FULLTEXT DEL 1 AV 2
Kvartalsrapport Q4 2023
===== SIDA 1 =====
—
ZURICH, SWITZERLAND, FEBRUARY 1, 2024
Q4 2023 results
Solid finish to a record year
Q4 2023
• Orders $7.6 billion, 0%; comparable1 0%
• Revenues $8.2 billion, +5%; comparable +6%
• Income from operations $1,116 million; margin 13.5%
• Operational EBITA1 $1,333 million; margin1 16.3%
• Basic EPS $0.50, -18%2
• Cash flow from operating activities $1,897 million; +176%
FY 2023
• Orders $33.8 billion, -1%; comparable1 +3%
• Revenues $32.2 billion, +9%; comparable +14%
• Income from operations $4,871 million; margin 15.1%
• Operational EBITA1 $5,427 million; margin1 16.9%
• Basic EPS $2.02, +55%2
• Cash flow from operating activities $4,290 million; +233%
• Dividend proposal of CHF0.87 per share
KEY FIGURES
CHANGE CHANGE
($ millions, unless otherwise indicated) Q4 2023 Q4 2022 US$ Comparable1 FY 2023 FY 2022 US$ Comparable1
Orders 7,649 7,620 0% 0% 33,818 33,988 -1% 3%
Revenues 8,245 7,824 5% 6% 32,235 29,446 9% 14%
Gross Profit 2,848 2,658 7% 11,214 9,710 15%
as % of revenues 34.5% 34.0% +0.5 pts 34.8% 33.0% +1.8 pts
Income from operations 1,116 1,185 -6% 4,871 3,337 46%
Operational EBITA1 1,333 1,146 16% 13% 3 5,427 4,510 20% 20% 3
as % of operational revenues1 16.3% 14.8% +1.5 pts 16.9% 15.3% +1.6 pts
Income from continuing operations, net of tax 946 1,168 -19% 3,848 2,637 46%
Net income attributable to ABB 921 1,132 -19% 3,745 2,475 51%
Basic earnings per share ($) 0.50 0.61 -18%2 2.02 1.30 55%2
Cash flow from operating activities4 1,897 687 176% 4,290 1,287 233%
1 For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q4 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
—
Q4 2023
Full year
Press Release
—
“Our strong 2023 delivery was the result of both our leading market position in electrification
and automation, as well as ABB being a more agile and efficient company in its execution.
With our upgraded financial and sustainability targets we look to the future with confidence.”
Björn Rosengren, CEO
===== SIDA 2 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 2
The fourth quarter of 2023, was a solid end to a fantastic
year. We improved operational performance and delivered a
very strong cash flow year-on-year. We increased the annual
return on capital employed (ROCE) by 460bps1 to 21.1% and
we are utilizing our strong balance sheet by recently signing
seven small bolt-on acquisitions, with the majority adding
additional embedded software and AI capabilities to our
customer offerings. We delivered in line with our guidance,
and I am pleased with the solid finish to the year.
Comparable order intake remained stable year-on-year,
with increases noted in three out of four business areas.
Most customer segments improved or remained stable,
with softer demand noted mainly in residential
construction and discrete automation, with the latter
hampered by normalizing order patterns as well as by
weakness in the robotics market. In tune with the historical
fourth quarter pattern the book-to-bill ratio was below one,
at 0.93, when revenues tend to be supported by end-of-the-
year systems deliveries.
Revenues amounted to $8,245 million and increased by 5%
(6% comparable), supported by both higher volumes and
contribution from earlier implemented price increases.
Thanks to our ongoing focus on improving the quality of
revenues, the gross margin improved by 50 basis points to
34.5%, contributing to the Operational EBITA margin
improvement of 150 basis points to 16.3%. The contribution
from mainly price and leverage on higher volumes clearly
offset the impact mainly from higher labor costs. This
represents the highest fourth quarter margin in recent
history. The historical pattern of a sequentially softer fourth
quarter margin repeated, as expected.
In the quarter we generated Cash flow from operating
activities of $1.9 billion. This contributed to Free Cash Flow
of $3.7 billion for the year, even stronger than what we
originally expected.
In my view, the strong 2023 performance is evidence of ABB
being a more efficient and agile company, but also of how
demand for our offerings benefits from our leading
position in markets accelerating the energy transition
towards electrification and increased automation and
digitalization. We feel confident in future performance,
which led us to raising our financial and sustainability
targets at our Capital Markets Day in November. In short,
we are targeting higher growth and higher returns while
enabling a net zero world.
Looking to 2024, the geopolitical situation adds
uncertainty, however we currently expect another year of
good performance. We expect a positive book-to-bill and
revenues to be supported by execution of parts of the $21.6
billion order backlog. In the projects- and systems business
we expect continued high customer activity, although we
face high comparables from last year when large orders
came through at a very high level. In total, order growth
year-on-year should show stronger momentum in the latter
part of the year when comparables ease. We expect to
improve on comparable revenues as well as on Operational
EBITA margin, and cash flow should benefit from continued
strong operational performance and our continued focus
on net working capital efficiency.
Considering the improving performance, robust cash flow
and a solid balance sheet, the Board of Directors proposes
an ordinary dividend of CHF0.87 per share, up from
CHF 0.84 in the previous year. We also plan to continue
utilizing share buybacks as a tool to return excess cash to
shareholders also during 2024.
Björn Rosengren
CEO
In the first quarter of 2024, we anticipate a low to mid-
single digit comparable revenue growth and the
Operational EBITA margin to remain stable or slightly
improve year-on-year.
In full-year 2024, we expect a positive book-to-bill,
comparable revenue growth to be about 5% and the
Operational EBITA margin to slightly improve from the 2023
level of 16.9%.
Outlook
CEO summary
===== SIDA 3 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 3
Orders were flat year-on-year (comparable 0%) at $7,649
million, with strong contribution from large orders,
including one in business area Process Automation for
approximately $150 million. This offset a mid-single digit
order decline in the short-cycle businesses, year-on-year.
Comparable orders increased in three business areas,
while Robotics & Discrete Automation declined sharply
as customers for machine automation continued the
sequential trend of normalizing order patterns, and due
to inventory adjustments in a declining robotics market.
These inventory adjustments are expected to level off
towards the end of the first quarter.
Orders increased in two out of the three regions.
Americas was up by 3% (comparable 3%) driven by
strong improvement of 5% (comparable 6%) in the
United States. Asia, Middle East and Africa remained
overall stable (up comparable 2%) where the strong
development in countries like India and South Korea
more than offset the decline in China of 8% (comparable
7%). Europe softened by 2% (comparable 5%) due mainly
to a double-digit decline in Germany.
Orders in the automotive segment softened slightly
year-on-year due to timing impacts for some larger
orders. General industry and consumer-related robotics
segments declined. The machine builder segment
declined as customers normalized order patterns in the
face of shortening delivery lead times.
In transport & infrastructure, there were positive
developments in marine, ports and renewables.
The buildings segment declined overall, weighed down by
the residential construction segment where the quarterly
pattern included stabilization in Europe and declines in
China and the United States. The commercial construction
segment was broadly stable, compared with last year, in the
United States and Europe while China declined.
Demand in the process-related businesses was strong
in most segments, with particular strength in the oil &
gas segment. It held up well also for refining,
petrochemicals and the energy-related low carbon
segments. Pulp & paper remained stable.
Revenues amounted to $8,245 million and the growth of 5%
year-on-year (comparable 6%) was driven by both higher
volumes and a positive price development. Execution of the
strong order backlog supported revenue growth and more
than offset weakness in parts of the short-cycle demand.
Consequently, three out of four business areas improved
comparable revenues, with only Robotics & Discrete
Automation declining.
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
Q4 Q4
Change year-on-year Orders Revenues
Comparable 0% 6%
FX 1% 1%
Portfolio changes -1% -2%
Total 0% 5%
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q4 2023 Q4 2022 US$ Comparable
Europe 2,554 2,604 -2% -5%
The Americas 2,985 2,898 3% 3%
Asia, Middle East
and Africa 2,110 2,118 0% 2%
ABB Group 7,649 7,620 0% 0%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q4 2023 Q4 2022 US$ Comparable
Europe 2,951 2,765 7% 4%
The Americas 2,847 2,555 11% 14%
Asia, Middle East
and Africa 2,447 2,504 -2% 0%
ABB Group 8,245 7,824 5% 6%
Orders and revenues
===== SIDA 4 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 4
Gross profit
Gross profit increased by 7% (6% constant currency) to $2,848
million, reflecting a gross margin improvement of 50 basis
points to 34.5%. Gross margin improved in all four business
areas.
Income from operations
Income from operations amounted to $1,116 million and
dropped by 6% year-on-year, mainly due to higher
restructuring and transformation related costs year-on-year,
and the provision release related to the non-core operations
which supported last year’s result. Margin on Income from
operations was 13.5%, down by 160 basis points year-on-year.
Operational EBITA
Operational EBITA improved by 16% year-on-year to $1,333
million and the margin was up by 150 basis points to 16.3%.
Key drivers to the higher earnings were the impacts from
robust pricing activities and operational leverage on higher
volumes, which more than offset adverse impacts from mainly
increased labor costs. Selling, general and administrative
expenses increased in relation to revenues to 18%, from 16.6%
last year. Operational EBITA in Corporate and Other amounted
to -$67 million, of which -$34 million related to the underlying
Corporate costs which were lower than expected mainly due
to real estate book gains. The remaining-$33 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.
While E-mobility is on track towards the improved portfolio,
the financial benefits may not be visible until towards the end
of 2024. Thus, we only expect a slight improvement in the E-
mobility Operational EBITA, year-on-year.
Net finance expenses
Net finance expense was $28 million, an increase from last
year’s level of $1 million which was unusually low due to reversal
of interest charges related to income tax risks.
Income tax
In line with the historical pattern, the fourth quarter tax rate
was low. Income tax expense was $136 million with an effective
tax rate of 12.6%, lower than expected mainly due to the
geographical profit mix and releases of valuation allowances on
deferred tax assets.
Net income and earnings per share
Net income attributable to ABB was $921 million, representing a
reduction of 19% from last year, as the improved operational
performance this year did not offset the positive impacts from
last year’s benefits from the provision reduction in non-core
operations and a reduction in tax valuation allowances. This
resulted in basic earnings per share of $0.50, down from $0.61
year-on-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) Q4 2023 Q4 2022
Corporate and Other
E-mobility (33) (3)
Corporate costs, intersegment
eliminations and other1 (34) (72)
Total (67) (75)
1 Majority of which relates to underlying corporate
===== SIDA 5 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 5
Net working capital
Net working capital amounted to $3,257 million,
increasing slightly year-on-year from $3,216 million
driven mainly by an increase in receivables on the back
of higher revenues, which was however largely offset by
customer advances. Net working capital decreased
sequentially from $4,041 million driven mainly by sound
trade net working capital management resulting in
lower inventories and receivables. Net working capital
as a percentage of revenues1 was 10.2%, down
sequentially from 12.8% and year-on-year 11.1%.
Capital expenditures
Purchases of property, plant and equipment and
intangible assets amounted to $264 million.
Net debt
Net debt1 amounted to $1,991 million at the end of the
quarter and decreased from $2,779 million year-on-year
and declined sequentially from $2,872 million. The
sequential net debt decrease was driven by the strong
free cash flow in the quarter.
Cash flows
Cash flow from operating activities was $1,897 million,
representing a steep year-on-year increase from
$687 million. All business areas increased cash flow from
operating activities in the quarter. The increase was driven
by better operational performance and a strong sequential
reduction of net working capital in the quarter driven by
lower inventories and receivables as well as higher
customer advances. Additionally, the prior year quarter was
hampered by settlements for the Kusile project.
Share buyback program
A share buyback program of up to $1 billion was launched
on April 3, 2023. During the fourth quarter, 6,143,500 shares
were repurchased on the second trading line for
approximately $230 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) Dec. 31
2023
Dec. 31
2022
Short term debt and current
maturities of long-term debt 2,607 2,535
Long-term debt 5,221 5,143
Total debt 7,828 7,678
Cash & equivalents 3,891 4,156
Restricted cash - current 18 18
Marketable securities and
short-term investments 1,928 725
Cash and marketable securities 5,837 4,899
Net debt (cash)* 1,991 2,779
Net debt (cash)* to EBITDA ratio 0.4 0.7
Net debt (cash)* to Equity ratio 0.14 0.21
* At Dec. 31, 2023 and Dec. 31, 2022, net debt(cash) excludes net pension (assets)/liabilities
of $(191) 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 Q4 2 02 3 6
Orders and revenues
Overall, the short-cycle businesses stabilized after some
weak quarters, and customer activity in the project- and
systems-related offering was robust. Total order intake
was virtually unchanged from last year, limited by the
divestment of the Power Conversion division (up
comparable 2%) at $3,395 million, to some extent
hampered by timing-related impacts in medium voltage
orders.
• Market activity was generally solid year-on-year
outside of the areas of residential building, which
stabilized in Europe at a low level but declined in both
United States and China. In China weakness was
noted in several customer segments.
• From a geographical perspective order intake
remained stable or improved in all three regions.
Europe was up by 7% (comparable 4%). The
underlying order intake improved slightly in the
Americas, however portfolio changes limited total
order growth to -1% (up comparable 1%). In Asia,
Middle East and Africa orders declined by 5% (stable
comparable 0%), the result of strength on comparable
basis in countries like India offsetting weakness in
China which declined by 9% (comparable 6%).
• Revenues amounted to $3,698 million, representing
an improvement of 6% (comparable 8%) from last
year, supported by both volumes and price impacts.
This was supported by all divisions except for Smart
Buildings division where the short-cycle weakness in
residential segment weighed on the total.
Profit
Strong operational performance clearly offset the small
adverse impact from portfolio changes and triggered a
26% improvement in Operational EBITA to $725 million
and 310 basis points rise in Operational EBITA margin,
year-on-year.
• Strong gross margin improvement supported by
contributions from price, leverage on higher volumes
in production and improved operational efficiency. All
of which more than offset slightly higher spend on
labor, R&D and Selling, General and Administration.
—
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) Q4 2023 Q4 2022 US$ Comparable FY 2023 FY 2022 US$ Comparable
Orders 3,395 3,385 0% 2% 15,189 15,182 0% 3%
Order backlog 6,808 6,404 6% 14% 6,808 6,404 6% 14%
Revenues 3,698 3,498 6% 8% 14,584 13,619 7% 10%
Operational EBITA 725 575 26% 2,937 2,343 25%
as % of operational revenues 19.7% 16.6% +3.1 pts 20.1% 17.2% +2.9 pts
Cash flow from operating activities 1,068 857 25% 3,211 2,115 52%
No. of employees (FTE equiv.) 50,300 50,600 -1%
Growth
Q4 Q4
Change year-on-year Orders Revenues
Comparable 2% 8%
FX 1% 1%
Portfolio changes -3% -3%
Total 0% 6%
===== SIDA 7 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 7
Orders and revenues
On continued robust performance in the long-cycle
business with some large orders booked mainly in the
Traction division, the total order intake reached $1,937
million, up 17% (comparable 13%) from the relatively low
comparable last year. Book-to-bill was at 1 for the quarter.
• Stronger order momentum was noted in the process-
related segments of oil & gas, chemicals and mining
as well as for food & beverage and rail. A weak
construction market weighed on demand for HVAC,
with some slowness noted also in pulp & paper.
• Orders increased at a double-digit rate in all three
regions. Europe increased by 30% (comparable 18%). The
Americas improved by 14% (comparable 9%) with strong
contribution from the United States being up by 14%
(comparable 10%). Asia, Middle East and Africa was up
by 10% (comparable 12%) including China being up by
10% (comparable 11%).
• Revenues amounted to $1,946 million and were up by 5%
(comparable 2%) year-on-year, with price as the key
positive driver. Execution of the order backlog supported
revenue generation, with the improvement rate however
hampered by lower deliveries in the motors business.
Profit
Operational EBITA remained stable year-on-year at
$318 million. Revenues increased and gross margin improved
somewhat, however the Operational EBITA margin declined
by 80 basis points to 16.6%.
• While price increases contributed to earnings, these were
more than offset by one-time product quality costs which
impacted Operational EBITA margin by approximately 60
basis points.
• The Large Motors & Generators division made a significant
profitability improvement, however, this was more than
offset mainly by the impacts from some underabsorption
in parts of the low voltage motor manufacturing and higher
labor costs, year-on-year.
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) Q4 2023 Q4 2022 US$ Comparable FY 2023 FY 2022 US$ Comparable
Orders 1,937 1,649 17% 13% 8,222 7,896 4% 4%
Order backlog 5,343 4,726 13% 8% 5,343 4,726 13% 8%
Revenues 1,946 1,845 5% 2% 7,814 6,745 16% 15%
Operational EBITA 318 318 0% 1,475 1,163 27%
as % of operational revenues 16.6% 17.4% -0.8 pts 18.9% 17.3% +1.6 pts
Cash flow from operating activities 597 346 73% 1,532 853 80%
No. of employees (FTE equiv.) 22,300 21,100 6%
Growth
Q4 Q4
Change year-on-year Orders Revenues
Comparable 13% 2%
FX 2% 1%
Portfolio changes 2% 2%
Total 17% 5%
===== SIDA 8 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 8
Orders and revenues
Market demand remained robust and order intake was
up 7% (comparable 5%) to $1,870 million, with the
fourth quarter being a strong finish to a year in which
large orders contributed more than usual, which more
than compensated for slowing momentum in the short-
cycle offering. Fourth quarter orders included a booking
of approximately $150 million with long delivery
schedule.
• Consistent with recent quarters, customer activity
was at a high level in all customer segments. The
market environment remained at a high level in the
traditional oil & gas segment, but there was also high
activity in the low carbon-related areas such as
hydrogen, LNG and carbon capture. Order momentum
was strong in the marine segment. Customer activity
was robust in the process-related segments of
mining, metals and remained stable in pulp & paper.
• Revenues improved strongly in all divisions and in all
regions and amounted to $1,727 million, supported by
execution of the order backlog. Book-to-bill was
positive at 1.08.
Profit
Gross margin improved and revenues were higher,
driving the 18% year-on-year increase in Operational
EBITA to $239 million and the 80 basis points rise in
Operational EBITA margin to 14.0%.
• Improved project execution and the impact from
higher volumes in the product business both
contributed to the higher earnings, with some
additional support stemming from price increases.
• All divisions performed at a double-digit margin level,
with the year-on-year profitability improvement led
by the Measurement & Analytics business.
5’500
6’000
6’500
7’000
7’500
8’000
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) Q4 2023 Q4 2022 US$ Comparable FY 2023 FY 2022 US$ Comparable
Orders 1,870 1,746 7% 5% 7,535 6,825 10% 24%
Order backlog 7,519 6,229 21% 19% 7,519 6,229 21% 19%
Revenues 1,727 1,551 11% 10% 6,270 6,044 4% 16%
Operational EBITA 239 203 18% 909 848 7%
as % of operational revenues 14.0% 13.2% +0.8 pts 14.5% 14.0% +0.5 pts
Cash flow from operating activities 444 205 117% 1,002 675 48%
No. of employees (FTE equiv.) 21,100 20,100 5%
Growth
Q4 Q4
Change year-on-year Orders Revenues
Comparable 5% 10%
FX 2% 1%
Portfolio changes 0% 0%
Total 7% 11%
===== SIDA 9 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 9
Orders and revenues
Markets are still adjusting to shorter delivery lead times,
putting pressure on order intake which amounted to $550
million, representing a sharp drop of 31% (comparable
33%) year-on-year. Although the challenging market
situation is expected to persist near-term, the fourth
quarter of 2023 is anticipated to have been the trough
quarter for absolute order intake.
• Machine Automation is executing the order backlog
and successfully reducing lead times in deliveries after
customers pre-ordering during the period of supply
chain constraints in 2022. The long-term strength of the
Machine Automation market is intact, however, the
order normalization is expected to persist through the
next couple of quarters.
• Robotics demand declined in all customer segments
year-on-year, with the most significant drop in 3C
electronics. The softening in the automotive segment
was mostly due to timing impacts for some larger
orders. Inventory adjustments among channel partners
were noted in China, and are expected to level off
towards the end of the first quarter.
• From a geographical perspective, orders in the Americas
declined by 19% (21% comparable). The decline in Europe
was 34% (comparable 38%). In Asia, Middle East and Africa
orders declined by 33% (comparable 31%), hampered by
China being down by 36% (comparable 34%).
• Revenues were down by 4% (comparable 7%) and
amounted to $852 million as the positive price
development was more than offset by lower volumes in the
Robotics division where the order backlog has normalized
and weak short-cycle demand weighed on customer
deliveries. Machine Automation improved revenues on
execution of the large order backlog.
Profit
Operational EBITA of $118 million softened by 6% year-on-
year on the back of lower revenues. However, the Operational
EBITA margin remained largely stable at 13.8%, down only 20
basis points from last year.
• Price impact and the positive mix from higher share of
revenues from Machine Automation were key positive
contributors to earnings, however slightly more than offset
by the impact from underabsorption in production due to
low Robotics volumes and increased cost for labor.
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) Q4 2023 Q4 2022 US$ Comparable FY 2023 FY 2022 US$ Comparable
Orders 550 798 -31% -33% 3,066 4,116 -26% -25%
Order backlog 2,141 2,679 -20% -20% 2,141 2,679 -20% -20%
Revenues 852 891 -4% -7% 3,640 3,181 14% 14%
Operational EBITA 118 125 -6% 536 340 58%
as % of operational revenues 13.8% 14.0% -0.2 pts 14.7% 10.7% +4 pts
Cash flow from operating activities 170 105 62% 436 214 104%
No. of employees (FTE equiv.) 11,300 10,700 5%
Growth
Q4 Q4
Change year-on-year Orders Revenues
Comparable -33% -7%
FX 2% 3%
Portfolio changes 0% 0%
Total -31% -4%
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 Q4 2 02 3 10
Events from the Quarter
• Despite ABB’s concerted efforts, there was one fatal
incident in the quarter involving one contractor,
working on a project in Algeria. A root cause
investigation and remediation plan are underway. The
thoughts of the senior management and everyone at
ABB go out to the family of the deceased. The health
and safety of ABB employees are always of highest
priority and the foremost standard by which
performance is measured. ABB is working to ensure
that such an incident never happens again.
• The 2023 ABB Accelerating Circularity Challenge led by
Motion and Electrification set out to find innovative
customer solutions that design out waste and
pollution and keep products and materials in use for
as long as possible. More than 100 startups from
around the world participated, the three winners
received $30,000 each to develop their concepts in
collaboration with ABB. The winners included Molg
from the United Sates who developed a take-back
care of a Variable Speed Drive. Minespider from
Switzerland won for their design of a reliable
circularity certificate management tool. Lastly, Excess
Materials Exchange from the Netherlands won for
their digital platform designed to generate value from
Power Distribution End-of-Life.
• ABB’s Motion business area successfully launched a
new Energy Appraisal tool that is able to assess
complex motor-driven systems to determine optimum
energy efficiency set ups for its customers. Using the
tool ABB identified an average energy-saving
potential of 31 percent per motor across 2,000 motors
assessed. These findings provide compelling evidence
for both the financial and environmental benefits of
using ABB's leading technology.
• H2 Energy Esbjerg ApS contracted ABB’s Process
Automation business area to provide basic electrical
engineering for the power distribution from grid point
of connection to electrolyzers, and for other process
equipment at its 1 GW hydrogen production facility in
Esbjerg and hydrogen distribution hub in Fredericia,
Denmark. The plant is expected to be among the largest
hydrogen developments in Europe.
• In the quarter ABB’s D&I activities focused on the
Abilities dimension with global events addressing
mental health awareness topics such as grief/loss,
dyslexia and digital accessibility. In addition, Abilities
training sessions were made available firmwide. During
the European Disability Week in November, ABB
participated in a hackathon in association with Avec
Nos Proches (Caregiving) and in December Karin
Lepasoon, Chief Communications and Sustainability
Officer, was named Executive Committee Sponsor for
Abilities.
—
Sustainability
Q4 outcome
• 40% reduction year-on-year of CO₂e emissions in own
operations due to a shift to green electricity and an
increase in energy efficiency in our operations.
• 10% decrease year-on-year in LTIFR continuing its
downward trend
• 3%-points increase year-on-year in share of women in
senior management, demonstrating strong progress
towards our target.
0
150
300
450
600
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
Q4 2023 Q4 2022 CHANGE 12M ROLLING
CO₂e own operations emissions,
Ktons scope 1 and 21 27 44 -40% 160
Lost Time Injury Frequency Rate (LTIFR),
frequency / 200,000 working hours 2 0.09 0.10 -10% 0.13
Share of females in senior management
positions, % 21.0 17.8 +3.2 pts 20.2
1 CO₂ equivalent emissions from site, energy use, SF₆ and fleet, previous quarter
2 Current quarter Includes all incidents reported until January 10, 2024
===== SIDA 11 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 11
During Q4 2023
• On November 30, ABB hosted its Capital Markets Day.
At the event, ABB provided an update on its
successful transformation, continuous improvements
and how the company will benefit from key secular
trends across its business areas. Both financial and
sustainability targets were updated to include:
o Comparable revenue growth of 5%-7% through
the economic cycle
o Operational EBITA margin in the range of 16%-
19%
o EPS growth of at least high single-digit through
the economic cycle
o Return on Capital Employed of >18%
o Net-zero targets for scopes 1, 2 and 3 for 2030 and
2050
o Support our customers to avoid 600Mt avoided
CO2e emissions by 2030. Aligned with WBCSD
2023 guidance.
• On October 30, ABB announced that Mathias Gaertner
has been appointed General Counsel and Company
Secretary and a Member of the Executive Committee.
He will join ABB in 2024. He will succeed Andrea
Antonelli, who has, as previously announced, left the
company to pursue other opportunities.
After Q4 2023
• On January 31, ABB announced that the Board of
Directors will propose Johan Forssell and Mats
Rahmström as new members for election at the
company’s Annual General Meeting (AGM) on March
21, 2024. They will replace Jacob Wallenberg and
Gunnar Brock who have decided not to stand for re-
election. ABB will publish its invitation to the 2024
AGM on February 23, 2024.
In 2023 the overall demand for ABB’s offering remained
robust, with most customer segments improving or
remaining stable. Weakness in the short-cycle businesses
related primarily to residential construction and discrete
automation was however more than offset by strong
momentum in the project- and systems-related
businesses. Orders remained stable or increased in three
out of four business areas, with a decline noted only in
Robotics & Discrete Automation. Orders amounted to
$33,818 million and were down 1% versus the prior year
(up 3 % comparable).
Revenues were supported by execution of the large order
backlog as supply chains normalized early in the year and
amounted to $32,235 million, up by 9% (14% comparable),
overall implying a book-to-bill of 1.05.
Income from operations amounted to $4,871 million, up
from $3,337 million year-on-year. This increase can be
attributed mostly to an improved operational
performance. In addition, the prior year was hampered by
charges of approximately $195 million due to the exit of
the legacy full-train retrofit business as well as a provision
of $325 million related to the legacy Kusile project in
South Africa awarded in 2015.
Operational EBITA increased by 20% year-on-year to
$5,427 million, up from $4,510 million in last year’s
period and the Operational EBITA margin improved by
160 basis points to 16.9%. The increase was driven by
higher margins across all business areas. Main drivers of
the margin expansion were operating leverage on higher
volumes as well as the impacts from implemented price
increases, which more than offset inflation in labor and
input cost. Corporate and Other Operational EBITA
amounted to -$430 million. This includes a loss of $167
million that 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 $52 million to
$110 million, primarily driven by higher interest rates on
higher debt levels compared to the prior year. The non-
operational pension credits decreased by $98 million to
$17 million in comparison to last year’s period, reflecting
the impact of higher interest rates. Income tax expense
was $930 million reflecting a tax rate of 19.5%. This
includes a net benefit realized on a favorable resolution
of a prior year tax matter relating to the Power Grids
business.
Net income attributable to ABB was $3,745 million, up
from $2,475 million year-on-year. Basic earnings per
share was $2.02, representing an increase of 55%
compared with the prior year.
Significant events
Full year 2023
===== SIDA 12 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 12
Acquisitions Company/unit Closing date Revenues, $ million1 No. of employees
2023
Robotics & Discrete Automation Sevensense 21-Dec <5 35
E-mobility Imagen Energy Inc 13-Nov <5 4
Motion Spring Point Solutions Llc 1-Nov <5 13
E-mobility Vourity AB 25-Oct <5 9
Electrification Eve Systems 1-Jun ~20 50
Motion Siemens low voltage NEMA Motors 2-May ~60 600
Acquisitions and divestments, last twelve months
ABB Group Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023
EBITDA, $ in million 1,067 794 906 1,384 4,151 1,389 1,494 1,453 1,315 5,651
Return on Capital Employed, % n.a. n.a. n.a. n.a. 16.50 n.a. n.a. n.a. n.a. 21.10
Net debt/Equity 0.20 0.34 0.34 0.21 0.21 0.30 0.31 0.21 0.14 0.14
Net debt/ EBITDA 12M rolling 0.4 0.7 0.7 0.7 0.7 0.9 0.8 0.5 0.4 0.4
Net working capital, % of 12M rolling
revenues 12.1% 12.8% 11.7% 11.1% 11.1% 13.9% 14.7% 12.8% 10.2% 10.2%
Earnings per share, basic, $ 0.31 0.20 0.19 0.61 1.30 0.56 0.49 0.48 0.50 2.02
Earnings per share, diluted, $ 0.31 0.20 0.19 0.60 1.30 0.55 0.48 0.47 0.50 2.01
Dividend per share, CHF n.a. n.a. n.a. n.a. 0.84 n.a. n.a. n.a. n.a. 0.87 *
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 37.30 37.30
Share price at the end of period, $ 1 30.76 25.43 24.41 30.46 30.46 34.30 39.32 35.86 44.32 44.32
Number of employees (FTE
equivalents) 104,720 106,380 106,830 105,130 105,130 106,170 108,320 107,430 107,870 107,870
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 1,842 1,842
1 Data prior to October 3, 2022, has been adjusted for the Accelleron spin-off (Source: FactSet).
* Dividend proposal subject to shareholder approval at the 2024 AGM
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
Note: comparable growth calculation includes acquisitions and divestments with revenues of greater than $50 million.
1 Represents the estimated revenues for the last fiscal year prior to the announcement of the respective acquisition/divestment unless otherwise stated.
Additional 2024 guidance
($ in millions, unless otherwise stated) FY 20241 Q1 2024
Corporate and Other Operational
EBITA2
~(300) ~(75)
Non-operating items
Acquisition-related amortization ~(210) ~(55)
Restructuring and related3 ~(200) ~(50)
ABB Way transformation ~(180) ~(55)
($ in millions, unless otherwise stated) FY 2024
Net finance expenses ~(120)
Effective tax rate ~25% 4
Capital Expenditures ~(900)
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 Excludes the impact of acquisitions or divestments or any significant non-operational items.
===== SIDA 13 =====
AB B IN TE RIM RE P ORT I Q4 2 02 3 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 Q4 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
Q4 results presentation on February 1, 2024
ABB 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 over 140 years of excellence, ABB’s more than 105,000 employees are committed to
driving innovations that accelerate industrial transformation.
Financial calendar
2024
March 21 Annual General Meeting, Zurich
April 18 Q1 2024 results
July 18 Q2 2024 results
October 17 Q3 2024 results
===== SIDA 14 =====
1 Q4 2023 FINANCIAL INFORMATION
February 1, 2024
Q4 2023
Financial information
===== SIDA 15 =====
2 Q4 2023 FINANCIAL INFORMATION
—
Financial Information
Contents
03 ─ 07 Key Figures
08 ─ 33 Consolidated Financial Information (unaudited)
34 ─ 47 Supplemental Reconciliations and Definitions
===== SIDA 16 =====
3 Q4 2023 FINANCIAL INFORMATION
—
Key Figures
CHANGE
($ in millions, unless otherwise indicated) Q4 2023 Q4 2022 US$ Comparable(1)
Orders 7,649 7,620 0% 0%
Order backlog (end December) 21,567 19,867 9% 9%
Revenues 8,245 7,824 5% 6%
Gross Profit 2,848 2,658 7%
as % of revenues 34.5% 34.0% +0.5 pts
Income from operations 1,116 1,185 -6%
Operational EBITA(1) 1,333 1,146 16% 13%(2)
as % of operational revenues(1) 16.3% 14.8% +1.5 pts
Income from continuing operations, net of tax 946 1,168 -19%
Net income attributable to ABB 921 1,132 -19%
Basic earnings per share ($) 0.50 0.61 -18%(3)
Cash flow from operating activities (4) 1,897 687 176%
Cash flow from operating activities in continuing operations 1,897 720 163%
CHANGE
($ in millions, unless otherwise indicated) FY 2023 FY 2022 US$ Comparable(1)
Orders 33,818 33,988 -1% 3%
Revenues 32,235 29,446 9% 14%
Gross Profit 11,214 9,710 15%
as % of revenues 34.8% 33.0% +1.8 pts
Income from operations 4,871 3,337 46%
Operational EBITA(1) 5,427 4,510 20% 20%(2)
as % of operational revenues(1) 16.9% 15.3% +1.6 pts
Income from continuing operations, net of tax 3,848 2,637 46%
Net income attributable to ABB 3,745 2,475 51%
Basic earnings per share ($) 2.02 1.30 55%(3)
Cash flow from operating activities (4) 4,290 1,287 233%
Cash flow from operating activities in continuing operations 4,301 1,334 222%
(1) For a reconciliation of non -GAAP measures see “ Supplemental Reconciliations and Definitions ” on page 34.
(2) Constant currency (not adjusted for portfolio changes).
(3) EPS growth rates are computed using unrounded amounts.
(4) Cash flow from operating activities includes both continuing and discontinued operations .
===== SIDA 17 =====
4 Q4 2023 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated) Q4 2023 Q4 2022 US$ Local Comparable
Orders ABB Group 7,649 7,620 0% -1% 0%
Electrification 3,395 3,385 0% -1% 2%
Motion 1,937 1,649 17% 15% 13%
Process Automation 1,870 1,746 7% 5% 5%
Robotics & Discrete Automation 550 798 -31% -33% -33%
Corporate and Other 125 257
Intersegment eliminations (228) (215)
Order backlog (end December) ABB Group 21,567 19,867 9% 7% 9%
Electrification 6,808 6,404 6% 6% 14%
Motion 5,343 4,726 13% 9% 8%
Process Automation 7,519 6,229 21% 19% 19%
Robotics & Discrete Automation 2,141 2,679 -20% -20% -20%
Corporate and Other
(incl. intersegment eliminations) (244) (171)
Revenues ABB Group 8,245 7,824 5% 4% 6%
Electrification 3,698 3,498 6% 5% 8%
Motion 1,946 1,845 5% 4% 2%
Process Automation 1,727 1,551 11% 10% 10%
Robotics & Discrete Automation 852 891 -4% -7% -7%
Corporate and Other 229 258
Intersegment eliminations (207) (219)
Income from operations ABB Group 1,116 1,185
Electrification 670 569
Motion 292 316
Process Automation 259 183
Robotics & Discrete Automation 99 101
Corporate and Other
(incl. intersegment eliminations) (204) 16
Income from operations % ABB Group 13.5% 15.1%
Electrification 18.1% 16.3%
Motion 15.0% 17.1%
Process Automation 15.0% 11.8%
Robotics & Discrete Automation 11.6% 11.3%
Operational EBITA ABB Group 1,333 1,146 16% 13%
Electrification 725 575 26% 24%
Motion 318 318 0% -1%
Process Automation 239 203 18% 19%
Robotics & Discrete Automation 118 125 -6% -6%
Corporate and Other(1)
(incl. intersegment eliminations) (67) (75)
Operational EBITA % ABB Group 16.3% 14.8%
Electrification 19.7% 16.6%
Motion 16.6% 17.4%
Process Automation 14.0% 13.2%
Robotics & Discrete Automation 13.8% 14.0%
Cash flow from operating activities ABB Group 1,897 687
Electrification 1,068 857
Motion 597 346
Process Automation 444 205
Robotics & Discrete Automation 170 105
Corporate and Other
(incl. intersegment eliminations) (382) (793)
Discontinued operations – (33)
(1) Corporate and Other at Q4 2023 and Q4 2022 includes losses of $33 million and $3 million, respectively, relating to E-mobility.
===== SIDA 18 =====
5 Q4 2023 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated) FY 2023 FY 2022 US$ Local Comparable
Orders ABB Group 33,818 33,988 -1% 1% 3%
Electrification 15,189 15,182 0% 1% 3%
Motion 8,222 7,896 4% 5% 4%
Process Automation 7,535 6,825 10% 12% 24%
Robotics & Discrete Automation 3,066 4,116 -26% -25% -25%
Corporate and Other 720 787
Intersegment eliminations (914) (818)
Order backlog (end December) ABB Group 21,567 19,867 9% 7% 9%
Electrification 6,808 6,404 6% 6% 14%
Motion 5,343 4,726 13% 9% 8%
Process Automation 7,519 6,229 21% 19% 19%
Robotics & Discrete Automation 2,141 2,679 -20% -20% -20%
Corporate and Other
(incl. intersegment eliminations) (244) (171)
Revenues ABB Group 32,235 29,446 9% 11% 14%
Electrification 14,584 13,619 7% 8% 10%
Motion 7,814 6,745 16% 17% 15%
Process Automation 6,270 6,044 4% 5% 16%
Robotics & Discrete Automation 3,640 3,181 14% 14% 14%
Corporate and Other 769 653
Intersegment eliminations (842) (796)
Income from operations ABB Group 4,871 3,337
Electrification 2,800 2,140
Motion 1,390 1,092
Process Automation 947 663
Robotics & Discrete Automation 446 247
Corporate and Other
(incl. intersegment eliminations) (712) (805)
Income from operations % ABB Group 15.1% 11.3%
Electrification 19.2% 15.7%
Motion 17.8% 16.2%
Process Automation 15.1% 11.0%
Robotics & Discrete Automation 12.3% 7.8%
Operational EBITA ABB Group 5,427 4,510 20% 20%
Electrification 2,937 2,343 25% 27%
Motion 1,475 1,163 27% 27%
Process Automation 909 848 7% 10%
Robotics & Discrete Automation 536 340 58% 58%
Corporate and Other(1)
(incl. intersegment eliminations) (430) (184)
Operational EBITA % ABB Group 16.9% 15.3%
Electrification 20.1% 17.2%
Motion 18.9% 17.3%
Process Automation 14.5% 14.0%
Robotics & Discrete Automation 14.7% 10.7%
Cash flow from operating activities ABB Group 4,290 1,287
Electrification 3,211 2,115
Motion 1,532 853
Process Automation 1,002 675
Robotics & Discrete Automation 436 214
Corporate and Other
(incl. intersegment eliminations) (1,880) (2,523)
Discontinued operations (11) (47)
(1) Corporate and Other at FY 2023 and FY 2022 includes losses of $167 million and $15 million, respectively, relating to E-mobility.
===== SIDA 19 =====
6 Q4 2023 FINANCIAL INFORMATION
Operational EBITA
Process Robotics & Discrete
ABB Electrification Motion Automation Automation
($ in millions, unless otherwise indicated) Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22
Revenues 8,245 7,824 3,698 3,498 1,946 1,845 1,727 1,551 852 891
Foreign exchange/commodity timing
differences in total revenues (66) (62) (15) (31) (35) (22) (21) (12) 2 1
Operational revenues 8,179 7,762 3,683 3,467 1,911 1,823 1,706 1,539 854 892
Income from operations 1,116 1,185 670 569 292 316 259 183 99 101
Acquisition-related amortization 56 55 22 24 9 8 1 1 20 19
Restructuring, related and
implementation costs(1) 127 47 50 10 41 5 (4) 23 6 2
Changes in obligations related to
divested businesses 2 (71) – 1 – – – – – –
Gains and losses from sale of businesses (4) 3 (4) – – 3 – – – –
Acquisition- and divestment-related
expenses and integration costs 19 24 7 5 2 3 (4) 12 7 2
Certain other non-operational items 76 (28) 5 11 2 – – – (14) (8)
Foreign exchange/commodity timing
differences in income from operations (59) (69) (25) (45) (28) (17) (13) (16) – 9
Operational EBITA 1,333 1,146 725 575 318 318 239 203 118 125
Operational EBITA margin (%) 16.3% 14.8% 19.7% 16.6% 16.6% 17.4% 14.0% 13.2% 13.8% 14.0%
Process Robotics & Discrete
ABB Electrification Motion Automation Automation
($ in millions, unless otherwise indicated) FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 FY 22
Revenues 32,235 29,446 14,584 13,619 7,814 6,745 6,270 6,044 3,640 3,181
Foreign exchange/commodity timing
differences in total revenues (41) 28 (3) (20) (23) (14) (18) 33 4 6
Operational revenues 32,194 29,474 14,581 13,599 7,791 6,731 6,252 6,077 3,644 3,187
Income from operations 4,871 3,337 2,800 2,140 1,390 1,092 947 663 446 247
Acquisition-related amortization 220 229 88 104 35 31 5 4 79 78
Restructuring, related and
implementation costs(1) 219 347 76 28 46 16 3 29 6 11
Changes in obligations related to
divested businesses (3) (88) 1 1 – – – – – –
Gains and losses from sale of businesses (101) 7 (75) (1) – 8 (26) – – –
Acquisition- and divestment-related
expenses and integration costs 74 195 30 36 17 15 (7) 134 14 6
Certain other non-operational items 165 452 16 41 6 – – – (10) (8)
Foreign exchange/commodity timing
differences in income from operations (18) 31 1 (6) (19) 1 (13) 18 1 6
Operational EBITA 5,427 4,510 2,937 2,343 1,475 1,163 909 848 536 340
Operational EBITA margin (%) 16.9% 15.3% 20.1% 17.2% 18.9% 17.3% 14.5% 14.0% 14.7% 10.7%
(1) Includes impairment of certain assets.
===== SIDA 20 =====
7 Q4 2023 FINANCIAL INFORMATION
Depreciation and Amortization
Process Robotics & Discrete
ABB Electrification Motion Automation Automation
($ in millions) Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22
Depreciation 133 130 66 62 28 27 12 13 14 16
Amortization 66 69 28 31 10 10 2 3 20 19
including total acquisition-related amortization of: 56 55 22 24 9 8 1 1 20 19
Process Robotics & Discrete
ABB Electrification Motion Automation Automation
($ in millions) FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 FY 22
Depreciation 517 531 256 253 108 105 47 64 57 62
Amortization 263 283 109 129 41 36 9 11 81 79
including total acquisition-related amortization of: 220 229 88 104 35 31 5 4 79 78
Orders received and revenues by region
($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE
Com- Com-
Q4 23 Q4 22 US$ Local parable Q4 23 Q4 22 US$ Local parable
Europe 2,554 2,604 -2% -7% -5% 2,951 2,765 7% 2% 4%
The Americas 2,985 2,898 3% 2% 3% 2,847 2,555 11% 10% 14%
of which United States 2,277 2,167 5% 4% 6% 2,105 1,898 11% 11% 15%
Asia, Middle East and Africa 2,110 2,118 0% 1% 2% 2,447 2,504 -2% 0% 0%
of which China 895 976 -8% -7% -7% 1,064 1,133 -6% -6% -5%
ABB Group 7,649 7,620 0% -1% 0% 8,245 7,824 5% 4% 6%
($ in millions, unless otherwise indicated) Orders received CHANGE Revenues CHANGE
Com- Com-
FY 23 FY 22 US$ Local parable FY 23 FY 22 US$ Local parable
Europe 11,458 11,778 -3% -4% -1% 11,568 10,285 12% 11% 14%
The Americas 12,437 11,825 5% 5% 7% 11,090 9,573 16% 15% 18%
of which United States 9,204 8,920 3% 3% 5% 8,248 7,023 17% 17% 21%
Asia, Middle East and Africa 9,923 10,385 -4% 1% 4% 9,577 9,588 0% 5% 8%
of which China 4,488 5,087 -12% -7% -5% 4,468 4,696 -5% -1% 1%
ABB Group 33,818 33,988 -1% 1% 3% 32,235 29,446 9% 11% 14%
===== SIDA 21 =====
8 Q4 2023 FINANCIAL INFORMATION
—
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Year ended Three months ended
($ in millions, except per share data in $) Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022
Sales of products 27,010 24,471 6,800 6,525
Sales of services and other 5,225 4,975 1,445 1,299
Total revenues 32,235 29,446 8,245 7,824
Cost of sales of products (17,938) (16,804) (4,545) (4,365)
Cost of services and other (3,083) (2,932) (852) (801)
Total cost of sales (21,021) (19,736) (5,397) (5,166)
Gross profit 11,214 9,710 2,848 2,658
Selling, general and administrative expenses (5,543) (5,132) (1,485) (1,299)
Non-order related research and development expenses (1,317) (1,166) (366) (322)
Other income (expense), net 517 (75) 119 148
Income from operations 4,871 3,337 1,116 1,185
Interest and dividend income 165 72 50 22
Interest and other finance expense (275) (130) (78) (23)
Non-operational pension (cost) credit 17 115 (6) 13
Income from continuing operations before taxes 4,778 3,394 1,082 1,197
Income tax expense (930) (757) (136) (29)
Income from continuing operations, net of tax 3,848 2,637 946 1,168
Loss from discontinued operations, net of tax (24) (43) (8) (7)
Net income 3,824 2,594 938 1,161
Net income attributable to noncontrolling
interests and redeemable noncontrolling interests (79) (119) (17) (29)
Net income attributable to ABB 3,745 2,475 921 1,132
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax 3,769 2,517 929 1,138
Loss from discontinued operations, net of tax (24) (42) (8) (6)
Net income 3,745 2,475 921 1,132
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 2.03 1.33 0.50 0.61
Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 0.00
Net income 2.02 1.30 0.50 0.61
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 2.02 1.32 0.50 0.60
Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 0.00
Net income 2.01 1.30 0.50 0.60
Weighted-average number of shares outstanding (in millions) used to compute:
Basic earnings per share attributable to ABB shareholders 1,855 1,899 1,845 1,870
Diluted earnings per share attributable to ABB shareholders 1,867 1,910 1,856 1,881
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
===== SIDA 22 =====
9 Q4 2023 FINANCIAL INFORMATION
—
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Year ended Three months ended
($ in millions) Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022
Total comprehensive income, net of tax 3,315 2,189 586 1,414
Total comprehensive income attributable to noncontrolling interests and
redeemable noncontrolling interests, net of tax (84) (87) (30) (29)
Total comprehensive income attributable to ABB shareholders, net of tax 3,231 2,102 556 1,385
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
===== SIDA 23 =====
10 Q4 2023 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions) Dec. 31, 2023 Dec. 31, 2022
Cash and equivalents 3,891 4,156
Restricted cash 18 18
Marketable securities and short-term investments 1,928 725
Receivables, net 7,446 6,858
Contract assets 1,090 954
Inventories, net 6,149 6,028
Prepaid expenses 235 230
Other current assets 520 601
Total current assets 21,277 19,570
Property, plant and equipment, net 4,142 3,911
Operating lease right-of-use assets 893 841
Investments in equity-accounted companies 187 130
Prepaid pension and other employee benefits 780 916
Intangible assets, net 1,223 1,406
Goodwill 10,561 10,511
Deferred taxes 1,381 1,396
Other non-current assets 496 467
Total assets 40,940 39,148
Accounts payable, trade 4,847 4,904
Contract liabilities 2,844 2,216
Short-term debt and current maturities of long-term debt 2,607 2,535
Current operating leases 249 220
Provisions for warranties 1,210 1,028
Other provisions 1,201 1,171
Other current liabilities 5,046 4,455
Total current liabilities 18,004 16,529
Long-term debt 5,221 5,143
Non-current operating leases 666 651
Pension and other employee benefits 686 719
Deferred taxes 669 729
Other non-current liabilities 1,548 2,105
Total liabilities 26,794 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 December 31, 2023 and 2022, respectively) 163 171
Additional paid-in capital 7 141
Retained earnings 19,724 20,082
Accumulated other comprehensive loss (5,070) (4,556)
Treasury stock, at cost
(40 million and 100 million shares at December 31, 2023 and 2022, respectively) (1,414) (3,061)
Total ABB stockholders’ equity 13,410 12,777
Noncontrolling interests 647 410
Total stockholders’ equity 14,057 13,187
Total liabilities and stockholders’ equity 40,940 39,148
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
===== SIDA 24 =====
11 Q4 2023 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Year ended Three months ended
($ in millions) Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022
Operating activities:
Net income 3,824 2,594 938 1,161
Loss from discontinued operations, net of tax 24 43 8 7
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 780 814 199 199
Changes in fair values of investments (29) (33) (1) 6
Pension and other employee benefits (48) (125) 19 (18)
Deferred taxes (25) (344) 17 (161)
Loss from equity-accounted companies 16 102 5 2
Net gain from derivatives and foreign exchange (55) (23) (11) (67)
Net gain from sale of property, plant and equipment (116) (84) (77) (20)
Net loss (gain) from sale of businesses (101) 7 (4) 3
Other 158 66 43 5
Changes in operating assets and liabilities:
Trade receivables, net (661) (831) 158 (174)
Contract assets and liabilities 412 416 169 63
Inventories, net (3) (1,599) 435 68
Accounts payable, trade (106) 395 (69) 5
Accrued liabilities 254 136 114 84
Provisions, net 211 (70) 105 (382)
Income taxes payable and receivable (190) (94) (181) (113)
Other assets and liabilities, net (44) (36) 30 52
Net cash provided by operating activities – continuing operations 4,301 1,334 1,897 720
Net cash provided by (used in) operating activities – discontinued operations (11) (47) – (33)
Net cash provided by operating activities 4,290 1,287 1,897 687
Investing activities:
Purchases of investments (1,957) (321) (854) (50)
Purchases of property, plant and equipment and intangible assets (770) (762) (264) (259)
Acquisition of businesses (net of cash acquired)
and increases in cost- and equity-accounted companies (225) (288) (65) (62)
Proceeds from sales of investments 610 697 12 43
Proceeds from maturity of investments 149 73 11 73
Proceeds from sales of property, plant and equipment 147 127 80 42
Proceeds from sales of businesses (net of transaction costs
and cash disposed) and cost- and equity-accounted companies 553 1,541 1 1,549
Net cash from settlement of foreign currency derivatives (109) (166) (33) (12)
Changes in loans receivable, net 3 320 (5) 309
Other investing activities 7 (14) (2) (4)
Net cash provided by (used in) investing activities – continuing operations (1,592) 1,207 (1,119) 1,629
Net cash used in investing activities – discontinued operations (23) (226) (1) (135)
Net cash provided by (used in) investing activities (1,615) 981 (1,120) 1,494
Financing activities:
Net changes in debt with original maturities of 90 days or less (1,365) 1,366 (368) (109)
Increase in debt 2,586 3,849 2 295
Repayment of debt (1,567) (2,703) (130) (678)
Delivery of shares 154 394 36 5
Purchase of treasury stock (1,258) (3,553) (349) (302)
Dividends paid (1,713) (1,698) – –
Cash associated with the spin-off of the Turbocharging Division – (172) – (172)
Dividends paid to noncontrolling shareholders (93) (99) (4) (16)
Proceeds from issuance of subsidiary shares 328 216 – 216
Other financing activities 31 6 27 64
Net cash used in financing activities – continuing operations (2,897) (2,394) (786) (697)
Net cash provided by financing activities – discontinued operations – – – –
Net cash used in financing activities (2,897) (2,394) (786) (697)
Effects of exchange rate changes on cash and equivalents and restricted cash (43) (189) 31 2
Net change in cash and equivalents and restricted cash (265) (315) 22 1,486
Cash and equivalents and restricted cash, beginning of period 4,174 4,489 3,887 2,688
Cash and equivalents and restricted cash, end of period 3,909 4,174 3,909 4,174
Supplementary disclosure of cash flow information:
Interest paid 250 90 99 43
Income taxes paid 1,147 1,188 282 281
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
===== SIDA 25 =====
12 Q4 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) 2,475 2,475 124 2,599
Foreign currency translation
adjustments, net of tax of $0 (608) (608) (31) (639)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(5) (21) (21) (21)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $86 256 256 (1) 255
Change in derivative instruments
and hedges, net of tax of $2 – – –
Issuance of subsidiary shares 120 120 86 206
Other changes in
noncontrolling interests 10 10 (34) (24)
Dividends to
noncontrolling shareholders – (100) (100)
Dividends to shareholders (1,700) (1,700) (1,700)
Spin-off of the Turbocharging Division (177) (95) (272) (12) (284)
Cancellation of treasury shares (8) (4) (2,864) 2,876 – –
Share-based payment arrangements 42 42 42
Purchase of treasury stock (3,502) (3,502) (3,502)
Delivery of shares (51) (130) 575 394 394
Other 2 2 2
Balance at December 31, 2022 171 141 20,082 (4,556) (3,061) 12,777 410 13,187
Balance at January 1, 2023 171 141 20,082 (4,556) (3,061) 12,777 410 13,187
Net income(1) 3,745 3,745 83 3,828
Foreign currency translation
adjustments, net of tax of $(2) (286) (286) 5 (281)
Effect of change in fair value of
available-for-sale securities,
net of tax of $3 11 11 11
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $(45) (237) (237) (237)
Change in derivative instruments
and hedges, net of tax of $(1) (2) (2) (2)
Issuance of subsidiary shares 170 170 168 338
Other changes in
noncontrolling interests (31) (37) (68) 67 (1)
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 101 101 2 103
Purchase of treasury stock (1,247) (1,247) (1,247)
Delivery of shares (173) 327 154 154
Other (2) (2) 5 3
Balance at December 31, 2023 163 7 19,724 (5,070) (1,414) 13,410 647 14,057
(1) Amounts attributable to noncontrolling interests for the year ended December 31, 2023 and 2022, exclude net losses of $4 million and $5 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 Q4 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 a ccounting 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 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 pension plan assets,
• estimates used to record expected costs for employee severance in connection with restructuring programs,
• 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 classification 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 considers all such adjustments to be of a normal recurring nat ure.
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 detai ls).
===== SIDA 27 =====
14 Q4 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 December 31, 2023 and
December 31, 2022, amounted to $415 million and $477 million, respectively. The Company’s payment terms related to suppliers’ finance programs are
not impacted by the suppliers’ decisions to sell amounts under the arrangements and are typically consistent with local marke t 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 exceptions 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 made during the course of the transition period ending Decemb er 31, 2024.
This update does not have a significant impact on the Company’s consolidated financial statements.
Applicable for future periods
Improvements to reportable segment disclosures
In November 2023, an accounting standard update was issued which requires the Company to disclose additional reportable segme nt information
primarily through enhanced disclosures about significant segment expenses and extending certain annual disclosure requirements to quarterly . This
update is effective for the Company for annual periods beginning January 1, 2024, and interim periods beginning January 1, 20 25, and is to be applied
retrospectively to each prior reporting period presented. The Company is currently evaluating the impact of adopting this update on its consolidated
financial statements.
Improvements to income tax disclosures
In December 2023, an accounting standard update was issued which requires the Company to disclose additional information rela ted to income taxes.
Under the update, the Company is required to annually disclose by jurisdiction (i) additional disaggregated information within the tax rate reconciliation
and (ii) income taxes paid. This update is effective for the Company prospectively, with retrospective adoption permitted, for annual periods beginning
January 1, 2025. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements.
─
Note 3
Discontinued operations
In 2020, the Company completed the divestment of its Power Grids business to Hitachi Ltd (Hitachi). As this divestment represented a strategic shift
that would have a major effect on the Company’s operations and financial results, the results of operations for this business are presented as
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. The remaining business activities of the Power Grids business being executed by the Company are not significant.
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 year and three months
ended December 31, 2023, the Company has recognized within its continuing operations, general and administrative expenses incurred to perform the
TSAs, offset by $121 million and $20 million in TSA-related income for such services that is reported in Other income (expense), net. In the year and three
months ended December 31, 2022, the Company has recognized within its continuing operations, general and administrative expenses incurred to
perform the TSAs, offset by $162 million and $47 million in TSA-related income for such services that is reported in Other income (expense), net.
In addition, the Company also has retained obligations (primarily for environmental and taxes) related to other businesses di sposed or otherwise exited
that qualified as discontinued operations at the time of their disposal. Changes to these retained obligations are also included in Loss from
discontinued operations, net of tax.
===== SIDA 28 =====
15 Q4 2023 FINANCIAL INFORMATION
─
Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Year ended December 31, Three months ended December 31,
($ in millions, except number of acquired businesses) 2023 2022 2023 2022
Purchase price for acquisitions (net of cash acquired) (1) 175 195 61 46
Aggregate excess of purchase price over
fair value of net assets acquired(2) 142 229 87 24
Number of acquired businesses 7 5 4 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
year ended December 31, 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 of $32 million was recorded in “Other income (expense), net” in the year ended
December 31, 2022. The Company entered into an agreement with the remaining noncontrolling 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 Redeem able 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 acquisitions 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 year and three months ended December 31, 2023, the Company received proceeds (net of transaction costs and cash disposed) of $553 million and
$1 million, respectively, relating to divestments of consolidated businesses and recorded gains of $101 million and $4 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.
On September 7, 2022, the shareholders approved the spin -off of the Company’s Turbocharging Division into an independent, publicly traded company,
Accelleron Industries AG (Accelleron), which was completed through the distribution of common stock of Accelleron to the stoc kholders of ABB on
October 3, 2022. As a result of the spin-off of this Division, the Company distributed net assets of $272 million, net of amounts attributable to
noncontrolling interests of $12 million, which was reflected as a reduction in Retained earnings. In addition, total accumulated comprehensive income of
$95 million, including the cumulative translation adjustment, was reclassified to Retained earnings. Cash and cash equivalents di stributed with
Accelleron was $172 million. The results of operations of the Turbocharging Division, are included in the continuing operations of the Process
Automation operating segment for all periods presented through to the spin -off date. In the year ended December 31, 2022, Income continuing
operations before taxes, included income of $134 million from this Division. In anticipation of the spin -off, the Company granted to a subsidiary of
Accelleron access to funds in the form of a short-term intercompany loan. At the spin-off date, this loan, having a principal amount of 300 million Swiss
francs ($306 million at the date of spin-off), was due to the Company and subsequently collected in October 2022.
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 September 2022, the Company and Hitachi agreed terms to sell the Company’s remaining investment in Hitachi Energy to Hitac hi and simultaneously
settle certain outstanding contractual obligations relating to the initial sale of the Power Grids business, including certai n indemnification guarantees
(see Note 15). The sale of the remaining investment was completed in December 2022, resulting in cash proceeds of $1,552 million and a gain of
$43 million which was recorded in “Other income (expense), net”.
===== SIDA 29 =====
16 Q4 2023 FINANCIAL INFORMATION
In the year and three months ended December 31, 2023 and 2022, the Company recorded its share of the earnings of investees accounted for under the
equity method of accounting in Other income (expense), net, as follows:
Year ended December 31, Three months ended December 31,
($ in millions) 2023 2022 2023 2022
Income (loss) from equity-accounted companies, net of taxes (16) (22) (5) 12
Basis difference amortization (net of deferred income tax benefit) – (80) – (14)
Loss from equity-accounted companies (16) (102) (5) (2)
─
Note 5
Cash and equivalents, marketable securities and short-term investments
Cash and equivalents, marketable securities and short -term investments consisted of the following:
December 31, 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 1,449 1,449 1,449
Time deposits 2,923 2,923 2,460 463
Equity securities 1,250 32 1,282 1,282
5,622 32 – 5,654 3,909 1,745
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations 189 2 (8) 183 183
189 2 (8) 183 – 183
Total 5,811 34 (8) 5,837 3,909 1,928
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 Q4 2023 FINANCIAL INFORMATION
─
Note 6
Derivative financial instruments
The Company is exposed to certain currency, commodity and interest rate risks arising from its global operating, financing and investing activities. The
Company uses derivative instruments to reduce and manage the economic impact of these exposures.
Currency risk
Due to the global nature of the Company’s operations, many of its subsidiaries are exposed to currency risk in their operatin g activities from entering
into transactions in currencies other than their functional currency. To manage such currency risks, the Company’s policies r equire 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 hed ge 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 fo reign 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 fu ture 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 as fair value hedges. In addition, from time to tim e, the
Company uses instruments such as interest rate swaps, interest rate futures, bond futures or forward rate agreements to manag e interest rate risk
arising from the Company’s balance sheet structure but does not designate such instruments as hedges.
Volume of derivative activity
In general, while the Company’s primary objective in its use of derivatives is to minimize exposures arising from its business, certain derivatives are
designated and qualify for hedge accounting treatment while others either are not designated or do not qualify for hedge acco unting.
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) December 31, 2023 December 31, 2022
Foreign exchange contracts 12,335 13,509
Embedded foreign exchange derivatives 1,137 933
Cross-currency interest rate swaps 886 855
Interest rate contracts 1,606 2,830
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 bas is,
to reflect the Company’s requirements for these commodities:
Type of derivative Unit Total notional amounts at
December 31, 2023 December 31, 2022
Copper swaps metric tonnes 35,015 29,281
Silver swaps ounces 2,359,363 2,012,213
Steel swaps metric tonnes 10,206 –
Aluminum swaps metric tonnes 5,900 6,825
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operati ons and commodity
swaps to manage its commodity risks. The Company applies cash flow hedge accounting in only limited cases. In these cases, th e effective portion of
the changes in their fair value is recorded in “Accumulated other comprehensive loss” and subsequently reclassified into earn ings in the same line item
and in the same period as the underlying hedged transaction affects earnings. For the year and three months ended December 31, 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 swaps 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 Q4 2023 FINANCIAL INFORMATION
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements w as as follows:
Year ended December 31, Three months ended December 31,
($ in millions) 2023 2022 2023 2022
Gains (losses) recognized in Interest and other finance expense:
Interest rate contracts Designated as fair value hedges 44 (91) 14 (8)
Hedged item (45) 93 (14) 8
Cross-currency interest rate swaps Designated as fair value hedges 30 (134) 43 (9)
Hedged item (40) 135 (42) 16
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 economic 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 deriva tives that are embedded
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 Year ended December 31, Three months ended December 31,
($ in millions) Location 2023 2022 2023 2022
Foreign exchange contracts Total revenues 145 (56) 158 145
Total cost of sales (71) 21 (51) (36)
SG&A expenses(1) 27 27 3 (8)
Non-order related research
and development (7) – (3) (2)
Interest and other finance expense (240) (128) (224) 11
Embedded foreign exchange Total revenues 18 (3) (21) (15)
contracts Total cost of sales 1 (11) 1 1
Commodity contracts Total cost of sales (3) (47) 4 25
Other Interest and other finance expense 1 4 – –
Total (129) (193) (133) 121
(1) SG&A expenses represent “Selling, general and administrative expenses”.
The fair values of derivatives included in the Consolidated Balance Sheets were as follows:
December 31, 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 – – 5 2
Interest rate contracts – – 18 –
Cross-currency interest rate swaps – – – 230
Other 10 – – –
Total 10 – 23 232
Derivatives not designated as hedging instruments:
Foreign exchange contracts 123 30 177 9
Commodity contracts 8 – 3 –
Interest rate contracts 1 – 1 –
Other equity contracts 4 – – –
Embedded foreign exchange derivatives 23 5 26 5
Total 159 35 207 14
Total fair value 169 35 230 246
===== SIDA 32 =====
19 Q4 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
Other 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 December 31, 2023 and 2022, have been presented on a gross basis.
The Company’s netting agreements and other similar arrangements allow net settlements under certain conditions. At December 31, 2023 and 2022,
information related to these offsetting arrangements was as follows:
($ in millions) December 31, 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 176 (111) – – 65
Total 176 (111) – – 65
($ in millions) December 31, 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 445 (111) – – 334
Total 445 (111) – – 334
($ 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 Q4 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 an d, when 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 available -for-sale securities. Non-financial assets recorded at fair value on a non -recurring basis
include long-lived assets that are reduced to their estimated fair value due to impairments.
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transactio n between market participants at
the measurement date. In determining fair value, the Company uses various valuation techniques including the market approach (using observable
market data for identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost approach (using costs a
market participant would incur to develop a comparable asset). Inputs used to determine the fair value of assets and liabilit ies are defined 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 unobser vable. An observable input
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 significant, in which case the fair value measurement woul d 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, forward foreign exchange contracts, foreign
exchange swaps and forward rate agreements, time deposits, as well as financing receivables and debt.
Level 3: Valuation inputs are based on the Company’s assumptions of relevant market data (unobservable input).
Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid -market quotes. However, for the purpose
of determining the fair value of cash-settled call options serving as hedges of the Company’s management incentive plan, bid prices are used.
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction ac tivity for the financial
instrument has significantly decreased or would not be considered orderly. In such cases, the resulting changes in valuation 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:
December 31, 2023
($ in millions) Level 1 Level 2 Level 3 Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities – 1,282 – 1,282
Debt securities—U.S. government obligations 183 – – 183
Derivative assets—current in “Other current assets” – 169 – 169
Derivative assets—non-current in “Other non-current assets” – 35 – 35
Total 183 1,486 – 1,669
Liabilities
Derivative liabilities—current in “Other current liabilities” – 230 – 230
Derivative liabilities—non-current in “Other non-current liabilities” – 246 – 246
Total – 476 – 476
===== SIDA 34 =====
21 Q4 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. The fair values obtained using price quotes fo r similar
instruments 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 years ended December 31, 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:
December 31, 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 1,431 1,431 – – 1,431
Time deposits 2,460 – 2,460 – 2,460
Restricted cash 18 18 – – 18
Marketable securities and short-term investments
(excluding securities):
Time deposits 463 – 463 – 463
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations) 2,576 2,521 55 – 2,576
Long-term debt (excluding finance lease obligations) 5,060 5,096 5 – 5,101
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 Q4 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) December 31, 2023 December 31, 2022 December 31, 2021
Contract assets 1,090 954 990
Contract liabilities 2,844 2,216 1,894
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:
Year ended December 31,
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 (1,311) (1,043)
Additions to Contract liabilities - excluding amounts recognized as revenue during the period 1,845 1,481
Receivables recognized that were included in the Contract assets balance at Jan 1, 2023/2022 (622) (591)
The Company considers its order backlog to represent its unsatisfied performance obligations. At December 31, 2023, the Company had unsatisfied
performance obligations totaling $21,567 million and, of this amount, the Company expects to fulfill approximately 69 percent of the obligations in 202 4,
approximately 16 percent of the obligations in 2025 and the balance thereafter.
===== SIDA 36 =====
23 Q4 2023 FINANCIAL INFORMATION
─
Note 9
Debt
The Company’s total debt at December 31, 2023 and 2022, amounted to $7,828 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) December 31, 2023 December 31, 2022
Short-term debt 87 1,448
Current maturities of long-term debt 2,520 1,087
Total 2,607 2,535
Short-term debt primarily represented issued commercial paper and short-term bank borrowings from various banks. At December 31, 2023, no amount
was outstanding under the $2 billion Euro-commercial paper program, while at December 31, 2022, $1,383 million was outstanding under this program .
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 December 31, 2023 and 2022, amounted to $5,221 million and $5,143 million, respectively.
Outstanding bonds (including maturities within the next 12 months) were as follows:
December 31, 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 $ 768 EUR 700 $ 720
Floating Rate EUR Instruments, due 2024 EUR 500 $ 554 EUR 500 $ 536
0.75% EUR Instruments, due 2024 EUR 750 $ 819 EUR 750 $ 769
0.3% CHF Bonds, due 2024 CHF 280 $ 335 CHF 280 $ 303
2.1% CHF Bonds, due 2025 CHF 150 $ 179 CHF 150 $ 162
1.965% CHF Bonds, due 2026 CHF 325 $ 387
3.25% EUR Instruments, due 2027 EUR 500 $ 551
0.75% CHF Bonds, due 2027 CHF 425 $ 507 CHF 425 $ 460
3.8% USD Notes, due 2028(2) USD 383 $ 382 USD 383 $ 381
1.9775% CHF Bonds, due 2028 CHF 150 $ 179
1.0% CHF Bonds, due 2029 CHF 170 $ 203 CHF 170 $ 184
0% EUR Instruments, due 2030 EUR 800 $ 749 EUR 800 $ 677
2.375% CHF Bonds, due 2030 CHF 150 $ 178 CHF 150 $ 162
3.375% EUR Instruments, due 2031 EUR 750 $ 818
2.1125% CHF Bonds, due 2033 CHF 275 $ 327
4.375% USD Notes, due 2042(2) USD 609 $ 591 USD 609 $ 590
Total $ 7,527 $ 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).
Subsequent events
In January 2024, the Company issued the following EUR Instruments: (i) EUR 500 million of 3.125 percent notes, due 2029, and (ii) EUR 750 million of
3.375 percent notes, due 2034, both paying interest annually in arrears. The aggregate net proceeds of these EUR Instruments, after discount and fees,
amounted to EUR 1,243 million (equivalent to approximately $1,360 million on date of issuance).
===== SIDA 37 =====
24 Q4 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 payments
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 SIU relating to improper payments and other
compliance issues associated with the Controls and Instrumentation Contract, and its Variation Orders for Units 1 and 2 at Kusile. The Company made a
provision of approximately $325 million which was recorded in Other income (expense), net, during the third quarter of 2022. In December 2022, the
Company settled with the SEC and DoJ as well as the authorities in South Africa and Switzerland. The matter is still 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 private 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 authorities. 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 December 31, 2023 and 2022, the Company had aggregate liabilities of $101 million and $86 million, respectively, included in “Other provisions” and
“Other non‑current liabilities”, for the above regulatory, compliance and legal contingencies, and none of the individual liabilities re cognized was
significant. As it is not possible to make an informed judgment on, or reasonably predict, the outcome of certain matters and as it is not possible, based
on information currently available to management, to estimate the maximum potential liability on other matters, there could b e adverse outcomes
beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the Company’s third -party guarantees. The maximum potential payments represent a
“worst-case scenario”, and do not reflect management’s expected outcomes.
Maximum potential payments ($ in millions) December 31, 2023 December 31, 2022
Performance guarantees 3,451 4,300
Financial guarantees 94 96
Total(1) 3,545 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 December 31, 2023 and 2022,
were not significant.
The Company is party to various guarantees providing financial or performance assurances to certain third parties. These guar antees, which have
various maturities up to 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 pro ject will be completed
within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. The
original maturity dates for the majority of these performance guarantees range from one to ten years.
In conjunction with the divestment of the high-voltage cable and cables accessories businesses, the Company has entered into various performance
guarantees with other parties with respect to certain liabilities of the divested business. At December 31, 2023 and 2022, the maximum potential payable
under these guarantees amounts to $874 million and $843 million, respectively, and these guarantees have various original maturities ranging from five
to ten years.
The Company retained obligations for financial and performance guarantees related to the sale of the Power Grids business (see Note 3 for details). At
both December 31, 2023 and 2022, the performance and financial guarantees have been fully 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
December 31, 2023 and 2022, is approximately $2.2 billion and $3.0 billion, respectively. On completing the sale of the Company’s remaining 19.9 percent
interest in Hitachi Energy Ltd. to Hitachi in 2022, the Company also settled certain existing indemnification guarantees that were due to be settled
concurrent with such transaction. As a result, in 2022, the Company recorded $136 million of cash outflows for the settlement of these liabilities
(recorded in discontinued operations).
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 would then have an obligation to reimburse t he financial institution for
amounts paid under the performance bonds. At December 31, 2023 and 2022, the total outstanding performance bonds aggregated to $3.1 billion and
$2.9 billion, respectively. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in the year and
three months ended December 31, 2023 and 2022.
===== SIDA 38 =====
25 Q4 2023 FINANCIAL INFORMATION
Product and order-related contingencies
The Company calculates its provision for product warranties based on historical claims experience and specific review of cert ain contracts. The
reconciliation of the “Provisions for warranties”, including guarantees of product performance, was as follows:
($ in millions) 2023 2022
Balance at January 1, 1,028 1,005
Net change in warranties due to acquisitions, divestments and spin -offs – (24)
Claims paid in cash or in kind (171) (157)
Net increase in provision for changes in estimates, warranties issued and warranties expired 327 252
Exchange rate differences 26 (48)
Balance at December 31, 1,210 1,028
Provisions for contractual penalties
During the three months ended December 31, 2022, the Company reversed a provision of $61 million it had previously recorded relating to one of its
divested businesses based on a settlement proposal issued by the ruling court. As the provision related to a customer contractual obligation, the
adjustment was reported as an increase in Sales of products and resulted in an increase in earnings per share (basic and diluted) of $ 0.03 for both the
year and three months ended December 31, 2022. In addition, as this amount relates to a divested business, it has been excluded from the Company’s
primary measure of segment performance, Operational EBITA (See Note 17).
─
Note 11
Income taxes
The effective tax rate of 19.5 percent in the year ended December 31, 2023, was lower than the effective tax rate of 22.3 percent in the year ended
December 31, 2022, primarily due to a net benefit realized on a favorable resolution of an uncertain tax position in the year ended December 31, 2023,
while 2022 included positive impacts from a reversal of a valuation allowance in the Americas partially offset by the negativ e impact of non-deductible
regulatory penalties in connection with the Kusile project .
In February 2023, on completion of a tax audit, the Company obtained resolution of the uncertain tax position for which an amount was rec orded within
Other non-current liabilities as of December 31, 2022. In the year ended December 31, 2023, the Company released the provision of $206 million, due to
the resolution of this matter, which resulted in an increase of $0.11 in earnings per share (basic and diluted) for the year ended December 31, 2023.
─
Note 12
Employee benefits
The Company operates defined benefit pension plans, defined contribution pension plans, and termination indemnity plans, in a ccordance with local
regulations and practices. At December 31, 2023, the Company’s most significant defined benefit pension plans are in Switzerland as well as in Germany,
the United Kingdom, and the United States. These plans cover a large portion of the Company’s employees and provide benefits to employees in the
event of death, disability, retirement, or termination of employment. Certain of these plans are multi -employer plans. The Company also operates other
postretirement benefit plans including postretirement health care benefits and other employee -related benefits for active employees including
long-service award plans. The measurement date used for the Company’s employee benefit plans is December 31. The funding policies of the Company’s
plans are consistent with the local government and tax requirements.
Net periodic benefit cost of the Company’s defined benefit pension and other postretirement benefit plans consisted of the fo llowing:
($ in millions) Defined pension benefits Other postretirement
Switzerland International benefits
Year ended December 31, 2023 2022 2023 2022 2023 2022
Operational pension cost:
Service cost 40 50 30 38 – –
Operational pension cost 40 50 30 38 – –
Non-operational pension cost (credit):
Interest cost 48 13 166 87 2 1
Expected return on plan assets (129) (116) (157) (153) – –
Amortization of prior service cost (credit) (8) (9) (2) (2) (1) (2)
Amortization of net actuarial loss – – 52 58 (4) (3)
Curtailments, settlements and special termination benefits 13 4 19 7 (16) –
Non-operational pension cost (credit) (76) (108) 78 (3) (19) (4)
Net periodic benefit cost (credit) (36) (58) 108 35 (19) (4)
===== SIDA 39 =====
26 Q4 2023 FINANCIAL INFORMATION
($ in millions) Defined pension benefits Other postretirement
Switzerland International benefits
Three months ended December 31, 2023 2022 2023 2022 2023 2022
Operational pension cost:
Service cost 11 10 9 12 – –
Operational pension cost 11 10 9 12 – –
Non-operational pension cost (credit):
Interest cost 13 11 44 26 1 –
Expected return on plan assets (35) (29) (41) (40) – –
Amortization of prior service cost (credit) (2) (4) – – – (1)
Amortization of net actuarial loss – – 13 14 (1) (1)
Curtailments, settlements and special termination benefits 13 4 1 7 – –
Non-operational pension cost (credit) (11) (18) 17 7 – (2)
Net periodic benefit cost (credit) – (8) 26 19 – (2)
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
Year ended December 31, 2023 2022 2023 2022 2023 2022
Total contributions to defined benefit pension and
other postretirement benefit plans 18 37 89 58 32 7
Of which, discretionary contributions to defined benefit
pension plans – – 67 18 25 –
($ in millions) Defined pension benefits Other postretirement
Switzerland International benefits
Three months ended December 31, 2023 2022 2023 2022 2023 2022
Total contributions to defined benefit pension and
other postretirement benefit plans 10 4 4 34 3 2
Of which, discretionary contributions to defined benefit
pension plans – – 11 18 – –
─
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 December 31, 2023, 17 million shares, resulting in an increase in Treasury stock of $ 640 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 9 million of its own shares on the open market in the year ended December 31, 2023,
mainly for use in connection with its employee share plans, resulting in an increase in Treasury stock of $ 354 million.
In the year ended December 31, 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 $170 million. In December 2023, an agreement was
reached to increase the ownership percentage of the investors participating in these private placements to 25 percent for no additional consideration.
===== SIDA 40 =====
27 Q4 2023 FINANCIAL INFORMATION
─
Note 14
Earnings per share
Basic earnings per share is calculated by dividing income by the weighted -average number of shares outstanding during the period. Diluted earnings per
share is calculated by dividing income by the weighted -average number of shares outstanding during the period, assuming that all potentially dilutive
securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options, and outsta nding options and shares
granted subject to certain conditions under the Company’s share -based payment arrangements.
Basic earnings per share
Year ended December 31, Three months ended December 31,
($ in millions, except per share data in $) 2023 2022 2023 2022
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax 3,769 2,517 929 1,138
Loss from discontinued operations, net of tax (24) (42) (8) (6)
Net income 3,745 2,475 921 1,132
Weighted-average number of shares outstanding (in millions) 1,855 1,899 1,845 1,870
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 2.03 1.33 0.50 0.61
Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 0.00
Net income 2.02 1.30 0.50 0.61
Diluted earnings per share
Year ended December 31, Three months ended December 31,
($ in millions, except per share data in $) 2023 2022 2023 2022
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax 3,769 2,517 929 1,138
Loss from discontinued operations, net of tax (24) (42) (8) (6)
Net income 3,745 2,475 921 1,132
Weighted-average number of shares outstanding (in millions) 1,855 1,899 1,845 1,870
Effect of dilutive securities:
Call options and shares 12 11 11 11
Adjusted weighted-average number of shares outstanding (in millions) 1,867 1,910 1,856 1,881
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 2.02 1.32 0.50 0.60
Loss from discontinued operations, net of tax (0.01) (0.02) 0.00 0.00
Net income 2.01 1.30 0.50 0.60
===== SIDA 41 =====
28 Q4 2023 FINANCIAL INFORMATION
─
Note 15
Reclassifications out of accumulated other comprehensive loss
The following table shows changes in “Accumulated other comprehensive loss” (OCI) attributable to ABB, by component, net of t ax:
Unrealized gains Pension and
Foreign currency (losses) on other Derivative
translation available-for-sale postretirement instruments
($ in millions) adjustments securities plan adjustments and hedges Total OCI
Balance at January 1, 2022 (2,993) 2 (1,089) (8) (4,088)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications (685) (23) 226 (12) (494)
Amounts reclassified from OCI 46 2 29 12 89
Total other comprehensive (loss) income (639) (21) 255 – (405)
Spin-off of the Turbocharging Division (93) – (5) – (98)
Less:
Amounts attributable to
noncontrolling interests (34) – (1) – (35)
Balance at December 31, 2022 (3,691) (19) (838) (8) (4,556)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications (290) 5 (283) (10) (578)
Amounts reclassified from OCI 9 6 46 8 69
Total other comprehensive (loss) income (281) 11 (237) (2) (509)
Less:
Amounts attributable to
noncontrolling interests and
redeemable noncontrolling interests 5 – – – 5
Balance at December 31, 2023 (3,977) (8) (1,075) (10) (5,070)
The following table reflects amounts reclassified out of OCI in respect of Foreign currency translation adjustments and Pension and other
postretirement plan adjustments:
Year ended Three months ended
($ in millions) Location of (gains) losses December 31, December 31,
Details about OCI components reclassified from OCI 2023 2022 2023 2022
Foreign currency translation adjustments:
Changes attributable to divestments Other income (expense), net 9 41 – 41
Net loss on complete or substantially complete
liquidations of foreign subsidiaries Other income (expense), net – 5 – –
Amounts reclassified from OCI 9 46 – 41
Pension and other postretirement plan adjustments:
Amortization of prior service cost (credit) Non-operational pension (cost) credit (11) (13) (2) (5)
Amortization of net actuarial loss Non-operational pension (cost) credit 48 55 12 13
Net gain (loss) from settlements and curtailments Non-operational pension (cost) credit 16 11 14 11
Changes attributable to divestments Other income (expense), net 3 (8) 3 (8)
Total before tax 56 45 27 11
Tax Income tax expense (10) (16) (9) (6)
Amounts reclassified from OCI 46 29 18 5
The amounts in respect of Unrealized gains (losses) on available -for-sale securities and Derivative instruments and hedges were not significant for the
year and three months ended December 31, 2023 and 2022.
===== SIDA 42 =====
29 Q4 2023 FINANCIAL INFORMATION
─
Note 16
Restructuring and related expenses
Restructuring-related activities
In the year and three months ended December 31, 2023 and 2022, the Company executed various restructuring -related activities and incurred the
following expenses:
Year ended December 31, Three months ended December 31,
($ in millions) 2023 2022 2023 2022
Employee severance costs 120 81 82 17
Estimated contract settlement, loss order and other costs 7 209 3 4
Inventory and long-lived asset impairments 49 7 31 2
Total 176 297 116 23
Expenses associated with these activities are recorded in the following line items in the Consolidated Income Statements:
Year ended December 31, Three months ended December 31,
($ in millions) 2023 2022 2023 2022
Total cost of sales 65 24 46 11
Selling, general and administrative expenses 52 40 38 1
Non-order related research and development expenses 3 2 3 –
Other income (expense), net 56 231 29 11
Total 176 297 116 23
During the second quarter of 2022, the Company completed a plan to fully exit its full train retrofit business by transferring the remaining contracts to a
third party. The Company recorded $195 million of restructuring expenses in connection with this business exit primarily for contract settlement costs.
Prior to exiting this business, the business was reported as part of the Company’s non -core business activities within Corporate and Other.
At December 31, 2023 and 2022, $250 million and $198 million, respectively, was recorded for 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 year and three months ended December 31, 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 increasingly digital and connected solutions includes renewable power
solutions, modular substation packages, distribution automation products, switchboard s 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 networ ks. 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, generators and traction converters that are driving the low -carbon future for
industries, cities, infrastructure and transportation. These products, digital technology and related services enable industr ial customers to
increase energy efficiency, improve safety and reliability, and achieve precise control of their processes. Building on over 140 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 Q4 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 provides industrial
and collaborative robots, autonomous mobile robotics, mapping and navigation solutions, robotic solutions, field services, spare parts and
digital services. Machine Automation specializes in automation solutions based on its programmable logic controllers (PLC), i ndustrial PCs
(IPC), servo motion, transport systems and machine vision. Both divisions offer software across the entire life cycle, includ ing engineering and
simulation software as well as a comprehensive range of digital solutions.
Corporate and Other: Corporate includes headquarter costs, the Company’s corporate real estate activities and the Corporate Treasury Operations
while Other includes the E-mobility operating segment, other non-core operating activities as well as the operating activities of certain divested
businesses.
The primary measure of profitability on which the operating segments are evaluated is Operational EBITA, which represents inc ome from operations
excluding:
• amortization expense on intangibles arising upon acquisition ( acquisition-related amortization),
• restructuring, related and implementation costs ,
• changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations
related to divested businesses),
• gains and losses from sale of businesses (including fair value adjustment on assets and liabilities held for sale , 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, certain asset write downs/impairments and
certain other fair value changes, changes in estimates relating to opening balance sheets of acquired businesses (changes in pre -acquisition estimates),
as well as other items which are determined by management on a case -by-case basis.
The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments.
Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at t he Company’s consolidated
Operational EBITA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at 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 year and three months ended December 31, 2023 and 2022,
as well as total assets at December 31, 2023 and 2022.
Year ended December 31, 2023
Robotics &
Process Discrete Corporate
($ in millions) Electrification Motion Automation Automation and Other Total
Geographical markets
Europe 4,547 2,455 2,294 1,932 340 11,568
The Americas 5,926 2,562 1,738 573 291 11,090
of which: United States 4,456 2,123 1,076 358 235 8,248
Asia, Middle East and Africa 3,899 2,276 2,212 1,119 71 9,577
of which: China 1,775 1,148 707 804 34 4,468
14,372 7,293 6,244 3,624 702 32,235
Product type
Products 13,437 6,219 3,661 3,063 630 27,010
Services and other 935 1,074 2,583 561 72 5,225
14,372 7,293 6,244 3,624 702 32,235
Third-party revenues 14,372 7,293 6,244 3,624 702 32,235
Intersegment revenues 212 521 26 16 (775) –
Total revenues(1) 14,584 7,814 6,270 3,640 (73) 32,235
===== SIDA 44 =====
31 Q4 2023 FINANCIAL INFORMATION
Year ended December 31, 2022
Robotics &
Process Discrete Corporate
($ in millions) Electrification Motion Automation Automation and Other Total
Geographical markets
Europe 4,199 2,031 2,248 1,494 313 10,285
The Americas 5,140 2,148 1,566 524 195 9,573
of which: United States 3,769 1,787 943 373 151 7,023
Asia, Middle East and Africa 4,053 2,101 2,199 1,155 80 9,588
of which: China 1,948 1,147 666 897 38 4,696
13,392 6,280 6,013 3,173 588 29,446
Product type
Products 12,535 5,380 3,311 2,695 550 24,471
Services and other 857 900 2,702 478 38 4,975
13,392 6,280 6,013 3,173 588 29,446
Third-party revenues 13,392 6,280 6,013 3,173 588 29,446
Intersegment revenues 227 465 31 8 (731) –
Total revenues(1) 13,619 6,745 6,044 3,181 (143) 29,446
Three months ended December 31, 2023
Robotics &
Process Discrete Corporate
($ in millions) Electrification Motion Automation Automation and Other Total
Geographical markets
Europe 1,136 597 631 476 111 2,951
The Americas 1,533 638 459 142 75 2,847
of which: United States 1,164 521 278 89 53 2,105
Asia, Middle East and Africa 987 577 632 233 18 2,447
of which: China 419 282 205 147 11 1,064
3,656 1,812 1,722 851 204 8,245
Product type
Products 3,387 1,524 994 710 185 6,800
Services and other 269 288 728 141 19 1,445
3,656 1,812 1,722 851 204 8,245
Third-party revenues 3,656 1,812 1,722 851 204 8,245
Intersegment revenues 42 134 5 1 (182) –
Total revenues(1) 3,698 1,946 1,727 852 22 8,245
Three months ended December 31, 2022
Robotics &
Process Discrete Corporate
($ in millions) Electrification Motion Automation Automation and Other Total
Geographical markets
Europe 1,074 601 522 424 144 2,765
The Americas 1,341 574 431 147 62 2,555
of which: United States 992 480 262 106 58 1,898
Asia, Middle East and Africa 1,033 537 592 317 25 2,504
of which: China 442 259 168 251 13 1,133
3,448 1,712 1,545 888 231 7,824
Product type
Products 3,207 1,449 891 760 218 6,525
Services and other 241 263 654 128 13 1,299
3,448 1,712 1,545 888 231 7,824
Third-party revenues 3,448 1,712 1,545 888 231 7,824
Intersegment revenues 50 133 6 3 (192) –
Total revenues(1) 3,498 1,845 1,551 891 39 7,824
(1) Due to rounding, numbers presented may not add to the totals provided.
===== SIDA 45 =====
32 Q4 2023 FINANCIAL INFORMATION
Year ended Three months ended
December 31, December 31,
($ in millions) 2023 2022 2023 2022
Operational EBITA:
Electrification 2,937 2,343 725 575
Motion 1,475 1,163 318 318
Process Automation 909 848 239 203
Robotics & Discrete Automation 536 340 118 125
Corporate and Other
‒ E-mobility (167) (15) (33) (3)
‒ Corporate costs, Intersegment elimination and other (263) (169) (34) (72)
Total 5,427 4,510 1,333 1,146
Acquisition-related amortization (220) (229) (56) (55)
Restructuring, related and implementation costs (1) (219) (347) (127) (47)
Changes in obligations related to divested businesses 3 88 (2) 71
Gains and losses from sale of businesses 101 (7) 4 (3)
Acquisition- and divestment-related expenses and integration costs (74) (195) (19) (24)
Foreign exchange/commodity timing differences in income from operations:
Unrealized gains and losses on derivatives (foreign exchange,
commodities, embedded derivatives) 19 32 77 139
Realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized 12 (48) 20 –
Unrealized foreign exchange movements on receivables/payables (and
related assets/liabilities) (13) (15) (38) (70)
Certain other non-operational items:
Other income/expense relating to the Power Grids joint venture 36 (57) 9 10
Regulatory, compliance and legal costs – (317) – 16
Business transformation costs(2) (205) (152) (66) (38)
Changes in pre-acquisition estimates (4) (10) – (10)
Gains and losses from sale of investments in
equity-accounted companies – 43 – 43
Certain other fair value changes, including asset impairments (10) 45 (13) (13)
Other non-operational items 18 (4) (6) 20
Income from operations 4,871 3,337 1,116 1,185
Interest and dividend income 165 72 50 22
Interest and other finance expense (275) (130) (78) (23)
Non-operational pension (cost) credit 17 115 (6) 13
Income from continuing operations before taxes 4,778 3,394 1,082 1,197
(1) Includes impairment of certain assets.
(2) Amount includes ABB Way process transformation costs of $188 million and $131 million for year ended December 31, 2023 and 2022, respectively, and $66 million
and $33 million for the three months ended December 31, 2023 and 2022 , respectively.
Total assets(1)
($ in millions) December 31, 2023 December 31, 2022
Electrification 12,668 12,500
Motion 7,016 6,565
Process Automation 4,971 4,598
Robotics & Discrete Automation 5,047 4,901
Corporate and Other(2) 11,238 10,584
Consolidated 40,940 39,148
(1) Total assets are after intersegment eliminations and therefore reflect third -party assets only.
(2) At December 31, 2023 and 2022 , respectively, Corporate and Other includes $ 57 million and $96 million of assets in the Power Grids business which is reported as
discontinued operations (see Note 3).
===== SIDA 46 =====
33 Q4 2023 FINANCIAL INFORMATION
===== SIDA 47 =====
34 Q4 2023 FINANCIAL INFORMATION
—
Supplemental Reconciliations and Definitions
The following reconciliations and definitions include measures which ABB uses to supplement its Consolidated Financial Inform ation (unaudited)
which is prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). Certain of these financial measures
are, or may be, considered non -GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission (SEC).
While ABB’s management believes that the non -GAAP financial measures herein are useful in evaluating ABB’s operating results, this information
should be considered as supplemental in nature and not as a substitute for the related financial information prepared in acco rdance with
U.S. GAAP. Therefore these measures should not be viewed in isolation but considered together with the Consolidated Financial Info rmation
(unaudited) prepared in accordance with U.S. GAAP as of and for the year and three months ended December 31, 2023.
Comparable growth rates
Growth rates for certain key figures may be presented and discussed on a “comparable” basis. The comparable growth rate measu res growth on a
constant currency basis. Since we are a global company, the comparability of our operating results reported in U.S. dollars i s affected by foreign
currency exchange rate fluctuations. We calculate the impacts from foreign 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 adjustment for portfolio changes is calculat ed as follows: where the
results of any business acquired or divested have not been consolidated and reported for the entire duration of both the curr ent and comparable
periods, the reported key figures of such business are adjusted to exclude the relevant key figures of any corresponding quar ters 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 cust omer markets are adjusted
as if the relevant business was divested in the period when the decision to cease business activities was taken. We do not ad just for portfolio changes
where the relevant business has annualized revenues of less than $50 million.
The following tables provide reconciliations of reported growth rates of certain key figures to their respective comparable g rowth rate.
Comparable growth rate reconciliation by Business Area
Q4 2023 compared to Q4 2022
Order growth rate Revenue growth rate
US$ Foreign US$ Foreign
(as exchange Portfolio (as exchange Portfolio
Business Area reported) impact changes Comparable reported) impact changes Comparable
Electrification 0% -1% 3% 2% 6% -1% 3% 8%
Motion 17% -2% -2% 13% 5% -1% -2% 2%
Process Automation 7% -2% 0% 5% 11% -1% 0% 10%
Robotics & Discrete Automation -31% -2% 0% -33% -4% -3% 0% -7%
ABB Group 0% -1% 1% 0% 5% -1% 2% 6%
FY 2023 compared to FY 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% 1% 2% 3% 7% 1% 2% 10%
Motion 4% 1% -1% 4% 16% 1% -2% 15%
Process Automation 10% 2% 12% 24% 4% 1% 11% 16%
Robotics & Discrete Automation -26% 1% 0% -25% 14% 0% 0% 14%
ABB Group -1% 2% 2% 3% 9% 2% 3% 14%
===== SIDA 48 =====
35 Q4 2023 FINANCIAL INFORMATION
Regional comparable growth rate reconciliation
Regional comparable growth rate reconciliation for ABB Group - Quarter
Q4 2023 compared to Q4 2022
Order growth rate Revenue growth rate
US$ Foreign US$ Foreign
(as exchange Portfolio (as exchange Portfolio
Region reported) impact changes Comparable reported) impact changes Comparable
Europe -2% -5% 2% -5% 7% -5% 2% 4%
The Americas 3% -1% 1% 3% 11% -1% 4% 14%
of which: United States 5% -1% 2% 6% 11% 0% 4% 15%
Asia, Middle East and Africa 0% 1% 1% 2% -2% 2% 0% 0%
of which: China -8% 1% 0% -7% -6% 0% 1% -5%
ABB Group 0% -1% 1% 0% 5% -1% 2% 6%
Regional comparable growth rate reconciliation by Business Area - Quarter
Q4 2023 compared to Q4 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 7% -5% 2% 4% 5% -5% 0% 0%
The Americas -1% -1% 3% 1% 14% -1% 8% 21%
of which: United States -3% 0% 4% 1% 17% 0% 11% 28%
Asia, Middle East and Africa -5% 3% 2% 0% -4% 3% 1% 0%
of which: China -9% 1% 2% -6% -4% 1% 1% -2%
Electrification 0% -1% 3% 2% 6% -1% 3% 8%
Q4 2023 compared to Q4 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 30% -8% -4% 18% -1% -5% -1% -7%
The Americas 14% -2% -3% 9% 12% -1% -4% 7%
of which: United States 14% -1% -3% 10% 9% -1% -3% 5%
Asia, Middle East and Africa 10% 2% 0% 12% 6% 2% 0% 8%
of which: China 10% 1% 0% 11% 7% 2% 0% 9%
Motion 17% -2% -2% 13% 5% -1% -2% 2%
Q4 2023 compared to Q4 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% -4% 0% -4% 21% -3% 0% 18%
The Americas 13% -3% 0% 10% 6% -1% 0% 5%
of which: United States 30% -5% 0% 25% 6% -1% 0% 5%
Asia, Middle East and Africa 10% 1% 0% 11% 7% 1% 0% 8%
of which: China -4% -1% 0% -5% 14% 1% 0% 15%
Process Automation 7% -2% 0% 5% 11% -1% 0% 10%
Q4 2023 compared to Q4 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 -34% -4% 0% -38% 12% -5% 0% 7%
The Americas -19% -2% 0% -21% -3% -2% 0% -5%
of which: United States -19% 0% 0% -19% -16% 0% 0% -16%
Asia, Middle East and Africa -33% 2% 0% -31% -28% 1% 0% -27%
of which: China -36% 2% 0% -34% -42% 1% 0% -41%
Robotics & Discrete Automation -31% -2% 0% -33% -4% -3% 0% -7%
===== SIDA 49 =====
36 Q4 2023 FINANCIAL INFORMATION
Regional comparable growth rate reconciliation for ABB Group – Year to date
FY 2023 compared to FY 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% 3% -1% 12% -1% 3% 14%
The Americas 5% 0% 2% 7% 16% -1% 3% 18%
of which: United States 3% 0% 2% 5% 17% 0% 4% 21%
Asia, Middle East and Africa -4% 5% 3% 4% 0% 5% 3% 8%
of which: China -12% 5% 2% -5% -5% 4% 2% 1%
ABB Group -1% 2% 2% 3% 9% 2% 3% 14%
Regional comparable growth rate reconciliation by Business Area – Year to date
FY 2023 compared to FY 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% -2% 1% 0% 7% -2% 1% 6%
The Americas 1% 0% 2% 3% 15% 0% 4% 19%
of which: United States -1% 0% 3% 2% 18% 0% 5% 23%
Asia, Middle East and Africa -2% 7% 1% 6% -4% 7% 1% 4%
of which: China -9% 5% 1% -3% -9% 5% 1% -3%
Electrification 0% 1% 2% 3% 7% 1% 2% 10%
FY 2023 compared to FY 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% -2% -1% 0% 19% -3% -1% 15%
The Americas 5% -1% -2% 2% 20% 0% -4% 16%
of which: United States 3% -1% -2% 0% 19% 0% -3% 16%
Asia, Middle East and Africa 4% 6% 0% 10% 9% 5% 0% 14%
of which: China -1% 5% 0% 4% 1% 5% 0% 6%
Motion 4% 1% -1% 4% 16% 1% -2% 15%
FY 2023 compared to FY 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 13% 1% 13% 27% 2% 0% 12% 14%
The Americas 22% -1% 9% 30% 11% -1% 10% 20%
of which: United States 25% -3% 12% 34% 14% 0% 12% 26%
Asia, Middle East and Africa -2% 4% 12% 14% 0% 5% 12% 17%
of which: China -3% 5% 14% 16% 4% 5% 13% 22%
Process Automation 10% 2% 12% 24% 4% 1% 11% 16%
FY 2023 compared to FY 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 -28% 0% 0% -28% 30% -3% 0% 27%
The Americas -11% -1% 0% -12% 10% -2% 0% 8%
of which: United States -17% 0% 0% -17% -3% -1% 0% -4%
Asia, Middle East and Africa -29% 4% 0% -25% -3% 4% 0% 1%
of which: China -35% 4% 0% -31% -10% 3% 0% -7%
Robotics & Discrete Automation -26% 1% 0% -25% 14% 0% 0% 14%
===== SIDA 50 =====
37 Q4 2023 FINANCIAL INFORMATION
Order backlog growth rate reconciliation
December 31, 2023 compared to December 31, 2022
US$ Foreign
(as exchange Portfolio
Business Area reported) impact changes Comparable
Electrification 6% 0% 8% 14%
Motion 13% -4% -1% 8%
Process Automation 21% -2% 0% 19%
Robotics & Discrete Automation -20% 0% 0% -20%
ABB Group 9% -2% 2% 9%
Other growth rate reconciliations
Q4 2023 compared to Q4 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 10% -1% 0% 9% 11% 0% 0% 11%
Motion 32% -1% 0% 31% 9% -1% 0% 8%
Process Automation 29% -3% 0% 26% 11% -1% 0% 10%
Robotics & Discrete Automation 10% -2% 0% 8% 11% -3% 0% 8%
ABB Group 22% -2% 0% 20% 11% -1% 0% 10%
FY 2023 compared to FY 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 7% 1% 0% 8% 9% 1% 0% 10%
Motion 13% 2% 0% 15% 19% 2% 0% 21%
Process Automation 4% 0% 21% 25% -4% 1% 18% 15%
Robotics & Discrete Automation 10% 0% 0% 10% 17% 0% 0% 17%
ABB Group 7% 1% 10% 18% 5% 1% 10% 16%
===== SIDA 51 =====
38 Q4 2023 FINANCIAL INFORMATION
Operational EBITA as % of operational revenues (Operational EBITA margin)
Definition
Operational EBITA margin
Operational EBITA margin is Operational EBITA as a percentage of operational revenues.
Operational EBITA
Operational earnings before interest, taxes and acquisition -related amortization (Operational EBITA) represents Income from operations excluding:
• acquisition-related amortization (as defined below),
• restructuring, related and implementation costs,
• changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations
related to divested businesses),
• gains and losses from sale of businesses (including fair value adjustment on assets and liabilities held for sale , 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, 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
Year ended December 31, Three months ended December 31,
($ in millions) 2023 2022 2023 2022
Operational EBITA 5,427 4,510 1,333 1,146
Acquisition-related amortization (220) (229) (56) (55)
Restructuring, related and implementation costs (1) (219) (347) (127) (47)
Changes in obligations related to divested businesses 3 88 (2) 71
Gains and losses from sale of businesses 101 (7) 4 (3)
Acquisition- and divestment-related expenses and integration costs (74) (195) (19) (24)
Certain other non-operational items (165) (452) (76) 28
Foreign exchange/commodity timing differences in income from operations 18 (31) 59 69
Income from operations 4,871 3,337 1,116 1,185
Interest and dividend income 165 72 50 22
Interest and other finance expense (275) (130) (78) (23)
Non-operational pension (cost) credit 17 115 (6) 13
Income from continuing operations before taxes 4,778 3,394 1,082 1,197
Income tax expense (930) (757) (136) (29)
Income from continuing operations, net of tax 3,848 2,637 946 1,168
Loss from discontinued operations, net of tax (24) (43) (8) (7)
Net income 3,824 2,594 938 1,161
(1) Includes impairment of certain assets.
===== SIDA 52 =====
39 Q4 2023 FINANCIAL INFORMATION
Reconciliation of Operational EBITA margin by business
Three months ended December 31, 2023
Corporate and
Robotics & Other and
Process Discrete Intersegment
($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated
Total revenues 3,698 1,946 1,727 852 22 8,245
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives (33) (48) (23) (5) (4) (113)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized (3) 1 (10) (1) (2) (15)
Unrealized foreign exchange movements
on receivables (and related assets) 21 12 12 8 9 62
Operational revenues 3,683 1,911 1,706 854 25 8,179
Income (loss) from operations 670 292 259 99 (204) 1,116
Acquisition-related amortization 22 9 1 20 4 56
Restructuring, related and
implementation costs(1) 50 41 (4) 6 34 127
Changes in obligations related to
divested businesses – – – – 2 2
Gains and losses from sale of businesses (4) – – – – (4)
Acquisition- and divestment-related expenses
and integration costs 7 2 (4) 7 7 19
Certain other non-operational items 5 2 – (14) 83 76
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives) (31) (36) (12) (2) 4 (77)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized (4) 1 (11) (2) (4) (20)
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities) 10 7 10 4 7 38
Operational EBITA 725 318 239 118 (67) 1,333
Operational EBITA margin (%) 19.7% 16.6% 14.0% 13.8% n.a. 16.3%
(1) Includes impairment of certain assets.
In the three months ended December 31, 2023, Certain other non-operational items in the table above includes the following:
Three months ended December 31, 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 – – – – (9) (9)
Business transformation costs(1) 3 – – (2) 65 66
Certain other fair values changes,
including asset impairments 1 1 – (11) 22 13
Other non-operational items 1 1 – (1) 5 6
Total 5 2 – (14) 83 76
(1) Amounts include ABB Way process transformation costs of $66 million for the three months ended December 31, 2023.
===== SIDA 53 =====
40 Q4 2023 FINANCIAL INFORMATION
Three months ended December 31, 2022
Corporate and
Robotics & Other and
Process Discrete Intersegment
($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated
Total revenues 3,498 1,845 1,551 891 39 7,824
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives (64) (35) (25) (10) (15) (149)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized – (2) (1) 1 4 2
Unrealized foreign exchange movements
on receivables (and related assets) 33 15 14 10 13 85
Operational revenues 3,467 1,823 1,539 892 41 7,762
Income (loss) from operations 569 316 183 101 16 1,185
Acquisition-related amortization 24 8 1 19 3 55
Restructuring, related and
implementation costs(1) 10 5 23 2 7 47
Changes in obligations related to
divested businesses 1 – – – (72) (71)
Gains and losses from sale of businesses – 3 – – – 3
Acquisition- and divestment-related expenses
and integration costs 5 3 12 2 2 24
Certain other non-operational items 11 – – (8) (31) (28)
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives) (80) (27) (21) 1 (12) (139)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized 1 (1) (2) 1 1 –
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities) 34 11 7 7 11 70
Operational EBITA 575 318 203 125 (75) 1,146
Operational EBITA margin (%) 16.6% 17.4% 13.2% 14.0% n.a. 14.8%
(1) Includes impairment of certain assets.
In the three months ended December 31, 2022, Certain other non-operational items in the table above includes the following:
Three months ended December 31, 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 – – – – (10) (10)
Regulatory, compliance and legal costs – – – – (16) (16)
Business transformation costs(1) 5 – – – 33 38
Changes in pre-acquisition estimates 9 – – 1 – 10
Gains and losses from sale of investments
in equity-accounted companies – – – – (43) (43)
Certain other fair values changes,
including asset impairments – – – 8 5 13
Other non-operational items (2) – – (17) (1) (20)
Total 12 – – (8) (32) (28)
(1) Amounts include ABB Way process transformation costs of $33 million for the three months ended December 31, 2022.
===== SIDA 54 =====
41 Q4 2023 FINANCIAL INFORMATION
Year ended December 31, 2023
Corporate and
Robotics & Other and
Process Discrete Intersegment
($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated
Total revenues 14,584 7,814 6,270 3,640 (73) 32,235
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives 4 (33) (20) (1) 2 (48)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized (8) – (2) – (1) (11)
Unrealized foreign exchange movements
on receivables (and related assets) 1 10 4 5 (2) 18
Operational revenues 14,581 7,791 6,252 3,644 (74) 32,194
Income (loss) from operations 2,800 1,390 947 446 (712) 4,871
Acquisition-related amortization 88 35 5 79 13 220
Restructuring, related and
implementation costs(1) 76 46 3 6 88 219
Changes in obligations related to
divested businesses 1 – – – (4) (3)
Gains and losses from sale of businesses (75) – (26) – – (101)
Acquisition- and divestment-related expenses
and integration costs 30 17 (7) 14 20 74
Certain other non-operational items 16 6 – (10) 153 165
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives) 11 (21) (13) (1) 5 (19)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized (5) – (4) – (3) (12)
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities) (5) 2 4 2 10 13
Operational EBITA 2,937 1,475 909 536 (430) 5,427
Operational EBITA margin (%) 20.1% 18.9% 14.5% 14.7% n.a. 16.9%
(1) Includes impairment of certain assets.
In the year ended December 31, 2023, Certain other non-operational items in the table above includes the following:
Year ended December 31, 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 – – – – (36) (36)
Business transformation costs(1) 15 1 – 1 188 205
Changes in pre-acquisition estimates 1 – – – 3 4
Certain other fair values changes,
including asset impairments 2 3 – (10) 15 10
Other non-operational items (2) 2 – (1) (17) (18)
Total 16 6 – (10) 153 165
(1) Amounts include ABB Way process transformation costs of $188 million for the year ended December 31, 2023.
===== SIDA 55 =====
42 Q4 2023 FINANCIAL INFORMATION
Year ended December 31, 2022
Corporate and
Robotics & Other and
Process Discrete Intersegment
($ in millions, unless otherwise indicated) Electrification Motion Automation Automation elimination Consolidated
Total revenues 13,619 6,745 6,044 3,181 (143) 29,446
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives (37) (18) 25 4 (1) (27)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized 11 – 10 1 33 55
Unrealized foreign exchange movements
on receivables (and related assets) 6 4 (2) 1 (9) –
Operational revenues 13,599 6,731 6,077 3,187 (120) 29,474
Income (loss) from operations 2,140 1,092 663 247 (805) 3,337
Acquisition-related amortization 104 31 4 78 12 229
Restructuring, related and
implementation costs(1) 28 16 29 11 263 347
Changes in obligations related to
divested businesses 1 – – – (89) (88)
Gains and losses from sale of businesses (1) 8 – – – 7
Acquisition- and divestment-related expenses
and integration costs 36 15 134 6 4 195
Certain other non-operational items 41 – – (8) 419 452
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives) (30) (5) 6 4 (7) (32)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized 10 – 9 1 28 48
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities) 14 6 3 1 (9) 15
Operational EBITA 2,343 1,163 848 340 (184) 4,510
Operational EBITA margin (%) 17.2% 17.3% 14.0% 10.7% n.a. 15.3%
(1) Includes impairment of certain assets.
In the year ended December 31, 2022, certain other non-operational items in the table above includes the following:
Year ended December 31, 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 – – – – 57 57
Regulatory, compliance and legal costs – – – – 317 317
Business transformation costs 20 – – – 132 152
Changes in pre-acquisition estimates 11 – – (1) – 10
Gains and losses from sale of investments
in equity-accounted companies – – – – (43) (43)
Certain other fair values changes,
including asset impairments (3) – – 8 (50) (45)
Other non-operational items 14 – – (15) 5 4
Total 42 – – (8) 418 452
(1) Amounts include ABB Way process transformation costs of $131 million for the year ended December 31, 2022.
===== SIDA 56 =====
43 Q4 2023 FINANCIAL INFORMATION
Net debt
Definition
Net debt
Net debt is defined as Total debt less Cash and marketable securities.
Total debt
Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt.
Cash and marketable securities
Cash and marketable securities is the sum of Cash and equivalents, Restricted cash (current and non -current) and Marketable securities and short -term
investments.
Reconciliation
December 31,
($ in millions) 2023 2022 2021
Short-term debt and current maturities of long-term debt 2,607 2,535 1,384
Long-term debt 5,221 5,143 4,177
Total debt 7,828 7,678 5,561
Cash and equivalents 3,891 4,156 4,159
Restricted cash - current 18 18 30
Marketable securities and short-term investments 1,928 725 1170
Restricted cash - non-current – – 300
Cash and marketable securities 5,837 4,899 5,659
Net debt (cash) 1,991 2,779 (98)
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) December 31, 2023 December 31, 2022
Total stockholders' equity 14,057 13,187
Net debt (as defined above) 1,991 2,779
Net debt / Equity ratio 0.14 0.21
Net debt/EBITDA Ratio
Definition
Net debt/EBITDA
Net debt/EBITDA 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) December 31, 2023 December 31, 2022
Income from operations 4,871 3,337
Depreciation and Amortization 780 814
EBITDA 5,651 4,151
Net debt (as defined above) 1,991 2,779
Net debt / EBITDA 0.35 0.67
===== SIDA 57 =====