ABBNY 6-K 2021 - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE

ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2021

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 101(b)(1):

⬜

Note:

Regulation S-T Rule 101(b)(1) only permits the submission in paper

of a Form 6-K if submitted solely to provide an

attached annual report to security holders.

Indication by check mark if the registrant is submitting

the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

⬜

Note:

Regulation S-T Rule 101(b)(7) only permits the submission in paper

of a Form 6-K if submitted to furnish a report or

other document that the registrant foreign private issuer must

furnish and make public under the laws of the jurisdiction

which the registrant is incorporated, domiciled or

legally organized (the registrant’s

“home country”), or under the rules of the

home country exchange on which the registrant’s

securities are traded, as long as the report or other document

is not a press

release, is not required to be and has not been distributed

to the registrant’s security

holders, and, if discussing a material event,

has already been the subject of a Form 6-K submission or other

Commission filing on EDGAR.

Indicate by check mark whether the registrant by furnishing

the information contained in this Form is also thereby

furnishing

the information to the Commission pursuant to Rule 12g3-2(b)

under the Securities Exchange Act of 1934.

Yes

⬜

☒

If “Yes”

is marked, indicate below the file number assigned to the

registrant in connection with Rule 12g3-2(b): 82-

This Form 6-K consists of the following:

Press release issued by ABB Ltd dated April 27,

2021 titled “Q1 2021 results: Strong start to the year”.

Q1 2021 Financial Information.

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.

●

Orders $7.8 billion, +6%; comparable

+1%

●

Revenues $6.9 billion, +11%; comparable +7%

●

Income from operations $797

million; margin 11.5%

●

Operational EBITA

$959

million; margin

13.8%

●

Basic EPS $0.25; +41%

●

Cash flow from operating activities $543 million; cash flow from operating activities in continuing operations $523 million

KEY FIGURES

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

7,756

7,346

Revenues

6,901

6,216

11%

Gross Profit

2,268

1,910

19%

as % of revenues

32.9%

30.7%

+2.2 pts

Income from operations

797

373

114%

Operational EBITA

959

636

51%

40%

as % of operational revenues

13.8%

10.2%

+3.6 pts

Income from continuing operations, net of tax

551

326

69%

Net income (loss) attributable to ABB

502

376

34%

Basic earnings per share ($)

0.25

0.18

41%

Cash flow from operating activities

543

(577)

n.a.

Cash flows from operating activities in continuing

operations

523

(396)

n.a.

For a reconciliation of non-GAAP measures, see “supplemental

reconciliations and definitions” in the attached Q1 2021 Financial

Information.

EPS growth rates are computed using unrounded amounts.

Constant currency (not adjusted for portfolio changes).

Amount represents total for both continuing and discontinued

operations.

—

ZURICH, SWITZERLAND, APRIL 27, 2021

Q1 2021 results

Strong start to the year

—

“After a busy year of creating the right set-up for the Group,

we are now

starting to show the real potential of our underlying business

es.

Through greater accountability,

transparency and speed, we increasingly create

value for our stakeholders.”

Björn Rosengren

, CEO

ABB

INTERIM

REPORT

2021

Market activity continued to recover from its lowest point

during the summer 2020. Demand was especially strong in

the short-cycle business, beyond our expectations. The

increased customer activity, in combination with the impact

from previously implemented cost measures,

resulted in

double-digit growth in Operational EBITA,

and a very high

first quarter margin of 13.8%. I am pleased to see good

performance also in cash flow, which was high for a first

quarter at $523 million. That said, while there was no

material impact on results in the period,

the progressively

tighter supply of certain components such as semiconductors

and plastics, is a concern. We anticipate prolonged delivery

lead-times to customers in parts of our businesses in the

coming quarter. On a separate note, we made the important

launch of our new collaborative robot families. Through this

expansion of our offering, we aim to unlock customer groups

with currently a low level of automation.

In total, we registered order growth of 6% (1% comp-

arable), supported by a broad recovery in most of our short-

cycle businesses. To some extent, demand is likely to have

been driven by a stock build-up related to supply chain

concerns. On the downside,

growth was hampered by a

weak development in the cruising and oil & gas segments

albeit initial signs of stabilization were noted. Overall, orders

increased slightly in Europe and AMEA, with the latter

supported by a stellar growth in China. Underlying business

momentum improved in the Americas, driven by the US,

although the region faced high comparable numbers in the

previous period, which put pressure on growth rates.

I am pleased about the progress toward our 2023 margin

target, with all business areas increasing operational EBITA

margin by more than 100 basis points. That said, we are

taking actions to further improve operational performance in

Based on the current market situation, ABB anticipates

growth rates in the

second quarter of 2021

to reflect the low

level of business activity in Q2 2020. Comparable orders and

revenues are expected to grow >10%, with orders growing

more than revenues.

The Operational EBITA margin for the Group is

expected to significantly improve year-on-year, to

approximately 14%.

As announced in the recent trading update, ABB anticipates

comparable revenue growth of ~5% or higher for

full-year

2021

, with the process industry related part of the business

expected to recover during the second half of the year.

In 2021, ABB expects a steady pace of improvement from

2020 toward the 2023 Operational EBITA margin target of

upper half of the 13%-16% range. This excludes the

combined adverse impact related to the Kusile project and

stranded costs, which weighed on margin in 2020.

Outlook

Process Automation,

which should also benefit from an

anticipated improvement in end markets during the latter part

of the year.

We made good progress with the divestment process for the

three previously announced divisions and I expect us to sign

the first deal during the second half of the year.

Furthermore, we have turned our E-mobility

business into a

separate division and initiated a carve out into a separate

legal structure. These steps will allow us to prepare for

a possible public listing, creating a platform for accelerated

growth and value creation in this business.

We held the Annual General Meeting at which the proposed

dividend of CHF 0.80 was approved. Furthermore,

announced an additional share buyback program of up to

$4.3 billion, whereby re-confirming the intention to return

$7.8 billion of cash proceeds from the Power Grids divestment

to shareholders.

Björn Rosengren

CEO

CEO summary

ABB

INTERIM

REPORT

2021

OEM business more than offset the growth noted in the

tier-1 customer segment.

In the process related businesses, oil & gas declined,

although there were signs of improving customer activity. A

largely stable development was registered in the pulp &

paper, mining and power generation segments. However,

customer activity in the areas of chemicals as well as water

& wastewater was high.

In transport and infrastructure, there was a very strong

order development across the renewables, data centers

and e-mobility segments. Also, the buildings segment

improved with the residential segment outperforming non-

residential. In the marine segment however, orders

declined, due to weak demand in the cruising segment.

Revenues amounted to $6,901 million, increasing by 11%

(7% comparable). Three out of four business areas reported

revenue increases with only Process Automation declining.

The overall demand for ABB products and services

improved both year-on-year and sequentially, reflecting

strength in the short-cycle business supported by positive

developments in most customer segments. Demand related

to process industries was subdued. In total, orders for the

ABB Group amounted to $7,756 million, increasing by 6%

(1% comparable).

On a sequential basis, the underlying general business

environment was positive in all three regions. Compared

with the corresponding period last year, growth in the

Americas was stable as the year-earlier period did not

include any significant adverse impacts from COVID-19, and

also benefited from higher large orders received. Asia,

Middle East and Africa (AMEA) improved by 8%

(2% comparable), driven by a sharp increase of 34%

(24% comparable) in China. Orders in Europe increased

10% (3% comparable), with a resilient performance in

Germany.

Orders grew strongly in the machine builders, consumer

electronics and food & beverage segments as well as in

general industries overall. The automotive segment

declined, as the adverse development in the relatively larger

Revenues by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q1 2021

Q1 2020

US$

Comparable

Europe

2,551

2,371

The Americas

2,043

2,092

-2%

Asia, Middle East

and Africa

2,307

1,706

35%

30%

Intersegment

–

ABB Group

6,901

6,216

11%

Growth

Change year-on-year

Orders

Revenues

Comparable

Portfolio changes

-1%

Total

11%

Orders by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q1 2021

Q1 2020

US$

Comparable

Europe

3,102

2,813

10%

The Americas

2,247

2,240

Asia, Middle East

and Africa

2,407

2,230

Intersegment

–

ABB Group

7,756

7,346

Intersegment orders/revenues until June 30, 2020, include

sales to the Power Grids business

which is presented as discontinued operations and thus these sales

are not eliminated from

total orders/revenues.

Orders and revenues

ABB

INTERIM

REPORT

2021

Corporate and Other Operational EBITA improved by

$14 million to -$101 million, with the underlying ongoing

corporate EBITA largely stable at -$79 million.

Net finance expenses

The net finance expenses amounted to $44 million, higher

than the $4 million in 2020. While interest costs on debt

were significantly lower, 2020 included a reduction in

interest expense due to changes in tax contingencies. Net

finance expenses for 2021 is still estimated at $130 million.

Income tax

Income tax expense was $252 million with a tax rate of

31.4% compared with 19.5% in the prior year, mostly due to

that 2020 included the impact of a favourable resolution of a

tax contingency. Tax

rate for 2021 is still estimated at 26%.

Net income and earnings per share

Net income attributable to ABB was $502 million and

increased by 34% year-on-year. Basic earnings per share

was $0.25 and increased by 41% year-on-year, including

the adverse impact of $0.01 from discontinued operations.

Gross profit

Gross margin increased to 32.9%, up 220 basis points

year-on-year, supported by the revenue growth and

structural improvements.

Gross margin increased in three

out of four business areas. Gross profit improved by 19%

and amounted to $2,268 million.

Income from operations

Income from operations amounted to $797 million and more

than doubled from the year-earlier period driven by stronger

operational profit,

lower negative impacts from hedging

timing differences and lower costs associated with the

divestment of Power Grids. Results include restructuring

activities progressing according to plan with restructuring

and restructuring related expenses of $35 million in the

period,

primarily related to Electrification.

Operational EBITA

Operational EBITA showed a steep improvement of 51%

(40% constant currency) year-on-year, increasing the

margin by 360 basis points to 13.8%. The stronger

performance was driven by increased revenues in

combination with improved gross margin, the impact from

earlier implemented cost measures and general stringent

cost control, with some additional support from the impact

of exchange rate movements.

Costs relating to selling,

general and administrative (SG&A) expenses remained

broadly stable, however the ratio in relation to revenues

declined to 18.3%, from 20.1% in the year-earlier period.

SG&A expenses increased by 1% (-4% constant currency),

partially held back by the abnormally low travel and sales

activities on the back of COVID-19 restrictions. R&D

expenses increased by 13% (6% constant currency).

Earnings

ABB

INTERIM

REPORT

2021

Net working capital

Net working capital amounted to $2,904 million,

and

decreased 12% year-on-year, while it increased from

$2,718 million in the prior quarter primarily due to higher

contract assets and inventories as well as lower accrual for

employee bonuses. Net working capital as a percentage of

revenues was 10.8%, compared with 12.3% in the

corresponding period last year.

Capital expenditures

Purchases of property, plant and equipment and intangible

assets in the quarter amounted to $142 million.

Net debt

Net debt totalled $1,233 million,

a significant reduction

compared with last year’s level of $6,221 million and a

sequential increase from $112 million. The sequential

increase reflects the impacts of the share buybacks during

the quarter as well as the initial dividend payment in the

period. The net debt to EBITDA ratio declined to 0.4 from

2.3 reported for the same period last year, while it increased

sequentially from 0.04.

Cash flows

Cash flow from operating activities in continuing operations

was $523 million,

very strong for a first quarter which

normally is seasonally weak, and a significant improvement

of $919 million compared with the corresponding period last

year. All business areas contributed to the increase which

primarily related to the contribution from a higher

operational result, a lower build-up of working capital and

more favorable timing of tax payments.

Share buyback program

announced earlier, ABB intends to return $7.8 billion of

cash proceeds from the Power Grids divestment to

shareholders through share buybacks. After completion of

the initial program, a further share buyback program of up

to $4.3 billion was launched on April 9. It is being executed

on a second trading line on the SIX Swiss Exchange and is

planned to run until the company’s 2022 Annual General

Meeting. ABB intends to request shareholders to approve

the cancellation of the remaining shares purchased but not

approved for cancellation under the initial program as well

as those purchased under this new program at its 2022

AGM.

($ millions,

unless otherwise indicated)

Mar. 31

2021

Mar. 31

2020

Dec. 31

2020

Short term debt and current

maturities of long-term debt

1,336

5,913

1,293

Long-term debt

5,619

6,830

4,828

Total debt

6,955

12,743

6,121

Cash & equivalents

3,466

5,971

3,278

Restricted cash - current

–

323

Marketable securities and

short-term investments

1,884

551

2,108

Restricted cash - non-current

300

–

300

Cash and marketable securities

5,722

6,522

6,009

Net debt*

1,233

6,221

112

Net debt* to EBITDA ratio

0.4

2.3

0.04

Net debt* to Equity ratio

0.09

0.52

0.01

net debt excludes net pension liabilities $871 million

Balance sheet & Cash flow

ABB

INTERIM

REPORT

2021

Orders and revenues

Order intake reached a high level of $3,531 million, a solid

increase of 13% (9% comparable). Revenues at

$3,140 million grew 13% (11% comparable) with strength

noted in most segments.

●

Strong demand was further supported by customers stock-

building to manage the rising constraints of component

availability. Additionally,

some accelerated orders from

customers due to expected price increases driven by rising

commodity prices also supported demand, although to a

smaller extent.

●

Demand improved in the buildings segment, with the

residential business outpacing the non-residential.

Customer activity was also high for the data centers, food &

beverage, rail and e-mobility segments. Activity in oil & gas

was muted,

albeit the initial signs of a pick-up for the

service business was noted.

●

Growth in AMEA was supported by stellar growth in China.

Orders grew strongly in both Europe and the Americas.

Profit

All of the larger divisions improved both Operational EBITA

and margin, hence the business area result improved by

61%

and margin increased by 480 basis points to 16.2%.

●

The strong performance reflects the impact from higher

utilization of fixed assets on increased volumes, improved

pricing, earlier implemented cost measures as well as

general stringent cost controls and constrained travel

expenses.

●

While the adverse impact from rising raw material costs

was very limited in the period, this is expected to have an

increasingly negative impact in the coming quarters as

commodities bought at higher rates

are moved out of

inventories.

—

Electrification

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

3,531

3,121

13%

Order backlog

4,699

4,386

Revenues

3,140

2,773

13%

11%

Operational EBITA

511

318

61%

as % of operational revenues

16.2%

11.4%

+4.8 pts

Cash flow from operating activities

319

n.a.

No. of employees (FTE equiv.)

50,990

52,710

Growth

Change year-on-year

Orders

Revenues

Comparable

11%

Portfolio changes

-1%

-3%

Total

13%

ABB

INTERIM

REPORT

2021

Orders and revenues

In total, order intake was at a high level and amounted to

$1,917 million which increased by 1%

(-4% comparable), although the high comparable from the

prior period weighed on the growth rate. Revenues

amounted to $1,667 million, representing growth of 10%

(6% comparable).

●

Customer activity was high in all segments except oil &

gas, where activity declined. Order intake was driven by

the short-cycle business, however there were initial signs

of improving demand for projects.

●

While orders declined in both AMEA and Europe due to

high comparables, it increased in the Americas.

The concept of the “Energy Efficiency Movement” was

launched, calling upon governments and industries to

accelerate the adoption of high-efficiency motors and

variable speed drives to combat climate change. This puts

the technology leadership in focus, supporting Motion’s

long-term growth opportunities.

Profit

Operational EBITA margin of 17.1% is a very high first-

quarter level, and the Operational EBITA increased by 26%,

relative to the same period last year.

●

Operational EBITA and margin improvements

were

supported by higher sales volumes, improved divisional

mix, stringent cost scrutiny and input costs still covered

by favorable hedging.

●

Although a tightening supply of semiconductors was

noted in the industry, there was no material impact on

customer deliveries or results.

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

1,917

1,901

-4%

Order backlog

3,419

3,259

-1%

Revenues

1,667

1,510

10%

Operational EBITA

289

230

26%

as % of operational revenues

17.1%

15.3%

+1.8 pts

Cash flow from operating activities

324

152

113%

No. of employees (FTE equiv.)

20,980

20,820

—

Motion

Growth

Change year-on-year

Orders

Revenues

Comparable

-4%

Portfolio changes

Total

10%

ABB

INTERIM

REPORT

2021

Orders and revenues

Customer activity in the process related segments was low

and orders and revenues declined year-on-year in most

divisions. Order intake amounted to $1,656 million, a

decrease of 6% (11%

comparable). Revenues amounted to

$1,407 million, declining by 4% (9% comparable).

●

On the back of a lower demand for products, systems as

well as services, the marine and oil & gas segments

weighed on the total business area growth. This more

than offset the somewhat positive developments in pulp &

paper, ports, chemicals and water & waste-water.

●

Orders declined in all divisions, except for a slight growth

in the short-cycle related business of Measurement &

Analytics.

●

Revenues declined, mainly reflecting the subdued service

business, timing in execution of the order backlog and

cruise operators operating significantly below normal

levels.

Profit

Despite the decline in revenues the margin improved by

130 basis points year-on-year to 11.0%

on improved

operational performance. Operational EBITA increased by

8%.

●

The negative volume development had an adverse

impact on the Operational EBITA, however this was offset

by the positive impact from earlier implemented cost

measures, stronger operational execution and positive

impact from currency movements.

●

There was no material impact from the rising constraints

of semiconductors supply.

●

To take the next step in operational performance, a

management change at the head of the

Measurement & Analytics division was made.

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

1,656

1,757

-6%

-11%

Order backlog

5,900

5,183

14%

Revenues

1,407

1,462

-4%

-9%

Operational EBITA

155

144

as % of operational revenues

11.0%

9.7%

+1.3 pts

Cash flow from operating activities

233

(26)

n.a.

No. of employees (FTE equiv.)

22,000

22,980

—

Process Automation

Growth

Change year-on-year

Orders

Revenues

Comparable

-11%

-9%

Portfolio changes

Total

-6%

-4%

ABB

INTERIM

REPORT

2021

Orders and revenues

In total, order intake amounted to $841 million, 4% higher (-

3% comparable) year-on-year. Revenues grew strongly,

increasing 27% (19% comparable

) and amounted to

$853 million, supported by a strong execution of deliveries

from the order backlog as well as a generally strong

development in the short-cycle business.

●

Demand from machine builders was strong, driving a

steep order increase in Machine Automation, partially due

to some inventory build-up.

Robotics orders improved in

most customer segments, except in the automotive

segment where the growth rate was also pressured by

the impact from the ongoing strategic selective order

approach, aimed at improving long-term profitability.

●

Orders grew in the AMEA region, outperforming the

declines in both the Americas and Europe.

The collaborative robot portfolio was expanded with two

new cobot families offering higher payloads and speeds.

Importantly, they are intuitively designed so customers need

not rely on in-house programming specialists. The launch

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

841

811

-3%

Order backlog

1,362

1,454

-6%

-12%

Revenues

853

671

27%

19%

Operational EBITA

105

78%

as % of operational revenues

12.4%

8.8%

+3.6 pts

Cash flow from operating activities

111

68%

No. of employees (FTE equiv.)

10,290

10,340

aims to unlock customer groups who currently have low

levels of automation.

Profit

Operational EBITA increased by 78% year-on-year and the

margin increased by 360 basis points to 12.4% with similar

improvements in both the Robotics and Machine

Automation divisions.

●

The margin improvement was primarily driven by the

better cost absorption from higher volumes, a positive

divisional mix, improved performance in the service

business and impacts from previously implemented cost

measures.

—

Robotics & Discrete Automation

Growth

Change year-on-year

Orders

Revenues

Comparable

-3%

19%

Portfolio changes

Total

27%

ABB

INTERIM

REPORT

2021

ABB took important steps in the first quarter of 2021 to

establish the governance of its new ambitious 2030

sustainability strategy, which was launched in November

There is a clear focus on areas with the biggest impact

– enabling a low-carbon society by reducing emissions,

preserving resources, and promoting social progress

underpinned by a strong commitment to integrity and

transparency.

Quarterly highlights

●

ABB recorded a 22% year-on-year reduction of CO

₂

emissions in its own operations mainly due to increased use

of renewable electricity. This was underlined by the

unveiling of a new solar power generation and renewable

energy integration system at its low-voltage products

manufacturing site in Beijing.

●

Reduction in LTIFR, defined below, of 31% year-on-year

partially due to the extra COVID-19 measures in addition to

our focus on safety overall at our sites. ABB is also

engaging in several initiatives to address mental health

issues, including rolling out business-led mental wellbeing

programs such as “Are you OK?”

●

ABB Switzerland was awarded the “Swiss LGBTI-Label” for

the next three years on the basis of criteria such as

strategy, HR policy and quality management.

Q1 2021

Q1 2020

CHANGE

12M ROLLING

CO2e own operations emissions,

kt scope 1 and 2

113

-22%

Lost Time Injury Frequency Rate (LTIFR),

frequency / 200,000 working hours

0.126

0.182

-31%

0.149

Share of females in senior management

positions, %

14.3

12.3

+2.0pts

13.4

Data is for the end of previous quarter

Furthermore, ABB has set itself the target of increasing the

share of women in senior management roles to 25%

by 2030.

●

ABB published its Annual Sustainability Report 2020,

achieving most of its targets and reducing greenhouse gas

emissions by 58% since 2013.

●

ABB was named one of the world’s most sustainable

companies by Corporate Knights, an international media and

research organization. Ranked 33, ABB significantly improved

its score versus last year’s ranking.

Story of the quarter

In early March, ABB’s Motion business area called upon

governments and industry to accelerate the adoption of high-

efficiency motors and variable speed drives to combat climate

change. Motor and drive technologies have seen exceptionally

rapid advancement in the past decade. However, a significant

number of industrial electric motor-driven systems in operation

today – in the region of 300 million globally – are inefficient or

consume much more power than required, resulting in

monumental energy wastage. Independent research estimates

that if these systems were replaced with optimized, high-

efficiency equipment, the gains to be realized could reduce

global electricity consumption by up to 10 percent. Read more at

https://www.energyefficiencymovement.com

Q1 outcome

●

22% reduction of CO

₂

emissions in own operations mainly

due to higher use of renewable electricity

●

31%

reduction in LTIFR through COVID-19 related safety

measures

●

Diversity & Inclusion initiative strengthened through Swiss

LGBTI certification

—

Sustainability

ABB

INTERIM

REPORT

2021

After Q1 2021

●

On April 9, ABB launched its previously announced

follow-up share buyback program of up to $4.3 billion.

Based on the share price at launch of the program this

represented a maximum of approximately 137 million

shares. The maximum number of shares that may be

repurchased under this new program on any given

trading day is 1,543,644.

●

On April 15, ABB issued a trading update following better-

than-anticipated performance in Q1. Additionally, it raised

its revenue guidance for full year 2021 outlook to

anticipating comparable revenue growth of ~5% or higher

(previously: comparable revenue growth to be broadly in

line with its long-term target range), including an

anticipated recovery in the process industry related part

of the business during the second half of the year.

●

On April 27, ABB announced it has separated the

E-mobility business into its own division

and initiated a carve out into a separate legal

structure. These steps will allow for preparation for

a possible public listing and create a platform for

accelerated growth and value creation in this business.

During Q1 2021

●

On February 24, ABB announced it is expanding its

collaborative robot (cobot) portfolio with the new GoFa™

and SWIFTI™ cobot families. These offer higher

payloads and speeds and complement YuMi® and Single

Arm YuMi® in ABB’s cobot line-up. These stronger, faster

and more capable cobots will accelerate the company’s

expansion in high-growth segments including electronics,

healthcare, consumer goods, logistics and food and

beverage, amongst others, meeting the growing demand

for automation across multiple industries.

●

On March 25, ABB announced it had completed its initial

share buyback program that was launched in July 2020

as part of the company’s plan to return to shareholders

cash proceeds from the Power Grids divestment of $7.8

billion. Through the initial buyback program, ABB

repurchased a total of 128,620,589 shares – equivalent to

5.93% of its issued share capital at launch of the buyback

program – for a total amount of approximately $3.5 billion.

At the Annual General Meeting (AGM) shareholders

approved the cancellation of 115 million shares

purchased under the initial share buyback program.

Consistent with ABB’s capital structure optimization

program, ABB’s Board of Directors approved a further

share buyback program of up to $4.3 billion.

●

On March 25, at the 2021 AGM, Peter Voser was

confirmed as Chairman of the company’s Board of

Directors with 92.9 percent of the votes. With the

exception of Matti Alahuhta, who as announced earlier

did not stand for re-election, all other members of the

Board were re-elected for another term: Jacob

Wallenberg, Gunnar Brock, David Constable, Frederico

Fleury Curado, Lars Förberg,

Jennifer Xin-Zhe Li,

Geraldine Matchett, David Meline and Satish Pai.

Significant events

ABB

INTERIM

REPORT

2021

Divestments

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Power Grids

1-Jul

9,200

36,000

Note: comparable growth calculation includes acquisitions and

divestments with revenues of greater than $50 million.

Represents the estimated annual revenues for the period

prior to the announcement of the respective acquisition/divestment.

Additional figures

ABB Group

Q1 2020

Q2 2020

Q3 2020

Q4 2020

FY 2020

Q1 2021

EBITDA, $ in million

600

799

302

807

2,508

1,024

Return on Capital Employed, %

n.a.

10.3%

n.a.

Net debt/Equity

0.50

0.60

(0.10)

0.01

0.09

Net debt/ EBITDA 12M rolling

2.3

2.5

(0.4)

0.04

0.4

Net working capital, % of 12M rolling revenues

12.3%

12.6%

12.5%

10.5%

10.8%

Earnings per share, basic, $

0.18

0.15

2.14

(0.04)

2.44

0.25

Earnings per share, diluted, $

0.18

0.15

2.14

(0.04)

2.43

0.25

Dividend per share, CHF

n.a.

0.80

n.a.

Share price at the end of period, CHF

17.01

21.33

23.45

24.71

28.56

Share price at the end of period, $

17.26

22.56

25.45

27.96

30.47

Number of employees (FTE equivalents)

143,320

142,310

106,420

105,520

105,330

No. of shares outstanding at end of period (in millions)

2,134

2,135

2,092

2,031

2,024

Excluding two main operational exposures that are ongoing

in the non-core business and for which exit timing is dependent

on circumstances beyond ABB’s control such as legal proceedings.

Excluding share of net income from JV.

($ in millions, unless otherwise stated)

FY 2021

Q2 2021

Net finance expenses

~(130)

~(30)

unchanged

Non-operational pension

(cost) / credit

~180

~45

unchanged

Effective tax rate

~26%

unchanged

Capital Expenditures

~(750)

~(185)

unchanged

($ in millions, unless otherwise stated)

FY 2021

Q2 2021

Corporate and Other Operational costs

~(425)

~(110)

unchanged

Non-operating items

Restructuring and restructuring related

~(200)

~(40)

unchanged

GEIS integration costs

~(20)

~(10)

from ~(30)

PPA-related amortization

~(255)

~(65)

unchanged

Certain other income and expenses

related to PG divestment

~(40)

~(15)

unchanged

Additional 2021 guidance

Acquisitions

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Robotics & Discrete Automation

Codian Robotics B.V.

1-Oct

Acquisitions and divestments, last twelve months

ABB

INTERIM

REPORT

2021

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.

The Q1 2021 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. CEST.

Q1 results presentation on April 27, 2021

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 “Outlook”, “CEO Summary”, “Share

buyback program” and “Sustainability”. These statements

are based on current expectations, estimates and

projections about the factors that may affect our future

performance, including global economic conditions, the

economic conditions of the regions and industries that are

major markets for ABB. These expectations, estimates and

projections are generally identifiable by statements

containing words such as “intends” “anticipates”, “expects,”

“believes,” “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. The 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.

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.

Media Relations

Phone: +41 43 317 71 11

Email: [email protected]

Investor Relations

Phone: +41 43 317 71 11

Email: [email protected]

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

For additional information please contact:

2021

July 22

Q2 results

October 21

Q3 results

Financial calendar

Important notice about forward-looking information

Q1 2021

FINANCIAL

INFORMATION

Q1 2021

FINANCIAL

INFORMATION

—

Financial

Information

Contents

─

5 Key Figures

─

32 Consolidated

Financial

Information

(unaudited)

33 ─

42 Supplemental

Reconciliations

and Definitions

Q1 2021

FINANCIAL

INFORMATION

—

Key Figures

CHANGE

($ in millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

(1)

Orders

7,756

7,346

Order backlog (end March)

14,750

13,698

Revenues

6,901

6,216

11%

Income from operations

797

373

114%

Operational EBITA

(1)

959

636

51%

40%

(2)

as % of operational revenues

(1)

13.8%

10.2%

+3.6 pts

Income from continuing operations, net of tax

551

326

69%

Net income attributable to ABB

502

376

34%

Basic earnings per share ($)

0.25

0.18

41%

(3)

Cash flow from operating activities

(4)

543

(577)

n.a.

(1) For

a reconciliation

of non-

GAAP measures

see

“

Supplemental

Reconciliations

and Definitions

”

on page 33

(2) Const

ant 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.

Q1 2021

FINANCIAL

INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Local

Comparable

Orders

ABB Group

7,756

7,346

Electrification

3,531

3,121

13%

Motion

1,917

1,901

-4%

Process Automation

1,656

1,757

-6%

-11%

Robotics & Discrete Automation

841

811

-3%

Corporate and Other

(incl. intersegment eliminations)

(189)

(244)

Order backlog (end March)

ABB Group

14,750

13,698

Electrification

4,699

4,386

Motion

3,419

3,259

-1%

Process Automation

5,900

5,183

14%

Robotics & Discrete Automation

1,362

1,454

-6%

-12%

Corporate and Other

(incl. intersegment eliminations)

(630)

(584)

Revenues

ABB Group

6,901

6,216

11%

Electrification

3,140

2,773

13%

11%

Motion

1,667

1,510

10%

Process Automation

1,407

1,462

-4%

-9%

Robotics & Discrete Automation

853

671

27%

19%

Corporate and Other

(incl. intersegment eliminations)

(166)

(200)

Income from operations

ABB Group

797

373

Electrification

440

199

Motion

265

191

Process Automation

147

124

Robotics & Discrete Automation

Corporate and Other

(incl. intersegment eliminations)

(137)

(173)

Income from operations %

ABB Group

11.5%

6.0%

Electrification

14.0%

7.2%

Motion

15.9%

12.6%

Process Automation

10.4%

8.5%

Robotics & Discrete Automation

9.6%

4.8%

Operational EBITA

ABB Group

959

636

51%

40%

Electrification

511

318

61%

47%

Motion

289

230

26%

18%

Process Automation

155

144

-1%

Robotics & Discrete Automation

105

78%

59%

Corporate and Other

(1)

(incl. intersegment eliminations)

(101)

(115)

Operational EBITA %

ABB Group

13.8%

10.2%

Electrification

16.2%

11.4%

Motion

17.1%

15.3%

Process Automation

11.0%

9.7%

Robotics & Discrete Automation

12.4%

8.8%

Cash flow from operating activities

(2)

ABB Group

543

(577)

Electrification

319

Motion

324

152

Process Automation

233

(26)

Robotics & Discrete Automation

111

Corporate and Other

(incl. intersegment eliminations)

(464)

(601)

Discontinued operations

(181)

(1)

Corporate and Other includes Stranded corporate costs of $21 million for the three months ended March 31, 2020.

(2)

Commencing Q3 2020, taxes and interest previously allocated to each individual operating segment are now fully allocated to Corporate and Other, and

commencing Q1 2021, depreciation relating to certain real estate assets, previously reported in Corporate and Other, has been reallocated to the individual

operating segments utilizing these assets. Comparatives have been restated to reflect both changes.

Q1 2021

FINANCIAL

INFORMATION

Operational

EBITA

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions, unless otherwise indicated)

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Revenues

6,901

6,216

3,140

2,773

1,667

1,510

1,407

1,462

853

671

Foreign exchange/commodity timing

differences in total revenues

(3)

(2)

Operational revenues

6,934

6,241

3,150

2,783

1,686

1,507

1,412

1,479

850

669

Income from operations

797

373

440

199

265

191

147

124

Acquisition-related amortization

Restructuring, related and

implementation costs

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

–

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

(6)

–

Foreign exchange/commodity timing

differences in income from operations

(2)

–

Operational EBITA

959

636

511

318

289

230

155

144

105

Operational EBITA margin (%)

13.8%

10.2%

16.2%

11.4%

17.1%

15.3%

11.0%

9.7%

12.4%

8.8%

Depreciation

and Amortization

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions)

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Depreciation

(1)

144

145

Amortization

including total acquisition-related amortization of:

(1) Commencing

Q1 2021,

depreciation

to certain

real estate

assets,

previously

reported

in Corporate

and Other

has

been re

allocated

to the individual

operating

segments

utilizing

these assets.

Comparatives

have been

restated

Orders

received

and revenues

by region

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

Q1 21

Q1 20

US$

Local

parable

Q1 21

Q1 20

US$

Local

parable

Europe

3,102

2,813

10%

2,551

2,371

The Americas

2,247

2,240

2,043

2,092

-2%

-3%

-2%

of which United States

1,679

1,710

-2%

1,532

1,615

-5%

-4%

Asia, Middle East and Africa

2,407

2,230

2,307

1,706

35%

28%

30%

of which China

1,199

898

34%

24%

1,176

667

76%

64%

69%

Intersegment orders/revenues

(1)

–

ABB Group

7,756

7,346

6,901

6,216

11%

(1) Intersegment

orders/revenues

during the

three months

ended March

31, 2020,

include

sales to

the Power

Grids business

which is

presented

as discontinued

operations

and thus

these s

ales are

not eliminated

from Total

orders/revenues.

Q1 2021

FINANCIAL

INFORMATION

—

Consolidated Financial Information

ABB Ltd Interim Consolidated Income Statements (unaudited)

Three months ended

($ in millions, except per share data in $)

Mar. 31, 2021

Mar. 31, 2020

Sales of products

5,707

4,993

Sales of services and other

1,194

1,223

Total revenues

6,901

6,216

Cost of sales of products

(3,924)

(3,575)

Cost of services and other

(709)

(731)

Total cost of sales

(4,633)

(4,306)

Gross profit

2,268

1,910

Selling, general and administrative expenses

(1,263)

(1,252)

Non-order related research and development expenses

(293)

(259)

Other income (expense), net

(26)

Income from operations

797

373

Interest and dividend income

Interest and other finance expense

(55)

(22)

Non-operational pension (cost) credit

Income from continuing operations before taxes

803

405

Income tax expense

(252)

(79)

Income from continuing operations, net of tax

551

326

Income (loss) from discontinued operations, net of tax

(28)

Net income

523

380

Net income attributable to noncontrolling interests

(21)

(4)

Net income attributable to ABB

502

376

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

530

325

Income (loss) from discontinued operations, net of tax

(28)

Net income

502

376

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

Weighted-average number of shares outstanding (in

millions) used to compute:

Basic earnings per share attributable to ABB shareholders

2,015

2,134

Diluted earnings per share attributable to ABB shareholders

2,034

2,138

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Interim Consolidated Financial Information

Q1 2021

FINANCIAL

INFORMATION

—

ABB Ltd Interim Condensed Consolidated Statements of Comprehensive

Income (unaudited)

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Total comprehensive income (loss),

net of tax

325

(127)

Total comprehensive

(income) loss attributable to noncontrolling interests, net of

tax

(24)

Total comprehensive income (loss)

attributable to ABB shareholders, net of tax

301

(123)

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Interim Consolidated Financial Information

Q1 2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Balance Sheets (unaudited)

($ in millions)

Mar. 31, 2021

Dec. 31, 2020

Cash and equivalents

3,466

3,278

Restricted cash

323

Marketable securities and short-term investments

1,884

2,108

Receivables, net

6,663

6,820

Contract assets

1,044

985

Inventories, net

4,475

4,469

Prepaid expenses

241

201

Other current assets

637

760

Current assets held for sale and in discontinued operations

241

282

Total current assets

18,723

19,226

Restricted cash, non-current

300

Property, plant and equipment, net

4,034

4,174

Operating lease right-of-use assets

972

969

Investments in equity-accounted companies

1,760

1,784

Prepaid pension and other employee benefits

362

360

Intangible assets, net

1,936

2,078

Goodwill

10,744

10,850

Deferred taxes

812

843

Other non-current assets

577

504

Total assets

40,220

41,088

Accounts payable, trade

4,453

4,571

Contract liabilities

1,855

1,903

Short-term debt and current maturities of long-term debt

1,336

1,293

Current operating leases

234

270

Provisions for warranties

1,012

1,035

Dividends payable to shareholders

874

–

Other provisions

1,471

1,519

Other current liabilities

3,921

4,181

Current liabilities held for sale and in discontinued operations

601

644

Total current liabilities

15,757

15,416

Long-term debt

5,619

4,828

Non-current operating leases

769

731

Pension and other employee benefits

1,158

1,231

Deferred taxes

678

661

Other non-current liabilities

1,992

2,025

Non-current liabilities held for sale and in discontinued operations

188

197

Total liabilities

26,161

25,089

Commitments and contingencies

Stockholders’ equity:

Common stock, CHF 0.12 par value

(2,168 million shares issued at March 31, 2021, and December

31, 2020)

188

Additional paid-in capital

–

Retained earnings

21,582

22,946

Accumulated other comprehensive loss

(4,203)

(4,002)

Treasury stock, at cost

(144 million and 137 million shares at March 31, 2021, and December

31, 2020, respectively)

(3,876)

(3,530)

Total ABB stockholders’ equity

13,691

15,685

Noncontrolling interests

368

314

Total stockholders’ equity

14,059

15,999

Total liabilities and stockholders’

equity

40,220

41,088

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

Q1 2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Statements of Cash Flows (unaudited)

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Operating activities:

Net income

523

380

Loss (income) from discontinued operations, net of tax

(54)

Adjustments to reconcile net income to net cash provided

by (used in) operating activities:

Depreciation and amortization

227

Pension and other employee benefits

(50)

(49)

Deferred taxes

Net loss from derivatives and foreign exchange

Net gain from sale of property, plant

and equipment

(11)

(8)

Fair value adjustment on assets and liabilities held for sale

–

Share-based payment arrangements

Other

Changes in operating assets and liabilities:

Trade receivables, net

(2)

(61)

Contract assets and liabilities

(90)

(41)

Inventories, net

(168)

(301)

Accounts payable, trade

(67)

Accrued liabilities

(76)

(59)

Provisions, net

(53)

Income taxes payable and receivable

(50)

(218)

Other assets and liabilities, net

(248)

Net cash provided by (used in) operating activities – continuing

operations

523

(396)

Net cash provided by (used in) operating activities – discontinued

operations

(181)

Net cash provided by (used in) operating activities

543

(577)

Investing activities:

Purchases of investments

(309)

(242)

Purchases of property, plant and equipment

and intangible assets

(142)

(163)

Acquisition of businesses (net of cash acquired) and increases

in cost-

and equity-accounted companies

(4)

(73)

Proceeds from sales of investments

391

393

Proceeds from maturity of investments

–

Proceeds from sales of property, plant

and equipment

Proceeds from sales of businesses (net of transaction costs and

cash disposed) and cost-

and

equity-accounted companies

(2)

(140)

Net cash from settlement of foreign currency derivatives

(61)

(129)

Other investing activities

(8)

(15)

Net cash used in investing activities – continuing operations

(35)

(346)

Net cash used in investing activities – discontinued operations

(44)

(37)

Net cash used in investing activities

(79)

(383)

Financing activities:

Net changes in debt with original maturities of 90 days or less

1,545

Increase in debt

991

2,247

Repayment of debt

(47)

(180)

Delivery of shares

760

–

Purchase of treasury stock

(1,386)

–

Dividends paid

(844)

–

Dividends paid to noncontrolling shareholders

(1)

(2)

Other financing activities

(36)

(104)

Net cash provided by (used in) financing activities –

continuing operations

(476)

3,506

Net cash provided by (used in) financing activities –

discontinued operations

–

(8)

Net cash provided by (used in) financing activities

(476)

3,498

Effects of exchange rate changes on cash and equivalents

and restricted cash

(51)

(111)

Net change in cash and equivalents and restricted cash

(63)

2,427

Cash and equivalents and restricted cash, beginning of period

3,901

3,544

Cash and equivalents and restricted cash, end of period

3,838

5,971

Supplementary disclosure of cash flow information:

Interest paid

Income taxes paid

256

266

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

Q1 2021

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, 2020

188

19,640

(5,590)

(785)

13,526

454

13,980

Adoption of accounting

standard update

(78)

(9)

(87)

Comprehensive income:

Net income

376

380

Foreign currency translation

adjustments, net of tax of $0

(589)

(8)

(597)

Effect of change in fair value of

available-for-sale securities,

net of tax of $3

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $25

Change in derivative instruments

and hedges, net of tax of $0

(9)

Total comprehensive loss

(123)

(4)

(127)

Changes in noncontrolling interests

(3)

Dividends to

noncontrolling shareholders

–

(2)

Dividends to shareholders

(1,758)

Share-based payment arrangements

Delivery of shares

(2)

–

Balance at March 31, 2020

188

18,180

(6,089)

(784)

11,570

462

12,032

Balance at January 1, 2021

188

22,946

(4,002)

(3,530)

15,685

314

15,999

Comprehensive income:

Net income

502

523

Foreign currency translation

adjustments, net of tax of $3

(273)

(270)

Effect

of change in fair value of

available-for-sale securities,

net of tax of $(3)

(12)

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $(2)

Change in derivative instruments

and hedges, net of tax of $(1)

Total comprehensive income

301

325

Changes in noncontrolling interests

(37)

(3)

Dividends to

noncontrolling shareholders

–

(4)

Dividends to shareholders

(1,730)

Share-based payment arrangements

Purchase of treasury stock

(1,300)

Delivery of shares

(58)

(136)

954

760

Balance at March 31, 2021

188

–

21,582

(4,203)

(3,876)

13,691

368

14,059

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

Q1 2021

FINANCIAL

INFORMATION

—

Notes to the Consolidated Financial Information (unaudited)

─

Note

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 financi

al information

should

be read

in conjunction

with the

audited

consolidated

financial

statements

in the

Company’s

Annual

Report

for the

year ended

December

31, 2020.

The preparation

of financial

information

in conformity

with U.S.

GAAP requires

management

to make

assumptions

and esti

mates that

directly

affect

the

amounts

reported

in the Consolidated

Financial

Information.

These accounti

ng 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,

●

assumptions

used in

the determination

of corporate

costs directly

attributable

to discontinued

operations,

●

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

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

to fut

ure 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 cla

ssification

of current

assets

and liabilities

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

to these

contracts

which will

not be realized

within

one year

that have

been

classified

as current.

Basis of

presentation

In the opinion

of management,

the unaudited

Consolidated

Financial

Information

contains

all necessary

adjustments

to present

fairly

the financial

position,

results

of operations

and cash

flows for

the reported

periods.

Management

considers

all such

adjustments

to be of

a normal

recurring

nature.

The

Consolidated

Financial

Information

is presented

in United

States

dollars

($) unless

otherwise

stated.

Due to

rounding,

numbers

presented

in the

Consolidated

Financial

Information

may not

add to the

totals

provided.

Certain

amounts

reported

in the

Interim

Consolidated

Financial

Information

for prior

periods

have been

reclassified

to conform

to the current

year’s

presentation.

These changes

primarily

relate to

the re

allocation

of certain

real estate

assets,

previously

reported

within

Corporate

and Other,

into the

operating

segments

which utilize

the assets

─

Note

Recent

accounting

pronouncements

Applicable

for current

periods

Simplifying

the accounting

for income

taxes

In January

2021, the

Company

adopted

a new accounting

standard

update

which enhances

and simplifies

various

aspects

of the income

tax accounting

guidance

to intraperiod

tax allocations,

ownership

changes

in investments

and certain

aspects

of interim

period tax

accounting.

Depending

on the

amendment,

the adoption

was applied

on either

a retrospective,

modified

retrospective,

or prospective

basis.

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

March 2020,

an accounting

standard

update was

issued

which provid

es temporary

optional

expedients

and exceptions

to the

current

guidance

contract

modifications

and hedge

accounting

to ease

the financial

reporting

burden

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, 202

2, with

early adoption

permitted.

The Company

is currently

evaluating

the impact

of adopting

this optional

guidance

on its

Consolidated

Financial

Statements.

Q1 2021

FINANCIAL

INFORMATION

─

Note

Discontinued

operations

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 Hita

chi Ltd

(Hitachi)

The transaction

was executed

through

the sale

of 80.1

percent

of the shares

of Hitachi

ABB Power

Grids Ltd

(“Hitachi

ABB PG”).

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).

Certain

amounts

relating

to the

sale price

for the

Power Grids

business

are currently

estimated

or otherwise

subject

to change

in value

and, as

a result,

the Company

will record

additional

adjustments

to the gain

in future

periods

which are

not expected

to have

a material

impact on

the consolidated

financial

statements.

At the date

of the divestment,

the Company

recorded

an initial

liability

in discontinued

operations

for estimated

future

costs and

other cash

payments

$487 million

for various

contractual

items relating

to the sale

of the business

including

required

future

cost reimbursements

payable

to Hitachi

ABB PG,

costs incurred

by the Company

for the

direct

benefit

of Hitachi

ABB PG,

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

March 31,

2021, $77

million

of these

liabilities

had

been paid

and are

reported

as reductions

in the

cash consideration

received,

of which

$44 million

was paid

during the

three months

ended March

31,

March 31,

2021, the

remaining

amount recorded

was $397

million.

Certain

entities

of the Power

Grids business

for which

the legal

process

or other

regulatory

delays

resulted

in the Company

not yet

having transferred

legal titles

to Hitachi

have been

accounted

for as

being sold

since control

of the business

as well

as all risks

and rewards

of the business

have been

fully

transferred

to Hitachi

ABB PG.

The proceeds

for these

entities

are included

in the cash

proceeds

described

above and

certain

funds have

been placed

escrow

pending

completion

of the

transfer

process.

At March

31, 2021,

current

restricte

cash includes

$53 million

in respect

of these

funds.

Upon closing

of the

sale, the

Company

entered

into various

transition

services

agreements

(TSAs).

Pursuant

to these

TSAs, the

Company

and Hitachi

ABB PG provide

to each

other,

on an interim,

transitional

basis,

various

services.

The services

provided

the Company

primaril

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

three months

ended March

31, 202

1, the Company

has recognized

within its

continuing

operations,

general

and

administrative

expenses

incurred

to perform

the TSA,

offset

by $47

million

in TSA

-related

income

for such

services

that is

reported

in Other

income

and

expense,

net.

Discontinued

operations

As a result

of the

sale of

the Power

Grids business,

substantially

all Power

Grids-related

assets and

liabilities

have been

sold. As

this divestment

represented

a strategic

shift that

would have

a major

effect on

the Company’s

operations

and financial

results,

the results

of operations

for this

business

have been

presented

as discontinued

operations

and the

assets

and liabilities

are presented

as held

for sale

and in discontinued

operations

for all

periods

presented.

Certain

of the business

contracts

in the

Power Grids

business

continue

to be executed

by subsidiaries

of the Company

for the

benefit

/risk of

Hitachi

ABB PG.

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

ABB PG.

Prior to

the divestment,

interest

expense

that was

not directly

attributable

to or related

to the Company’s

continuing

business

or discontinued

business

was

allocated

to discontinued

operations

based on

the ratio

of net assets

to be sold

less debt

that wa

required

to be paid

as a result

of the planned

disposal

transaction

to the sum

of total

net assets

of the Company

plus con

solidated

debt. General

corporate

overhead

was not

allocated

to discontinued

operations.

Operating

results

of the discontinued

operations,

are summarized

as follows:

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Total revenues

–

1,941

Total cost of sales

–

(1,471)

Gross profit

–

470

Expenses

(4)

(394)

Change to net gain recognized on sale of the Power Grids business

(24)

–

Income (loss) from operations

(28)

Net interest and other finance expense

–

(3)

Non-operational pension (cost) credit

–

Income (loss) from discontinued operations before taxes

(28)

Income tax

–

(22)

Income (loss) from discontinued operations, net of tax

(28)

Of the total

Income

(loss) from

discontinued

operations

before

taxes in

the table

above, $

(28) million

and $72

million

in the

three months

ended March

31,

2021 and

2020, respectively,

are attributable

to the

Company,

while the

remainder

is attributable

to noncontrolling

interests.

Until the

date of

the divestment,

Income from

discontinued

operations

before

taxes exclude

stranded

costs which

were previously

able to

be allocated

the Power

Grids operating

segment

As a result,

for the

three months

ended March

31, 20

20,

$21 million

of allocated

overhead

and other

management

costs, which

were previously

included

in the

measure

of segment

profit for

the Power

Grids operating

segment

are reported

as part

of Corporate

and

Other.

In the table

above, N

et interest

and other

finance

expense

in the three

months

ended March

31,

2020,

include

million

of interest

expense

which

was recorded

on an allocated

basis in

accordance

with the

Company’s

accounting

policy

election

until the

divestment

date.

In addition,

as required

by U.S.

GAAP,

subsequent

to December

17, 2018,

(the date

of the

original

agreement

to sell

the Power

Grids business)

the Company

has not

record

depreciation

or amortization

on the property,

plant and

equipment,

and intangible

assets

reported

as discontinued

operations.

Included

in the

reported

Total

revenues

of the Company

for the

three months

ended March

31, 20

20, are

revenues

for sales

from the

Company’s

operating

segments

to the Power

Grids business

of $47 million,

which represent

intercompa

ny transactions

that, prior

to Power

Grids being

classified

as a

discontinued

operation,

were eliminated

in the

Company’s

consolidated

financial

statements

(see Note

17). Subsequent

to the

divestment,

sales to

Hitachi

ABB PG are

reported

as third

-party

revenues.

Q1 2021

FINANCIAL

INFORMATION

In addition

the Company

also has

retained

obligations

(primarily

for environmental

and taxes)

to other

businesses

disposed

or otherwise

exited

that qualified

as discontinued

operations.

Changes

to these

retained

obligations

are also

included

in Income

(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)

Mar. 31, 2021

(1)

Dec. 31, 2020

(1)

Receivables, net

235

280

Inventories, net

Other current assets

Current assets held for sale and in discontinued operations

241

282

Accounts payable, trade

187

188

Other liabilities

414

456

Current liabilities held for sale and in discontinued operations

601

644

Other non-current liabilities

188

197

Non-current liabilities held for sale and in discontinued

operations

188

197

(1) At March

31, 2021

and December

31,

2020, 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

Divestments

and equity

-accounted

companies

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

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

its continuing

involvement

with the

Power Grids

business,

including

membership

in its

governing

board of

directors,

it has

significant

influence

over Hitachi

ABB PG.

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

ABB PG

exceeded

the book

value of

the underlying

net assets

March 31,

2021 and

December

31, 2020,

the reported

value of

the investment

in Hitachi

ABB PG

includes

$1,577

million

and $1,597

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 amortization,

net of related

deferred

tax benefit,

as a reduction

of income

from

equity

accounted

companies.

As of March

31, 202

1, 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, expect ownership share in %)

March 31, 2021

December 31, 2020

Hitachi ABB Power Grids Ltd

19.9%

1,678

1,710

Others

Total

1,760

1,784

In the three

months

ended March

31, 2021

and 2020

the Company

recorded

its share

of the earnings

of investees

accounted

for under

the equity

method

of accounting

in Other

income

(expense),

net, as

follows:

Three months ended March 31,

($ in millions)

2021

2020

Loss from equity-accounted companies, net of taxes

(3)

–

Basis difference amortization (net of deferred income

tax benefit)

(32)

–

Loss from equity-accounted companies

(35)

–

Q1 2021

FINANCIAL

INFORMATION

Divestment

of the

solar

inverters

business

In February

2020, the

Company

completed

the sale

of its

solar invert

ers business

for no

consideration.

Under the

agreement,

which was

reached

in July

2019, the

Company

was required

to transfer

$143

million

of cash

to the buy

er on the

closing

date.

In addition,

payments

totaling

EUR 132

million

($145 million)

are required

to be transferred

to the buyer

from 2020

through

2025.

In the y

ear ended

December

31, 2019,

the

Company

recorded

a loss

$421 million

representing

the excess

of the carrying

value,

which includes

a loss of

$99 million

arising

from the

cumulative

translation

adjustment

over

the estimated

fair value

of this

business

During

the three

months

ended March

31,

2020, a

loss of

$19 million

was in

cluded in

“Other

income

(expense),

net” for

changes

in fair

value of

this business.

The loss

in 2020

includes

the $99

million

reclassification

from other

comprehensive

income

of the currency

translation

adjustment

to the business.

The fair

value wa

based on

the estimated

current

market

values

using Level

3 inputs,

considering

the agreed

-upon sale

terms with

the buyer.

The solar

inverters

business,

which includes

the solar

inverters

business

acquired

as part

of the Power

-One acquisition

in 2013,

was

part of

the Company

’s

Electrification

segment.

As this

divestment

does not

qualify

as a discontinued

operation,

the results

of operations

for this

business

prior to

its disposal

are included

in the

Company’s

continuing

operations

for all

periods

presented.

Including

the above

loss of

$19 million

the three

months

ended March

31,

2020, Income

from continuing

operations

before

taxes includes

net loss

es of

$33 million

from the

solar inverters

business

prior to

its sale

─

Note

Cash

and equivalents,

marketable

securities

and short

-term

investments

Cash and

equivalents,

marketable

securities

and short

-term investments

consisted

of the

following:

March 31, 2021

Cash and

Marketable

Gross

equivalents

securities

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

2,056

Time deposits

1,783

1,782

Equity securities

1,586

1,599

5,425

–

5,438

3,838

1,600

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

194

(2)

203

European government obligations

Corporate

(1)

273

(3)

284

–

284

Total

5,698

(3)

5,722

3,838

1,884

Of which:

Restricted cash, current

Restricted cash, non-current

300

Q1 2021

FINANCIAL

INFORMATION

December 31, 2020

Cash and

Marketable

Gross

equivalents

securities

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

2,388

Time deposits

1,513

Equity securities

1,704

1,716

5,605

–

5,617

3,901

1,716

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

274

293

European government obligations

Corporate

367

–

392

–

392

Total

5,972

–

6,009

3,901

2,108

Of which:

Restricted cash, current

323

Restricted cash, non-current

300

─

Note

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 curr

ency risk

in their

operating

activities

from entering

into

transactions

in currencies

other than

their functional

currency.

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

denomin

ated sales

of standard

products

and the

foreign

currency

denominated

purchases,

the Company’s

policy is

to hedge

up to a

maximum

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

future cash

flows (caused

by changes

in exchange

rates) of

contracted

and forecasted

sales and

purchases

denominated

in foreign

currencies.

addition,

within its

treasury

operatio

ns, 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.

manage

the price

risk of

commodities,

the Com

pany’s

policies

require

that its

subsidiaries

hedge the

commodity

price

risk exposures

from binding

contracts,

as well

as at least

50 percent

(up to a

maximum

of 100 percent)

of the

forecasted

commodity

exposure

over the

next 12

months

or longer

(up to

a maximum

of 18 months).

Primarily

swap contracts

are used

to manage

the associated

price risks

of commodities.

Interest

rate risk

The Company

has issued

bonds at

fixed rates.

Interest

rate swaps

and cross

-currency

swaps are

used to

manage

the interest

rate and

foreign

currency

risk associated

with certain

debt and

generally

such swap

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.

eliminate

such risk,

the

Company

has purchased

cash-settled

call options,

indexed

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.

Q1 2021

FINANCIAL

INFORMATION

Foreign

exchange

and interest

rate derivatives

The gross

notional

amounts

of outstanding

foreign

exchange

and interest

rate derivatives

(whether

designated

as hedges

or not)

were as

follows:

Type of derivative

Total notional amounts at

($ in millions)

March 31, 2021

December 31, 2020

March 31, 2020

Foreign exchange contracts

11,229

12,610

14,654

Embedded foreign exchange derivatives

1,313

1,134

975

Cross currency swaps

973

–

Interest rate contracts

3,122

3,227

4,195

Derivative

commodity

contracts

The Company

uses derivatives

to hedge

its direct

or indirect

exposure

to the

movement

in the

prices of

commodities

which are

primarily

copper,

silver

and

aluminum.

The following

table

shows the

notional

amounts

of outstanding

derivatives

(whether

designated

as hedges

or not),

on a net

basis,

to reflect

the

Company’s

requirements

for these

commodities:

Type of derivative

Unit

Total notional amounts at

March 31, 2021

December 31, 2020

March 31, 2020

Copper swaps

metric tonnes

42,448

39,390

45,438

Silver swaps

ounces

2,217,821

1,966,677

2,075,488

Aluminum swaps

metric tonnes

7,450

8,112

9,770

Equity

derivatives

At March

31, 2021,

December

31, 2020,

and March

31, 2020,

the Company

held 18

million,

22 million

and 38 million

cash-settled

call options

indexed

ABB Ltd

shares (conversion

ratio 5:1)

with a

total fair

value of

$30 million,

$21 million

and $7

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 recorde

in “Accumulated

other comprehensive

loss” and

subsequently

reclassified

into earnings

in the

same line

item and

in the

same period

as the underlying

hedged

transaction

affects

earnings.

For the

three months

ended

March, 31,

2021 and

2020, there

were no

significant

amounts

recorded

for cash

flow hedge

accounting

activities.

Fair value

hedges

reduce its

interest

rate exposure

arising

primarily

from its

debt issuance

activities,

the Company

uses interest

rate swaps

and cross

-currency

swaps.

Where such

instruments

are designated

as fair

value hedges,

the changes

in the fair

value of

these instruments,

as well

as the cha

nges 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”.

The effect

of derivative

instruments,

designated

and qualifying

as fair

value hedges,

on the Consolidated

Income

Statements

was as

follows:

Type of derivative designated

Three months ended March 31, 2021

as a fair value hedge

Gains (losses) recognized in income on

Gains (losses) recognized in income

derivatives designated as fair value hedges

on hedged item

($ in millions)

Location

Interest rate contracts

Interest and other finance expense

(14)

Interest and other finance expense

Cross-currency swaps

Interest and other finance expense

(23)

Interest and other finance expense

Total

(37)

Type of derivative designated

Three months ended March 31, 2020

as a fair value hedge

Gains (losses) recognized in income on

Gains (losses) recognized in income

derivatives designated as fair value hedges

on hedged item

($ in millions)

Location

Interest rate contracts

Interest and other finance expense

(25)

Total

(25)

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

the same

line in

the income

statement

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.

Q1 2021

FINANCIAL

INFORMATION

The gains

(losses)

recognized

in the

Consolidated

Income

Statements

on derivatives

not designated

in hedging

relationships

were as

follows:

Type of derivative not

Gains (losses) recognized in income

designated as a hedge

Three months ended March 31,

($ in millions)

Location

2021

2020

Foreign exchange contracts

Total revenues

(60)

(134)

Total cost of sales

(4)

SG&A expenses

(1)

Non-order related research and development

(1)

Interest and other finance expense

(106)

Embedded foreign exchange contracts

Total revenues

(14)

Total cost of sales

(1)

(4)

Commodity contracts

Total cost of sales

(66)

Other

Interest and other finance expense

–

(1)

Total

(143)

(196)

(1) SG&A

expenses

represent

“Selling,

general

and administrative

expenses”.

The fair

values

of derivatives

included

in the

Consolidated

Balance

Sheets

were as

follows:

March 31, 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”

liabilities”

Derivatives designated as hedging instruments:

Foreign exchange contracts

–

Interest rate contracts

–

Cross currency swaps

–

Cash-settled call options

–

Total

Derivatives not designated as hedging instruments:

Foreign exchange contracts

105

111

Commodity contracts

–

Interest rate contracts

–

Embedded foreign exchange derivatives

Total

184

141

Total fair value

203

107

142

101

December 31, 2020

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”

liabilities”

Derivatives designated as hedging instruments:

Foreign exchange contracts

–

Interest rate contracts

–

Cash-settled call options

–

Total

Derivatives not designated as hedging instruments:

Foreign exchange contracts

221

106

Commodity contracts

–

Interest rate contracts

–

Embedded foreign exchange derivatives

Total

292

143

Total fair value

308

114

145

Close-

out netting

agreements

provide

for the

termination,

valuation

and net

settlement

of some

or all outstanding

transactions

between

two counterparties

on the occurrence

of one

or more

pre-defined

trigger

events.

Although

the Company

is party

to close

-out netting

agreements

with most

derivative

counterparties,

the fair

values

in the tables

above and

in the

Consolidated

Balance

Sheets

at March

31, 2021,

and December

31, 2020,

have been

presented

on a gross

basis.

Q1 2021

FINANCIAL

INFORMATION

The Company’s

netting

agreements

and other

similar

arrangements

allow net

settlements

under certain

conditions.

At March

31, 2021,

and December

31,

2020, information

to these

offsetting

arrangements

was as

follows:

($ in millions)

March 31, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net asset

similar arrangement

assets

in case of default

received

exposure

Derivatives

296

(151)

–

145

Total

296

(151)

–

145

($ in millions)

March 31, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net liability

similar arrangement

liabilities

in case of default

pledged

exposure

Derivatives

212

(151)

–

Total

212

(151)

–

($ in millions)

December 31, 2020

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net asset

similar arrangement

assets

in case of default

received

exposure

Derivatives

410

(106)

–

304

Total

410

(106)

–

304

($ in millions)

December 31, 2020

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net liability

similar arrangement

liabilities

in case of default

pledged

exposure

Derivatives

147

(106)

–

Total

147

(106)

–

─

Note

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

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

non-recurring

basis include

long-li

ved 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

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 liabili

ties), 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 natu

re of those

inputs.

The Company

has categorized

its financial

assets and

liabilities

and non

-financial

assets

measured

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 i

nclude

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

inactive

markets

and inputs

other than

quoted

prices such

as interest

rate yield

curves,

credit

spreads,

or inputs

derived

from oth

er 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

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

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.

Q1 2021

FINANCIAL

INFORMATION

Recurring

fair value

measures

The fair

values

of financial

assets

and liabilities

measured

at fair

value on

a recurring

basis were

as follows:

March 31, 2021

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

Securities in “Marketable securities and short-term investments”:

Equity securities

1,599

Debt securities—U.S. government obligations

203

Debt securities—European government obligations

Debt securities—Corporate

Securities in “Other non-current assets”:

Debt securities—U.S. government obligations

Derivative assets—current in “Other current assets”

203

Derivative assets—non-current in “Other non-current assets”

107

Total

293

1,980

–

2,273

Liabilities

Derivative liabilities—current in “Other current liabilities”

142

Derivative liabilities—non-current in “Other non-current liabilities”

101

Total

–

243

–

243

December 31, 2020

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

Securities in “Marketable securities and short-term investments”:

Equity securities

1,716

Debt securities—U.S. government obligations

293

Debt securities—European government obligations

Debt securities—Corporate

Derivative assets—current in “Other current assets”

308

Derivative assets—non-current in “Other non-current assets”

114

Total

317

2,213

–

2,530

Liabilities

Derivative liabilities—current in “Other current liabilities”

145

Derivative liabilities—non-current in “Other non-current liabilities”

Total

–

191

–

191

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 ob

servable

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,

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

During

the three

months

ended March

31, 2020,

the Company

recorded

a $19 million

fair value

adjustment

for the

solar inverters

business

which

met the

criteria

to be classified

as held

for sale

in June

2019 and

was sold

in February

2020 (

see Note

4 for details

Apart from

the transaction

above, t

here were

no additional

significant

non-recurring

fair value

measurements

during the

three months

ended March

31,

2021 and

2020.

Q1 2021

FINANCIAL

INFORMATION

Disclosure

about f

inancial

instruments

carried

on a cost

basis

The fair

values

of financial

instruments

carried

on a cost

basis were

as follows:

March 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

1,684

Time deposits

1,782

Restricted cash

Restricted cash, non-current

300

Liabilities

Short-term debt and current maturities of long-term debt

(excluding finance lease obligations)

1,311

417

894

1,311

Long-term debt (excluding finance lease obligations)

5,447

5,610

5,694

December 31, 2020

($ 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

1,765

Time deposits

1,513

Restricted cash

323

Restricted cash, non-current

300

Liabilities

Short-term debt and current maturities of long-term debt

(excluding finance lease obligations)

1,266

497

769

1,266

Long-term debt (excluding finance lease obligations)

4,668

4,909

4,998

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),

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).

Q1 2021

FINANCIAL

INFORMATION

─

Note

Contract

assets

and liabilities

The following

table provides

information

about Contract

assets

and Contract

liabilities:

($ in millions)

March 31, 2021

December 31, 2020

March 31, 2020

Contract assets

1,044

985

1,038

Contract liabilities

1,855

1,903

1,665

Contract

assets primarily

relate to

the Company’s

right to

receive

consideration

for wo

rk 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

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:

Three months ended March 31,

2021

2020

Contract

($ in millions)

assets

liabilities

assets

liabilities

Revenue recognized, which was included in the Contract liabilities

balance at Jan 1, 2021/2020

(497)

(513)

Additions to Contract liabilities - excluding amounts recognized

as revenue during the period

493

526

Receivables recognized that were included in the Contract asset

balance at Jan 1, 2021/2020

(275)

(276)

March 31,

2021

, the Company

had unsatisfied

performance

obligations

totaling

$14,750

million

and, of

this amount,

the Company

expects

to fulfill

approximately

66 percent

of the obligations

in 2021,

approximately

21 percent

of the obligations

in 2022

and the

balance

thereafter.

─

Note

Debt

The Company’s

total debt

at March

31, 2021,

and December

31, 2020,

amounted

to $6,955

million

and $6,

121 million,

respectively.

Short-

term debt

and current

maturities

of long

-term debt

The Company’s

“Short-

term debt

and current

maturities

of long

-term debt”

consisted

of the

following:

($ in millions)

March 31, 2021

December 31, 2020

Short-term debt

239

153

Current maturities of long-term debt

1,097

1,140

Total

1,336

1,293

Short-term

debt primarily

represented

issued

commercial

paper and

short-

term bank

borrowings

from various

banks.

At March

31, 20

21, and

December

31, 2020,

$167 million

and $

million,

respectively,

was outstanding

under the

$2 billion

commercial

paper progr

am in the

United

States.

amount

was outstanding

under the

$2 billion

Euro-commercial

paper program

at March

31, 2021

or December

31, 2020.

Long-term

debt

The Company’s

long-term

debt at

March 31,

2021, and

December

31, 2020,

amounted

to $5,619

million

and $4,828

million,

respectively.

Q1 2021

FINANCIAL

INFORMATION

Outstanding

bonds (including

maturities

within

the next

12 months)

were as

follows:

March 31, 2021

December 31, 2020

(in millions)

Nominal outstanding

Carrying value

(1)

Nominal outstanding

Carrying value

(1)

Bonds:

4.0% USD Notes, due 2021

USD

650

USD

650

649

2.25% CHF Bonds, due 2021

CHF

350

375

CHF

350

403

2.875% USD Notes, due 2022

USD

1,250

1,274

USD

1,250

1,280

0.625% EUR Instruments, due 2023

EUR

700

835

EUR

700

875

0.75% EUR Instruments, due 2024

EUR

750

901

EUR

750

946

0.3% CHF Notes, due 2024

CHF

280

296

CHF

280

317

3.8% USD Notes, due 2028

(2)

USD

383

381

USD

383

381

1.0% CHF Notes, due 2029

CHF

170

180

CHF

170

192

0% EUR Notes, due 2030

EUR

800

907

–

4.375% USD Notes, due 2042

(2)

USD

609

589

USD

609

589

Total

6,388

5,632

(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 USD750

million

In January

2021, the

Company

issued

zero percent

notes having

a principal

amount

of EUR 800

million

and due

in 2030.

The Company

recorded

net

proceeds

(after

underwriting

fees) of

EUR 791

million

(equivalent

to $960

million

on the

date of

issuance).

In line

with the

Company’s

policy of

reducing

its

currency

and interest

rate exposure

cross-currency

interest

rate swaps

have been

used to

modify

the characteristics

of the EUR

800 million

Notes,

due

2030.

After cons

idering

the impact

of these

cross-currency

interest

rate swaps

the EUR

Notes,

due 20

30,

effectively

became

a floating

rate U.S.

dollar

obligation

─

Note

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

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-reporte

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 par

ties have

expressed

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 Dec

ember 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

cooperate

fully with

the National

Prosecuting

Authority

in South

Africa

as well

as other

authorities

in their

review

of the Kusile

project.

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

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

investigations

carried

out by various

law enforcement

authorities.

With respect

to the

above-mentioned

claims,

regulatory

matters,

and any

proceedings,

the Company

will bear

the related

costs,

including

costs necessary

to resolve

them.

Liabilities

recognized

At March

31, 2021,

and December

31, 2020,

the Company

had aggregate

liabilities

of $98 million

and $100

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 re

asonably

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.

Q1 2021

FINANCIAL

INFORMATION

Guarantees

General

The following

table provides

quantitative

data regarding

the Company’s

third-

party guarantees.

The maximum

potential

payments

represent

a “worst

-case

scenario”,

and do not

reflect

management’s

expected

outcomes.

Maximum potential payments

($ in millions)

March 31, 2021

December 31, 2020

Performance guarantees

5,815

6,726

Financial guarantees

344

339

Indemnification guarantees

(1)

127

177

Total

(2)

6,286

7,242

(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 March

31, 2021,

and

December

31, 2020,

amounted

to $

127

million

and $

135

million,

respectively,

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 20

35,

mainly

consist

of performance

guarantees

whereby

(i) the

Company

guarantees

the performance

of a third

party’s

product

service

according

to the

terms of

a contra

ct 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

specif

ied time.

the third

party does

not fulfill

the obligation,

the Company

will compensate

the guaranteed

party in

cash or

in kind.

The original

maturity

dates for

the

majority

of these

performance

guarantees

range from

one to

ten years.

In conjunction

with the

divestment

of the

high-voltage

cable and

cables

accessories

businesses,

the Company

has entered

into various

performance

guarantees

with other

parties

with respect

to certain

liabilities

of the divested

business.

At March

31, 2021,

and December

31, 2020,

the maximum

potential

payable

under these

guarantees

amounts

to $

945

million

and $994

million,

respectively,

and these

guarantees

have various

maturities

ranging

from one

to ten

years.

The Company

retained

obligations

for financial,

performance

and indemnification

guarantees

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

ABB Power

Grids (80.1

percent).

These guarantees,

which have

various

maturities

up to 2035,

primarily

consist

of bank

guarantees,

standby

letters

credit

business

performance

guarantees

and other

trade-

guarantees,

the majority

of which

have original

maturit

dates ranging

from one

to ten

years. The

maximum

amount

payable

under the

guarantees

at March

31, 2021,

and December

31,

2020, are

approximately

$4.7 billion

and $5.5

billion,

respectively

and the

carrying

amounts

of liabilities

(recorded

in discontinued

operations)

at March

31,2021,

and December

31, 2020

amounted

127

million

and $135

million

respectively

Commercial

commitments

In addition,

in the

normal

course

of bidding

for and

executing

certain

projects,

the Company

has entered

into standby

letters

of credit,

bid/performance

bonds and

surety bonds

(collectively

“performance

bonds”)

with various

financial

institutions.

Customers

can draw

on such

performance

bonds in

the

event that

the Company

does not

fulfill

its contractual

obligations.

The Company

would then

have an

obligation

to reimburse

the financial

institution

for

amounts

paid under

the performance

bonds. At

March 31,

2021, and

December

31, 2020,

the total

outstanding

performance

bonds aggregated

4.0

billion

and $4.3

billion,

respectively,

of which

$0.3 billion

and $0.

billion

respectively,

relate to

discontinued

operations.

There have

been no

significant

amounts

reimbursed

to financial

institutions

under these

types of

arrangements

in the three

months

ended March

31, 2021

and 2020.

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)

2021

2020

Balance at January 1,

1,035

816

Net change in warranties due to acquisitions, divestments and

liabilities held for sale

(1)

Claims paid in cash or in kind

(54)

(52)

Net increase in provision for changes in estimates, warranties

issued and warranties expired

Exchange rate differences

(33)

(29)

Balance at March 31,

1,012

770

(1) Includes

adjustments

to the initial

purchase

price allocation

recorded

during the

measurement

period.

─

Note

Income

taxes

In calculating

income tax

expense,

the Company

uses an

estimate

of the annual

effective

tax rate

based upon

the facts

and circumstance

known at

each

interim

period.

On a quarterly

basis,

the actual

effective

tax rate

is adjusted,

as appropriate,

based upon

changed

facts and

circumstances,

if any,

compared

to those

forecasted

at the beginning

of the

year and

each interim

period thereafter.

The effective

tax rate

of 31.4

percent

the three

months

ended March

31, 2021,

was

higher

than the

effective

tax rate

of 19.5

percent

in thr

ee months

ended March

31, 2020,

primarily

because

2020 included

a net benefit

from a

favorable

resolution

of an uncertain

tax position

partially

offset

by increases

to the valuation

allowance

in certain

countries

Q1 2021

FINANCIAL

INFORMATION

─

Note

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

employees

in the

event of

death,

disability,

retirement,

or termination

of employment.

Certain

of these

plans are

multi-employer

plans. The

Company

also operates