. Operational EBITA in Corporate and Other amounted to -$143 million, of which -$67 million related to the E-mobility business, hampered by some inventory related provisions as well as technology investments triggered by a shift back to a more focused product strategy to secure a continued leading market position. Net finance expenses Net finance expense was $25 million and remained largely stable compared with last year. Income tax Income tax expense was $349 million with an effective tax rate of 27.2%. Net income and earnings per share Net income attributable to ABB was $906 million and more than doubled from last year driven by improved operational performance and lower non-operational items. This resulted in basic earnings per share of $0.49, up from $0.20 last year. Earnings 2021 2022 2023 Basic EPS $ per share 1.40 1.30 0.50 0.40 0.30 0.20 0.00 ‡ 1.50 ‡ 0.60 0.70 0.10 0% 5% 10% 15% 20% 2021 2022 2023 Operational EBITA Income from operations Operational EBITA margin % Income from operations & Operational EBITA $ in millions 3,000 1,500 1,000 500 0 ‡ ‡ 25% 27% 29% 31% 33% 35% 37% 0 500 1’000 1’500 2’000 2’500 3’000 2021 2022 2023 Gross profit Gross margin (%) Gross profit & Gross margin $ in millions Operational EBITA ($ millions) Q2 2023 Q2 2022 Corporate and Other E-mobility (67) (6) Corporate costs, intersegment eliminations and other1 (76) (13) Total (143) (19) 1 Majority of which relates to underlying corporate ===== SIDA 5 ===== AB B IN TE RIM RE P ORT I Q2 20 23 5 Net working capital Net working capital amounted to $4,585 million, increasing year-on-year from $3,663 million and sequentially from $4,164 million. The sequential increase was driven mainly by higher receivables triggered by high revenue growth and higher inventories to support a positive book-to-bill ratio. Net working capital as a percentage of revenues1 was 14.7%, up sequentially from 13.9%. Capital expenditures Purchases of property, plant and equipment and intangible assets amounted to $180 million. Net debt Net debt1 amounted to $4,165 million at the end of the quarter and decreased from $4,235 million year-on-year, and increased from $3,826 million sequentially. The sequential net increase was mainly driven by cash payments related to the dividend and the ongoing share buyback program. Cash flows Cash flow from operating activities was $760 million and increased year-on-year from $382 million. This was driven by improvements in the Electrification and Motion business areas on the back of higher earnings and a lower build-up of net working capital, year-on-year, mainly related to inventories. Share buyback program A share buyback program of up to $1 billion was launched on April 3, 2023. During the second quarter, 5,778,691 shares were repurchased on the second trading line for approximately $212 million. ABB’s total number of issued shares, including shares held in treasury, amounts to 1,882,002,575. Balance sheet & Cash flow -8’500 -5’500 -2’500 500 2021 2022 2023 Net Cash (Net Debt) position $ in millions 0% 100% 200% 300% 400% 2021 2022 2023 Free cash flow conversion to net income¹, R12M ($ millions, unless otherwise indicated) Jun. 30 2023 Jun. 30 2022 Dec. 31 2022 Short term debt and current maturities of long-term debt 3,849 2,830 2,535 Long-term debt 4,451 5,086 5,143 Total debt 8,300 7,916 7,678 Cash & equivalents 2,923 2,412 4,156 Restricted cash - current 19 23 18 Marketable securities and short-term investments 1,193 945 725 Restricted cash - non-current – 301 – Cash and marketable securities 4,135 3,681 4,899 Net debt (cash)* 4,165 4,235 2,779 Net debt (cash)* to EBITDA ratio 0.8 0.7 0.7 Net debt (cash)* to Equity ratio 0.31 0.34 0.21 * At Jun. 30, 2023, Jun. 30, 2022 and Dec. 31, 2022, net debt(cash) excludes net pension (assets)/liabilities of $(328) million $(71) million and $(276) million, respectively. -1’000 0 1’000 2’000 2021 2022 2023 Cash flow from operating activities $ in millions ===== SIDA 6 ===== AB B IN TE RIM RE P ORT I Q2 20 23 6 Orders and revenues Customer activity was yet again at a high level. At $3,960 million, orders increased by 1% (3% comparable), up from the high base last year. • Order momentum was strongest in the systems-related offering often linked to the medium voltage segment which supported a strong order growth in the Distribution Solutions division. Overall demand remained firm in most segments and was particularly strong in segments like data centers and oil & gas. Weakness was noted in the buildings segment where residential construction declined in all regions. Some weakness was recorded in commercial construction in China and Germany, while the US remained broadly stable. • High order activity in the Americas resulted in regional growth of 8% (8% comparable), supported by a strong increase in the United States of 6% (6% comparable), resulting in one of the strongest quarters on record. Orders in Asia, Middle East and Africa declined by 3% (up 5% comparable) with the comparable demand decline in China more than offset by strength in markets such as India. Europe declined by 4% (6% comparable) hampered mainly by a weak residential construction market in Germany. • Revenues improved by 9% (11% comparable) to $3,735 million with double-digit growth in all divisions except Smart Buildings and Installation Products due mainly to the adverse impact of residential construction. Increased volumes combined with strong price development, contributed more or less equally to comparable growth. Profit The second quarter was an all-time-high period for both absolute Operational EBITA of $787 million and the Operational EBITA margin of 21.1%, supported by a significant gross margin improvement. Profitability improved in all but one division, with the strongest improvement recorded in Distribution Solutions which is reaping the rewards of order backlog execution and structural profitability efforts. • Positive price impact more than offset labor inflation, and the margin was additionally supported by a reduction in raw materials and freight costs, year-on-year. • Higher volume output in production supported operational leverage for an improved Operational EBITA margin. — Electrification 10’000 12’000 14’000 16’000 2’500 3’000 3’500 4’000 4’500 2021 2022 2023 Orders Revenues Orders 12M rolling Orders and Revenues $ in millions 12M $ in millions 0% 5% 10% 15% 20% 25% 0 150 300 450 600 750 900 2021 2022 2023 Operational EBITA Income from operations Operational EBITA margin % Income from operations & Operational EBITA $ in millions CHANGE CHANGE ($ millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable H1 2023 H1 2022 US$ Comparable Orders 3,960 3,913 1% 3% 8,101 8,025 1% 4% Order backlog 7,298 6,194 18% 19% 7,298 6,194 18% 19% Revenues 3,735 3,414 9% 11% 7,325 6,650 10% 14% Operational EBITA 787 605 30% 1,464 1,117 31% as % of operational revenues 21.1% 17.6% +3.5 pts 20.0% 16.8% +3.2 pts Cash flow from operating activities 697 456 53% 1,092 543 101% No. of employees (FTE equiv.) 51,800 50,200 3% Growth Q2 Q2 Change year-on-year Orders Revenues Comparable 3% 11% FX -2% -2% Portfolio changes 0% 0% Total 1% 9% ===== SIDA 7 ===== AB B IN TE RIM RE P ORT I Q2 20 23 7 Orders and revenues Strong momentum in the systems-related operations supported the business area order increase of 3% (3% comparable) to $2,137 million, up from the high comparable level last year. • High customer activity in the medium voltage operations triggered a strong order growth in the System Drives and Large Motors and Generators divisions as well as in the tightly linked Service business. This successfully offset softness in the more short-cycle divisions. • Europe was up by 8% (4% comparable) and the Americas was up by 4% (1% comparable) despite a decline in the United States. Asia, Middle East and Africa decreased by 3% (up 3% comparable) as the slight comparable decline in China was more than offset by strength in markets such as India. • Execution of the order backlog led to very strong revenue growth of 22% (22% comparable) to $1,981 million. Higher volumes were the main driver, along with the robust price impact triggered by activities implemented last year. High double-digit comparable revenue growth was recorded in most divisions. Profit The 51% year-on-year increase in Operational EBITA to $401 million, resulted in the first ever quarter with margin surpassing 20% at 20.4%. • Earnings and margins improved from last year in most divisions, including Large Motors and Generators that benefitted from ongoing focused self-help measures. As a result, all divisions but one recorded double-digit margins in the quarter. • Strong price contribution more than offset cost inflation related to labor, commodities and freight and was the main driver of the profitability increase from last year. • The backlog execution increased volume output in production which improved the fixed cost coverage. • A positive divisional mix contributed to the margin improvement, supported by a higher share of revenues generated in the drives-related operations. 6’000 6’500 7’000 7’500 8’000 8’500 500 1’000 1’500 2’000 2’500 2021 2022 2023 Orders Revenues Orders 12M rolling Orders and Revenues $ in millions 12M $ in millions 0% 5% 10% 15% 20% 25% 2021 2022 2023 Operational EBITA Income from operations Operational EBITA margin % Income from operations & Operational EBITA $ in millions 2,400 400 300 200 100 0 ‡‡ 2,500 — Motion CHANGE CHANGE ($ millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable H1 2023 H1 2022 US$ Comparable Orders 2,137 2,079 3% 3% 4,399 4,281 3% 5% Order backlog 5,322 4,568 17% 14% 5,322 4,568 17% 14% Revenues 1,981 1,626 22% 22% 3,921 3,198 23% 25% Operational EBITA 401 266 51% 767 540 42% as % of operational revenues 20.4% 16.4% +4 pts 19.6% 16.9% +2.7 pts Cash flow from operating activities 320 241 33% 469 239 96% No. of employees (FTE equiv.) 22,200 20,800 7% Growth Q2 Q2 Change year-on-year Orders Revenues Comparable 3% 22% FX -1% -1% Portfolio changes 1% 1% Total 3% 22% ===== SIDA 8 ===== AB B IN TE RIM RE P ORT I Q2 20 23 8 Orders and revenues Customer activity remained at a high level across the segments, although some hampering timing-related effects were noted. The project pipeline in the market remained robust. Primarily the spin-off of Accelleron weighed on total growth year-on-year, which declined by 8% (up 6% comparable) to $1,669 million. • Market momentum was positive across customer segments and especially strong in the oil & gas segment where the United States stood out on the positive side. Good developments were also noted in the ports, refining, petrochemicals and the energy-related low carbon segments. • Both Europe and Asia, Middle East and Africa recorded a positive comparable order growth which more than offset a small decline in the Americas, while total growth was weighed down primarily by the portfolio change of Accelleron. • All divisions contributed strongly to the revenue growth of 2% (19% comparable) to $1,553 million, with increased volumes being the main contributor along with additional support from price. Profit Executing the order backlog with a higher gross margin supported earnings growth of 7% from the same quarter last year, to Operational EBITA of $239 million. The Operational EBITA margin improved by 110 basis points to 15.4%, just exceeding the previous recent high. • Improved operational performance in business area Process Automation helped to more than offset the impact of the divestment of the Accelleron business which supported last year’s margin by 190 basis points. • Profitability improved in all divisions except for Marine & Ports where the mix weighed on performance due to the absence of the arctic marine propulsion business. The Measurement & Analytics division recorded the strongest margin improvement to clearly above the business area average on the back of good mix, successful business segmentation for improved transparency and performance actions, including price. 5’500 6’000 6’500 7’000 7’500 500 1’000 1’500 2’000 2’500 2021 2022 2023 Orders Revenues Orders 12M rolling Orders and Revenues $ in millions 12M $ in millions 0% 5% 10% 15% 20% 0 75 150 225 300 2021 2022 2023 Operational EBITA Income from operations Operational EBITA margin % Income from operations & Operational EBITA $ in millions — Process Automation CHANGE CHANGE ($ millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable H1 2023 H1 2022 US$ Comparable Orders 1,669 1,819 -8% 6% 3,782 3,511 8% 29% Order backlog 6,821 6,170 11% 17% 6,821 6,170 11% 17% Revenues 1,553 1,529 2% 19% 2,989 3,035 -2% 17% Operational EBITA 239 224 7% 444 420 6% as % of operational revenues 15.4% 14.3% +1.1 pts 14.8% 13.7% +1.1 pts Cash flow from operating activities 188 193 -3% 300 253 19% No. of employees (FTE equiv.) 20,600 22,200 -7% Growth Q2 Q2 Change year-on-year Orders Revenues Comparable 6% 19% FX -2% -2% Portfolio changes -12% -15% Total -8% 2% ===== SIDA 9 ===== AB B IN TE RIM RE P ORT I Q2 20 23 9 Orders and revenues Orders declined by 23% (22% comparable) year-on-year, to $850 million. Consistent with the previous quarter, customers normalized order patterns, adjusting to an environment with shorter delivery lead times as supply chain constraints eased compared with last year. Some inventory adjustments among customers put additional sequential pressure on orders, mainly in China. These impacts are expected to persist into the third quarter. • Orders declined at a double-digit rate in both divisions on the back of stable development in the automotive segment against declines in the other segments, particularly in the machine automation and electronics segments. • Customer inventory adjustments were most prominent in Asia, Middle East and Africa where orders declined by 33% (29% comparable), weighed down by a significant decline in China. Europe also dropped by 23% (24% comparable) while the Americas recorded an increase of 4% (4% comparable), supported by good momentum in Canada and Mexico. • Execution of the high order backlog drove the strong revenue growth of 26% (27% comparable), with a similar pattern in both divisions. While higher volumes were the main driver for growth, pricing also contributed materially on the back of last year's implemented actions. Profit Operational EBITA more than doubled to $141 million from last year’s low level when earnings were impacted by Covid-related shut-downs and strained supply chains. Improved operational performance supported the 710 basis points increase in Operational EBITA margin, to 15.3%, the highest level in several years. • Operational leverage on higher volumes in production was the main driver for higher earnings and margin. • Positive impact from earlier implemented price actions significantly contributed to the improved profitability. Pricing more than offset inflation in labor with additional support from lower input and freight costs. • Both divisions recorded margins of above 15% in the period. 2’500 3’000 3’500 4’000 4’500 350 600 850 1’100 1’350 2021 2022 2023 Orders Revenues Orders 12M rolling Orders and Revenues $ in millions 12M $ in millions — Robotics & Discrete Automation CHANGE CHANGE ($ millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable H1 2023 H1 2022 US$ Comparable Orders 850 1,109 -23% -22% 1,851 2,417 -23% -21% Order backlog 2,657 2,728 -3% -2% 2,657 2,728 -3% -2% Revenues 922 732 26% 27% 1,859 1,462 27% 31% Operational EBITA 141 60 135% 281 109 158% as % of operational revenues 15.3% 8.2% +7.1 pts 15.1% 7.4% +7.7 pts Cash flow from operating activities 44 56 -21% 174 27 544% No. of employees (FTE equiv.) 10,900 10,800 1% Growth Q2 Q2 Change year-on-year Orders Revenues Comparable -22% 27% FX -1% -1% Portfolio changes 0% 0% Total -23% 26% 0% 5% 10% 15% 20% 0 40 80 120 160 2021 2022 2023 Operational EBITA Income from operations Operational EBITA margin % Income from operations & Operational EBITA $ in millions ===== SIDA 10 ===== AB B IN TE RIM RE P ORT I Q2 20 23 10 Quarterly highlights • ABB is collaborating with Lhyfe, a world pioneer in the production of renewable hydrogen, and Skyborn, a global leader in renewable energy, to jointly realize and optimize one of Europe’s most ambitious renewable hydrogen projects ever, SoutH2Port. Powered by Skyborn’s planned offshore wind farm, the plant in Söderhamn, Sweden, will produce around 240 tons of hydrogen per day, equivalent to around 1.8 million barrels of oil per annum. ABB will apply critical expertise to optimize the integration of the hydrogen and electricity production across the entire ecosystem including automation, electrical and digital technologies. • From June 17 to 25, the Special Olympics World Games took place in Berlin and for the first time in Germany where 7,000 athletes with diverse abilities from more than 190 countries competed in 26 sports with the motto #Unbeatabletogether. Around 150 ABB employees volunteered to support the athletes during the exciting and inspiring competitions. ABB Germany has been a supporting partner of the Special Olympics at the local and state levels games for 23 years. • A pilot project between ABB Robotics and US non- profit organization Junglekeepers demonstrated the role Cloud technology can play in making reforestation faster, more efficient and scalable. ABB’s cobot YuMi automated planting tasks in a jungle laboratory in the Amazon, speeding the process and allowing Junglekeepers’ volunteers to focus on more impactful work. Through ABB RobotStudio Cloud technology, ABB experts simulated, refined and deployed the programming required for YuMi’s tasks in the jungle from 12,000 kms away in Sweden – enabling the world’s most remote robot. • ABB has won a 2023 Global Water Award in the category “Smart Water Project of the Year” for its collaboration with Wellington Water, the water services provider for the Wellington region of New Zealand. ABB’s state-of- the-art instrumentation technology and variable frequency drives enables Wellington Water to measure and store data about the water flow in real time and delivers up to 10% in energy savings per month. • In May 2023, ABB E-mobility and Scania successfully undertook a first test for the development of a megawatt charging system, representing the next milestone in the development of an efficient, high power charging solution for heavy duty vehicles. The technology will enable half the charging time for heavy duty vehicles. Developing a solution to fast charge these commercial electric vehicles, which will also deliver significant range, is a major step towards increasing sales of heavy-duty vehicles that can be driven fossil-free. 0 150 300 450 600 750 0 50 100 150 200 2021 2022 2023 Ktons of CO₂ equivalent emissions (Scope 1&2) Ktons of CO₂ equivalent emissions (Scope 1&2), R12M Scope 1&2 Ktons Ktons, R12M CO2e 0.00 0.05 0.10 0.15 0.20 2021 2022 2023 LTIFR, frequency/200,000 working hours LTIFR, frequency/200,000 working hours, R12M Lost Time Injury Frequency Rate LTIFR — Sustainability Q2 2023 Q2 2022 CHANGE 12M ROLLING CO₂e own operations emissions, Ktons scope 1 and 21,3 52 73 -28% 201 Lost Time Injury Frequency Rate (LTIFR), frequency / 200,000 working hours 2 0.12 0.17 -32% 0.13 Share of females in senior management positions, % 20.2 16.8 +3.4 pts 18.6 1 CO₂ equivalent emissions from site, energy use, SF₆ and fleet, previous quarter 2 Current quarter Includes all incidents reported until July 10, 2023 3 Q2 2022 emission data was restated from 88.8 to 72.6 Ktons of CO₂e to reflect the application of green energy certificates retrospectively. Q2 outcome • 28% reduction of CO₂e emissions in own operations mainly driven by shifting to green electricity in our operations. • 32% decrease in LTIFR due to a decrease in incidents in absolute numbers. • 3.4%-points increase in share of women in senior management, demonstrating strong progress towards our target. ===== SIDA 11 ===== AB B IN TE RIM RE P ORT I Q2 20 23 11 During Q2 2023 • On April 3, ABB launched its previously announced new share buyback program of up to $1 billion. The maximum number of shares that may be repurchased under this new program on any given trading day is 762,196. • On April 25, ABB announced its plans to delist its American Depositary Receipts (ADRs) from the New York Stock Exchange (NYSE), and ultimately to seek to deregister its ADRs and the underlying shares under the US Securities Act of 1934 (The Securities Exchange Act). The delisting became effective on May 23 and the ADR program was converted into a sponsored Level I ADR program, trading on the US over-the-counter (OTC) market. • On June 7, ABB announced that following the completion of the cancellation of 82,742,500 of its shares, ABB held 20,845,438 of its own shares, which corresponds to 1.1 percent of total share capital and voting rights in the company. This includes 4,269,700 shares purchased for capital reduction. ABB’s total number of issued shares, including shares held in treasury, amounts to 1,882,002,575. After Q2 2023 • On July 3, ABB announced the closing of the divestment of Power Conversion division at around $500 million. As a result, ABB expects to record a non- operational book gain estimated at approximately $50 million in Income from operations in the third quarter of 2023. With this transaction, ABB has completed all divisional portfolio divestments announced at the end of 2020. The demand for ABB’s offering remained strong in the first six months of 2023. Weakness in the residential construction market and some softening in the short- cycle business from last year's high level was offset by strong momentum in the long-cycle business driven predominantly by the medium voltage segment and process related industries. Orders increased in three out of four business areas and remained stable (up 6% comparable) for ABB at $18,117 million. Revenues supported by strong backlog execution amounted to $16,022 million, up by 13% (19% comparable), overall implying a book-to-bill of 1.13. Income from operations amounted to $2,496 million, up from $1,444 million in the first half 2022, mostly reflecting improved operational performance. Additionally, the result in the same period last year included charges totalling approximately $250 million triggered by the exit of a legacy project in non-core and the decision to exit Russian operations. Operational EBITA improved by 27% year-on-year to $2,702 million and the Operational EBITA margin increased by 200 basis points to 16.9%, significantly higher in all business areas compared to the same period last year. Performance was driven by operating leverage from backlog execution as well as benefits from successful price management, which more than offset cost inflation mainly related to labor. Corporate and Other Operational EBITA amounted to -$254 million, out of which -$95 million related to the E-mobility business, which was hampered by some inventory related provisions as well as technology investments triggered by a shift back to a more focused product strategy to secure a continued leading market position. Net finance expenses increased $17 million to $46 million, while non-operational pension credits declined by $53 million to $15 million compared to the same period last year, mainly due to higher interest rates. Income tax expense was $468 million with a tax rate of 19.0%, including a net benefit from the favorable resolution of a prior year tax matter relating to the divestment of the Power Grids business. Net income attributable to ABB was $1,942 million, up from $983 million year-on-year. Basic earnings per share was $1.04 more than doubling from the same period last year. Significant events First six months 2023 ===== SIDA 12 ===== AB B IN TE RIM RE P ORT I Q2 20 23 12 Acquisitions Company/unit Closing date Revenues, $ million1 No. of employees 2023 Electrification Eve Systems 1-Jun ~20 50 Motion Siemens low voltage NEMA Motors 2-May ~60 600 2022 Motion PowerTech Converter business 1-Dec ~60 300 Electrification ASKI Industrie Elektronik GmbH 3-Oct ~2 16 Electrification Numocity Technologies Private Ltd. (majority stake) 22-Jul <1 20 Acquisitions and divestments, last twelve months ABB Group Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2023 Q2 2023 EBITDA, $ in million 1,067 794 906 1,384 4,151 1,389 1,494 Return on Capital Employed, % n.a. n.a. n.a. n.a. 16.50 n.a. n.a. Net debt/Equity 0.20 0.34 0.34 0.21 0.21 0.30 0.31 Net debt/ EBITDA 12M rolling 0.4 0.7 0.7 0.7 0.7 0.9 0.8 Net working capital, % of 12M rolling revenues 12.1% 12.8% 11.7% 11.1% 11.1% 13.9% 14.7% Earnings per share, basic, $ 0.31 0.20 0.19 0.61 1.30 0.56 0.49 Earnings per share, diluted, $ 0.31 0.20 0.19 0.60 1.30 0.55 0.48 Dividend per share, CHF n.a. n.a. n.a. n.a. 0.84 n.a. n.a. Share price at the end of period, CHF 1 29.12 24.57 24.90 28.06 28.06 31.37 35.18 Share price at the end of period, $ 1 30.76 25.43 24.41 30.46 30.46 34.30 39.32 Number of employees (FTE equivalents) 104,720 106,380 106,830 105,130 105,130 106,170 108,320 No. of shares outstanding at end of period (in millions) 1,929 1,892 1,875 1,865 1,865 1,862 1,860 1 Data prior to October 3, 2022, has been adjusted for the Accelleron spin-off (Source: FactSet). Additional figures Divestments Company/unit Closing date Revenues, $ million1 No. of employees 2023 Process Automation UK technical engineering consultancy business 1-May ~20 160 2022 Hitachi Energy JV (Power Grids, 19.9% stake) 28-Dec Note: comparable growth calculation includes acquisitions and divestments with revenues of greater than $50 million. 1 Represents the estimated revenues for the last fiscal year prior to the announcement of the respective acquisition/divestment unless otherwise stated. Additional 2023 guidance ($ in millions, unless otherwise stated) FY 20231 Q3 2023 Corporate and Other Operational EBITA2 ~(300) ~(75) unchanged Non-operating items Acquisition-related amortization ~(220) ~(55) unchanged Restructuring and related3 ~(150) ~(40) unchanged ABB Way transformation ~(180) ~(50) unchanged ($ in millions, unless otherwise stated) FY 2023 Net finance expenses ~(130) from ~(150) Effective tax rate ~21% 4 unchanged Capital Expenditures ~(800) unchanged 1 Excludes one project estimated to a total of ~$100 million, that is ongoing in the non-core business. Exact exit timing is difficult to assess due to legal proceedings etc. 2 Excludes Operational EBITA from E-mobility business. 3 Includes restructuring and restructuring-related as well as separation costs. 4 Includes net positive tax impact of $206 million linked to a favorable resolution of certain prior year tax matters in Q1 2023 but excludes the impact of acquisitions or divestments or any significant non-operational items. ===== SIDA 13 ===== AB B IN TE RIM RE P ORT I Q2 20 23 13 This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business, including those in the sections of this release titled “CEO summary,” “Outlook,” “Earnings,” “Balance sheet & cash flow,” “Sustainability” and “Significant events”. 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. These expectations, estimates and projections are generally identifiable by statements containing words such as “anticipates,” “expects,” “estimates,” “plans,” “targets,” “likely” 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. Some 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. The Q2 2023 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations. A conference call and webcast for analysts and investors is scheduled to begin today at 10:00 a.m. CET. To pre-register for the conference call or to join the webcast, please refer to the ABB website: www.abb.com/investorrelations. The recorded session will be available after the event on ABB’s website. Important notice about forward-looking information For additional information please contact: Media Relations Phone: +41 43 317 71 11 Email: media.relations@ch.abb.com Investor Relations Phone: +41 43 317 71 11 Email: investor.relations@ch.abb.com ABB Ltd Affolternstrasse 44 8050 Zurich Switzerland Q2 results presentation on July 20, 2023 ABB (ABBN: SIX Swiss Ex) is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company’s solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated. Building on more than 130 years of excellence, ABB’s ~105,000 employees are committed to driving innovations that accelerate industrial transformation. Financial calendar 2023 October 18 Q3 2023 results November 30 Capital Markets Day in Frosinone, Italy ===== SIDA 14 ===== 1 Q2 2023 FINANCIAL INFORMATION July 20, 2023 Q2 2023 Financial information ===== SIDA 15 ===== 2 Q2 2023 FINANCIAL INFORMATION — Financial Information Contents 03 ─ 07 Key Figures 08 ─ 33 Consolidated Financial Information (unaudited) 34 ─ 46 Supplemental Reconciliations and Definitions ===== SIDA 16 ===== 3 Q2 2023 FINANCIAL INFORMATION — Key Figures CHANGE ($ in millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Comparable(1) Orders 8,667 8,807 -2% 2% Order backlog (end June) 21,938 19,477 13% 14% Revenues 8,163 7,251 13% 17% Gross Profit 2,888 2,290 26% as % of revenues 35.4% 31.6% +3.8 pts Income from operations 1,298 587 121% Operational EBITA(1) 1,425 1,136 25% 26%(2) as % of operational revenues(1) 17.5% 15.5% +2 pts Income from continuing operations, net of tax 932 406 130% Net income attributable to ABB 906 379 139% Basic earnings per share ($) 0.49 0.20 145%(3) Cash flow from operating activities (4) 760 382 99% Cash flow from operating activities in continuing operations 759 385 97% CHANGE ($ in millions, unless otherwise indicated) H1 2023 H1 2022 US$ Comparable(1) Orders 18,117 18,180 0% 6% Revenues 16,022 14,216 13% 19% Gross Profit 5,604 4,571 23% as % of revenues 35.0% 32.2% +2.8 pts Income from operations 2,496 1,444 73% Operational EBITA(1) 2,702 2,133 27% 29%(2) as % of operational revenues(1) 16.9% 14.9% +2 pts Income from continuing operations, net of tax 1,997 1,049 90% Net income attributable to ABB 1,942 983 98% Basic earnings per share ($) 1.04 0.51 104%(3) Cash flow from operating activities (4) 1,042 (191) n.a. Cash flow from operating activities in continuing operations 1,043 (179) n.a. (1) For a reconciliation of non-GAAP measures see “Supplemental Reconciliations and Definitions” on page 34. (2) Constant currency (not adjusted for portfolio changes). (3) EPS growth rates are computed using unrounded amounts. (4) Cash flow from operating activities includes both continuing and discontinued operations. ===== SIDA 17 ===== 4 Q2 2023 FINANCIAL INFORMATION CHANGE ($ in millions, unless otherwise indicated) Q2 2023 Q2 2022 US$ Local Comparable Orders ABB Group 8,667 8,807 -2% 0% 2% Electrification 3,960 3,913 1% 3% 3% Motion 2,137 2,079 3% 4% 3% Process Automation 1,669 1,819 -8% -6% 6% Robotics & Discrete Automation 850 1,109 -23% -22% -22% Corporate and Other 264 77 Intersegment eliminations (213) (190) Order backlog (end June) ABB Group 21,938 19,477 13% 13% 14% Electrification 7,298 6,194 18% 19% 19% Motion 5,322 4,568 17% 16% 14% Process Automation 6,821 6,170 11% 12% 17% Robotics & Discrete Automation 2,657 2,728 -3% -2% -2% Corporate and Other (incl. intersegment eliminations) (160) (183) Revenues ABB Group 8,163 7,251 13% 14% 17% Electrification 3,735 3,414 9% 11% 11% Motion 1,981 1,626 22% 23% 22% Process Automation 1,553 1,529 2% 4% 19% Robotics & Discrete Automation 922 732 26% 27% 27% Corporate and Other 177 140 Intersegment eliminations (205) (190) Income from operations ABB Group 1,298 587 Electrification 713 474 Motion 380 231 Process Automation 270 175 Robotics & Discrete Automation 119 43 Corporate and Other (incl. intersegment eliminations) (184) (336) Income from operations % ABB Group 15.9% 8.1% Electrification 19.1% 13.9% Motion 19.2% 14.2% Process Automation 17.4% 11.4% Robotics & Discrete Automation 12.9% 5.9% Operational EBITA ABB Group 1,425 1,136 25% 26% Electrification 787 605 30% 33% Motion 401 266 51% 51% Process Automation 239 224 7% 9% Robotics & Discrete Automation 141 60 135% 141% Corporate and Other(1) (incl. intersegment eliminations) (143) (19) Operational EBITA % ABB Group 17.5% 15.5% Electrification 21.1% 17.6% Motion 20.4% 16.4% Process Automation 15.4% 14.3% Robotics & Discrete Automation 15.3% 8.2% Cash flow from operating activities ABB Group 760 382 Electrification 697 456 Motion 320 241 Process Automation 188 193 Robotics & Discrete Automation 44 56 Corporate and Other (incl. intersegment eliminations) (490) (561) Discontinued operations 1 (3) (1) Corporate and Other at Q2 2023 and Q2 2022 includes losses of $67 million and $6 million, respectively, relating to E-mobility. ===== SIDA 18 ===== 5 Q2 2023 FINANCIAL INFORMATION CHANGE ($ in millions, unless otherwise indicated) H1 2023 H1 2022 US$ Local Comparable Orders ABB Group 18,117 18,180 0% 3% 6% Electrification 8,101 8,025 1% 4% 4% Motion 4,399 4,281 3% 6% 5% Process Automation 3,782 3,511 8% 12% 29% Robotics & Discrete Automation 1,851 2,417 -23% -21% -21% Corporate and Other 460 382 Intersegment eliminations (476) (436) Order backlog (end June) ABB Group 21,938 19,477 13% 13% 14% Electrification 7,298 6,194 18% 19% 19% Motion 5,322 4,568 17% 16% 14% Process Automation 6,821 6,170 11% 12% 17% Robotics & Discrete Automation 2,657 2,728 -3% -2% -2% Corporate and Other Intersegment eliminations (160) (183) Revenues ABB Group 16,022 14,216 13% 16% 19% Electrification 7,325 6,650 10% 14% 14% Motion 3,921 3,198 23% 26% 25% Process Automation 2,989 3,035 -2% 2% 17% Robotics & Discrete Automation 1,859 1,462 27% 31% 31% Corporate and Other 346 254 Intersegment eliminations (418) (383) Income from operations ABB Group 2,496 1,444 Electrification 1,368 955 Motion 733 485 Process Automation 470 326 Robotics & Discrete Automation 234 65 Corporate and Other (incl. intersegment eliminations) (309) (387) Income from operations % ABB Group 15.6% 10.2% Electrification 18.7% 14.4% Motion 18.7% 15.2% Process Automation 15.7% 10.7% Robotics & Discrete Automation 12.6% 4.4% Operational EBITA ABB Group 2,702 2,133 27% 29% Electrification 1,464 1,117 31% 35% Motion 767 540 42% 46% Process Automation 444 420 6% 10% Robotics & Discrete Automation 281 109 158% 172% Corporate and Other(1) (incl. intersegment eliminations) (254) (53) Operational EBITA % ABB Group 16.9% 14.9% Electrification 20.0% 16.8% Motion 19.6% 16.9% Process Automation 14.8% 13.7% Robotics & Discrete Automation 15.1% 7.4% Cash flow from operating activities ABB Group 1,042 (191) Electrification 1,092 543 Motion 469 239 Process Automation 300 253 Robotics & Discrete Automation 174 27 Corporate and Other (incl. intersegment eliminations) (992) (1,241) Discontinued operations (1) (12) (1) Corporate and Other at H1 2023 and H1 2022 includes losses of $95 million and $8 million, respectively, relating to E-mobility. ===== SIDA 19 ===== 6 Q2 2023 FINANCIAL INFORMATION Operational EBITA Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions, unless otherwise indicated) Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Revenues 8,163 7,251 3,735 3,414 1,981 1,626 1,553 1,529 922 732 Foreign exchange/commodity timing differences in total revenues (10) 70 2 18 (11) (4) – 32 (1) 1 Operational revenues 8,153 7,321 3,737 3,432 1,970 1,622 1,553 1,561 921 733 Income from operations 1,298 587 713 474 380 231 270 175 119 43 Acquisition-related amortization 55 59 22 28 9 7 2 1 19 19 Restructuring, related and implementation costs(1) 13 264 4 8 1 – 2 – – 2 Changes in obligations related to divested businesses (8) (3) 1 – – – – – – – Gains and losses from sale of businesses (26) 4 – – – 4 (26) – – – Acquisition- and divestment-related expenses and integration costs 26 50 12 10 8 3 (2) 36 2 2 Certain other non-operational items 41 65 6 20 1 – – – 1 (1) Foreign exchange/commodity timing differences in income from operations 26 110 29 65 2 21 (7) 12 – (5) Operational EBITA 1,425 1,136 787 605 401 266 239 224 141 60 Operational EBITA margin (%) 17.5% 15.5% 21.1% 17.6% 20.4% 16.4% 15.4% 14.3% 15.3% 8.2% Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions, unless otherwise indicated) H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 Revenues 16,022 14,216 7,325 6,650 3,921 3,198 2,989 3,035 1,859 1,462 Foreign exchange/commodity timing differences in total revenues (26) 67 (20) 8 (11) (1) 10 31 – 6 Operational revenues 15,996 14,283 7,305 6,658 3,910 3,197 2,999 3,066 1,859 1,468 Income from operations 2,496 1,444 1,368 955 733 485 470 326 234 65 Acquisition-related amortization 109 119 44 56 17 15 3 2 39 40 Restructuring, related and implementation costs(1) 41 280 12 10 2 8 4 5 – 3 Changes in obligations related to divested businesses (5) (17) 1 – – – – – – – Gains and losses from sale of businesses (26) 4 – – – 4 (26) – – – Acquisition- and divestment-related expenses and integration costs 45 109 19 28 12 8 1 69 4 3 Certain other non-operational items 40 99 9 23 3 – – – 3 (1) Foreign exchange/commodity timing differences in income from operations 2 95 11 45 – 20 (8) 18 1 (1) Operational EBITA 2,702 2,133 1,464 1,117 767 540 444 420 281 109 Operational EBITA margin (%) 16.9% 14.9% 20.0% 16.8% 19.6% 16.9% 14.8% 13.7% 15.1% 7.4% (1) Includes impairment of certain assets. ===== SIDA 20 ===== 7 Q2 2023 FINANCIAL INFORMATION Depreciation and Amortization Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions) Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Depreciation 129 136 64 65 27 26 12 16 14 15 Amortization 67 71 27 34 10 9 3 3 20 20 including total acquisition-related amortization of: 55 59 22 28 9 7 2 1 19 19 Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions) H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 Depreciation 254 272 126 129 53 53 23 34 29 30 Amortization 133 145 54 68 20 18 5 6 40 41 including total acquisition-related amortization of: 109 119 44 56 17 15 3 2 39 40 Orders received and revenues by region ($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE Com- Com- Q2 23 Q2 22 US$ Local parable Q2 23 Q2 22 US$ Local parable Europe 2,931 2,958 -1% -1% 1% 2,935 2,508 17% 16% 20% The Americas 3,209 3,050 5% 5% 6% 2,815 2,397 17% 17% 19% of which United States 2,319 2,234 4% 4% 4% 2,092 1,746 20% 20% 21% Asia, Middle East and Africa 2,527 2,799 -10% -4% -1% 2,413 2,346 3% 9% 13% of which China 1,194 1,409 -15% -10% -9% 1,174 1,163 1% 6% 9% ABB Group 8,667 8,807 -2% 0% 2% 8,163 7,251 13% 14% 17% ($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE Com- Com- H1 23 H1 22 US$ Local parable H1 23 H1 22 US$ Local parable Europe 6,513 6,492 0% 3% 6% 5,807 5,026 16% 18% 21% The Americas 6,194 5,947 4% 4% 6% 5,468 4,566 20% 20% 22% of which United States 4,449 4,459 0% 0% 1% 4,076 3,328 22% 23% 24% Asia, Middle East and Africa 5,410 5,741 -6% 2% 5% 4,747 4,624 3% 11% 15% of which China 2,549 2,946 -13% -8% -6% 2,328 2,263 3% 10% 12% ABB Group 18,117 18,180 0% 3% 6% 16,022 14,216 13% 16% 19% ===== SIDA 21 ===== 8 Q2 2023 FINANCIAL INFORMATION — Consolidated Financial Information ABB Ltd Consolidated Income Statements (unaudited) Six months ended Three months ended ($ in millions, except per share data in $) Jun. 30, 2023 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022 Sales of products 13,530 11,762 6,886 6,013 Sales of services and other 2,492 2,454 1,277 1,238 Total revenues 16,022 14,216 8,163 7,251 Cost of sales of products (8,946) (8,222) (4,528) (4,254) Cost of services and other (1,472) (1,423) (747) (707) Total cost of sales (10,418) (9,645) (5,275) (4,961) Gross profit 5,604 4,571 2,888 2,290 Selling, general and administrative expenses (2,727) (2,556) (1,388) (1,317) Non-order related research and development expenses (637) (572) (333) (295) Other income (expense), net 256 1 131 (91) Income from operations 2,496 1,444 1,298 587 Interest and dividend income 78 33 38 20 Interest and other finance expense (124) (62) (63) (40) Non-operational pension (cost) credit 15 68 8 32 Income from continuing operations before taxes 2,465 1,483 1,281 599 Income tax expense (468) (434) (349) (193) Income from continuing operations, net of tax 1,997 1,049 932 406 Loss from discontinued operations, net of tax (9) (20) (4) (9) Net income 1,988 1,029 928 397 Net income attributable to noncontrolling interests and redeemable noncontrolling interests (46) (46) (22) (18) Net income attributable to ABB 1,942 983 906 379 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 1,951 1,003 910 388 Loss from discontinued operations, net of tax (9) (20) (4) (9) Net income 1,942 983 906 379 Basic earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.05 0.52 0.49 0.20 Loss from discontinued operations, net of tax 0.00 (0.01) 0.00 0.00 Net income 1.04 0.51 0.49 0.20 Diluted earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.04 0.52 0.49 0.20 Loss from discontinued operations, net of tax 0.00 (0.01) 0.00 0.00 Net income 1.04 0.51 0.48 0.20 Weighted-average number of shares outstanding (in millions) used to compute: Basic earnings per share attributable to ABB shareholders 1,861 1,922 1,862 1,909 Diluted earnings per share attributable to ABB shareholders 1,873 1,935 1,873 1,918 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 22 ===== 9 Q2 2023 FINANCIAL INFORMATION — ABB Ltd Condensed Consolidated Statements of Comprehensive Income (unaudited) Six months ended Three months ended ($ in millions) Jun. 30, 2023 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022 Total comprehensive income, net of tax 1,914 708 761 131 Total comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests, net of tax (43) (26) (13) (3) Total comprehensive income attributable to ABB shareholders, net of tax 1,871 682 748 128 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 23 ===== 10 Q2 2023 FINANCIAL INFORMATION — ABB Ltd Consolidated Balance Sheets (unaudited) ($ in millions) Jun. 30, 2023 Dec. 31, 2022 Cash and equivalents 2,923 4,156 Restricted cash 19 18 Marketable securities and short-term investments 1,193 725 Receivables, net 7,481 6,858 Contract assets 1,010 954 Inventories, net 6,448 6,028 Prepaid expenses 290 230 Other current assets 500 505 Current assets held for sale and in discontinued operations 628 96 Total current assets 20,492 19,570 Property, plant and equipment, net 3,923 3,911 Operating lease right-of-use assets 852 841 Investments in equity-accounted companies 154 130 Prepaid pension and other employee benefits 964 916 Intangible assets, net 1,257 1,406 Goodwill 10,420 10,511 Deferred taxes 1,320 1,396 Other non-current assets 474 467 Total assets 39,856 39,148 Accounts payable, trade 4,881 4,904 Contract liabilities 2,394 2,216 Short-term debt and current maturities of long-term debt 3,849 2,535 Current operating leases 223 220 Provisions for warranties 1,076 1,028 Other provisions 1,124 1,171 Other current liabilities 4,277 4,323 Current liabilities held for sale and in discontinued operations 207 132 Total current liabilities 18,031 16,529 Long-term debt 4,451 5,143 Non-current operating leases 652 651 Pension and other employee benefits 721 719 Deferred taxes 699 729 Other non-current liabilities 1,853 2,085 Non-current liabilities held for sale and in discontinued operations 20 20 Total liabilities 26,427 25,876 Commitments and contingencies Redeemable noncontrolling interest 89 85 Stockholders’ equity: Common stock, CHF 0.12 par value (1,882 million and 1,965 million shares issued at June 30, 2023, and December 31, 2022, respectively) 163 171 Additional paid-in capital 11 141 Retained earnings 17,958 20,082 Accumulated other comprehensive loss (4,627) (4,556) Treasury stock, at cost (22 million and 100 million shares at June 30, 2023, and December 31, 2022, respectively) (709) (3,061) Total ABB stockholders’ equity 12,796 12,777 Noncontrolling interests 544 410 Total stockholders’ equity 13,340 13,187 Total liabilities and stockholders’ equity 39,856 39,148 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 24 ===== 11 Q2 2023 FINANCIAL INFORMATION — ABB Ltd Consolidated Statements of Cash Flows (unaudited) Six months ended Three months ended ($ in millions) Jun. 30, 2023 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022 Operating activities: Net income 1,988 1,029 928 397 Loss from discontinued operations, net of tax 9 20 4 9 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 387 417 196 207 Changes in fair values of investments (24) (15) (11) 9 Pension and other employee benefits (12) (83) (13) (37) Deferred taxes 37 (148) 11 (32) Loss (income) from equity-accounted companies 7 62 – 14 Net loss (gain) from derivatives and foreign exchange (54) 77 (17) 105 Net gain from sale of property, plant and equipment (33) (55) (7) (23) Net loss (gain) from sale of businesses (26) 4 (26) 4 Other 92 63 65 27 Changes in operating assets and liabilities: Trade receivables, net (667) (621) (301) (304) Contract assets and liabilities 79 252 69 145 Inventories, net (450) (1,083) (186) (541) Accounts payable, trade (2) 213 (29) 206 Accrued liabilities (202) (255) 122 135 Provisions, net 56 126 16 179 Income taxes payable and receivable (86) (52) 29 (66) Other assets and liabilities, net (56) (130) (91) (49) Net cash provided by (used in) operating activities – continuing operations 1,043 (179) 759 385 Net cash provided by (used in) operating activities – discontinued operations (1) (12) 1 (3) Net cash provided by (used in) operating activities 1,042 (191) 760 382 Investing activities: Purchases of investments (760) (256) (100) (128) Purchases of property, plant and equipment and intangible assets (331) (338) (180) (151) Acquisition of businesses (net of cash acquired) and increases in cost- and equity-accounted companies (135) (179) (116) (34) Proceeds from sales of investments 176 506 156 201 Proceeds from maturity of investments 138 – 138 – Proceeds from sales of property, plant and equipment 57 66 26 31 Proceeds from sales of businesses (net of transaction costs and cash disposed) and cost- and equity-accounted companies 43 (13) 43 (13) Net cash from settlement of foreign currency derivatives (18) 56 (54) (10) Changes in loans receivable, net 1 9 (7) (2) Other investing activities 9 (17) 10 (16) Net cash used in investing activities – continuing operations (820) (166) (84) (122) Net cash used in investing activities – discontinued operations (21) (91) (16) (70) Net cash used in investing activities (841) (257) (100) (192) Financing activities: Net changes in debt with original maturities of 90 days or less (35) 1,191 679 (114) Increase in debt 1,648 3,181 15 639 Repayment of debt (1,128) (1,483) (1,092) (1,442) Delivery of shares 96 370 1 – Purchase of treasury stock (476) (2,661) (202) (1,100) Dividends paid (1,713) (1,698) (419) (809) Dividends paid to noncontrolling shareholders (83) (76) (80) (75) Proceeds from issuance of subsidiary shares 328 – (13) – Other financing activities – (53) (12) (19) Net cash used in financing activities – continuing operations (1,363) (1,229) (1,123) (2,920) Net cash provided by financing activities – discontinued operations – – – – Net cash used in financing activities (1,363) (1,229) (1,123) (2,920) Effects of exchange rate changes on cash and equivalents and restricted cash (42) (76) (37) (80) Adjustment for the net change in cash and equivalents and restricted cash in Assets held for sale (28) – (15) – Net change in cash and equivalents and restricted cash (1,232) (1,753) (515) (2,810) Cash and equivalents and restricted cash, beginning of period 4,174 4,489 3,457 5,546 Cash and equivalents and restricted cash, end of period 2,942 2,736 2,942 2,736 Supplementary disclosure of cash flow information: Interest paid 108 36 60 27 Income taxes paid 527 638 320 298 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 25 ===== 12 Q2 2023 FINANCIAL INFORMATION — ABB Ltd Consolidated Statements of Changes in Stockholders’ Equity (unaudited) ($ in millions) Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total ABB stockholders’ equity Non- controlling interests Total stockholders’ equity Balance at January 1, 2022 178 22 22,477 (4,088) (3,010) 15,579 378 15,957 Net income(1) 983 983 48 1,031 Foreign currency translation adjustments, net of tax of $1 (392) (392) (22) (414) Effect of change in fair value of available-for-sale securities, net of tax of $(4) (17) (17) (17) Unrecognized income (expense) related to pensions and other postretirement plans, net of tax of $37 106 106 106 Change in derivative instruments and hedges, net of tax of $2 2 2 2 Changes in noncontrolling interests (2) (2) (13) (15) Dividends to noncontrolling shareholders – (74) (74) Dividends to shareholders (1,700) (1,700) (1,700) Cancellation of treasury shares (8) (4) (2,864) 2,876 – – Share-based payment arrangements 28 28 28 Purchase of treasury stock (2,693) (2,693) (2,693) Delivery of shares (38) (130) 538 370 370 Other 6 6 6 Balance at June 30, 2022 171 12 18,767 (4,389) (2,290) 12,271 315 12,586 Balance at January 1, 2023 171 141 20,082 (4,556) (3,061) 12,777 410 13,187 Net income(1) 1,942 1,942 47 1,989 Foreign currency translation adjustments, net of tax of $(2) (76) (76) (3) (79) Effect of change in fair value of available-for-sale securities, net of tax of $2 7 7 7 Unrecognized income (expense) related to pensions and other postretirement plans, net of tax of $4 (5) (5) (5) Change in derivative instruments and hedges, net of tax of $1 3 3 3 Issuance of subsidiary shares 170 170 168 338 Other changes in noncontrolling interests (6) (6) 4 (2) Dividends to noncontrolling shareholders – (84) (84) Dividends to shareholders (1,706) (1,706) (1,706) Cancellation of treasury shares (7) (201) (2,359) 2,567 – – Share-based payment arrangements 62 62 1 63 Purchase of treasury stock (464) (464) (464) Delivery of shares (153) 249 96 96 Other (3) (3) (3) Balance at June 30, 2023 163 11 17,958 (4,627) (709) 12,796 544 13,340 (1) Amounts attributable to noncontrolling interests for the six months ended June 30, 2023 and 2022, exclude net losses of $2 million and $2 million, respectively, related to redeemable noncontrolling interests, which are reported in the mezzanine equity section on the Consolidated Balance Sheets. See Note 4 for details. Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 26 ===== 13 Q2 2023 FINANCIAL INFORMATION — Notes to the Consolidated Financial Information (unaudited) ─ Note 1 The Company and basis of presentation ABB Ltd and its subsidiaries (collectively, the Company) together form a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The Company’s solutions connect engineering know -how and software to optimize how things are manufactured, moved, powered and operated. The Company’s Consolidated Financial Information is prepared in accordance with United States of America generally accepted accounting principles (U.S. GAAP) for interim financial reporting. As such, the Consolidated Financial Information does not include all the informa tion and notes required under U.S. GAAP for annual consolidated financial statements. Therefore, such financial information should be read in conjunction w ith the audited consolidated financial statements in the Company’s Annual Report for the year ended December 31, 2022. The preparation of financial information in conformity with U.S. GAAP requires management to make assumptions and estimates t hat directly affect the amounts reported in the Consolidated Financial Information. These accounting assumptions and estimates include: • estimates to determine valuation allowances for deferred tax assets and amounts recorded for unrecognized tax benefits, • estimates related to credit losses expected to occur over the remaining life of financial assets such as trade and other rece ivables, loans and other instruments, • estimates used to record expected costs for employee severance in connection with restructuring programs, • estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environme ntal damages, product warranties, self-insurance reserves, regulatory and other proceedings, • assumptions and projections, principally related to future material, labor and project -related overhead costs, used in determining the percentage-of-completion on projects where revenue is recognized over time , as well as the amount of variable consideration the Company expects to be entitled to, • assumptions used in the calculation of pension and postretirement benefits and the fair value of p ension plan assets, • assumptions used in determining inventory obsolescence and net realizable value, • growth rates, discount rates and other assumptions used to determine impairment of long -lived assets and in testing goodwill for impairment, • estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations, and • estimates and assumptions used in determining the initial fair value of retained noncontrolling interest s and certain obligations in connection with divestments. The actual results and outcomes may differ from the Company’s estimates and assumptions. A portion of the Company’s activities (primarily long-term construction activities) has an operating cycle that exceeds one year. For classifi cation of current assets and liabilities related to such activities, the Company elected to use the duration of the individual contract s as its operating cycle. Accordingly, there are accounts receivable, contract assets, inventories and provisions related to these contracts which will not be realized within one year that have been classified as current. Basis of presentation In the opinion of management, the unaudited Consolidated Financial Information contains all necessary adjustments to present fairly the financial position, results of operations and cash flows for the reported periods. Management consi ders all such adjustments to be of a normal recurring nature. The Consolidated Financial Information is presented in United States dollars ($) unless otherwise stated. Due to rounding, nu mbers presented in the Consolidated Financial Information may not add to the totals provided. Certain amounts reported in the Consolidated Financial Information for prior periods have been reclassified to conform to the current year’s presentation. These changes relate primarily to the reorganization of the Company’s operating segments (see Note 17 for details). ===== SIDA 27 ===== 14 Q2 2023 FINANCIAL INFORMATION ─ Note 2 Recent accounting pronouncements Applicable for current periods Disclosure about supplier finance program obligations In January 2023, the Company adopted an accounting standard update which requires entities to disclose information related to supplier finan ce programs. Under the update, the Company is required to disclose annually (i) the key terms of the program, (ii) the amount of the supplier finance obligations outstanding and where those obligations are presented in the balance sheet at the reporting date, and (iii) a rollforward of the supplier finance obligation program within the reporting period. The Company adopted this update retrospectively for all in-scope transactions, with the exception of the rollforward disclosures, which will be adopted prospectively for annual periods beginning January 1, 2024. Apart from the additional disclosure requirements, this update does not have a significant impact on the Company’s consolidated financial statements. The total outstanding supplier finance obligation included in “Accounts payable, trade” in the Consolidated Balance Sheets at June 30, 2023 and December 31, 2022, amounted to $457 million and $477 million, respectively. The Company’s payment terms related to suppliers’ finance programs are not impacted by the suppliers’ decisions to sell amounts under the arrangements and are typically consistent with local m arket practices. Facilitation of the effects of reference rate reform on financial reporting In January 2023, the Company adopted an accounting standard update which provides temporary optional expedients and exce ptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected marke t transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The Company is applying this standard update as relevant contract and hedge accounting relationship modifications are m ade during the course of the transition period ending December 31, 2024. This update does not have a significant impact on the Company’s consolidated financial statements. ─ Note 3 Discontinued operations and assets held for sale Divestment of the Power Grids business In 2020, the Company completed the divestment of its Power Grids business to Hitachi Ltd (Hitachi). Upon closing of the sale, the Company entered into various transition services agreements (TSAs), some of which continue to have services performed . Pursuant to these TSAs, the Company and Hitachi Energy provide to each other, on a transitional basis, various services. The services provided by the Company primarily include finance, information technology, human resources and certain other administrative services. The TSAs were to be performed for up to 3 years with the possibility to agree on extensions on an exceptional basis for business-critical services which are reasonably necessary to avoid a material adverse impact on the business. The TSA for information technology services was extended until mid -2025. In the six and three months ended June 30, 2023, the Company has recognized within its continuing operations, general and administrative expense s incurred to perform the TSAs, offset by $76 million and $39 million in TSA-related income for such services that is reported in Other income (expense), net. In the six and three months ended June 30, 2022, the Company has recognized within its continuing operations, general and administrative expenses incurred to perform the TSA s, offset by $76 million and $38 million in TSA-related income for such services that is reported in Other income (expense), net. Discontinued operations As a result of the sale of the Power Grids business, substantially all Power Grids-related assets and liabilities have been sold. As this divestment represented a strategic shift that would have a major effect on the Company’s operations and financial results, th e results of operations for this business are presented as discontinued operations and the assets and liabilities are presented as held for sale and in discontinued operations. Certain of the business contracts in the Power Grids business continue to be executed by subsidiaries of the Company for the benefit/ risk of Hitachi Energy. Assets and liabilities relating to, as well as the net financial results of, these contracts will continue to be included in discontinue d operations until they have been completed or otherwise transferred to Hitachi Energy. The remaining business activities of the Power Grids business being executed by the Company is not significant. In addition, the Company also has retained obligations (primarily for environmental and taxes) related to other businesses di sposed or otherwise exited that qualified as discontinued operations at the time of their disposal. Changes to these retained obligations are also included in Loss from discontinued operations, net of tax. At June 30, 2023, the balances reported as held for sale and in discontinued operations pertain ing to the activities of the Power Grids business and other obligations will remain with the Company until such time as the obligation s are settled or the activities are fully wound down . These balances amounted to $74 million of current assets, $97 million of current liabilities and $20 million of non-current liabilities. Planned business divestments classified as held for sale The Company classifies its long-lived assets or disposal groups to be sold as held for sale in the period in which all of the held for sale criteria are met. The Company initially measures a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any resulting loss is recognized in the period in which the held for sale criteria are met , while gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. The Company assesses the fair value of a long -lived asset or disposal group less any costs to sell at each reporting period and until the asset or disposal group is no longer classified as held for sale. In January 2023, the Company entered into an agreement to divest its Power Conversion Division to AcBel Polytech Inc . for cash proceeds of $505 million. The Power Conversion Division is part of the Company’s Electrification operating segment and the divestment, subject to regulatory approvals, is expected to be completed in the second half of 2023. ===== SIDA 28 ===== 15 Q2 2023 FINANCIAL INFORMATION As this planned divestment does not qualify as a discontinued operation, the results of operations for this business are included in the Comp any’s continuing operations for all periods presented. The assets and liabilities of this business are shown as assets and liabilit ies held for sale in the Company’s Consolidated Balance Sheet at June 30, 2023. The carrying amounts of the major classes of assets and liabilities held for sale relating to this planned divestment are as follows: ($ in millions) June 30, 2023 Assets Receivables, net 97 Inventories, net 104 Property, plant and equipment, net 44 Other intangible assets, net 74 Goodwill 175 Other assets 60 Current assets held for sale 554 Liabilities Accounts payable, trade 48 Other liabilities 62 Current liabilities held for sale 110 In the six and three months ended June 30, 2023, Income from continuing operations before taxes includes income of $ 30 million and $13 million, respectively, from the Power Conversion Division. In the six and three months ended June 30, 2022, Income from continuing operations before taxes includes income of $12 million and $11 million, respectively, from this Division. Subsequent events On July 3, 2023, the Company completed the divestment of its Power Conversion Division to AcBel Polytech Inc. ─ Note 4 Acquisitions and equity-accounted companies Acquisition of controlling interests Acquisitions of controlling interests were as follows: Six months ended June 30, Three months ended June 30, ($ in millions, except number of acquired businesses) 2023 2022 2023 2022 Purchase price for acquisitions (net of cash acquired) (1) 114 138 113 - Aggregate excess of purchase price over fair value of net assets acquired(2) 54 191 50 - Number of acquired businesses 2 1 2 - (1) Excluding changes in cost- and equity-accounted companies. (2) Recorded as goodwill. In the table above, the “Purchase price for acquisitions” and “Aggregate excess of purchase price over fair value of net assets acquired” amounts in the six months ended June 30, 2022, relate primarily to the acquisition of InCharge Energy, Inc. (In-Charge). Acquisitions of controlling interests have been accounted for under the acquisition method and have been included in the Comp any’s consolidated financial statements since the date of acquisition. On January 26, 2022, the Company increased its ownership in In -Charge to a 60 percent controlling interest through a stock purchase agreement. In-Charge is headquartered in Santa Monica, USA, and is a provider of turn -key commercial electric vehicle charging hardware and software solutions. The resulting cash outflows for the Company amounted to $13 4 million (net of cash acquired of $4 million). The acquisition expands the market presence of the E-mobility operating segment, particularly in the North American market. In connection with the acquisition, the Company’s pre-existing 13.2 percent ownership of In-Charge was revalued to fair value and a gain o f $32 million was recorded in “Other income (expense), net” in the six months ended June 30, 2022. The Company entered into an agreement with the remaining noncontr olling shareholders allowing either party to put or call the remaining 40 percent of the shares until 2027. The amount for which either party can exercise their option is dependent on a formula based on revenues and thus, the amount is subject to change. As a result of this agreement, the noncontrolling interest is classified as Redeemable noncontrolling interest (i.e. mezzanine equity) in the Consolidated Balance Sheets and was initially recognized at fair value. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value assets ac quired and liabilities assumed at the acquisition date, the purchase price allocation for acquisiti ons is preliminary for up to 12 months after the acquisition date and is subject to refinement as more detailed analyses are completed and additional information about the fair values of the assets and liabilities becomes available. Investments in equity-accounted companies In connection with the divestment of its Power Grids business to Hitachi in 2020 (see Note 3), the Company initially retained a 19.9 percent interest in the business until December 2022, when the retained investment was sold to Hitachi. During the Company’s period of ownership of t he retained 19.9 percent interest, based on its continuing involvement with the Power Grids business, including the membership in its governing board of directors, the Company concluded that it had significant influence over Hitachi Energy. As a result, the investment was accounted for using the equity method through to the date of its sale. ===== SIDA 29 ===== 16 Q2 2023 FINANCIAL INFORMATION In the six and three months ended June 30, 2023 and 2022, the Company recorded its share of the earnings of investees accounted for under the equity method of accounting in Other income (expense), net, as follows: Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Income (loss) from equity-accounted companies, net of taxes (7) (10) – 1 Basis difference amortization (net of deferred income tax benefit) – (52) – (15) Income (loss) from equity-accounted companies (7) (62) – (14) ─ Note 5 Cash and equivalents, marketable securities and short-term investments Cash and equivalents, marketable securities and short-term investments consisted of the following: June 30, 2023 Cash and Marketable Gross Gross equivalents securities unrealized unrealized and restricted and short-term ($ in millions) Cost basis gains losses Fair value cash investments Changes in fair value recorded in net income Cash 1,743 1,743 1,743 Time deposits 1,541 1,541 1,199 342 Equity securities 622 16 638 638 3,906 16 – 3,922 2,942 980 Changes in fair value recorded in other comprehensive income Debt securities available-for-sale: U.S. government obligations 225 1 (13) 213 213 225 1 (13) 213 – 213 Total 4,131 17 (13) 4,135 2,942 1,193 Of which: Restricted cash, current 19 December 31, 2022 Cash and Marketable Gross Gross equivalents securities unrealized unrealized and restricted and short-term ($ in millions) Cost basis gains losses Fair value cash investments Changes in fair value recorded in net income Cash 1,715 1,715 1,715 Time deposits 2,459 2,459 2,459 Equity securities 345 10 355 355 4,519 10 – 4,529 4,174 355 Changes in fair value recorded in other comprehensive income Debt securities available-for-sale: U.S. government obligations 269 1 (15) 255 255 Other government obligations 58 58 58 Corporate 64 (7) 57 57 391 1 (22) 370 – 370 Total 4,910 11 (22) 4,899 4,174 725 Of which: Restricted cash, current 18 ===== SIDA 30 ===== 17 Q2 2023 FINANCIAL INFORMATION ─ Note 6 Derivative financial instruments The Company is exposed to certain currency, commodity, interest rate and equity risks arising fr om its global operating, financing and investing activities. The Company uses derivative instruments to reduce and manage the economic impact of these exposures. Currency risk Due to the global nature of the Company’s operations, many of its subsidiaries are exposed to currency risk in their operatin g activities from entering into transactions in currencies other than their functional currency. To manage such currency risks, the Company’s policies require its subsidiaries to hedge their foreign currency exposures from binding sales and purchase contracts denominated in foreign currencies. For forec asted foreign currency denominated sales of standard products and the related foreign currency denominated purchases, the Company’s policy is to hedge up to a maximum of 100 percent of the forecasted foreign currency denominated exposures, depending on the length of the forecasted exposures. Foreca sted exposures greater than 12 months are not hedged. Forward foreign exchange contracts are the main instrument used to protect the Company against the vol atility of future cash flows (caused by changes in exchange rates) of contracted and forecasted sales and purchases denominated in foreign currencies. In addition, within its treasury operations, the Company primarily uses foreign exchange swaps and forward foreign exchange cont racts to manage the currency and timing mismatches arising in its liquidity management activities. Commodity risk Various commodity products are used in the Company’s manufacturing activities. Consequently it is exposed to volatility in future cash flows arising from changes in commodity prices. To manage the price risk of commodities, the Com pany’s policies require that its subsidiaries hedge the commodity price risk exposures from binding contracts, as well as at least 50 percent (up to a maximum of 100 percent) of the forecasted commodity exposure over the next 12 months or longer (up to a maximum of 18 months). Primarily swap contracts are used to manage the associated price risks of commodities. Interest rate risk The Company has issued bonds at fixed rates. Interest rate swaps and cross-currency interest rate swaps are used to manage the interest rate and foreign currency risk associated with certain debt and generally such swaps are designated a s fair value hedges. In addition, from time to time, the Company uses instruments such as interest rate swaps, interest rate futures, bond futures or forward rate agreements to manag e interest rate risk arising from the Company’s balance sheet structure but does not designate such instruments as hedges. Equity risk The Company is exposed to fluctuations in the fair value of its warrant appreciation rights (WARs) issued under its management incentive plan. A WAR gives its holder the right to receive cash equal to the market price of an equivalent listed warrant on the date of exercise. To eliminate such risk, the Company has purchased cash-settled call options, indexed to the shares of the Company, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. Volume of derivative activity In general, while the Company’s primary objective in its use of derivatives is to minimize exposures arising from its busines s, certain derivatives are designated and qualify for hedge accounting treatment while others either are not designated or do not qualify for hedge accounting. Foreign exchange and interest rate derivatives The gross notional amounts of outstanding foreign exchange and interest rate derivatives (whether designated as hedges or not ) were as follows: Type of derivative Total notional amounts at ($ in millions) June 30, 2023 December 31, 2022 June 30, 2022 Foreign exchange contracts 14,256 13,509 14,470 Embedded foreign exchange derivatives 1,374 933 850 Cross-currency interest rate swaps 868 855 833 Interest rate contracts 2,198 2,830 3,049 Derivative commodity contracts The Company uses derivatives to hedge its direct or indirect exposure to the movement in the prices of commodities which are primarily copper, silver, steel and aluminum. The following table shows the notional amounts of outstanding derivatives (whether designated as hedges or not), on a net basis, to reflect the Company’s requirements for these commodities: Type of derivative Unit Total notional amounts at June 30, 2023 December 31, 2022 June 30, 2022 Copper swaps metric tonnes 32,894 29,281 42,961 Silver swaps ounces 1,726,172 2,012,213 2,844,285 Steel swaps metric tonnes 11,158 – – Aluminum swaps metric tonnes 5,950 6,825 7,350 Equity derivatives At June 30, 2023, December 31, 2022, and June 30, 2022, the Company held 3 million, 8 million and 9 million cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with a total fair value of $ 12 million, $15 million and $12 million, respectively. Cash flow hedges As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operati ons, commodity swaps to manage its commodity risks and cash-settled call options to hedge its WAR liabilities. The Company applies cash flow hedge accounting in only limited cases. In these cases, the effective portion of the changes in their fair value is recorded in “Accumulated other comprehensive loss” and subsequently reclassified into earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. For the six and three months ended June 30, 2023 and 2022, there were no significant amounts recorded for cash flow hedge accounting activities. Fair value hedges To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swap s and cross-currency interest rate swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in the fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in “Interes t and other finance expense”. ===== SIDA 31 ===== 18 Q2 2023 FINANCIAL INFORMATION The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements w as as follows: Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Gains (losses) recognized in Interest and other finance expense: Interest rate contracts Designated as fair value hedges 18 (55) 8 (26) Hedged item (18) 56 (8) 27 Cross-currency interest rate swaps Designated as fair value hedges (10) (94) 1 (49) Hedged item – 90 (2) 46 Derivatives not designated in hedge relationships Derivative instruments that are not designated as hedges or do not qualify as either cash flow or fair value hedges are econo mic hedges used for risk management purposes. Gains and losses from changes in the fair values of such derivatives are recognized in the same line in the income statement as the economically hedged transaction. Furthermore, under certain circumstances, the Company is required to split and account separately for foreign currency derivatives that are embedd ed within certain binding sales or purchase contracts denominated in a currency other than the functional currency of the subsid iary and the counterparty. The gains (losses) recognized in the Consolidated Income Statements on derivatives not designated in hedging relationships we re as follows: Type of derivative not Gains (losses) recognized in income designated as a hedge Six months ended June 30, Three months ended June 30, ($ in millions) Location 2023 2022 2023 2022 Foreign exchange contracts Total revenues 5 (119) (6) (123) Total cost of sales (12) 34 (11) 40 SG&A expenses(1) 14 23 8 15 Non-order related research and development (1) 1 (1) – Interest and other finance expense (62) (54) (104) (76) Embedded foreign exchange Total revenues 45 5 38 7 contracts Total cost of sales (1) (2) – (3) Commodity contracts Total cost of sales (15) (51) (26) (86) Other Interest and other finance expense 1 3 1 2 Total (26) (160) (101) (224) (1) SG&A expenses represent “Selling, general and administrative expenses”. The fair values of derivatives included in the Consolidated Balance Sheets were as follows: June 30, 2023 Derivative assets Derivative liabilities Current in Non-current in Current in Non-current in “Other current “Other non-current “Other current “Other non-current ($ in millions) assets” assets” liabilities” liabilities” Derivatives designated as hedging instruments: Foreign exchange contracts – – 4 2 Interest rate contracts – – 45 – Cross-currency interest rate swaps – – – 282 Cash-settled call options 12 – – – Total 12 – 49 284 Derivatives not designated as hedging instruments: Foreign exchange contracts 145 25 122 22 Commodity contracts 4 – 16 – Interest rate contracts 2 – 2 – Other equity contracts 10 – – – Embedded foreign exchange derivatives 36 10 15 3 Total 197 35 155 25 Total fair value 209 35 204 309 ===== SIDA 32 ===== 19 Q2 2023 FINANCIAL INFORMATION December 31, 2022 Derivative assets Derivative liabilities Current in Non-current in Current in Non-current in “Other current “Other non-current “Other current “Other non-current ($ in millions) assets” assets” liabilities” liabilities” Derivatives designated as hedging instruments: Foreign exchange contracts – – 4 4 Interest rate contracts – – 5 57 Cross-currency interest rate swaps – – – 288 Cash-settled call options 15 – – – Total 15 – 9 349 Derivatives not designated as hedging instruments: Foreign exchange contracts 140 21 80 5 Commodity contracts 13 – 12 – Interest rate contracts 5 – 3 – Embedded foreign exchange derivatives 11 6 17 13 Total 169 27 112 18 Total fair value 184 27 121 367 Close-out netting agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of one or more pre-defined trigger events. Although the Company is party to close-out netting agreements with most derivative counterparties, the fair values in the tables above and in the Consolidated Balance Sheets at June 30, 2023, and December 31, 2022, have been presented on a gross basis. The Company’s netting agreements and other similar arrangements allow net settlements under ce rtain conditions. At June 30, 2023, and December 31, 2022, information related to these offsetting arrang ements was as follows: ($ in millions) June 30, 2023 Gross amount Derivative liabilities Cash Non-cash Type of agreement or of recognized eligible for set-off collateral collateral Net asset similar arrangement assets in case of default received received exposure Derivatives 198 (103) – – 95 Total 198 (103) – – 95 ($ in millions) June 30, 2023 Gross amount Derivative liabilities Cash Non-cash Type of agreement or of recognized eligible for set-off collateral collateral Net liability similar arrangement liabilities in case of default pledged pledged exposure Derivatives 495 (103) – – 392 Total 495 (103) – – 392 ($ in millions) December 31, 2022 Gross amount Derivative liabilities Cash Non-cash Type of agreement or of recognized eligible for set-off collateral collateral Net asset similar arrangement assets in case of default received received exposure Derivatives 194 (96) – – 98 Total 194 (96) – – 98 ($ in millions) December 31, 2022 Gross amount Derivative liabilities Cash Non-cash Type of agreement or of recognized eligible for set-off collateral collateral Net liability similar arrangement liabilities in case of default pledged pledged exposure Derivatives 458 (96) – – 362 Total 458 (96) – – 362 ===== SIDA 33 ===== 20 Q2 2023 FINANCIAL INFORMATION ─ Note 7 Fair values The Company uses fair value measurement principles to record certain financial assets and liabilities on a recurring basis and, w hen necessary, to record certain non-financial assets at fair value on a non -recurring basis, as well as to determine fair value disclosures for certain financial instruments carried at amortized cost in the financial statements. Financial assets and liabilities recorded at fair value on a recurring basis i nclude foreign currency, commodity and interest rate derivatives, as well as cash-settled call options and available-for-sale securities. Non-financial assets recorded at fair value on a non-recurring basis include long-lived assets that are reduced to their estimated fair value due to impairments. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transactio n between market participants at the measurement date. In determining fair value, the Company uses various valuation techniques including the market approach (using observable market data for identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost approach (using costs a market participant would incur to develop a comparable asset). Inputs used to determine the fair value of assets and liabilities are d efined by a three-level hierarchy, depending on the nature of those inputs. The Company has categorized its financial assets and liabilities and non -financial assets measured at fair value within this hierarchy based on whether the inputs to the valuation technique are observable or unobservable. An observable inp ut is based on market data obtained from independent sources, while an unobservable input reflects the Company’s assumptions abo ut market data. The levels of the fair value hierarchy are as follows: Level 1: Valuation inputs consist of quoted prices in an active market for identical assets or liabilities (observable quoted prices). Assets and liabilities valued using Level 1 inputs include exchange‑traded equity securities, listed derivatives which are actively traded such as commodity futures, interest rate futures and certain actively traded debt securities . Level 2: Valuation inputs consist of observable inputs (other than Level 1 inputs) such as actively quoted prices for similar assets, quoted prices in inactive markets and inputs other than quoted prices such as interest rate yield curves, credit spreads, or inputs derived fr om other observable data by interpolation, correlation, regression or other means. The adjustments applied to quoted prices or the inputs used in valuation models may be both observable and unobservable. In these cases, the fair value measurement is classified as Level 2 unless the unobs ervable portion of the adjustment or the unobservable input to the valuation model is signific ant, in which case the fair value measurement would be classified as Level 3. Assets and liabilities valued or disclosed using Level 2 inputs include investments in certain funds, certain debt s ecurities that are not actively traded, interest rate swaps, cross-currency interest rate swaps, commodity swaps, cash -settled call options, forward foreign exchange contracts, foreign exchange swaps and forward rate agreements, time deposits, as well as financing receivables and debt. Level 3: Valuation inputs are based on the Company’s assumptions of relevant market data (unobservable input). Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid -market quotes. However, for the purpose of determining the fair value of cash-settled call options serving as hedges of the Company’s management incentive plan, bid prices are used. When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for t he financial instrument has significantly decreased or would not be considered orderly. In such cases, the resulting changes in val uation techniques would be disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use anoth er valuation technique, such as an income approach. Recurring fair value measures The fair values of financial assets and liabilities measured at fair value on a recurring basis were as follows: June 30, 2023 ($ in millions) Level 1 Level 2 Level 3 Total fair value Assets Securities in “Marketable securities and short-term investments”: Equity securities – 638 – 638 Debt securities—U.S. government obligations 213 – – 213 Derivative assets—current in “Other current assets” – 209 – 209 Derivative assets—non-current in “Other non-current assets” – 35 – 35 Total 213 882 – 1,095 Liabilities Derivative liabilities—current in “Other current liabilities” – 204 – 204 Derivative liabilities—non-current in “Other non-current liabilities” – 309 – 309 Total – 513 – 513 ===== SIDA 34 ===== 21 Q2 2023 FINANCIAL INFORMATION December 31, 2022 ($ in millions) Level 1 Level 2 Level 3 Total fair value Assets Securities in “Marketable securities and short-term investments”: Equity securities – 355 – 355 Debt securities—U.S. government obligations 255 – – 255 Debt securities—European government obligations – 58 – 58 Debt securities—Corporate – 57 – 57 Derivative assets—current in “Other current assets” – 184 – 184 Derivative assets—non-current in “Other non-current assets” – 27 – 27 Total 255 681 – 936 Liabilities Derivative liabilities—current in “Other current liabilities” – 121 – 121 Derivative liabilities—non-current in “Other non-current liabilities” – 367 – 367 Total – 488 – 488 The Company uses the following methods and assumptions in estimating fair values of financial assets and liabilities measured at fair value on a recurring basis: • Securities in “Marketable securities and short-term investments”: If quoted market prices in active markets for identical assets are available, these are considered Level 1 inputs; however, when markets are not active, these inputs are considered Level 2. If such quoted market prices are not available, fair value is determined using market prices for similar assets or present value techniques, applying an appropriate risk -free interest rate adjusted for non-performance risk. The inputs used in present value techniques are observable and fall into the Level 2 category. • Derivatives: The fair values of derivative instruments are determined using quoted prices of identical instruments from an active market , if available (Level 1 inputs). If quoted prices are not available, price quotes for similar instruments, appropriately adjusted, or present value techniques, based on available market data, or option pricing models are used. Cash -settled call options hedging the Company’s WAR liability are valued based on bid prices of the equivalent listed warrant. The fair values obtained using price quotes for similar inst ruments or valuation techniques represent a Level 2 input unless significant unobservable inputs are used. Non-recurring fair value measures There were no significant non-recurring fair value measurements during the six and three months ended June 30, 2023 and 2022. Disclosure about financial instruments carried on a cost basis The fair values of financial instruments carried on a cost basis were as follows: June 30, 2023 ($ in millions) Carrying value Level 1 Level 2 Level 3 Total fair value Assets Cash and equivalents (excluding securities with original maturities up to 3 months): Cash 1,724 1,724 – – 1,724 Time deposits 1,199 – 1,199 – 1,199 Restricted cash 19 19 – – 19 Marketable securities and short-term investments (excluding securities): Time deposits 342 – 342 – 342 Liabilities Short-term debt and current maturities of long-term debt (excluding finance lease obligations) 3,821 2,412 1,409 – 3,821 Long-term debt (excluding finance lease obligations) 4,316 4,222 16 – 4,238 December 31, 2022 ($ in millions) Carrying value Level 1 Level 2 Level 3 Total fair value Assets Cash and equivalents (excluding securities with original maturities up to 3 months): Cash 1,697 1,697 – – 1,697 Time deposits 2,459 – 2,459 – 2,459 Restricted cash 18 18 – – 18 Liabilities Short-term debt and current maturities of long-term debt (excluding finance lease obligations) 2,500 1,068 1,432 – 2,500 Long-term debt (excluding finance lease obligations) 4,976 4,813 30 – 4,843 ===== SIDA 35 ===== 22 Q2 2023 FINANCIAL INFORMATION The Company uses the following methods and assumptions in estimating fair values of financial instruments carried on a cost basis : • Cash and equivalents (excluding securities with orig inal maturities up to 3 months), Restricted cash, and Marketable securities and short -term investments (excluding securities): The carrying amounts approximate the fair values as the items are short -term in nature or, for cash held in banks, are equal to the deposit amount. • Short-term debt and current maturities of long-term debt (excluding finance lease obligations): Short-term debt includes commercial paper, bank borrowings and overdrafts. The carrying amounts of short -term debt and current maturities of long-term debt, excluding finance lease obligations, approximate their fair values. • Long-term debt (excluding finance lease obligations): Fair values of bonds are determined using qu oted market prices (Level 1 inputs), if available. For bonds without available quoted market prices and o ther long-term debt, the fair values are determined using a discounted cash flow methodology based upon borrowing rates of similar debt instruments and reflecting appropriate adjustments for non -performance risk (Level 2 inputs). ─ Note 8 Contract assets and liabilities The following table provides information about Contract assets and Contr act liabilities: ($ in millions) June 30, 2023 December 31, 2022 June 30, 2022 Contract assets 1,010 954 965 Contract liabilities 2,394 2,216 2,141 Contract assets primarily relate to the Company’s right to receive consideration for work completed but for which no invoice has been issued at the reporting date. Contract assets are transferred to receivables when rights to receive payment become unconditional. Management expects that the majority of the amounts will be collected within one year of the respective balance sheet date. Contract liabilities primarily relate to up-front advances received on orders from customers as well as amounts invoiced to customers in excess of revenues recognized predominantly on long-term projects. Contract liabilities are reduced as work is performed and as revenues are recognized . The significant changes in the Contract assets and Contract liabilities balances were as follows: Six months ended June 30, 2023 2022 Contract Contract Contract Contract ($ in millions) assets liabilities assets liabilities Revenue recognized, which was included in the Contract liabilities balance at Jan 1, 2023/2022 (966) (763) Additions to Contract liabilities - excluding amounts recognized as revenue during the period 1,102 1,102 Receivables recognized that were included in the Contract assets balance at Jan 1, 2023/2022 (465) (423) The Company considers its order backlog to represent its unsatisfied performance obligations. At June 30, 2023, the Company had unsatisfied performance obligations totaling $21,938 million and, of this amount, the Company expects to fulfill approximately 51 percent of the obligations in 202 3, approximately 36 percent of the obligations in 2024 and the balance thereafter. ===== SIDA 36 ===== 23 Q2 2023 FINANCIAL INFORMATION ─ Note 9 Debt The Company’s total debt at June 30, 2023, and December 31, 2022, amounted to $8,300 million and $7,678 million, respectively. Short-term debt and current maturities of long-term debt The Company’s “Short-term debt and current maturities of long-term debt” consisted of the following: ($ in millions) June 30, 2023 December 31, 2022 Short-term debt 1,434 1,448 Current maturities of long-term debt 2,415 1,087 Total 3,849 2,535 Short-term debt primarily represented issued commercial paper and short -term bank borrowings from various banks. At June 30, 2023, and December 31, 2022, $1,352 million and $1,383 million, respectively, was outstanding under the $2 billion Euro-commercial paper program. No amount was outstanding under the $2 billion commercial paper program in the United States a t June 30, 2023, or at December 31, 2022. In May 2023, the Company repaid on maturity its EUR 700 million 0.625% Instruments, equivalent to $772 million on date of repayment. Long-term debt The Company’s long-term debt at June 30, 2023, and December 31, 2022, amounted to $4,451 million and $5,143 million, respectively. Outstanding bonds (including maturities within the next 12 months) were as follows: June 30, 2023 December 31, 2022 (in millions) Nominal outstanding Carrying value(1) Nominal outstanding Carrying value(1) Bonds: 0.625% EUR Instruments, due 2023 EUR 700 $ 742 0% CHF Bonds, due 2023 CHF 275 $ 305 CHF 275 $ 298 0.625% EUR Instruments, due 2024 EUR 700 $ 739 EUR 700 $ 720 Floating Rate EUR Instruments, due 2024 EUR 500 $ 544 EUR 500 $ 536 0.75% EUR Instruments, due 2024 EUR 750 $ 788 EUR 750 $ 769 0.3% CHF Bonds, due 2024 CHF 280 $ 310 CHF 280 $ 303 2.1% CHF Bonds, due 2025 CHF 150 $ 166 CHF 150 $ 162 3.25% EUR Instruments, due 2027 EUR 500 $ 539 0.75% CHF Bonds, due 2027 CHF 425 $ 470 CHF 425 $ 460 3.8% USD Notes, due 2028(2) USD 383 $ 382 USD 383 $ 381 1.0% CHF Bonds, due 2029 CHF 170 $ 188 CHF 170 $ 184 0% EUR Instruments, due 2030 EUR 800 $ 691 EUR 800 $ 677 2.375% CHF Bonds, due 2030 CHF 150 $ 166 CHF 150 $ 162 3.375% EUR Instruments, due 2031 EUR 750 $ 801 4.375% USD Notes, due 2042(2) USD 609 $ 590 USD 609 $ 590 Total $ 6,679 $ 5,984 (1) USD carrying values include unamortized debt issuance costs, bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate. (2) Prior to completing a cash tender offer in November 2020, the original principal amount outstanding, on each of the 3.8% USD Notes, due 2028, and the 4.375% USD Notes, due 2042, was USD 750 million. In January 2023, the Company issued the following EUR Instruments: (i) EUR 500 million of 3.25 percent Instruments, due 2027, and (ii) EUR 750 million of 3.375 percent Instruments, due 2031, both paying interest annually in arrears. The aggregate net proceeds of these EUR Instruments, after discount and fees, amounted to EUR 1,235 million (equivalent to approximately $1,338 million on date of issuance). ===== SIDA 37 ===== 24 Q2 2023 FINANCIAL INFORMATION ─ Note 10 Commitments and contingencies Contingencies—Regulatory, Compliance and Legal Regulatory Based on findings during an internal investigation, the Company self -reported to the SEC and the DoJ, in the United States, to the Special Investigating Unit (SIU) and the National Prosecuting Authority (NPA) in South Africa as well as to various authorities in other countries potential suspect payment s and other compliance concerns in connection with some of the Company’s dealings with Eskom and related persons. Many of those parties have expressed an interest in, or commenced an investigation into, these matters and the Company is cooperating fully with them. T he Company paid $104 million to Eskom in December 2020 as part of a full and final settlement with Eskom and the Special Investigating Unit relati ng to improper payments and other compliance issues associated with the Controls and Instrumentation Contract, and its Variation Orders for Units 1 and 2 at Kusile. The Company made a provision of approximately $325 million which was recorded in Other income (expense), net, during the third quarter of 2022. In December 2022, the Company settled with the SEC and DOJ as well as the authorities in South Africa and Switzerland. The matter is s till pending with the authorities in Germany, but the Company does not believe that it will need to record any additional provisions for this matter. General The Company is aware of proceedings, or the threat of proceedings, against it and others in respect of pri vate claims by customers and other third parties with regard to certain actual or alleged anticompetitive practices. Also, the Company is subject to other claims and legal proceedings, as well as investigations carried out by various law enforcement author ities. With respect to the above-mentioned claims, regulatory matters, and any related proceedings, the Company will bear the related costs, including costs necessary to resolve them. Liabilities recognized At June 30, 2023, and December 31, 2022, the Company had aggregate liabilities of $95 million and $86 million, respectively, included in “Other provisions” and “Other non‑current liabilities”, for the above regulatory, compliance and legal contingencies, and none of the indi vidual liabilities recognized was significant. As it is not possible to make an informed judgment on, or reasonably predict, the outcome of cert ain matters and as it is not possible, based on information currently available to management, to estimate the m aximum potential liability on other matters, there could be adverse outcomes beyond the amounts accrued. Guarantees General The following table provides quantitative data regarding the Company’s third -party guarantees. The maximum potential payments represent a “worst-case scenario”, and do not reflect management’s expected outcomes. Maximum potential payments ($ in millions) June 30, 2023 December 31, 2022 Performance guarantees 3,546 4,300 Financial guarantees 94 96 Total(1) 3,640 4,396 (1) Maximum potential payments include amounts in both continuing and discontinued operations. The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects the Company’s best estimate of future payments, which it may incur as part of fulfilling its guarantee obligations. In respect of the above guarantees, the carrying amo unts of liabilities at June 30, 2023, and December 31, 2022, were not significant. The Company is party to various guarantees providing financial or performance assurances to certain third parties. These guar antees, which have various maturities up to 2035, mainly consist of performance guarantees whereby (i) the Company guarantees the performance of a third party’s product or service according to the terms of a contract and (ii) as member of a consortium/joint-venture that includes third parties, the Company guarantees not only its own performance but also the work of third parties. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. The original maturity dates for the majority of these performance guarantees range from one to ten years. In conjunction with the divestment of the high-voltage cable and cables accessories businesses, the Company has entered into various performance guarantees with other parties with respect to certain liabilities of the divested business. At both June 30, 2023, and December 31, 2022, the maximum potential payable under these guarantees amounts to $843 million, respectively, and these guarantees have various original maturities ranging from five to ten years. The Company retained obligations for financial, performance and indemnification guarantees related to the sale of the Power Grids business (see Note 3 for details). The performance and financial guarantees have been indemnified by Hitachi Ltd. These guarantees, which have various maturities up to 2035, primarily consist of bank guarantees, standby letters of credit , business performance guarantees and other trade-related guarantees, the majority of which have original maturity dates ranging from one to ten years. The maximum amount payable under these guarantees at June 30, 2023, and December 31, 2022, is approximately $2.3 billion and $3.0 billion, respectively. Commercial commitments In addition, in the normal course of bidding for and executing certain projects, the Company has entered into st andby letters of credit, bid/performance bonds and surety bonds (collectively “performance bonds”) with various financial institutions. Customers can draw on such per formance bonds in the event that the Company does not fulfill its contractual obligations. The Company would then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. At June 30, 2023, and December 31, 2022, respectively, the total outstanding performance bonds aggregated to $3.0 billion and $2.9 billion. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in the six and three months ended June 30, 2023 and 2022. ===== SIDA 38 ===== 25 Q2 2023 FINANCIAL INFORMATION Product and order-related contingencies The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts. The reconciliation of the “Provisions for warranties”, including guarantees of product performance, was as follows: ($ in millions) 2023 2022 Balance at January 1, 1,028 1,005 Claims paid in cash or in kind (85) (82) Net increase in provision for changes in estimates, warranties issued and warranties expired 136 103 Exchange rate differences (3) (54) Balance at June 30, 1,076 972 ─ Note 11 Income taxes In calculating income tax expense, the Company uses an estimate of the annual effective tax rate based upon the facts and cir cumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circums tances, if any, as compared to those forecasted at the beginning of the year and each interim period thereafter. The effective tax rate of 19.0 percent in the six months ended June 30, 2023, was lower than the effective tax rate of 29.3 percent in the six months ended June 30, 2022, primarily due to a net benefit realized on a favorable resolution of an uncertain tax position. In February 2023, on completion of a tax audit, the Company obtained resolution of the uncertain tax position for which an amount was recorded within Other non -current liabilities as of December 31, 2022. In the six months ended June 30, 2023, the Company released the provision of $206 million, due to the resolution of this matter , which resulted in an increase of $0.11 in earnings per share (basic and diluted) for the six months ended June 30, 2023 . ─ Note 12 Employee benefits The Company operates defined benefit pension plans, defined contribution pension plans, and termination in demnity plans, in accordance with local regulations and practices. At June 30, 2023, the Company’s most significant defined benefit pension plans are in Switzerland as well as in Germany, the United Kingdom, and the United States. These plans cover a large portion of the Company’s employees and provide benefits to employees in the event of death, disability, retirement, or termination o f employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans including postretirement health care benefits and other employee -related benefits for active employees including long-service award plans. The measurement date used for the Company’s employee benefit plans is December 31. The funding policies of the Company’s plans are consistent with the local government and tax requirements. Net periodic benefit cost of the Company’s defined benefit pension and other postretirement benefit plans consisted of the following: ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Six months ended June 30, 2023 2022 2023 2022 2023 2022 Operational pension cost: Service cost 19 27 14 17 – – Operational pension cost 19 27 14 17 – – Non-operational pension cost (credit): Interest cost 24 1 82 43 1 1 Expected return on plan assets (63) (58) (74) (77) – – Amortization of prior service cost (credit) (4) (4) (1) (1) (1) (1) Amortization of net actuarial loss – – 23 30 (2) (2) Non-operational pension cost (credit) (43) (61) 30 (5) (2) (2) Net periodic benefit cost (credit) (24) (34) 44 12 (2) (2) ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Three months ended June 30, 2023 2022 2023 2022 2023 2022 Operational pension cost: Service cost 10 13 6 8 – – Operational pension cost 10 13 6 8 – – Non-operational pension cost (credit): Interest cost 12 – 42 21 – 1 Expected return on plan assets (30) (28) (35) (36) – – Amortization of prior service cost (credit) (4) (2) (1) (1) (1) – Amortization of net actuarial loss – – 10 15 (1) (2) Non-operational pension cost (credit) (22) (30) 16 (1) (2) (1) Net periodic benefit cost (credit) (12) (17) 22 7 (2) (1) The components of net periodic benefit cost other than the service cost component are included in the line “Non -operational pension cost (credit)” in the income statement. ===== SIDA 39 ===== 26 Q2 2023 FINANCIAL INFORMATION Employer contributions were as follows: ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Six months ended June 30, 2023 2022 2023 2022 2023 2022 Total contributions to defined benefit pension and other postretirement benefit plans 5 31 21 19 4 4 ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Three months ended June 30, 2023 2022 2023 2022 2023 2022 Total contributions to defined benefit pension and other postretirement benefit plans 3 15 10 9 2 1 The Company expects to make contributions totaling approximately $95 million and $34 million to its defined pension plans and other postretirement benefit plans, respectively, for the full year 2023. ─ Note 13 Stockholder's equity At the Annual General Meeting of Shareholders (AGM) on March 23, 2023, shareholders approved the proposal of the Board of Directors to distribute 0.84 Swiss francs per share to shareholders. The declared dividend amounted to $ 1,706 million, with the Company disbursing a portion in March and the remaining amounts in April. In March 2023, the Company completed the share buyback program that was launched in April 2022. This program was executed on a second trading line on the SIX Swiss Exchange. Through this program, the Company purchased a total of 67 million shares for approximately $2.0 billion, of which 8 million shares were purchased in the first quarter of 2023 (resulting in an increase in Treasury stock of $253 million). Also in March 2023, the Company announced a new share buyback program of up to $ 1 billion. This program, which was launched in April 2023, is being executed on a second trading line on the SIX Swiss Exchange and is planned to run until the Company’s 2024 AGM. Through this program, the Company purchased, from the program’s launch in April 2023 to June 30, 2023, 6 million shares, resulting in an increase in Treasury stock of $212 million. In the second quarter of 2023, the Company cancelled 83 million shares which had been purchased under its share buyback program. This resulted in a decrease in Treasury stock of $2,567 million and a corresponding total decrease in Capital stock, Additional paid -in capital and Retained earnings. During the first quarter of 2023, the Company delivered, out of treasury stock, approximately 5 million shares in connection with its Management Incentive Plan. In February 2023, the Company obtained funding through a private placement of shares in its ABB E-Mobility subsidiary, ABB E-mobility Holding Ltd (ABB E-Mobility), receiving gross proceeds of 325 million Swiss francs (approximately $351 million) and reducing the Company’s ownership in ABB E-Mobility from 92 percent to 81 percent. This resulted in an increase in Additional paid -in capital of $170 million. ===== SIDA 40 ===== 27 Q2 2023 FINANCIAL INFORMATION ─ Note 14 Earnings per share Basic earnings per share is calculated by dividing income by the weighted -average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options, and outsta nding options and shares granted subject to certain conditions under the Company’s share -based payment arrangements. Basic earnings per share Six months ended June 30, Three months ended June 30, ($ in millions, except per share data in $) 2023 2022 2023 2022 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 1,951 1,003 910 388 Loss from discontinued operations, net of tax (9) (20) (4) (9) Net income 1,942 983 906 379 Weighted-average number of shares outstanding (in millions) 1,861 1,922 1,862 1,909 Basic earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.05 0.52 0.49 0.20 Loss from discontinued operations, net of tax 0.00 (0.01) 0.00 0.00 Net income 1.04 0.51 0.49 0.20 Diluted earnings per share Six months ended June 30, Three months ended June 30, ($ in millions, except per share data in $) 2023 2022 2023 2022 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 1,951 1,003 910 388 Loss from discontinued operations, net of tax (9) (20) (4) (9) Net income 1,942 983 906 379 Weighted-average number of shares outstanding (in millions) 1,861 1,922 1,862 1,909 Effect of dilutive securities: Call options and shares 12 13 11 9 Adjusted weighted-average number of shares outstanding (in millions) 1,873 1,935 1,873 1,918 Diluted earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.04 0.52 0.49 0.20 Loss from discontinued operations, net of tax 0.00 (0.01) 0.00 0.00 Net income 1.04 0.51 0.48 0.20 ===== SIDA 41 ===== 28 Q2 2023 FINANCIAL INFORMATION ─ Note 15 Reclassifications out of accumulated other comprehensive loss The following table shows changes in “Accumulated other comprehensive loss” (OCI) attributable to ABB, by component, net of t ax: Unrealized gains Pension and Foreign currency (losses) on other Derivative translation available-for-sale postretirement instruments ($ in millions) adjustments securities plan adjustments and hedges Total OCI Balance at January 1, 2022 (2,993) 2 (1,089) (8) (4,088) Other comprehensive (loss) income: Other comprehensive (loss) income before reclassifications (419) (17) 91 (12) (357) Amounts reclassified from OCI 5 – 15 14 34 Total other comprehensive (loss) income (414) (17) 106 2 (323) Less: Amounts attributable to noncontrolling interests and redeemable noncontrolling interests (22) – – – (22) Balance at June 30, 2022 (3,385) (15) (983) (6) (4,389) Unrealized gains Pension and Foreign currency (losses) on other Derivative translation available-for-sale postretirement instruments ($ in millions) adjustments securities plan adjustments and hedges Total OCI Balance at January 1, 2023 (3,691) (19) (838) (8) (4,556) Other comprehensive (loss) income: Other comprehensive (loss) income before reclassifications (79) 2 (13) (1) (91) Amounts reclassified from OCI – 5 8 4 17 Total other comprehensive (loss) income (79) 7 (5) 3 (74) Less: Amounts attributable to noncontrolling interests and redeemable noncontrolling interests (3) (3) Balance at June 30, 2023 (3,767) (12) (843) (5) (4,627) The amounts reclassified out of OCI for the six and three months ended June 30, 2023 and 2022, were not significant. ===== SIDA 42 ===== 29 Q2 2023 FINANCIAL INFORMATION ─ Note 16 Restructuring and related expenses Other restructuring-related activities In the six and three months ended June 30, 2023 and 2022, the Company executed various other restructuring -related activities and incurred the following expenses: Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Employee severance costs 26 43 7 35 Estimated contract settlement, loss order and other costs 2 202 1 195 Inventory and long-lived asset impairments – 5 – 1 Total 28 250 8 231 Expenses associated with these activities are recorded in the following line items in the Consolidated Income Statements: Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Total cost of sales 10 8 3 4 Selling, general and administrative expenses 13 28 1 24 Non-order related research and development expenses – 2 (1) 2 Other income (expense), net 5 212 5 201 Total 28 250 8 231 During the second quarter of 2022, the Company completed a plan to fully exit its full train retrofit business by transferring the remaining contracts to a third party. The Company recorded $195 million of restructuring expenses in connection with this business exit primarily for contract settlement costs. Prior to exiting this business, the business was reported as part of the Company’s non -core business activities within Corporate and Other. At June 30, 2023 and December 31, 2022, $193 million and $198 million, respectively, was recorded for other restructuring -related liabilities and is included primarily in Other provisions. ─ Note 17 Operating segment data The Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The CODM allocates resources to and assesses the performance of each operating segment using the information outlined below. The Company is organized into the following segments, based on products and services: Electrification, Motion, Process Automation and Robotics & Discrete Automation. The remain ing operations of the Company are included in Corporate and Other. Effective January 1, 2023, the E-mobility Division is no longer managed within the Electrification segment and has become a separate operating segment. This new segment does not currently meet any of the size thresholds to be considered a reportable segment and as such is presented within Corporate and Other. The segment information for the six and three months ended June 30, 2023 and 2022, and at December 31, 2022, has been recast to reflect this change. A description of the types of products and services provided by each reportable segment is as follow s: • Electrification: manufactures and sells electrical products and solutions which are design ed to provide safe, smart and sustainable electrical flow from the substation to the socket. The portfolio of increasingly digital and connected solutions includes renewable power solutions, modular substation packages, distribution automation products, switchboard and panelboards, switchgear, UPS solutions, circuit breakers, measuring and sensing devices, control products, wiring accessories, enclosures and cabling systems and intelligent home and building solutions, designed to integrate and automate lighting, heating, ventilation, security and data communication network s. The products and services are delivered through six operating Divisions: Distribution Solutions, Smart Power, Smart Buildings, Installation Products, Power Conversion and Service. • Motion: designs, manufactures, and sells drives, motors, generators and traction converters that are driving the low -carbon future for industries, cities, infrastructure and transportation. These products, digital technology and related services enable industr ial customers to increase energy efficiency, improve safety and reliability, and achieve precise control of their processes. Building on over 130 years of cumulative experience in electric powertrains, Motion combines domain expertise and technology to deliver the optimum solution for a wide range of applications in all industrial segments. In addition, Motion, along with its partners, has a leading global service presence. These products and services are delivered through seven operating Divisions: Large Motors and Generators, IEC LV Motors, NEMA Motors, Drive Products, System Drives, Service and Traction. ===== SIDA 43 ===== 30 Q2 2023 FINANCIAL INFORMATION • Process Automation: offers a broad range of industry-specific, integrated automation, electrification and digital solutions, as well as lifecycle services for the process, hybrid and marine industries. The product portfolio includes control technologies, industrial software, advanced analytics, sensing and measurement technology, and marine propulsion systems. In addition, Process Automation offers a comprehensive range of services, from repair to advanced digital capabilities such as remote monitoring, preventive maintenance, asset performance management, emission monitoring and cybersecurity . The products, systems and services are currently delivered through four operating Divisions: Energy Industries, Process Industries, Marine & Ports and Measurement & Analytics as well as, prior to its spin-off in October 2022, the Turbocharging Division (Accelleron). • Robotics & Discrete Automation: delivers its products, solutions and services through two operating Divisions: Robotics and Machine Automation. Robotics includes industrial robots, autonomous mobile robotics, software, robotic solutions, field services, spare parts, and digital services. Machine Automation specializes in solutions based on its programmable logic controllers (PLC), industrial PCs (IPC), servo motion, transport systems and machine vision. Both Divisions offer engineering and simulation software as well as a comprehensive range of digital solutions. Corporate and Other: includes headquarter costs, the Company’s corporate real estate activities, Corporate Treasury Operations, the E-mobility operating segment, historical operating activities of certain divested businesses , and other non-core operating activities. The primary measure of profitability on which the operating segments are evaluated is Operational EBITA, which represents income from operations excluding: • amortization expense on intangibles arising upon acquisition (acquisition-related amortization), • restructuring, related and implementation costs , • changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations related to divested businesses), • gains and losses from sale of businesses (including fair value adjustment on assets and liabilities held for sale) , • acquisition- and divestment-related expenses and integration costs, • certain other non-operational items, as well as • foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets /liabilities). Certain other non-operational items generally includes certain regulatory, compliance a nd legal costs, other income/expense relating to the Power Grids joint venture, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates), as well as other items which are determined by management on a case -by-case basis. 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 t he Company’s consolidated Operational EBITA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at c urrent market prices. The following tables present disaggregated segment revenues from contracts with customers , Operational EBITA, and the reconciliations of consolidated Operational EBITA to Income from continuing operations before taxes for the six and three months ended June 30, 2023 and 2022, as well as total assets at June 30, 2023, and December 31, 2022. Six months ended June 30, 2023 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 2,328 1,289 1,081 956 153 5,807 The Americas 2,932 1,267 868 272 129 5,468 of which: United States 2,179 1,061 550 175 111 4,076 Asia, Middle East and Africa 1,948 1,117 1,027 623 32 4,747 of which: China 917 581 339 475 17 2,329 7,208 3,673 2,976 1,851 314 16,022 Product type Products 6,762 3,169 1,743 1,576 280 13,530 Services and other 446 504 1,233 275 34 2,492 7,208 3,673 2,976 1,851 314 16,022 Third-party revenues 7,208 3,673 2,976 1,851 314 16,022 Intersegment revenues 117 248 13 8 (386) – Total revenues(1) 7,325 3,921 2,989 1,859 (72) 16,022 ===== SIDA 44 ===== 31 Q2 2023 FINANCIAL INFORMATION Six months ended June 30, 2022 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 2,120 953 1,131 712 110 5,026 The Americas 2,445 1,029 767 238 87 4,566 of which: United States 1,789 853 460 166 60 3,328 Asia, Middle East and Africa 1,967 995 1,119 509 34 4,624 of which: China 992 565 309 382 15 2,263 6,532 2,977 3,017 1,459 231 14,216 Product type Products 6,124 2,552 1,642 1,230 214 11,762 Services and other 408 425 1,375 229 17 2,454 6,532 2,977 3,017 1,459 231 14,216 Third-party revenues 6,532 2,977 3,017 1,459 231 14,216 Intersegment revenues 118 221 18 3 (360) – Total revenues(1) 6,650 3,198 3,035 1,462 (129) 14,216 Three months ended June 30, 2023 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 1,166 651 562 482 74 2,935 The Americas 1,525 635 447 136 72 2,815 of which: United States 1,136 528 286 84 58 2,092 Asia, Middle East and Africa 991 568 538 299 17 2,413 of which: China 460 300 177 227 10 1,174 3,682 1,854 1,547 917 163 8,163 Product type Products 3,456 1,586 916 785 143 6,886 Services and other 226 268 631 132 20 1,277 3,682 1,854 1,547 917 163 8,163 Third-party revenues 3,682 1,854 1,547 917 163 8,163 Intersegment revenues 53 127 6 5 (191) – Total revenues(1) 3,735 1,981 1,553 922 (28) 8,163 Three months ended June 30, 2022 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 1,058 487 546 358 59 2,508 The Americas 1,281 537 399 130 50 2,397 of which: United States 940 446 239 94 27 1,746 Asia, Middle East and Africa 1,016 496 573 242 19 2,346 of which: China 535 278 159 185 6 1,163 3,355 1,520 1,518 730 128 7,251 Product type Products 3,143 1,304 829 618 119 6,013 Services and other 212 216 689 112 9 1,238 3,355 1,520 1,518 730 128 7,251 Third-party revenues 3,355 1,520 1,518 730 128 7,251 Intersegment revenues 59 106 11 2 (178) – Total revenues(1) 3,414 1,626 1,529 732 (50) 7,251 (1) Due to rounding, numbers presented may not add to the totals provided. ===== SIDA 45 ===== 32 Q2 2023 FINANCIAL INFORMATION Six months ended Three months ended June 30, June 30, ($ in millions) 2023 2022 2023 2022 Operational EBITA: Electrification 1,464 1,117 787 605 Motion 767 540 401 266 Process Automation 444 420 239 224 Robotics & Discrete Automation 281 109 141 60 Corporate and Other ‒ E-mobility (95) (8) (67) (6) ‒ Corporate costs, Intersegment elimination and other (159) (45) (76) (13) Total 2,702 2,133 1,425 1,136 Acquisition-related amortization (109) (119) (55) (59) Restructuring, related and implementation costs (1) (41) (280) (13) (264) Changes in obligations related to divested businesses 5 17 8 3 Gains and losses from sale of businesses 26 (4) 26 (4) Acquisition- and divestment-related expenses and integration costs (45) (109) (26) (50) Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) (10) (100) (32) (118) Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (6) (35) (1) (33) Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) 14 40 7 41 Certain other non-operational items: Other income/expense relating to the Power Grids joint venture 20 (37) 7 (2) Regulatory, compliance and legal costs – (4) – (5) Business transformation costs(2) (82) (66) (48) (40) Changes in pre-acquisition estimates (4) 1 (4) 2 Certain other fair value changes, including asset impairments 6 34 7 – Other non-operational items 20 (27) (3) (20) Income from operations 2,496 1,444 1,298 587 Interest and dividend income 78 33 38 20 Interest and other finance expense (124) (62) (63) (40) Non-operational pension (cost) credit 15 68 8 32 Income from continuing operations before taxes 2,465 1,483 1,281 599 (1) Includes impairment of certain assets. (2) Amount includes ABB Way process transformation costs of $71 million and $64 million for six months ended June 30, 2023 and 2022, respectively, and $41 million and $39 million for the three months ended June 30, 2023 and 2022, respectively. Total assets(1) ($ in millions) June 30, 2023 December 31, 2022 Electrification 13,300 12,500 Motion 7,043 6,565 Process Automation 4,761 4,598 Robotics & Discrete Automation 4,931 4,901 Corporate and Other(2) 9,821 10,584 Consolidated 39,856 39,148 (1) Total assets are after intersegment eliminations and therefore reflect third-party assets only. (2) At June 30, 2023, and December 31, 2022, respectively, Corporate and Other includes $74 million and $96 million of assets in the Power Grids business which is reported as discontinued operations (see Note 3). ===== SIDA 46 ===== 33 Q2 2023 FINANCIAL INFORMATION ===== SIDA 47 ===== 34 Q2 2023 FINANCIAL INFORMATION — Supplemental Reconciliations and Definitions The following reconciliations and definitions include measures which ABB uses to supplement its Consolidated Financial Inform ation (unaudited) which is prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). Certain of these financial measures are, or may be, considered non -GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission (SEC). While ABB’s management believes that the non -GAAP financial measures herein are useful in evaluating ABB’s operating results, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in acco rdance with U.S. GAAP. Therefore these measures should not be viewed in isolation but considered together with the Consolidated Financial Info rmation (unaudited) prepared in accordance with U.S. GAAP as of and for the six and three months ended June 30, 2023. Comparable growth rates Growth rates for certain key figures may be presented and discussed on a “comparable” basis. The comparable growth rate measures growth on a constant currency basis. Since we are a global company, the comparability of our operating results reported in U.S. dollars i s affected by foreign currency exchange rate fluctuations. We calculate the impacts from foreign c urrency fluctuations by translating the current-year periods’ reported key figures into U.S. dollar amounts using the exchange rates in effect for the comparable periods in the previous year. Comparable growth rates are also adjusted for changes in our business portfolio. Adjustments to our business portfolio occur due to acquisitions, divestments, or by exiting specific business activities or customer markets. The adjustment for p ortfolio changes is calculated as follows: where the results of any business acquired or divested have not been consolidated and reported for the entire duration of both the curr ent and comparable periods, the reported key figures of such business are adju sted to exclude the relevant key figures of any corresponding quarters which are not comparable when computing the comparable growth rate. Certain portfolio changes which do not qualify as divestments under U.S . GAAP have been treated in a similar manner to divestments. Changes in our portfolio where we have exited certain business activities or customer markets are adjusted as if the relevant business was divested in the period when the decision to cease business activities was taken. We do not ad just for portfolio changes where the relevant business has annualized revenues of less than $50 million. The following tables provide reconciliations of reported growth rates of certain ke y figures to their respective comparable growth rate. Comparable growth rate reconciliation by Business Area Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Business Area reported) impact changes Comparable reported) impact changes Comparable Electrification 1% 2% 0% 3% 9% 2% 0% 11% Motion 3% 1% -1% 3% 22% 1% -1% 22% Process Automation -8% 2% 12% 6% 2% 2% 15% 19% Robotics & Discrete Automation -23% 1% 0% -22% 26% 1% 0% 27% ABB Group -2% 2% 2% 2% 13% 1% 3% 17% H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Business Area reported) impact changes Comparable reported) impact changes Comparable Electrification 1% 3% 0% 4% 10% 4% 0% 14% Motion 3% 3% -1% 5% 23% 3% -1% 25% Process Automation 8% 4% 17% 29% -2% 4% 15% 17% Robotics & Discrete Automation -23% 2% 0% -21% 27% 4% 0% 31% ABB Group 0% 3% 3% 6% 13% 3% 3% 19% ===== SIDA 48 ===== 35 Q2 2023 FINANCIAL INFORMATION Regional comparable growth rate reconciliation Regional comparable growth rate reconciliation for ABB Group - Quarter Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -1% 0% 2% 1% 17% -1% 4% 20% The Americas 5% 0% 1% 6% 17% 0% 2% 19% of which: United States 4% 0% 0% 4% 20% 0% 1% 21% Asia, Middle East and Africa -10% 6% 3% -1% 3% 6% 4% 13% of which: China -15% 5% 1% -9% 1% 5% 3% 9% ABB Group -2% 2% 2% 2% 13% 1% 3% 17% Regional comparable growth rate reconciliation by Business Area - Quarter Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -4% -2% 0% -6% 9% -1% 0% 8% The Americas 8% 0% 0% 8% 19% 0% 0% 19% of which: United States 6% 0% 0% 6% 21% 0% 0% 21% Asia, Middle East and Africa -3% 8% 0% 5% -2% 7% 0% 5% of which: China -9% 6% 0% -3% -14% 4% 0% -10% Electrification 1% 2% 0% 3% 9% 2% 0% 11% Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe 8% -2% -2% 4% 31% -2% -1% 28% The Americas 4% -1% -2% 1% 20% 0% -3% 17% of which: United States 0% -1% -2% -3% 20% 0% -3% 17% Asia, Middle East and Africa -3% 6% 0% 3% 14% 8% 0% 22% of which: China -6% 5% 0% -1% 8% 6% 0% 14% Motion 3% 1% -1% 3% 22% 1% -1% 22% Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -6% 3% 13% 10% 3% 0% 17% 20% The Americas -8% -1% 8% -1% 12% 0% 12% 24% of which: United States -2% 0% 9% 7% 19% 0% 16% 35% Asia, Middle East and Africa -10% 3% 15% 8% -7% 5% 15% 13% of which: China -6% 4% 14% 12% 11% 6% 21% 38% Process Automation -8% 2% 12% 6% 2% 2% 15% 19% Q2 2023 compared to Q2 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -23% -1% 0% -24% 35% -2% 0% 33% The Americas 4% 0% 0% 4% 6% -1% 0% 5% of which: United States -16% 1% 0% -15% -9% 0% 0% -9% Asia, Middle East and Africa -33% 4% 0% -29% 23% 6% 0% 29% of which: China -41% 4% 0% -37% 23% 7% 0% 30% Robotics & Discrete Automation -23% 1% 0% -22% 26% 1% 0% 27% ===== SIDA 49 ===== 36 Q2 2023 FINANCIAL INFORMATION Regional comparable growth rate reconciliation for ABB Group – Year to date H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe 0% 3% 3% 6% 16% 2% 3% 21% The Americas 4% 0% 2% 6% 20% 0% 2% 22% of which: United States 0% 0% 1% 1% 22% 1% 1% 24% Asia, Middle East and Africa -6% 8% 3% 5% 3% 8% 4% 15% of which: China -13% 5% 2% -6% 3% 7% 2% 12% ABB Group 0% 3% 3% 6% 13% 3% 3% 19% Regional comparable growth rate reconciliation by Business Area – Year to date H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -2% 2% 0% 0% 9% 2% 0% 11% The Americas 3% 1% 0% 4% 20% 0% 0% 20% of which: United States 0% 0% 0% 0% 22% 0% 0% 22% Asia, Middle East and Africa 1% 9% 0% 10% -1% 9% 0% 8% of which: China -10% 6% 0% -4% -8% 6% 0% -2% Electrification 1% 3% 0% 4% 10% 4% 0% 14% H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe 6% 3% -1% 8% 31% 2% -1% 32% The Americas 2% 0% -1% 1% 24% 0% -1% 23% of which: United States 1% -1% -1% -1% 25% 0% -1% 24% Asia, Middle East and Africa -1% 8% 0% 7% 13% 9% 0% 22% of which: China -7% 6% 0% -1% 5% 7% 0% 12% Motion 3% 3% -1% 5% 23% 3% -1% 25% H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe 18% 7% 20% 45% -4% 3% 16% 15% The Americas 8% 0% 12% 20% 13% 1% 13% 27% of which: United States -5% 0% 12% 7% 20% 0% 17% 37% Asia, Middle East and Africa -2% 5% 18% 21% -8% 5% 15% 12% of which: China 5% 7% 20% 32% 9% 7% 21% 37% Process Automation 8% 4% 17% 29% -2% 4% 15% 17% H1 2023 compared to H1 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Region reported) impact changes Comparable reported) impact changes Comparable Europe -22% 2% 0% -20% 35% 2% 0% 37% The Americas -8% -1% 0% -9% 16% -1% 0% 15% of which: United States -20% 0% 0% -20% 6% 1% 0% 7% Asia, Middle East and Africa -31% 5% 0% -26% 22% 9% 0% 31% of which: China -35% 4% 0% -31% 24% 9% 0% 33% Robotics & Discrete Automation -23% 2% 0% -21% 27% 4% 0% 31% ===== SIDA 50 ===== 37 Q2 2023 FINANCIAL INFORMATION Order backlog growth rate reconciliation June 30, 2023 compared to June 30, 2022 US$ Foreign (as exchange Portfolio Business Area reported) impact changes Comparable Electrification 18% 1% 0% 19% Motion 17% -1% -2% 14% Process Automation 11% 1% 5% 17% Robotics & Discrete Automation -3% 1% 0% -2% ABB Group 13% 0% 1% 14% Other growth rate reconciliations Q2 2023 compared to Q2 2022 Service orders growth rate Services revenues growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Business Area reported) impact changes Comparable reported) impact changes Comparable Electrification 1% 1% 0% 2% 7% 3% 0% 10% Motion 10% 3% 0% 13% 24% 3% 0% 27% Process Automation -16% 2% 20% 6% -8% 1% 25% 18% Robotics & Discrete Automation 8% 0% 0% 8% 18% 0% 0% 18% ABB Group -6% 2% 11% 7% 3% 2% 14% 19% H1 2023 compared to H1 2022 Service orders growth rate Services revenues growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Business Area reported) impact changes Comparable reported) impact changes Comparable Electrification 3% 3% 0% 6% 10% 3% 0% 13% Motion 8% 4% 0% 12% 18% 6% 0% 24% Process Automation -16% 3% 22% 9% -10% 3% 25% 18% Robotics & Discrete Automation 9% 3% 0% 12% 20% 3% 0% 23% ABB Group -6% 4% 12% 10% 2% 3% 14% 19% ===== SIDA 51 ===== 38 Q2 2023 FINANCIAL INFORMATION Operational EBITA as % of operational revenues (Operational EBITA margin) Definition Operational EBITA margin Operational EBITA margin is Operational EBITA as a percentage of operational revenues. Operational EBITA Operational earnings before interest, taxes and acquisition -related amortization (Operational EBITA) represents Income from operations excluding: • acquisition-related amortization (as defined below), • restructuring, related and implementation costs, • changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations related to divested businesses), • gains and losses from sale of businesses (including fair value adjustment on assets and liabilities held for sale), • acquisition- and divestment-related expenses and integration costs, • certain other non-operational items, as well as • foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities). Certain other non-operational items generally includes certain regulatory, compliance and legal costs, other income/expense relating to the Pow er Grids joint venture, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates), as well as other items which are determined by management on a case -by-case basis. Operational EBITA is our measure of segment profit but is also used by management to evaluate the profitability of the Compan y as a whole. Acquisition-related amortization Amortization expense on intangibles arising upon acquisitions. Restructuring, related and implementation costs Restructuring, related and implementation costs consi sts of restructuring and other related expenses, as well as internal and external costs relating to the implementation of group-wide restructuring programs. Operational revenues The Company presents operational revenues solely for the purpose of allowing the computation of Operational EBITA margin. Operational revenues are Total revenues adjusted for foreign exchange/commodity timing differences in total revenues of: (i) unrealized gains and losses on 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 (and related assets). Operational revenues are not intended to be an alternative measure to Total revenues, which represent our revenues measured in accordance with U.S. GAAP. Reconciliation The following tables provide reconciliations of consolidated Operational EBITA to Net Income and Operational EBITA Margin by business. Reconciliation of consolidated Operational EBITA to Net Income Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Operational EBITA 2,702 2,133 1,425 1,136 Acquisition-related amortization (109) (119) (55) (59) Restructuring, related and implementation costs (1) (41) (280) (13) (264) Changes in obligations related to divested businesses 5 17 8 3 Gains and losses from sale of businesses 26 (4) 26 (4) Acquisition- and divestment-related expenses and integration costs (45) (109) (26) (50) Certain other non-operational items (40) (99) (41) (65) Foreign exchange/commodity timing differences in income from operations (2) (95) (26) (110) Income from operations 2,496 1,444 1,298 587 Interest and dividend income 78 33 38 20 Interest and other finance expense (124) (62) (63) (40) Non-operational pension (cost) credit 15 68 8 32 Income from continuing operations before taxes 2,465 1,483 1,281 599 Income tax expense (468) (434) (349) (193) Income from continuing operations, net of tax 1,997 1,049 932 406 Loss from discontinued operations, net of tax (9) (20) (4) (9) Net income 1,988 1,029 928 397 (1) Includes impairment of certain assets. ===== SIDA 52 ===== 39 Q2 2023 FINANCIAL INFORMATION Reconciliation of Operational EBITA margin by business Three months ended June 30, 2023 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 3,735 1,981 1,553 922 (28) 8,163 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 6 (9) 3 6 8 14 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (4) – 5 – (2) (1) Unrealized foreign exchange movements on receivables (and related assets) – (2) (8) (7) (6) (23) Operational revenues 3,737 1,970 1,553 921 (28) 8,153 Income (loss) from operations 713 380 270 119 (184) 1,298 Acquisition-related amortization 22 9 2 19 3 55 Restructuring, related and implementation costs(1) 4 1 2 – 6 13 Changes in obligations related to divested businesses 1 – – – (9) (8) Gains and losses from sale of businesses – – (26) – – (26) Acquisition- and divestment-related expenses and integration costs 12 8 (2) 2 6 26 Certain other non-operational items 6 1 – 1 33 41 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 31 5 (8) 4 – 32 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (2) – 5 – (2) 1 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) – (3) (4) (4) 4 (7) Operational EBITA 787 401 239 141 (143) 1,425 Operational EBITA margin (%) 21.1% 20.4% 15.4% 15.3% n.a. 17.5% (1) Includes impairment of certain assets. In the three months ended June 30, 2023, Certain other non-operational items in the table above includes the following: Three months ended June 30, 2023 Robotics & Process Discrete Corporate ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation and Other Consolidated Certain other non-operational items: Other income/expense relating to the Power Grids joint venture – – – – (7) (7) Business transformation costs(1) 5 – – 1 42 48 Changes in pre-acquisition estimates 1 – – – 3 4 Certain other fair values changes, including asset impairments – – – – (7) (7) Other non-operational items – 1 – – 2 3 Total 6 1 – 1 33 41 (1) Amounts include ABB Way process transformation costs of $41 million for the three months ended June 30, 2023. ===== SIDA 53 ===== 40 Q2 2023 FINANCIAL INFORMATION Three months ended June 30, 2022 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 3,414 1,626 1,529 732 (50) 7,251 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 30 (1) 37 9 10 85 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 6 1 5 – 26 38 Unrealized foreign exchange movements on receivables (and related assets) (18) (4) (10) (8) (13) (53) Operational revenues 3,432 1,622 1,561 733 (27) 7,321 Income (loss) from operations 474 231 175 43 (336) 587 Acquisition-related amortization 28 7 1 19 4 59 Restructuring, related and implementation costs(1) 8 – – 2 254 264 Changes in obligations related to divested businesses – – – – (3) (3) Gains and losses from sale of businesses – 4 – – – 4 Acquisition- and divestment-related expenses and integration costs 10 3 36 2 (1) 50 Certain other non-operational items 20 – – (1) 46 65 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 74 23 12 1 8 118 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 4 1 7 (1) 22 33 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (13) (3) (7) (5) (13) (41) Operational EBITA 605 266 224 60 (19) 1,136 Operational EBITA margin (%) 17.6% 16.4% 14.3% 8.2% n.a. 15.5% (1) Includes impairment of certain assets. In the three months ended June 30, 2022, Certain other non-operational items in the table above includes the following: Three months ended June 30, 2022 Robotics & Process Discrete Corporate ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation and Other Consolidated Certain other non-operational items: Other income/expense relating to the Power Grids joint venture – – – – 2 2 Regulatory, compliance and legal costs – – – – 5 5 Business transformation costs(1) 1 – – – 39 40 Changes in pre-acquisition estimates – – – (2) – (2) Other non-operational items 19 – – 1 – 20 Total 20 – – (1) 46 65 (1) Amounts include ABB Way process transformation costs of $39 million for the three months ended June 30, 2022. ===== SIDA 54 ===== 41 Q2 2023 FINANCIAL INFORMATION Six months ended June 30, 2023 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 7,325 3,921 2,989 1,859 (72) 16,022 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives (8) (5) 16 8 4 15 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (5) – 6 – – 1 Unrealized foreign exchange movements on receivables (and related assets) (7) (6) (12) (8) (9) (42) Operational revenues 7,305 3,910 2,999 1,859 (77) 15,996 Income (loss) from operations 1,368 733 470 234 (309) 2,496 Acquisition-related amortization 44 17 3 39 6 109 Restructuring, related and implementation costs(1) 12 2 4 – 23 41 Changes in obligations related to divested businesses 1 – – – (6) (5) Gains and losses from sale of businesses – – (26) – – (26) Acquisition- and divestment-related expenses and integration costs 19 12 1 4 9 45 Certain other non-operational items 9 3 – 3 25 40 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 16 5 (10) 6 (7) 10 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (2) – 7 – 1 6 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (3) (5) (5) (5) 4 (14) Operational EBITA 1,464 767 444 281 (254) 2,702 Operational EBITA margin (%) 20.0% 19.6% 14.8% 15.1% n.a. 16.9% (1) Includes impairment of certain assets. In the six months ended June 30, 2023, Certain other non-operational items in the table above includes the following: Six months ended June 30, 2023 Robotics & Process Discrete Corporate ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation and Other Consolidated Certain other non-operational items: Other income/expense relating to the Power Grids joint venture – – – – (20) (20) Business transformation costs(1) 9 – – 2 71 82 Changes in pre-acquisition estimates 1 – – – 3 4 Certain other fair values changes, including asset impairments 1 1 – 1 (9) (6) Other non-operational items (2) 2 – – (20) (20) Total 9 3 – 3 25 40 (1) Amounts include ABB Way process transformation costs of $71 million for the six months ended June 30, 2023. ===== SIDA 55 ===== 42 Q2 2023 FINANCIAL INFORMATION Six months ended June 30, 2022 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 6,650 3,198 3,035 1,462 (129) 14,216 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 19 3 36 11 8 77 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 7 2 2 – 30 41 Unrealized foreign exchange movements on receivables (and related assets) (18) (6) (7) (5) (15) (51) Operational revenues 6,658 3,197 3,066 1,468 (106) 14,283 Income (loss) from operations 955 485 326 65 (387) 1,444 Acquisition-related amortization 56 15 2 40 6 119 Restructuring, related and implementation costs(1) 10 8 5 3 254 280 Changes in obligations related to divested businesses – – – – (17) (17) Gains and losses from sale of businesses – 4 – – – 4 Acquisition- and divestment-related expenses and integration costs 28 8 69 3 1 109 Certain other non-operational items 23 – – (1) 77 99 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 53 22 18 4 3 100 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 6 1 4 (1) 25 35 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (14) (3) (4) (4) (15) (40) Operational EBITA 1,117 540 420 109 (53) 2,133 Operational EBITA margin (%) 16.8% 16.9% 13.7% 7.4% n.a. 14.9% (1) Includes impairment of certain assets. In the six months ended June 30, 2022, certain other non-operational items in the table above includes the following: Six months ended June 30, 2022 Robotics & Process Discrete Corporate ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation and Other Consolidated Certain other non-operational items: Other income/expense related to the Power Grids joint venture – – – – 37 37 Regulatory, compliance and legal costs – – – – 4 4 Business transformation costs 2 – – – 64 66 Changes in pre-acquisition estimates 1 – – (2) – (1) Certain other fair values changes, including asset impairments – – – – (34) (34) Other non-operational items 20 – – 1 6 27 Total 23 – – (1) 77 99 (1) Amounts include ABB Way process transformation costs of $64 million for the six months ended June 30, 2022. ===== SIDA 56 ===== 43 Q2 2023 FINANCIAL INFORMATION Net debt Definition Net debt Net debt is defined as Total debt less Cash and marketable securities. Total debt Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt. Cash and marketable securities Cash and marketable securities is the sum of Cash and equivalents, Restricted cash (current and non -current) and Marketable securities and short -term investments. Reconciliation ($ in millions) June 30, 2023 December 31, 2022 Short-term debt and current maturities of long-term debt 3,849 2,535 Long-term debt 4,451 5,143 Total debt 8,300 7,678 Cash and equivalents 2,923 4,156 Restricted cash - current 19 18 Marketable securities and short-term investments 1,193 725 Cash and marketable securities 4,135 4,899 Net debt 4,165 2,779 Net debt/Equity ratio Definition Net debt/Equity ratio Net debt/Equity ratio is defined as Net debt divided by Equity. Equity Equity is defined as Total stockholders’ equity. Reconciliation ($ in millions, unless otherwise indicated) June 30, 2023 December 31, 2022 Total stockholders' equity 13,340 13,187 Net debt (as defined above) 4,165 2,779 Net debt / Equity ratio 0.31 0.21 Net debt/EBITDA ratio Definition Net debt/EBITDA ratio Net debt/EBITDA ratio is defined as Net debt divided by EBITDA. EBITDA EBITDA is defined as Income from operations for the trailing twelve months preceding the balance sheet date before depreciati on and amortization for the same trailing twelve-month period. Reconciliation ($ in millions, unless otherwise indicated) June 30, 2023 June 30, 2022 Income from operations for the three months ended: September 30, 2022 / 2021 708 852 December 31, 2022 / 2021 1,185 2,975 March 31, 2023 / 2022 1,198 857 June 30, 2023 / 2022 1,298 587 Depreciation and Amortization for the three months ended: September 30, 2022 / 2021 198 220 December 31, 2022 / 2021 199 216 March 31, 2023 / 2022 191 210 June 30, 2023 / 2022 196 207 EBITDA 5,173 6,124 Net debt (as defined above) 4,165 4,235 Net debt / EBITDA 0.8 0.7 ===== SIDA 57 ===== 44 Q2 2023 FINANCIAL INFORMATION Net working capital as a percentage of revenues Definition Net working capital as a percentage of revenues Net working capital as a percentage of revenues is calculated as Net working capital divided by Adjusted revenues for the tra iling twelve months. Net working capital Net working capital is the sum of (i) receivables, net, (ii) contract assets, (iii) inventories, net, and (iv) prepaid expenses; less (v ) accounts payable, trade, (vi) contract liabilities (including non-current amounts) and (vii) other current liabilities (excluding primarily: (a) income taxes payable, (b) current derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain other restructuring-related activities and (f) liabilities related to the divestment of the Power Grids business ); and including the amounts related to these accounts which have been presented as either assets or liabilities held for sale but excluding any amounts included in discontinued operations . Adjusted revenues for the trailing twelve months Adjusted revenues for the trailing twelve months includes total revenues recorded by ABB in the twelve months preceding the r elevant balance sheet date adjusted to eliminate revenues of divested businesses and the estimated impact of annualizing revenues of certain acquisitions which were completed in the same trailing twelve-month period. Reconciliation ($ in millions, unless otherwise indicated) June 30, 2023 June 30, 2022 Net working capital: Receivables, net 7,481 6,960 Contract assets 1,010 965 Inventories, net 6,448 5,595 Prepaid expenses 290 262 Accounts payable, trade (4,881) (4,805) Contract liabilities (2,394) (2,141) Other current liabilities(1) (3,506) (3,173) Net working capital in assets and liabilities held for sale 137 – Net working capital 4,585 3,663 Total revenues for the three months ended: September 30, 2022 / 2021 7,406 7,028 December 31, 2022 / 2021 7,824 7,567 March 31, 2023 / 2022 7,859 6,965 June 30, 2023 / 2022 8,163 7,251 Adjustment to annualize/eliminate revenues of certain acquisitions/divestments (162) (213) Adjusted revenues for the trailing twelve months 31,090 28,598 Net working capital as a percentage of revenues (%) 14.7% 12.8% (1) Amounts exclude $771 million and $1,104 million at June 30, 2023 and 2022, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain restructuring-related activities and (f) liabilities related to the divestment of the Power Grids business. ===== SIDA 58 ===== 45 Q2 2023 FINANCIAL INFORMATION Free cash flow conversion to net income Definition Free cash flow conversion to net income Free cash flow conversion to net income is calculated as free cash flow divided by Adjusted net income attributable to ABB . Adjusted net income attributable to ABB Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodw ill, (ii) losses from extinguishment of debt, and (iii) gains arising on the sale of both the Hitachi Energy Joint Venture and Power Grids business, the latter being included in discontinued operations. Free cash flow Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and e quipment and intangible assets, and (ii) proceeds from sales of property, plant and equipment . Free cash flow for the trailing twelve months Free cash flow for the trailing twelve months includes f ree cash flow recorded by ABB in the twelve months preceding the relevant balance sheet date. Net income for the trailing twelve months Net income for the trailing twelve months includes net income recorded by ABB (as adjusted) in the twelve months preceding the relevant balance sheet date. Free cash flow conversion to net income Twelve months to ($ in millions, unless otherwise indicated) June 30, 2023 December 31, 2022 Net cash provided by operating activities – continuing operations 2,555 1,334 Adjusted for the effects of continuing operations: Purchases of property, plant and equipment and intangible assets (755) (762) Proceeds from sale of property, plant and equipment 118 127 Free cash flow from continuing operations 1,918 699 Net cash used in operating activities – discontinued operations (35) (47) Free cash flow 1,883 652 Adjusted net income attributable to ABB (1) 3,392 2,442 Free cash flow conversion to net income 56% 27% (1) Adjusted net income attributable to ABB for the year ended December 31, 2022, is adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million and reductions to the gain on the sale of Power Grids of $10 million. Reconciliation of the trailing twelve months to June 30, 2023 Continuing operations Discontinued operations ($ in millions) Net cash provided by continuing operating activities Purchases of property, plant and equipment and intangible assets Proceeds from sale of property, plant and equipment Net cash provided by (used in) discontinued operating activities Adjusted net income attributable to ABB(1) Q3 2022 793 (165) 19 (2) 362 Q4 2022 720 (259) 42 (33) 1,088 Q1 2023 283 (151) 31 (1) 1,036 Q2 2023 759 (180) 26 1 906 Total for the trailing twelve months to June 30, 2023 2,555 (755) 118 (35) 3,392 (1) Adjusted net income attributable to ABB for Q3 and Q4 2022, is adjusted to exclude reductions to the gain on the sale of Power Grids of $2 million and $(1) million, respectively. In addition, Q4 2022 is also adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million. ===== SIDA 59 ===== 46 Q2 2023 FINANCIAL INFORMATION Net finance expenses Definition Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense. Reconciliation Six months ended June 30, Three months ended June 30, ($ in millions) 2023 2022 2023 2022 Interest and dividend income 78 33 38 20 Interest and other finance expense (124) (62) (63) (40) Net finance expenses (46) (29) (25) (20) Book-to-bill ratio Definition Book-to-bill ratio is calculated as Orders received divided by Total revenues. Reconciliation Six months ended June 30, 2023 2022 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill Electrification 8,101 7,325 1.11 8,025 6,650 1.21 Motion 4,399 3,921 1.12 4,281 3,198 1.34 Process Automation 3,782 2,989 1.27 3,511 3,035 1.16 Robotics & Discrete Automation 1,851 1,859 1.00 2,417 1,462 1.65 Corporate and Other (incl. intersegment eliminations) (16) (72) n.a. (54) (129) n.a. ABB Group 18,117 16,022 1.13 18,180 14,216 1.28 Three months ended June 30, 2023 2022 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill Electrification 3,960 3,735 1.06 3,913 3,414 1.15 Motion 2,137 1,981 1.08 2,079 1,626 1.28 Process Automation 1,669 1,553 1.07 1,819 1,529 1.19 Robotics & Discrete Automation 850 922 0.92 1,109 732 1.52 Corporate and Other (incl. intersegment eliminations) 51 (28) n.a. (113) (50) n.a. ABB Group 8,667 8,163 1.06 8,807 7,251 1.21 ===== SIDA 60 ===== — ABB Ltd Corporate Communications P.O. Box 8131 805 0 Zurich Switzerland Tel: +41 (0)43 317 71 11 www.abb.com