FULLTEXT DEL 1 AV 2
Kvartalsrapport Q2 2023
===== 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 =====