===== SIDA 1 ===== — ZURICH, SWITZERLAND, OCTOBER 18, 2023 Q3 2023 results Positive book-to-bill, high margin and strong cash flow delivery • Orders $8,052 million, -2%; comparable1 +2% • Revenues $7,968 million, +8%; comparable1 +11% • Income from operations $1,259 million; margin 15.8% • Operational EBITA1 $1,392 million; margin1 17.4% • Basic EPS $0.48; +149%2 • Cash flow from operating activities4 $1,351 million; +71% — “Q3 2023 was a strong quarter for ABB including a positive book-to-bill ratio, Operational EBITA margin again above 17% and a strong cash flow delivery putting us in a good position to achieve an annual free cash flow of about $3 billion.” Björn Rosengren, CEO KEY FIGURES CHANGE CHANGE ($ millions, unless otherwise indicated) Q3 2023 Q3 2022 US$ Comparable1 9M 2023 9M 2022 US$ Comparable1 Orders 8,052 8,188 -2% 2% 26,169 26,368 -1% 4% Revenues 7,968 7,406 8% 11% 23,990 21,622 11% 16% Gross Profit 2,762 2,481 11% 8,366 7,052 19% as % of revenues 34.7% 33.5% +1.2 pts 34.9% 32.6% +2.3 pts Income from operations 1,259 708 78% 3,755 2,152 74% Operational EBITA1 1,392 1,231 13% 11% 3 4,094 3,364 22% 22% 3 as % of operational revenues1 17.4% 16.6% +0.8 pts 17.0% 15.5% +1.5 pts Income from continuing operations, net of tax 905 420 115% 2,902 1,469 98% Net income attributable to ABB 882 360 145% 2,824 1,343 110% Basic earnings per share ($) 0.48 0.19 149%2 1.52 0.70 116%2 Cash flow from operating activities4 1,351 791 71% 2,393 600 299% 1 For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q3 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 — Q3 2023 First nine months Press Release ===== SIDA 2 ===== AB B IN TE RIM RE P ORT I Q3 2 023 2 The third quarter developed largely as planned, and I am pleased about the comparable order growth of 2% supporting a book-to-bill ratio of 1.01. This means we delivered on our quarterly expectation of book-to-bill in positive territory, despite a double-digit comparable increase in revenues. We had yet another quarter with strong operational performance across the business areas, and this time coupled with a very strong cash flow generation, setting us up to achieve free cash flow of about $3 billion in 2023. In total, Operational EBITA increased by 13% and we achieved an Operational EBITA margin of 17.4%, an improvement of 80 basis points from the corresponding period last year. This was supported by a strong price contribution which outweighed the impacts from inflation in labor costs, with additional support from efficient execution of higher volumes in production. It was good to see that our focus on cash conversion yielded results with Cash flow from operating activities at $1.4 billion, an increase of $560 million from last year supported mainly by higher earnings and better Net working capital management. As in recent quarters, the order development was strong in the project- and systems-related businesses that is often linked to our various medium voltage offerings. This more than offset the impact from a decline in parts of the short- cycle businesses. In total, most customer segments remained overall stable or improved, with declines mainly noted in the discrete automation and construction segments. Order growth was strongest in business area Process Automation, supported by a strong underlying market and the added contribution from a large order amounting to approximately $285 million. In contrast, order intake in Robotics & Discrete Automation was hampered by customers normalizing order patterns in a period of shortening delivery lead times, with added pressure from inventory adjustments among robotics-related distribution channels in China. From a geographical perspective, the Americas region was the growth engine for orders, driven by double-digit comparable growth in the United States and supported by the timing of large orders booked. Also, Asia, Middle East and Africa improved on a comparable basis where India noted yet another quarter with strong year-on-year development. In contrast, orders in China declined at a low single-digit comparable growth rate particularly hampered by weakness in robotics and construction demand. Outside of these segments and towards the end of the quarter we noted some indications of the underlying Chinese market stabilizing, although uncertainty is admittedly high. Europe declined to the tune of a low double-digit rate, and while the underlying market softened, the rate of decline was accentuated by a high comparable last year due to timing of larger orders booked. Sustainability is embedded in everything we do, and I was pleased to see this being recognized by MSCI and the upgrade of ABB to the highest ESG rating of AAA, meaning we score in the top 10% of the peer universe. During the quarter, Process Automation expanded its partnership with Northvolt, providing electrification and automation technologies to power the world’s largest battery recycling facility, Revolt Ett. The recycling site will process 125,000 tons of end-of-life batteries and battery production waste each year – making it the largest plant of its kind in the world. We recently took additional steps to support our customers on their journey towards more sustainable and flexible production with Robotics & Discrete Automation expanding its robot family with four models in 22 variants and energy savings of up to 20 percent. We have also announced our plans to invest $280 million in our Robotics business in Sweden. The site will serve as a European hub, and further strengthen our capabilities in serving our customers in Europe with locally manufactured products in a growing market. This is to replace the existing old robotics facilities at the site, and the new Campus is planned to open in late 2026. To mark the completion of all divisional portfolio divestments announced at the end of 2020, we successfully closed the divestment of the Power Conversion division. Going forward we will continuously review the product groups within all divisions to optimize the portfolio as part of the ABB Way operating model. Björn Rosengren CEO In the fourth quarter of 2023, we anticipate low- to mid single digit comparable revenue growth. Additionally, we expect the historical pattern to repeat with the Operational EBITA margin in Q4 to be sequentially lower from Q3, and to be around 16%. In full-year 2023, we anticipate comparable revenue growth to be in the low teens range and we expect Operational EBITA margin to be in the range of 16.5% - 17.0%. CEO summary Outlook ===== SIDA 3 ===== AB B IN TE RIM RE P ORT I Q3 2 023 3 Strong demand for the project- and systems-related businesses, often linked to the medium voltage offerings, more than offset a decline in parts of the short-cycle businesses hampered by inventory adjustments among channel partners and normalizing order patterns. In total, orders declined by 2% (up comparable 2%) year-on-year to 8,052 million. Comparable order growth was driven by the higher contribution from large orders, including the one in the Process Automation business area for $285 million, which will be executed over a multi-year period. Timing of booking significant orders supported the Americas growth of 9% (comparable 13%). Orders in Asia, Middle East and Africa declined by 5% (up comparable 4%) as the decline in China of 10% (comparable 3%) was more than offset by strength elsewhere in the region, including strong growth in India. The sharp order decline of 11% (comparable 13%) in Europe was the result of softer markets including the impact from customers normalizing inventory levels, but also impacted by last year’s high comparable supported by timing of customers placing large orders. Demand in the automotive segment improved, supported by EV-related investments, while the general industry and consumer-related robotics segments declined. In transport & infrastructure, there were positive developments in marine, ports and renewables. The machine builder segment declined as customers normalized order patterns in the face of shortening delivery lead times. In buildings, there was weakness in all three regions in residential-related demand. In the commercial construction segment the United States stood out with a continued robust momentum and outperformed a broadly stable Europe and declining China. Demand in the process-related businesses was strong across the board, with particular strength in the oil & gas segment, and it held up well also for refining, petrochemicals and the energy-related low carbon segments. Revenues increased by 8% (11% comparable) to $7,968 million and benefitted primarily from increased volumes through execution of the order backlog, combined with a strong price contribution. These benefits more than offset a slight adverse impact from portfolio changes. Revenues increased in all business areas, supported by comparable growth in most divisions as the order backlog was executed. Orders and revenues 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 Q3 Q3 Change year-on-year Orders Revenues Comparable 2% 11% FX 0% 1% Portfolio changes -4% -4% Total -2% 8% Orders by region ($ in millions, unless otherwise indicated) CHANGE Q3 2023 Q3 2022 US$ Comparable Europe 2,391 2,682 -11% -13% The Americas 3,258 2,980 9% 13% Asia, Middle East and Africa 2,403 2,526 -5% 4% ABB Group 8,052 8,188 -2% 2% Revenues by region ($ in millions, unless otherwise indicated) CHANGE Q3 2023 Q3 2022 US$ Comparable Europe 2,810 2,494 13% 10% The Americas 2,775 2,452 13% 16% Asia, Middle East and Africa 2,383 2,460 -3% 6% ABB Group 7,968 7,406 8% 11% ===== SIDA 4 ===== AB B IN TE RIM RE P ORT I Q3 2 023 4 Gross profit Gross profit increased strongly by 11% (9% constant currency) to $2,762 million, reflecting a strong gross margin improvement of 120 basis points to 34.7%. Gross margin improved in three out of four business areas, with only Process Automation declining mainly due to the absence of the exited high margin Turbocharging division (Accelleron). Income from operations Income from operations amounted to $1,259 million and increased by 78% year-on-year. The improvement was driven by operational performance and contribution from gains of $71 million from selling businesses, including the divestment of the Power Conversion division, but also by last year’s period being burdened by the recording of a provision of $325 million relating to the legacy Kusile project. Margin on Income from operations reached 15.8%, up by 620 basis points year-on-year. Operational EBITA Operational EBITA improved by 13% year-on-year to $1,392 million and the margin was up by 80 basis points to 17.4%. Key drivers to the higher earnings were the impacts from robust price activities and operational leverage on higher volumes, which more than offset adverse impacts from inflation in labor costs and from divestments. Selling, general and administrative expenses declined in relation to revenues to 16.7%, from 17.2% last year, mostly due to the absence of costs related to the spin-off of the Accelleron business in last year’s period. Operational EBITA in Corporate and Other amounted to -$109 million, of which -$39 million related to the E-mobility business where operational performance was hampered by the ongoing reorganization to ensure a more focused portfolio, and some inventory-related provisions. Net finance expenses Net finance expense was $36 million and increased slightly from last year’s $28 million. Income tax Income tax expense was $326 million with an effective tax rate of 26.5%. Net income and earnings per share Net income attributable to ABB was $882 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 $0.48, up from $0.19 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) Q3 2023 Q3 2022 Corporate and Other E-mobility (39) (4) Corporate costs, intersegment eliminations and other1 (70) (52) Total (109) (56) 1 Majority of which relates to underlying corporate ===== SIDA 5 ===== AB B IN TE RIM RE P ORT I Q3 2 023 5 Net working capital Net working capital amounted to $4,041 million, increasing year-on-year from $3,407 million driven mainly by the increase in inventories and receivables. Net working capital decreased sequentially from $4,585 million driven mainly by strong trade net working capital management and an increase in accrued expenses related to the timing of payments of accruals. Net working capital as a percentage of revenues1 was 12.8%, down sequentially from 14.7%. Capital expenditures Purchases of property, plant and equipment and intangible assets amounted to $175 million. Net debt Net debt1 amounted to $2,872 million at the end of the quarter and decreased from $4,117 million year-on-year, and declined sequentially from $4,165 million. The sequential net decrease was driven by the strong operational cash flow in the quarter, and further supported by the proceeds from the sale of the Power Conversion business. Cash flows Cash flow from operating activities was $1,351 million, representing a steep year-on-year increase from $791 million. This was driven by strong improvements in all business areas on the back of higher earnings and a reduction of net working capital this quarter versus a build- up of net working capital in the prior 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 third quarter, 5,244,809 shares were repurchased on the second trading line for approximately $200 million. ABB’s total number of issued shares, including shares held in treasury, amounts to 1,882,002,575. Balance sheet & Cash flow -5’000 -2’000 1’000 2021 2022 2023 Net Cash (Net Debt) position $ in millions 0% 50% 100% 150% 200% 250% 300% 350% 2021 2022 2023 Free cash flow conversion to net income¹, R12M ($ millions, unless otherwise indicated) Sep. 30 2023 Sep. 30 2022 Dec. 31 2022 Short term debt and current maturities of long-term debt 2,951 3,068 2,535 Long-term debt 4,899 4,530 5,143 Total debt 7,850 7,598 7,678 Cash & equivalents 3,869 2,365 4,156 Restricted cash - current 18 323 18 Marketable securities and short-term investments 1,091 793 725 Restricted cash - non-current – – – Cash and marketable securities 4,978 3,481 4,899 Net debt (cash)* 2,872 4,117 2,779 Net debt (cash)* to EBITDA ratio 0.5 0.7 0.7 Net debt (cash)* to Equity ratio 0.21 0.34 0.21 * At Sep. 30, 2023, Sep. 30, 2022 and Dec. 31, 2022, net debt(cash) excludes net pension (assets)/liabilities of $(414) million $(114) 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 Q3 2 023 6 Orders and revenues Demand linked to the medium-voltage offerings noted strong year-on-year development and more than offset market softness in parts of the short-cycle business which was hampered by distributors normalizing inventory levels in the face of shortening delivery lead times. Total orders amounted to $3,693 million and declined 2% (up comparable 1%) impacted by the divestment of the Power Conversion division early in the quarter. • Demand was particularly strong in the datacenters and chemical, oil & gas segments with a solid development noted in rail and green energy-linked areas like solar. However, weakness was noted in construction with the residential segment down in all three regions while in commercial construction the United States stood out with a continued robust momentum and outperformed a broadly stable Europe and declining China. • In Asia, Middle East and Africa orders decreased by 5% (up comparable 2%) including a slight comparable improvement in China, where signs of sequential stabilization emerged towards the latter part of the quarter outside of the construction segment. The Americas declined by 2% (up comparable 4%) with United States down by 2% (up comparable 6%). Europe was stable (down comparable 3%), including a 6% decline in Germany where weakness in the residential construction market weighed on the Smart Buildings division. • Revenues amounted to $3,561 million and weakness in the buildings segment weighed on growth in Smart Buildings and Installation Products, while the remaining divisions contributed to revenue growth of 3% (comparable 6%) with a strong contribution from price as the key driver. Profit Operational EBITA increased by 15% year-on-year and amounted to $748 million, supported by strong operational performance which more than offset the absent earnings from portfolio changes. The Operational EBITA margin remained sequentially strong at 20.8%, representing an improvement of 210 basis points year-on-year. • Benefits from a strong price execution was the main driver to the earnings improvement, with some additional support from operational leverage on slightly higher volumes. • The positive impact from lower commodity costs year-on-year, was virtually offset by inflation linked to labor. — 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) Q3 2023 Q3 2022 US$ Comparable 9M 2023 9M 2022 US$ Comparable Orders 3,693 3,772 -2% 1% 11,794 11,797 0% 3% Order backlog 6,994 6,317 11% 16% 6,994 6,317 11% 16% Revenues 3,561 3,471 3% 6% 10,886 10,121 8% 11% Operational EBITA 748 651 15% 2,212 1,768 25% as % of operational revenues 20.8% 18.7% +2.1 pts 20.3% 17.4% +2.9 pts Cash flow from operating activities 1,051 715 47% 2,143 1,258 70% No. of employees (FTE equiv.) 50,500 50,500 0% Growth Q3 Q3 Change year-on-year Orders Revenues Comparable 1% 6% FX 0% 1% Portfolio changes -3% -4% Total -2% 3% ===== SIDA 7 ===== AB B IN TE RIM RE P ORT I Q3 2 023 7 Orders and revenues Total orders declined due to a high level of larger bookings in last year’s period. Looking beyond this impact, it was a more stable development with a strong order momentum reported for the long-cycle businesses, while weakness was noted in parts of the short-cycle businesses. Order intake amounted to $1,886 million, representing a decrease of 4% (7% comparable). • Demand improved in the process-related segments of chemicals, oil & gas, pulp & paper and mining, however declined in the more short-cycle segments including HVAC linked to weakness in construction, food & beverage and electronics. • Order intake increased by 10% (comparable 15%) in Asia, Middle East and Africa, supported by a double-digit comparable growth in China. Europe declined sharply by 22% (comparable 28%) mainly due to the Traction- related high order level last year. The Americas increased by 3% (down comparable 3%) as the acquired contribution was more than offset by softness in demand for the low voltage motors. • Execution of the order backlog resulted in high revenues of $1,947 million, representing an increase of 14% (comparable 11%) year-on-year. Higher volumes and earlier implemented pricing activities both contributed strongly to comparable growth. Profit All divisions contributed to the strong 28% year-on-year improvement in Operational EBITA to $390 million, driving the Operational EBITA margin up by 200 basis points to 19.8%. • Results were mainly supported by the benefits from a strong price execution which more than offset cost inflation related to labor and raw materials. • Higher volume output supported the fixed cost absorption in production. • Strongest profitability improvements were reported in the motor divisions, with Large Motors & Generators as the outperformer. • Divisional mix was slightly positive due to strong deliveries from the drives and service-related businesses. 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) Q3 2023 Q3 2022 US$ Comparable 9M 2023 9M 2022 US$ Comparable Orders 1,886 1,966 -4% -7% 6,285 6,247 1% 1% Order backlog 5,108 4,613 11% 5% 5,108 4,613 11% 5% Revenues 1,947 1,702 14% 11% 5,868 4,900 20% 20% Operational EBITA 390 305 28% 1,157 845 37% as % of operational revenues 19.8% 17.8% +2 pts 19.7% 17.2% +2.5 pts Cash flow from operating activities 466 268 74% 935 507 84% No. of employees (FTE equiv.) 22,100 20,700 7% Growth Q3 Q3 Change year-on-year Orders Revenues Comparable -7% 11% FX 1% 1% Portfolio changes 2% 2% Total -4% 14% ===== SIDA 8 ===== AB B IN TE RIM RE P ORT I Q3 2 023 8 Orders and revenues On a broad robust underlying activity across the customer segments, with the added contribution of large orders, order intake reached $1,883 million and increased by 20% (comparable 38%) year-on-year. • Order intake included the booking of an order at a value of $285 million with fulfillment due over a multi- year period. • The Energy Industries division benefited from strong demand in the traditional oil & gas segment, but also seeing high activity levels in low carbon-related areas such as hydrogen, LNG and carbon capture. One example of how Energy Industries builds further on its value creation offer enabling the clean energy transition, is that it was contracted to support the Danish company H2 Energy Esbjerg ApS with electrical engineering at its hydrogen production and distribution hub. The plant will convert renewable electricity from offshore wind into about 90,000 tons of green hydrogen per year – the equivalent of 1.9 million barrels of oil, supporting the decarbonization of heavy industry and road transportation. • All divisions contributed with a double-digit growth in revenues, which amounted to $1,554 million, up by 7% (comparable 23%) year-on-year, supported mainly by volumes but also by a positive price development. Total revenue growth was hampered mainly by the absence of the Accelleron business which was spun-off in early October 2022, meaning this is the last quarter of structural impact. Profit The Operational EBITA was largely stable year-on-year at $226 million, the result of a strong revenue execution which offset the absence of earnings related to the exited Accelleron business. The Operational EBITA margin amounted to 14.6%, representing a decline of 70 basis points as operational improvements did not quite offset the adverse impact of 190 basis points due to the portfolio change. • Operational EBITA margin remained stable or increased in all divisions except for a decline in Marine & Ports, which was somewhat impacted by an adverse mix due to lower share of revenues stemming from the arctic marine propulsion business. 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) Q3 2023 Q3 2022 US$ Comparable 9M 2023 9M 2022 US$ Comparable Orders 1,883 1,568 20% 38% 5,665 5,079 12% 31% Order backlog 7,135 6,006 19% 20% 7,135 6,006 19% 20% Revenues 1,554 1,458 7% 23% 4,543 4,493 1% 19% Operational EBITA 226 225 0% 670 645 4% as % of operational revenues 14.6% 15.3% -0.7 pts 14.7% 14.2% +0.5 pts Cash flow from operating activities 258 217 19% 558 470 19% No. of employees (FTE equiv.) 20,900 22,400 -6% Growth Q3 Q3 Change year-on-year Orders Revenues Comparable 38% 23% FX 2% 1% Portfolio changes -20% -17% Total 20% 7% ===== SIDA 9 ===== AB B IN TE RIM RE P ORT I Q3 2 023 9 Orders and revenues With both divisions in negative growth, total orders declined by 26% (comparable 27%), weighed down by normalizing order patterns and weakening of the Chinese robotics market. Although it is difficult to exactly assess, we expect these pressures to persist also in the next couple of quarters. • In Machine Automation order intake was impacted by customers normalizing order patterns to align with shortening delivery lead times, and awaiting deliveries from the Machine Automation order backlog which extends into the second half of 2024. • In the Robotics division, orders declined at a mid-single digit rate. This was driven by a sequential softening of the underlying Chinese market, with some additional pressure from local inventory reductions among channel partners outside of the automotive segment. Outside of China demand was more resilient with growth in the United States and the decline in Europe limited to a mid-single digit rate. • From a geographical perspective, orders in the Americas declined by 10% (12% comparable). The decline in Europe was 35% (comparable 38%) triggered by machine automation-related customers normalizing order patterns. In Asia, Middle East and Africa orders declined by 20% (comparable 17%), hampered by China being down by 32% (comparable 28%) weighed down mainly by robotics-related channel partners adjusting inventories. • Revenues increased in both divisions as the order backlog was executed and amounted to $929 million, an improvement of 12% (comparable 9%), supported by positive impacts from both price and volumes. Profit Steep improvement of 29% in Operational EBITA to $137 million was supported by both divisions, and Operational EBITA margin was up by 190 basis points and reached 14.7%. • Higher gross margin was the key contributor to the strong earnings improvement, mainly supported by positive impacts from earlier implemented price increases and improved operational execution, which more than offset the impacts from higher labor costs as well as increased spend in Research & Development. 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) Q3 2023 Q3 2022 US$ Comparable 9M 2023 9M 2022 US$ Comparable Orders 665 901 -26% -27% 2,516 3,318 -24% -22% Order backlog 2,363 2,659 -11% -14% 2,363 2,659 -11% -14% Revenues 929 828 12% 9% 2,788 2,290 22% 23% Operational EBITA 137 106 29% 418 215 94% as % of operational revenues 14.7% 12.8% +1.9 pts 15.0% 9.4% +5.6 pts Cash flow from operating activities 92 82 12% 266 109 144% No. of employees (FTE equiv.) 11,000 10,700 3% Growth Q3 Q3 Change year-on-year Orders Revenues Comparable -27% 9% FX 1% 3% Portfolio changes 0% 0% Total -26% 12% 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 Q3 2 023 10 Quarterly highlights • ABB was upgraded from AA to AAA in the MSCI ESG rating. ESG ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material environmental, societal and governance (ESG) risks. Achieving the highest possible rating of AAA, ABB ranks in the top ten percent of industry peers. • As part of its commitment to increase the circularity of its low-voltage solutions, ABB expanded its portfolio of electrification products that are made of sustainable plastics in the Nordics, Germany and Spain. ABB’s Smart Buildings division is progressively substituting about 1,000 tonnes per year of conventional fossil-based plastics with sustainable alternatives including mechanically recycled or bio- based plastics. • ABB’s Motion business area and WindESCo have signed a strategic partnership, where ABB has acquired a minority stake in the company. US-based WindESCo is the leading analytics software provider for improving the performance and reliability of wind turbines. Leveraging WindESCo’ solutions, the investment will strengthen ABB’s position as a key enabler of a low carbon society and its position in the renewable power generation sector. • ABB will deliver complete power, propulsion and automation systems for two newbuild short-sea container ships of global logistics company Samskip Group. The vessels will be among the world’s first of their kind to use hydrogen as a fuel. Both vessels will be operating between Oslo Fjord and Rotterdam, a distance of approximately 700 nautical miles. • ABB has expanded its large robot range with four new models and 22 variants offering more choice, increased coverage and greater performance. The next generation models offer customers superior performance and up to 20% energy savings thanks to their lighter robot design and use of regenerative braking. • In August and September 2023, ABB organized a range of courses and trainings for its employees to better understand the differences between generations, how to challenge biases, and benefit from intergenerational collaboration. The events were part of the company’s commitment to the generations dimension of its D&I strategy that is focused on ensuring that all generations are welcomed and skills and strengths are utilized and bridged across. — Sustainability Q3 outcome • 34% reduction year-on-year of CO₂e emissions in own operations mainly driven by shifting to green electricity in our operations. • 9% increase year-on-year in LTIFR due to a slight increase in incidents in absolute numbers. • 3%-points increase year-on-year in share of women in senior management, demonstrating steady progress towards our target. 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 Q3 2023 Q3 2022 CHANGE 12M ROLLING CO₂e own operations emissions, Ktons scope 1 and 21 36 55 -34% 182 Lost Time Injury Frequency Rate (LTIFR), frequency / 200,000 working hours 2 0.15 0.14 9% 0.13 Share of females in senior management positions, % 20.4 17.4 +3 pts 19.4 1 CO₂ equivalent emissions from site, energy use, SF₆ and fleet, previous quarter 2 Current quarter Includes all incidents reported until October 5, 2023 ===== SIDA 11 ===== AB B IN TE RIM RE P ORT I Q3 2 023 11 During Q3 2023 • On July 3, ABB announced the closing of the divestment of the Power Conversion division at around $530 million. As a result, ABB recorded a non-operational book gain of $53 million in Income from operations in the third quarter of 2023. Net cash impact was approximately $500 million. With this transaction, ABB has completed all divisional portfolio divestments announced at the end of 2020. The demand for ABB’s offering was robust in the first nine months of 2023. Weakness in the short-cycle businesses from last year's high level was offset by strong momentum in the project- and systems businesses. Orders remained stable or increased in three out of four business areas, with a decline noted only in Robotics & Discrete Automation, for a combined total decrease of 1% (up 4% comparable) at $26,169 million. Revenues were supported by strong execution of the order backlog and amounted to $23,990 million, up by 11% (16% comparable), overall implying a book-to-bill of 1.09. Income from operations amounted to $3,755 million, up from $2,152 million year-on-year. This increase can be attributed mostly to an improved operational performance. In addition, the result in the first three quarters last year was hampered by charges of approximately $195 million due to the exit of a legacy project in non-core business as well as a provision of $325 million related to the legacy Kusile project. Operational EBITA increased by 22% year-on-year to $4,094 million, up from $3,364 million in last year’s period and the Operational EBITA margin improved by 150 basis points to 17.0%. The increase was driven by higher margins across all business areas. Main drivers of the margin expansion were operating leverage on higher volumes from backlog execution as well as the impacts from earlier implemented price increases, which more than offset inflation in labor and input cost. Corporate and Other Operational EBITA amounted to -$363 million. Thereof, an amount of -$134 million can be attributed to the E-mobility business, which was negatively affected by the ongoing reorganization to ensure a more focused portfolio, and some inventory-related provisions. Net finance expenses increased by $25 million to $82 million, whereas non-operational pension credits decreased by $79 million to $23 million in comparison to last year’s period, reflecting the impact of higher interest rates. Income tax expense was $794 million reflecting a tax rate of 21.5%. This includes a net benefit realized on a favorable resolution of a prior year tax matter relating to the Power Grids business in the current year, as well as the impact of non-deductible regulatory penalties related to the Kusile project in the prior year. Net income attributable to ABB was $2,824 million, up from $1,343 million year-on-year. Basic earnings per share was $1.52, representing an increase of 116% compared with the first nine months last year. Significant events First nine months 2023 ===== SIDA 12 ===== AB B IN TE RIM RE P ORT I Q3 2 023 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 Acquisitions and divestments, last twelve months ABB Group Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2023 Q2 2023 Q3 2023 EBITDA, $ in million 1,067 794 906 1,384 4,151 1,389 1,494 1,453 Return on Capital Employed, % n.a. n.a. n.a. n.a. 16.50 n.a. n.a. n.a. Net debt/Equity 0.20 0.34 0.34 0.21 0.21 0.30 0.31 0.21 Net debt/ EBITDA 12M rolling 0.4 0.7 0.7 0.7 0.7 0.9 0.8 0.5 Net working capital, % of 12M rolling revenues 12.1% 12.8% 11.7% 11.1% 11.1% 13.9% 14.7% 12.8% Earnings per share, basic, $ 0.31 0.20 0.19 0.61 1.30 0.56 0.49 0.48 Earnings per share, diluted, $ 0.31 0.20 0.19 0.60 1.30 0.55 0.48 0.47 Dividend per share, CHF n.a. n.a. n.a. n.a. 0.84 n.a. 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 32.80 Share price at the end of period, $ 1 30.76 25.43 24.41 30.46 30.46 34.30 39.32 35.86 Number of employees (FTE equivalents) 104,720 106,380 106,830 105,130 105,130 106,170 108,320 107,430 No. of shares outstanding at end of period (in millions) 1,929 1,892 1,875 1,865 1,865 1,862 1,860 1,849 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 Electrification Power Conversion division 3-Jul ~440 1,500 Electrification Industrial Plugs & Sockets business 3-Jul ~12 2 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 Q4 2023 Corporate and Other Operational EBITA2 ~(300) ~(75) unchanged Non-operating items Acquisition-related amortization ~(220) ~(55) unchanged Restructuring and related3 ~(180) ~(40) from ~(150) ABB Way transformation ~(180) ~(55) unchanged ($ in millions, unless otherwise stated) FY 2023 Net finance expenses ~(100) from ~(130) 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 and integration 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 Q3 2 023 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,” and “Sustainability”. 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,” “guidance,” “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 Q3 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 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 Q3 results presentation on October 18, 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 November 30 Capital Markets Day in Frosinone, Italy 2024 February 1 Q4 and FY 2023 results March 21 Annual General Meeting, Zurich April 18 Q1 2024 results July 18 Q2 2024 results October 17 Q3 2024 results ===== SIDA 14 ===== 1 Q3 2023 FINANCIAL INFORMATION October 18, 2023 Q3 2023 Financial information ===== SIDA 15 ===== 2 Q3 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 Q3 2023 FINANCIAL INFORMATION — Key Figures CHANGE ($ in millions, unless otherwise indicated) Q3 2023 Q3 2022 US$ Comparable(1) Orders 8,052 8,188 -2% 2% Order backlog (end September) 21,445 19,393 11% 11% Revenues 7,968 7,406 8% 11% Gross Profit 2,762 2,481 11% as % of revenues 34.7% 33.5% +1.2 pts Income from operations 1,259 708 78% Operational EBITA(1) 1,392 1,231 13% 11%(2) as % of operational revenues(1) 17.4% 16.6% +0.8 pts Income from continuing operations, net of tax 905 420 115% Net income attributable to ABB 882 360 145% Basic earnings per share ($) 0.48 0.19 149%(3) Cash flow from operating activities(4) 1,351 791 71% Cash flow from operating activities in continuing operations 1,361 793 72% CHANGE ($ in millions, unless otherwise indicated) 9M 2023 9M 2022 US$ Comparable(1) Orders 26,169 26,368 -1% 4% Revenues 23,990 21,622 11% 16% Gross Profit 8,366 7,052 19% as % of revenues 34.9% 32.6% +2.3 pts Income from operations 3,755 2,152 74% Operational EBITA(1) 4,094 3,364 22% 22%(2) as % of operational revenues(1) 17.0% 15.5% +1.5 pts Income from continuing operations, net of tax 2,902 1,469 98% Net income attributable to ABB 2,824 1,343 110% Basic earnings per share ($) 1.52 0.70 116%(3) Cash flow from operating activities(4) 2,393 600 299% Cash flow from operating activities in continuing operations 2,404 614 n.a. (1) For a reconciliation of non-GAAP measures see “Supplemental Reconciliations and Definitions” on page 34. (2) Constant currency (not adjusted for portfolio changes). (3) EPS growth rates are computed using unrounded amounts. (4) Cash flow from operating activities includes both continuing and discontinued operations. ===== SIDA 17 ===== 4 Q3 2023 FINANCIAL INFORMATION CHANGE ($ in millions, unless otherwise indicated) Q3 2023 Q3 2022 US$ Local Comparable Orders ABB Group 8,052 8,188 -2% -2% 2% Electrification 3,693 3,772 -2% -2% 1% Motion 1,886 1,966 -4% -5% -7% Process Automation 1,883 1,568 20% 18% 38% Robotics & Discrete Automation 665 901 -26% -27% -27% Corporate and Other 135 147 Intersegment eliminations (210) (166) Order backlog (end September) ABB Group 21,445 19,393 11% 8% 11% Electrification 6,994 6,317 11% 9% 16% Motion 5,108 4,613 11% 6% 5% Process Automation 7,135 6,006 19% 16% 20% Robotics & Discrete Automation 2,363 2,659 -11% -14% -14% Corporate and Other (incl. intersegment eliminations) (155) (202) Revenues ABB Group 7,968 7,406 8% 7% 11% Electrification 3,561 3,471 3% 2% 6% Motion 1,947 1,702 14% 13% 11% Process Automation 1,554 1,458 7% 6% 23% Robotics & Discrete Automation 929 828 12% 9% 9% Corporate and Other 194 141 Intersegment eliminations (217) (194) Income from operations ABB Group 1,259 708 Electrification 762 616 Motion 365 291 Process Automation 218 154 Robotics & Discrete Automation 113 81 Corporate and Other (incl. intersegment eliminations) (199) (434) Income from operations % ABB Group 15.8% 9.6% Electrification 21.4% 17.7% Motion 18.7% 17.1% Process Automation 14.0% 10.6% Robotics & Discrete Automation 12.2% 9.8% Operational EBITA ABB Group 1,392 1,231 13% 11% Electrification 748 651 15% 14% Motion 390 305 28% 25% Process Automation 226 225 0% 0% Robotics & Discrete Automation 137 106 29% 27% Corporate and Other(1) (incl. intersegment eliminations) (109) (56) Operational EBITA % ABB Group 17.4% 16.6% Electrification 20.8% 18.7% Motion 19.8% 17.8% Process Automation 14.6% 15.3% Robotics & Discrete Automation 14.7% 12.8% Cash flow from operating activities ABB Group 1,351 791 Electrification 1,051 715 Motion 466 268 Process Automation 258 217 Robotics & Discrete Automation 92 82 Corporate and Other (incl. intersegment eliminations) (506) (489) Discontinued operations (10) (2) (1) Corporate and Other at Q3 2023 and Q3 2022 includes losses of $39 million and $4 million, respectively, relating to E-mobility. ===== SIDA 18 ===== 5 Q3 2023 FINANCIAL INFORMATION CHANGE ($ in millions, unless otherwise indicated) 9M 2023 9M 2022 US$ Local Comparable Orders ABB Group 26,169 26,368 -1% 1% 4% Electrification 11,794 11,797 0% 2% 3% Motion 6,285 6,247 1% 2% 1% Process Automation 5,665 5,079 12% 14% 31% Robotics & Discrete Automation 2,516 3,318 -24% -22% -22% Corporate and Other 595 530 Intersegment eliminations (686) (603) Order backlog (end September) ABB Group 21,445 19,393 11% 8% 11% Electrification 6,994 6,317 11% 9% 16% Motion 5,108 4,613 11% 6% 5% Process Automation 7,135 6,006 19% 16% 20% Robotics & Discrete Automation 2,363 2,659 -11% -14% -14% Corporate and Other (incl. intersegment eliminations) (155) (202) Revenues ABB Group 23,990 21,622 11% 13% 16% Electrification 10,886 10,121 8% 10% 11% Motion 5,868 4,900 20% 22% 20% Process Automation 4,543 4,493 1% 3% 19% Robotics & Discrete Automation 2,788 2,290 22% 23% 23% Corporate and Other 540 395 Intersegment eliminations (635) (577) Income from operations ABB Group 3,755 2,152 Electrification 2,130 1,571 Motion 1,098 776 Process Automation 688 480 Robotics & Discrete Automation 347 146 Corporate and Other (incl. intersegment eliminations) (508) (821) Income from operations % ABB Group 15.7% 10.0% Electrification 19.6% 15.5% Motion 18.7% 15.8% Process Automation 15.1% 10.7% Robotics & Discrete Automation 12.4% 6.4% Operational EBITA ABB Group 4,094 3,364 22% 22% Electrification 2,212 1,768 25% 27% Motion 1,157 845 37% 38% Process Automation 670 645 4% 6% Robotics & Discrete Automation 418 215 94% 98% Corporate and Other(1) (incl. intersegment eliminations) (363) (109) Operational EBITA % ABB Group 17.0% 15.5% Electrification 20.3% 17.4% Motion 19.7% 17.2% Process Automation 14.7% 14.2% Robotics & Discrete Automation 15.0% 9.4% Cash flow from operating activities ABB Group 2,393 600 Electrification 2,143 1,258 Motion 935 507 Process Automation 558 470 Robotics & Discrete Automation 266 109 Corporate and Other (incl. intersegment eliminations) (1,498) (1,730) Discontinued operations (11) (14) (1) Corporate and Other at 9M 2023 and 9M 2022 includes losses of $134 million and $12 million, respectively, relating to E-mobility. ===== SIDA 19 ===== 6 Q3 2023 FINANCIAL INFORMATION Operational EBITA Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions, unless otherwise indicated) Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Revenues 7,968 7,406 3,561 3,471 1,947 1,702 1,554 1,458 929 828 Foreign exchange/commodity timing differences in total revenues 51 23 32 3 23 9 (7) 14 2 (1) Operational revenues 8,019 7,429 3,593 3,474 1,970 1,711 1,547 1,472 931 827 Income from operations 1,259 708 762 616 365 291 218 154 113 81 Acquisition-related amortization 55 55 22 24 9 8 1 1 20 19 Restructuring, related and implementation costs(1) 51 20 14 8 3 3 3 1 – 6 Changes in obligations related to divested businesses – – – – – – – – – – Gains and losses from sale of businesses (71) – (71) (1) – 1 – – – – Acquisition- and divestment-related expenses and integration costs 10 62 4 3 3 4 (4) 53 3 1 Certain other non-operational items 49 381 2 7 1 – – – 1 1 Foreign exchange/commodity timing differences in income from operations 39 5 15 (6) 9 (2) 8 16 – (2) Operational EBITA 1,392 1,231 748 651 390 305 226 225 137 106 Operational EBITA margin (%) 17.4% 16.6% 20.8% 18.7% 19.8% 17.8% 14.6% 15.3% 14.7% 12.8% Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions, unless otherwise indicated) 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 Revenues 23,990 21,622 10,886 10,121 5,868 4,900 4,543 4,493 2,788 2,290 Foreign exchange/commodity timing differences in total revenues 25 90 12 11 12 8 3 45 2 5 Operational revenues 24,015 21,712 10,898 10,132 5,880 4,908 4,546 4,538 2,790 2,295 Income from operations 3,755 2,152 2,130 1,571 1,098 776 688 480 347 146 Acquisition-related amortization 164 174 66 80 26 23 4 3 59 59 Restructuring, related and implementation costs(1) 92 300 26 18 5 11 7 6 – 9 Changes in obligations related to divested businesses (5) (17) 1 – – – – – – – Gains and losses from sale of businesses (97) 4 (71) (1) – 5 (26) – – – Acquisition- and divestment-related expenses and integration costs 55 171 23 31 15 12 (3) 122 7 4 Certain other non-operational items 89 480 11 30 4 – – – 4 – Foreign exchange/commodity timing differences in income from operations 41 100 26 39 9 18 – 34 1 (3) Operational EBITA 4,094 3,364 2,212 1,768 1,157 845 670 645 418 215 Operational EBITA margin (%) 17.0% 15.5% 20.3% 17.4% 19.7% 17.2% 14.7% 14.2% 15.0% 9.4% (1) Includes impairment of certain assets. ===== SIDA 20 ===== 7 Q3 2023 FINANCIAL INFORMATION Depreciation and Amortization Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions) Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Depreciation 130 129 64 62 27 25 12 17 14 16 Amortization 64 69 27 30 11 8 2 2 21 19 including total acquisition-related amortization of: 55 55 22 24 9 8 1 1 20 19 Process Robotics & Discrete ABB Electrification Motion Automation Automation ($ in millions) 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 9M 23 9M 22 Depreciation 384 401 190 191 80 78 35 51 43 46 Amortization 197 214 81 98 31 26 7 8 61 60 including total acquisition-related amortization of: 164 174 66 80 26 23 4 3 59 59 Orders received and revenues by region ($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE Com- Com- Q3 23 Q3 22 US$ Local parable Q3 23 Q3 22 US$ Local parable Europe 2,391 2,682 -11% -16% -13% 2,810 2,494 13% 6% 10% The Americas 3,258 2,980 9% 8% 13% 2,775 2,452 13% 12% 16% of which United States 2,479 2,294 8% 7% 13% 2,067 1,796 15% 15% 19% Asia, Middle East and Africa 2,403 2,526 -5% 0% 4% 2,383 2,460 -3% 2% 6% of which China 1,044 1,166 -10% -5% -3% 1,075 1,300 -17% -13% -10% ABB Group 8,052 8,188 -2% -2% 2% 7,968 7,406 8% 7% 11% ($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE Com- Com- 9M 23 9M 22 US$ Local parable 9M 23 9M 22 US$ Local parable Europe 8,904 9,174 -3% -3% 0% 8,617 7,520 15% 14% 17% The Americas 9,452 8,927 6% 5% 8% 8,243 7,018 17% 17% 20% of which United States 6,928 6,753 3% 2% 5% 6,143 5,124 20% 20% 23% Asia, Middle East and Africa 7,813 8,267 -5% 1% 5% 7,130 7,084 1% 7% 12% of which China 3,593 4,114 -13% -7% -5% 3,404 3,563 -4% 1% 4% ABB Group 26,169 26,368 -1% 1% 4% 23,990 21,622 11% 13% 16% ===== SIDA 21 ===== 8 Q3 2023 FINANCIAL INFORMATION — Consolidated Financial Information ABB Ltd Consolidated Income Statements (unaudited) Nine months ended Three months ended ($ in millions, except per share data in $) Sep. 30, 2023 Sep. 30, 2022 Sep. 30, 2023 Sep. 30, 2022 Sales of products 20,210 17,946 6,680 6,184 Sales of services and other 3,780 3,676 1,288 1,222 Total revenues 23,990 21,622 7,968 7,406 Cost of sales of products (13,393) (12,439) (4,447) (4,217) Cost of services and other (2,231) (2,131) (759) (708) Total cost of sales (15,624) (14,570) (5,206) (4,925) Gross profit 8,366 7,052 2,762 2,481 Selling, general and administrative expenses (4,058) (3,833) (1,331) (1,277) Non-order related research and development expenses (951) (844) (314) (272) Other income (expense), net 398 (223) 142 (224) Income from operations 3,755 2,152 1,259 708 Interest and dividend income 115 50 37 17 Interest and other finance expense (197) (107) (73) (45) Non-operational pension (cost) credit 23 102 8 34 Income from continuing operations before taxes 3,696 2,197 1,231 714 Income tax expense (794) (728) (326) (294) Income from continuing operations, net of tax 2,902 1,469 905 420 Loss from discontinued operations, net of tax (16) (36) (7) (16) Net income 2,886 1,433 898 404 Net income attributable to noncontrolling interests and redeemable noncontrolling interests (62) (90) (16) (44) Net income attributable to ABB 2,824 1,343 882 360 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 2,840 1,379 889 376 Loss from discontinued operations, net of tax (16) (36) (7) (16) Net income 2,824 1,343 882 360 Basic earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.53 0.72 0.48 0.20 Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 (0.01) Net income 1.52 0.70 0.48 0.19 Diluted earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.52 0.72 0.48 0.20 Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 (0.01) Net income 1.51 0.70 0.47 0.19 Weighted-average number of shares outstanding (in millions) used to compute: Basic earnings per share attributable to ABB shareholders 1,859 1,909 1,854 1,882 Diluted earnings per share attributable to ABB shareholders 1,871 1,920 1,865 1,889 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 22 ===== 9 Q3 2023 FINANCIAL INFORMATION — ABB Ltd Condensed Consolidated Statements of Comprehensive Income (unaudited) Nine months ended Three months ended ($ in millions) Sep. 30, 2023 Sep. 30, 2022 Sep. 30, 2023 Sep. 30, 2022 Total comprehensive income, net of tax 2,729 775 815 67 Total comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests, net of tax (54) (58) (11) (32) Total comprehensive income attributable to ABB shareholders, net of tax 2,675 717 804 35 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 23 ===== 10 Q3 2023 FINANCIAL INFORMATION — ABB Ltd Consolidated Balance Sheets (unaudited) ($ in millions) Sep. 30, 2023 Dec. 31, 2022 Cash and equivalents 3,869 4,156 Restricted cash 18 18 Marketable securities and short-term investments 1,091 725 Receivables, net 7,586 6,858 Contract assets 1,073 954 Inventories, net 6,332 6,028 Prepaid expenses 280 230 Other current assets 527 505 Current assets held for sale and in discontinued operations 60 96 Total current assets 20,836 19,570 Property, plant and equipment, net 3,891 3,911 Operating lease right-of-use assets 850 841 Investments in equity-accounted companies 186 130 Prepaid pension and other employee benefits 969 916 Intangible assets, net 1,181 1,406 Goodwill 10,356 10,511 Deferred taxes 1,366 1,396 Other non-current assets 464 467 Total assets 40,099 39,148 Accounts payable, trade 4,777 4,904 Contract liabilities 2,610 2,216 Short-term debt and current maturities of long -term debt 2,951 2,535 Current operating leases 234 220 Provisions for warranties 1,108 1,028 Other provisions 1,114 1,171 Other current liabilities 4,597 4,323 Current liabilities held for sale and in discontinued operations 79 132 Total current liabilities 17,470 16,529 Long-term debt 4,899 5,143 Non-current operating leases 643 651 Pension and other employee benefits 642 719 Deferred taxes 675 729 Other non-current liabilities 1,908 2,085 Non-current liabilities held for sale and in discontinued operations 19 20 Total liabilities 26,256 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 September 30, 2023, and December 31, 2022, respectively) 163 171 Additional paid-in capital 19 141 Retained earnings 18,840 20,082 Accumulated other comprehensive loss (4,705) (4,556) Treasury stock, at cost (33 million and 100 million shares at September 30, 2023, and December 31, 2022, respectively) (1,111) (3,061) Total ABB stockholders’ equity 13,206 12,777 Noncontrolling interests 548 410 Total stockholders’ equity 13,754 13,187 Total liabilities and stockholders’ equity 40,099 39,148 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 24 ===== 11 Q3 2023 FINANCIAL INFORMATION — ABB Ltd Consolidated Statements of Cash Flows (unaudited) Nine months ended Three months ended ($ in millions) Sep. 30, 2023 Sep. 30, 2022 Sep. 30, 2023 Sep. 30, 2022 Operating activities: Net income 2,886 1,433 898 404 Loss from discontinued operations, net of tax 16 36 7 16 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 581 615 194 198 Changes in fair values of investments (28) (39) (4) (24) Pension and other employee benefits (67) (107) (55) (24) Deferred taxes (42) (183) (79) (35) Loss from equity-accounted companies 11 100 4 38 Net loss (gain) from derivatives and foreign exchange (44) 44 10 (33) Net gain from sale of property, plant and equipment (39) (64) (6) (9) Net loss (gain) from sale of businesses (97) 4 (71) – Other 115 61 23 (2) Changes in operating assets and liabilities: Trade receivables, net (819) (657) (152) (36) Contract assets and liabilities 243 353 164 101 Inventories, net (438) (1,667) 12 (584) Accounts payable, trade (37) 390 (35) 177 Accrued liabilities 140 52 342 307 Provisions, net 106 312 50 186 Income taxes payable and receivable (9) 19 77 71 Other assets and liabilities, net (74) (88) (18) 42 Net cash provided by operating activities – continuing operations 2,404 614 1,361 793 Net cash used in operating activities – discontinued operations (11) (14) (10) (2) Net cash provided by operating activities 2,393 600 1,351 791 Investing activities: Purchases of investments (1,103) (271) (343) (15) Purchases of property, plant and equipment and intangible assets (506) (503) (175) (165) Acquisition of businesses (net of cash acquired) and increases in cost- and equity-accounted companies (160) (226) (25) (47) Proceeds from sales of investments 598 654 422 148 Proceeds from maturity of investments 138 – – – Proceeds from sales of property, plant and equipment 67 85 10 19 Proceeds from sales of businesses (net of transaction costs and cash disposed) and cost- and equity-accounted companies 552 (8) 509 5 Net cash from settlement of foreign currency derivatives (76) (154) (58) (210) Changes in loans receivable, net 8 11 7 2 Other investing activities 9 (10) – 7 Net cash provided by (used in) investing activities – continuing operations (473) (422) 347 (256) Net cash provided by (used in) investing activities – discontinued operations (22) (91) (1) – Net cash provided by (used in) investing activities (495) (513) 346 (256) Financing activities: Net changes in debt with original maturities of 90 days or less (997) 1,475 (962) 284 Increase in debt 2,584 3,554 936 373 Repayment of debt (1,437) (2,025) (309) (542) Delivery of shares 118 389 22 19 Purchase of treasury stock (909) (3,251) (433) (590) Dividends paid (1,713) (1,698) – – Dividends paid to noncontrolling shareholders (89) (83) (6) (7) Proceeds from issuance of subsidiary shares 328 – – – Other financing activities 4 (58) 4 (5) Net cash used in financing activities – continuing operations (2,111) (1,697) (748) (468) Net cash provided by financing activities – discontinued operations – – – – Net cash used in financing activities (2,111) (1,697) (748) (468) Effects of exchange rate changes on cash and equivalents and restricted cash (74) (191) (32) (115) Adjustment for the net change in cash and equivalents and restricted cash in Assets held for sale – – 28 – Net change in cash and equivalents and restricted cash (287) (1,801) 945 (48) Cash and equivalents and restricted cash, beginning of period 4,174 4,489 2,942 2,736 Cash and equivalents and restricted cash, end of period 3,887 2,688 3,887 2,688 Supplementary disclosure of cash flow information: Interest paid 151 47 43 11 Income taxes paid 865 907 338 269 Due to rounding, numbers presented may not add to the totals provided. See Notes to the Consolidated Financial Information ===== SIDA 25 ===== 12 Q3 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) 1,343 1,343 93 1,436 Foreign currency translation adjustments, net of tax of $1 (774) (774) (32) (806) Effect of change in fair value of available-for-sale securities, net of tax of $(6) (24) (24) (24) Unrecognized income (expense) related to pensions and other postretirement plans, net of tax of $57 172 172 172 Change in derivative instruments and hedges, net of tax of $3 – – – Changes in noncontrolling interests (3) (3) (22) (25) Dividends to noncontrolling shareholders – (81) (81) Dividends to shareholders (1,700) (1,700) (1,700) Cancellation of treasury shares (8) (4) (2,864) 2,876 – – Share-based payment arrangements 33 33 33 Purchase of treasury stock (3,201) (3,201) (3,201) Delivery of shares (46) (130) 565 389 389 Other 7 7 7 Balance at September 30, 2022 171 9 19,127 (4,715) (2,770) 11,822 336 12,158 Balance at January 1, 2023 171 141 20,082 (4,556) (3,061) 12,777 410 13,187 Net income(1) 2,824 2,824 65 2,889 Foreign currency translation adjustments, net of tax of $0 (177) (177) (8) (185) Effect of change in fair value of available-for-sale securities, net of tax of $1 6 6 6 Unrecognized income (expense) related to pensions and other postretirement plans, net of tax of $8 19 19 19 Change in derivative instruments and hedges, net of tax of $0 3 3 3 Issuance of subsidiary shares 170 170 168 338 Other changes in noncontrolling interests (7) (7) 5 (2) Dividends to noncontrolling shareholders – (93) (93) Dividends to shareholders (1,706) (1,706) (1,706) Cancellation of treasury shares (7) (201) (2,359) 2,567 – – Share-based payment arrangements 82 82 1 83 Purchase of treasury stock (898) (898) (898) Delivery of shares (163) 281 118 118 Other (4) (4) (4) Balance at September 30, 2023 163 19 18,840 (4,705) (1,111) 13,206 548 13,754 (1) Amounts attributable to noncontrolling interests for the nine months ended September 30, 2023 and 2022, exclude net losses of $3 million and $3 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 Q3 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 Q3 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 September 30, 2023 and December 31, 2022, amounted to $448 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 lo cal market 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 nine and three months ended September 30, 2023, the Company has recognized within its continuing operations, general and administrative e xpenses incurred to perform the TSAs, offset by $114 million and $38 million in TSA-related income for such services that is reported in Other income (expense), net. In the nine and three months ended September 30, 2022, the Company has recognized within its continuing operations, general and administrative expenses incurred to perform the TSA s, offset by $115 million and $39 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 disco ntinued 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 are 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 September 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 $60 million of current assets, $79 million of current liabilities and $19 million of non-current liabilities. ===== SIDA 28 ===== 15 Q3 2023 FINANCIAL INFORMATION ─ Note 4 Acquisitions and equity-accounted companies Acquisition of controlling interests Acquisitions of controlling interests were as follows: Nine months ended September 30, Three months ended September 30, ($ in millions, except number of acquired businesses) 2023 2022 2023 2022 Purchase price for acquisitions (net of cash acquired) (1) 115 150 1 12 Aggregate excess of purchase price over fair value of net assets acquired(2) 55 205 1 14 Number of acquired businesses 3 3 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 nine months ended September 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 nine months ended September 30, 2022. The Company entered into an agreement with the remaining no ncontrolling 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. Business divestments In the nine and three months ended September 30, 2023, the Company received proceeds (net of transaction costs and cash disposed) of $ 552 million and $509 million, respectively, relating to divestments of conso lidated businesses and recorded gains of $ 97 million and $71 million, respectively, in “Other income (expense), net” on the sale of such businesses. These are primarily due th e divestment of the Company’s Power Conversion Division to AcBel Polytech Inc., which prior to its sale was part of the Company’s Electrification operating segment. Certain amounts included in the net g ain for the sale of Power Conversion Division are estimated or otherwise subject to change in value and, as a result, the Company may record additional adjustments to the gain in future periods which are not expected to have a material impact on the consolidated financial statements. Investments in equity-accounted companies In connection with the divestment of its Power Grids business to Hitachi in 2020 (see Note 3), the Company initially retained a 19.9 percent interest in the business until December 2022, when the retained investment was sold to Hitachi. During the Company’s period of ownership of t he retained 19.9 percent interest, based on its continuing involvement with the Power Grids business, including the membership in its governing board of directors, the Company concluded that it had significant influence over Hitachi Energy. As a result, the investment was accounted for using the equity method through to the date of its sale. In the nine and three months ended September 30, 2023 and 2022, the Company recorded its share of the earnings of investees accounted for under the equity method of accounting in Other income (expense), net, as follows: Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Loss from equity-accounted companies, net of taxes (11) (34) (4) (24) Basis difference amortization (net of deferred income tax benefit) – (66) – (14) Loss from equity-accounted companies (11) (100) (4) (38) ===== SIDA 29 ===== 16 Q3 2023 FINANCIAL INFORMATION ─ Note 5 Cash and equivalents, marketable securities and short-term investments Cash and equivalents, marketable securities and short -term investments consisted of the following: September 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 1,425 1,425 1,425 Time deposits 2,709 2,709 2,462 247 Equity securities 620 24 644 644 4,754 24 – 4,778 3,887 891 Changes in fair value recorded in other comprehensive income Debt securities available-for-sale: U.S. government obligations 200 1 (13) 188 188 European government obligations 12 12 12 212 1 (13) 200 – 200 Total 4,966 25 (13) 4,978 3,887 1,091 Of which: Restricted cash, current 18 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 Q3 2023 FINANCIAL INFORMATION ─ Note 6 Derivative financial instruments The Company is exposed to certain currency, commodity, interest rate and equity risks arising from its global operating, fina ncing 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 operating ac tivities from entering into transactions in currencies other than their functional currency. To manage such currency risks, the Co mpany’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 bu t 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 Compan y, 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) September 30, 2023 December 31, 2022 September 30, 2022 Foreign exchange contracts 13,090 13,509 15,501 Embedded foreign exchange derivatives 1,291 933 864 Cross-currency interest rate swaps 849 855 781 Interest rate contracts 1,751 2,830 2,598 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 September 30, 2023 December 31, 2022 September 30, 2022 Copper swaps metric tonnes 32,223 29,281 36,264 Silver swaps ounces 1,702,359 2,012,213 2,787,909 Steel swaps metric tonnes 11,476 – – Aluminum swaps metric tonnes 5,800 6,825 6,925 Equity derivatives At September 30, 2023, December 31, 2022, and September 30, 2022, the Company held 3 million, 8 million and 8 million cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with a total fair value of $ 9 million, $15 million and $11 million, respectively. Cash flow hedges As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operati ons, commodity swaps to manage its commodity risks and cash-settled call options to hedge its WAR liabilities. The Company applies cash flow hedge accounting in only limited cases. In these cases, the effective portion of the changes in their fair value is recorded in “Accumulated other comprehensive loss” and subsequently reclassified into earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. For the nine and three months ended September 30, 2023 and 2022, there were no significant amounts recorded for cash flow hedge accounting activities. Fair value hedges To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swap s and cross-currency interest rate swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in the fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in “Interes t and other finance expense”. ===== SIDA 31 ===== 18 Q3 2023 FINANCIAL INFORMATION The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements w as as follows: Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Gains (losses) recognized in Interest and other finance expense: Interest rate contracts Designated as fair value hedges 30 (83) 12 (28) Hedged item (31) 85 (13) 29 Cross-currency interest rate swaps Designated as fair value hedges (13) (125) (3) (31) Hedged item 2 119 2 29 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 Nine months ended September 30, Three months ended September 30, ($ in millions) Location 2023 2022 2023 2022 Foreign exchange contracts Total revenues (13) (201) (18) (82) Total cost of sales (20) 57 (8) 23 SG&A expenses(1) 24 35 10 12 Non-order related research (4) and development 2 (3) 1 Interest and other finance expense (16) (139) 46 (85) Embedded foreign exchange Total revenues 39 12 (6) 7 contracts Total cost of sales – (12) 1 (10) Commodity contracts Total cost of sales (7) (72) 8 (21) Other Interest and other finance expense 1 4 – 1 Total 4 (314) 30 (154) (1) SG&A expenses represent “Selling, general and administrative expenses”. The fair values of derivatives included in the Consolidated Balance Sheets were as follows: September 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 1 Interest rate contracts – – 32 – Cross-currency interest rate swaps – – – 304 Cash-settled call options 9 – – – Total 9 – 36 305 Derivatives not designated as hedging instruments: Foreign exchange contracts 179 17 91 16 Commodity contracts 3 – 8 – Interest rate contracts 1 – 4 – Other equity contracts 9 – – – Embedded foreign exchange derivatives 26 10 22 4 Total 218 27 125 20 Total fair value 227 27 161 325 ===== SIDA 32 ===== 19 Q3 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 September 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 und er certain conditions. At September 30, 2023, and December 31, 2022, information related to these offsetting arrangements was as follows: ($ in millions) September 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 218 (70) – – 148 Total 218 (70) – – 148 ($ in millions) September 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 460 (70) – – 390 Total 460 (70) – – 390 ($ 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 Q3 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 val ue, 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 as sumptions 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: September 30, 2023 ($ in millions) Level 1 Level 2 Level 3 Total fair value Assets Securities in “Marketable securities and short-term investments”: Equity securities – 644 – 644 Debt securities—U.S. government obligations 188 – – 188 Debt securities—European government obligations 12 – – 12 Derivative assets—current in “Other current assets” – 227 – 227 Derivative assets—non-current in “Other non-current assets” – 27 – 27 Total 200 898 – 1,098 Liabilities Derivative liabilities—current in “Other current liabilities” – 161 – 161 Derivative liabilities—non-current in “Other non-current liabilities” – 325 – 325 Total – 486 – 486 ===== SIDA 34 ===== 21 Q3 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 a ppropriate 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 liabi lity 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 nine and three months ended September 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: September 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 1,407 1,407 – – 1,407 Time deposits 2,462 – 2,462 – 2,462 Restricted cash 18 18 – – 18 Marketable securities and short-term investments (excluding securities): Time deposits 247 – 247 – 247 Liabilities Short-term debt and current maturities of long -term debt (excluding finance lease obligations) 2,923 2,380 543 – 2,923 Long-term debt (excluding finance lease obligations) 4,768 4,618 13 – 4,631 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 Q3 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 original 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 quoted market prices (Level 1 inputs), if available. For bonds without available quoted market prices and other 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 Contract liabilities: ($ in millions) September 30, 2023 December 31, 2022 September 30, 2022 Contract assets 1,073 954 955 Contract liabilities 2,610 2,216 2,115 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: Nine months ended September 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 (1,230) (923) Additions to Contract liabilities - excluding amounts recognized as revenue during the period 1,602 1,320 Receivables recognized that were included in the Contract assets balance at Jan 1, 2023/2022 (553) (501) The Company considers its order backlog to represent its unsatisfied performance obligations. At September 30, 2023, the Company had unsatisfied performance obligations totaling $21,445 million and, of this amount, the Company expects to fulfill approximately 30% percent of the obligations in 2023, approximately 49% percent of the obligations in 2024 and the balance thereafter. ===== SIDA 36 ===== 23 Q3 2023 FINANCIAL INFORMATION ─ Note 9 Debt The Company’s total debt at September 30, 2023, and December 31, 2022, amounted to $7,850 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) September 30, 2023 December 31, 2022 Short-term debt 568 1,448 Current maturities of long-term debt 2,383 1,087 Total 2,951 2,535 Short-term debt primarily represented issued commercial paper and short -term bank borrowings from various banks. At September 30, 2023, and December 31, 2022, $486 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 September 30, 2023, or at December 31, 2022. In September 2023, the Company repaid at maturity its CHF 275 million 0% Bonds, equivalent to $302 million on date of repayment. In May 2023, the Company repaid at 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 September 30, 2023, and December 31, 2022, amounted to $4,899 million and $5,143 million, respectively. Outstanding bonds (including maturities within the next 12 months) were as follows: September 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 $ 298 0.625% EUR Instruments, due 2024 EUR 700 $ 729 EUR 700 $ 720 Floating Rate EUR Instruments, due 2024 EUR 500 $ 531 EUR 500 $ 536 0.75% EUR Instruments, due 2024 EUR 750 $ 777 EUR 750 $ 769 0.3% CHF Bonds, due 2024 CHF 280 $ 307 CHF 280 $ 303 2.1% CHF Bonds, due 2025 CHF 150 $ 164 CHF 150 $ 162 1.965% CHF Bonds, due 2026 CHF 325 $ 356 3.25% EUR Instruments, due 2027 EUR 500 $ 527 0.75% CHF Bonds, due 2027 CHF 425 $ 466 CHF 425 $ 460 3.8% USD Notes, due 2028(2) USD 383 $ 382 USD 383 $ 381 1.9775% CHF Bonds, due 2028 CHF 150 $ 165 1.0% CHF Bonds, due 2029 CHF 170 $ 186 CHF 170 $ 184 0% EUR Instruments, due 2030 EUR 800 $ 670 EUR 800 $ 677 2.375% CHF Bonds, due 2030 CHF 150 $ 164 CHF 150 $ 162 3.375% EUR Instruments, due 2031 EUR 750 $ 783 2.1125% CHF Bonds, due 2033 CHF 275 $ 301 4.375% USD Notes, due 2042(2) USD 609 $ 590 USD 609 $ 590 Total $ 7,098 $ 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). In September 2023, the Company issued the following CHF Bonds: (i) CHF 325 million of 1.965 percent Bonds, due 2026, (ii) CHF 150 million of 1.9775 percent Bonds, due 2028, and (iii) CHF 275 million of 2.1125 percent Bonds, due 2033, all paying interest annually in arrears. The aggregate net proceeds of these CHF Bonds, after fees, amounted to CHF 748 million (equivalent to approximately $825 million on date of issuance). ===== SIDA 37 ===== 24 Q3 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 $3 25 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 September 30, 2023, and December 31, 2022, the Company had aggregate liabilities of $94 million and $86 million, respectively, included in “Other provisions” and “Other non‑current liabilities”, for the above regulatory, compliance and legal con tingencies, and none of the individual liabilities recognized was significant. As it is not possible to make an informed judgment on, or reasonably predict, the outcome of cert ain matters and as it is not possible, based on information currently available to management, to estimate the maximum potential liability on other matters, there could be adverse outcomes beyond the amounts accrued. Guarantees General The following table provides quantitative data regarding the Company’s third -party guarantees. The maximum potential payments represent a “worst-case scenario”, and do not reflect management’s expected outcomes. Maximum potential payments ($ in millions) September 30, 2023 December 31, 2022 Performance guarantees 3,358 4,300 Financial guarantees 92 96 Total(1) 3,450 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 amounts of liabilitie s at September 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 guarantees, which have various maturities up to 2032, 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 cer tain liabilities of the divested business. At September 30, 2023, and December 31, 2022, the maximum potential payable under these guarantees amounts to $ 830 million and $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 2032, 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 September 30, 2023, and December 31, 2022, is approximately $2.2 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 standby 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 woul d then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. At September 30, 2023, and December 31, 2022, respectively, the total outstanding performance bonds aggregated to $3.0 billion and $2.9 billion. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in the nine and three months ended September 30, 2023 and 2022. ===== SIDA 38 ===== 25 Q3 2023 FINANCIAL INFORMATION Product and order-related contingencies The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts. The reconciliation of the “Provisions for warranties”, including gu arantees of product performance, was as follows: ($ in millions) 2023 2022 Balance at January 1, 1,028 1,005 Claims paid in cash or in kind (132) (122) Net increase in provision for changes in estimates, warranties issued and warranties expired 228 173 Exchange rate differences (16) (94) Balance at September 30, 1,108 962 ─ 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 21.5 percent in the nine months ended September 30, 2023, was lower than the effective tax rate of 33.1 percent in the nine months ended September 30, 2022, primarily due to a net benefit realized on a favorable resolution of an uncertain tax position in the nine months ended September 30, 2023, as well as the impact of non-deductible regulatory penalties in connection with the Kusile project in the nine months ended September 30, 2022. In February 2023, on completion of a tax audit, the Company obtained resolution of the uncertain ta x position for which an amount was recorded within Other non-current liabilities as of December 31, 2022. In the nine months ended September 30, 2023, the Company released the provision of $206 million, due to the resolution of this matter, which resulted in an increase of $0.11 in earnings per share (basic and diluted) for the nine months ended September 30, 2023. ─ Note 12 Employee benefits The Company operates defined benefit pension plans, defined contribution pension plans, and termination indemnity plans, in accordance with local regulations and practices. At September 30, 2023, the Company’s most significant defined benefit pension plans are in Switzer land as well as in Germany, the United Kingdom, and the United States. These plans cover a large portion of the Company’s employees and provide benefits to employees in the event of death, disability, retirement, or termination of employment. Certain of these plans are multi -employer plans. The Company also operates other postretirement benefit plans including postretirement health care benefits and other employee -related benefits for active employees including long-service award plans. The measurement date used for the Company’s empl oyee benefit plans is December 31. The funding policies of the Company’s plans are consistent with the local government and tax requirements. Net periodic benefit cost of the Company’s defined benefit pension and other postretirement benefit plans consisted of the following: ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Nine months ended September 30, 2023 2022 2023 2022 2023 2022 Operational pension cost: Service cost 29 40 21 26 – – Operational pension cost 29 40 21 26 – – Non-operational pension cost (credit): Interest cost 35 2 122 61 1 1 Expected return on plan assets (94) (87) (116) (113) – – Amortization of prior service cost (credit) (6) (5) (2) (2) (1) (1) Amortization of net actuarial loss – – 39 44 (3) (2) Curtailments, settlements and special termination benefits – – 18 – (16) – Non-operational pension cost (credit) (65) (90) 61 (10) (19) (2) Net periodic benefit cost (credit) (36) (50) 82 16 (19) (2) ===== SIDA 39 ===== 26 Q3 2023 FINANCIAL INFORMATION ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Three months ended September 30, 2023 2022 2023 2022 2023 2022 Operational pension cost: Service cost 10 13 7 9 – – Operational pension cost 10 13 7 9 – – Non-operational pension cost (credit): Interest cost 11 1 40 18 – – Expected return on plan assets (31) (29) (42) (36) – – Amortization of prior service cost (credit) (2) (1) (1) (1) – – Amortization of net actuarial loss – – 16 14 (1) – Curtailments, settlements and special termination benefits – – 18 – (16) – Non-operational pension cost (credit) (22) (29) 31 (5) (17) – Net periodic benefit cost (credit) (12) (16) 38 4 (17) – 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. Employer contributions were as follows: ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Nine months ended September 30, 2023 2022 2023 2022 2023 2022 Total contributions to defined benefit pension and other postretirement benefit plans 8 33 85 24 29 5 Of which, discretionary contributions to defined benefit pension plans – – 56 – 25 – ($ in millions) Defined pension benefits Other postretirement Switzerland International benefits Three months ended September 30, 2023 2022 2023 2022 2023 2022 Total contributions to defined benefit pension and other postretirement benefit plans 3 2 64 5 25 1 Of which, discretionary contributions to defined benefit pension plans – – 56 – 25 – The Company expects to make contributions totaling approximately $91 million and $31 million to its defined pension plans and other post retirement 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 September 30, 2023, 11 million shares, resulting in an increase in Treasury stock of $411 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. In addition to the share buyback programs, the Company purchased 6 million of its own shares on the open market in the nine months ended September 30, 2023, mainly for use in connection with its employee share plans, resulting in an increase in Treasury stock of $234 million. In the nine months ended September 30, 2023, the Company delivered, out of treasury stock, approximately 6 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 $170 million. ===== SIDA 40 ===== 27 Q3 2023 FINANCIAL INFORMATION ─ Note 14 Earnings per share Basic earnings per share is calculated by dividing income by the weighted -average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing income by the weighted -average number of shares outstanding during th e period, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options, and outsta nding options and shares granted subject to certain conditions under the Company’s share-based payment arrangements. Basic earnings per share Nine months ended September 30, Three months ended September 30, ($ in millions, except per share data in $) 2023 2022 2023 2022 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 2,840 1,379 889 376 Loss from discontinued operations, net of tax (16) (36) (7) (16) Net income 2,824 1,343 882 360 Weighted-average number of shares outstanding (in millions) 1,859 1,909 1,854 1,882 Basic earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.53 0.72 0.48 0.20 Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 (0.01) Net income 1.52 0.70 0.48 0.19 Diluted earnings per share Nine months ended September 30, Three months ended September 30, ($ in millions, except per share data in $) 2023 2022 2023 2022 Amounts attributable to ABB shareholders: Income from continuing operations, net of tax 2,840 1,379 889 376 Loss from discontinued operations, net of tax (16) (36) (7) (16) Net income 2,824 1,343 882 360 Weighted-average number of shares outstanding (in millions) 1,859 1,909 1,854 1,882 Effect of dilutive securities: Call options and shares 12 11 11 7 Adjusted weighted-average number of shares outstanding (in millions) 1,871 1,920 1,865 1,889 Diluted earnings per share attributable to ABB shareholders: Income from continuing operations, net of tax 1.52 0.72 0.48 0.20 Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 (0.01) Net income 1.51 0.70 0.47 0.19 ===== SIDA 41 ===== 28 Q3 2023 FINANCIAL INFORMATION ─ Note 15 Reclassifications out of accumulated other comprehensive loss The following table shows changes in “Accumulated other comprehensive loss” (OCI) attributable to ABB, by component, net of tax: Unrealized gains Pension and Foreign currency (losses) on other Derivative translation available-for-sale postretirement instruments ($ 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 (811) (25) 148 (15) (703) Amounts reclassified from OCI 5 1 24 15 45 Total other comprehensive (loss) income (806) (24) 172 – (658) Less: Amounts attributable to noncontrolling interests and redeemable noncontrolling interests (32) – – – (32) Balance at September 30, 2022(1) (3,767) (22) (917) (8) (4,715) 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 (194) – (9) (5) (208) Amounts reclassified from OCI 9 6 28 8 51 Total other comprehensive (loss) income (185) 6 19 3 (157) Less: Amounts attributable to noncontrolling interests and redeemable noncontrolling interests (8) – – – (8) Balance at September 30, 2023 (3,868) (13) (819) (5) (4,705) (1) Due to rounding, numbers presented may not add to the totals provided. The following table reflects amounts reclassified out of OCI in respect of Foreign currency translation adjustments and Pension and other postretirement plan adjustments: Nine months ended Three months ended ($ in millions) Location of (gains) losses September 30, September 30, Details about OCI components reclassified from OCI 2023 2022 2023 2022 Foreign currency translation adjustments: Changes attributable to divestments Other income (expense), net 9 – 9 – Net loss on complete or substantially complete liquidations of foreign subsidiaries Other income (expense), net – 5 – – Amounts reclassified from OCI 9 5 9 – Pension and other postretirement plan adjustments: Amortization of prior service cost (credit) Non-operational pension (cost) credit (9) (8) (3) (2) Amortization of net actuarial loss Non-operational pension (cost) credit 36 42 15 14 Net gain (loss) from settlements and curtailments Non-operational pension (cost) credit 2 – 2 – Total before tax 29 34 14 12 Tax Income tax expense (1) (10) 6 (3) Amounts reclassified from OCI 28 24 20 9 The amounts in respect of Unrealized gains (losses) on available -for-sale securities and Derivative instruments and hedges were not significant for the nine and three months ended September 30, 2023 and 2022. ===== SIDA 42 ===== 29 Q3 2023 FINANCIAL INFORMATION ─ Note 16 Restructuring and related expenses Other restructuring-related activities In the nine and three months ended September 30, 2023 and 2022, the Company executed various other restructuring -related activities and incurred the following expenses: Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Employee severance costs 38 64 12 21 Estimated contract settlement, loss order and other costs 4 205 2 3 Inventory and long-lived asset impairments 18 5 18 – Total 60 274 32 24 Expenses associated with these activities are recorded in the following line items in the Consolidated Income Statements: Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Total cost of sales 19 13 9 5 Selling, general and administrative expenses 14 39 1 11 Non-order related research and development expenses – 2 – – Other income (expense), net 27 220 22 8 Total 60 274 32 24 During the second quarter of 2022, the Company completed a plan to fully exit its full train retrofit business by transferrin g 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 September 30, 2023, and December 31, 2022, $179 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 remaining operations of the Company are i ncluded 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 nine and three months ended September 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 follows: • Electrification: manufactures and sells electrical products and solutions which are designed to provide safe, smart and sustainable electrical flow from the substation to the socket. The portfolio of inc reasingly 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 networks . The products and services are delivered through six operating Divisions: Distribution Solutions, Smart Power, Smart Buildings, Installation Products and Service, as well as, prior to its sale in July 2023, the Power Conversion Division. • Motion: designs, manufactures, and sells drives, motors, gen erators 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 saf ety 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 Q3 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 up on 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 , if any), • 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 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 manage ment 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 trans fers were to third parties, at current 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 nine and three months ended September 30, 2023 and 2022, as well as total assets at September 30, 2023, and December 31, 2022. Nine months ended September 30, 2023 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 3,411 1,858 1,663 1,456 229 8,617 The Americas 4,393 1,924 1,279 431 216 8,243 of which: United States 3,292 1,602 798 269 182 6,143 Asia, Middle East and Africa 2,912 1,699 1,580 886 53 7,130 of which: China 1,356 866 502 657 23 3,404 10,716 5,481 4,522 2,773 498 23,990 Product type Products 10,050 4,695 2,667 2,353 445 20,210 Services and other 666 786 1,855 420 53 3,780 10,716 5,481 4,522 2,773 498 23,990 Third-party revenues 10,716 5,481 4,522 2,773 498 23,990 Intersegment revenues 170 387 21 15 (593) – Total revenues(1) 10,886 5,868 4,543 2,788 (95) 23,990 ===== SIDA 44 ===== 31 Q3 2023 FINANCIAL INFORMATION Nine months ended September 30, 2022 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 3,125 1,430 1,726 1,070 169 7,520 The Americas 3,799 1,574 1,135 377 133 7,018 of which: United States 2,777 1,307 681 267 92 5,124 Asia, Middle East and Africa 3,020 1,564 1,607 838 55 7,084 of which: China 1,506 888 498 646 25 3,563 9,944 4,568 4,468 2,285 357 21,622 Product type Products 9,328 3,931 2,420 1,935 332 17,946 Services and other 616 637 2,048 350 25 3,676 9,944 4,568 4,468 2,285 357 21,622 Third-party revenues 9,944 4,568 4,468 2,285 357 21,622 Intersegment revenues 177 332 25 5 (539) – Total revenues(1) 10,121 4,900 4,493 2,290 (182) 21,622 Three months ended September 30, 2023 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 1,083 569 582 500 76 2,810 The Americas 1,461 657 411 159 87 2,775 of which: United States 1,113 541 248 94 71 2,067 Asia, Middle East and Africa 964 582 553 263 21 2,383 of which: China 439 285 163 182 6 1,075 3,508 1,808 1,546 922 184 7,968 Product type Products 3,288 1,526 924 777 165 6,680 Services and other 220 282 622 145 19 1,288 3,508 1,808 1,546 922 184 7,968 Third-party revenues 3,508 1,808 1,546 922 184 7,968 Intersegment revenues 53 139 8 7 (207) – Total revenues(1) 3,561 1,947 1,554 929 (23) 7,968 Three months ended September 30, 2022 Robotics & Process Discrete Corporate ($ in millions) Electrification Motion Automation Automation and Other Total Geographical markets Europe 1,005 477 595 358 59 2,494 The Americas 1,354 545 368 139 46 2,452 of which: United States 988 454 221 101 32 1,796 Asia, Middle East and Africa 1,053 569 488 329 21 2,460 of which: China 514 323 189 264 10 1,300 3,412 1,591 1,451 826 126 7,406 Product type Products 3,204 1,379 778 705 118 6,184 Services and other 208 212 673 121 8 1,222 3,412 1,591 1,451 826 126 7,406 Third-party revenues 3,412 1,591 1,451 826 126 7,406 Intersegment revenues 59 111 7 2 (179) – Total revenues(1) 3,471 1,702 1,458 828 (53) 7,406 (1) Due to rounding, numbers presented may not add to the totals provided. ===== SIDA 45 ===== 32 Q3 2023 FINANCIAL INFORMATION Nine months ended Three months ended September 30, September 30, ($ in millions) 2023 2022 2023 2022 Operational EBITA: Electrification 2,212 1,768 748 651 Motion 1,157 845 390 305 Process Automation 670 645 226 225 Robotics & Discrete Automation 418 215 137 106 Corporate and Other ‒ E-mobility (134) (12) (39) (4) ‒ Corporate costs, Intersegment elimination and other (229) (97) (70) (52) Total 4,094 3,364 1,392 1,231 Acquisition-related amortization (164) (174) (55) (55) Restructuring, related and implementation costs (1) (92) (300) (51) (20) Changes in obligations related to divested businesses 5 17 – – Gains and losses from sale of businesses 97 (4) 71 – Acquisition- and divestment-related expenses and integration costs (55) (171) (10) (62) Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) (58) (107) (48) (7) Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (8) (48) (2) (13) Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) 25 55 11 15 Certain other non-operational items: Other income/expense relating to the Power Grids joint venture 27 (67) 7 (30) Regulatory, compliance and legal costs – (333) – (329) Business transformation costs (2) (139) (114) (57) (48) Changes in pre-acquisition estimates (4) – – (1) Certain other fair value changes, including asset impairments 3 58 (3) 24 Other non-operational items 24 (24) 4 3 Income from operations 3,755 2,152 1,259 708 Interest and dividend income 115 50 37 17 Interest and other finance expense (197) (107) (73) (45) Non-operational pension (cost) credit 23 102 8 34 Income from continuing operations before taxes 3,696 2,197 1,231 714 (1) Includes impairment of certain assets. (2) Amount includes ABB Way process transformation costs of $122 million and $98 million for nine months ended September 30, 2023 and 2022, respectively, and $51 million and $34 million for the three months ended September 30, 2023 and 2022, respectively. Total assets(1) ($ in millions) September 30, 2023 December 31, 2022 Electrification 12,699 12,500 Motion 7,013 6,565 Process Automation 4,900 4,598 Robotics & Discrete Automation 4,893 4,901 Corporate and Other(2) 10,594 10,584 Consolidated 40,099 39,148 (1) Total assets are after intersegment eliminations and therefore reflect third-party assets only. (2) At September 30, 2023, and December 31, 2022, respectively, Corporate and Other includes $60 million and $96 million of assets in the Power Grids business which is reported as discontinued operations (see Note 3). ===== SIDA 46 ===== 33 Q3 2023 FINANCIAL INFORMATION ===== SIDA 47 ===== 34 Q3 2023 FINANCIAL I NFORMATION — 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 nine and three months ended September 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 fro m foreign currency 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 adjus tment for portfolio 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 busine ss are adjusted 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 a djusted as if the relevant business was divested in the period when the decision to cease business activities was taken. We do not adjust for portfolio changes where the relevant business has annualized revenues of less than $50 million. The following tables provide reconciliations of reported growth rates of certain key figures to their respective comparable growth rate. Comparable growth rate reconciliation by Business Area Q3 2023 compared to Q3 2022 Order growth rate Revenue growth rate US$ Foreign US$ Foreign (as exchange Portfolio (as exchange Portfolio Business Area reported) impact changes Comparable reported) impact changes Comparable Electrification -2% 0% 3% 1% 3% -1% 4% 6% Motion -4% -1% -2% -7% 14% -1% -2% 11% Process Automation 20% -2% 20% 38% 7% -1% 17% 23% Robotics & Discrete Automation -26% -1% 0% -27% 12% -3% 0% 9% ABB Group -2% 0% 4% 2% 8% -1% 4% 11% 9M 2023 compared to 9M 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 0% 2% 1% 3% 8% 2% 1% 11% Motion 1% 1% -1% 1% 20% 2% -2% 20% Process Automation 12% 2% 17% 31% 1% 2% 16% 19% Robotics & Discrete Automation -24% 2% 0% -22% 22% 1% 0% 23% ABB Group -1% 2% 3% 4% 11% 2% 3% 16% ===== SIDA 48 ===== 35 Q3 2023 FINANCIAL I NFORMATION Regional comparable growth rate reconciliation Regional comparable growth rate reconciliation for ABB Group - Quarter Q3 2023 compared to Q3 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 -11% -5% 3% -13% 13% -7% 4% 10% The Americas 9% -1% 5% 13% 13% -1% 4% 16% of which: United States 8% -1% 6% 13% 15% 0% 4% 19% Asia, Middle East and Africa -5% 5% 4% 4% -3% 5% 4% 6% of which: China -10% 5% 2% -3% -17% 4% 3% -10% ABB Group -2% 0% 4% 2% 8% -1% 4% 11% Regional comparable growth rate reconciliation by Business Area - Quarter Q3 2023 compared to Q3 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% -6% 3% -3% 7% -7% 2% 2% The Americas -2% 0% 6% 4% 8% -1% 6% 13% of which: United States -2% 0% 8% 6% 13% 0% 6% 19% Asia, Middle East and Africa -5% 6% 1% 2% -8% 5% 3% 0% of which: China -6% 6% 1% 1% -15% 5% 3% -7% Electrification -2% 0% 3% 1% 3% -1% 4% 6% Q3 2023 compared to Q3 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% -5% -1% -28% 21% -9% -1% 11% The Americas 3% -2% -4% -3% 21% -1% -5% 15% of which: United States -3% 0% -4% -7% 19% 0% -5% 14% Asia, Middle East and Africa 10% 5% 0% 15% 3% 5% 0% 8% of which: China 5% 6% 0% 11% -12% 5% 0% -7% Motion -4% -1% -2% -7% 14% -1% -2% 11% Q3 2023 compared to Q3 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% -3% 22% 37% -2% -3% 13% 8% The Americas 63% -5% 22% 80% 12% -2% 15% 25% of which: United States 75% -6% 27% 96% 13% -1% 19% 31% Asia, Middle East and Africa -11% 2% 14% 5% 13% 4% 22% 39% of which: China -22% 4% 17% -1% -14% 5% 15% 6% Process Automation 20% -2% 20% 38% 7% -1% 17% 23% Q3 2023 compared to Q3 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 -35% -3% 0% -38% 40% -9% 0% 31% The Americas -10% -2% 0% -12% 14% -3% 0% 11% of which: United States -9% 0% 0% -9% -6% 0% 0% -6% Asia, Middle East and Africa -20% 3% 0% -17% -19% 3% 0% -16% of which: China -32% 4% 0% -28% -31% 4% 0% -27% Robotics & Discrete Automation -26% -1% 0% -27% 12% -3% 0% 9% ===== SIDA 49 ===== 36 Q3 2023 FINANCIAL I NFORMATION Regional comparable growth rate reconciliation for ABB Group – Year to date 9M 2023 compared to 9M 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 -3% 0% 3% 0% 15% -1% 3% 17% The Americas 6% -1% 3% 8% 17% 0% 3% 20% of which: United States 3% -1% 3% 5% 20% 0% 3% 23% Asia, Middle East and Africa -5% 6% 4% 5% 1% 6% 5% 12% of which: China -13% 6% 2% -5% -4% 5% 3% 4% ABB Group -1% 2% 3% 4% 11% 2% 3% 16% Regional comparable growth rate reconciliation by Business Area – Year to date 9M 2023 compared to 9M 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% -1% 1% -1% 8% -1% 1% 8% The Americas 2% 0% 2% 4% 16% 0% 2% 18% of which: United States -1% 0% 3% 2% 19% 0% 2% 21% Asia, Middle East and Africa -1% 8% 0% 7% -3% 7% 1% 5% of which: China -9% 6% 0% -3% -10% 5% 1% -4% Electrification 0% 2% 1% 3% 8% 2% 1% 11% 9M 2023 compared to 9M 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 -3% -1% -1% -5% 28% -2% -1% 25% The Americas 2% 0% -2% 0% 23% 0% -3% 20% of which: United States 0% -1% -2% -3% 23% 0% -3% 20% Asia, Middle East and Africa 3% 6% 0% 9% 9% 7% 0% 16% of which: China -3% 6% 0% 3% -1% 6% 0% 5% Motion 1% 1% -1% 1% 20% 2% -2% 20% 9M 2023 compared to 9M 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% 4% 21% 43% -4% 1% 15% 12% The Americas 26% -1% 14% 39% 13% 0% 13% 26% of which: United States 24% -3% 17% 38% 17% 0% 18% 35% Asia, Middle East and Africa -5% 4% 17% 16% -2% 5% 17% 20% of which: China -2% 5% 20% 23% 1% 5% 19% 25% Process Automation 12% 2% 17% 31% 1% 2% 16% 19% 9M 2023 compared to 9M 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 -26% 0% 0% -26% 36% -1% 0% 35% The Americas -8% -2% 0% -10% 15% -1% 0% 14% of which: United States -17% 0% 0% -17% 1% 0% 0% 1% Asia, Middle East and Africa -28% 4% 0% -24% 6% 6% 0% 12% of which: China -34% 4% 0% -30% 2% 5% 0% 7% Robotics & Discrete Automation -24% 2% 0% -22% 22% 1% 0% 23% ===== SIDA 50 ===== 37 Q3 2023 FINANCIAL I NFORMATION Order backlog growth rate reconciliation September 30, 2023 compared to September 30, 2022 US$ Foreign (as exchange Portfolio Business Area reported) impact changes Comparable Electrification 11% -2% 7% 16% Motion 11% -5% -1% 5% Process Automation 19% -3% 4% 20% Robotics & Discrete Automation -11% -3% 0% -14% ABB Group 11% -3% 3% 11% Other growth rate reconciliations Q3 2023 compared to Q3 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 12% 0% 0% 12% 6% -2% 0% 4% Motion 6% -2% 0% 4% 33% -1% 0% 32% Process Automation 30% -3% 37% 64% -8% -1% 25% 16% Robotics & Discrete Automation 10% -3% 0% 7% 19% -4% 0% 15% ABB Group 22% -3% 17% 36% 5% -1% 14% 18% 9M 2023 compared to 9M 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 6% 2% 0% 8% 8% 2% 0% 10% Motion 7% 3% 0% 10% 23% 3% 0% 26% Process Automation -2% 1% 26% 25% -9% 1% 25% 17% Robotics & Discrete Automation 9% 2% 0% 11% 20% 0% 0% 20% ABB Group 2% 2% 14% 18% 3% 2% 14% 19% ===== SIDA 51 ===== 38 Q3 2023 FINANCIAL I NFORMATION 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 , if any), • 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 tra nsaction 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 consists 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 Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Operational EBITA 4,094 3,364 1,392 1,231 Acquisition-related amortization (164) (174) (55) (55) Restructuring, related and implementation costs (1) (92) (300) (51) (20) Changes in obligations related to divested businesses 5 17 – – Gains and losses from sale of businesses 97 (4) 71 – Acquisition- and divestment-related expenses and integration costs (55) (171) (10) (62) Certain other non-operational items (89) (480) (49) (381) Foreign exchange/commodity timing differences in income from operations (41) (100) (39) (5) Income from operations 3,755 2,152 1,259 708 Interest and dividend income 115 50 37 17 Interest and other finance expense (197) (107) (73) (45) Non-operational pension (cost) credit 23 102 8 34 Income from continuing operations before taxes 3,696 2,197 1,231 714 Income tax expense (794) (728) (326) (294) Income from continuing operations, net of tax 2,902 1,469 905 420 Loss from discontinued operations, net of tax (16) (36) (7) (16) Net income 2,886 1,433 898 404 (1) Includes impairment of certain assets. ===== SIDA 52 ===== 39 Q3 2023 FINANCIAL I NFORMATION Reconciliation of Operational EBITA margin by business Three months ended September 30, 2023 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 3,561 1,947 1,554 929 (23) 7,968 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 45 20 (13) (4) 2 50 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized – (1) 2 1 1 3 Unrealized foreign exchange movements on receivables (and related assets) (13) 4 4 5 (2) (2) Operational revenues 3,593 1,970 1,547 931 (22) 8,019 Income (loss) from operations 762 365 218 113 (199) 1,259 Acquisition-related amortization 22 9 1 20 3 55 Restructuring, related and implementation costs(1) 14 3 3 – 31 51 Changes in obligations related to divested businesses – – – – – – Gains and losses from sale of businesses (71) – – – – (71) Acquisition- and divestment-related expenses and integration costs 4 3 (4) 3 4 10 Certain other non-operational items 2 1 – 1 45 49 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 26 10 9 (5) 8 48 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 1 (1) – 2 – 2 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (12) – (1) 3 (1) (11) Operational EBITA 748 390 226 137 (109) 1,392 Operational EBITA margin (%) 20.8% 19.8% 14.6% 14.7% n.a. 17.4% (1) Includes impairment of certain assets. In the three months ended September 30, 2023, Certain other non-operational items in the table above includes the following: Three months ended September 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) 3 1 – 1 52 57 Changes in pre-acquisition estimates – – – – – – Certain other fair values changes, including asset impairments – 1 – – 2 3 Other non-operational items (1) (1) – – (2) (4) Total 2 1 – 1 45 49 (1) Amounts include ABB Way process transformation costs of $51 million for the three months ended September 30, 2023. ===== SIDA 53 ===== 40 Q3 2023 FINANCIAL I NFORMATION Three months ended September 30, 2022 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 3,471 1,702 1,458 828 (53) 7,406 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 8 14 14 3 6 45 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 4 – 9 – (1) 12 Unrealized foreign exchange movements on receivables (and related assets) (9) (5) (9) (4) (7) (34) Operational revenues 3,474 1,711 1,472 827 (55) 7,429 Income (loss) from operations 616 291 154 81 (434) 708 Acquisition-related amortization 24 8 1 19 3 55 Restructuring, related and implementation costs(1) 8 3 1 6 2 20 Changes in obligations related to divested businesses – – – – – – Gains and losses from sale of businesses (1) 1 – – – – Acquisition- and divestment-related expenses and integration costs 3 4 53 1 1 62 Certain other non-operational items 7 – – 1 373 381 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) (3) – 9 (1) 2 7 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 3 – 7 1 2 13 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (6) (2) – (2) (5) (15) Operational EBITA 651 305 225 106 (56) 1,231 Operational EBITA margin (%) 18.7% 17.8% 15.3% 12.8% n.a. 16.6% (1) Includes impairment of certain assets. In the three months ended September 30, 2022, Certain other non-operational items in the table above includes the following: Three months ended September 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 – – – – 30 30 Regulatory, compliance and legal costs – – – – 329 329 Business transformation costs(1) 13 – – – 35 48 Changes in pre-acquisition estimates 1 – – – – 1 Certain other fair values changes, including asset impairments (3) – – – (21) (24) Other non-operational items (4) – – 1 – (3) Total 7 – – 1 373 381 (1) Amounts include ABB Way process transformation costs of $34 million for the three months ended September 30, 2022. ===== SIDA 54 ===== 41 Q3 2023 FINANCIAL I NFORMATION Nine months ended September 30, 2023 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 10,886 5,868 4,543 2,788 (95) 23,990 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 37 15 3 4 6 65 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (5) (1) 8 1 1 4 Unrealized foreign exchange movements on receivables (and related assets) (20) (2) (8) (3) (11) (44) Operational revenues 10,898 5,880 4,546 2,790 (99) 24,015 Income (loss) from operations 2,130 1,098 688 347 (508) 3,755 Acquisition-related amortization 66 26 4 59 9 164 Restructuring, related and implementation costs(1) 26 5 7 – 54 92 Changes in obligations related to divested businesses 1 – – – (6) (5) Gains and losses from sale of businesses (71) – (26) – – (97) Acquisition- and divestment-related expenses and integration costs 23 15 (3) 7 13 55 Certain other non-operational items 11 4 – 4 70 89 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 42 15 (1) 1 1 58 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized (1) (1) 7 2 1 8 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (15) (5) (6) (2) 3 (25) Operational EBITA 2,212 1,157 670 418 (363) 4,094 Operational EBITA margin (%) 20.3% 19.7% 14.7% 15.0% n.a. 17.0% (1) Includes impairment of certain assets. In the nine months ended September 30, 2023, Certain other non-operational items in the table above includes the following: Nine months ended September 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 – – – – (27) (27) Business transformation costs(1) 12 1 – 3 123 139 Changes in pre-acquisition estimates 1 – – – 3 4 Certain other fair values changes, including asset impairments 1 2 – 1 (7) (3) Other non-operational items (3) 1 – – (22) (24) Total 11 4 – 4 70 89 (1) Amounts include ABB Way process transformation costs of $122 million for the nine months ended September 30, 2023. ===== SIDA 55 ===== 42 Q3 2023 FINANCIAL I NFORMATION Nine months ended September 30, 2022 Corporate and Robotics & Other and Process Discrete Intersegment ($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated Total revenues 10,121 4,900 4,493 2,290 (182) 21,622 Foreign exchange/commodity timing differences in total revenues: Unrealized gains and losses on derivatives 27 17 50 14 14 122 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 11 2 11 – 29 53 Unrealized foreign exchange movements on receivables (and related assets) (27) (11) (16) (9) (22) (85) Operational revenues 10,132 4,908 4,538 2,295 (161) 21,712 Income (loss) from operations 1,571 776 480 146 (821) 2,152 Acquisition-related amortization 80 23 3 59 9 174 Restructuring, related and implementation costs(1) 18 11 6 9 256 300 Changes in obligations related to divested businesses – – – – (17) (17) Gains and losses from sale of businesses (1) 5 – – – 4 Acquisition- and divestment-related expenses and integration costs 31 12 122 4 2 171 Certain other non-operational items 30 – – – 450 480 Foreign exchange/commodity timing differences in income from operations: Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) 50 22 27 3 5 107 Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized 9 1 11 – 27 48 Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) (20) (5) (4) (6) (20) (55) Operational EBITA 1,768 845 645 215 (109) 3,364 Operational EBITA margin (%) 17.4% 17.2% 14.2% 9.4% n.a. 15.5% (1) Includes impairment of certain assets. In the nine months ended September 30, 2022, certain other non-operational items in the table above includes the following: Nine months ended September 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 – – – – 67 67 Regulatory, compliance and legal costs – – – – 333 333 Business transformation costs 15 – – – 99 114 Changes in pre-acquisition estimates 2 – – (2) – – Certain other fair values changes, including asset impairments (3) – – – (55) (58) Other non-operational items 16 – – 2 6 24 Total 30 – – – 450 480 (1) Amounts include ABB Way process transformation costs of $98 million for the nine months ended September 30, 2022. ===== SIDA 56 ===== 43 Q3 2023 FINANCIAL I NFORMATION Net debt Definition Net debt Net debt is defined as Total debt less Cash and marketable securities. Total debt Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt. Cash and marketable securities Cash and marketable securities is the sum of Cash and equi valents, Restricted cash (current and non -current) and Marketable securities and short -term investments. Reconciliation ($ in millions) September 30, 2023 December 31, 2022 Short-term debt and current maturities of long -term debt 2,951 2,535 Long-term debt 4,899 5,143 Total debt 7,850 7,678 Cash and equivalents 3,869 4,156 Restricted cash - current 18 18 Marketable securities and short-term investments 1,091 725 Cash and marketable securities 4,978 4,899 Net debt 2,872 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) September 30, 2023 December 31, 2022 Total stockholders' equity 13,754 13,187 Net debt (as defined above) 2,872 2,779 Net debt / Equity ratio 0.21 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) September 30, 2023 September 30, 2022 Income from operations for the three months ended: December 31, 2022 / 2021 1,185 2,975 March 31, 2023 / 2022 1,198 857 June 30, 2023 / 2022 1,298 587 September 30, 2023 / 2022 1,259 708 Depreciation and Amortization for the three months ended: December 31, 2022 / 2021 199 216 March 31, 2023 / 2022 191 210 June 30, 2023 / 2022 196 207 September 30, 2023 / 2022 194 198 EBITDA 5,720 5,958 Net debt (as defined above) 2,872 4,117 Net debt / EBITDA 0.5 0.7 ===== SIDA 57 ===== 44 Q3 2023 FINANCIAL I NFORMATION 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 trailing 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 and (vii) other current liabilities (excluding primarily: (a) income taxes payable, (b) current derivative liabilities, (c) pens ion 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 t he relevant balance sheet date adjusted to eliminate revenues of divested businesses and the estimated impact of annualizing revenues of certain acquis itions which were completed in the same trailing twelve-month period. Reconciliation ($ in millions, unless otherwise indicated) September 30, 2023 September 30, 2022 Net working capital: Receivables, net 7,586 6,695 Contract assets 1,073 955 Inventories, net 6,332 5,849 Prepaid expenses 280 261 Accounts payable, trade (4,777) (4,769) Contract liabilities (2,610) (2,178) Other current liabilities(1) (3,843) (3,406) Net working capital 4,041 3,407 Total revenues for the three months ended: December 31, 2022 / 2021 7,824 7,567 March 31, 2023 / 2022 7,859 6,965 June 30, 2023 / 2022 8,163 7,251 September 30, 2023 / 2022 7,968 7,406 Adjustment to annualize/eliminate revenues of certain acquisitions/divestments (267) (55) Adjusted revenues for the trailing twelve months 31,547 29,134 Net working capital as a percentage of revenues (%) 12.8% 11.7% (1) Amounts exclude $754 million and $795 million at September 30, 2023 and 2022, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain restructuring-related activities and (f) liabilities related to the divestment of the Power Grids business. ===== SIDA 58 ===== 45 Q3 2023 FINANCIAL I NFORMATION Free cash flow conversion to net income Definition Free cash flow conversion to net income Free cash flow conversion to net income is calculated as free cash flow divided by Adjusted net income attributable to ABB . Adjusted net income attributable to ABB Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodw ill, (ii) losses from extinguishment of debt, and (iii) gains arising on the sale of the Power Conversion Division, the Hitachi Energy Joint Venture and the Power Grids business, the latter being included in discontinued operations. Free cash flow Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible assets, and (ii) proceeds from sales of property, plant and equipment . Free cash flow for the trailing twelve months Free cash flow for the trailing twelve months includes free cash flow recorded by ABB in the twelve months preceding the rele vant balance sheet date. Net income for the trailing twelve months Net income for the trailing twelve months includes net income recorded by ABB (as adjusted) in the twelve months preceding the relevant balance sheet date. Free cash flow conversion to net income Twelve months to ($ in millions, unless otherwise indicated) September 30, 2023 December 31, 2022 Net cash provided by operating activities – continuing operations 3,123 1,334 Adjusted for the effects of continuing operations: Purchases of property, plant and equipment and intangible assets (765) (762) Proceeds from sale of property, plant and equipment 109 127 Free cash flow from continuing operations 2,467 699 Net cash used in operating activities – discontinued operations (43) (47) Free cash flow 2,424 652 Adjusted net income attributable to ABB (1) 3,859 2,442 Free cash flow conversion to net income 63% 27% (1) Adjusted net income attributable to ABB for the year ended December 31, 2022, is adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million and reductions to the gain on the sale of Power Grids of $10 million. Reconciliation of the trailing twelve months to September 30, 2023 Continuing operations Discontinued operations ($ in millions) Net cash provided by continuing operating activities Purchases of property, plant and equipment and intangible assets Proceeds from sale of property, plant and equipment Net cash provided by (used in) discontinued operating activities Adjusted net income attributable to ABB(1) Q4 2022 720 (259) 42 (33) 1,088 Q1 2023 283 (151) 31 (1) 1,036 Q2 2023 759 (180) 26 1 906 Q3 2023 1,361 (175) 10 (10) 829 Total for the trailing twelve months to September 30, 2023 3,123 (765) 109 (43) 3,859 (1) Adjusted net income attributable to ABB for Q3 2023, is adjusted to exclude the gain on sale of the Power Conversion Division of $53 million, while Q4 2022, is adjusted to exclude reductions to the gain on the sale of Power Grids of $(1) million. In addition, Q4 2022 is also adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million. ===== SIDA 59 ===== 46 Q3 2023 FINANCIAL I NFORMATION Net finance expenses Definition Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense. Reconciliation Nine months ended September 30, Three months ended September 30, ($ in millions) 2023 2022 2023 2022 Interest and dividend income 115 50 37 17 Interest and other finance expense (197) (107) (73) (45) Net finance expenses (82) (57) (36) (28) Book-to-bill ratio Definition Book-to-bill ratio is calculated as Orders received divided by Total revenues. Reconciliation Nine months ended September 30, 2023 2022 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill Electrification 11,794 10,886 1.08 11,797 10,121 1.17 Motion 6,285 5,868 1.07 6,247 4,900 1.27 Process Automation 5,665 4,543 1.25 5,079 4,493 1.13 Robotics & Discrete Automation 2,516 2,788 0.90 3,318 2,290 1.45 Corporate and Other (incl. intersegment eliminations) (91) (95) n.a. (73) (182) n.a. ABB Group 26,169 23,990 1.09 26,368 21,622 1.22 Three months ended September 30, 2023 2022 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill Electrification 3,693 3,561 1.04 3,772 3,471 1.09 Motion 1,886 1,947 0.97 1,966 1,702 1.16 Process Automation 1,883 1,554 1.21 1,568 1,458 1.08 Robotics & Discrete Automation 665 929 0.72 901 828 1.09 Corporate and Other (incl. intersegment eliminations) (75) (23) n.a. (19) (53) n.a. ABB Group 8,052 7,968 1.01 8,188 7,406 1.11 ===== SIDA 60 ===== — ABB Ltd Corporate Communications P.O. Box 8131 8050 Zurich Switzerland Tel: +41 (0)43 317 71 11 www.abb.com