UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2023
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s name into English)
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
☒
⬜
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
⬜
Note:
attached annual report to security holders.
Indication by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
⬜
Note:
other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in
which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the
home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press
release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event,
has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
⬜
☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated April 25, 2023 titled “Q1 2023 results”.
2.
Q1 2023 Financial Information.
3.
Press release issued by ABB Ltd dated April 25, 2023 titled “ABB plans to delist ADRs from NYSE”.
4.
Announcements regarding transactions in ABB Ltd’s Securities made by the directors or the members of the
Executive Committee.
The information provided by Item 2 above is hereby incorporated by reference into the Registration Statements on Form F-3 of
ABB Ltd and ABB Finance (USA) Inc. (File Nos. 333-223907 and 333-223907-01) and registration statements on Form S-8
(File Nos. 333-190180, 333-181583, 333-179472, 333-171971 and 333-129271) each of which was previously filed with the
Securities and Exchange Commission.
2
—
ZURICH, SWITZERLAND, APRIL 25, 2023
Q1 2023 results
Strong start to the year
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1
1
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2
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4
Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange
—
Q1 2023
First three months
Press Release
—
“ABB had a strong start to the year, with a positive development in most measures,
including cash flow. This gives us the confidence to raise our 2023 guidance.”
Björn Rosengren
, CEO
KEY FIGURES
CHANGE
($ millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
1
Orders
9,450
9,373
1%
9%
Revenues
7,859
6,965
13%
22%
Gross Profit
2,716
2,281
19%
as % of revenues
34.6%
32.7%
+1.9 pts
Income from operations
1,198
857
40%
Operational EBITA
1
1,277
997
28%
33%
as % of operational revenues
1
16.3%
14.3%
+2 pts
Income from continuing operations, net of tax
1,065
643
66%
Net income attributable to ABB
1,036
604
72%
Basic earnings per share ($)
0.56
0.31
78%
2
Cash flow from operating activities
4
282
(573)
n.a.
1
For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q1 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.
ABB INTERIM REPORT
I
Q1 2023
Customer activity was strong in the first quarter . Despite a very
high comparable from last year, we increased order intake by
1% (9% comparable) , with a positive development in three out
of four business areas. While Robotics & Discrete Automation
improved orders sequentially, it declined from last year’s high
level which benefited from pre-buys in a period of significant
component shortages. Particularly strong momentum was noted
in Process Automation with orders reaching the highest level in
recent history. A positive underlying momentum was noted also
in all three regions.
Just like in the previous quarter, we did not face significant
supply chain constraints, hence we converted backlog into
customer deliveries. Revenue growth was strong at 13% (22%
comparable), with double -digit comparable increases in all
business areas. The impacts from robust development in both
pricing and volumes more than offset the notable adverse
impact from changes in exchange rates. Despite strong
revenue growth we built order backlog, with book-to-bill at
120%.
I was pleased about the operational execution of the increased
revenues. We improved the Operational EBITA by 28% to
$1,277 million and the margin was up by 200 basis points to
16.3%. This is the strongest first quarter result in many years.
On top of the strong operational performance, net income was
additionally supported by net positive tax impacts of
approximately $200 million linked to a favorable resolution of
certain prior year tax matters, mainly related to the divestment
of the Power Grids business.
It was good to see our cash flow improve from last year by $855
million, in line with our expectations. Cash flow from operating
activities of $282 million was strong for a first quarter, and set
us off to a robust start for what I expect will be a good cash
delivery this year. I feel confident that our balance sheet will be
strong enough to support both organic and acquired growth, a
rising, sustainable dividend per share over time and utilizing
share buybacks as a means to return excess cash to our
shareholders. In early April, we launched our new share
buyback program of up to $1 billion, which will run until March
2024.
In February, we published our first integrated report, including
our 2022 sustainability report showing solid progress toward our
2030 goals. One highlight to mention is that we reduced our
own greenhouse gas emissions by 43%, a total reduction of
65% from the 2019 baseline.
Furthermore, we defined a new emissions reduction target for
our supply chain, covering suppliers that account for 70% of our
procurement spend. We have continued our work to strengthen
ABB’s circularity approach by defining clear key performance
indicators for every stage of the product life cycle, from design
to end-of-life. The largest positive environmental impact we can
make is through providing our customers with resource -efficient
products and the demand for clean energy and efficiency is
broad and long-term.
After having been listed on the New York Stock Exchange
(NYSE) since 2001, we have decided to delist and plan to
eventually deregister with the SEC. The main reason being that
the access to international equity markets has increased since
our listing, through digital trading on multiple platforms.
Consequently, we no longer see the need to be listed on as
many as three equity capital markets. We plan to delist our
American Depositary Receipts (ADRs) on or around May 23,
2023, and as from the time of delisting, the ABB ADRs will
instead be converted to a sponsored Level I program. This still
gives US investors the ability to invest in ABB through ADRs.
The ABB shares will remain listed on the SIX Swiss Exchange
and the Swedish Nasdaq exchange due to the company’s
heritage. The delisting and planned deregistration in the US
would be yet another step towards further simplification and
efficiency at ABB.
I want to emphasize that we remain as committed to the US-
market, which represent ed 24% of our revenues in 2022. The
United States is critical to ABB’s success, and approximately
85% of ABB’s sales in the US are from products produced
locally. To support future success, we are currently investing
approximately $170 million in our US facilities to meet
increasing demand for clean energy and automation.
Björn Rosengren
CEO
In the
second quarter of 2023
, we anticipate double-digit
comparable revenue growth to support an improvement in the
Operational EBITA margin, year-on-year.
In full-year 2023
, despite current market uncertainty, we
anticipate comparable revenue growth to be at least 10% and
we expect to improve Operational EBITA margin, year-on-year.
CEO summary
Outlook
ABB INTERIM REPORT
I
Q1 2023
In the first quarter, a robust customer activity resulted in an
order intake of $9,450 million, representing an increase of 1%
(9% comparable) from last year’s high level. The strongest
order momentum was noted in the late-cyclical process
industry-related business segments.
Order intake improved in three out of four business areas.
Process Automation increased orders by 25% (55%
comparable) supported by a strong general demand pattern
as well as by timing of larger project orders, and additionally
by the impact from the de-booking of approximately
$190 million in last year’s period. Electrification orders were
up by 1% (5% comparable) despite weakness in the
residential construction market. Motion improved by 3% (8%
comparable). In Robotics & Discrete Automation customers
returned to a seemingly more normal order pattern,
recovering from the previous quarter, although some
hampering effect from customers outside of the automotive
segment adjusting inventory levels was noted. In total, orders
declined by 23% (20% comparable) from the high comparable
last year.
The automotive segment improved on EV-related
investments, while softening demand was noted in the
robotics consumer related segments.
In transport & infrastructure, there was a positive development in
marine & ports and renewables. In buildings there was weakness
in all three regions in residential-related demand, while
commercial construction was solid.
Demand in the process -related business was strong across the
board, with particular strength in oil & gas, and it held up well also
for refining, water & wastewater, power generation and pulp &
paper.
Customer activity was high in all three regions. Orders in Europe
increased by 1% (10% comparable), with growth rates reflecting
the de-booking last year . The underlying business increased
slightly, despite weakness in Germany. Asia, Middle East and
Africa declined by 2% (up 11% comparable), although China
declined by 12% (3% comparable). The Covid-related
implications in China eased quickly, and demand came off to a
strong start early in the quarter with the additional timing related
support from ordering ahead of the New Year celebrations in
China, after which customer activity slowed somewhat from the
record-high comparable last year. The Americas improved by 3%
(5% comparable), weighed down by the United States which
declined by 4% (3% comparable) from the challenging
comparable in last year’s period.
Orders and revenues
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2023
Q1 2022
US$
Comparable
Europe
3,582
3,534
1%
10%
The Americas
2,985
2,897
3%
5%
Asia, Middle East
and Africa
2,883
2,942
-2%
11%
ABB Group
9,450
9,373
1%
9%
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
9%
22%
FX
-5%
-6%
Portfolio changes
-3%
-3%
Total
1%
13%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2023
Q1 2022
US$
Comparable
Europe
2,872
2,518
14%
24%
The Americas
2,653
2,169
22%
25%
Asia, Middle East
and Africa
2,334
2,278
2%
16%
ABB Group
7,859
6,965
13%
22%
ABB INTERIM REPORT
I
Q1 2023
Gross profit
Gross profit increased strongly by 19% (25% constant currency) to
$2,716 million, supported by a significant gross margin
improvement of 190 basis points to 34.6%. Gross margin improved
in all business areas, with three showing significant increases.
Income from operations
Income from operations amounted to $1,198 million, representing a
strong increase of 40 % (46% constant currency), year-on-year.
Compared with last year, earnings were mainly supported by the
improved operational performance, with some additional tailwind
from lower expenses related to both acquisition - and divestments
and non-operational items.
Operational EBITA
The year-on-year improvement was driven by strong operational
execution of the significantly higher volumes as well as benefits
from successful price management
with only a slight adverse
impact from raw materials and freight costs. Price clearly more than
offset higher labor costs. Selling, general and administrative
expenses declined in relation to revenues to 17.0%, from 17.8%
last year. The operational improvements more than offset the
adverse impact from changes in exchange rates, resulting in an
Operational EBITA of $1,277 million, an increase of 28% (33%
constant currency) year-on-year. Operational EBITA in Corporate
and Other amounted to -$111 million, out of which -$28 million
related to the E-mobility business, which is reported as part of
Group Corporate and Other as from this quarter.
Net finance expenses
Net finance expense was $21 million, somewhat lower than
expected due to a reduction in certain income tax-related risks.
Income tax
Income tax expense was $119 million with an effective tax rate of
10.1%, including approximately 17% net benefit on the favorable
resolution of a prior year tax matter relating to the divestment of the
Power Grids business.
Net income and earnings per share
Net income attributable to ABB was $1,036 million and increased by
72%, driven primarily by improved operational performance and the
benefit of the resolution of the prior year tax matter booked in the
quarter. This resulted in basic earnings per share of $0.56, up from
$0.31 last year.
Operational EBITA
($ millions)
Q1 2023
Q1 2022
Corporate and Other
E-mobility
(28)
(2)
Corporate costs, intersegment
eliminations and other
1
(83)
(32)
Total
(111)
(34)
1
Majority of which relates to underlying corporate
Earnings
ABB INTERIM REPORT
I
Q1 2023
Net working capital
Net working capital amounted to $4,164 million,
increasing
year-on-year from $3,461 million and sequentially from
$3,216 million.
The sequential increase was mainly driven
by higher receivables triggered by high revenue growth and
higher inventories on the back of continued strong order
intake. That said, inventory volumes began to decline
toward the end of the quarter. Net working capital as a
percentage of revenues
1
Capital expenditures
Purchases of property, plant and equipment and intangible
assets amounted to $151 million.
Net debt
Net debt
1
and increased from $2,772 million year-on-year, and
sequentially from $2,779 million. The sequential increase was
mainly driven by the initial dividend payment s, partially offset
by positive free cash flow during the period as well as the
shares issued in our subsidiary ABB E-mobility to third parties
in private placements of $341 million.
Cash flows
Cash flow from operating activities was $282 million and
increased year-on-year from -$573 million. The improvement
was driven by positive cash generation across all business
areas on the back of higher earnings and a lower build-up of net
working capital, year-on-year. It should also be noted that last
year’s cash flow included a negative cash flow of approximately
$170 million for income taxes related to business separations.
Share buyback program
ABB has completed its share buyback program that was
launched in April 2022. Through this buyback program, ABB
repurchased a total of 67,459,000 shares – equivalent to 3.29%
of its issued share capital at launch of the buyback program –
for a total amount of approximately $2 billion. This included the
remaining $1.2 billion of the $7.8 billion of cash proceeds from
the Power Grids divestment. A new share buyback program of
up to $1 billion was launched on April 3, 2023.
($ millions,
unless otherwise indicated)
Mar. 31
2023
Mar. 31
2022
Dec. 31
2022
Short term debt and current
maturities of long-term debt
3,433
3,114
2,535
Long-term debt
5,230
6,171
5,143
Total debt
8,663
9,285
7,678
Cash & equivalents
3,438
5,216
4,156
Restricted cash - current
19
30
18
Marketable securities and
short-term investments
1,380
967
725
Restricted cash - non-current
–
300
–
Cash and marketable securities
4,837
6,513
4,899
Net debt (cash)*
3,826
2,772
2,779
Net debt (cash)* to EBITDA ratio
0.9
0.4
0.7
Net debt (cash)* to Equity ratio
0.30
0.20
0.21
*
At Mar. 31, 2023, Mar. 31, 2022 and Dec. 31, 2022, net debt(cash) excludes net pension
(assets)/liabilities of $(301) million $(13) million and $(114) million, respectively.
Balance sheet & Cash flow
ABB INTERIM REPORT
I
Q1 2023
Orders and revenues
Despite a very challenging comparable from last year, order
intake increased by 1% (5% comparable) to
$4,141 million, the highest quarterly level in several years.
Strong orders added further to the order backlog, with book-
to-bill at 115%.
●
Demand improved in all customer segments except for
residential construction, which declined year-on-year in all
three regions. Weakness in residential construction
impacted primarily the Smart Buildings division, and to
some extent also Installation Products, while the other
divisions generally improved order intake at a double-digit
pace.
●
Orders increased by 4% (15% comparable) in Asia, Middle
East and Africa, as the decline in China of 11% (4%
comparable) was more than offset by a strong development
elsewhere in the region. Europe improved by 1% (5%
comparable), as a solid development in a majority of the
markets more than offset a low single-digit decline in
Germany. The Americas declined slightly by 1% (1%
comparable), weighed down by a 6% drop in the United
States.
●
Revenues increased by 11% (16% comparable) to the
highest level in many years, with strong developments in
both pricing and volume, supported by solid market
demand and execution of the order backlog.
●
This was the first quarter when the E-mobility business was
not reported as part of the business area. In preparation of
the planned separate listing and new governance structure,
E-mobility is now reported in Corporate and Other.
Profit
Both earnings and margin reached their highest levels in recent
history. Operational EBITA amounted to $677 million, up 32% year-
on-year, and the Operational EBITA margin reached 19.0%,
representing a 310 basis points improvement.
●
The impacts from operational leverage on increased volumes
and strong pricing activities, in combination with lower costs
related to raw materials and freight, more than offset a slight
negative divisional and geographical mix in revenues, as well as
the adverse impacts from changes in exchange rates.
●
Margins improved in all divisions except in Smart Buildings where
profitability was slightly hampered due to the weakness in
residential construction demand.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
5%
16%
FX
-4%
-5%
Portfolio changes
0%
0%
Total
1%
11%
—
Electrification
CHANGE
($ millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
Orders
4,141
4,112
1%
5%
Order backlog
7,101
5,946
19%
24%
Revenues
3,590
3,236
11%
16%
Operational EBITA
677
512
32%
as % of operational revenues
19.0%
15.9%
+3.1 pts
Cash flow from operating activities
395
87
354%
No. of employees (FTE equiv.)
51,130
49,650
ABB INTERIM REPORT
I
Q1 2023
Orders and revenues
Order intake of $2,262 million reached the highest level in
several years, up by 3% (8% comparable) from last year’s
high comparable. Notably, the order intake increased also
when separating out the impact of larger project orders. Book-
to-bill was 11 7%, expanding the order backlog to
$5,102 million.
●
Positive development s for the energy efficiency -related
drives business, the e-mobility Traction division and the
Service division supported the strong overall order growth,
while the low voltage motor divisions declined from last
year’s very high levels.
●
In total, customer activity improved in all segments, except
for weakness in the HVAC business due to softer
construction demand.
●
Order intake increased in Europe by 6% (11% comparable),
despite a double-digit decline in Germany. Asia, Middle East
and Africa was up by 2% (11% comparable), as a slight
decline in China was more than offset by good momentum
elsewhere in the region. The Americas was stable (1%
comparable), including a slight increase of 2% (2%
comparable) in the United States.
●
Strong revenue growth of 23% (29% comparable)
supported by execution of the order backlog resulted in
the highest revenues since the formation of the Motion
business area. Significant support from both increased
volumes and robust price development.
Profit
Operational EBITA of $366 million and Operational EBITA
margin of 18.9% reached their highest levels in several
years.
●
Positive earnings and margin impact from earlier
implemented price actions were the main driver s to the
year-on-year improvement.
●
Efficient execution of increased volumes, supported by
deliveries from the order backlog, contributed
significantly.
●
The margin was somewhat supported by a positive
divisional mix as the drives and service businesses
represented a slightly larger proportion of revenues, year-
on-year.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
8%
29%
FX
-5%
-7%
Portfolio changes
0%
1%
Total
3%
23%
—
Motion
CHANGE
($ millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
Orders
2,262
2,202
3%
8%
Order backlog
5,102
4,317
18%
22%
Revenues
1,940
1,572
23%
29%
Operational EBITA
366
274
34%
as % of operational revenues
18.9%
17.4%
+1.5 pts
Cash flow from operating activities
149
(2)
n.a.
No. of employees (FTE equiv.)
21,000
20,330
ABB INTERIM REPORT
I
Q1 2023
Orders and revenues
Driven by a strong underlying customer activity across the
segments, as well as by supportive timing of some project
orders, the orders increased by 25% (55% comparable) to
$2,113 million - the highest quarterly level in recent history. The
order backlog increased to $6,893 million.
●
All divisions reported order growth of more than 15% (+20%
comparable) year -on-year. Momentum was particularly strong
in the Energy Industries division, including high activity
related to new energy sources such as hydrogen, which
admittedly still is a small part of the total but growing at a high
pace.
●
Europe improved by 44 % (88% comparable), with growth
rates positively impacted by the order de-booking of
approximately $190 million in last year’s period. Asia, Middle
East and Africa was up by 5% (34% comparable), with strong
contribution from China at 16% (52% comparable). The
Americas was up by 29% (47% comparable), including an
overall decline in the United States of 9% (up 6%
comparable).
●
Total revenue growth was hampered primarily by the absence of
the Turbocharging division (Accelleron) which was spun-off in
2022. That aside, a strong customer activity and deliveries from
the order backlog resulted in revenues of $1,436 million, down in
total by 5% (up 15% comparable), year-on-year.
Profit
Strong operational performance resulted in an Operational EBITA
margin of 14.2%, up by 120 basis points year-on -year, more than
offsetting the adverse margin impact of 140 basis points related to
the exit of the high-margin Accelleron business.
●
Significant gross margin improvement was the main contributor
to the strong operational performance.
●
Operational EBITA margin increased in all divisions except for
a slight decline in Marine & Ports, which was somewhat
impacted by an adverse mix due to lower share of revenues
stemming from the arctic marine propulsion business.
●
All divisions were well into double-digit margin territory.
Particularly strong year-on-year improvement was noted in
Measurement & Analytics which benefited from a positive mix
in deliveries.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
55%
15%
FX
-7%
-5%
Portfolio changes
-23%
-15%
Total
25%
-5%
—
Process Automation
CHANGE
($ millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
Orders
2,113
1,692
25%
55%
Order backlog
6,893
6,190
11%
21%
Revenues
1,436
1,506
-5%
15%
Operational EBITA
205
196
5%
as % of operational revenues
14.2%
13.0%
+1.2 pts
Cash flow from operating activities
112
60
87%
No. of employees (FTE equiv.)
20,500
21,920
ABB INTERIM REPORT
I
Q1 2023
Orders and revenues
Order intake amounted to $1,001 million, declining by 23%
(20% comparable) from the high order level last year, which
benefitted from pre-buys in a period of a strained supply
chain. While orders increased from the fourth quarter,
somewhat of a hampering effect from customers outside of
the automotive segment adjusting inventory levels was
noted, particularly in China.
●
Orders declined at a double-digit rate in both divisions
and all regions. In total, book-to-bill was 107% and order
backlog increased to $2,782 million.
●
Orders were positively impacted by favorable
development in the automotive segment. This was
however offset by declines across other segments and
primarily for machine builders, from last year’s very high
level.
●
With no material supply chain constraints, execution of
the order backlog supported the strong revenue growth of
28% (35% comparable). Both divisions benefitted from
strong double-digit comparable growth, with contribution
from both higher volumes and solid pricing actions.
Profit
Operational EBITA close to tripled year-on-year and
amounted to $140 million, supported by higher production
output and favorable business mix, which triggered an
820 basis point margin improvement to 14.9%.
●
Significantly higher volumes in production improved cost
absorption and were the main driver in the strong
earnings increase.
●
Strong contribution from earlier implemented price
actions.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
-20%
35%
FX
-3%
-7%
Portfolio changes
0%
0%
Total
-23%
28%
—
Robotics & Discrete Automation
CHANGE
($ millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
Orders
1,001
1,308
-23%
-20%
Order backlog
2,782
2,495
12%
16%
Revenues
937
730
28%
35%
Operational EBITA
140
49
186%
as % of operational revenues
14.9%
6.7%
+8.2 pts
Cash flow from operating activities
130
(29)
n.a.
No. of employees (FTE equiv.)
10,850
10,690
ABB INTERIM REPORT
I
Q1 2023
10
Quarterly highlights
●
ABB’s production site in Xiamen – which covers 425,000
m
2
2
equivalent (CO
2
e) emissions by 13,400 tons as part of
ABB’s global Mission to Zero program. This year, Xiamen
will be opening its doors to customers and other
manufacturers in China to showcase how its smart digital
technology has been applied to decarbonize and reduce
scope 2 emissions and help them achieve similar results.
●
ABB launched its new film series: Unstoppable. This series
aims to promote diversity and profiles three remarkable
female leaders in the mining, pulp & paper, and metals
industries. Unstoppable highlights the inspiring stories of
three women who have broken down barriers and made
significant contributions to their respective industries.
Through this series, ABB aims to raise awareness of the
importance of diversity and inclusion; and encourage more
women to pursue careers in STEM fields.
●
On March 8, 2022, CEO – Björn Rosengren signed ABB’s
commitment to UN’s Women Empowerment’s Principles
(WEPs). The UN WEPs are a powerful vehicle for
corporate delivery on the gender equality dimension of
the 2030 agenda and the UN Sustainable Development
Goals. Following the commitment, in March 2023, the
WEPs were witnessed in action through organization-
wide participation in numerous activities and events –
such as panel discussions with leadership on the
commitment, mastering the Open Job Market and global
engagement in the social media campaign
#ABBsolutelyUnited, to name a few.
●
Tarkett’s vinyl flooring factory in Ronneby, Sweden, is using
ABB data insights and service expertise to save 800
megawatt-hours (MWh) of energy per year from their motor-
driven systems. With the data gathered through the ABB
Ability™ Digital Powertrain Energy Appraisal solution, ABB
identified that upgrading 10 motors to IE5 SynRM
technology would boost efficiency from 80% to 95%. With
the current energy prices, the payback period would be only
18 months or less.
●
ABB has been recognized for its global leadership in
corporate sustainabil ity as the company has been named
on CDP’s this years’ Supplier Engagement Leaderboard,
being among the top 8% of the assessed companies for
supplier engagement on climate change, based on ABB’s
2022 CDP disclosure .
Story of the quarter
●
Research shows that businesses around the world
remain concerned about the impacts of energy security
and prices, which could be a catalyst for a range of
environmental, social and economic ripple effects.
According to ABB Electrification’s Energy Insights survey
of 2,300 leaders from small and large businesses across
a range of sectors, 92% of respondents feel that the
continuing instability of energy is threatening their
profitability and competitiveness. Energy costs and
insecurity are having a significant impact on the workforce
with decreased investment in employees. Business
leaders are also concerned about potential impacts of
meeting their sustainability targets.
Q1 outcome
●
48% reduction of CO
₂
e emissions in own operations mainly
driven by shifting to green electricity in our operations.
●
13% decrease in LTIFR due to a decrease in incidents in
absolute numbers.
●
2.1%-points increase in share of women in senior management,
demonstrating progress towards our target.
—
Sustainability
Q1 2023
Q1 2022
CHANGE
12M ROLLING
CO
₂
e own operations emissions,
Ktons scope 1 and 2
1
50
96
-48%
221
Lost Time Injury Frequency Rate (LTIFR),
frequency / 200,000 working hours
2
0.15
0.18
-13%
0.14
Share of females in senior management
positions, %
19.0
16.9
+2.1 pts
17.6
1
CO
₂
₆
2
Current quarter Includes all incidents reported until April 5, 2023
ABB INTERIM REPORT
I
Q1 2023
11
During Q1 2023
●
On January 20, ABB announced it had reached an agreement
to sell its Power Conversion division to AcBel Polytech Inc. for
$505 million in cash. The transaction is subject to regulatory
approvals and is expected to be completed in the second half
of 2023. Upon closing, ABB expects to record a small non-
operational book gain in Income from operations on the sale.
●
On February 1, ABB anno unced its E-mobility business had
signed an agreement with four minority investors to raise an
additional CHF325 million in funds in exchange for
approximately a 12% shareholding in the company. The
transaction represents the final part of ABB E-mobility’s pre-
IPO funding tranche through newly issued shares . Through
the private placement, a total of approximately
CHF525 million has been raised for approximately a 20%
shareholding in ABB’s E-mobility business , which will be
used to continue the execution of its growth strategy, driven
by both organic and M&A investments in hardware and
software.
●
On March 23, at ABB’s Annual General Meeting, Denise C.
Johnson was elected as a new member to the Board while
Satish Pai did not stand for re-election.
●
On March 31, ABB announced its E-mobility business is taking
additional strategic steps to further increase customer focus by
driving growth in the three customer-centric business lines of
public, transit & fleet and home & work. Supporting this strategy
evolution, changes in the company’s leadership were
announced and Michael Halbherr, with his strong background
in software and high-tech industries, will take on the role of
Executive Chairman and interim-CEO.
After Q1 2023
●
On April 3, ABB launch ed its previously announced new share
buyback program of up to $1 billion. The maximum number of
shares that may be repurchased under this new program on
any given trading day is 762,196.
●
On April 25, ABB announced it plans to delist its American
Depositary Receipts (ADRs) from the New York Stock
Exchange (NYSE), and ultimately to seek to deregister its
ADRs and the underlying shares under the US Securities Act of
1934 (the Exchange Act). In connection with the delisting of its
ADRs from the NYSE, ABB intends to convert its current
sponsored Level II ADR program into a sponsored Level I ADR
program, which would give US investors a continued
investment option, in addition to the ordinary ABB share. The
company’s shares will remain listed on the SIX Swiss
Exchange (SIX) and the Swedish Nasdaq exchange due to the
company’s heritage.
Significant events
ABB INTERIM REPORT
I
Q1 2023
12
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2022
Hitachi Energy JV (Power Grids, 19.9% stake)
28-Dec
Note: comparable growth calculation includes acquisitions and divestments with revenues of greater than $50 million.
1
Represents the estimated revenues for the last fiscal year prior to the announcement of the respective acquisition/divestment unless otherwise stated.
ABB Group
Q1 2022
Q2 2022
Q3 2022
Q4 2022
FY 2022
Q1 2023
EBITDA, $ in million
1,067
794
906
1,384
4,151
1,389
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
16.50
n.a.
Net debt/Equity
0.20
0.34
0.34
0.21
0.21
0.30
Net debt/ EBITDA 12M rolling
0.4
0.7
0.7
0.7
0.7
0.9
Net working capital, % of 12M rolling revenues
12.1%
12.8%
11.7%
11.1%
11.1%
13.9%
Earnings per share, basic, $
0.31
0.20
0.19
0.61
1.30
0.56
Earnings per share, diluted, $
0.31
0.20
0.19
0.60
1.30
0.55
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.84
n.a.
Share price at the end of period, CHF
1
29.12
24.57
24.90
28.06
28.06
31.37
Share price at the end of period, $
1
30.76
25.43
24.41
30.46
30.46
34.30
Number of employees (FTE equivalents)
104,720
106,380
106,830
105,130
105,130
106,170
No. of shares outstanding at end of period (in millions)
1,929
1,892
1,875
1,865
1,865
1,862
1
Data prior to October 3, 2022, has been adjusted for the Accelleron spin-off (Source: FactSet).
1
Excludes one project estimated to a total of ~$100 million, that is ongoing in the non-core business. Exact exit timing is difficult to assess due to legal proceedings etc.
2
Excludes Operational EBITA from E-mobility business.
3
Includes restructuring and restructuring-related as well as separation costs.
4
Includes net positive tax impact of $206 million linked to a favorable resolution of certain prior year tax matters in Q1 2023 but excludes the impact of acquisitions or divestments or any
significant non-operational items.
($ in millions, unless otherwise stated)
FY 2023
Net finance expenses
~(150)
unchanged
Effective tax rate
~21%
from ~25%
Capital Expenditures
~(800)
unchanged
($ in millions, unless otherwise stated)
FY 2023
1
Q2 2023
Corporate and Other Operational EBITA
2
~(300)
~(75)
unchanged
Non-operating items
Acquisition-related amortization
~(220)
~(55)
unchanged
Restructuring and related
3
~(150)
~(40)
unchanged
ABB Way transformation
~(180)
~(40)
unchanged
Additional 2023 guidance
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2022
Motion
PowerTech Converter business
1-Dec
~60
300
Electrification
ASKI Industrie Elektronik GmbH
3-Oct
~2
16
Electrification
Numocity Technologies Private Ltd. (majority stake)
22-Jul
<1
20
Additional figures
Acquisitions and divestments, last twelve months
ABB INTERIM REPORT
I
Q1 2023
13
For additional information please contact:
Media Relations
Phone: +41 43 317 71 11
Email:
Investor Relations
Phone: +41 43 317 71 11
Email:
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Financial calendar
2023
July 20 Q2 2023 results
October 18 Q3 2023 results
November 30 Capital Markets Day in Frosinone, Italy
This press release includes forward-looking information and
statements as well as other statements concerning the
outlook for our business, including those in the sections of
this release titled “CEO summary,” “Outlook,” “Earnings,”
“Balance sheet & cash flow,” “Sustainability” and
“Significant events”. These statements are based on current
expectations, estimates and projections about the factors
that may affect our future performance, including global
economic conditions, the economic conditions of the
regions and industries that are major markets for ABB.
These expectations, estimates and projections are generally
identifiable by statements containing words such as
“anticipates,” “expects,” “estimates,” “plans,” “targets ,”
“likely” or similar expressions. However, there are many
risks and uncertainties, many of which are beyond our
control, that could cause our actual results to differ
materially from the forward-looking information and
statements
made in this press release and which could affect our ability
to achieve any or all of our stated targets. Some important
factors that could cause such differences include, among
others, business risks associated with the volatile global
economic environment and political conditions, costs
associated with compliance activities, market acceptance of
new products and services, changes in governmental
regulations and currency exchange rates and such other
factors as may be discussed from time to time in ABB Ltd’s
filings with the U.S. Securities and Exchange Commission,
including its Annual Reports on Form 20-F. Although ABB
Ltd believes that its expectations reflected in any such
forward looking statement are based upon reasonable
assumptions, it can give no assurance that those
expectations will be achieved.
The Q1 2023 results press release and presentation slides
are available on the ABB News Center at
www.abb.com/news and on the Investor Relations
homepage at www.abb.com/investorrelations.
A conference call and webcast for analysts and investors is
scheduled to begin today at 10:00 a.m. CET.
To pre-register for the conference call or to join the
webcast, please refer to the ABB website:
www.abb.com/investorrelations.
The recorded session will be available after the event on
ABB’s website.
Important notice about forward-looking information
Q1 results presentation on April 25, 2023
ABB
efficient future. The company’s solutions connect engineering know -how and software to optimize how things are manufactured,
moved, powered and operated. Building on more than 130 years of excellence, ABB’s ~105,000 employees are committed to
driving innovations that accelerate industrial transformation.
1 Q1 2023 FINANCIAL INFORMATION
April 25, 2023
Q1 2023
Financial information
2 Q1 2023 FINANCIAL INFORMATION
—
Financial Information
Contents
03
─ 05 Key Figures
06 ─
28 Consolidated Financial Information (unaudited)
29 ─
38 Supplemental Reconciliations and Definitions
3 Q1 2023 FINANCIAL INFORMATION
—
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Comparable
(1)
Orders
9,450
9,373
1%
9%
Order backlog (end March)
21,607
18,901
14%
21%
Revenues
7,859
6,965
13%
22%
Gross Profit
2,716
2,281
19%
as % of revenues
34.6%
32.7%
+1.9 pts
Income from operations
1,198
857
40%
Operational EBITA
(1)
1,277
997
28%
33%
(2)
as % of operational revenues
(1)
16.3%
14.3%
+2 pts
Income from continuing operations, net of tax
1,065
643
66%
Net income attributable to ABB
1,036
604
72%
Basic earnings per share ($)
0.56
0.31
78%
(3)
Cash flow from operating activities
(4)
282
(573)
n.a.
Cash flow from operating activities in continuing operations
283
(564)
n.a.
(1) For a reconciliation of non-GAAP measures see “
” on page 29.
(2) Constant currency (not adjusted for portfolio changes).
(3) EPS growth rates are computed using unrounded amounts.
(4) Cash flow from operating activities includes both continuing and discontinued operations.
4 Q1 2023 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q1 2023
Q1 2022
US$
Local
Comparable
Orders
ABB Group
9,450
9,373
1%
6%
9%
Electrification
4,141
4,112
1%
5%
5%
Motion
2,262
2,202
3%
8%
8%
Process Automation
2,113
1,692
25%
32%
55%
Robotics & Discrete Automation
1,001
1,308
-23%
-20%
-20%
Corporate and Other
196
305
Intersegment eliminations
(263)
(246)
Order backlog (end March)
ABB Group
21,607
18,901
14%
19%
21%
Electrification
7,101
5,946
19%
24%
24%
Motion
5,102
4,317
18%
22%
22%
Process Automation
6,893
6,190
11%
18%
21%
Robotics & Discrete Automation
2,782
2,495
12%
16%
16%
Corporate and Other
(incl. intersegment eliminations)
(271)
(47)
Revenues
ABB Group
7,859
6,965
13%
19%
22%
Electrification
3,590
3,236
11%
16%
16%
Motion
1,940
1,572
23%
30%
29%
Process Automation
1,436
1,506
-5%
1%
15%
Robotics & Discrete Automation
937
730
28%
35%
35%
Corporate and Other
169
114
Intersegment eliminations
(213)
(193)
Income from operations
ABB Group
1,198
857
Electrification
655
481
Motion
353
254
Process Automation
200
151
Robotics & Discrete Automation
115
22
Corporate and Other
(incl. intersegment eliminations)
(125)
(51)
Income from operations %
ABB Group
15.2%
12.3%
Electrification
18.2%
14.9%
Motion
18.2%
16.2%
Process Automation
13.9%
10.0%
Robotics & Discrete Automation
12.3%
3.0%
Operational EBITA
ABB Group
1,277
997
28%
33%
Electrification
677
512
32%
38%
Motion
366
274
34%
40%
Process Automation
205
196
5%
11%
Robotics & Discrete Automation
140
49
186%
212%
Corporate and Other
(1)
(incl. intersegment eliminations)
(111)
(34)
Operational EBITA %
ABB Group
16.3%
14.3%
Electrification
19.0%
15.9%
Motion
18.9%
17.4%
Process Automation
14.2%
13.0%
Robotics & Discrete Automation
14.9%
6.7%
Cash flow from operating activities
ABB Group
282
(573)
Electrification
395
87
Motion
149
(2)
Process Automation
112
60
Robotics & Discrete Automation
130
(29)
Corporate and Other
(incl. intersegment eliminations)
(503)
(680)
Discontinued operations
(1)
(9)
(1)
Corporate and Other at Q1 2023 and Q1 2022 includes losses of $28 million and $2 million, respectively, relating to E-mobility.
5 Q1 2023 FINANCIAL INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Revenues
7,859
6,965
3,590
3,236
1,940
1,572
1,436
1,506
937
730
Foreign exchange/commodity timing
differences in total revenues
(16)
(3)
(22)
(10)
–
3
10
(1)
1
5
Operational revenues
7,843
6,962
3,568
3,226
1,940
1,575
1,446
1,505
938
735
Income from operations
1,198
857
655
480
353
254
200
151
115
22
Acquisition-related amortization
54
60
22
28
8
8
1
1
20
21
Restructuring, related and
implementation costs
(1)
28
16
8
2
1
8
2
5
–
1
Changes in obligations related to
divested businesses
3
(14)
–
–
–
–
–
–
–
–
Acquisition- and divestment-related
expenses and integration costs
19
59
7
18
4
5
3
33
2
1
Certain other non-operational items
(1)
34
3
3
2
–
–
–
2
–
Foreign exchange/commodity timing
differences in income from operations
(24)
(15)
(18)
(19)
(2)
(1)
(1)
6
1
4
Operational EBITA
1,277
997
677
512
366
274
205
196
140
49
Operational EBITA margin (%)
16.3%
14.3%
19.0%
15.9%
18.9%
17.4%
14.2%
13.0%
14.9%
6.7%
(1) Includes impairment of certain assets.
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Q1 23
Q1 22
Depreciation
125
136
62
64
26
27
11
18
14
15
Amortization
66
74
27
34
10
9
2
3
20
21
including total acquisition-related amortization of:
54
60
22
28
8
8
1
1
20
21
Orders received and revenues by region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q1 23
Q1 22
US$
Local
parable
Q1 23
Q1 22
US$
Local
parable
Europe
3,582
3,534
1%
7%
10%
2,872
2,518
14%
20%
24%
The Americas
2,985
2,897
3%
3%
5%
2,653
2,169
22%
23%
25%
of which United States
2,130
2,225
-4%
-4%
-3%
1,984
1,582
25%
26%
28%
Asia, Middle East and Africa
2,883
2,942
-2%
7%
11%
2,334
2,278
2%
12%
16%
of which China
1,355
1,537
-12%
-5%
-3%
1,155
1,100
5%
13%
16%
ABB Group
9,450
9,373
1%
6%
9%
7,859
6,965
13%
19%
22%
6 Q1 2023 FINANCIAL INFORMATION
—
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Three months ended
($ in millions, except per share data in $)
Mar. 31, 2023
Mar. 31, 2022
Sales of products
6,644
5,749
Sales of services and other
1,215
1,216
Total revenues
7,859
6,965
Cost of sales of products
(4,418)
(3,968)
Cost of services and other
(725)
(716)
Total cost of sales
(5,143)
(4,684)
Gross profit
2,716
2,281
Selling, general and administrative expenses
(1,339)
(1,239)
Non-order related research and development expenses
(304)
(277)
Other income (expense), net
125
92
Income from operations
1,198
857
Interest and dividend income
40
13
Interest and other finance expense
(61)
(22)
Non-operational pension (cost) credit
7
36
Income from continuing operations before taxes
1,184
884
Income tax expense
(119)
(241)
Income from continuing operations, net of tax
1,065
643
Loss from discontinued operations, net of tax
(5)
(11)
Net income
1,060
632
Net income attributable to noncontrolling interests and redeemable noncontrolling interests
(24)
(28)
Net income attributable to ABB
1,036
604
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,041
615
Loss from discontinued operations, net of tax
(5)
(11)
Net income
1,036
604
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.56
0.32
Loss from discontinued operations, net of tax
–
(0.01)
Net income
0.56
0.31
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.56
0.31
Loss from discontinued operations, net of tax
–
(0.01)
Net income
0.55
0.31
Weighted-average number of shares outstanding (in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
1,861
1,936
Diluted earnings per share attributable to ABB shareholders
1,874
1,953
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Interim Consolidated Financial Information
7 Q1 2023 FINANCIAL INFORMATION
—
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Three months ended
($ in millions)
Mar. 31, 2023
Mar. 31, 2022
Total comprehensive income, net of tax
1,153
577
Total comprehensive income attributable to noncontrolling interests and redeemable
noncontrolling interests, net of tax
(30)
(23)
Total comprehensive income attributable to ABB shareholders, net of tax
1,123
554
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Interim Consolidated Financial Information
8 Q1 2023 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Mar. 31, 2023
Dec. 31, 2022
Cash and equivalents
3,438
4,156
Restricted cash
19
18
Marketable securities and short-term investments
1,380
725
Receivables, net
7,174
6,858
Contract assets
1,009
954
Inventories, net
6,269
6,028
Prepaid expenses
304
230
Other current assets
484
505
Current assets held for sale and in discontinued operations
615
96
Total current assets
20,692
19,570
Property, plant and equipment, net
3,888
3,911
Operating lease right-of-use assets
870
841
Investments in equity-accounted companies
153
130
Prepaid pension and other employee benefits
935
916
Intangible assets, net
1,285
1,406
Goodwill
10,381
10,511
Deferred taxes
1,381
1,396
Other non-current assets
454
467
Total assets
40,039
39,148
Accounts payable, trade
4,945
4,904
Contract liabilities
2,339
2,216
Short-term debt and current maturities of long-term debt
3,433
2,535
Current operating leases
228
220
Provisions for warranties
1,060
1,028
Dividends payable to shareholders
411
–
Other provisions
1,196
1,171
Other current liabilities
4,112
4,323
Current liabilities held for sale and in discontinued operations
225
132
Total current liabilities
17,949
16,529
Long-term debt
5,230
5,143
Non-current operating leases
666
651
Pension and other employee benefits
716
719
Deferred taxes
731
729
Other non-current liabilities
1,807
2,085
Non-current liabilities held for sale and in discontinued operations
20
20
Total liabilities
27,119
25,876
Commitments and contingencies
Redeemable noncontrolling interest
89
85
Stockholders’ equity:
Common stock, CHF 0.12 par value
(1,965 million shares issued at March 31, 2023, and December 31, 2022)
171
171
Additional paid-in capital
279
141
Retained earnings
19,411
20,082
Accumulated other comprehensive loss
(4,469)
(4,556)
Treasury stock, at cost
(103 million and 100 million shares at March 31, 2023, and December 31, 2022, respectively)
(3,165)
(3,061)
Total ABB stockholders’ equity
12,227
12,777
Noncontrolling interests
604
410
Total stockholders’ equity
12,831
13,187
Total liabilities and stockholders’ equity
40,039
39,148
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
9 Q1 2023 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Three months ended
($ in millions)
Mar. 31, 2023
Mar. 31, 2022
Operating activities:
Net income
1,060
632
Loss from discontinued operations, net of tax
5
11
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
191
210
Changes in fair values of investments
(13)
(24)
Pension and other employee benefits
1
(46)
Deferred taxes
25
(116)
Loss from equity-accounted companies
7
48
Net gain from derivatives and foreign exchange
(37)
(28)
Net gain from sale of property, plant and equipment
(26)
(32)
Other
27
36
Changes in operating assets and liabilities:
Trade receivables, net
(366)
(317)
Contract assets and liabilities
10
107
Inventories, net
(264)
(542)
Accounts payable, trade
27
7
Accrued liabilities
(324)
(390)
Provisions, net
40
(53)
Income taxes payable and receivable
(115)
14
Other assets and liabilities, net
35
(81)
Net cash provided by (used in) operating activities – continuing operations
283
(564)
Net cash used in operating activities – discontinued operations
(1)
(9)
Net cash provided by (used in) operating activities
282
(573)
Investing activities:
Purchases of investments
(660)
(128)
Purchases of property, plant and equipment and intangible assets
(151)
(187)
Acquisition of businesses (net of cash acquired) and increases in cost- and equity-accounted companies
(19)
(145)
Proceeds from sales of investments
20
305
Proceeds from sales of property, plant and equipment
31
35
Net cash from settlement of foreign currency derivatives
36
66
Other investing activities
7
10
Net cash used in investing activities – continuing operations
(736)
(44)
Net cash used in investing activities – discontinued operations
(5)
(21)
Net cash used in investing activities
(741)
(65)
Financing activities:
Net changes in debt with original maturities of 90 days or less
(714)
1,305
Increase in debt
1,633
2,542
Repayment of debt
(36)
(41)
Delivery of shares
95
370
Purchase of treasury stock
(274)
(1,561)
Dividends paid
(1,294)
(889)
Dividends paid to noncontrolling shareholders
(3)
(1)
Proceeds from issuance of subsidiary shares
341
–
Other financing activities
12
(34)
Net cash provided by (used in) financing activities – continuing operations
(240)
1,691
Net cash provided by financing activities – discontinued operations
–
–
Net cash provided by (used in) financing activities
(240)
1,691
Effects of exchange rate changes on cash and equivalents and restricted cash
(5)
4
Adjustment for the net change in cash and equivalents and restricted cash in Assets held for sale
(13)
–
Net change in cash and equivalents and restricted cash
(717)
1,057
Cash and equivalents and restricted cash, beginning of period
4,174
4,489
Cash and equivalents and restricted cash, end of period
3,457
5,546
Supplementary disclosure of cash flow information:
Interest paid
48
9
Income taxes paid
207
340
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
10 Q1 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
604
604
28
632
Foreign currency translation
adjustments, net of tax of $0
(70)
(70)
(5)
(75)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(3)
(12)
(12)
(12)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $10
28
28
28
Change in derivative instruments
and hedges, net of tax of $2
4
4
4
Changes in noncontrolling interests
(10)
(10)
(7)
(17)
Dividends to
noncontrolling shareholders
–
(3)
(3)
Dividends to shareholders
(1,700)
(1,700)
(1,700)
Share-based payment arrangements
12
12
12
Purchase of treasury stock
(1,561)
(1,561)
(1,561)
Delivery of shares
(26)
(104)
500
370
370
Other
2
2
2
Balance at March 31, 2022
178
–
21,278
(4,138)
(4,071)
13,247
391
13,638
Balance at January 1, 2023
171
141
20,082
(4,556)
(3,061)
12,777
410
13,187
Net income
(1)
1,036
1,036
25
1,061
Foreign currency translation
adjustments, net of tax of $(1)
79
79
6
85
Effect of change in fair value of
available-for-sale securities,
net of tax of $1
5
5
5
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $1
–
–
–
Change in derivative instruments
and hedges, net of tax of $0
3
3
3
Issuance of subsidiary shares
170
170
168
338
Other changes in
noncontrolling interests
–
(1)
(1)
Dividends to
noncontrolling shareholders
–
(5)
(5)
Dividends to shareholders
(1,706)
(1,706)
(1,706)
Share-based payment arrangements
22
22
1
23
Purchase of treasury stock
(253)
(253)
(253)
Delivery of shares
(53)
148
95
95
Other
(2)
(2)
(2)
Balance at March 31, 2023
171
279
19,411
(4,469)
(3,165)
12,227
604
12,831
(1)
Amounts attributable to noncontrolling interests for the three months ended March 31, 2023, exclude net losses of $1 million 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
11 Q1 2023 FINANCIAL INFORMATION
—
Notes to the Consolidated Financial Information (unaudited)
─
Note 1
The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively, the Company) together form a technology leader in electrification and automation, enabling a more sustainable and
resource-efficient future. The Company’s solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and
operated.
The Company’s Consolidated Financial Information is prepared in accordance with United States of America generally accepted accounting principles (U.S.
GAAP) for interim financial reporting. As such, the Consolidated Financial Information does not include all the information and notes required under U.S. GAAP for
annual consolidated financial statements. Therefore, such financial information should be read in conjunction with 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 that 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 receivables, loans and other
instruments,
●
estimates used to record expected costs for employee severance in connection with restructuring programs,
●
estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental 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,
●
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 interests 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 contracts 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 nature. The Consolidated Financial
Information is presented in United States dollars ($) unless otherwise stated. Due to rounding, numbers 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 16 for details).
12 Q1 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 finance 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 March 31, 2023 and December 31,
2022, amounted to $460 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 market practices.
Facilitation of the effects of reference rate reform on financial reporting
In January 2023, the Company adopted an accounting standard update which provides temporary optional expedients and exceptions to the current guidance on
contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market 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 December 31, 2024. This update does not have a significant
impact on the Company’s consolidated financial statements.
─
Note 3
Discontinued operations and assets held for sale
Divestment of the Power Grids business
In 2020, the Company completed the divestment of its Power Grids business to Hitachi Ltd (Hitachi). Upon closing of the sale, the Company entered into various
transition services agreements (TSAs), some of which continue to have services performed. Pursuant to these TSAs, the Company and Hitachi Energy provide to
each other, on a transitional basis, various services. The services provided by the Company primarily include finance, information technology, human resources
and certain other administrative services. The TSAs were to be performed for up to 3 years with the possibility to agree on extensions on an exceptional basis for
business-critical services which are reasonably necessary to avoid a material adverse impact on the business. The TSA for information technology services was
extended until mid-2025. In the three months ended March 31, 2023 and 2022, the Company has recognized within its continuing operations, general and
administrative expenses incurred to perform the TSAs, offset by $37 million and $38 million, respectively, in TSA-related income for such services that is reported
in Other income (expense), net.
Discontinued operations
As a result of the sale of the Power Grids business, substantially all Power Grids-related assets and liabilities have been sold. As this divestment represented a
strategic shift that would have a major effect on the Company’s operations and financial results, the results of operations for this business are presented as
discontinued operations and the assets and liabilities are presented as held for sale and in discontinued operations. Certain of the business contracts in the Power
Grids business continue to be executed by subsidiaries of the Company for the benefit/risk of Hitachi Energy. Assets and liabilities relating to, as well as the net
financial results of, these contracts will continue to be included in discontinued operations until they have been completed or otherwise transferred to Hitachi
Energy. The remaining business activities of the Power Grids business being executed by the Company is not significant.
In addition, the Company also has retained obligations (primarily for environmental and taxes) related to other businesses disposed or otherwise exited that
qualified as discontinued operations at the time of their disposal. Changes to these retained obligations are also included in Loss from discontinued operations, net
of tax.
At March 31, 2023, the balances reported as held for sale and in discontinued operations pertaining to the activities of the Power Grids business and other
obligations will remain with the Company until such time as the obligations are settled or the activities are fully wound down . These balances amounted to
$90 million of current assets, $122 million of current liabilities and $20 million of non-current liabilities.
Planned business divestments classified as held for sale
The Company classifies its long-lived assets or disposal groups to be sold as held for sale in the period in which all of the held for sale criteria are met. The
Company initially measures a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to
sell. Any resulting loss is recognized in the period in whi ch the held for sale criteria are met, while gains are not recognized on the sale of a long-lived asset or
disposal group until the date of sale. The Company assesses the fair value of a long-lived asset or disposal group less any costs to sell at each reporting period
and until the asset or disposal group is no longer classified as held for sale.
In January 2023, the Company entered into an agreement to divest its Power Conversion Division to AcBel Polytech Inc. for cash proceeds of $505 million. The
Power Conversion Division is part of the Company’s Electrification operating segment and the divestment, subject to regulatory approvals, is expected to be
completed in the second half of 2023.
13 Q1 2023 FINANCIAL INFORMATION
As this planned divestment does not qualify as a discontinued operation, the results of operations for this business are included in the Company’s continuing
operations for all periods presented. The assets and liabilities of this business are shown as assets and liabilities held for sale in the Company’s Consolidated
Balance Sheet at March 31, 2023. The carrying amounts of the major classes of assets and liabilities held for sale relating to this planned divestment are as
follows:
($ in millions)
March 31, 2023
Assets
Receivables, net
92
Inventories, net
106
Property, plant and equipment, net
42
Other intangible assets, net
73
Goodwill
175
Other assets
37
Current assets held for sale
525
Liabilities
Accounts payable, trade
44
Other liabilities
59
Current liabilities held for sale
103
In the three months ended March 31, 2023 and 2022, Income from continuing operations before taxes includes income of $17 million and $1 million, respectively,
from the Power Conversion Division.
─
Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Three months ended March 31,
($ in millions, except number of acquired businesses)
2023
2022
Purchase price for acquisitions (net of cash acquired)
(1)
1
138
Aggregate excess of purchase price over fair value of net assets acquired
(2)
4
191
Number of acquired businesses
–
1
(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 for the three
months ended March 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 $134 million (net of cash acquired of $4 million). The acquisition expands the market presence of the E-mobility Division of
its Electrification 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 $32 million was recorded in “Other income (expense), net” in the three months ended March 31,
2022. The Company entered into an agreement with the remaining noncontrolling shareholders allowing either party to put or call the remaining 40 percent of the
shares until 2027. The amount for which either party can exercise their option is dependent on a formula based on revenues and thus, the amount is subject to
change. As a result of this agreement, the noncontrolling interest is classified as Redeemable noncontrolling interest (i.e. mezzanine equity) in the Consolidated
Balance Sheets and was initially recognized at fair value.
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at
the acquisition date, the purchase price allocation for acquisitions is preliminary for up to 12 months after the acquisition date and is subject to refinement as more
detailed analyses are completed and additional information about the fair values of the assets and liabilities becomes available.
Investments in equity-accounted companies
In connection with the divestment of its Power Grids business to Hitachi in 2020 (see Note 3), the Company initially retained a 19.9 percent interest in the business
until December 2022, when the retained investment was sold to Hitachi. During the Company’s period of ownership of the retained 19.9 percent interest, based on
its continuing involvement with the Power Grids business, including the membership in its governing board of directors, the Company concluded that it had
significant influence over Hitachi Energy. As a result, the investment was accounted for using the equity method through to the date of its sale.
In the three months ended March 31, 2023 and 2022, the Company recorded its share of the earnings of investees accounted for under the equity method of
accounting in Other income (expense), net, as follows:
Three months ended March 31,
($ in millions)
2023
2022
Loss from equity-accounted companies, net of taxes
(7)
(11)
Basis difference amortization (net of deferred income tax benefit)
–
(37)
Loss from equity-accounted companies
(7)
(48)
14 Q1 2023 FINANCIAL INFORMATION
─
Note 5
Cash and equivalents, marketable securities and short-term investments
Cash and equivalents, marketable securities and short-term investments consisted of the following:
March 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
1,319
1,319
1,319
Time deposits
2,424
2,424
2,138
286
Equity securities
696
18
714
714
4,439
18
–
4,457
3,457
1,000
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
270
2
(11)
261
261
Other government obligations
58
58
58
Corporate
67
(6)
61
61
395
2
(17)
380
–
380
Total
4,834
20
(17)
4,837
3,457
1,380
Of which:
Restricted cash, current
19
December 31, 2022
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
1,715
1,715
1,715
Time deposits
2,459
2,459
2,459
Equity securities
345
10
355
355
4,519
10
–
4,529
4,174
355
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
269
1
(15)
255
255
Other government obligations
58
58
58
Corporate
64
(7)
57
57
391
1
(22)
370
–
370
Total
4,910
11
(22)
4,899
4,174
725
Of which:
Restricted cash, current
18
15 Q1 2023 FINANCIAL INFORMATION
─
Note 6
Derivative financial instruments
The Company is exposed to certain currency, commodity, interest rate and equity risks arising from its global operating, 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 operating activities from entering into
transactions in currencies other than their functional currency. To manage such currency risks, the Company’s policies require its subsidiaries to hedge their
foreign currency exposures from binding sales and purchase contracts denominated in foreign currencies. For forecasted foreign currency denominated sales of
standard products and the related foreign currency denominated purchases, the Company’s policy is to hedge up to a maximum of 100 percent of the forecasted
foreign currency denominated exposures, depending on the length of the forecasted exposures. Forecasted exposures greater than 12 months are not hedged.
Forward foreign exchange contracts are the main instrument used to protect the Company against the volatility of future cash flows (caused by changes in
exchange rates) of contracted and forecasted sales and purchases denominated in foreign currencies. In addition, within its treasury operations, the Company
primarily uses foreign exchange swaps and forward foreign exchange contracts to manage the currency and timing mismatches arising in its liquidity management
activities.
Commodity risk
Various commodity products are used in the Company’s manufacturing activities. Consequently it is exposed to volatility in future cash flows arising from changes
in commodity prices. To manage the price risk of commodities, the Company’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 time, the Company uses
instruments such as interest rate swaps, interest rate futures, bond futures or forward rate agreements to manage interest rate risk arising from the Company’s
balance sheet structure but does not designate such instruments as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of its warrant appreciation rights (WARs) issued under its management incentive plan. A WAR gives its
holder the right to receive cash equal to the market price of an equivalent listed warrant on the date of exercise. To eliminate such risk, the Company has
purchased cash-settled call options, indexed to the shares of the Company, which entitle the Company to receive amounts equivalent to its obligations under the
outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective in its use of derivatives is to minimize exposures arising from its business, certain derivatives are designated
and qualify for hedge accounting treatment while others either are not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange and interest rate derivatives (whether designated as hedges or not) were as follows:
Type of derivative
Total notional amounts at
($ in millions)
March 31, 2023
December 31, 2022
March 31, 2022
Foreign exchange contracts
13,273
13,509
13,255
Embedded foreign exchange derivatives
1,104
933
863
Cross-currency interest rate swaps
870
855
888
Interest rate contracts
2,963
2,830
4,421
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 and
aluminum. The following table shows the notional amounts of outstanding derivatives (whether designated as hedges or not), on a net basis, to reflect the
Company’s requirements for these commodities:
Type of derivative
Unit
Total notional amounts at
March 31, 2023
December 31, 2022
March 31, 2022
Copper swaps
metric tonnes
27,920
29,281
39,223
Silver swaps
ounces
2,392,353
2,012,213
2,634,550
Aluminum swaps
metric tonnes
6,750
6,825
6,950
Equity derivatives
At March 31, 2023, December 31, 2022, and March 31, 2022, the Company held 5 million, 8 million and 9 million cash -settled call options indexed to ABB Ltd
shares (conversion ratio 5:1) with a total fair value of $14 million, $15 million and $20 million, respectively.
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operations, commodity swaps to
manage its commodity risks and cash-settled call options to hedge its WAR liabilities. The Company applies cash flow hedge accounting in only limited cases. In
these cases, the effective portion of the changes in their fair value is recorded in “Accumulated other comprehensive loss” and subsequently reclassified into
earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. For the three months ended March 31, 2023 and
2022, there were no significant amounts recorded for cash flow hedge accounting activities.
Fair value hedges
To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps and cross-currency interest rate
swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in the fair value of
the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in “Interest and other finance expense”.
16 Q1 2023 FINANCIAL INFORMATION
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows:
Three months ended March 31,
($ in millions)
2023
2022
Gains (losses) recognized in Interest and other finance expense:
Interest rate contracts
Designated as fair value hedges
10
(29)
Hedged item
(10)
29
Cross-currency interest rate swaps
Designated as fair value hedges
(11)
(45)
Hedged item
2
44
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 derivatives that are embedded within
certain binding sales or purchase contracts denominated in a currency other than the functional currency of the subsidiary and the counterparty.
The gains (losses) recognized in the Consolidated Income Statements on derivatives not designated in hedging relationships were as follows:
Type of derivative not
Gains (losses) recognized in income
designated as a hedge
Three months ended March 31,
($ in millions)
Location
2023
2022
Foreign exchange contracts
Total revenues
11
4
Total cost of sales
(1)
(6)
SG&A expenses
(1)
6
8
Non-order related research and development
–
1
Interest and other finance expense
42
22
Embedded foreign exchange contracts
Total revenues
7
(2)
Total cost of sales
(1)
1
Commodity contracts
Total cost of sales
11
35
Other
Interest and other finance expense
–
1
Total
75
64
(1) SG&A expenses represent “Selling, general and administrative expenses”.
The fair values of derivatives included in the Consolidated Balance Sheets were as follows:
March 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
–
–
4
2
Interest rate contracts
–
–
25
28
Cross-currency interest rate swaps
–
–
–
281
Cash-settled call options
14
–
–
–
Total
14
–
29
311
Derivatives not designated as hedging instruments:
Foreign exchange contracts
149
23
56
11
Commodity contracts
17
–
6
–
Interest rate contracts
7
–
4
–
Embedded foreign exchange derivatives
14
7
24
5
Total
187
30
90
16
Total fair value
201
30
119
327
17 Q1 2023 FINANCIAL INFORMATION
December 31, 2022
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
–
–
4
4
Interest rate contracts
–
–
5
57
Cross-currency interest rate swaps
–
–
–
288
Cash-settled call options
15
–
–
–
Total
15
–
9
349
Derivatives not designated as hedging instruments:
Foreign exchange contracts
140
21
80
5
Commodity contracts
13
–
12
–
Interest rate contracts
5
–
3
–
Embedded foreign exchange derivatives
11
6
17
13
Total
169
27
112
18
Total fair value
184
27
121
367
Close-out netting agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the
occurrence of one or more pre-defined trigger events.
Although the Company is party to close-out netting agreements with most derivative counterparties, the fair values in the tables above and in the Consolidated
Balance Sheets at March 31, 2023, and December 31, 2022, have been presented on a gross basis.
The Company’s netting agreements and other similar arrangements allow net settlements under certain conditions. At March 31, 2023, and December 31, 2022,
information related to these offsetting arrangements was as follows:
($ in millions)
March 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
210
(91)
–
–
119
Total
210
(91)
–
–
119
($ in millions)
March 31, 2023
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
417
(91)
–
–
326
Total
417
(91)
–
–
326
($ in millions)
December 31, 2022
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
eligible for set-off
collateral
collateral
Net asset
similar arrangement
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
eligible for set-off
collateral
Net liability
similar arrangement
liabilities
pledged
pledged
exposure
Derivatives
458
(96)
–
–
362
Total
458
(96)
–
–
362
18 Q1 2023 FINANCIAL INFORMATION
─
Note 7
Fair values
The Company uses fair value measurement principles to record certain financial assets and liabilities on a recurring basis and, 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 include foreign currency, commodity and interest rate
derivatives, as well as cash-settled call options and available -for-sale securities. Non-financial assets recorded at fair value on a non-recurring basis include
long-lived assets that are reduced to their estimated fair value due to impairments.
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. In determining fair value, the Company uses various valuation techniques including the market approach (using observable market data for
identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost approach (using costs a market participant would incur
to develop a comparable asset). Inputs used to determine the fair value of assets and liabilities are 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 unobservable. An observable input is based on market data obtained from independent sources,
while an unobservable input reflects the Company’s assumptions about 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 from other observable data by
interpolation, correlation, regression or other means. The adjustments applied to quoted prices or the inputs used in valuati on models may be both
observable and unobservable. In these cases, the fair value measurement is classified as Level 2 unless the unobservable portion of the adjustment or
the unobservable input to the valuation model is significant, in which case the fair value measurement would be classified as Level 3. Assets and
liabilities valued or disclosed using Level 2 inputs include investments in certain funds, certain debt securities that are not actively traded, interest rate
swaps, cross-currency interest rate swaps, commodity swaps, cash-settled call options, forward foreign exchange contracts, foreign exchange swaps and
forward rate agreements, time deposits, as well as financing receivables and debt.
Level 3:
Valuation inputs are based on the Company’s assumptions of relevant market data (unobservable input).
Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid-market quotes. However, for the purpose of
determining the fair value of cash-settled call options serving as hedges of the Company’s management incentive plan, bid prices are used.
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for 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 another 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:
March 31, 2023
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
714
714
Debt securities—U.S. government obligations
261
261
Debt securities—Other government obligations
58
58
Debt securities—Corporate
61
61
Derivative assets—current in “Other current assets”
201
201
Derivative assets—non-current in “Other non-current assets”
30
30
Total
261
1,064
–
1,325
Liabilities
Derivative liabilities—current in “Other current liabilities”
119
119
Derivative liabilities—non-current in “Other non-current liabilities”
327
327
Total
–
446
–
446
19 Q1 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:
●
If quoted market prices in active markets for identical assets are available, these are
considered Level 1 inputs; however, when markets are not active, these inputs are considered Level 2. If such quoted market prices are not available,
fair value is determined using market prices for similar assets or present value techniques, applying an appropriate risk-free interest rate adjusted for
non-performance risk. The inputs used in present value techniques are observable and fall into the Level 2 category.
●
: The fair values of derivative instruments are determined using quoted prices of identical instruments from an active market, if available
(Level 1 inputs). If quoted prices are not available, price quotes for similar instruments, appropriately adjusted, or present value techniques, based on
available market data, or option pricing models are used. Cash-settled call options hedging the Company’s WAR liability are valued based on bid prices
of the equivalent listed warrant. The fair values obtained using price quotes for similar 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 three months ended March 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:
March 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
1,300
1,300
1,300
Time deposits
2,138
2,138
2,138
Restricted cash
19
19
19
Marketable securities and short-term investments
(excluding securities):
Time deposits
286
286
286
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
3,406
2,365
1,041
3,406
Long-term debt (excluding finance lease obligations)
5,093
5,014
20
5,034
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
20 Q1 2023 FINANCIAL INFORMATION
The Company uses the following methods and assumptions in estimating fair values of financial instruments carried on a cost basis:
●
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 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.
●
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)
March 31, 2023
December 31, 2022
March 31, 2022
Contract assets
1,009
954
1,072
Contract liabilities
2,339
2,216
2,080
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:
Three months ended March 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
(651)
(518)
Additions to Contract liabilities - excluding amounts recognized as revenue during the period
707
701
Receivables recognized that were included in the Contract assets balance at Jan 1, 2023/2022
(325)
(318)
The Company considers its order backlog to represent its unsatisfied performance obligations. At March 31, 2023, the Company had unsatisfied performance
obligations totaling $21,607 million and, of this amount, the Company expects to fulfill approximately 66 percent of the obligations in 2023, approximately
23 percent of the obligations in 2024 and the balance thereafter.
21 Q1 2023 FINANCIAL INFORMATION
─
Note 9
Debt
The Company’s total debt at March 31, 2023, and December 31, 2022, amounted to $8,663 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)
March 31, 2023
December 31, 2022
Short-term debt
1,047
1,448
Current maturities of long-term debt
2,386
1,087
Total
3,433
2,535
Short-term debt primarily represented issued commercial paper and short-term bank borrowings from various banks. At March 31, 2023, and December 31, 2022,
$946 million and $1,383 million, respectively, was outstanding under the $2 billion Euro-commercial paper program. At March 31, 2023, $34 million was
outstanding under the $2 billion commercial paper program in the United States, whereas at December 31, 2022, no amount was outstanding under this program.
Long-term debt
The Company’s long-term debt at March 31, 2023, and December 31, 2022, amounted to $5,230 million and $5,143 million, respectively.
Outstanding bonds (including maturities within the next 12 months) were as follows:
March 31, 2023
December 31, 2022
(in millions)
Nominal outstanding
(1)
Nominal outstanding
(1)
Bonds:
0.625% EUR Instruments, due 2023
EUR
700
$
759
EUR
700
$
742
0% CHF Bonds, due 2023
CHF
275
$
300
CHF
275
$
298
0.625% EUR Instruments, due 2024
EUR
700
$
737
EUR
700
$
720
Floating Rate EUR Instruments, due 2024
EUR
500
$
545
EUR
500
$
536
0.75% EUR Instruments, due 2024
EUR
750
$
787
EUR
750
$
769
0.3% CHF Bonds, due 2024
CHF
280
$
305
CHF
280
$
303
2.1% CHF Bonds, due 2025
CHF
150
$
163
CHF
150
$
162
3.25% EUR Instruments, due 2027
EUR
500
$
540
0.75% CHF Bonds, due 2027
CHF
425
$
462
CHF
425
$
460
3.8% USD Notes, due 2028
(2)
USD
383
$
381
USD
383
$
381
1.0% CHF Bonds, due 2029
CHF
170
$
185
CHF
170
$
184
0% EUR Instruments, due 2030
EUR
800
$
691
EUR
800
$
677
2.375% CHF Bonds, due 2030
CHF
150
$
163
CHF
150
$
162
3.375% EUR Instruments, due 2031
EUR
750
$
802
4.375% USD Notes, due 2042
(2)
USD
609
$
590
USD
609
$
590
Total
$
7,410
$
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).
22 Q1 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. The Company paid $104 million to Eskom in December 2020 as
part of a full and final settlement with Eskom and the Special Investigating Unit 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 March 31, 2023, and December 31, 2022, the Company had aggregate liabilities of $97 million and $86 million, respectively, included in “Other provisions” and
“Other non
‑
current liabilities”, for the above regulatory, compliance and legal contingencies, and none of the individual liabilities recognized was significant. As it is
not possible to make an informed judgment on, or reasonably predict, the outcome of certain matters and as it is not possible, based on information currently
available to management, to estimate the maximum potential liability on other matters, there could be adverse outcomes beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the Company’s third-party guarantees. The maximum potential payments represent a “worst-case
scenario”, and do not reflect management’s expected outcomes.
Maximum potential payments
($ in millions)
March 31, 2023
December 31, 2022
Performance guarantees
3,778
4,300
Financial guarantees
94
96
Total
(1)
3,872
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 liabilities at March 31, 2023, and December 31, 2022, were not
significant.
The Company is party to various guarantees providing financial or performance assurances to certain third parties. These guarantees, which have various
maturities up to 2035, mainly consist of performance guarantees whereby (i) the Company guarantees the performance of a third party’s product or service
according to the terms of a contract and (ii) as member of a consortium/joint-venture that includes third parties, the Company guarantees not only its own
performance but also the work of third parties. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party
does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. The original maturity dates for the majority of these
performance guarantees range from one to ten years.
In conjunction with the divestment of the high-voltage cable and cables accessories businesses, the Company has entered into various performance guarantees
with other parties with respect to certain liabilities of the divested business. At March 31, 2023, and December 31, 2022, the maximum potential payable under
these guarantees amounts to $855 million and $843 million, respectively, and these guarantees have various original maturities ranging from five to ten years.
The Company retained obligations for financial, performance and indemnification guarantees related to the sale of the Power Grids business (see Note 3 for
details). The performance and financial guarantees have been indemnified by Hitachi Ltd. These guarantees, which have various maturities up to 2035, primarily
consist of bank guarantees, standby letters of credit, business performance guarantees and other trade-related guarantees, the majority of which have original
maturity dates ranging from one to ten years. The maximum amount payable under these guarantees at March 31, 2023, and December 31, 2022, is
approximately $2.5 billion and $3.0 billion, respectively.
Commercial commitments
In addition, in the normal course of bidding for and executing certain projects, the Company has entered into standby letters of credit, bid/performance bonds and
surety bonds (collectively “performance bonds”) with various financial institutions. Customers can draw on such performance bonds in the event that the Company
does not fulfill its contractual obligations. The Company would then have an obligation to reimburse the financial institution for amounts paid under the performance
bonds. At both March 31, 2023, and December 31, 2022, the total outstanding performance bonds aggregated to $2.9 billion. There have been no significant
amounts reimbursed to financial institutions under these types of arrangements in the three months ended March 31, 2023 and 2022.
Product and order-related contingencies
The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts. The reconciliation of the
“Provisions for warranties”, including guarantees of product performance, was as follows:
($ in millions)
2023
2022
Balance at January 1,
1,028
1,005
Claims paid in cash or in kind
(40)
(36)
Net increase in provision for changes in estimates, warranties issued and warranties expired
65
38
Exchange rate differences
7
(8)
Balance at March 31,
1,060
999
23 Q1 2023 FINANCIAL INFORMATION
─
Note 11
Income taxes
In calculating income tax expense, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim
period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those
forecasted at the beginning of the year and each interim period thereafter.
The effective tax rate of 10.1 percent in the three months ended March 31, 2023, was lower than the effective tax rate of 27.3 percent in the three months ended
March 31, 2022, primarily due to a net benefit realized on a favorable resolution of an uncertain tax position in the three months ended March 31, 2023. In
February 2023, on completion of a tax audit, the Company obtained resolution of the uncertain tax position for which an amount was recorded within Other non-
current liabilities as of December 31, 2022. In the three months ended March 31, 2023, the Company released the provision of $206 million, due to the resolution
of this matter, which resulted in an increase of $0.11 in earnings per share (basic and diluted).
─
Note 12
Employee benefits
The Company operates defined benefit pension plans, defined contribution pension plans, and termination indemnity plans, in accordance with local regulations
and practices. At March 31, 2023, the Company’s most significant defined benefit pension plans are in Switzerland as well as in Germany, the United Kingdom,
and the United States. These plans cover a large portion of the Company’s employees and provide benefits to employees in the event of death, disability,
retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans including
postretirement health care benefits and other employee-related benefits for active employees including long-service award plans. The measurement date used for
the Company’s employee benefit plans is December 31. The funding policies of the Company’s plans are consistent with the local government and tax
requirements.
Net periodic benefit cost of the Company’s defined benefit pension and other postretirement benefit plans consisted of the following:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended March 31,
2023
2022
2023
2022
2023
2022
Operational pension cost:
Service cost
9
14
8
9
–
–
Operational pension cost
9
14
8
9
–
–
Non-operational pension cost (credit):
Interest cost
12
1
40
22
1
–
Expected return on plan assets
(33)
(30)
(39)
(41)
–
–
Amortization of prior service cost (credit)
–
(2)
–
–
–
(1)
Amortization of net actuarial loss
–
–
13
15
(1)
–
Non-operational pension cost (credit)
(21)
(31)
14
(4)
–
(1)
Net periodic benefit cost (credit)
(12)
(17)
22
5
–
(1)
The components of net periodic benefit cost other than the service cost component are included in the line “Non-operational pension (cost) credit” in the income
statement.
Employer contributions were as follows:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended March 31,
2023
2022
2023
2022
2023
2022
Total contributions to defined benefit pension and
other postretirement benefit plans
2
16
11
10
2
3
The Company expects to make contributions totaling approximately $67 million and $5 million to its defined pension plans and other postretirement benefit plans,
respectively, for the full year 2023.
24 Q1 2023 FINANCIAL INFORMATION
─
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 disburs ing 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.
During the first quarter of 2023, the Company delivered, out of treasury stock, approximately 5 million shares in connection with its Management Incentive Plan.
In February 2023, the Company obtained funding through a private placement of shares in its ABB E-Mobility subsidiary, ABB E-mobility Holding Ltd
(ABB E-Mobility), receiving gross proceeds of 325 million Swiss francs (approximately $351 million) and reducing the Company’s ownership in ABB E-Mobility from
92 percent to 81 percent. This resulted in an increase in Additional paid-in capital of $170 million.
─
Note 14
Earnings per share
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is
calculated by dividing income by the weighted-average number of shares outstanding during the period, assuming that all potentially dilutive securities were
exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options, and outstanding options and shares granted subject to certain
conditions under the Company’s share-based payment arrangements.
Basic earnings per share
Three months ended March 31,
($ in millions, except per share data in $)
2023
2022
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,041
615
Loss from discontinued operations, net of tax
(5)
(11)
Net income
1,036
604
Weighted-average number of shares outstanding (in millions)
1,861
1,936
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.56
0.32
Loss from discontinued operations, net of tax
–
(0.01)
Net income
0.56
0.31
Diluted earnings per share
Three months ended March 31,
($ in millions, except per share data in $)
2023
2022
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,041
615
Loss from discontinued operations, net of tax
(5)
(11)
Net income
1,036
604
Weighted-average number of shares outstanding (in millions)
1,861
1,936
Effect of dilutive securities:
Call options and shares
13
17
Adjusted weighted-average number of shares outstanding (in millions)
1,874
1,953
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.56
0.31
Loss from discontinued operations, net of tax
–
(0.01)
Net income
0.55
0.31
25 Q1 2023 FINANCIAL INFORMATION
─
Note 15
Reclassifications out of accumulated other comprehensive loss
The following table shows changes in “Accumulated other comprehensive loss” (OCI) attributable to ABB, by component, net of tax:
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2022
(2,993)
2
(1,089)
(8)
(4,088)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
(80)
(12)
20
(4)
(76)
Amounts reclassified from OCI
5
–
8
8
21
Total other comprehensive (loss) income
(75)
(12)
28
4
(55)
Less:
Amounts attributable to
noncontrolling interests and
redeemable noncontrolling interests
(5)
–
–
–
(5)
Balance at March 31, 2022
(3,063)
(10)
(1,061)
(4)
(4,138)
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2023
(3,691)
(19)
(838)
(8)
(4,556)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
85
4
(8)
2
83
Amounts reclassified from OCI
–
1
8
1
10
Total other comprehensive (loss) income
85
5
–
3
93
Less:
Amounts attributable to
noncontrolling interests and
redeemable noncontrolling interests
6
–
–
–
6
Balance at March 31, 2023
(3,612)
(14)
(838)
(5)
(4,469)
The amounts reclassified out of OCI for the three months ended March 31, 2023 and 2022, were not significant.
─
Note 16
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 included in Corporate and Other.
Effective January 1, 2023, the E-mobility Division is no longer managed within the Electrification segment and has become a separate operating segment. This
new segment does not currently meet any of the size thresholds to be considered a reportable segment and as such is presented within Corporate and Other. The
segment information for the three months ended March 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:
●
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 and panelboards, switchgear, UPS solutions, circuit breakers, measuring and sensing devices,
control products, wiring accessories, enclosures and cabling systems and intelligent home and building solutions, designed to integrate and automate
lighting, heating, ventilation, security and data communication networks. The products and services are delivered through six operating Divisions:
Distribution Solutions, Smart Power, Smart Buildings, Installation Products, Power Conversion and Service.
●
infrastructure and transportation. These products, digital technology and related services enable industrial customers to increase energy efficiency,
improve safety and reliability, and achieve precise control of their processes. Building on over 130 years of cumulative experience in electric
powertrains, Motion combines domain expertise and technology to deliver the optimum solution for a wide range of applications in all industrial
segments. In addition, Motion, along with its partners, has a leading global service presence. These products and services are delivered through seven
operating Divisions: Large Motors and Generators, IEC LV Motors, NEMA Motors, Drive Products, System Drives, Service and Traction.
26 Q1 2023 FINANCIAL INFORMATION
●
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 includes industrial robots, autonomous mobile robotics, software, robotic solutions, field services, spare parts, and digital services. Machine
Automation specializes in solutions based on its programmable logic controllers (PLC), industrial PCs (IPC), servo motion, transport systems and
machine vision. Both Divisions offer engineering and simulation software as well as a comprehensive range of digital solutions.
Corporate and Other:
segment, historical operating activities of certain divested businesses , and other non-core operating activities.
The primary measure of profitability on which the operating segments are evaluated is Operational EBITA, which represents income from operations excluding:
●
●
●
divested businesses),
●
●
●
●
exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been
realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory, compliance and legal costs, other income/expense relating to the Power Grids joint
venture, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired
businesses (changes in pre-acquisition estimates), as well as other items which are determined by 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 the 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 three months ended March 31, 2023 and 2022, as well as total assets at March 31 ,
2023, and December 31, 2022.
Three months ended March 31, 2023
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,162
638
519
474
79
2,872
The Americas
1,407
632
421
136
57
2,653
of which: United States
1,043
533
264
91
53
1,984
Asia, Middle East and Africa
957
549
489
324
15
2,334
of which: China
457
281
162
248
7
1,155
3,526
1,819
1,429
934
151
7,859
Product type
Products
3,306
1,583
827
791
137
6,644
Services and other
220
236
602
143
14
1,215
3,526
1,819
1,429
934
151
7,859
Third-party revenues
3,526
1,819
1,429
934
151
7,859
Intersegment revenues
64
121
7
3
(195)
–
Total revenues
(1)
3,590
1,940
1,436
937
(44)
7,859
27 Q1 2023 FINANCIAL INFORMATION
Three months ended March 31, 2022
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,062
466
585
354
51
2,518
The Americas
1,164
492
368
108
37
2,169
of which: United States
849
407
221
72
33
1,582
Asia, Middle East and Africa
951
499
546
267
15
2,278
of which: China
457
287
150
197
9
1,100
3,177
1,457
1,499
729
103
6,965
Product type
Products
2,981
1,248
813
612
95
5,749
Services and other
196
209
686
117
8
1,216
3,177
1,457
1,499
729
103
6,965
Third-party revenues
3,177
1,457
1,499
729
103
6,965
Intersegment revenues
59
115
7
1
(182)
–
Total revenues
(1)
3,236
1,572
1,506
730
(79)
6,965
(1) Due to rounding, numbers presented may not add to the totals provided.
Three months ended
March 31,
($ in millions)
2023
2022
Operational EBITA:
Electrification
677
512
Motion
366
274
Process Automation
205
196
Robotics & Discrete Automation
140
49
Corporate and Other
‒
E-mobility
(28)
(2)
‒ Corporate costs, intersegment eliminations and other
(83)
(32)
Total
1,277
997
Acquisition-related amortization
(54)
(60)
Restructuring, related and implementation costs
(1)
(28)
(16)
Changes in obligations related to divested businesses
(3)
14
Acquisition- and divestment-related expenses and integration costs
(19)
(59)
Foreign exchange/commodity timing differences in income from operations:
Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)
22
18
Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized
(5)
(2)
Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)
7
(1)
Certain other non-operational items:
Other income/expense relating to the Power Grids joint venture
13
(35)
Regulatory, compliance and legal costs
–
1
Business transformation costs
(2)
(34)
(26)
Changes in pre-acquisition estimates
–
(1)
Certain other fair value changes, including asset impairments
(1)
34
Other non-operational items
23
(7)
Income from operations
1,198
857
Interest and dividend income
40
13
Interest and other finance expense
(61)
(22)
Non-operational pension (cost) credit
7
36
Income from continuing operations before taxes
1,184
884
(1) Includes impairment of certain assets.
(2) Amount includes ABB Way process transformation costs of $30 million and $25 million for three months ended March 31, 2023 and 2022, respectively.
Total assets
(1)
($ in millions)
March 31, 2023
December 31, 2022
Electrification
13,001
12,993
Motion
6,832
6,565
Process Automation
4,672
4,598
Robotics & Discrete Automation
4,960
4,901
Corporate and Other
(2)
10,574
10,091
Consolidated
40,039
39,148
(1) Total assets are after intersegment eliminations and therefore reflect third-party assets only.
(2) At March 31, 2023, and December 31, 2022, respectively, Corporate and Other includes $90 million and $96 million of assets in the Power Grids business which is reported as
discontinued operations (see Note 3). In addition, at March 31, 2023, Corporate and Other includes assets held for sale of $525 million (see Note 3).
28 Q1 2023 FINANCIAL INFORMATION
29 Q1 2023 FINANCIAL INFORMATION
—
Supplemental Reconciliations and Definitions
The following reconciliations and definitions include measures which ABB uses to supplement its Consolidated Financial Information (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 accordance with U.S. GAAP. Therefore
these measures should not be viewed in isolation but considered together with the Consolidated Financial Information (unaudited) prepared in accordance
with U.S. GAAP as of and for the three months ended March 31, 2023.
Comparable growth rates
Growth rates for certain key figures may be presented and discussed on a “comparable” basis. The comparable growth rate measures growth on a constant
currency basis. Since we are a global company, the comparability of our operating results reported in U.S. dollars is 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 calculated as follows: where the results of any business
acquired or divested have not been consolidated and reported for the entire duration of both the current and comparable periods, the reported key figures of such
business are adjusted to exclude the relevant key figures of any corresponding quarters which are not comparable when computing the comparable growth rate.
Certain portfolio changes which do not qualify as divestments under U.S. GAAP have been treated in a similar manner to divestments. Changes in our portfolio
where we have exited certain business activities or customer markets are adjusted as if the relevant business was divested in the period when the decision to
cease business activities was taken. We do not adjust for portfolio changes where the relevant business has annualized revenues of less than $50 million.
The following tables provide reconciliations of reported growth rates of certain key figures to their respective comparable growth rate.
Comparable growth rate reconciliation by Business Area
Q1 2023 compared to Q1 2022
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Electrification
1%
4%
0%
5%
11%
5%
0%
16%
Motion
3%
5%
0%
8%
23%
7%
-1%
29%
Process Automation
25%
7%
23%
55%
-5%
5%
15%
15%
Robotics & Discrete Automation
-23%
3%
0%
-20%
28%
7%
0%
35%
ABB Group
1%
5%
3%
9%
13%
6%
3%
22%
30 Q1 2023 FINANCIAL INFORMATION
Regional comparable growth rate reconciliation
Regional comparable growth rate reconciliation for ABB Group - Quarter
Q1 2023 compared to Q1 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%
6%
3%
10%
14%
7%
3%
24%
The Americas
3%
0%
2%
5%
22%
1%
2%
25%
of which: United States
-4%
-1%
2%
-3%
25%
1%
2%
28%
Asia, Middle East and Africa
-2%
9%
4%
11%
2%
10%
4%
16%
of which: China
-12%
6%
3%
-3%
5%
8%
3%
16%
ABB Group
1%
5%
3%
9%
13%
6%
3%
22%
Regional comparable growth rate reconciliation by Business Area - Quarter
Q1 2023 compared to Q1 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%
4%
0%
5%
9%
5%
0%
14%
The Americas
-1%
0%
0%
-1%
21%
0%
0%
21%
of which: United States
-6%
0%
0%
-6%
23%
0%
0%
23%
Asia, Middle East and Africa
4%
11%
0%
15%
1%
11%
0%
12%
of which: China
-11%
7%
0%
-4%
0%
8%
0%
8%
Electrification
1%
4%
0%
5%
11%
5%
0%
16%
Q1 2023 compared to Q1 2022
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
6%
6%
-1%
11%
30%
7%
-1%
36%
The Americas
0%
1%
0%
1%
29%
0%
0%
29%
of which: United States
2%
0%
0%
2%
32%
0%
-1%
31%
Asia, Middle East and Africa
2%
9%
0%
11%
12%
10%
0%
22%
of which: China
-8%
7%
0%
-1%
3%
8%
0%
11%
Motion
3%
5%
0%
8%
23%
7%
-1%
29%
Q1 2023 compared to Q1 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
44%
12%
32%
88%
-11%
5%
15%
9%
The Americas
29%
1%
17%
47%
14%
1%
15%
30%
of which: United States
-9%
0%
15%
6%
20%
0%
19%
39%
Asia, Middle East and Africa
5%
8%
21%
34%
-10%
6%
15%
11%
of which: China
16%
9%
27%
52%
8%
7%
22%
37%
Process Automation
25%
7%
23%
55%
-5%
6%
14%
15%
Q1 2023 compared to Q1 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
-21%
4%
0%
-17%
34%
7%
0%
41%
The Americas
-17%
-1%
0%
-18%
27%
0%
0%
27%
of which: United States
-23%
0%
0%
-23%
26%
0%
0%
26%
Asia, Middle East and Africa
-29%
6%
0%
-23%
22%
10%
0%
32%
of which: China
-31%
5%
0%
-26%
25%
11%
0%
36%
Robotics & Discrete Automation
-23%
3%
0%
-20%
28%
7%
0%
35%
31 Q1 2023 FINANCIAL INFORMATION
Order backlog growth rate reconciliation
March 31, 2023 compared to March 31, 2022
US$
Foreign
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
Electrification
19%
5%
0%
24%
Motion
18%
4%
0%
22%
Process Automation
11%
6%
4%
21%
Robotics & Discrete Automation
12%
4%
0%
16%
ABB Group
14%
6%
1%
21%
Other growth rate reconciliations
Q1 2023 compared to Q1 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
5%
5%
0%
10%
12%
5%
0%
17%
Motion
6%
6%
0%
12%
13%
7%
0%
20%
Process Automation
-16%
4%
23%
11%
-12%
4%
25%
17%
Robotics & Discrete Automation
10%
5%
0%
15%
22%
6%
0%
28%
ABB Group
-6%
5%
13%
12%
0%
5%
14%
19%
32 Q1 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:
●
●
●
divested businesses),
●
●
●
●
exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been
realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory, compliance and legal costs, other income/expense relating to the Power Grids joint
venture, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired
businesses (changes in pre-acquisition estimates), as well as other items which are determined by 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 Company 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
Three months ended March 31,
($ in millions)
2023
2022
Operational EBITA
1,277
997
Acquisition-related amortization
(54)
(60)
Restructuring, related and implementation costs
(1)
(28)
(16)
Changes in obligations related to divested businesses
(3)
14
Acquisition- and divestment-related expenses and integration costs
(19)
(59)
Certain other non-operational items
1
(34)
Foreign exchange/commodity timing differences in income from operations
24
15
Income from operations
1,198
857
Interest and dividend income
40
13
Interest and other finance expense
(61)
(22)
Non-operational pension (cost) credit
7
36
Income from continuing operations before taxes
1,184
884
Income tax expense
(119)
(241)
Income from continuing operations, net of tax
1,065
643
Loss from discontinued operations, net of tax
(5)
(11)
Net income
1,060
632
(1) Includes impairment of certain assets.
33 Q1 2023 FINANCIAL INFORMATION
Reconciliation of Operational EBITA margin by business
Three months ended March 31, 2023
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,590
1,940
1,436
937
(44)
7,859
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
(14)
4
13
2
(4)
1
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
–
1
–
2
2
Unrealized foreign exchange movements
on receivables (and related assets)
(7)
(4)
(4)
(1)
(3)
(19)
Operational revenues
3,568
1,940
1,446
938
(49)
7,843
Income (loss) from operations
655
353
200
115
(125)
1,198
Acquisition-related amortization
22
8
1
20
3
54
Restructuring, related and
implementation costs
8
1
2
–
17
28
Changes in obligations related to
divested businesses
–
–
–
–
3
3
Acquisition- and divestment-related expenses
and integration costs
7
4
3
2
3
19
Certain other non-operational items
3
2
–
2
(8)
(1)
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
(15)
–
(2)
2
(7)
(22)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
–
–
2
–
3
5
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(3)
(2)
(1)
(1)
–
(7)
Operational EBITA
677
366
205
140
(111)
1,277
Operational EBITA margin (%)
19.0%
18.9%
14.2%
14.9%
n.a.
16.3%
In the three months ended March 31, 2023, certain other non-operational items in the table above includes the following:
Three months ended March 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
–
–
–
–
(13)
(13)
Certain other fair values changes,
including asset impairments
1
1
–
1
(2)
1
Business transformation costs
(1)
4
–
–
1
29
34
Other non-operational items
(2)
1
–
–
(22)
(23)
Total
3
2
–
2
(8)
(1)
(1) Amounts include ABB Way process transformation costs of $30 million for the three months ended March 31, 2023.
34 Q1 2023 FINANCIAL INFORMATION
Three months ended March 31, 2022
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,236
1,572
1,506
730
(79)
6,965
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
(11)
4
(1)
2
(2)
(8)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
1
1
(3)
–
4
3
Unrealized foreign exchange movements
on receivables (and related assets)
–
(2)
3
3
(2)
2
Operational revenues
3,226
1,575
1,505
735
(79)
6,962
Income (loss) from operations
480
254
151
22
(50)
857
Acquisition-related amortization
28
8
1
21
2
60
Restructuring, related and
implementation costs
2
8
5
1
–
16
Changes in obligations related to
divested businesses
–
–
–
–
(14)
(14)
Acquisition- and divestment-related expenses
and integration costs
18
5
33
1
2
59
Certain other non-operational items
3
–
–
–
31
34
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
(21)
(1)
6
3
(5)
(18)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
2
–
(3)
–
3
2
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
–
–
3
1
(3)
1
Operational EBITA
512
274
196
49
(34)
997
Operational EBITA margin (%)
15.9%
17.4%
13.0%
6.7%
n.a.
14.3%
In the three months ended March 31, 2022, certain other non-operational items in the table above includes the following:
Three months ended March 31, 2022
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Regulatory, compliance and legal costs
–
–
–
–
(1)
(1)
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
35
35
Certain other fair values changes,
including asset impairments
–
–
–
–
(34)
(34)
Business transformation costs
(1)
1
–
–
–
25
26
Changes in pre-acquisition estimates
1
–
–
–
–
1
Other non-operational items
1
–
–
–
6
7
Total
3
–
–
–
31
34
(1) Amounts include ABB Way process transformation costs of $25 million for the three months ended March 31, 2022.
35 Q1 2023 FINANCIAL INFORMATION
Net debt
Definition
Net debt
Net debt is defined as Total debt less Cash and marketable securities.
Total debt
Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt.
Cash and marketable securities
Cash and marketable securities is the sum of Cash and equivalents, Restricted cash (current and non-current) and Marketable securities and short-term
investments.
Reconciliation
($ in millions)
March 31, 2023
December 31, 2022
Short-term debt and current maturities of long-term debt
3,433
2,535
Long-term debt
5,230
5,143
Total debt
8,663
7,678
Cash and equivalents
3,438
4,156
Restricted cash - current
19
18
Marketable securities and short-term investments
1,380
725
Cash and marketable securities
4,837
4,899
Net debt
3,826
2,779
Net debt/Equity ratio
Definition
Net debt/Equity ratio
Net debt/Equity ratio is defined as Net debt divided by Equity.
Equity
Equity is defined as Total stockholders’ equity.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2023
December 31, 2022
Total stockholders' equity
12,831
13,187
Net debt (as defined above)
3,826
2,779
Net debt / Equity ratio
0.30
0.21
Net debt/EBITDA ratio
Definition
Net debt/EBITDA ratio
Net debt/EBITDA ratio is defined as Net debt divided by EBITDA.
EBITDA
EBITDA is defined as Income from operations for the trailing twelve months preceding the balance sheet date before depreciati on and amortization for the same
trailing twelve-month period.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2023
March 31, 2022
Income from operations for the three months ended:
June 30, 2022 / 2021
587
1,094
September 30, 2022 / 2021
708
852
December 31, 2022 / 2021
1,185
2,975
March 31, 2023 / 2022
1,198
857
Depreciation and Amortization for the three months ended:
June 30, 2022 / 2021
207
230
September 30, 2022 / 2021
198
220
December 31, 2022 / 2021
199
216
March 31, 2023 / 2022
191
210
EBITDA
4,473
6,654
Net debt (as defined above)
3,826
2,772
Net debt / EBITDA
0.9
0.4
36 Q1 2023 FINANCIAL INFORMATION
Net working capital as a percentage of revenues
Definition
Net working capital as a percentage of revenues
Net working capital as a percentage of revenues is calculated as Net working capital divided by Adjusted revenues for the trailing twelve months.
Net working capital
Net working capital is the sum of (i) receivables, net, (ii) contract assets, (iii) inventories, net, and (iv) prepaid expenses; less (v) accounts payable, trade, (vi)
contract liabilities (including non-current amounts) and (vii) other current liabilities (excluding primarily: (a) income taxes payable, (b) current derivative liabilities, (c)
pension and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain other restructuring -related activities and
(f) liabilities related to the divestment of the Power Grids business ); and including the amounts related to these accounts which have been presented as either
assets or liabilities held for sale but excluding any amounts included in discontinued operations.
Adjusted revenues for the trailing twelve months
Adjusted revenues for the trailing twelve months includes total revenues recorded by ABB in the twelve months preceding the relevant balance sheet date adjusted
to eliminate revenues of divested businesses and the estimated impact of annualizing revenues of certain acquisitions which were completed in the same trailing
twelve-month period.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2023
March 31, 2022
Net working capital:
Receivables, net
7,174
6,851
Contract assets
1,009
1,072
Inventories, net
6,269
5,372
Prepaid expenses
304
289
Accounts payable, trade
(4,945)
(4,830)
Contract liabilities
(2,339)
(2,080)
Other current liabilities
(1)
(3,444)
(3,213)
Net working capital in assets and liabilities held for sale
136
–
Net working capital
4,164
3,461
Total revenues for the three months ended:
June 30, 2022 / 2021
7,251
7,449
September 30, 2022 / 2021
7,406
7,028
December 31, 2022 / 2021
7,824
7,567
March 31, 2023 / 2022
7,859
6,965
Adjustment to annualize/eliminate revenues of certain acquisitions/divestments
(340)
(363)
Adjusted revenues for the trailing twelve months
30,000
28,646
Net working capital as a percentage of revenues (%)
13.9%
12.1%
(1) Amounts exclude $668 million and $901 million at March 31, 2023 and 2022, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension
and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain restructuring-related activities and (f) liabilities related to the divestment of
the Power Grids business.
37 Q1 2023 FINANCIAL INFORMATION
Free cash flow conversion to net income
Definition
Free cash flow conversion to net income
Free cash flow conversion to net income is calculated as free cash flow divided by Adjusted net income attributable to ABB.
Adjusted net income attributable to ABB
Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodwill, (ii) losses from extinguishment of
debt, and (iii) gains arising on the sale of both the Hitachi Energy Joint Venture and Power Grids business, the latter being included in discontinued operations.
Free cash flow
Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible assets, and (ii)
proceeds from sales of property, plant and equipment.
Free cash flow for the trailing twelve months
Free cash flow for the trailing twelve months includes free cash flow recorded by ABB in the twelve months preceding the relevant balance sheet date.
Net income for the trailing twelve months
Net income for the trailing twelve months includes net income recorded by ABB (as adjusted) in the twelve months preceding the relevant balance sheet date.
Free cash flow conversion to net income
Twelve months to
($ in millions, unless otherwise indicated)
March 31, 2023
December 31, 2022
Net cash provided by operating activities – continuing operations
2,181
1,334
Adjusted for the effects of continuing operations:
Purchases of property, plant and equipment and intangible assets
(726)
(762)
Proceeds from sale of property, plant and equipment
123
127
Free cash flow from continuing operations
1,578
699
Net cash used in operating activities – discontinued operations
(39)
(47)
Free cash flow
1,539
652
Adjusted net income attributable to ABB
(1)
2,869
2,442
Free cash flow conversion to net income
54%
27%
(1) Adjusted net income attributable to ABB for the year ended December 31, 2022, is adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million and
reductions to the gain on the sale of Power Grids of $10 million.
Reconciliation of the trailing twelve months to March 31, 2023
Continuing operations
Discontinued
operations
($ in millions)
Net cash provided by
continuing operating
activities
Purchases of
property, plant and
equipment and
intangible assets
Proceeds
from sale of property,
plant and equipment
Net cash provided
by (used in)
discontinued
operating activities
Adjusted net income
attributable to ABB
(1)
Q2 2022
385
(151)
31
(3)
383
Q3 2022
793
(165)
19
(2)
362
Q4 2022
720
(259)
42
(33)
1,088
Q1 2023
283
(151)
31
(1)
1,036
Total for the trailing twelve
months to March 31, 2023
2,181
(726)
123
(39)
2,869
(1) Adjusted net income attributable to ABB for Q2, Q3 and Q4 of 2022, is adjusted to exclude reductions to the gain on the sale of Power Grids of $4 million, $2 million and $(1) million,
respectively. In addition, Q4 2022 is also adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of $43 million.
38 Q1 2023 FINANCIAL INFORMATION
Net finance expenses
Definition
Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense.
Reconciliation
Three months ended March 31,
($ in millions)
2023
2022
Interest and dividend income
40
13
Interest and other finance expense
(61)
(22)
Net finance expenses
(21)
(9)
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by Total revenues.
Reconciliation
Three months ended March 31,
2023
2022
($ in millions, except Book-to-bill presented as a ratio)
Orders
Revenues
Book-to-bill
Orders
Revenues
Book-to-bill
Electrification
4,141
3,590
1.15
4,112
3,236
1.27
Motion
2,262
1,940
1.17
2,202
1,572
1.40
Process Automation
2,113
1,436
1.47
1,692
1,506
1.12
Robotics & Discrete Automation
1,001
937
1.07
1,308
730
1.79
Corporate and Other
(67)
(44)
n.a.
59
(79)
n.a.
ABB Group
9,450
7,859
1.20
9,373
6,965
1.35
39 Q1 2023 FINANCIAL INFORMATION
—
ABB Ltd
Corporate Communications
P.O. Box 8131
8050 Zurich
Switzerland
Tel: +41 (0)43 317 71
11
www.abb.com
—
ZURICH, SWITZERLAND, APRIL 25, 2023
ABB plans to delist ADRs from NYSE
ABB is planning to delist its American Depositary Receipts (ADRs) from the New York Stock Exchange (NYSE),
and ultimately to seek to deregister its ADRs and the underlying shares under the US Securities Exchange Act
of 1934 (the Exchange Act). In connection with the delisting of its ADRs from the NYSE, ABB intends to convert
its current sponsored Level II ADR program into a sponsored Level I ADR program, which would give US
investors a continued investment option, in addition to the ordinary ABB share. The company’s shares will
remain listed on the SIX Swiss Exchange (SIX) and the Nasdaq Stockholm due to the company’s heritage.
ABB was listed on the NYSE in April 2001. Investor access to international equity markets has significantly
changed in recent times with digital trading on multiple platforms providing many new possibilities to investors.
Consequently, the need to be listed on as many as three equity capital markets has decreased.
Trading of ABB shares is currently conducted predominantly on the SIX and via electronic trading platforms.
ABB expects that reducing the number of listings will support internal simplification and efficiency while the
company remains fully committed to an open and frequent dialog with US investors, as well as maintaining the
highest standards of corporate governance and transparent financial reporting.
ABB plans to file the required Form 25 with the SEC on or around May 12, 2023. The last day of trading of
ABB’s ADRs on the NYSE is expected to be on or around May 22, 2023, and the delisting is expected to
become effective on or around May 23, 2023.
Once the delisting is effective, ABB’s ADRs will no longer be traded on the NYSE but will instead be traded on
the US over-the-counter (OTC) market. In connection with the delisting, ABB will establish a Level I ADR
program to allow investors to continue to hold their ABB shares in the form of ADRs. Once the 12-month US
Average Daily Trading Volume (ADTV) in ABB ADRs has fallen to less than 5 percent ADTV worldwide, ABB
intends to apply for deregistration with the SEC and for termination of its equity reporting obligations under the
Exchange Act.
Timo Ihamuotila, Chief Financial Officer of ABB. “Over the last years, capital market access has moved strongly
towards trading on digital platforms. Furthermore, ABB has a strong balance sheet and good capital markets
access to facilitate both organic and inorganic growth, while also returning cash to shareholders. As a result,
we believe three separate stock market listings are no longer necessary for us. The delisting and deregistration
in the US would be yet another step towards further simplification and efficiency at ABB. I would also like to
emphasize that we remain fully committed to serve the US market with our leading, sustainable and resource-
efficient solutions for electrification and automation.”
The US is ABB’s largest market representing nearly a quarter of Group revenues and since 2010, ABB has
invested a combined $14 billion in the US with acquisitions, plant expansions, operational improvements, state-
of-the-art equipment, products, and people. With approx. 20,000 employees in more than 40 manufacturing
and distribution facilities, ABB is investing, growing, and serving across America through industries that create
jobs, encourage innovation, and achieve a more productive, sustainable future.
1/2
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 more than 130 years of excellence, ABB’s
~105,000 employees are committed to driving innovations that accelerate industrial transformation.
www.abb.com
—
For more information please contact:
Media Relations
Phone: +41 43 317 71 11
Email: [email protected]
Investor Relations
Phone: +41 43 317 71 11
Email: [email protected]
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Important notice about forward-looking information
This press release includes forward-looking information and statements which are based on current
expectations, estimates and projections about the factors that may affect our future performance, including 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 “intends”,
“expects”, “plans”, 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 or anticipated transactions. Some important factors that could cause such differences include, among
others, business risks associated with the COVID-19 pandemic, the volatile global economic environment and
political conditions including the conflict in Ukraine, 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 foregoing list of factors is not exclusive and
undue reliance should not be placed upon any forward-looking statements, including projections, which speak
only as of the date made.
ABB PLANS TO DELIST ADRS FROM NYSE
2/2
January 1 — March 31, 2023
ABB Ltd announces that the following members of the Executive Committee or Board of Directors of ABB have purchased,
sold or been granted ABB’s registered shares, call options and warrant appreciation rights (“WARs”), in the following amounts:
Name
Date
Type of Instrument
Received*
Purchased
Sold
Price / Instrument
Björn Rosengren
February 01, 2023
Share
12,742
CHF
31.39
Tarak Mehta
February 03, 2023
Share
60,000
CHF
31.97
Peter Terwiesch
February 03, 2023
Share
42,940
CHF
31.38
Key:
* Received instruments were delivered as part of the ABB Ltd Director’s or Executive Committee Member’s compensation or as compensation for foregone
benefits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ABB LTD
Date: April 25, 2023.
By:
/s/ Ann-Sofie Nordh
Name:
Ann-Sofie Nordh
Title:
Group Senior Vice President and
Head of Investor Relations
Date: April 25, 2023.
By:
/s/ Richard A. Brown
Name:
Richard A. Brown
Title:
Group Senior Vice President and
Chief Counsel Corporate & Finance