6-K
Abb Ltd (ABBNY)
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 July 2022
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.
Form 20-F
☒
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
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⬜
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permits the submission in paper of
a Form 6-K if submitted solely to provide
an
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is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(7):
⬜
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permits the submission in paper of
a Form 6-K if submitted to furnish
a report or
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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.
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by furnishing the information
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the Securities Exchange Act of 1934.
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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
July 21, 2022 titled “Q2
2022 results”.
2.
Q2 2022 Financial Information.
3.
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
—
“I am pleased with our performance and thatwe
have taken yet another step toward our
long-term margin target. I am also delighted that we are moving ahead with the spin-off of
Accelleron and its planned listing in Switzerland.”
Björn Rosengren
, CEO
—
ZURICH, SWITZERLAND, JULY 21, 2022
Q2 2022 results
Strong demand and good
operational performance
●
Orders $8.8 billion,
+10%; comparable
1
+20%
●
Revenues $7.3 billion,
-3%; comparable +6%
●
Income from operations
$587 million; margin 8.1%
●
Operational EBITA
1
$1,136 million;
margin
1
15.5%
●
Basic EPS $0.20; -47%
2
●
Cash flow from operating
activities $382 million
Ad hoc Announcement pursuant to Art.
53 Listing Rules of SIX Swiss Exchange
—
Q2 2022
First six months
Press Release
KEY FIGURES
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
1
H1 2022
H1 2021
US$
Comparable
1
Orders
8,807
7,989
10%
20%
18,180
15,745
15%
24%
Revenues
7,251
7,449
-3%
6%
14,216
14,350
-1%
7%
Gross Profit
2,290
2,508
-9%
4,571
4,776
-4%
as % of revenues
31.6%
33.7%
-2.1 pts
32.2%
33.3%
-1.1 pts
Income from operations
587
1,094
-46%
1,444
1,891
-24%
Operational EBITA
1
1,136
1,113
2%
9%
3
2,133
2,072
3%
9%
3
as % of operational revenues
1
15.5%
15.0%
+0.5 pts
14.9%
14.4%
+0.5 pts
Income from continuing operations, net of tax
406
789
-49%
1,049
1,340
-22%
Net income attributable to ABB
379
752
-50%
983
1,254
-22%
Basic earnings per share ($)
0.20
0.37
-47%
2
0.51
0.62
-18%
2
Cash flow from operating activities
4
382
663
-42%
(191)
1,206
n.a.
Cash flow from operating activities in continuing
operations
385
663
-42%
(179)
1,186
-115%
1
For a reconciliation of non-GAAP measures, see “supplemental
reconciliations and definitions” in the attached
Q2 2022 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
Q2
2022
2
Overall, I am pleased
with how the teams delivered
strong order
growth as well as a
margin in line with our long-term
target. This
was achieved despite
the pressure from a tight
supply chain,
Covid-enforced lockdowns
in China and the inflationary
environment. Cash
flow came in higher than
in the first quarter,
and I expect a good
momentum in the second
half of the year.
We achieved a
strong order growth of 10
%
(20%
comparable)
and we saw a positive
development in all
major customer
segments. While changes
in exchange rates weighed
on the total,
comparable orders
increased at a double-digit
rate in all regions.
With all business areas
in double-digit growth,
order intake
amounted to $8,807
million and a record-high order
backlog of
$19.5 billion.
In total, revenues declined
by 3% (up 6% comparable)
,
year-on-
year.
Negative impact from change
s
in exchange rates and
portfolio changes outweighed
the positives of strong price
execution and increased
volumes, with the latter
somewhat held
back by the strained supply
chain. Comparable revenues
increased in all business
areas except for Robotics
& Discrete
Automation which together
with the Distribution Solutions
division
in Electrification, are
where customer deliveries
were materially
slowed by component
shortages. Overall, the supply
chain
constraints slightly
eased compared with the
previous quarter,
however we saw temporary
pressure on customer deliveries
in
China where lockdowns
slowed down logistics somewhat
more
than expected.
We anticipate further easing
of component supply
in the coming quarters.
I am pleased that we
managed to improve
the Operational
EBITA margin
to 15.5%. Notably,
our teams successfully
offset
inflationary effects
such as input costs and
freight through
strong pricing execution
and higher volumes.
Process
Automation noted a
sharp 180 basis point improvement
to its
margin, year-on-year
.
I am also pleased with the
performance
levels
in Electrification and Motion,
although margins declined
from last year’s high levels
.
Robotics & Discrete Automation
is
the area with operational
underperformance,
triggered by
customer deliveries
materially hampered by
lockdowns in China
and semiconductor
shortages. Additionally,
results were
supported by lower
than anticipated costs in
Corporate and
Other including a positive
margin impact of approximately
60
basis points related
to the exit of a legacy project
and a real
estate sale which came
through sooner than expected.
Looking at Income
from operations,
it included items impacting
comparability of
approximately $250 million.
These include the earlier
mentioned
charge of $195 million
triggered by us exiting
the largest legacy project
exposure in non-
core operations,
namely the full-train retrofit
business.
It also
includes the financial
impact of our decision
to exit the Russian
market, triggered by
the ongoing war in Ukraine
and impact of
related international
sanctions.
We have started the
process of
winding down the remaining
activities in Russia.
This triggered a
charge of $57 million
,
of which $23 million will
impact cash flow in
the third quarter.
The balance sheet
is robust,
although year-on-year the cash
flow
from operating activities
in continuing operations declined
to $385
million,
mainly on a higher build-up
of net working capital. That
said, we have continued
to execute on our share buyback
program, and just after
the close of the second
quarter we
successfully delivered
on our promise to return
to shareholders
the remaining $1.2
billion - out of the total of
$7.8 billion - from the
Power Grids proceeds.
We will now continue with
the execution of
our ongoing buyback
program of up to $3 billion.
On the back of the
volatile financial markets,
we decided to
postpone the planned
IPO of our E-mobility
business. We will
monitor the market
conditions and are fully
committed to proceed
with a listing on the
SIX Swiss Exchange as and
when market
conditions are constructive.
Meanwhile, building on
the earlier
seed stage investment
three years ago, the E-mobility
team has
agreed to acquire a
controlling interest in
Numocity,
a leading
digital platform for EV charging
in India. This deal
allows
E-
mobility to leverage
on the regional opportunity
from increasing
demand for charging
solutions for two and
three-wheelers, cars
and light commercial
vehicles. After the close
of the second
quarter,
we decided to spin off
the Accelleron business
(Turbocharging)
with a planned listing
on SIX Swiss Exchange
on
October 3, subject
to approval by the Extraordinary
General
Meeting. I am pleased
about this as it allows for
shareholders to
realize the full value
of Accelleron while allowing
ABB to focus on
its core areas of electrification
and automation.
Björn Rosengren
CEO
In the
third quarter of 2022
, we anticipate double-digit
comparable revenue
growth and the Operational
EBITA margin
to sequentially improve,
excluding the 60 basis
points positive
impact from special
items in the second quarter.
In full-year 2022
, we expect a steady margin
improvement
towards the 2023 target
of at least 15%, supported
by
increased efficiency
as we fully incorporate the
decentralized
operating model and performance
culture in all our divisions.
Furthermore, we expect
support from a positive
market
momentum and our
strong order backlog.
CEO summary
Outlook
ABB
INTERIM
REPORT
I
Q2
2022
3
Demand was strong across
all customer segments and
all
business areas reported
double-digit order growth
in the second
quarter,
supported by virtually all divisions.
Demand remained
strong throughout the
period.
Service-related orders
increased
by 4% (12%
comparable). In total,
high demand more than
offset the adverse
impact from changes
in exchange rates and
order intake improved
by 10% (20% comparable)
to $8,807
million.
The positive development
was very strong in the segments
of
machine building, food
& beverage and in general
industries as
well as in the automotive
segment due to accelerating
investments in the
EV segment.
In transport and infrastructure,
the order development was
strong in the renewables
and e-mobility business
es. In the
buildings segment there
was a positive development
in both the
non-residential and residential
areas, although some softness
in
residential building
in China was noted. In the
marine segment
a positive development
was noted for cruising as
well as
general marine & port
demand.
The process-related business
improved across the customer
segments.
Customer activity was
strong across the regions
but changes
in
exchange rates weighed
on reported order intake.
Europe was
stable at 0% (15%
comparable). The Americas
improved by
23%
(33% comparable), supported
by a stellar 21% (32%
comparable) in the
United States. In Asia, Middle
East and
Africa orders increased
by 9% (15% comparable),
including an
increase in China of
7% (10%
comparable).
Revenues were adversely
impacted by changes
in exchange
rates which more than
offset benefits from
a strong price
development and slightly
higher volumes. While
component
constraints eased somewhat
,
mainly semiconductors,
they still
impacted customer
deliveries, above all noticeable
in Robotics
& Discrete Automation
and in the Distribution Solutions
division
in Electrification.
An added challenge to customer
deliveries
stemmed from the
Covid-related lockdowns
in China which in
addition to forcing Robotics
to close its Shanghai production
for
five weeks followed
by a gradual re-opening, also
triggered a
general slow-down
of local logistics for part
of the quarter.
In
total, the revenue decline
in Robotics & Discrete
Automation
was however more
than offset by strong comparable
improvements in the other
business areas. In total,
ABB Group
revenues declined
by -3% (up 6% comparable)
and amounted
to $7,251 million.
Orders and revenues
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q2 2022
Q2 2021
US$
Comparable
Europe
2,958
2,954
0%
15%
The Americas
3,050
2,473
23%
33%
Asia, Middle East
and Africa
2,799
2,562
9%
15%
ABB Group
8,807
7,989
10%
20%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
20%
6%
FX
-7%
-7%
Portfolio changes
-3%
-2%
Total
10%
-3%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q2 2022
Q2 2021
US$
Comparable
Europe
2,508
2,697
-7%
7%
The Americas
2,397
2,284
5%
14%
Asia, Middle East
and Africa
2,346
2,468
-5%
0%
ABB Group
7,251
7,449
-3%
6%
ABB
INTERIM
REPORT
I
Q2
2022
4
Gross profit
Gross profit decreased
by 9% to $2,290 million,
primarily due to
changes
in exchange rates. Gross
margin was 31.6%, a decline
of
210 basis points
from last year’s very high level
driven primarily by
mark to market losses
on commodity derivatives
as well as under-
absorption of fixed
costs in Robotics & Discrete
Automation.
Income from operations
Income from operations
amounted to $587 million,
declining by
$507 million,
or 46%. The decline was
primarily related to
charges
totaling approximately
$250 million triggered by
the exit of a legacy
project in non-core
operations and the decision
to exit Russian
operations.
Additional adverse impact
related to changes
in
exchange rates,
commodity timing differences
and significantly less
support from fair value
adjustments of equity investments
.
Operational EBITA
Operational EBITA
of $1,136
million was 2% higher (9% constant
currency) year-on-year,
as contribution from operational
performance
offset the adverse
impact from mainly changes
in
exchange rates and
portfolio changes.
The Operational
EBITA margin increased
by 50 basis points
to
15.5% despite year-on-year
headwind from less support
from raw
material hedges,
mainly in Electrification. A positive
contribution
stemmed from operations
successfully offsetting
inflationary effects
such as input costs
and freight with impacts
from strong pricing
execution and slightly
higher volumes. Additional
support was due
to the lower than anticipated
costs in Corporate
and Other which
was up by $79 million
to -$13
million including a positive
margin
impact of approximately
60 basis points related
to the exit of a
legacy project and
a real estate sale. Operational
EBITA margin for
the second quarter
last year was 15.0%,
including 20 basis points
from the now divested
Mechanical Power Transmission
business.
Net finance expenses
Net finance expenses
remained stable at $20
million compared with
$21 million a year ago,
primarily reflecting lower
interest charges on
borrowings and lower
interest on tax risks offset
by certain fair
value adjustments
on investments.
Income tax
Income tax expense
was $193
million with an effective
tax rate of
32.2%, including a 7.
2% adverse tax impact
from the non-
deductibility of certain
non-operational charges.
Net income and earnings
per share
Net income attributable
to ABB was $379 million and
decreased by
50%
from last year,
with the decline primarily
related to the lower
Income from operations
.
Basic earnings per
share was $0.20, and declined
from $0.37,
year-
on-year, adversely
impacted by charges
mainly related to the exit of
the legacy full-train
retrofit project and the decision
to wind-down
operations in Russia,
but also by commodity timing
differences.
Earnings
ABB
INTERIM
REPORT
I
Q2
2022
5
Net working capital
Net working capital
amounted to $3,663 million,
increasing
both year-on-year from
$3,251 million and sequentially
from
$3,461 million.
The sequential increase
was driven primarily
by inventories to support
future deliveries to
help meet the
strong market dem
and, as well as receivables
.
Net working
capital as a percentage
of revenues
1
was 12.8%.
Capital expenditures
Purchases of property,
plant and equipment and
intangible
assets amounted to
$151 million.
Net debt
Net debt
1
amounted to $4,235 million
at the end of the
quarter,
and increased from $2,259
million, year-on-year.
Sequentially,
it increased from $2,772
million,
mainly due to
paid dividend and share
buybacks.
Cash flows
Cash flow from operating
activities in continuing operations
was $385
million and declined year
-on-year from
$663 million. The year
-on-year decline was
driven by a
higher build-up of trade
net working capital, mainly
related
to inventories to
support future deliveries and
payables.
ABB expects a solid cash
flow delivery in 2022.
Share buyback program
ABB launched a new
share buyback program
of up to $3 billion
on April 1. As part of
this program, ABB completed
just after the
close of the second
quarter, the
return to its shareholders
of the
remaining $1.2 billion
out of the $7.8 billion
of cash proceeds
from the Power Grids
divestment. During the
second quarter,
33,852,000 shares
were repurchased on
the second trading line
for the amount of approximately
$1,016 million. The total
number of ABB Ltd’s
issued shares is 1,964,745,075
,
after the
cancellation of 88,403,189
shares in June, as approved
at
ABB's 2022 AGM.
($ millions,
unless otherwise indicated)
Jun. 30
2022
Jun. 30
2021
Dec. 31
2021
Short term debt and current
maturities of long-term debt
2,830
2,117
1,384
Long-term debt
5,086
4,375
4,177
Total debt
7,916
6,492
5,561
Cash & equivalents
2,412
2,860
4,159
Restricted cash - current
23
71
30
Marketable securities and
short-term investments
945
1,002
1,170
Restricted cash - non-current
301
300
300
Cash and marketable securities
3,681
4,233
5,659
Net debt (cash)*
4,235
2,259
(98)
Net debt (cash)* to EBITDA ratio
0.7
0.7
(0.01)
Net debt (cash)* to Equity ratio
0.34
0.16
(0.01)
*
At Jun. 30, 2022, Jun. 30, 2021 and Dec. 31, 2021,
net debt(cash) excludes net pension
(assets)/liabilities of $(72) million, $633 million and $45
million, respectively.
Balance sheet & Cash flow
ABB
INTERIM
REPORT
I
Q2
2022
6
Orders and revenues
Order intake was strong
with a stable trend
throughout the
quarter except for some
temporary weakness in
China which
recovered towards
the end of the second
quarter. Order
intake amounted
to $4,037
million, improving by 9% (16%
comparable), year-on-year.
The order backlog extended
to a
record level of $6.7
billion.
●
Customer activity was
strong in most segments
with
softness noted only
in the residential construction
-related
segment in China.
●
Orders in the Asia,
Middle East and Africa region
improved
by 1% (7% comparable),
weighed down by China which
declined by 7% (5% comparable).
China came off from
the
high comparable last year
on lower demand in the
residential construction
segment, but also by a
temporary
general dampening of
customer activity during
the Covid-
related lockdowns
that started in April. A recovery
was
noted during the
quarter as restrictions progressively
eased. In Europe customer
activity was strong across
the
major countries, however
changes
in exchange rates
weighed on the total
which was down by 4% (up 10%
comparable).
The Americas improved
sharply by 29%
(30%
comparable).
●
Revenues improved
by 4% (10% comparable)
to
$3,531 million
with strong pricing execution
as the main
driver of comparable
revenue growth. Double
-digit growth
in comparable revenues
was reported in the Americas
and
Europe, while Asia,
Middle East and Africa
increased at a
mid-single digit rate.
In contrast to the other
divisions,
volume growth was
negative in Distribution
Solutions which
was held back by supply
constraints mainly
related to
semiconductors.
Additional challenges stemmed
from the
lockdowns in China
which slowed down local logistics,
although it gradually
improved
as the quarter progressed.
Profit
Operational EBITA
was $599 million, remaining
stable as a
reported headline number
but improving by 9% in constant
currency.
Operational EBITA
margin declined
by 50 basis
points to 16.9%.
●
Under-absorption of
fixed costs in the large
Distribution
Solutions
division triggered by component
shortages that
hampered customer deliveries
was the primary driver for
the business area’s
margin decline.
—
Electrification
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
16%
10%
FX
-7%
-6%
Portfolio changes
0%
0%
Total
9%
4%
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
4,037
3,693
9%
16%
8,434
7,224
17%
22%
Order backlog
6,706
5,029
33%
42%
6,706
5,029
33%
42%
Revenues
3,531
3,406
4%
10%
6,858
6,546
5%
10%
Operational EBITA
599
592
1%
1,109
1,103
1%
as % of operational revenues
16.9%
17.4%
-0.5 pts
16.1%
16.8%
-0.7 pts
Cash flow from operating activities
393
511
-23%
432
830
-48%
No. of employees (FTE equiv.)
51,600
51,700
0%
ABB
INTERIM
REPORT
I
Q2
2022
7
Orders and revenues
The second quarter
was another +$2 billion
quarter with
orders up by 7% (26%
comparable) to $2,079 million,
despite the adverse
impacts
from portfolio changes and
changes
in exchange rates. Both base
orders and large
orders increased year-on
-year.
●
Strong demand was seen
in all the customer segments
for the electrical
motors, drives and service
offerings and
all divisions reported
double-digit order growth.
●
Demand was strong in
all
major regions, although
reported order growth
was hampered by changes
in
exchange rates and
portfolio changes. Orders
increased
in Europe by 1% (17%
comparable) and by 17%
(24%
comparable) in Asia,
Middle East and Africa with no
material impact on
customer order patterns
from the
Covid-related lockdowns.
The Americas reported
orders
up by 3% (38% comparable)
reflecting the divestment
of
Mechanical Power
Transmission (Dodge).
●
The divestment of Dodge
and changes
in exchange rates
weighed on reported revenue
growth which decreased
by 12% (up 3% comparable).
Strong price execution
drove comparable growth,
but volumes were hampered
by the lockdowns in
China which slowed down
local
logistics.
That said, a gradual easing was
noted as the
quarter progressed.
The order backlog expanded
to
record-high $4.6 billion.
Profit
Operational EBITA
amounted to $266
million and declined
from last year due to
adverse impacts from
low volumes,
portfolio changes and
changes in exchange
rates.
Operational EBITA
margin was 16.4%,
with about half of the
130 basis points year
-on-year decline relating to
the
divestment of the
Dodge business.
●
Strong pricing execution
offset the increased
costs
related to such as commodities
and freight.
●
The Covid-related lockdowns
in China hampered
customer and supplier
deliveries and triggered
under-
absorption of fixed
costs.
●
In addition, there
was an adverse divisional
mix in
revenues.
—
Motion
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
2,079
1,947
7%
26%
4,281
3,864
11%
29%
Order backlog
4,568
3,558
28%
43%
4,568
3,558
28%
43%
Revenues
1,626
1,850
-12%
3%
3,198
3,517
-9%
6%
Operational EBITA
266
325
-18%
540
614
-12%
as % of operational revenues
16.4%
17.7%
-1.3 pts
16.9%
17.4%
-0.5 pts
Cash flow from operating activities
241
223
8%
239
547
-56%
No. of employees (FTE equiv.)
20,800
21,500
-3%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
26%
3%
FX
-7%
-6%
Portfolio changes
-12%
-9%
Total
7%
-12%
ABB
INTERIM
REPORT
I
Q2
2022
8
Orders and revenues
Customer demand
was strong across the segments
which
resulted in an order
growth of 17% (25% comparable),
although the headline
number was weighed
down by
changes
in exchange rates. Strong
demand was noted for
the product, system
s
and service businesses.
●
Double-digit order increases
were reported for all of the
divisions, supported
by base orders but also by
a higher
contribution from large
orders, year-on-year.
●
Demand was strong across
all customer segments,
with a
particularly strong development
in the metals & mining
and marine segment.
High customer activity
in the oil &
gas segment included
also the LNG business.
While
hydrogen is still a small
part of the business, customer
interest was high. Service
orders increased by 4%
(12%
comparable).
●
All regions improved,
and comparable order
intake
increased at a double
-digit rate. Europe was
up by 8%
(22%
comparable) and the
Americas by 53%
(55%
comparable). Asia,
Middle East and Africa was up
by 4% (11%
comparable).
●
Revenues declined
by 1% (up 7% comparable)
adversely
impacted by change
s
in exchange rates which
more than
offset the positive
impact of increased volumes
and
positive pricing. All
divisions contributed to
comparable
revenue growth.
Profit
Most divisions reported
double-digit Operational
EBITA
margin with both profit
and profitability improvements
,
year-
on-year.
Operational EBITA increased
by 17%
(28% constant currency)
,
to $224 million, and the
Operational EBITA
margin improved by
180 basis points to
14.3%.
●
Performance improvements
were driven by higher
volumes and efficiency
measures,
which more than offset
cost inflation mainly
in electrical components,
and freight
as well as a slight negative
divisional mix.
—
Process Automation
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
25%
7%
FX
-8%
-8%
Portfolio changes
0%
0%
Total
17%
-1%
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
1,819
1,555
17%
25%
3,511
3,211
9%
15%
Order backlog
6,170
5,980
3%
12%
6,170
5,980
3%
12%
Revenues
1,529
1,540
-1%
7%
3,035
2,947
3%
9%
Operational EBITA
224
192
17%
420
347
21%
as % of operational revenues
14.3%
12.5%
+1.8 pts
13.7%
11.8%
+1.9 pts
Cash flow from operating activities
193
228
-15%
253
461
-45%
No. of employees (FTE equiv.)
22,200
21,900
2%
ABB
INTERIM
REPORT
I
Q2
2022
9
Orders and revenues
On high customer demand
,
order intake improved
by 15% (23%
comparable) to $1,109
million.
However,
revenues were
significantly hampered
by both general supply
chain constraints
as well as Covid-related
lockdowns in China.
Consequently,
the
order backlog reached
a record-high level of $2.7
billion.
Semiconductor constraints
are expected to ease
in the third
quarter.
●
Both divisions noted strong
momentum and reported
double-
digit rates
in order growth. Demand
was stable throughout
the quarter.
●
Customer activity increased
in all segments with particularly
strong momentum
in general industry as
well as automotive
which was supported
by a strong development
in EV
investments in China.
●
Order momentum was
very strong in Europe at
9%
(22%
comparable) and Asia,
Middle East and Africa at
30%
(36%
comparable),
including orders in China
which improved
by 40%
(43%
comparable). The Americas
declined by 3%
(3% comparable) from
a high comparable last year
due to
large orders received.
●
Revenues declined
by 12% (5% comparable)
adversely
impacted by change
s
in exchange rates.
While price
increases supported comparable
growth, volumes declined
in
both divisions.
This was triggered by customer
deliveries
being adversely impacted
by the shortages in the
supply of
semiconductors
and the production halt
in the Robotics
division’s Shanghai
factory due to enforced
Covid-related
lockdowns.
As an additional challenge,
the lockdowns
triggered a general
slowdown in local logistics
in the
beginning of the second
quarter. After approximately
five
week’s shutdown,
production in the Shanghai
plant gradually
increased and ran
at close to full capacity
at the end of the
quarter.
Profit
Both profit and profitability
declined year-on-year due
to low
volumes and cost inflation
linked to the tight supply
chain.
Operational EBITA
declined by
38% with a margin
deterioration of
330 basis
points.
●
In total, the decline
in volumes triggered under-absorption
of fixed costs,
which combined with
cost inflation related
to freight and input
costs more than offset
the contribution
from cost measures and
positive price execution,
year-
on-year.
—
Robotics & Discrete Automation
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
1,109
968
15%
23%
2,417
1,809
34%
40%
Order backlog
2,728
1,501
82%
97%
2,728
1,501
82%
97%
Revenues
732
832
-12%
-5%
1,462
1,685
-13%
-9%
Operational EBITA
60
96
-38%
109
201
-46%
as % of operational revenues
8.2%
11.5%
-3.3 pts
7.4%
11.9%
-4.5 pts
Cash flow from operating activities
56
78
-28%
27
189
-86%
No. of employees (FTE equiv.)
10,800
10,300
5%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
23%
-5%
FX
-9%
-7%
Portfolio changes
1%
0%
Total
15%
-12%
ABB
INTERIM
REPORT
I
Q2
2022
10
Quarterly highlights
●
Microsoft has joined
ABB’s Energy Efficiency
Movement.
Launched in March
2021 by ABB, the
#energyefficiencymovement
is a multi-stakeholder
initiative to raise awareness
and spur action to reduce
energy consumption and
carbon emissions to combat
climate change. Other
members include Deutsche
Post
DHL Group and Alfa Laval.
●
ABB has been assigned
by EPC contractor Aker
Solutions,
a leader in sustainable
energy solutions, to deliver
the main
electrical, automation
and safety systems for
Norway’s
Northern Lights project.
A joint venture between
Equinor,
Shell and TotalEnergies,
Northern Lights is the first
industrial carbon capture
and storage project to
develop an
open and flexible infrastructure
to safely store CO2 from
industries across
Europe.
●
ABB E-mobility has
signed a new global framework
agreement with Shell
to supply ABB’s end-to-end
portfolio
of AC and DC charging
stations. The portfolio
ranges
from the AC wallbox
for home, work or retail installations
to the Terra
360 which is ideal for refueling
stations,
urban charging stations,
retail parking and fleet
applications.
●
ABB celebrated this
year’s Pride Month in June
with a
clear focus on what
can be done on an individual
level to
support the LGBTQ+ community
and make the workplace
more inclusive. Since
last year,
the number of “Allies” in
LGBTQ+ Employee
Resource Groups across
ABB more
than doubled, now
having about 900 members.
●
From June 19-24, the Special
Olympics National
Summer
Games took place
in Berlin. Around 4,000
athletes
competed in 20 sport
disciplines, including
basketball,
beach volleyball, handball,
table tennis and triathlon,
at
the National Games –
and were supported and
cheered
on by about 100
volunteers from ABB. They submitted
time-off or vacation
to actively participate in
the largest
inclusive sports event
in Germany this year.
Story of the quarter
ABB has launched
a product label called
EcoSolutions™ targeting
its customers with full
transparency on
the circularity value and environmental
impact of ABB products
across all business areas.
By
scanning the QR code
on the EcoSolutions label
or by
visiting the product
page, customers can easily
have this
information at hand.
For customers, the ABB EcoSolutions
label is an assurance
that, where relevant, the
product they
are buying is designed
to last and has been
manufactured
with the maximum
amount of sustainably sourced
raw
materials; made
with processes that are designed
to avoid
waste and maximize
the use of sustainable
packaging
materials; designed
to increase resource and process
efficiency while
in use, be upgradable and
optimize the
lifetime of equipment
and facilities; supported
by take-back
services leading to
refurbishment, re-use or
recycling of
products and components,
and is accompanied by
instructions for responsible
end-of-life treatment.
Q2 outcome
●
22% reduction of CO
₂
emissions in own operations year
-on-year
due to increased use of renewable
energy and energy efficient
projects on sites.
●
21% year-on-year increase
in LTIFR due
to a slight increase in
absolute incidents as well as fewer
hours booked during the
second quarter.
●
2.9%-points increase in number of women
in senior
management versus the prior
year continued to be supported
by
targeted initiatives across all business
areas.
—
Sustainability
Q2 2022
Q2 2021
CHANGE
12M ROLLING
CO2e own operations emissions,
kt scope 1 and 2
1
89
114
-22%
376
Lost Time Injury Frequency Rate (LTIFR),
frequency / 200,000 working hours
0.17
0.14
21%
0.16
Share of females in senior management
positions, %
16.8
13.9
+2.9 pts
16.3
1
CO
₂
equivalent emissions from site, energy use and
fleet, previous quarter
ABB
INTERIM
REPORT
I
Q2
2022
11
During Q2 2022
●
On May 25, ABB announced
that its E-mobility division
had
agreed to acquire a controlling
stake in Numocity,
a
leading digital platform
for electric vehicle charging
in
India. ABB will increase
its shareholding to a controlling
majority of 72 percent
and has the right to become
sole
owner by 2026. The
transaction is part of ABB E-
mobility’s overall
growth strategy and will significantly
improve its position
across India, as well as
South
East
Asia and the Middle
East – target regions for
Numocity
given increasing demand
for charging solutions
for two
and three-wheelers,
cars and light commercial
vehicles.
●
On June 20, ABB announced
that it had decided
to
postpone its planned
IPO of the E-mobility business.
The
listing of the business
remains an important
part of ABB’s
strategy.
However, recent
market conditions made
it
challenging to proceed
with a planned share
offering in
the second quarter
of 2022. Consequently,
ABB is
monitoring market
conditions and is fully committed
to
proceed with a listing
of the business on
the SIX Swiss
Exchange as and when
market conditions are
constructive.
After the second quarter
On July 20, ABB announced
that it will spin off Accelleron
and list the company
on SIX Swiss Exchange,
assuming
shareholders approval
at the ABB Extraordinary
General
Meeting planned
for
September 7, 2022.
ABB shareholders would receive
1
Accelleron share for every
20 ABB shares held.
Planned
date for listing is
October 3, 2022. Accelleron
develops,
produces and services
turbochargers and large
turbocharging components
for engines, which enhance
propulsion and increase
fuel efficiency while
reducing
emissions. Its leading
products support clients
in sectors
such as marine, energy
and rail, helping to provide
sustainable and
reliable power and highest efficiencies.
Accelleron’s potential
is driven by its position,
built on its
very
long track record, as a global
market leader in
heavy-duty turbocharging
for mission-critical applicati
ons.
●
On July 21, ABB announced
it has decided to exit the
Russian market and started
the process to wind down
its
remaining activities
there. The financial impact
of this
decision amounted
to $57
million in the second quarter,
of
which $23 million will
impact cash flow in the
third quarter.
After Q2 2022
In the first six months
of 2022, demand for ABB’s
products increased
strongly year-on-year,
supported by
most customer segments.
Orders amounted to
$18,180 million and
improved by 15%
(24%
comparable)
and revenues amounted
to $14,216 million down by
-1%
(up 7% comparable),
implying a book-to-bill
of 1.28. In the
period demand increased
in both the product and
the
service business. Changes
in exchange rates had a
negative impact
on order intake and revenues
.
Income from operations
amounted to $1,444
million down
from $1,891 million
in the year-earlier period. Results
included
restructuring activities progressing
according to
plan with restructuring
and restructuring-related
expenses of
$280 million. This include
d
a project charge amounting
to
$195 million triggered
by the exit of the largest
legacy
project exposure
in non-core operations.
Operational EBITA
improved by 3%
year on year to
$2,133 million and
the Operational EBITA
margin increased
by 50 basis points to
14.9%. Performance was
driven by the
impacts from strong pricing
execution and higher
volumes
offsetting inflationary
impacts in for example
input costs
and freight, but not
offsetting the adverse
year-on-year
impact related to the commodity
hedges which supported
last year’s period.
Selling, general and
administrative (SG&A) expenses
decreased -1% in line
with revenues.
The ratio in relation to
revenues therefore
remained stable at 18.0%.
Corporate
and Other Operational
EBITA improved
by $148 million
to -$45 million. The
net finance expenses amounted
to
$29 million.
Income tax expense
was $434 million with a
tax rate of
29.3%.
Net income attributable
to ABB was $983 million and
decreased by -22%. Basic
earnings per share was
$0.51 and
decreased by -18%.
Significant events
First six months 2022
ABB
INTERIM
REPORT
I
Q2
2022
12
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
Includes restructuring-related expenses of $195 million
from the exit of the full train retrofit business
as well as $57 million respectively from the exit of the
Russian market in Q2 2022.
3
Costs relating to the announced exits and the
potential E-mobility listing.
4
Excluding share of net income from JV.
5
Excluding impact of acquisitions or divestments or
any significant non-operational items.
($ in millions, unless otherwise stated)
FY 2022
Q3 2022
Net finance expenses
~(100)
~(30)
unchanged
Non-operational pension
(cost) / credit
~120
~30
from ~(140)
Effective tax rate
~25%
5
~25%
5
unchanged
Capital Expenditures
~(750)
~(200)
unchanged
($ in millions, unless otherwise stated)
FY 2022
1
Q3 2022
Corporate and Other Operational costs
~(200)
~(80)
from ~(300)
Non-operating items
Acquisition-related amortization
~(230)
~(55)
unchanged
Restructuring and restructuring related
~(100)+(252)
2
~(35)
2
from ~(130)
Separation costs
3
~(180)
~(50)
unchanged
ABB Way transformation
~(150)
~(40)
unchanged
Certain other income and expenses
related to PG divestment
4
~(25)
-
unchanged
Additional 2022 guidance
Note: comparable growth calculation includes acquisitions
and divestments with revenues of greater than $50
million.
1
Represents the estimated annual revenues for the
period prior to the announcement of the respective acquisition/divestment.
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2021
Motion
Mechanical Power Transmission
1-Nov
645
1,500
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2022
Electrification
InCharge Energy, Inc (majority stake)
26-Jan
16
40
2021
Electrification
Enervalis (majority stake)
26-Apr
1
22
Robotics & Discrete Automation
ASTI Mobile Robotics Group
2-Aug
36
300
Additional figures
ABB Group
Q1 2021
Q2 2021
Q3 2021
Q4 2021
FY 2021
Q1 2022
Q2 2022
EBITDA, $ in million
1,024
1,324
1,072
3,191
6,611
1,067
794
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
14.90
n.a.
n.a.
Net debt/Equity
0.09
0.16
0.13
(0.01)
(0.01)
0.20
0.34
Net debt/ EBITDA 12M rolling
0.4
0.7
0.5
(0.01)
(0.01)
0.4
0.7
Net working capital, % of 12M rolling revenues
10.8%
11.6%
10.2%
8.1%
8.1%
12.1%
12.8%
Earnings per share, basic, $
0.25
0.37
0.33
1.34
2.27
0.31
0.20
Earnings per share, diluted, $
0.25
0.37
0.32
1.33
2.25
0.31
0.20
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.82
n.a.
n.a.
Share price at the end of period, CHF
28.56
31.39
31.39
34.90
34.90
30.17
25.46
Share price at the end of period, $
30.47
33.99
33.36
38.17
38.17
32.34
26.73
Number of employees (FTE equivalents)
105,330
106,370
106,080
104,420
104,420
104,720
106,380
No. of shares outstanding at end of period (in millions)
2,024
2,006
1,993
1,958
1,958
1,929
1,892
Acquisitions and divestments, last twelve months
ABB
INTERIM
REPORT
I
Q2
2022
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
2022
August 31
Accelleron Cap
ital Markets Day
September 7
Planned ABB Extraordinary General Meeting
October 3
Planned listing of
Accelleron on SIX Swiss Exchange
October 20
Q3 2022 results
2023
February
2
Q4
2022 results
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,” “Balance
sheet & cash flow”,
and “Robotics and Discrete
Automation”. 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
“intends,” “anticipates,”
“expects,” “estimates,” “plans,”
“targets” or similar
expressions. However,
there are many
risks and uncertainties,
many of which are beyond
our
control, that could cause
our actual results to differ
materially from the
forward-looking information
and
statements made in
this press release and which
could
affect our ability
to achieve any or all of our
stated targets.
Some important
factors that could cause such
differences
include, among others,
business risks associated
with the
volatile global economic
environment and political
conditions, costs associated
with compliance activities,
market acceptance
of new products and services,
changes
in governmental
regulations and currency exchange
rates
and such other factors
as may be discussed
from time to
time in ABB Ltd’s
filings with the U.S. Securities
and
Exchange Commission,
including its Annual Reports
on
Form 20-F.
Although ABB Ltd believes
that its expectations
reflected in any such
forward looking statement
are based
upon reasonable assumptions,
it can give no assurance
that
those expectations
will be achieved.
The Q2 2022
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
Q2 results presentation on July 21, 2022
ABB
(ABBN: SIX Swiss
Ex) is a leading global
technology company
that energizes the transformation
of society and industry to
achieve a more productive,
sustainable future. By connecting
software to its electrification,
robotics, automation and
motion
portfolio, ABB pushes
the boundaries of technology
to drive performance
to new levels. With a history
of excellence stretching
back
more than 130 years,
ABB’s success is
driven by about 105,000 talented
employees in over 100 countries.
1
Q2 2022
FINANCIAL
INFORMATION
July 21, 2022
Q2 2022
Financial information
2
Q2 2022
FINANCIAL
INFORMATION
—
Financial
Information
Contents
03
─ 07
Key Figures
08 ─
34
Consolidated
Financial
Information
(unaudited)
35 ─
47
Supplemental
Reconciliations
and Definitions
3
Q2 2022
FINANCIAL
INFORMATION
—
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
(1)
Orders
8,807
7,989
10%
20%
Order backlog (end June)
19,477
15,424
26%
37%
Revenues
7,251
7,449
-3%
6%
Gross Profit
2,290
2,508
-9%
as % of revenues
31.6%
33.7%
-2.1 pts
Income from operations
587
1,094
-46%
Operational EBITA
(1)
1,136
1,113
2%
9%
(2)
as % of operational revenues
(1)
15.5%
15.0%
+0.5 pts
Income from continuing operations, net of tax
406
789
-49%
Net income attributable to ABB
379
752
-50%
Basic earnings per share ($)
0.20
0.37
-47%
(3)
Cash flow from operating activities
(4)
382
663
-42%
Cash flow from operating activities in continuing operations
385
663
-42%
CHANGE
($ in millions, unless otherwise indicated)
H1 2022
H1 2021
US$
Comparable
(1)
Orders
18,180
15,745
15%
24%
Revenues
14,216
14,350
-1%
7%
Gross Profit
4,571
4,776
-4%
as % of revenues
32.2%
33.3%
-1.1 pts
Income from operations
1,444
1,891
-24%
Operational EBITA
(1)
2,133
2,072
3%
9%
(2)
as % of operational revenues
(1)
14.9%
14.4%
+0.5 pts
Income from continuing operations, net of tax
1,049
1,340
-22%
Net income attributable to ABB
983
1,254
-22%
Basic earnings per share ($)
0.51
0.62
-18%
(3)
Cash flow from operating activities
(4)
(191)
1,206
n.a.
Cash flow from operating activities in continuing operations
(179)
1,186
n.a.
(1)
For a reconciliation of non-GAAP measures see “
Supplemental Reconciliations and Definitions
” on page 35.
(2)
Constant currency (not adjusted for portfolio changes).
(3)
EPS growth rates are computed using unrounded amounts.
(4)
Cash flow from operating activities includes both continuing and discontinued operations.
4
Q2 2022
FINANCIAL
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Local
Comparable
Orders
ABB Group
8,807
7,989
10%
17%
20%
Electrification
4,037
3,693
9%
16%
16%
Motion
2,079
1,947
7%
14%
26%
Process Automation
1,819
1,555
17%
25%
25%
Robotics & Discrete Automation
1,109
968
15%
24%
23%
Corporate and Other
(incl. intersegment eliminations)
(237)
(174)
Order backlog (end June)
ABB Group
19,477
15,424
26%
36%
37%
Electrification
6,706
5,029
33%
42%
42%
Motion
4,568
3,558
28%
40%
43%
Process Automation
6,170
5,980
3%
12%
12%
Robotics & Discrete Automation
2,728
1,501
82%
98%
97%
Corporate and Other
(incl. intersegment eliminations)
(695)
(644)
Revenues
ABB Group
7,251
7,449
-3%
4%
6%
Electrification
3,531
3,406
4%
10%
10%
Motion
1,626
1,850
-12%
-6%
3%
Process Automation
1,529
1,540
-1%
7%
7%
Robotics & Discrete Automation
732
832
-12%
-5%
-5%
Corporate and Other
(incl. intersegment eliminations)
(167)
(179)
Income from operations
ABB Group
587
1,094
Electrification
465
549
Motion
231
303
Process Automation
175
190
Robotics & Discrete Automation
43
74
Corporate and Other
(incl. intersegment eliminations)
(327)
(22)
Income from operations %
ABB Group
8.1%
14.7%
Electrification
13.2%
16.1%
Motion
14.2%
16.4%
Process Automation
11.4%
12.3%
Robotics & Discrete Automation
5.9%
8.9%
Operational EBITA
ABB Group
1,136
1,113
2%
9%
Electrification
599
592
1%
9%
Motion
266
325
-18%
-13%
Process Automation
224
192
17%
28%
Robotics & Discrete Automation
60
96
-38%
-29%
Corporate and Other
(incl. intersegment eliminations)
(13)
(92)
Operational EBITA %
ABB Group
15.5%
15.0%
Electrification
16.9%
17.4%
Motion
16.4%
17.7%
Process Automation
14.3%
12.5%
Robotics & Discrete Automation
8.2%
11.5%
Cash flow from operating activities
ABB Group
382
663
Electrification
393
511
Motion
241
223
Process Automation
193
228
Robotics & Discrete Automation
56
78
Corporate and Other
(incl. intersegment eliminations)
(498)
(377)
Discontinued operations
(3)
–
5
Q2 2022
FINANCIAL
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
H1 2022
H1 2021
US$
Local
Comparable
Orders
ABB Group
18,180
15,745
15%
21%
24%
Electrification
8,434
7,224
17%
22%
22%
Motion
4,281
3,864
11%
17%
29%
Process Automation
3,511
3,211
9%
15%
15%
Robotics & Discrete Automation
2,417
1,809
34%
42%
40%
Corporate and Other
(incl. intersegment eliminations)
(463)
(363)
Order backlog (end June)
ABB Group
19,477
15,424
26%
36%
37%
Electrification
6,706
5,029
33%
42%
42%
Motion
4,568
3,558
28%
40%
43%
Process Automation
6,170
5,980
3%
12%
12%
Robotics & Discrete Automation
2,728
1,501
82%
98%
97%
Corporate and Other
(incl. intersegment eliminations)
(695)
(644)
Revenues
ABB Group
14,216
14,350
-1%
5%
7%
Electrification
6,858
6,546
5%
10%
10%
Motion
3,198
3,517
-9%
-4%
6%
Process Automation
3,035
2,947
3%
9%
9%
Robotics & Discrete Automation
1,462
1,685
-13%
-8%
-9%
Corporate and Other
(incl. intersegment eliminations)
(337)
(345)
Income from operations
ABB Group
1,444
1,891
Electrification
971
989
Motion
485
568
Process Automation
326
337
Robotics & Discrete Automation
65
156
Corporate and Other
(incl. intersegment eliminations)
(403)
(159)
Income from operations %
ABB Group
10.2%
13.2%
Electrification
14.2%
15.1%
Motion
15.2%
16.2%
Process Automation
10.7%
11.4%
Robotics & Discrete Automation
4.4%
9.3%
Operational EBITA
ABB Group
2,133
2,072
3%
9%
Electrification
1,109
1,103
1%
7%
Motion
540
614
-12%
-8%
Process Automation
420
347
21%
29%
Robotics & Discrete Automation
109
201
-46%
-40%
Corporate and Other
(incl. intersegment eliminations)
(45)
(193)
Operational EBITA %
ABB Group
14.9%
14.4%
Electrification
16.1%
16.8%
Motion
16.9%
17.4%
Process Automation
13.7%
11.8%
Robotics & Discrete Automation
7.4%
11.9%
Cash flow from operating activities
ABB Group
(191)
1,206
Electrification
432
830
Motion
239
547
Process Automation
253
461
Robotics & Discrete Automation
27
189
Corporate and Other
(incl. intersegment eliminations)
(1,130)
(841)
Discontinued operations
(12)
20
6
Q2 2022
FINANCIAL
INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Revenues
7,251
7,449
3,531
3,406
1,626
1,850
1,529
1,540
732
832
Foreign exchange/commodity timing
differences in total revenues
70
(13)
22
2
(4)
(11)
32
(4)
1
2
Operational revenues
7,321
7,436
3,553
3,408
1,622
1,839
1,561
1,536
733
834
Income from operations
587
1,094
465
549
231
303
175
190
43
74
Acquisition-related amortization
59
64
30
29
7
13
1
1
19
21
Restructuring, related and
implementation costs
(1)
264
18
8
4
–
4
–
10
2
–
Changes in obligations related to
divested businesses
(3)
4
–
–
–
–
–
–
–
–
Changes in pre-acquisition estimates
(2)
2
–
2
–
–
–
–
(2)
–
Gains and losses from sale of businesses
4
(12)
–
1
4
(1)
–
(13)
–
–
Acquisition- and divestment-related
expenses and integration costs
50
20
10
12
3
4
36
3
2
–
Other income/expense relating to the
Power Grids joint venture
2
2
–
–
–
–
–
–
–
–
Certain other non-operational items
65
(86)
22
(9)
–
1
–
2
1
–
Foreign exchange/commodity timing
differences in income from operations
110
7
64
4
21
1
12
(1)
(5)
1
Operational EBITA
1,136
1,113
599
592
266
325
224
192
60
96
Operational EBITA margin (%)
15.5%
15.0%
16.9%
17.4%
16.4%
17.7%
14.3%
12.5%
8.2%
11.5%
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
Revenues
14,216
14,350
6,858
6,546
3,198
3,517
3,035
2,947
1,462
1,685
Foreign exchange/commodity timing
differences in total revenues
67
20
12
12
(1)
8
31
1
6
(1)
Operational revenues
14,283
14,370
6,870
6,558
3,197
3,525
3,066
2,948
1,468
1,684
Income from operations
1,444
1,891
971
989
485
568
326
337
65
156
Acquisition-related amortization
119
129
61
58
15
26
2
2
40
41
Restructuring, related and
implementation costs
(1)
280
53
10
21
8
5
5
13
3
5
Changes in obligations related to
divested businesses
(17)
6
–
–
–
–
–
–
–
–
Changes in pre-acquisition estimates
(1)
8
1
8
–
–
–
–
(2)
–
Gains and losses from sale of businesses
4
(9)
–
4
4
(1)
–
(13)
–
–
Acquisition- and divestment-related
expenses and integration costs
109
30
29
18
8
7
69
4
3
–
Other income/expense relating to the
Power Grids joint venture
37
19
–
–
–
–
–
–
–
–
Certain other non-operational items
63
(74)
(8)
(15)
–
1
–
2
1
–
Foreign exchange/commodity timing
differences in income from operations
95
19
45
20
20
8
18
2
(1)
(1)
Operational EBITA
2,133
2,072
1,109
1,103
540
614
420
347
109
201
Operational EBITA margin (%)
14.9%
14.4%
16.1%
16.8%
16.9%
17.4%
13.7%
11.8%
7.4%
11.9%
(1)
Includes impairment of certain assets.
7
Q2 2022
FINANCIAL
INFORMATION
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Depreciation
136
148
67
68
26
32
16
19
15
15
Amortization
71
82
35
39
9
15
3
3
20
21
including total acquisition-related amortization of:
59
64
30
29
7
13
1
1
19
21
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
Depreciation
272
292
134
132
53
64
34
38
30
28
Amortization
145
165
72
76
18
29
6
6
41
42
including total acquisition-related amortization of:
119
129
61
58
15
26
2
2
40
41
Orders received and revenues by region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q2 22
Q2 21
US$
Local
parable
Q2 22
Q2 21
US$
Local
parable
Europe
2,958
2,954
0%
15%
15%
2,508
2,697
-7%
7%
7%
The Americas
3,050
2,473
23%
24%
33%
2,397
2,284
5%
6%
14%
of which United States
2,234
1,846
21%
21%
32%
1,746
1,676
4%
4%
14%
Asia, Middle East and Africa
2,799
2,562
9%
15%
15%
2,346
2,468
-5%
0%
0%
of which China
1,409
1,322
7%
9%
10%
1,163
1,313
-11%
-9%
-9%
ABB Group
8,807
7,989
10%
17%
20%
7,251
7,449
-3%
4%
6%
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
H1 22
H1 21
US$
Local
parable
H1 22
H1 21
US$
Local
parable
Europe
6,492
6,056
7%
19%
19%
5,026
5,248
-4%
7%
7%
The Americas
5,947
4,720
26%
26%
36%
4,566
4,327
6%
7%
15%
of which United States
4,459
3,525
26%
27%
39%
3,328
3,208
4%
4%
14%
Asia, Middle East and Africa
5,741
4,969
16%
19%
19%
4,624
4,775
-3%
0%
0%
of which China
2,946
2,521
17%
17%
18%
2,263
2,489
-9%
-9%
-8%
ABB Group
18,180
15,745
15%
21%
24%
14,216
14,350
-1%
5%
7%
8
Q2 2022
FINANCIAL
INFORMATION
—
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Six months ended
Three months ended
($ in millions, except per share data in $)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Sales of products
11,762
11,874
6,013
6,167
Sales of services and other
2,454
2,476
1,238
1,282
Total revenues
14,216
14,350
7,251
7,449
Cost of sales of products
(8,222)
(8,108)
(4,254)
(4,184)
Cost of services and other
(1,423)
(1,466)
(707)
(757)
Total cost of sales
(9,645)
(9,574)
(4,961)
(4,941)
Gross profit
4,571
4,776
2,290
2,508
Selling, general and administrative expenses
(2,556)
(2,577)
(1,317)
(1,314)
Non-order related research and development expenses
(572)
(601)
(295)
(308)
Other income (expense), net
1
293
(91)
208
Income from operations
1,444
1,891
587
1,094
Interest and dividend income
33
26
20
15
Interest and other finance expense
(62)
(91)
(40)
(36)
Non-operational pension (cost) credit
68
88
32
38
Income from continuing operations before taxes
1,483
1,914
599
1,111
Income tax expense
(434)
(574)
(193)
(322)
Income from continuing operations, net of
tax
1,049
1,340
406
789
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
1,029
1,304
397
781
Net income attributable to noncontrolling interests
(46)
(50)
(18)
(29)
Net income attributable to ABB
983
1,254
379
752
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,003
1,290
388
760
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
983
1,254
379
752
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.64
0.20
0.38
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.63
0.20
0.37
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
Weighted-average number of shares outstanding
(in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
1,922
2,015
1,909
2,016
Diluted earnings per share attributable to ABB shareholders
1,935
2,033
1,918
2,031
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
9
Q2 2022
FINANCIAL
INFORMATION
—
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Total comprehensive income, net of
tax
708
1,206
131
881
Total comprehensive income
attributable to noncontrolling interests, net of tax
(26)
(55)
(3)
(31)
Total comprehensive income attributable
to ABB shareholders, net of tax
682
1,151
128
850
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
10
Q2 2022
FINANCIAL
INFORMATION
—
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Jun. 30, 2022
Dec. 31, 2021
Cash and equivalents
2,412
4,159
Restricted cash
23
30
Marketable securities and short-term investments
945
1,170
Receivables, net
6,960
6,551
Contract assets
965
990
Inventories, net
5,595
4,880
Prepaid expenses
262
206
Other current assets
474
573
Current assets held for sale and in discontinued operations
122
136
Total current assets
17,758
18,695
Restricted cash, non-current
301
300
Property, plant and equipment, net
3,885
4,045
Operating lease right-of-use assets
783
895
Investments in equity-accounted companies
1,617
1,670
Prepaid pension and other employee benefits
908
892
Intangible assets, net
1,474
1,561
Goodwill
10,452
10,482
Deferred taxes
1,272
1,177
Other non-current assets
448
543
Total assets
38,898
40,260
Accounts payable, trade
4,805
4,921
Contract liabilities
2,141
1,894
Short-term debt and current maturities of long-term debt
2,830
1,384
Current operating leases
222
230
Provisions for warranties
972
1,005
Other provisions
1,144
1,386
Other current liabilities
4,277
4,367
Current liabilities held for sale and in discontinued operations
306
381
Total current liabilities
16,697
15,568
Long-term debt
5,086
4,177
Non-current operating leases
586
689
Pension and other employee benefits
925
1,025
Deferred taxes
696
685
Other non-current liabilities
2,214
2,116
Non-current liabilities held for sale and in discontinued operations
28
43
Total liabilities
26,232
24,303
Commitments and contingencies
Redeemable noncontrolling interest
80
–
Stockholders’ equity:
Common stock, CHF 0.12 par value
(1,965 million and 2,053 million shares issued at June 30,
2022, and December 31, 2021, respectively)
171
178
Additional paid-in capital
12
22
Retained earnings
18,767
22,477
Accumulated other comprehensive loss
(4,389)
(4,088)
Treasury stock, at cost
(72 million and 95 million shares at June 30, 2022, and December
31, 2021, respectively)
(2,290)
(3,010)
Total ABB stockholders’ equity
12,271
15,579
Noncontrolling interests
315
378
Total stockholders’ equity
12,586
15,957
Total liabilities and stockholders’
equity
38,898
40,260
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
11
Q2 2022
FINANCIAL
INFORMATION
—
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Operating activities:
Net income
1,029
1,304
397
781
Loss from discontinued operations, net of tax
20
36
9
8
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
417
457
207
230
Changes in fair values of investments
(15)
(113)
9
(103)
Pension and other employee benefits
(83)
(94)
(37)
(44)
Deferred taxes
(148)
109
(32)
50
Loss from equity-accounted companies
62
57
14
22
Net loss (gain) from derivatives and foreign exchange
77
44
105
24
Net loss (gain) from sale of property,
plant and equipment
(55)
(15)
(23)
(4)
Other
67
29
31
9
Changes in operating assets and liabilities:
Trade receivables, net
(621)
(414)
(304)
(412)
Contract assets and liabilities
252
(147)
145
(57)
Inventories, net
(1,083)
(293)
(541)
(125)
Accounts payable, trade
80
309
73
267
Accrued liabilities
(255)
53
135
129
Provisions, net
126
(60)
179
(61)
Income taxes payable and receivable
(52)
(56)
(66)
(6)
Other assets and liabilities, net
3
(20)
84
(45)
Net cash provided by (used in) operating activities – continuing
operations
(179)
1,186
385
663
Net cash provided by (used in) operating activities – discontinued
operations
(12)
20
(3)
–
Net cash provided by (used in) operating activities
(191)
1,206
382
663
Investing activities:
Purchases of investments
(256)
(347)
(128)
(38)
Purchases of property, plant and
equipment and intangible assets
(338)
(293)
(151)
(151)
Acquisition of businesses (net of cash acquired)
and increases in cost-
and equity-accounted companies
(179)
(28)
(34)
(24)
Proceeds from sales of investments
506
1,321
201
930
Proceeds from maturity of investments
–
80
–
–
Proceeds from sales of property,
plant and equipment
66
23
31
3
Proceeds from sales of businesses (net of transaction costs
and cash disposed) and cost-
and equity-accounted companies
(13)
47
(13)
49
Net cash from settlement of foreign currency derivatives
56
(72)
(10)
(11)
Other investing activities
(8)
(14)
(18)
(6)
Net cash provided by (used in) investing activities – continuing
operations
(166)
717
(122)
752
Net cash used in investing activities – discontinued
operations
(91)
(70)
(70)
(26)
Net cash provided by (used in) investing activities
(257)
647
(192)
726
Financing activities:
Net changes in debt with original maturities of 90 days or less
1,191
274
(114)
187
Increase in debt
3,181
1,004
639
13
Repayment of debt
(1,483)
(750)
(1,442)
(703)
Delivery of shares
370
766
–
6
Purchase of treasury stock
(2,661)
(1,971)
(1,100)
(585)
Dividends paid
(1,698)
(1,726)
(809)
(882)
Dividends paid to noncontrolling shareholders
(76)
(92)
(75)
(91)
Other financing activities
(53)
6
(19)
42
Net cash used in financing activities – continuing
operations
(1,229)
(2,489)
(2,920)
(2,013)
Net cash provided by financing activities – discontinued
operations
–
–
–
–
Net cash used in financing activities
(1,229)
(2,489)
(2,920)
(2,013)
Effects of exchange rate changes on cash and equivalents
and restricted cash
(76)
(34)
(80)
17
Net change in cash and equivalents and restricted cash
(1,753)
(670)
(2,810)
(607)
Cash and equivalents and restricted cash, beginning of period
4,489
3,901
5,546
3,838
Cash and equivalents and restricted cash, end of period
2,736
3,231
2,736
3,231
Supplementary disclosure of cash flow information:
Interest paid
36
58
27
46
Income taxes paid
638
543
298
287
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
12
Q2 2022
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, 2021
188
83
22,946
(4,002)
(3,530)
15,685
314
15,999
Comprehensive income:
Net income
1,254
1,254
50
1,304
Foreign currency translation
adjustments, net of tax of $2
(166)
(166)
5
(161)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(3)
(8)
(8)
(8)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $(3)
71
71
71
Change in derivative instruments
and hedges, net of tax of $0
–
–
–
Total comprehensive income
1,151
55
1,206
Changes in noncontrolling interests
(37)
(20)
(57)
57
–
Dividends to
noncontrolling shareholders
–
(92)
(92)
Dividends to shareholders
(1,730)
(1,730)
(1,730)
Cancellation of treasury shares
(10)
(17)
(3,130)
3,157
–
–
Share-based payment arrangements
37
37
37
Purchase of treasury stock
(1,924)
(1,924)
(1,924)
Delivery of shares
(58)
(136)
960
766
766
Other
2
2
2
Balance at June 30, 2021
178
10
19,185
(4,104)
(1,337)
13,932
334
14,266
Balance at January 1, 2022
178
22
22,477
(4,088)
(3,010)
15,579
378
15,957
Comprehensive income:
Net income
983
983
48
1,031
Foreign currency translation
adjustments, net of tax of $1
(392)
(392)
(22)
(414)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(4)
(17)
(17)
(17)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $37
106
106
106
Change in derivative instruments
and hedges, net of tax of $2
2
2
2
Total comprehensive income
682
26
708
Changes in noncontrolling interests
(2)
(2)
(13)
(15)
Dividends to
noncontrolling shareholders
–
(74)
(74)
Dividends to shareholders
(1,700)
(1,700)
(1,700)
Cancellation of treasury shares
(8)
(4)
(2,864)
2,876
–
–
Share-based payment arrangements
28
28
28
Purchase of treasury stock
(2,693)
(2,693)
(2,693)
Delivery of shares
(38)
(130)
538
370
370
Other
6
6
6
Balance at June 30, 2022
171
12
18,767
(4,389)
(2,290)
12,271
315
12,586
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
13
Q2 2022
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 leading global technology
company, connecting software
to its electrification, robotics,
automation and motion portfolio to drive performance to new
levels.
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, 2021.
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:
●
growth rates, discount rates and other assumptions used to determine
impairment of long-lived assets and in testing goodwill
for impairment,
●
estimates to determine valuation allowances for deferred tax assets
and amounts recorded for unrecognized tax benefits,
●
assumptions used in determining inventory obsolescence and net
realizable value,
●
estimates and assumptions used in determining the initial fair value
of retained noncontrolling interest and certain obligations
in connection with
divestments,
●
estimates and assumptions used in determining the fair values
of assets and liabilities assumed in business
combinations,
●
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,
●
estimates used to record expected costs for employee severance
in connection with restructuring programs,
●
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,
●
assumptions used in the calculation of pension and postretirement
benefits and the fair value of pension plan assets, and
●
assumptions and projections, principally related to future material,
labor and project-related overhead costs, used in determining the
percentage-of-
completion on projects, as well as the amount of variable consideration
the Company expects to be entitled to.
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.
14
Q2 2022
FINANCIAL
INFORMATION
─
Note 2
Recent accounting pronouncements
Applicable for current periods
Business Combinations — Accounting for contract
assets and contract liabilities from contracts with customers
In January 2022, the Company early adopted a new accounting
standard update, which provides guidance on the accounting for
revenue contracts acquired in a
business combination. The update requires contract assets
and liabilities acquired in a business combination to be recognized
and measured at the date of
acquisition in accordance with the principles for recognizing revenues
from contracts with customers.
The Company has applied this accounting standard update
prospectively starting with acquisitions closing after January 1, 2022.
Disclosures about government assistance
In January 2022, the Company adopted a new accounting standard
update,
which requires entities to disclose certain types of government
assistance. Under the
update, the Company is required to annually disclose (i) the
type of the assistance received, including any significant
terms and conditions, (ii) its related
accounting policy, and (iii) the effect
such transactions have on its financial statements. The Company
has applied this accounting standard update prospe
ctively.
This update does not have a significant impact on the Company’s
consolidated financial statements.
Applicable for future periods
Facilitation of the effects of reference rate reform on financial
reporting
In March 2020, an accounting standard update was issued
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. This update, along with clarifications outlined
in a subsequent update issued in January
2021, can be adopted and applied no later than December 31,
2022, with early adoption permitted. The Company does
not expect this update to have a significant
impact on its consolidated financial statements.
─
Note 3
Discontinued operations and assets held for sale
Divestment of the Power Grids business
On July 1, 2020, the Company completed the sale of 80.1 percent
of its Power Grids business to Hitachi Ltd (Hitachi).
The transaction was executed through the
sale of 80.1 percent of the shares of Hitachi Energy Ltd, formerly
Hitachi ABB Power Grids Ltd (“Hitachi Energy”).
Cash consideration received at the closing date
was $9,241 million net of cash disposed.
Further, for accounting purposes,
the 19.9 percent ownership interest retained by the Company
is deemed to have been
both divested and reacquired at its fair value on July 1, 2020 (see
Note 4).
At the date of the divestment, the Company recorded liabilities in discontinued
operations for estimated future costs and other cash payments
of $487 million for
various contractual items relating to the sale of the business
including required future cost reimbursements payable
to Hitachi Energy, costs to be
incurred by the
Company for the direct benefit of Hitachi Energy,
and an amount due to Hitachi Ltd in connection
with the expected purchase price finalization of the closing
debt
and working capital balances. From the date of the disposal
through June 30, 2022,
$438 million of these liabilities had been paid and
are reported as reductions in
the cash consideration received, of which $74 million and $53
million was paid during the six and three months ended June 30,
2022,
respectively. In the six and
three months ended June 30, 2021, total cash payments made
in connection with these liabilities amounted to $70 million
and $26 million,
respectively. At
June 30, 2022,
the remaining amount recorded was $64 million.
During the second quarter of 2022,
the Company completed the legal title transfer
of the remaining entities of Power Grids business to Hitachi
Energy, resulting
in
the release of $12 million held in escrow and included in Current
Restricted Cash at December 31, 2021.
Upon closing of the sale, the Company entered into various
transition services agreements (TSAs). Pursuant to these
TSAs, the Company and Hitachi Energy
provide to each other, on an interim, transitional
basis, various services. The services
provided by the Company primarily include finance, information technology,
human resources and certain other administrative services.
Under the current terms, the TSAs will continue for up
to 3 years, and can only be extended on an
exceptional basis for business-critical services for an additional period which
is reasonably necessary to avoid a material adverse
impact on the business. In the
six and three months ended June 30, 2022, the Company has
recognized within its continuing operations, general
and administrative expenses incurred to perform
the TSA, offset by $76 million and $38 million, respectively,
in TSA-related income for such services
that is reported in Other income
(expense). In the six and
three months ended June 30, 2021, Other income (expense)
included $88 million and $41 million, respectively,
of TSA-related income for such services.
Discontinued operations
As a result of the sale of the Power Grids business, substantially
all assets and liabilities related to Power Grids have
been sold. As this divestment represented
a
strategic shift that would have a major effect on the Company’s
operations and financial results, the
results of this business were presented as discontinued
operations and the assets and liabilities were presented as held
for sale and in discontinued operations. After the
date of sale, certain business contracts in the
Power Grids business continue to be executed by subsidiaries
of the Company for the benefit/risk of Hitachi Energy
.
Assets and liabilities relating to, as well as
the
net financial results of, these contracts will continue to be
included in discontinued operations until they have been completed
or otherwise transferred to Hitachi
Energy.
15
Q2 2022
FINANCIAL
INFORMATION
Amounts recorded in discontinued operations were as follows:
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Total revenues
–
–
–
–
Total cost of sales
–
–
–
–
Gross profit
–
–
–
–
Expenses
(11)
(9)
(5)
(5)
Change to net gain recognized on sale of the Power Grids business
(9)
(27)
(4)
(3)
Loss from operations
(20)
(36)
(9)
(8)
Net interest income (expense) and other finance expense
–
–
–
–
Non-operational pension (cost) credit
–
–
–
–
Loss from discontinued operations before taxes
(20)
(36)
(9)
(8)
Income tax
–
–
–
–
Loss from discontinued operations, net of
tax
(20)
(36)
(9)
(8)
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. Changes to these retained obligations
are also included in Loss from discontinued operations,
net of tax, above.
The major components of assets and liabilities held for sale and
in discontinued operations in the Company’s Consolidated
Balance Sheets are summarized as
follows:
($ in millions)
Jun. 30, 2022
(1)
Dec. 31, 2021
(1)
Receivables, net
110
131
Other current assets
12
5
Current assets held for sale and in discontinued
operations
122
136
Accounts payable, trade
52
71
Other liabilities
254
310
Current liabilities held for sale and in discontinued
operations
306
381
Other non-current liabilities
28
43
Non-current liabilities held for sale and in discontinued
operations
28
43
(1)
At June 30, 2022, and December 31, 2021, the balances reported as held for sale and in discontinued operations pertain to Power Grids activities and other obligations which will
remain with the Company until such time as the obligation is settled or the activities are fully wound down.
─
Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Six months ended June 30,
Three months ended June 30,
($ in millions, except number of acquired businesses)
2022
2021
2022
2021
Purchase price for acquisitions (net of cash acquired)
(1)
138
26
–
26
Aggregate excess of purchase price
over fair value of net assets acquired
(2)
191
11
–
11
Number of acquired businesses
1
1
–
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 six
months ended June 30, 2022, relate primarily to the acquisition of
InCharge Energy, Inc.
(In-Charge).
Acquisitions of controlling interests have been accounted for
under the acquisition method and have been included in
the Company’s Consolidated Financial
Statements since the date of acquisition.
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.
16
Q2 2022
FINANCIAL
INFORMATION
On January 26, 2022, the Company increased its ownership in
In-Charge to a 60 percent controlling interest through a stock
purchase agreement. The resulting
cash outflows for the Company amounted to $135 million (net
of cash acquired of $4 million). The acquisition expands
the market presence of the E-mobility
Division, 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) in the six months ended June
30, 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.
There were no significant business acquisitions for the six months
ended June 30, 2021.
Investments in equity-accounted companies
In connection with the divestment of its Power Grids business
to Hitachi (see Note 3), the Company retained a 19.
9
percent interest in the business and obtained
an option, exercisable with three-months’ notice commencing
April 2023, granting it the right to require Hitachi to purchase
this investment at fair value, subject to
a minimum floor price equivalent to a 10 percent discount compared
to the price paid for the initial 80.1 percent. The
Company has concluded that based on its
continuing involvement with the Power Grids business, including
membership in its governing board of directors,
it has significant influence over Hitachi Energy.
As
a result, the investment (including the value of the option)
is accounted for using the equity method.
At the date of the divestment of the Power Grids business,
the fair value of Hitachi Energy exceeded the book
value of the underlying net assets.
At June 30, 2022,
and December 31, 2021,
the reported value of the investment in Hitachi
Energy includes $1,428 million and $1,474 million, respectively,
for the Company’s
19.9 percent share of this basis difference. The Company
amortizes its share of these differences
over the estimated remaining
useful lives of the underlying
assets that gave rise to this difference, recording the amortizati
on, net of related deferred tax benefit, as a reduction of
income from equity-accounted companies.
As of June 30, 2022, the Company determined that no impairment
of its equity-accounted investments existed.
The carrying value of the Company’s investments in equity-accounted
companies and respective percentage of ownership
is as follows:
Ownership as of
Carrying value at
($ in millions, except ownership share in %)
June 30, 2022
June 30, 2022
December 31, 2021
Hitachi Energy Ltd
19.9%
1,551
1,609
Others
66
61
Total
1,617
1,670
In the six and three months ended June 30, 2022 and 2021
,
the Company recorded its share of the earnings of
investees accounted for under the equity method of
accounting in Other income (expense), net, as follows:
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Income (loss) from equity-accounted companies, net of taxes
(10)
4
1
8
Basis difference amortization (net of deferred income tax benefit)
(52)
(61)
(15)
(30)
Loss from equity-accounted companies
(62)
(57)
(14)
(22)
17
Q2 2022
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:
June 30, 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
1,752
–
–
1,752
1,752
–
Time deposits
1,074
–
–
1,074
984
90
Equity securities
411
5
–
416
–
416
3,237
5
–
3,242
2,736
506
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
270
2
(12)
260
–
260
Other government obligations
122
–
–
122
–
122
Corporate
63
–
(6)
57
–
57
455
2
(18)
439
–
439
Total
3,692
7
(18)
3,681
2,736
945
Of which:
Restricted cash, current
23
Restricted cash, non-current
301
December 31, 2021
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
2,752
2,752
2,752
Time deposits
2,037
2,037
1,737
300
Equity securities
569
18
587
587
5,358
18
–
5,376
4,489
887
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
203
7
(1)
209
209
Corporate
74
1
(1)
74
74
277
8
(2)
283
–
283
Total
5,635
26
(2)
5,659
4,489
1,170
Of which:
Restricted cash, current
30
Restricted cash, non-current
300
18
Q2 2022
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)
June 30, 2022
December 31, 2021
June 30, 2021
Foreign exchange contracts
14,470
11,276
9,309
Embedded foreign exchange derivatives
850
815
893
Cross-currency interest rate swaps
833
906
951
Interest rate contracts
3,049
3,541
3,553
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
June 30, 2022
December 31, 2021
June 30, 2021
Copper swaps
metric tonnes
42,961
36,017
37,340
Silver swaps
ounces
2,844,285
2,842,533
2,306,804
Aluminum swaps
metric tonnes
7,350
7,125
7,325
Equity derivatives
At June 30, 2022, December 31, 2021, and June 30, 2021, the
Company held 9 million, 9 million and 15 million cash
-settled call options indexed to ABB Ltd
shares (conversion ratio 5:1) with a total fair value of $12
million, $29 million and $34 million, respectively.
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange
contracts to manage the foreign exchange risk
of its operations, commodity swaps to
manage its commodity risks and cash-settled call options to
hedge its WAR liabilities. The Company applies cash
flow hedge accounting in only limited cases. In
these cases, the effective portion of the changes in their
fair value is recorded in “Accumulated other comprehensive
loss” and subsequently reclassified into
earnings in the same line item and in the same period as
the underlying hedged transaction affects
earnings. For the six and three months ended June 30,
2022
and 2021, there were no significant amounts recorded for
cash flow hedge accounting activities.
Fair value hedges
To reduce its interest
rate exposure arising primarily from its debt issuance activities,
the Company uses interest rate swaps
and cross-currency interest rate
swaps. Where such instruments are designated as fair value hedges,
the changes in the fair value of these instruments,
as well as the changes in the fair value of
the risk component of the underlying debt being hedged, are recorded
as offsetting gains and losses in “Interest
and other finance expense”.
19
Q2 2022
FINANCIAL
INFORMATION
The effect of derivative instruments, designated and qualifying
as fair value hedges, on the Consolidated Income
Statements was as follows:
Six months ended
June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Gains (losses) recognized in Interest and other finance expense:
Interest rate contracts
Designated as fair value hedges
(55)
(27)
(26)
(13)
Hedged item
56
28
27
13
Cross-currency interest rate swaps
Designated as fair value hedges
(94)
(25)
(49)
(2)
Hedged item
90
24
46
2
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
Six months ended June 30,
Three months ended June 30,
($ in millions)
Location
2022
2021
2022
2021
Foreign exchange contracts
Total revenues
(119)
(10)
(123)
50
Total cost of sales
34
(24)
40
(20)
SG&A expenses
(1)
23
(1)
15
(8)
Non-order related research
and development
1
(1)
–
–
Interest and other finance expense
(54)
(119)
(76)
(13)
Embedded foreign exchange
Total revenues
5
(13)
7
1
contracts
Total cost of sales
(2)
(2)
(3)
(1)
Commodity contracts
Total cost of sales
(51)
63
(86)
27
Other
Interest and other finance expense
3
1
2
1
Total
(160)
(106)
(224)
37
(1)
SG&A expenses represent
“Selling, general and
administrative expenses”.
The fair values of derivatives included in the Consolidated Balance
Sheets were as follows:
June 30, 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
5
Interest rate contracts
2
–
4
24
Cross-currency interest rate swaps
–
–
–
268
Cash-settled call options
12
–
–
–
Total
14
–
8
297
Derivatives not designated as hedging instruments:
Foreign exchange contracts
82
21
251
12
Commodity contracts
3
–
56
–
Interest rate contracts
4
–
5
–
Embedded foreign exchange derivatives
19
3
14
9
Total
108
24
326
21
Total fair value
122
24
334
318
20
Q2 2022
FINANCIAL
INFORMATION
December 31, 2021
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
–
–
3
5
Interest rate contracts
9
20
–
–
Cross currency swaps
–
–
–
109
Cash-settled call options
29
–
–
–
Total
38
20
3
114
Derivatives not designated as hedging instruments:
Foreign exchange contracts
108
14
107
7
Commodity contracts
19
–
5
–
Interest rate contracts
1
–
2
–
Embedded foreign exchange derivatives
10
7
16
10
Total
138
21
130
17
Total fair value
176
41
133
131
Close-out netting agreements provide for the termination, valuation
and net settlement of some or all outstanding transactions
between two counterparties on the
occurrence of one or more pre-defined trigger events.
Although the Company is party to close-out netting agreements
with most derivative counterparties, the fair values in the
tables above and in the Consolidated
Balance Sheets at June 30, 2022, and December 31, 2021, have
been presented on a gross basis.
The Company’s netting agreements and other similar arrangements
allow net settlements under certain conditions.
At June 30, 2022, and December 31, 2021,
information related to these offsetting arrangements was as
follows:
($ in millions)
June 30, 2022
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
assets
in case of default
received
received
exposure
Derivatives
124
(90)
–
–
34
Total
124
(90)
–
–
34
($ in millions)
June 30, 2022
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
629
(90)
–
–
539
Total
629
(90)
–
–
539
($ in millions)
December 31, 2021
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
200
(104)
–
–
96
Total
200
(104)
–
–
96
($ in millions)
December 31, 2021
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
238
(104)
–
–
134
Total
238
(104)
–
–
134
21
Q2 2022
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 valuation
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:
June 30, 2022
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
416
416
Debt securities—U.S. government obligations
260
260
Debt securities—Other government obligations
122
122
Debt securities—Corporate
57
57
Derivative assets—current in “Other current assets”
122
122
Derivative assets—non-current in “Other non-current assets”
24
24
Total
260
741
–
1,001
Liabilities
Derivative liabilities—current in “Other current liabilities”
334
334
Derivative liabilities—non-current in “Other non-current liabilities”
318
318
Total
–
652
–
652
22
Q2 2022
FINANCIAL
INFORMATION
December 31, 2021
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
587
587
Debt securities—U.S. government obligations
209
209
Debt securities—Corporate
74
74
Derivative assets—current in “Other current assets”
176
176
Derivative assets—non-current in “Other non-current assets”
41
41
Total
209
878
–
1,087
Liabilities
Derivative liabilities—current in “Other current liabilities”
133
133
Derivative liabilities—non-current in “Other non-current liabilities”
131
131
Total
–
264
–
264
The Company uses the following methods and assumptions in
estimating fair values of financial assets
and liabilities measured at fair value on a recurring basis:
●
Securities in “Marketable securities and short-term investments”
and “Other non-current assets”:
If quoted market prices in active markets for identical
assets are available, these are considered Level 1 inputs; however,
when markets are not active, these inputs
are considered Level 2. If such quoted
market prices are not available, fair value is determined using
market prices for similar assets or present value techniques,
applying an appropriate risk-
free interest rate adjusted for non-performance risk. The inputs
used in present value techniques are observable and fall
into the Level 2 category.
●
Derivatives
: The fair values of derivative instruments are determined using
quoted prices of identical instruments from an
active market, if available
(Level 1 inputs). If quoted prices are not available, price quotes
for similar instruments, appropriately adjusted, or present
value techniques, based on
available market data, or option pricing models are used. Cash-settled
call options hedging the Company’s WAR
liability are valued based on bid prices
of the equivalent listed warrant. The fair values obtained using price
quotes for similar instruments or valuation techniques
represent a Level 2 input
unless significant unobservable inputs are used.
Non-recurring fair value measures
The Company elects to record private equity investments without readily
determinable fair values at cost, less impairment, adjusted
by observable price changes.
The Company reassesses at each reporting period whether these
investments continue to qualify for this treatment. During the
six months ended June 30, 2022
and 2021,
the Company recognized, in Other income (expense), net
fair value gains of $30 million and $109 million, respectively,
related to certain of its private
equity investments based on observable market price changes
for an identical or similar investment of the same issuer
of which net gains of $1 million and
$99 million were recognized in the three months ended June
30, 2022 and 2021, respectively.
The fair values were determined using level 2 inputs.
The carrying
values of investments, carried at fair value on a non-recurring basis,
at June 30, 2022, and December 31, 2021, totaled
$40 million and $146 million, respectively.
Apart from the transactions above, there were no additional significant
non-recurring fair value measurements during the
six months ended June 30, 2022 and
2021.
Disclosure about financial instruments carried on a cost
basis
The fair values of financial instruments carried on a cost
basis were as follows:
June 30, 2022
($ 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
1,428
1,428
1,428
Time deposits
984
984
984
Restricted cash
23
23
23
Marketable securities and short-term investments
(excluding securities):
Time deposits
90
90
90
Restricted cash, non-current
301
301
301
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
2,798
769
2,029
2,798
Long-term debt (excluding finance lease obligations)
4,913
4,797
39
4,836
23
Q2 2022
FINANCIAL
INFORMATION
December 31, 2021
($ 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
2,422
2,422
2,422
Time deposits
1,737
1,737
1,737
Restricted cash
30
30
30
Marketable securities and short-term investments
(excluding securities):
Time deposits
300
300
300
Restricted cash, non-current
300
300
300
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
1,357
1,288
69
1,357
Long-term debt (excluding finance lease obligations)
4,043
4,234
58
4,292
The Company uses the following methods and assumptions in
estimating fair values of financial instruments carried
on a cost basis:
●
Cash and equivalents (excluding securities with original maturities
up to 3 months), Restricted cash, current
and non-current, and Marketable securities
and short-term investments (excluding securities):
The carrying amounts approximate the fair values as the
items are short-term in nature or, for cash
held in banks, are equal to the deposit amount.
●
Short-term debt and current maturities of long-term debt (excluding
finance lease obligations):
Short-term debt includes commercial paper,
bank
borrowings and overdrafts. The carrying amounts of short-term debt
and current maturities of long-term debt, excluding finance
lease obligations,
approximate their fair values.
●
Long-term debt (excluding finance lease obligations):
Fair values of bonds are determined using quoted market
prices (Level 1 inputs), if available. For
bonds without available quoted market prices and other long-term
debt, the fair values are determined using a discounted cash
flow methodology
based upon borrowing rates of similar debt instruments and reflecting
appropriate adjustments for non-performance risk
(Level 2 inputs).
─
Note 8
Contract assets and liabilities
The following table provides information about Contract assets
and Contract liabilities:
($ in millions)
June 30, 2022
December 31, 2021
June 30, 2021
Contract assets
965
990
1,087
Contract liabilities
2,141
1,894
1,846
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.
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, primarily for long-term projects. Contract
liabilities are reduced as work is performed and as revenues
are recognized.
The significant changes in the Contract assets and Contract liabilities
balances were as follows:
Six months ended June 30,
2022
2021
Contract
Contract
Contract
Contract
($ in millions)
assets
liabilities
assets
liabilities
Revenue recognized, which was included in the Contract liabilities
balance at Jan 1, 2022/2021
(763)
(818)
Additions to Contract liabilities - excluding amounts recognized as
revenue during the period
1,102
785
Receivables recognized that were included in the Contract
asset balance at Jan 1, 2022/2021
(423)
(411)
At June 30, 2022, the Company had unsatisfied performance
obligations totaling $19,477 million and, of this amount,
the Company expects to fulfill approximately
56 percent of the obligations in 2022, approximately 33 percent
of the obligations in 2023 and the balance thereafter.
24
Q2 2022
FINANCIAL
INFORMATION
─
Note 9
Debt
The Company’s total debt at June 30, 2022, and December
31, 2021, amounted to $7,916 million and $5,561 million,
respectively.
Short-term debt and current maturities of long-term
debt
The Company’s “Short-term debt and current maturities of
long-term debt” consisted of the following:
($ in millions)
June 30, 2022
December 31, 2021
Short-term debt
2,058
78
Current maturities of long-term debt
772
1,306
Total
2,830
1,384
Short-term debt primarily represented issued commercial paper and
short-term bank borrowings from various banks.
At June 30, 2022,
$1,755 million was
outstanding under the $2 billion Euro-commercial paper program
and $210 million was outstanding under the $2 billion commercial
paper program in the United
States. At December 31, 2021, no amount was outstanding under
either of these programs.
On May 9, 2022, the Company repaid on maturity its USD 1,250
million 2.875% Notes.
Long-term debt
The Company’s long-term debt at June 30, 2022, and
December 31, 2021, amounted to $5,086 million
and $4,177 million, respectively.
Outstanding bonds (including maturities within the next 12 months)
were as follows:
June 30, 2022
December 31, 2021
(in millions)
Nominal outstanding
Carrying value
(1)
Nominal outstanding
Carrying value
(1)
Bonds:
2.875% USD Notes, due 2022
USD
1,250
$
1,258
0.625% EUR Instruments, due 2023
EUR
700
$
726
EUR
700
$
800
0% CHF Bonds, due 2023
CHF
275
$
286
0.625% EUR Instruments, due 2024
EUR
700
$
717
0% EUR Instruments, due 2024
EUR
500
$
524
0.75% EUR Instruments, due 2024
EUR
750
$
765
EUR
750
$
860
0.3% CHF Bonds, due 2024
CHF
280
$
292
CHF
280
$
306
0.75% CHF Bonds, due 2027
CHF
425
$
443
3.8% USD Notes, due 2028
(2)
USD
383
$
381
USD
383
$
381
1.0% CHF Bonds, due 2029
CHF
170
$
177
CHF
170
$
186
0% EUR Notes, due 2030
EUR
800
$
700
EUR
800
$
862
4.375% USD Notes, due 2042
(2)
USD
609
$
590
USD
609
$
589
Total
$
5,601
$
5,242
(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 March 2022, the Company issued the following CHF bonds
:
(i) CHF 275 million of zero interest bonds, due 2023, and (ii) CHF
425 million of 0.75 percent bonds,
due 2027 with interest payable annually in arrears. The aggregate
net proceeds of these CHF bond issues, after discount
and fees, amounted to CHF 699 million
(equivalent to approximately $751 million on date of issuance).
Also in March 2022, the Company issued the following EUR notes,
both due in 2024, (i) EUR 700 million,
paying interest annually in arrears at a fixed rate of
0.625 percent per annum, and (ii) EUR 500 million floating
rate notes,
paying interest quarterly in arrears at a variable rate of
70 basis points above the 3-month
EURIBOR. In relation to these EUR Notes, the Company recorded
net proceeds (after the respective discount and premium,
as well as fees) of EUR 1,203 million
(equivalent to $1,335 million on the date of issuance).
In line with the Company’s policy of reducing its currency
and interest rate exposures, interest rate swaps have been used to
modify the characteristics of the
CHF 425 million Bonds, due 2027, and the EUR 700 million Notes,
due 2024. After considering the impact of these
interest rate swaps, the CHF 425 million
Bonds
and EUR 700 million Notes, effectively become floating rate
obligations.
25
Q2 2022
FINANCIAL
INFORMATION
─
Note 10
Commitments and contingencies
Contingencies—Regulatory, Compliance
and Legal
Regulatory
As a result of an internal investigation, the Company self-reported
to the Securities and Exchange Commission
(SEC) and the Department of Justice (DoJ) in the
United States as well as to the Serious Fraud Office (SFO)
in the United Kingdom concerning certain of its past dealings
with Unaoil and its subsidiaries, including
alleged improper payments made by these entities to third parties. In May
2020, the SFO closed its investigation, which it originally
announced in February 2017,
as the case did not meet the relevant test for prosecution.
The Company continues to cooperate with the U.S.
authorities as requested. At this time, it is not
possible for the Company to make an informed judgment about
the outcome of this matter.
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 continues to cooperate fully with the authorities
in their
review of the Kusile project and is in discussions with them regarding
a coordinated resolution. Although the Company believes
that there could be an unfavorable
outcome in one or more of these ongoing reviews, at this time
it is not possible for the Company to make
an informed judgment about the possible financial impact.
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 June 30, 2022, and December 31, 2021, the Company
had aggregate liabilities of $82 million and $104 million, respectively,
included in “Other provisions” and
“Other non
‑
current liabilities”, for the above regulatory,
compliance and legal contingencies, and none of the individual
liabilities recognized was significant. As it is
not possible to make an informed judgment on, or reasonably predict,
the outcome of certain matters and as it
is not possible, based on information currently
available to management, to estimate the maximum potential
liability on other matters, there could be adverse outcomes beyond
the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the
Company’s third-party guarantees. The maximum
potential payments represent a “worst-case
scenario”, and do not reflect management’s expected
outcomes.
Maximum potential payments
($ in millions)
June 30, 2022
December 31, 2021
Performance guarantees
4,036
4,540
Financial guarantees
55
52
Indemnification guarantees
(1)
130
136
Total
(2)
4,221
4,728
(1)
Certain indemnifications provided to Hitachi in connection with the divestment of Power Grids are without limit.
(2)
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 June 30, 2022, and
December 31, 2021, amounted to
$142 million and $156 million, respectively,
the majority of which is included in discontinued operations.
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 in 2017, the
Company has entered into various performance
guarantees with other parties with respect to certain liabilities
of the divested business. At June 30, 2022, and December
31, 2021, the maximum potential payable
under these guarantees amounts to $828 million and $911
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 Power Grids
business sold on July 1, 2020 (see Note 3
for details). The performance and financial guarantees have been
indemnified by Hitachi, at the same proportion of its ownership
in Hitachi Energy Ltd
(80.1 percent). 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 the guarantees at June 30, 2022, and December 31, 2021,
is approximately $2.8 billion and $3.2 billion, respectively,
and the carrying amounts of liabilities
(recorded in discontinued operations) at June 30, 2022, and December
31, 2021, amounted to $130 million and $136
million, respectively.
26
Q2 2022
FINANCIAL
INFORMATION
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 June 30, 2022, and December 31, 2021, the total
outstanding performance bonds aggregated to $3.1 billion,
of each of these amounts, $0.1 billion
relates to discontinued operations. There have been no significant
amounts reimbursed to financial institutions under
these types of arrangements in the six and
three months ended June 30, 2022 and 2021.
Product and order-related contingencies
The Company calculates its provision for product warranties
based on historical claims experience and specific review
of certain contracts. The reconciliation of the
“Provisions for warranties”, including guarantees of product performance,
was as follows:
($ in millions)
2022
2021
Balance at January 1,
1,005
1,035
Net change in warranties due to acquisitions, divestments and liabilities
held for sale
–
1
Claims paid in cash or in kind
(82)
(127)
Net increase in provision for changes in estimates, warranties
issued and warranties expired
103
122
Exchange rate differences
(54)
(19)
Balance at June 30,
972
1,012
─
Note 11
Employee benefits
The Company operates defined benefit pension plans, defined contribution
pension plans, and termination indemnity plans,
in accordance with local regulations
and practices. 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
- The funding policies of the Company’s plans
are consistent with the local government and tax
requirements.
Net periodic benefit cost of the Company’s defined benefit
pension and other postretirement benefit plans consisted of
the following:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Six months ended June 30,
2022
2021
2022
2021
2022
2021
Operational pension cost:
Service cost
27
30
17
22
–
–
Operational pension cost
27
30
17
22
–
–
Non-operational pension cost (credit):
Interest cost
1
(2)
43
37
1
1
Expected return on plan assets
(58)
(58)
(77)
(91)
–
–
Amortization of prior service cost (credit)
(4)
(5)
(1)
(1)
(1)
(1)
Amortization of net actuarial loss
–
–
30
35
(2)
(1)
Curtailments, settlements and special termination benefits
–
–
–
(2)
–
–
Non-operational pension cost (credit)
(61)
(65)
(5)
(22)
(2)
(1)
Net periodic benefit cost (credit)
(34)
(35)
12
–
(2)
(1)
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended June 30,
2022
2021
2022
2021
2022
2021
Operational pension cost:
Service cost
13
15
8
12
–
–
Operational pension cost
13
15
8
12
–
–
Non-operational pension cost (credit):
Interest cost
–
(1)
21
19
1
1
Expected return on plan assets
(28)
(29)
(36)
(44)
–
–
Amortization of prior service cost (credit)
(2)
(3)
(1)
(1)
–
(1)
Amortization of net actuarial loss
–
–
15
18
(2)
(1)
Curtailments, settlements and special termination benefits
–
–
–
4
–
–
Non-operational pension cost (credit)
(30)
(33)
(1)
(4)
(1)
(1)
Net periodic benefit cost (credit)
(17)
(18)
7
8
(1)
(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.
27
Q2 2022
FINANCIAL
INFORMATION
Employer contributions were as follows:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Six months ended June 30,
2022
2021
2022
2021
2022
2021
Total contributions
to defined benefit pension and
other postretirement benefit plans
31
31
19
13
4
3
Of which, discretionary contributions to defined benefit
pension plans
–
–
–
(9)
–
–
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended June 30,
2022
2021
2022
2021
2022
2021
Total contributions
to defined benefit pension and
other postretirement benefit plans
15
16
9
16
1
2
Of which, discretionary contributions to defined benefit
pension plans
–
–
–
–
–
–
The Company expects to make contributions totaling approximately
$77 million and $6 million to its defined pension plans
and other postretirement benefit plans,
respectively, for the full year 2022.
─
Note 12
Stockholder's
equity
At the Annual General Meeting of Shareholders (AGM) on March
24, 2022, shareholders approved the proposal of the
Board of Directors to distribute 0.82
Swiss
francs per share to shareholders. The declared dividend amounted
to $1,700 million, with the Company disburs
ing a portion in March and the remaining amounts
in April.
In March 2022, the Company completed the share buyback
program that was launched in April 2021. This program was executed
on a second trading line on the
SIX Swiss Exchange. Through this program, the Company purchased
a total of 90 million shares for approximately
$3.1 billion, of which 31 million shares were
purchased in the first quarter of 2022 (resulting in an
increase in Treasury stock of $1,089 million).
At the 2022 AGM, shareholders approved the cancellation
of
88 million shares which had been purchased under the share buyback
programs launched in July 2020 and April 2021.
The cancellation was completed in the
second quarter of 2022, resulting in a decrease in Treasury
stock of $2,876 million and a corresponding total decrease
in Capital stock, Additional paid-in capital
and Retained Earnings.
Also in March 2022, the Company announced a new share buyback
program of up to $3 billion. This program, which was
launched in April 2022, is being executed
on a second trading line on the SIX Swiss Exchange and is planned
to run until the Company’s 2023 AGM. Through
this program, the Company purchased, in
the
second quarter of 2022, approximately 34 million shares, resulting
in an increase in Treasury stock
of $1,016 million. At the 2023
AGM, the Company intends to
request shareholder approval to cancel the shares purchased through
this new program as well as those shares purchased under
the program launched in April
2021 that were not proposed for cancellation at the 2022 AGM.
In addition to the share buyback programs, the Company
purchased 17 million of its own shares on the open market
in the first half of 2022, mainly for use in
connection with its employee share plans, resulting in an increase
in Treasury stock
of $588 million.
During the first six months of 2022, the Company delivered,
out of treasury stock, 16 million shares in connection
with its Management Incentive Plan.
28
Q2 2022
FINANCIAL
INFORMATION
─
Note 13
Earnings per share
Basic earnings per share is calculated by dividing income by the
weighted-average number of shares outstanding during
the period. Diluted earnings per share is
calculated by dividing income by the weighted-average number of shares
outstanding during the period, assuming that all potentially
dilutive securities were
exercised, if dilutive. Potentially dilutive securities comprise outstanding
written call options, and outstanding options and
shares granted subject to certain
conditions under the Company’s share-based payment arrangements.
Basic earnings per share
Six months ended June 30,
Three months ended June 30,
($ in millions, except per share data in $)
2022
2021
2022
2021
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,003
1,290
388
760
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
983
1,254
379
752
Weighted-average number of shares outstanding
(in millions)
1,922
2,015
1,909
2,016
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.64
0.20
0.38
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
Diluted earnings per share
Six months ended June 30,
Three months ended June 30,
($ in millions, except per share data in $)
2022
2021
2022
2021
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,003
1,290
388
760
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
983
1,254
379
752
Weighted-average number of shares outstanding (in millions)
1,922
2,015
1,909
2,016
Effect of dilutive securities:
Call options and shares
13
18
9
15
Adjusted weighted-average number of shares outstanding
(in millions)
1,935
2,033
1,918
2,031
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.63
0.20
0.37
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
29
Q2 2022
FINANCIAL
INFORMATION
─
Note 14
Reclassifications out of accumulated other comprehensive loss
The following table shows changes in “Accumulated other comprehensive
loss” (OCI) attributable to ABB, by component, net
of tax:
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2021
(2,460)
17
(1,556)
(3)
(4,002)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
(161)
(7)
34
14
(120)
Amounts reclassified from OCI
–
(1)
37
(14)
22
Total other comprehensive (loss)
income
(161)
(8)
71
–
(98)
Less:
Amounts attributable to
noncontrolling interests
5
–
–
–
5
Balance at June 30, 2021
(1)
(2,625)
9
(1,485)
(3)
(4,104)
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2022
(2,993)
2
(1,089)
(8)
(4,088)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
(419)
(17)
91
(12)
(357)
Amounts reclassified from OCI
5
–
15
14
34
Total other comprehensive (loss)
income
(414)
(17)
106
2
(323)
Less:
Amounts attributable to
noncontrolling interests
(22)
–
–
–
(22)
Balance at June 30, 2022
(3,385)
(15)
(983)
(6)
(4,389)
(1)
Due to rounding, numbers presented may not add to the totals provided.
The following table reflects amounts reclassified out of OCI
in respect of Pension and other postretirement plan adjustments:
Six months ended
Three months ended
($ in millions)
Location of (gains) losses
June 30,
June 30,
Details about OCI components
reclassified from OCI
2022
2021
2022
2021
Foreign currency translation adjustments:
Net loss on complete or substantially complete
liquidations of foreign subsidiaries
Other income (expense), net
5
–
–
–
Pension and other postretirement plan adjustments:
Amortization of prior service cost (credit)
Non-operational pension (cost) credit
(1)
(6)
(7)
(3)
(5)
Amortization of net actuarial loss
Non-operational pension (cost) credit
(1)
28
34
13
23
Net gain (loss) from settlements and curtailments
Non-operational pension (cost) credit
(1)
–
(2)
–
(2)
Total before tax
22
25
10
16
Tax
Income tax expense
(7)
12
(3)
(4)
Amounts reclassified from OCI
15
37
7
12
The amounts in respect of Unrealized gains (losses)
on available-for-sale securities and Derivative instruments
and hedges were not significant for the six and
three months ended June 30, 2022 and 2021.
30
Q2 2022
FINANCIAL
INFORMATION
─
Note 15
Restructuring and related expenses
Other restructuring-related activities
In the six and three months ended June 30, 2022 and 2021,
the Company executed various other restructuring
-related activities and incurred the following
expenses:
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Employee severance costs
43
33
35
13
Estimated contract settlement, loss order and other costs
202
12
195
3
Inventory and long-lived asset impairments
5
2
1
2
Total
250
47
231
18
Expenses associated with these activities are recorded in the
following line items in the Consolidated Income
Statements:
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Total cost of sales
8
24
4
10
Selling, general and administrative expenses
28
5
24
3
Non-order related research and development expenses
2
–
2
–
Other income (expense), net
212
18
201
5
Total
250
47
231
18
During
the second
quarter
of 2022,
the Company
completed
a plan
to fully
exit
its full
train retrofit
business
by transferring
the remaining
contracts
to a
third
party.
The Company
recorded
$195
million
of restructuring
expenses
in connection
with this
business
exit primarily
for contract
settlement
costs.
Prior
to exiting
this business,
the business
was reported
as part
of the
Company’s
non-core
business
activities
within
Corporate
and Other.
At June
30, 2022,
$332 million
was recorded
for other
restructuring
-related
liabilities
primarily
in Other
provisions
and Other
current
liabilities,
while
at
December
31, 2021,
$212 million
was recorded
primarily
in Other
provisions.
─
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.
A description of the types of products and services
provided by each reportable segment is as follows:
●
Electrification:
manufactures and sells electrical products and solutions
which are designed to provide safe, smart and
sustainable electrical flow from
the substation to the socket. The portfolio of increasingly digital and
connected solutions includes electric vehicle
charging infrastructure, 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 seven operating Divisions: Distribution Solutions,
Smart Power, Smart Buildings, E-Mobility,
Installation Products, Power Conversion
and Electrification Service.
●
Motion:
designs, manufactures, and sells drives, motors, generators
and traction converters that are driving the
low-carbon future for industries, cities,
infrastructure and transportation. These products, digital technology
and related services enable 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, the Business Area combines domain expertise and
technology to deliver the optimum solution for a wide range
of applications in all
industrial segments. In addition, the Business Area, 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,
as well as, prior to its sale in November 2021, the Mechanical
Power Transmission Division.
31
Q2 2022
FINANCIAL
INFORMATION
●
Process Automation:
develops and sells a broad range of industry-specific,
integrated automation, electrification and digital
systems and solutions, as
well as digital solutions, lifecycle services, advanced industrial analytics
and artificial intelligence applications and suites for
the process, marine and
hybrid industries. Products and solutions include control technologies,
advanced process control software and manufacturing execution
systems,
sensing, measurement and analytical instrumentation, marine
propulsion systems and turbochargers. In addition,
the Business Area offers a
comprehensive range of services ranging from repair to advanced services
such as remote monitoring, preventive maintenance,
asset performance
management, emission monitoring and cybersecurity
services. The products, systems and services
are delivered through five operating Divisions:
Energy Industries, Process Industries, Marine & Ports,
Turbocharging, and Measurement & Analytics
.
●
Robotics & Discrete Automation:
delivers its products, solutions and services
through two operating Divisions: Robotics and Machine Automation.
Robotics includes industrial robots, software, robotic solutions, field
services, spare parts, and digital services. Machine Automation
specializes in
solutions based on its programmable logic controllers (PLC),
industrial PCs (IPC), servo motion, transport systems
and machine vision.
Both Divisions
offer engineering and simulation software as well as
a comprehensive range of digital solutions.
Corporate and Other:
includes headquarter costs,
the Company’s corporate real estate activities, Corporate Treasury
Operations, historical operating activities of
certain divested businesses and other non-core operating activities.
The primary measure of profitability on which the operating segments
are evaluated is Operational EBITA, which
represents income from operations excluding:
●
amortization expense on intangibles arising upon acquisition (acquisition
-related amortization),
●
restructuring, related and implementation costs,
●
changes in the amount recorded for obligations related to
divested businesses occurring after the divestment date (changes
in obligations related to
divested businesses),
●
changes in estimates relating to opening balance sheets of acquired
businesses (changes in pre-acquisition estimates),
●
gains and losses from sale of businesses (including fair value adjustment
on assets and liabilities held for sale),
●
acquisition- and divestment-related expenses and integration costs,
●
other income/expense relating to the Power Grids joint venture,
●
certain other non-operational items, as well as
●
foreign exchange/commodity timing differences in income
from operations consisting of: (a) unrealized gains
and losses on derivatives (foreign
exchange, commodities, embedded derivatives), (b) realized
gains and losses on derivatives where the underlying hedged
transaction has not yet been
realized, and (c) unrealized foreign exchange movements on receivables/payables
(and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory,
compliance and legal costs, certain asset write downs/impairments
and certain other fair
value changes, 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 six
and three months ended June 30, 2022 and 2021, as well as
total assets at
June 30, 2022, and December 31, 2021.
Six months ended June 30, 2022
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
2,228
953
1,131
712
2
5,026
The Americas
2,531
1,029
767
238
1
4,566
of which: United States
1,849
853
460
166
–
3,328
Asia, Middle East and Africa
1,993
995
1,119
509
8
4,624
of which: China
1,007
565
309
382
1
2,263
6,752
2,977
3,017
1,459
11
14,216
Product type
Products
5,920
2,552
681
858
6
10,017
Systems
407
–
961
372
5
1,745
Services and other
425
425
1,375
229
–
2,454
6,752
2,977
3,017
1,459
11
14,216
Third-party revenues
6,752
2,977
3,017
1,459
11
14,216
Intersegment revenues
106
221
18
3
(348)
–
Total revenues
(2)
6,858
3,198
3,035
1,462
(337)
14,216
32
Q2 2022
FINANCIAL
INFORMATION
Six months ended June 30, 2021
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
2,266
1,020
1,142
814
6
5,248
The Americas
2,221
1,223
658
224
1
4,327
of which: United States
1,655
1,029
363
161
–
3,208
Asia, Middle East and Africa
1,950
1,047
1,125
642
11
4,775
of which: China
1,053
577
376
483
–
2,489
6,437
3,290
2,925
1,680
18
14,350
Product type
Products
5,557
2,845
749
1,058
10
10,219
Systems
450
–
811
386
8
1,655
Services and other
430
445
1,365
236
–
2,476
6,437
3,290
2,925
1,680
18
14,350
Third-party revenues
6,437
3,290
2,925
1,680
18
14,350
Intersegment revenues
(1)
109
227
22
5
(363)
–
Total revenues
(2)
6,546
3,517
2,947
1,685
(345)
14,350
Three months ended June 30, 2022
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,116
487
546
358
1
2,508
The Americas
1,330
537
399
130
1
2,397
of which: United States
967
446
239
94
–
1,746
Asia, Middle East and Africa
1,029
496
573
242
6
2,346
of which: China
542
278
159
185
–
1,163
3,475
1,520
1,518
730
8
7,251
Product type
Products
3,093
1,304
335
418
2
5,152
Systems
161
–
494
200
6
861
Services and other
221
216
689
112
–
1,238
3,475
1,520
1,518
730
8
7,251
Third-party revenues
3,475
1,520
1,518
730
8
7,251
Intersegment revenues
56
106
11
2
(175)
–
Total revenues
3,531
1,626
1,529
732
(167)
7,251
Three months ended June 30, 2021
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,166
551
579
396
5
2,697
The Americas
1,163
635
368
118
–
2,284
of which: United States
855
535
200
86
–
1,676
Asia, Middle East and Africa
1,021
544
583
316
4
2,468
of which: China
565
313
201
234
–
1,313
3,350
1,730
1,530
830
9
7,449
Product type
Products
2,937
1,496
428
532
3
5,396
Systems
181
–
402
182
6
771
Services and other
232
234
700
116
–
1,282
3,350
1,730
1,530
830
9
7,449
Third-party revenues
3,350
1,730
1,530
830
9
7,449
Intersegment revenues
56
120
10
2
(188)
–
Total revenues
3,406
1,850
1,540
832
(179)
7,449
(1)
Due to rounding, numbers presented may not add to the totals provided.
33
Q2 2022
FINANCIAL
INFORMATION
Six months ended
Three months ended
June 30,
June 30,
($ in millions)
2022
2021
2022
2021
Operational EBITA:
Electrification
1,109
1,103
599
592
Motion
540
614
266
325
Process Automation
420
347
224
192
Robotics & Discrete Automation
109
201
60
96
Corporate and Other
‒
Non-core and divested businesses
18
(29)
12
(7)
‒ Corporate costs and Other Intersegment elimination
(63)
(164)
(25)
(85)
Total
2,133
2,072
1,136
1,113
Acquisition-related amortization
(119)
(129)
(59)
(64)
Restructuring, related and implementation costs
(1)
(280)
(53)
(264)
(18)
Changes in obligations related to divested businesses
17
(6)
3
(4)
Changes in pre-acquisition estimates
1
(8)
2
(2)
Gains and losses from sale of businesses
(4)
9
(4)
12
Acquisition- and divestment-related expenses and integration
costs
(109)
(30)
(50)
(20)
Other income/expense relating to the Power Grids joint venture
(37)
(19)
(2)
(2)
Foreign exchange/commodity timing differences in
income from operations:
Unrealized gains and losses on derivatives (foreign exchange,
commodities, embedded derivatives)
(100)
(56)
(118)
(8)
Realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized
(35)
9
(33)
7
Unrealized foreign exchange movements on receivables/payables (and
related assets/liabilities)
40
28
41
(6)
Certain other non-operational items:
Regulatory, compliance and legal costs
(4)
(2)
(5)
–
Business transformation costs
(2)
(66)
(39)
(40)
(19)
Certain other fair value changes, including asset impairments
34
114
–
96
Other non-operational items
(27)
1
(20)
9
Income from operations
1,444
1,891
587
1,094
Interest and dividend income
33
26
20
15
Interest and other finance expense
(62)
(91)
(40)
(36)
Non-operational pension (cost) credit
68
88
32
38
Income from continuing operations before taxes
1,483
1,914
599
1,111
(1)
Includes impairment of certain assets.
(2)
Amount includes ABB Way process transformation costs of $64 million and $33 million for six months ended June 30, 2022 and 2021, respectively, and $39 million and $18 million for
the three months ended June 30, 2022 and 2021, respectively.
Total assets
(1)
($ in millions)
June 30, 2022
December 31, 2021
Electrification
13,684
12,831
Motion
6,247
5,936
Process Automation
4,929
5,009
Robotics & Discrete Automation
4,732
4,860
Corporate and Other
(2)
9,306
11,624
Consolidated
38,898
40,260
(1)
Total assets are after intersegment eliminations and therefore reflect third-party assets only.
(2)
At June 30, 2022, and December 31, 2021, respectively, Corporate and Other includes $122 million and $136 million of assets in the Power Grids business which is reported as
discontinued operations (see Note 3). In addition, at June 30, 2022, and December 31, 2021, Corporate and Other includes $1,551 million and $1,609 million,
respectively, related to
the equity investment in Hitachi Energy Ltd (see Note 4).
34
Q2 2022
FINANCIAL
INFORMATION
35
Q2 2022
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
six and
three mo
nths ended
June
30, 2022.
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 $50 million.
The following tables provide reconciliations of reported growth rates
of certain key figures to their respective comparable growth
rate.
Comparable growth rate reconciliation by Business Area
Q2 2022 compared to Q2 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Electrification
9%
7%
0%
16%
4%
6%
0%
10%
Motion
7%
7%
12%
26%
-12%
6%
9%
3%
Process Automation
17%
8%
0%
25%
-1%
8%
0%
7%
Robotics & Discrete Automation
15%
9%
-1%
23%
-12%
7%
0%
-5%
ABB Group
10%
7%
3%
20%
-3%
7%
2%
6%
H1 2022 compared to H1 2021
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
17%
5%
0%
22%
5%
5%
0%
10%
Motion
11%
6%
12%
29%
-9%
5%
10%
6%
Process Automation
9%
6%
0%
15%
3%
6%
0%
9%
Robotics & Discrete Automation
34%
8%
-2%
40%
-13%
5%
-1%
-9%
ABB Group
15%
6%
3%
24%
-1%
6%
2%
7%
36
Q2 2022
FINANCIAL
INFORMATION
Regional comparable growth rate reconciliation
Regional comparable growth rate reconciliation for ABB Group
- Quarter
Q2 2022 compared to Q2 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
0%
15%
0%
15%
-7%
14%
0%
7%
The Americas
23%
1%
9%
33%
5%
1%
8%
14%
of which: United States
21%
0%
11%
32%
4%
0%
10%
14%
Asia, Middle East and Africa
9%
6%
0%
15%
-5%
5%
0%
0%
of which: China
7%
3%
0%
10%
-11%
2%
0%
-9%
ABB Group
10%
7%
3%
20%
-3%
7%
2%
6%
Regional comparable growth rate reconciliation by Business
Area - Quarter
Q2 2022 compared to Q2 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-4%
14%
0%
10%
-4%
14%
0%
10%
The Americas
29%
1%
0%
30%
14%
1%
0%
15%
of which: United States
31%
0%
0%
31%
13%
0%
0%
13%
Asia, Middle East and Africa
1%
6%
0%
7%
1%
5%
0%
6%
of which: China
-7%
2%
0%
-5%
-4%
3%
0%
-1%
Electrification
9%
7%
0%
16%
4%
6%
0%
10%
Q2 2022 compared to Q2 2021
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%
16%
0%
17%
-12%
14%
0%
2%
The Americas
3%
2%
34%
39%
-15%
1%
28%
14%
of which: United States
7%
1%
42%
50%
-16%
0%
31%
15%
Asia, Middle East and Africa
17%
5%
2%
24%
-10%
4%
1%
-5%
of which: China
5%
2%
2%
9%
-13%
2%
1%
-10%
Motion
7%
7%
12%
26%
-12%
6%
9%
3%
Q2 2022 compared to Q2 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
8%
14%
0%
22%
-6%
12%
0%
6%
The Americas
53%
2%
0%
55%
9%
3%
0%
12%
of which: United States
26%
1%
0%
27%
20%
1%
0%
21%
Asia, Middle East and Africa
4%
7%
0%
11%
-2%
7%
0%
5%
of which: China
21%
3%
0%
24%
-21%
3%
0%
-18%
Process Automation
17%
8%
0%
25%
-1%
8%
0%
7%
Q2 2022 compared to Q2 2021
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
9%
15%
-2%
22%
-10%
13%
-1%
2%
The Americas
-3%
0%
0%
-3%
9%
1%
0%
10%
of which: United States
-3%
0%
0%
-3%
10%
0%
0%
10%
Asia, Middle East and Africa
30%
6%
0%
36%
-23%
4%
0%
-19%
of which: China
40%
3%
0%
43%
-21%
2%
0%
-19%
Robotics & Discrete Automation
15%
9%
-1%
23%
-12%
7%
0%
-5%
37
Q2 2022
FINANCIAL
INFORMATION
Regional comparable growth rate reconciliation for ABB Group
– Year to date
H1 2022 compared to H1 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
7%
12%
0%
19%
-4%
11%
0%
7%
The Americas
26%
0%
10%
36%
6%
1%
8%
15%
of which: United States
26%
1%
12%
39%
4%
0%
10%
14%
Asia, Middle East and Africa
16%
3%
0%
19%
-3%
3%
0%
0%
of which: China
17%
1%
0%
18%
-9%
1%
0%
-8%
ABB Group
15%
6%
3%
24%
-1%
6%
2%
7%
Regional comparable growth rate reconciliation by Business
Area – Year to date
H1 2022 compared to H1 2021
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
10%
13%
0%
23%
-2%
12%
0%
10%
The Americas
35%
1%
0%
36%
14%
0%
0%
14%
of which: United States
40%
0%
0%
40%
12%
0%
0%
12%
Asia, Middle East and Africa
4%
3%
0%
7%
2%
3%
0%
5%
of which: China
1%
1%
0%
2%
-4%
0%
0%
-4%
Electrification
17%
5%
0%
22%
5%
5%
0%
10%
H1 2022 compared to H1 2021
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
10%
14%
0%
24%
-4%
11%
1%
8%
The Americas
2%
1%
35%
38%
-16%
1%
29%
14%
of which: United States
3%
0%
40%
43%
-17%
1%
31%
15%
Asia, Middle East and Africa
22%
3%
1%
26%
-6%
2%
1%
-3%
of which: China
13%
1%
1%
15%
-5%
0%
1%
-4%
Motion
11%
6%
12%
29%
-9%
5%
10%
6%
H1 2022 compared to H1 2021
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-11%
9%
0%
-2%
-1%
10%
0%
9%
The Americas
38%
1%
0%
39%
16%
2%
0%
18%
of which: United States
30%
0%
0%
30%
26%
1%
0%
27%
Asia, Middle East and Africa
15%
5%
0%
20%
-1%
5%
0%
4%
of which: China
17%
1%
0%
18%
-18%
1%
0%
-17%
Process Automation
9%
6%
0%
15%
3%
6%
0%
9%
H1 2022 compared to H1 2021
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
24%
13%
-2%
35%
-13%
10%
-2%
-5%
The Americas
35%
0%
0%
35%
6%
0%
0%
6%
of which: United States
35%
0%
0%
35%
3%
0%
0%
3%
Asia, Middle East and Africa
48%
2%
0%
50%
-21%
2%
0%
-19%
of which: China
66%
0%
0%
66%
-21%
0%
0%
-21%
Robotics & Discrete Automation
34%
8%
-2%
40%
-13%
5%
-1%
-9%
38
Q2 2022
FINANCIAL
INFORMATION
Order backlog growth rate reconciliation
June 30, 2022 compared to June 30, 2021
US$
Foreign
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
Electrification
33%
9%
0%
42%
Motion
28%
15%
0%
43%
Process Automation
3%
9%
0%
12%
Robotics & Discrete Automation
82%
15%
0%
97%
ABB Group
26%
10%
1%
37%
Other growth rate reconciliations
Q2 2022 compared to Q2 2021
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%
7%
0%
12%
-5%
7%
0%
2%
Motion
6%
8%
0%
14%
-7%
8%
0%
1%
Process Automation
4%
8%
0%
12%
-2%
8%
0%
6%
Robotics & Discrete Automation
1%
9%
0%
10%
-5%
9%
0%
4%
ABB Group
4%
8%
0%
12%
-3%
7%
0%
4%
H1 2022 compared to H1 2021
Service orders growth rate
Services revenues growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Electrification
10%
6%
0%
16%
-1%
5%
0%
4%
Motion
10%
7%
0%
17%
-4%
6%
0%
2%
Process Automation
5%
7%
0%
12%
1%
6%
0%
7%
Robotics & Discrete Automation
6%
8%
0%
14%
-3%
7%
0%
4%
ABB Group
7%
7%
0%
14%
-1%
6%
0%
5%
39
Q2 2022
FINANCIAL
INFORMATION
Operational EBITA as
% of operational revenues (Operational EBITA margin)
Definition
Operational EBITA margin
Operational EBITA margin is Operational
EBITA as a percentage of
operational revenues.
Operational EBITA
Operational earnings before interest, taxes and acquisition-related
amortization (Operational EBITA)
represents Income from operations excluding:
●
acquisition-related amortization (as defined below),
●
restructuring, related and implementation costs,
●
changes in the amount recorded for obligations related to divested
businesses occurring after the divestment date (changes
in obligations related to
divested businesses),
●
changes in estimates relating to opening balance sheets of acquired
businesses (changes in pre-acquisition estimates),
●
gains and losses from sale of businesses (including fair value adjustment
on assets and liabilities held for sale),
●
acquisition- and divestment-related expenses and integration costs,
●
other income/expense relating to the Power Grids joint venture,
●
certain other non-operational items, as well as
●
foreign exchange/commodity timing differences in income
from operations consisting of: (a) unrealized gains
and losses on derivatives (foreign
exchange, commodities, embedded derivatives), (b) realized
gains and losses on derivatives where the underlying hedged
transaction has not yet been
realized, and (c) unrealized foreign exchange movements
on receivables/payables (and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory,
compliance and legal costs, certain asset impairments
and certain other fair value
changes, 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.
Other income/expense relating to the Power Grids joint
venture
Other income/expense relating to the Power Grids joint venture
consists of amounts recorded in Income from continuing
operations before taxes relating to the
divested Power Grids business including the income/loss under the
equity method for the investment in Hitachi Energy
Ltd. (Hitachi Energy), amortization of
deferred brand income as well as changes in value of other
obligations relating to the divestment.
Operational revenues
The Company presents operational revenues solely for the purpose
of allowing the computation of Operational EBITA
margin. Operational revenues are Total
revenues adjusted for foreign exchange/commodity timing differences
in total revenues of: (i) unrealized gains and losses
on derivatives, (ii) realized gains and
losses on derivatives where the underlying hedged transaction
has not yet been realized, and (iii) unrealized foreign
exchange movements on receivables (and
related assets). Operational revenues are not intended to be an
alternative measure to Total
revenues, which represent our revenues measured
in accordance
with U.S. GAAP.
Reconciliation
The following tables provide reconciliations of consolidated Operational
EBITA to Net Income and Operational
EBITA Margin by business.
Reconciliation of consolidated Operational EBITA
to Net Income
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Operational EBITA
2,133
2,072
1,136
1,113
Acquisition-related amortization
(119)
(129)
(59)
(64)
Restructuring, related and implementation costs
(1)
(280)
(53)
(264)
(18)
Changes in obligations related to divested businesses
17
(6)
3
(4)
Changes in pre-acquisition estimates
1
(8)
2
(2)
Gains and losses from sale of businesses
(4)
9
(4)
12
Acquisition- and divestment-related expenses and integration
costs
(109)
(30)
(50)
(20)
Other income/expense relating to the Power Grids joint venture
(37)
(19)
(2)
(2)
Certain other non-operational items
(63)
74
(65)
86
Foreign exchange/commodity timing differences in
income from operations
(95)
(19)
(110)
(7)
Income from operations
1,444
1,891
587
1,094
Interest and dividend income
33
26
20
15
Interest and other finance expense
(62)
(91)
(40)
(36)
Non-operational pension (cost) credit
68
88
32
38
Income from continuing operations before taxes
1,483
1,914
599
1,111
Income tax expense
(434)
(574)
(193)
(322)
Income from continuing operations, net of
tax
1,049
1,340
406
789
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
1,029
1,304
397
781
(1)
Includes impairment of certain assets.
40
Q2 2022
FINANCIAL
INFORMATION
Reconciliation of Operational EBITA
margin by business
Three months ended June 30, 2022
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,531
1,626
1,529
732
(167)
7,251
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
36
(1)
37
9
4
85
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
8
1
5
–
24
38
Unrealized foreign exchange movements
on receivables (and related assets)
(22)
(4)
(10)
(8)
(9)
(53)
Operational revenues
3,553
1,622
1,561
733
(148)
7,321
Income (loss) from operations
465
231
175
43
(327)
587
Acquisition-related amortization
30
7
1
19
2
59
Restructuring, related and
implementation costs
(1)
8
–
–
2
254
264
Changes in obligations related to
divested businesses
–
–
–
–
(3)
(3)
Changes in pre-acquisition estimates
–
–
–
(2)
–
(2)
Gains and losses from sale of businesses
–
4
–
–
–
4
Acquisition- and divestment-related expenses
and integration costs
10
3
36
2
(1)
50
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
2
2
Certain other non-operational items
22
–
–
1
42
65
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
75
23
12
1
7
118
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
6
1
7
(1)
20
33
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(17)
(3)
(7)
(5)
(9)
(41)
Operational EBITA
599
266
224
60
(13)
1,136
Operational EBITA margin (%)
16.9%
16.4%
14.3%
8.2%
n.a.
15.5%
(1)
Includes impairment of certain assets.
In the three months ended June 30, 2022, Certain other
non-operational items in the table above includes the following:
Three months ended June 30, 2022
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Regulatory, compliance and legal costs
–
–
–
–
5
5
Business transformation costs
(1)
1
–
–
–
39
40
Other non-operational items
21
–
–
1
(2)
20
Total
22
–
–
1
42
65
(1)
Amounts
include ABB Way process transformation costs of $39 million for the three months ended June 30, 2022.
41
Q2 2022
FINANCIAL
INFORMATION
Three months ended June 30, 2021
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,406
1,850
1,540
832
(179)
7,449
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
(7)
(14)
2
–
–
(19)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
–
(5)
–
(1)
(7)
Unrealized foreign exchange movements
on receivables (and related assets)
10
3
(1)
2
(1)
13
Operational revenues
3,408
1,839
1,536
834
(181)
7,436
Income (loss) from operations
549
303
190
74
(22)
1,094
Acquisition-related amortization
29
13
1
21
–
64
Restructuring, related and
implementation costs
4
4
10
–
–
18
Changes in obligations related to
divested businesses
–
–
–
–
4
4
Changes in pre-acquisition estimates
2
–
–
–
–
2
Gains and losses from sale of businesses
1
(1)
(13)
–
1
(12)
Acquisition- and divestment-related expenses
and integration costs
12
4
3
–
1
20
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
2
2
Certain other non-operational items
(9)
1
2
–
(80)
(86)
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
4
(2)
2
–
4
8
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
1
(2)
(1)
(4)
(7)
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
1
2
(1)
2
2
6
Operational EBITA
592
325
192
96
(92)
1,113
Operational EBITA margin (%)
17.4%
17.7%
12.5%
11.5%
n.a.
15.0%
In the three months ended June 30, 2021, Certain other
non-operational items in the table above includes the following:
Three months ended June 30, 2021
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Certain other fair values changes,
including asset impairments
(10)
–
–
–
(86)
(96)
Business transformation costs
(1)
1
–
–
–
18
19
Other non-operational items
–
1
2
–
(12)
(9)
Total
(9)
1
2
–
(80)
(86)
(1)
Amounts
include ABB Way process transformation costs of $18 million for the three months ended June 30, 2021.
42
Q2 2022
FINANCIAL
INFORMATION
Six months ended June 30, 2022
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
6,858
3,198
3,035
1,462
(337)
14,216
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
24
3
36
11
3
77
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
10
2
2
–
27
41
Unrealized foreign exchange movements
on receivables (and related assets)
(22)
(6)
(7)
(5)
(11)
(51)
Operational revenues
6,870
3,197
3,066
1,468
(318)
14,283
Income (loss) from operations
971
485
326
65
(403)
1,444
Acquisition-related amortization
61
15
2
40
1
119
Restructuring, related and
implementation costs
(1)
10
8
5
3
254
280
Changes in obligations related to
divested businesses
–
–
–
–
(17)
(17)
Changes in pre-acquisition estimates
1
–
–
(2)
–
(1)
Gains and losses from sale of businesses
–
4
–
–
–
4
Acquisition- and divestment-related expenses
and integration costs
29
8
69
3
–
109
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
37
37
Certain other non-operational items
(8)
–
–
1
70
63
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
54
22
18
4
2
100
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
8
1
4
(1)
23
35
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(17)
(3)
(4)
(4)
(12)
(40)
Operational EBITA
1,109
540
420
109
(45)
2,133
Operational EBITA margin (%)
16.1%
16.9%
13.7%
7.4%
n.a.
14.9%
(1)
Includes impairment of certain assets.
In the six months ended June 30, 2022, Certain other non-operational
items in the table above includes the following:
Six months ended June 30, 2022
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Regulatory, compliance and legal costs
–
–
–
–
4
4
Certain other fair values changes,
including asset impairments
(31)
–
–
–
(3)
(34)
Business transformation costs
(1)
2
–
–
–
64
66
Other non-operational items
21
–
–
1
5
27
Total
(8)
–
–
1
70
63
(1)
Amounts
include ABB Way process transformation costs of $64 million for the six months ended June 30, 2022.
43
Q2 2022
FINANCIAL
INFORMATION
Six months ended June 30, 2021
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
6,546
3,517
2,947
1,685
(345)
14,350
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
22
13
14
5
4
58
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
–
(7)
(1)
(1)
(10)
Unrealized foreign exchange movements
on receivables (and related assets)
(9)
(5)
(6)
(5)
(3)
(28)
Operational revenues
6,558
3,525
2,948
1,684
(345)
14,370
Income (loss) from operations
989
568
337
156
(159)
1,891
Acquisition-related amortization
58
26
2
41
2
129
Restructuring, related and
implementation costs
21
5
13
5
9
53
Changes in obligations related to
divested businesses
–
–
–
–
6
6
Changes in pre-acquisition estimates
8
–
–
–
–
8
Gains and losses from sale of businesses
4
(1)
(13)
–
1
(9)
Acquisition- and divestment-related expenses
and integration costs
18
7
4
–
1
30
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
19
19
Certain other non-operational items
(15)
1
2
–
(62)
(74)
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
29
12
12
1
2
56
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
1
(3)
(1)
(5)
(9)
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(8)
(5)
(7)
(1)
(7)
(28)
Operational EBITA
1,103
614
347
201
(193)
2,072
Operational EBITA margin (%)
16.8%
17.4%
11.8%
11.9%
n.a.
14.4%
In the six months ended June 30, 2021, Certain other non-operational
items in the table above includes the following:
Six months ended June 30, 2021
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
–
–
–
–
2
2
Certain other fair values changes,
including asset impairments
(19)
–
–
–
(95)
(114)
Business transformation costs
4
–
–
–
35
39
Other non-operational items
–
1
2
–
(4)
(1)
Total
(15)
1
2
–
(62)
(74)
(1)
Amounts
include ABB Way process transformation costs of $33 million for the six months ended June 30, 2021.
44
Q2 2022
FINANCIAL
INFORMATION
Net debt
Definition
Net debt
Net debt is defined as Total
debt less Cash and marketable securities.
Total debt
Total debt is the sum
of Short-term debt and current maturities of long-term
debt, and Long-term debt.
Cash and marketable securities
Cash and marketable securities is the sum of Cash and equivalents,
Restricted cash (current and non-current)
and Marketable securities and short-term
investments.
Reconciliation
($ in millions)
June 30, 2022
December 31, 2021
Short-term debt and current maturities of long-term debt
2,830
1,384
Long-term debt
5,086
4,177
Total debt (gross debt)
7,916
5,561
Cash and equivalents
2,412
4,159
Restricted cash - current
23
30
Marketable securities and short-term investments
945
1,170
Restricted cash - non-current
301
300
Cash and marketable securities
3,681
5,659
Net debt (cash)
4,235
(98)
Net debt/Equity ratio
Definition
Net debt/Equity ratio
Net debt/Equity ratio is defined as Net debt divided by Equity.
Equity
Equity is defined as Total
stockholders’ equity.
Reconciliation
($ in millions, unless otherwise indicated)
June 30, 2022
December 31, 2021
Total stockholders'
equity
12,586
15,957
Net debt (cash) (as defined above)
4,235
(98)
Net debt (cash) / Equity ratio
0.34
-0.01
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 depreciation
and amortization for the same
trailing twelve-month period.
Reconciliation
($ in millions, unless otherwise indicated)
June 30, 2022
June 30, 2021
Income from operations for the three months ended:
June 30, 2022 / 2021
587
1,094
March 31, 2022 / 2021
857
797
December 31, 2021 / 2020
2,975
578
September 30, 2021 / 2020
852
71
Depreciation and Amortization for the three months
ended:
June 30, 2022 / 2021
207
230
March 31, 2022 / 2021
210
227
December 31, 2021 / 2020
216
229
September 30, 2021 / 2020
220
231
EBITDA
6,124
3,457
Net debt (as defined above)
4,235
2,259
Net debt / EBITDA
0.7
0.7
45
Q2 2022
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, 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)
June 30, 2022
June 30, 2021
Net working capital:
Receivables, net
(1)
6,960
7,113
Contract assets
965
1,087
Inventories, net
5,595
4,700
Prepaid expenses
262
229
Accounts payable, trade
(4,805)
(4,708)
Contract liabilities
(2,141)
(1,846)
Other current liabilities
(2)
(3,173)
(3,324)
Net working capital
3,663
3,251
Total revenues for the three months
ended:
June 30, 2022 / 2021
7,251
7,449
March 31, 2022 / 2021
6,965
6,901
December 31, 2021 / 2020
7,567
7,182
September 30, 2021 / 2020
7,028
6,582
Adjustment to annualize/eliminate revenues of certain acquisitions/divestments
(213)
–
Adjusted revenues for the trailing twelve months
28,598
28,114
Net working capital as a percentage of revenues (%)
12.8%
11.6%
(1)
Amount excludes receivables related to sales of investments outstanding at June 30, 2021.
(2)
Amounts exclude $1,104 million and $705 million at June 30, 2022 and 2021, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension
and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain restructuring-related activities and (f) liabilities related to the divestment of
the Power Grids business.
46
Q2 2022
FINANCIAL
INFORMATION
Free cash flow conversion to net income
Definition
Free cash flow conversion to net income
Free cash flow conversion to net income is calculated as free cash
flow divided by Adjusted net income attributable to
ABB.
Adjusted net income attributable to ABB
Adjusted net income attributable to ABB is calculated as net income
attributable to ABB adjusted for: (i) impairment of
goodwill, (ii) losses from extinguishment of
debt, and (iii) gains arising on the sale of both the Mechanical
Power Transmission Division (Dodge) and Power
Grids business, the latter being included in
discontinued operations.
Free cash flow
Free cash flow is calculated as net cash provided by operating activities
adjusted for: (i) purchases of property,
plant and equipment and intangible assets, and
(ii)
proceeds from sales of property,
plant and equipment.
Free cash flow for the trailing twelve months
Free cash flow for the trailing twelve months includes free cash flow
recorded by ABB in the twelve months preceding the
relevant balance sheet date.
Net income for the trailing twelve months
Net income for the trailing twelve months includes net income
recorded by ABB (as adjusted) in the twelve months
preceding the relevant balance sheet date.
Free cash flow conversion to net income
Twelve months to
($ in millions, unless otherwise indicated)
June 30, 2022
December 31, 2021
Net cash provided by operating activities – continuing
operations
1,973
3,338
Adjusted for the effects of continuing operations:
Purchases of property, plant and
equipment and intangible assets
(865)
(820)
Proceeds from sale of property, plant and
equipment
136
93
Free cash flow from continuing operations
1,244
2,611
Net cash provided by (used in) operating activities – discontinued
operations
(40)
(8)
Free cash flow
1,204
2,603
Adjusted net income attributable to ABB
(1)
2,132
2,416
Free cash flow conversion to net income
56%
108%
(1)
Adjusted net income attributable to ABB for the year ended December 31, 2021, is adjusted to exclude the gain on the sale of Dodge of $2,195 million and reductions to the gain on
the sale of Power Grids of $65 million.
Reconciliation of the trailing twelve months to
June 30, 2022
Continuing operations
Discontinued operations
($ 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
Purchases of
property, plant
and equipment
and intangible
assets
Proceeds
from sale of
property, plant
and equipment
Adjusted net
income
attributable
to ABB
(1)
Q3 2021
1,119
(166)
13
(15)
–
–
657
Q4 2021
1,033
(361)
57
(13)
–
–
478
Q1 2022
(564)
(187)
35
(9)
–
–
609
Q2 2022
385
(151)
31
(3)
–
–
388
Total for the trailing
twelve months to
June 30, 2022
1,973
(865)
136
(40)
–
–
2,132
(1)
Adjusted net income attributable to ABB for Q3 and Q4 of 2021 as well as Q1 and Q2 of 2022,
is adjusted to exclude reductions to the gain on the sale of Power Grids of $5 million,
$33 million, $5 million and $9 million, respectively.
In addition, Q4 2021 is also adjusted to exclude the gain on the sale of Dodge of $2,195 million.
47
Q2 2022
FINANCIAL
INFORMATION
Net finance expenses
Definition
Net finance expenses is calculated as Interest and dividend income
less Interest and other finance expense.
Reconciliation
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Interest and dividend income
33
26
20
15
Interest and other finance expense
(62)
(91)
(40)
(36)
Net finance expenses
(29)
(65)
(20)
(21)
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by Total
revenues.
Reconciliation
Six months ended June 30,
2022
2021
($ in millions, except Book-to-bill presented as a ratio)
Orders
Revenues
Book-to-bill
Orders
Revenues
Book-to-bill
Electrification
8,434
6,858
1.23
7,224
6,546
1.10
Motion
4,281
3,198
1.34
3,864
3,517
1.10
Process Automation
3,511
3,035
1.16
3,211
2,947
1.09
Robotics & Discrete Automation
2,417
1,462
1.65
1,809
1,685
1.07
Corporate and Other
(incl. intersegment eliminations)
(463)
(337)
n.a.
(363)
(345)
n.a.
ABB Group
18,180
14,216
1.28
15,745
14,350
1.10
Three months ended June 30,
2022
2021
($ in millions, except Book-to-bill presented as a ratio)
Orders
Revenues
Book-to-bill
Orders
Revenues
Book-to-bill
Electrification
4,037
3,531
1.14
3,693
3,406
1.08
Motion
2,079
1,626
1.28
1,947
1,850
1.05
Process Automation
1,819
1,529
1.19
1,555
1,540
1.01
Robotics & Discrete Automation
1,109
732
1.52
968
832
1.16
Corporate and Other
(incl. intersegment eliminations)
(237)
(167)
n.a.
(174)
(179)
n.a.
ABB Group
8,807
7,251
1.21
7,989
7,449
1.07
48
Q2 2022
FINANCIAL
INFORMATION
—
ABB Ltd
Corporate Communications
P.O. Box
8131
8050
Zurich
Switzerland
Tel:
+41 (0)43
317 71
11
www.abb.com
April 1 — June 30, 2022
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
Description
Received *
Purchased
Sold
Price
Timo Ihamuotila
May 16, 2022
Share
38,594
CHF
28.31
Tarak Mehta
May 16, 2022
Share
34,937
CHF
28.31
Peter Terwiesch
May 16, 2022
Share
32,500
CHF
28.31
Morten Wierod
May 16, 2022
Share
43,752
CHF
28.31
Sami Atiya
May 16, 2022
Share
39,001
CHF
28.31
Peter Voser
May 02, 2022
Share
18,296
CHF
31.16
Gunnar Brock
May 02, 2022
Share
2,026
CHF
31.16
David Constable
May 02, 2022
Share
1,964
CHF
31.16
Frederico Curado
May 02, 2022
Share
4,075
CHF
31.16
Lars Förberg
May 02, 2022
Share
4,870
CHF
31.16
Jennifer Xin-Zhe Li
May 02, 2022
Share
1,986
CHF
31.16
Geraldine Matchett
May 02, 2022
Share
2,647
CHF
31.16
David Meline
May 02, 2022
Share
2,456
CHF
31.16
Satish Pai
May 02, 2022
Share
1,872
CHF
31.16
Jacob Wallenberg
May 02, 2022
Share
2,763
CHF
31.16
Key:
* Received instruments were delivered
as part of the ABB Ltd Director’s or
Executive Committee Member’s
compensation 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: July 21, 2022.
By:
/s/ Ann-Sofie Nordh
Name:
Ann-Sofie Nordh
Title:
Group Senior Vice President and
Head of Investor Relations
Date: July 21, 2022.
By:
/s/ Richard A. Brown
Name:
Richard A. Brown
Title:
Group Senior Vice President and
Chief Counsel Corporate & Finance