FULLTEXT DEL 1 AV 2
Kvartalsrapport Q3 2023
===== 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
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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
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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 $19 million of non-current liabilities.
===== SIDA 28 =====
15 Q3 2023 FINANCIAL INFORMATION
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Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Nine months ended September 30, Three months ended September 30,
($ 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%
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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 =====