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 July 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 July 22,

2021 titled “Q2 2021 results: Strong performance in a recovery

quarter”.

Q2 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.

—

“I am very encouraged that we have delivered a clearly improved performance. The strong

upturn in Operational EBITA

margin reflects the recovery in demand in combination with

increased internal efficiency and the strength of ABB’s electrification and automation

offerings. We will continue to sharpen our focus on profitability through innovation,

sustainability and digitalization, while actively managing our portfolio.”

Björn Rosengren

, CEO

—

ZURICH, SWITZERLAND, JULY

22, 2021

Q2 2021 results

Strong performance in a recovery quarter

●

Orders $8.0 billion, +32%; comparable

+24%

●

Revenues $7.4 billion, +21%; comparable +14%

●

Income from operations $1,094 million; margin 14.7%

●

Operational EBITA

$1,113 million; margin

15.0%

●

Basic EPS $0.37; +150%

●

Cash flow from operating activities and from operating activities continuing operations was $663 million

Ad hoc Announcement pursuant to Art. 53 Listing

Rules of SIX Swiss Exchange

—

Q2 2021

First six months

Press Release

KEY FIGURES

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

7,989

6,054

32%

24%

15,745

13,400

18%

11%

Revenues

7,449

6,154

21%

14%

14,350

12,370

16%

11%

Gross Profit

2,508

1,987

26%

4,776

3,897

23%

as % of revenues

33.7%

32.3%

+1.4 pts

33.3%

31.5%

+1.8 pts

Income from operations

1,094

571

92%

1,891

944

100%

Operational EBITA

1,113

651

71%

59%

2,072

1,287

61%

50%

as % of operational revenues

15.0%

10.6%

+4.4 pts

14.4%

10.4%

+4 pts

Income from continuing operations, net of tax

789

395

100%

1,340

721

86%

Net income (loss) attributable to ABB

752

319

136%

1,254

695

80%

Basic earnings per share ($)

0.37

0.15

150%

0.62

0.33

91%

Cash flow from operating activities

663

680

-3%

1,206

103

n.a.

Cash flows from operating activities in continuing

operations

663

648

1,186

252

n.a.

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

reconciliations and definitions” in the attached Q2 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.

ABB

INTERIM

REPORT

2021

The underlying customer activity in the second quarter

increased slightly on a sequential basis. However, orders

and revenues increased significantly compared with last

year’s low levels, when the adverse business impact of the

COVID-19 pandemic was at its peak. Double-digit order

growth was reported in all business areas driven by a

broad-based improvement across most short-cycle

customer segments and a positive development in several

process-related businesses. Growth was to some extent

supported by customers stock-building.

We improved Operational EBITA by 71% and the

Operational EBITA margin increased to the high level of

15.0%, up 440 basis points, year-on-year. Results were

supported by the recovery in demand in combination with

the impact from earlier implemented cost measures, as well

as ongoing restricted travel spending.

An additional effect

was derived from proactive price measures taken to

mitigate the expected increase in headwinds from higher

commodity prices. I am pleased to see how well the team

has handled certain component shortages, whereby

managing to limit the impact on customer deliveries.

Despite active management of the situation the tight supply

of certain components, such as semiconductors, is

expected to continue in the coming quarter. The strong

earnings converted into cash flow from operating activities

in continuing operations of $663 million, improving slightly

from last year. I am pleased with how the team managed to

keep net working capital broadly stable year-on-year in this

strong growth environment. Our strong cash generation in

the first half of the year provides a good base to deliver on

our guidance of a solid cash flow in 2021.

During the second quarter Robotics & Discrete Automation

broadened its automation offering to the construction

segment. Robotic automation is not yet widely used in this

industry and we see potential to increase efficiency in areas

such as fabrication of modular homes, welding and material

handling. Additionally, it was good to receive the prestigious

Innovation and Entrepreneurship in Robotics & Automation

(IERA) award for our PixelPaint robotic non-overspray

technology for the automotive industry.

We made further progress toward our long-term

sustainability target of reducing emissions and achieving

carbon neutrality in our own operations by 2030 by joining

three initiatives led by the international non-profit Climate

Group. They include electrifying our fleet of more than

10,000 vehicles, sourcing 100% renewable electricity, as

well as establishing energy efficiency targets and continuing

to deploy energy management systems at our sites.

Furthermore, our targets have received approval by the

Science Based Targets initiative (SBTi)

confirming they are

in line with the Paris Agreement.

ABB also joined the

Business Ambition for 1.5°C Campaign, a global coalition of

UN agencies, business and industry leaders, led by the UN

Global Compact (UNGC).

I am pleased to see that our increased focus on acquired

growth resulted in Robotics & Discrete Automation acquiring

ASTI, after the close of the second quarter. It is a leading

global mobile robotics manufacturer and this transaction will

expand our offering to make ABB the only company to offer

a holistic automation portfolio for the entire value chain,

helping customers replace today’s linear production lines

with fully flexible networks. Going forward, I expect to see

more of these small- to mid-sized bolt-on deals as the

divisions fill up their target pipelines. We have also made

good progress with the announced portfolio changes and I

expect to announce an agreement for a divestment during

the third quarter.

Björn Rosengren

CEO

ABB anticipates growth rates in the

third quarter

of 2021 to

reflect the low level of business activity in Q3 2020. Based

on the current market situation, comparable revenues are

expected to grow ~10%, with orders growing more than

revenues.

In the

third quarter

, higher demand and service revenues

should be supportive to the Operational EBITA margin year-

on-year, however some sequential adverse impact is

expected from rising raw material costs, component

shortages as well as increasing travel spend as pandemic-

related restrictions ease.

ABB anticipates comparable revenue growth of just below

10% (update from ~5% or more) 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 strong (update from steady) pace of

improvement from 2020 toward the 2023 operational EBITA

margin target of the upper half of the 13%-16% range.

CEO summary

Outlook

ABB

INTERIM

REPORT

2021

Demand increased significantly compared with the prior year

period, when the adverse business effects of the COVID-19

pandemic were at their peak. In total, orders amounted to

$7,989 million, increasing by 32%

(24% comparable), including

a 28% (20% comparable)

step-up in the service business.

Revenues amounted to $7,449 million, increasing by 21% (14%

comparable). On a sequential basis, the customer demand

improved.

Orders grew strongly in the machine builders, consumer

electronics and food & beverage segments as well as in general

industries overall. Orders in the automotive segment declined,

mainly due to the strategic selective order approach aimed at

improving long-term profitability.

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 a

positive development for both the residential and non-

residential segments. The marine segment recovered, including

a slight positive development in the cruise segment with

customers initiating service spend in anticipation of upcoming

cruising activities.

The process-related business improved slightly overall

supported by positive developments

in pulp & paper, mining,

water & wastewater and chemicals. Demand in the oil & gas

segment recovered primarily due to a somewhat positive

development in the Americas. Customer activity improved in

power generation,

albeit from a low level.

On a sequential basis, the general business environment

improved slightly in all three regions. Compared with the

corresponding period last year, growth was very strong in all

three regions reflecting the recovery from last year’s low levels

due to the impact from the pandemic. In the Americas orders

improved by 44% (41% comparable) including growth in the

United States of 39% (39% comparable). Europe improved by

33% (23% comparable) with growth in all of the most significant

countries. In Asia, Middle East and Africa (AMEA) where

business had already started to recover in the second quarter of

2020, orders improved more moderately by 25% (15%

comparable), including 26% (15%

comparable) in China.

Orders and revenues

Orders by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q2 2021

Q2 2020

US$

Comparable

Europe

2,954

2,219

33%

23%

The Americas

2,473

1,720

44%

41%

Asia, Middle East

and Africa

2,562

2,056

25%

15%

Intersegment

–

ABB Group

7,989

6,054

32%

24%

Growth

Change year-on-year

Orders

Revenues

Comparable

24%

14%

Portfolio changes

Total

32%

21%

Revenues by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q2 2021

Q2 2020

US$

Comparable

Europe

2,697

2,217

22%

12%

The Americas

2,284

1,872

22%

19%

Asia, Middle East

and Africa

2,468

2,004

23%

15%

Intersegment

–

ABB Group

7,449

6,154

21%

14%

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.

ABB

INTERIM

REPORT

2021

Gross profit

Gross margin increased to 33.7%, up 140 basis points year-

on-year, supported by the revenue growth and structural

improvements. Gross margins were higher in three out of

four business areas. Gross profit improved by 26%

and

amounted to $2,508 million.

Income from operations

Income from operations amounted to $1,094 million and

close to doubled from the year-earlier period driven

primarily by stronger Operational EBITA,

lower restructuring

related expenses and a positive impact from fair value

adjustments of equity investments of $96 million. Results

include restructuring activities with restructuring and

restructuring related expenses of

$18 million, primarily related to Process Automation.

Operational EBITA

Operational EBITA of $1,113

million was 71% higher (59%

constant currency) year-on-year. The margin improved by

440 basis points to 15.0%. Three out of four business areas

improved their margin,

with Motion remaining stable at an

already high level. 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 additional support from the

impacts of exchange rate movements. Selling, general and

administrative (SG&A) expenses increased by 11%

(4% in

local currency),

driven by higher sales expenses. However,

the ratio in relation to revenues declined to 17.6%, from

19.2% in the year-earlier period. R&D expenses increased

by 18% (9% constant currency). Corporate and Other

Operational EBITA improved by $42 million to -$92 million,

reflecting primarily the elimination of stranded costs and

our

new decentralized operating model.

The underlying ongoing

corporate Operational EBITA was -$85 million,

compared to

-$107 million last year

Net finance expenses

The net finance expenses

amounted to $21 million,

reflecting lower interest costs on debt and lower costs on

uncertain tax positions compared with last year. Net finance

expenses for 2021 are still expected at

$130 million.

Income tax

Income tax expense was $322 million with a tax rate of

29.0% compared with 24.8% in the prior year. The higher

rate is primarily due to timing differences between tax

recognition and underlying profit.

Tax rate for 2021 is still

estimated at 26%

Net income and earnings per share

Net income attributable to ABB was $752 million and

increased by 136% with last year’s second quarter being

the period most severely impacted by the pandemic. Basic

earnings per share was $0.37 and increased by 150%.

Excludes impact of acquisitions or divestments or any significant

non-operational items

Earnings

ABB

INTERIM

REPORT

2021

Net working capital

Net working capital amounted to $3,251 million, remaining

broadly stable year-on-year. However, it increased from

$2,904 million in the prior quarter, primarily due to receivables

from higher business volumes. In total, the reduction of net

working capital in Process Automation partially offset the

increase in the other three business areas. Net working

capital as a percentage of revenues

was 11.6%.

Capital expenditures

Purchases of property, plant and equipment and intangible

assets amounted to $151 million.

Net debt

totaled $2,259 million, a significant reduction

compared with last year’s level of $7,615 million and a

sequential increase from $1,233 million. The sequential

increase reflects the impacts of the share buybacks during the

quarter as well as the remaining payment of the annual

dividend payment. The net debt to EBITDA ratio

declined to

0.7 from 2.5 reported for the same period last year, while it

increased sequentially from 0.4.

Cash flows

Cash flow from operating activities in continuing operations was

$663 million, a slight improvement of $15 million compared with

the corresponding period last year. Three out of four business

areas contributed to the improvement which was driven by

higher earnings and included a sequential build-up of net

working capital reflecting the increase in customer deliveries.

Share buyback program

As approved at the Annual General Meeting, 115,000,000

shares repurchased under the initial share buyback program

were cancelled. The total number of ABB Ltd’s issued shares is

2,053,148,264, compared with 2,168,148,264 before the

cancellation. At the end of the period, ABB holding of treasury

shares amounted to 47,370,987 which corresponds to 2.3%

the total number of issued shares of which 28,554,689 have

been purchased for cancellation in connection with share

buyback activities on the second trading line.

The previously announced follow-up share buyback program of

up to $4.3 billion was launched in early April. This follow-up

program is part of the plan to return

$7.8 billion of cash proceeds from the Power Grids divestment

to shareholders. Under the initial program a total of

128,620,589 shares were repurchased for an amount of

approximately $3.5 billion. In Q2 a total of 14,934,100 shares

were repurchased on the second trading line.

($ millions,

unless otherwise indicated)

Jun. 30

2021

Jun. 30

2020

Dec. 31

2020

Short term debt and current

maturities of long-term debt

2,117

6,383

1,293

Long-term debt

4,375

6,237

4,828

Total debt

6,492

12,620

6,121

Cash & equivalents

2,860

2,518

3,278

Cash and equivalents in

discontinued operations

–

609

–

Restricted cash - current

–

323

Marketable securities and

short-term investments

1,002

1,878

2,108

Restricted cash - non-current

300

–

300

Cash and marketable securities

4,233

5,005

6,009

Net debt*

2,259

7,615

112

Net debt* to EBITDA ratio

0.7

2.5

0.04

Net debt* to Equity ratio

0.16

0.61

0.01

net debt excludes net pension liabilities $871 million

Balance sheet & Cash flow

ABB

INTERIM

REPORT

2021

Orders and revenues

Demand recovered from the low levels in the year-earlier

period when business activities were the most affected by the

effects of the pandemic.

Orders increased to the high level of

$3,693 million, an increase of 35%

(28% comparable).

Revenues amounted to $3,406 million, up by 23%

(17% comparable).

●

Strong comparable order growth represents a double-digit

growth rate in all divisions.

●

Demand improved in the buildings segment, with a positive

development for both residential and non-residential

business. Customer activity was also high for the data

centers, food & beverage, rail and e-mobility segments.

Activity in oil & gas was moderate.

●

Orders increased at double-digit rates in all three regions

although at a higher pace of >40% (>30% comparable) in

the Americas and Europe while AMEA increased by 20%

(11% comparable).

●

Comparable growth was to some extent supported by

customers stock-building to manage the constraints of

component availability as well as solid pricing execution.

While component shortages had no material impact on

customer deliveries in the period, delays are expected in

the coming quarter.

Profit

All of the larger divisions improved both Operational EBITA

and margin, hence the business area result improved by 70%

and margin increased by 480 basis points to 17.4%.

●

The strong performance reflects the impact from higher

volumes, capacity utilization, improved pricing, cost controls

and constrained travel expenses.

●

While the adverse impact from rising raw material costs

was limited in the period, it is expected to have an

increasingly negative impact in the coming quarters as

commodities bought at higher rates are used in production.

Some increase in travel expenses is also expected, as

pandemic-related travel restrictions ease.

Growth

Change year-on-year

Orders

Revenues

Comparable

28%

17%

Portfolio changes

Total

35%

23%

—

Electrification

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

3,693

2,737

35%

28%

7,224

5,858

23%

18%

Order backlog

5,029

4,465

13%

5,029

4,465

13%

Revenues

3,406

2,764

23%

17%

6,546

5,537

18%

14%

Operational EBITA

592

348

70%

1,103

666

66%

as % of operational revenues

17.4%

12.6%

+4.8 pts

16.8%

12.0%

+4.8 pts

Cash flow from operating activities

511

402

27%

830

415

100%

No. of employees (FTE equiv.)

51,700

ABB

INTERIM

REPORT

2021

Orders and revenues

Both orders and revenues were at high absolute levels, and

growth was additionally supported by low comparables in the

year-earlier period. In total, order intake amounted to $1,947

million, up by 23% (16% comparable). Revenues amounted to

$1,850 million, representing growth of 17% (11% comparable).

●

Customer activity improved in all segments. Order intake was

driven by the short-cycle product business as well as service,

with emerging signs of improving demand for projects.

●

Orders increased in all three regions, with the Americas

outperforming Europe and AMEA.

Profit

Operational EBITA margin of 17.7% remained stable compared

with the high comparable from last year. Operational EBITA

increased by 16%, relative to the same period last year and

reached the high quarterly level of

$325 million.

●

Operational EBITA margin was supported by the impact of

higher sales volumes, however there was an offsetting effect

from the geographical mix from the strong recovery in both

Europe and the Americas.

●

Although a tightening supply of semiconductors was noted in

the industry, there was no material impact on customer

deliveries or results. However, longer lead-times in customer

deliveries are anticipated in the coming quarter.

●

While the adverse impact from rising raw material costs was

limited in the period, it is expected to have an increasingly

negative impact in the coming quarters as commodities

bought at higher rates are used in production.

Growth

Change year-on-year

Orders

Revenues

Comparable

16%

11%

Portfolio changes

Total

23%

17%

—

Motion

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

1,947

1,586

23%

16%

3,864

3,487

11%

Order backlog

3,558

3,384

3,558

3,384

Revenues

1,850

1,583

17%

11%

3,517

3,093

14%

Operational EBITA

325

279

16%

614

509

21%

as % of operational revenues

17.7%

0 pts

17.4%

16.5%

+0.9 pts

Cash flow from operating activities

223

328

-32%

547

480

14%

No. of employees (FTE equiv.)

21,500

20,700

ABB

INTERIM

REPORT

2021

Orders and revenues

Orders improved in all segments and divisions, although from

the low level in the year-earlier period when demand was

significantly impacted by the spread of the pandemic. Order

intake amounted to $1,555 million, an increase of 19% (11%

comparable). Revenues turned to growth and amounted to

$1,540 million, up by 11% (4% comparable).

●

In total, both the products and service business improved

in orders year-on-year.

●

The process-related business improved overall supported

by positive developments

in pulp & paper, mining, water

& wastewater and chemicals. Demand in the oil & gas

segment recovered

primarily due to a positive

development in the Americas. Customer activity improved

in power generation, albeit from a low level.

●

The marine segment improved, including a slight positive

development in the cruise segment with customers

initiating service spend in anticipation of upcoming

cruising activities.

●

The increase in revenues reflects

the low comparable

from last year, backlog execution and a broad-based

recovery in demand with all divisions reporting stable to

positive growth.

Profit

All divisions improved their Operational EBITA and

margin

year-on-year. In total, profit increased by 67% and margin

rose by 410 basis points to 12.5%.

●

The result was supported by positive volume

development, improved mix from higher share of service

revenues, impact from earlier implemented cost

measures and impact from currency movements.

●

There was no material impact from the rising constraints

of semiconductors supply.

Growth

Change year-on-year

Orders

Revenues

Comparable

11%

Portfolio changes

Total

19%

11%

—

Process Automation

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

1,555

1,305

19%

11%

3,211

3,062

-2%

Order backlog

5,980

5,210

15%

5,980

5,210

15%

Revenues

1,540

1,382

11%

2,947

2,844

-3%

Operational EBITA

192

115

67%

347

259

34%

as % of operational revenues

12.5%

8.4%

+4.1 pts

11.8%

9.1%

+2.7 pts

Cash flow from operating activities

228

120

90%

461

390%

No. of employees (FTE equiv.)

21,900

22,900

-5%

ABB

INTERIM

REPORT

2021

Orders and revenues

Both divisions contributed strongly to the total order growth

of 52% (41% comparable) from last year’s low level. In total,

orders amounted to $968 million. Revenues increased by

32% (22% comparable) to $832 million, to some degree

adversely impacted by extended lead times in customer

deliveries. This was due to component shortages which are

anticipated to persist near-term.

●

Robotics orders improved significantly in all customer

segments, except in automotive where orders were

adversely impacted by the ongoing strategic selective

order approach, aimed at improving long-term profitability.

Demand from machine builders was very strong with

orders to some extent supported by inventory build-up.

●

All regions improved strongly, with the Americas and

Europe outgrowing the AMEA region.

After the close of the second quarter, the acquisition of

ASTI Mobile Robotics Group (ASTI) was announced. It is a

leading global autonomous mobile robotics (AMR)

manufacturer with a portfolio across all major applications

enabled by the company’s software suite. The acquisition

adds to Robotics and Machine Automation solutions to

deliver a unique automation portfolio, further expanding into

new industry segments.

Profit

Operational EBITA more than doubled year-on-year and the

margin increased by 470 basis points to 11.5% with

substantial improvement in both divisions.

●

The margin improvement was primarily driven by the

better cost absorption from higher volumes. Mix improved

through higher service revenues and a positive divisional

mix as well as additional support from previously

implemented cost measures.

Growth

Change year-on-year

Orders

Revenues

Comparable

41%

22%

11%

10%

Portfolio changes

Total

52%

32%

—

Robotics & Discrete Automation

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

968

638

52%

41%

1,809

1,449

25%

16%

Order backlog

1,501

1,478

-4%

1,501

1,478

-4%

Revenues

832

629

32%

22%

1,685

1,300

30%

20%

Operational EBITA

123%

201

102

97%

as % of operational revenues

11.5%

6.8%

+4.7 pts

11.9%

7.8%

+4.1 pts

Cash flow from operating activities

15%

189

134

41%

No. of employees (FTE equiv.)

10,300

ABB

INTERIM

REPORT

2021

Quarterly highlights

●

ABB is launching a gender-neutral global parental leave

program granting 12 weeks of paid leave for primary

caregivers and 4 weeks for secondary caregivers across

the global organization.

●

As part of its new Sustainability Strategy and its ambition

to enable a low-carbon society, ABB joined three

initiatives led by the international non-profit Climate

Group in line with its action plan and focus areas

identified to reduce its own emissions: EV 100: ABB

commits to electrifying its fleet of more than 10,000

vehicles by 2030. RE 100: ABB commits to sourcing 100

percent renewable electricity by 2030. EP 100: ABB

commits to establishing energy efficiency targets and

continue deploying energy management systems at the

company’s sites. Furthermore, the company’s own

reduction targets have now also received approval by

the Science Based Targets initiative (SBTi) confirming

that they are in line with the 1.5°C scenario of the Paris

Agreement. ABB also joined the Business Ambition for

1.5°C Campaign, a global coalition of UN agencies,

business and industry leaders, led by the UN Global

Compact (UNGC).

●

ABB Azipod® electric propulsion technology celebrated in

April 30 years of excellence at sea. From its creation

three decades ago to its market leading position in global

shipping today, Azipod® propulsion has revolutionized

marine transport with its unparalleled performance,

efficiency, sustainability and reliability.

●

ABB has become

the Official Global Partner of the FIA

Girls on Track – ABB Formula E Project – a grassroots

program to inspire the next generation of women.

Story of the quarter

In the Pride Month of June, ABB highlighted the real strides it

has made with respect to LGBTQ+, including governance and

policy, inclusive leadership and culture, and partnerships. It has

already signed the Standards of Conduct for Business Tackling

Discrimination against Lesbian, Gay, Bisexual, Trans and

Intersex People, put forth by the Office of the United Nations

High Commissioner for Human Rights. Additionally,

partnerships with Stonewall and Open for Business have been

established. ABB has instituted mandatory training on how to

interrupt unconscious bias for all leaders on a worldwide basis.

Also, “Count on us!” campaigns have been initiated to support

LGBTQ+ employees in coming out. In recent months, LGBTQ+

Employee Resource Groups (ERGs) have been launched in

Europe, the United States, Latin America and Poland.

Collectively, LGBTQ+ ERGs across ABB now boast more than

400 members, creating a critical mass of committed people

working to support education, foster empathy and drive

engagement on this important topic.

Q2 outcome

●

14%

reduction of CO

₂

emissions in own operations mainly

due to continuation of renewable energy and energy

efficiency programs

●

13%

year on year decline in LTIFR but a slight increase

sequentially due to easing Covid-19 restrictions

●

Diversity & Inclusion initiative strengthened through

celebration of Pride Month in June

—

Sustainability

Q2 2021

Q2 2020

CHANGE

12M ROLLING

CO2e own operations emissions,

kt scope 1 and 2

105

-14%

Lost Time Injury Frequency Rate (LTIFR),

frequency / 200,000 working hours

0.147

0.168

-13%

0.153

Share of females in senior management

positions, %

13.9

12.5

+1.4 pts

13.8

From energy use, previous quarter

ABB

INTERIM

REPORT

2021

During Q2 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 this follow-up

program this represents

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 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.

After Q2 2021

●

On 20 July, ABB announced the acquisition of ASTI

Mobile Robotics Group to drive next generation of flexible

automation with Autonomous Mobile Robots. ASTI is

global leader in high growth Autonomous Mobile Robot

(AMR) market with broad portfolio of vehicles and

software. Acquisition adds to RA’s solutions to deliver a

unique automation portfolio further expanding into new

industry segments. Since 2015, the company has enjoyed

close to 30%

annual growth and is targeting

approximately $50 million in revenue in 2021.

In the first six months of 2021, demand for ABB’s products

increased strongly from the low level in the previous year

period when the adverse business impact of the COVID-19

pandemic was at its peak. Orders amounted to $15,745

million and improved by 18% (11% comparable) and

revenues amounted to $14,350 million up by 16% (11%

comparable), implying a book-to-bill of 1.10. The recovery

was mostly driven by the short-cycle business as from the

first quarter, while the process-related business

predominantly picked up during the second quarter. In the

period demand increased in both the product and the

service business. Additionally, exchange rates had a

positive impact on order intake and revenues.

Income from operations amounted to $1,891 million and

doubled from the year-earlier period driven primarily by

stronger Operational EBITA. Results include restructuring

activities progressing according to plan with restructuring

and restructuring-related expenses of $53

million.

Operational EBITA improved by 61% year on year to $2,072

million and the Operational EBITA margin increased by 400

basis points to 14.4%. 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 additional support

from the impacts of exchange rate movements. While

revenues increased by 16%, the expenses related to

selling, general and administrative (SG&A) increased by a

more limited 6%, driven by higher sales expenses. The ratio

in relation to revenues declined to 18.0%, from 19.7% in the

year-earlier period. R&D expenses increased by 15%.

Corporate and Other Operational EBITA improved by $56

million to -$193 million. The net finance expenses amounted

to -$65 million.

Income tax expense was $574 million with a tax rate of

30.0%.

Net income attributable to ABB was $1,254 million and

increased by 80% with last year’s period being the period

most severely impacted by the pandemic. Basic earnings

per share was $0.62 and increased by 91%.

Significant events

First six months 2021

ABB

INTERIM

REPORT

2021

($ in millions, unless otherwise stated)

FY 2021

Q3 2021

Net finance expenses

~(130)

~(30)

unchanged

Non-operational pension

(cost) / credit

~180

~40

unchanged

Effective tax rate

~26%

<26%

unchanged

Capital Expenditures

~(750)

~(200)

unchanged

($ in millions, unless otherwise stated)

FY 2021

Q3 2021

Corporate and Other Operational costs

~(400)

~(100)

from ~(425)

Non-operating items

Restructuring and restructuring related

~(150)

~(40)

from ~(200)

GEIS integration costs

~(20)

~(5)

unchanged

Separation costs

~(130)

~(50)

new

PPA-related amortization

~(255)

~(65)

unchanged

Certain other income and expenses

related to PG divestment

~(40)

~(15)

unchanged

Additional 2021 guidance

Additional figures

ABB Group

Q1 2020

Q2 2020

Q3 2020

Q4 2020

FY 2020

Q1 2021

Q2 2021

EBITDA, $ in million

600

799

302

807

2,508

1,024

1,324

Return on Capital Employed, %

n.a.

10.3%

n.a.

Net debt/Equity

0.52

0.61

(0.05)

0.01

0.09

0.16

Net debt/ EBITDA 12M rolling

2.3

2.5

(0.4)

0.04

0.4

0.7

Net working capital, % of 12M rolling revenues

12.3%

12.6%

12.5%

10.5%

10.8%

11.6%

Earnings per share, basic, $

0.18

0.15

2.14

(0.04)

2.44

0.25

0.37

Earnings per share, diluted, $

0.18

0.15

2.14

(0.04)

2.43

0.25

0.37

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

31.39

Share price at the end of period, $

17.26

22.56

25.45

27.96

30.47

33.99

Number of employees (FTE equivalents)

143,320

142,310

106,420

105,520

105,330

106,370

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

2,134

2,135

2,092

2,031

2,024

2,006

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.

Costs relating to the announced exits and the potential E-mobility

listing.

Excluding share of net income from JV.

Excludes impact of acquisitions or divestments or any significant

non-operational items.

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.

Divestments

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Power Grids

1-Jul

9,200

36,000

Acquisitions

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Robotics & Discrete Automation

Codian Robotics B.V.

1-Oct

2021

Electrification

Enervalis (majority stake)

26-Apr

Acquisitions and divestments, last twelve months

ABB

INTERIM

REPORT

2021

For additional information please contact:

Media Relations

Phone: +41 43 317 71 11

Email:

[email protected]

Investor Relations

Phone: +41 43 317 71 11

Email:

[email protected]

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

Financial calendar

2021

September 28-29 ABB Motion CMD in Helsinki

October 21 Q3 results

December 7 ABB Group CMD in Zurich

2022

February 3 Q4

results

This press release includes forward-looking information and

statements as well as other statements concerning the

outlook for our business, including those in the sections of

this release titled “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.

The Q2

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.

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.

Q2 results presentation on July 22,

2021

Important notice about forward-looking information

ABB

(ABBN: SIX Swiss Ex) is a leading global technology company that energizes the transformation of society and industry to

achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation and motion

portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching back

more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.

1 Q2

2021

FINANCIAL

INFORMATION

July 22, 2021

Q2 2021

Financial information

2 Q2

2021

FINANCIAL

INFORMATION

—

Financial

Information

Contents

─ 07

Key Figures

08 ─

35 Consolidated

Financial

Information

(unaudited)

36 ─

48 Supplemental

Reconciliations

and Definitions

3 Q2

2021

FINANCIAL

INFORMATION

—

Key Figures

CHANGE

($ in millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

(1)

Orders

7,989

6,054

32%

24%

Order backlog (end June)

15,424

13,917

11%

Revenues

7,449

6,154

21%

14%

Gross Profit

2,508

1,987

26%

as % of revenues

33.7%

32.3%

+1.4 pts

Income from operations

1,094

571

92%

Operational EBITA

(1)

1,113

651

71%

59%

(2)

as % of operational revenues

(1)

15.0%

10.6%

+4.4 pts

Income from continuing operations, net of tax

789

395

100%

Net income attributable to ABB

752

319

136%

Basic earnings per share ($)

0.37

0.15

150%

(3)

Cash flow from operating activities

(4)

663

680

-3%

Cash flows from operating activities in continuing operations

663

648

CHANGE

($ in millions, unless otherwise indicated)

H1 2021

H1 2020

US$

Comparable

(1)

Orders

15,745

13,400

18%

11%

Revenues

14,350

12,370

16%

11%

Gross Profit

4,776

3,897

23%

as % of revenues

33.3%

31.5%

+1.8 pts

Income from operations

1,891

944

100%

Operational EBITA

(1)

2,072

1,287

61%

50%

(2)

as % of operational revenues

(1)

14.4%

10.4%

+4 pts

Income from continuing operations, net of tax

1,340

721

86%

Net income attributable to ABB

1,254

695

80%

Basic earnings per share ($)

0.62

0.33

91%

(3)

Cash flow from operating activities

(4)

1,206

103

n.a.

Cash flow from operating activities in continuing operations

1,186

252

n.a.

(1) For

a reconciliation of non-GAAP measures see

“Supplemental Reconciliations and Definitions”

on page 36.

(2) Constant

currency (not adjusted for portfolio changes).

(3) EPS

growth rates are computed using unrounded amounts.

(4) Cash

flow from operating activities includes both continuing and discontinued operations.

4 Q2

2021

FINANCIAL

INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Local

Comparable

Orders

ABB Group

7,989

6,054

32%

24%

Electrification

3,693

2,737

35%

28%

Motion

1,947

1,586

23%

16%

Process Automation

1,555

1,305

19%

11%

Robotics & Discrete Automation

968

638

52%

41%

Corporate and Other

(incl. intersegment eliminations)

(174)

(212)

Order backlog (end June)

ABB Group

15,424

13,917

11%

Electrification

5,029

4,465

13%

Motion

3,558

3,384

Process Automation

5,980

5,210

15%

Robotics & Discrete Automation

1,501

1,478

-4%

Corporate and Other

(incl. intersegment eliminations)

(644)

(620)

Revenues

ABB Group

7,449

6,154

21%

14%

Electrification

3,406

2,764

23%

16%

17%

Motion

1,850

1,583

17%

11%

Process Automation

1,540

1,382

11%

Robotics & Discrete Automation

832

629

32%

22%

Corporate and Other

(incl. intersegment eliminations)

(179)

(204)

Income from operations

ABB Group

1,094

571

Electrification

549

305

Motion

303

284

Process Automation

190

117

Robotics & Discrete Automation

Corporate and Other

(incl. intersegment eliminations)

(22)

(153)

Income from operations %

ABB Group

14.7%

9.3%

Electrification

16.1%

11.0%

Motion

16.4%

17.9%

Process Automation

12.3%

8.5%

Robotics & Discrete Automation

8.9%

2.9%

Operational EBITA

ABB Group

1,113

651

71%

59%

Electrification

592

348

70%

55%

Motion

325

279

16%

Process Automation

192

115

67%

52%

Robotics & Discrete Automation

123%

107%

Corporate and Other

(1)

(incl. intersegment eliminations)

(92)

(134)

Operational EBITA %

ABB Group

15.0%

10.6%

Electrification

17.4%

12.6%

Motion

17.7%

Process Automation

12.5%

8.4%

Robotics & Discrete Automation

11.5%

6.8%

Cash flow from operating activities

(2)

ABB Group

663

680

Electrification

511

402

Motion

223

328

Process Automation

228

120

Robotics & Discrete Automation

Corporate and Other

(incl. intersegment eliminations)

(377)

(270)

Discontinued operations

–

(1)

Corporate and Other includes Stranded corporate costs of $19 million for the three months ended June 30, 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.

5 Q2

2021

FINANCIAL

INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

H1 2021

H1 2020

US$

Local

Comparable

Orders

ABB Group

15,745

13,400

18%

11%

Electrification

7,224

5,858

23%

17%

18%

Motion

3,864

3,487

11%

Process Automation

3,211

3,062

-2%

Robotics & Discrete Automation

1,809

1,449

25%

16%

Corporate and Other

(incl. intersegment eliminations)

(363)

(456)

Order backlog (end June)

ABB Group

15,424

13,917

11%

Electrification

5,029

4,465

13%

Motion

3,558

3,384

Process Automation

5,980

5,210

15%

Robotics & Discrete Automation

1,501

1,478

-4%

Corporate and Other

(incl. intersegment eliminations)

(644)

(620)

Revenues

ABB Group

14,350

12,370

16%

10%

11%

Electrification

6,546

5,537

18%

13%

14%

Motion

3,517

3,093

14%

Process Automation

2,947

2,844

-3%

Robotics & Discrete Automation

1,685

1,300

30%

20%

Corporate and Other

(incl. intersegment eliminations)

(345)

(404)

Income from operations

ABB Group

1,891

944

Electrification

989

504

Motion

568

475

Process Automation

337

241

Robotics & Discrete Automation

156

Corporate and Other

(incl. intersegment eliminations)

(159)

(326)

Income from operations %

ABB Group

13.2%

7.6%

Electrification

15.1%

9.1%

Motion

16.2%

15.4%

Process Automation

11.4%

8.5%

Robotics & Discrete Automation

9.3%

3.8%

Operational EBITA

ABB Group

2,072

1,287

61%

50%

Electrification

1,103

666

66%

52%

Motion

614

509

21%

13%

Process Automation

347

259

34%

23%

Robotics & Discrete Automation

201

102

97%

79%

Corporate and Other

(1)

(incl. intersegment eliminations)

(193)

(249)

Operational EBITA %

ABB Group

14.4%

10.4%

Electrification

16.8%

12.0%

Motion

17.4%

16.5%

Process Automation

11.8%

9.1%

Robotics & Discrete Automation

11.9%

7.8%

Cash flow from operating activities

(2)

ABB Group

1,206

103

Electrification

830

415

Motion

547

480

Process Automation

461

Robotics & Discrete Automation

189

134

Corporate and Other

(incl. intersegment eliminations)

(841)

(871)

Discontinued operations

(149)

(1)

Corporate and Other includes Stranded corporate costs of $40 million for the six months ended June 30, 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.

6 Q2

2021

FINANCIAL

INFORMATION

Operational EBITA

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions, unless otherwise indicated)

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Revenues

7,449

6,154

3,406

2,764

1,850

1,583

1,540

1,382

832

629

Foreign exchange/commodity timing

differences in total revenues

(13)

(16)

–

(11)

(4)

(18)

Operational revenues

7,436

6,138

3,408

2,764

1,839

1,579

1,536

1,364

834

633

Income from operations

1,094

571

549

305

303

284

190

117

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

(12)

(1)

–

(13)

–

Acquisition-

and divestment-related

expenses and integration costs

–

Other income/expense relating to the

Power Grids joint venture

–

Certain other non-operational items

(86)

–

(9)

(7)

–

Foreign exchange/commodity timing

differences in income from operations

(73)

(28)

(31)

(1)

(17)

Operational EBITA

1,113

651

592

348

325

279

192

115

Operational EBITA margin (%)

15.0%

10.6%

17.4%

12.6%

17.7%

12.5%

8.4%

11.5%

6.8%

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions, unless otherwise indicated)

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

Revenues

14,350

12,370

6,546

5,537

3,517

3,093

2,947

2,844

1,685

1,300

Foreign exchange/commodity timing

differences in total revenues

(7)

(1)

Operational revenues

14,370

12,379

6,558

5,547

3,525

3,086

2,948

2,843

1,684

1,302

Income from operations

1,891

944

989

504

568

475

337

241

156

Acquisition-related amortization

129

130

Restructuring, related and

implementation costs

107

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

(9)

(1)

–

(13)

–

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

(74)

(15)

(7)

–

Foreign exchange/commodity timing

differences in income from operations

(12)

(1)

Operational EBITA

2,072

1,287

1,103

666

614

509

347

259

201

102

Operational EBITA margin (%)

14.4%

10.4%

16.8%

12.0%

17.4%

16.5%

11.8%

9.1%

11.9%

7.8%

7 Q2

2021

FINANCIAL

INFORMATION

Depreciation and Amortization

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions)

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Depreciation

(1)

148

147

Amortization

including total acquisition-related amortization of:

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions)

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

Depreciation

(1)

292

132

139

Amortization

165

163

including total acquisition-related amortization of:

129

130

(1) Commencing

Q1 2021, depreciation related 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.

Orders received and revenues by region

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

Q2 21

Q2 20

US$

Local

parable

Q2 21

Q2 20

US$

Local

parable

Europe

2,954

2,219

33%

23%

2,697

2,217

22%

12%

The Americas

2,473

1,720

44%

41%

2,284

1,872

22%

19%

of which United States

1,846

1,327

39%

1,676

1,469

14%

Asia, Middle East and Africa

2,562

2,056

25%

16%

15%

2,468

2,004

23%

14%

15%

of which China

1,322

1,049

26%

15%

1,313

1,012

30%

18%

19%

Intersegment orders/revenues

(1)

–

ABB Group

7,989

6,054

32%

24%

7,449

6,154

21%

14%

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

H1 21

H1 20

US$

Local

parable

H1 21

H1 20

US$

Local

parable

Europe

6,056

4,994

21%

13%

5,248

4,588

14%

The Americas

4,720

3,998

18%

17%

4,327

3,964

of which United States

3,525

3,037

16%

3,208

3,079

Asia, Middle East and Africa

4,969

4,286

16%

4,775

3,710

29%

21%

22%

of which China

2,521

1,947

29%

19%

2,489

1,678

48%

36%

38%

Intersegment orders/revenues

(1)

–

122

–

108

ABB Group

15,745

13,400

18%

11%

14,350

12,370

16%

10%

11%

(1) Intersegment

orders/revenues during the six months ended 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.

8 Q2

2021

FINANCIAL

INFORMATION

—

Consolidated Financial Information

ABB Ltd Consolidated Income Statements (unaudited)

Six months ended

Three months ended

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

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Sales of products

11,874

10,028

6,167

5,035

Sales of services and other

2,476

2,342

1,282

1,119

Total revenues

14,350

12,370

7,449

6,154

Cost of sales of products

(8,108)

(7,039)

(4,184)

(3,464)

Cost of services and other

(1,466)

(1,434)

(757)

(703)

Total cost of sales

(9,574)

(8,473)

(4,941)

(4,167)

Gross profit

4,776

3,897

2,508

1,987

Selling, general and administrative expenses

(2,577)

(2,432)

(1,314)

(1,180)

Non-order related research and development expenses

(601)

(521)

(308)

(262)

Other income (expense), net

293

–

208

Income from operations

1,891

944

1,094

571

Interest and dividend income

Interest and other finance expense

(91)

(112)

(36)

(90)

Non-operational pension (cost) credit

Income from continuing operations before taxes

1,914

930

1,111

525

Income tax expense

(574)

(209)

(322)

(130)

Income from continuing operations, net of tax

1,340

721

789

395

Income (loss) from discontinued operations, net of tax

(36)

(8)

(49)

Net income

1,304

726

781

346

Net income attributable to noncontrolling interests

(50)

(31)

(29)

(27)

Net income attributable to ABB

1,254

695

752

319

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

1,290

703

760

378

Income (loss) from discontinued operations, net of tax

(36)

(8)

(59)

Net income

1,254

695

752

319

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.64

0.33

0.38

0.18

Income (loss) from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.63

0.33

0.37

0.18

Income (loss) from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

Weighted-average number of shares outstanding (in

millions) used to compute:

Basic earnings per share attributable to ABB shareholders

2,015

2,134

2,016

2,134

Diluted earnings per share attributable to ABB shareholders

2,033

2,137

2,031

2,137

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

See Notes to the Consolidated Financial Information

9 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Condensed Consolidated Statements of Comprehensive

Income (unaudited)

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Total comprehensive income, net

of tax

1,206

484

881

611

Total comprehensive

income attributable to noncontrolling interests, net of tax

(55)

(27)

(31)

Total comprehensive income attributable

to ABB shareholders, net of tax

1,151

457

850

580

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

See Notes to the Consolidated Financial Information

10 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Balance Sheets (unaudited)

($ in millions)

Jun. 30, 2021

Dec. 31, 2020

Cash and equivalents

2,860

3,278

Restricted cash

323

Marketable securities and short-term investments

1,002

2,108

Receivables, net

7,158

6,820

Contract assets

1,087

985

Inventories, net

4,700

4,469

Prepaid expenses

229

201

Other current assets

579

760

Current assets held for sale and in discontinued operations

192

282

Total current assets

17,878

19,226

Restricted cash, non-current

300

Property, plant and equipment, net

4,079

4,174

Operating lease right-of-use assets

983

969

Investments in equity-accounted companies

1,719

1,784

Prepaid pension and other employee benefits

400

360

Intangible assets, net

1,877

2,078

Goodwill

10,798

10,850

Deferred taxes

828

843

Other non-current assets

559

504

Total assets

39,421

41,088

Accounts payable, trade

4,708

4,571

Contract liabilities

1,846

1,903

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

2,117

1,293

Current operating leases

233

270

Provisions for warranties

1,012

1,035

Other provisions

1,454

1,519

Other current liabilities

4,029

4,181

Current liabilities held for sale and in discontinued operations

548

644

Total current liabilities

15,947

15,416

Long-term debt

4,375

4,828

Non-current operating leases

779

731

Pension and other employee benefits

1,144

1,231

Deferred taxes

748

661

Other non-current liabilities

1,972

2,025

Non-current liabilities held for sale and in discontinued operations

190

197

Total liabilities

25,155

25,089

Commitments and contingencies

Stockholders’ equity:

Common stock, CHF 0.12 par value

(2,053 million and 2,168 million shares issued at June 30,

2021, and December 31, 2020, respectively)

178

188

Additional paid-in capital

Retained earnings

19,185

22,946

Accumulated other comprehensive loss

(4,104)

(4,002)

Treasury stock, at cost

(47 million and 137 million shares at June 30, 2021, and December

31, 2020, respectively)

(1,337)

(3,530)

Total ABB stockholders’ equity

13,932

15,685

Noncontrolling interests

334

314

Total stockholders’ equity

14,266

15,999

Total liabilities and stockholders’

equity

39,421

41,088

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

See Notes to the Consolidated Financial Information

11 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Statements of Cash Flows (unaudited)

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Operating activities:

Net income

1,304

726

781

346

Loss (income) from discontinued operations, net of tax

(5)

Adjustments to reconcile net income (loss) to

net cash provided by operating activities:

Depreciation and amortization

457

455

230

228

Changes in fair values of investments

(113)

(61)

(103)

(66)

Pension and other employee benefits

(94)

(82)

(44)

(33)

Deferred taxes

109

(1)

(45)

Net loss (gain) from derivatives and foreign exchange

(48)

Net loss (gain) from sale of property,

plant and equipment

(15)

(4)

Fair value adjustment on assets and liabilities held for sale

–

Other

Changes in operating assets and liabilities:

Trade receivables, net

(414)

(412)

127

Contract assets and liabilities

(147)

(87)

(57)

(46)

Inventories, net

(293)

(199)

(125)

102

Accounts payable, trade

309

(200)

267

(133)

Accrued liabilities

(8)

129

Provisions, net

(60)

(61)

(7)

Income taxes payable and receivable

(56)

(157)

(6)

Other assets and liabilities, net

(20)

(239)

(45)

Net cash provided by operating activities – continuing operations

1,186

252

663

648

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

operations

(149)

–

Net cash provided by operating activities

1,206

103

663

680

Investing activities:

Purchases of investments

(347)

(1,614)

(38)

(1,372)

Purchases of property, plant and equipment

and intangible assets

(293)

(303)

(151)

(140)

Acquisition of businesses (net of cash acquired)

and increases in cost- and equity-accounted companies

(28)

(80)

(24)

(7)

Proceeds from sales of investments

1,321

455

930

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

(142)

(2)

Net cash from settlement of foreign currency derivatives

(72)

(76)

(11)

Other investing activities

(14)

(6)

Net cash provided by (used in) investing activities –

continuing operations

717

(1,747)

752

(1,401)

Net cash used in investing activities – discontinued operations

(70)

(110)

(26)

(73)

Net cash provided by (used in) investing activities

647

(1,857)

726

(1,474)

Financing activities:

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

274

3,582

187

(146)

Increase in debt

1,004

315

251

Repayment of debt

(750)

(568)

(703)

(388)

Delivery of shares

766

–

Purchase of treasury stock

(1,971)

–

(585)

–

Dividends paid

(1,726)

(1,736)

(882)

(1,736)

Dividends paid to noncontrolling shareholders

(92)

(71)

(91)

(69)

Other financing activities

(104)

–

Net cash provided by (used in) financing activities –

continuing operations

(2,489)

1,418

(2,013)

(2,088)

Net cash provided by financing activities – discontinued

operations

–

Net cash provided by (used in) financing activities

(2,489)

1,435

(2,013)

(2,063)

Effects of exchange rate changes on cash and equivalents

and restricted cash

(34)

(98)

Adjustment for the net change in cash and equivalents and restricted

cash

in discontinued operations

–

(609)

–

(609)

Net change in cash and equivalents and restricted cash

(670)

(1,026)

(607)

(3,453)

Cash and equivalents and restricted cash, beginning of period

3,901

3,544

3,838

5,971

Cash and equivalents and restricted cash, end of period

3,231

2,518

3,231

2,518

Supplementary disclosure of cash flow information:

Interest paid

102

Income taxes paid

543

462

287

196

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

See Notes to the Consolidated Financial Information

12 Q2

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

(82)

(9)

(91)

Comprehensive income:

Net income

695

726

Foreign currency translation

adjustments, net of tax of $(2)

(283)

(4)

(287)

Effect of change in fair value of

available-for-sale securities,

net of tax of $4

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $7

Change in derivative instruments

and hedges, net of tax of $0

(4)

Total comprehensive income

457

484

Changes in noncontrolling interests

(16)

Dividends to

noncontrolling shareholders

–

(88)

Dividends to shareholders

(1,758)

Share-based payment arrangements

Delivery of shares

(24)

–

Balance at June 30, 2020

188

18,495

(5,828)

(761)

12,156

419

12,575

Balance at January 1, 2021

188

22,946

(4,002)

(3,530)

15,685

314

15,999

Comprehensive income:

Net income

1,254

1,304

Foreign currency translation

adjustments, net of tax of $2

(166)

(161)

Effect of change in fair value of

available-for-sale securities,

net of tax of $(3)

(8)

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $(3)

Change in derivative instruments

and hedges, net of tax of $0

–

Total comprehensive income

1,151

1,206

Changes in noncontrolling interests

(37)

(20)

(57)

–

Dividends to

noncontrolling shareholders

–

(92)

Dividends to shareholders

(1,730)

Cancellation of treasury shares

(10)

(17)

(3,130)

3,157

–

Share-based payment arrangements

Purchase of treasury stock

(1,924)

Delivery of shares

(58)

(136)

960

766

Other

Balance at June 30, 2021

178

19,185

(4,104)

(1,337)

13,932

334

14,266

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

See Notes to the Consolidated Financial Information

13 Q2

2021

FINANCIAL

INFORMATION

—

Notes to the Consolidated Financial Information (unaudited)

─

Note 1

The Company and basis of presentation

ABB Ltd and its subsidiaries (collectively,

the Company) together form a leading global technology

company, connecting software

to its electrification, robotics,

automation and motion portfolio to drive performance to new levels.

The Company’s Consolidated Financial Information is

prepared in accordance with United States of America generally

accepted accounting principles (U.S.

GAAP) for interim financial reporting. As such, the Consolidated

Financial Information does not include all the information and

notes required under U.S. GAAP for

annual consolidated financial statements. Therefore, such financial

information should be read in conjunction with the audited

consolidated financial statements in

the Company’s Annual Report for the year ended December

31, 2020.

The preparation of financial information in conformity with

U.S. GAAP requires management to make assumptions

and estimates that directly affect the amounts

reported in the Consolidated Financial Information. These accounting

assumptions and estimates include:

●

growth rates, discount rates and other assumptions used to

determine impairment of long-lived assets and in testing

goodwill for impairment,

●

estimates to determine valuation allowances for deferred tax assets

and amounts recorded for unrecognized tax benefits,

●

assumptions used in determining inventory obsolescence and

net realizable value,

●

estimates and assumptions used in determining the initial fair

value of retained noncontrolling interest and certain obligations

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 related to credit losses expected to occur over the remaining

life of financial assets such as trade and other receivables,

loans and other

instruments,

●

assumptions used in the calculation of pension and postretirement

benefits and the fair value of pension plan assets, and

●

assumptions and projections, principally related to future material,

labor and project-related overhead costs, used in determining

the percentage-of-

completion on projects, as well as the amount of variable consideration

the Company expects to be entitled to.

The actual results and outcomes may differ from

the Company’s estimates and assumptions.

A portion of the Company’s activities (primarily long

-term construction activities) has an operating cycle that exceeds

one year. For classification of current

assets

and liabilities related to such activities, the Company elected to

use the duration of the individual contracts as its operating

cycle. Accordingly, there are

accounts

receivable, contract assets, inventories

and provisions related to these contracts which will not be realized

within one year that have been classified as current.

Basis of presentation

In the opinion of management, the unaudited Consolidated

Financial Information contains all necessary adjustments

to present fairly the financial position, results

of operations and cash flows for the reported periods. Management

considers all such adjustments to be of a normal recurring

nature. The Consolidated Financial

Information is presented in United States dollars ($) unless otherwise

stated. Due to rounding, numbers presented in the

Consolidated Financial Information may

not add to the totals provided.

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 reallocation of certain real

estate assets, previously reported within Corporate

and Other, into the operating segments

which

utilize the assets.

Adjustment related to prior periods

In the three months ended June 30, 2020, the Company recorded

a cumulative adjustment to increase the value of certain

privately-held equity investments to fair

value based on observable market price changes for an identical

or similar investment of the same issuer (Level 2 inputs).

These changes in fair value primarily

occurred in 2019 and 2018. The correction resulted in a gain

of $58 million being recorded in Other income (expense)

in the Interim Consolidated Income

Statements for the three months ended June 30, 2020. The

Company evaluated the impact of the correction

on both a quantitative and qualitative basis under the

guidance of ASC 250, Accounting Changes and Error Corrections,

and determined that there were no material impacts

on the trend of net income, cash flows or

liquidity for previously issued annual financial statements.

14 Q2

2021

FINANCIAL

INFORMATION

─

Note 2

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

related 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

In March 2020, an accounting standard update was issued

which provides temporary optional expedients and exceptions

to the current guidance on contract

modifications and hedge accounting to ease the financial reporting

burdens

related to the expected market transition from the

London Interbank Offered Rate

(LIBOR) and other interbank offered rates to alternative

reference rates.

This update, along with clarifications outlined in a subsequent

update issued in January

2021, can be adopted and applied no later than December

31, 2022, with early adoption permitted. The Company

is currently evaluating the impact of adopting

this optional guidance on its Consolidated Financial Statements.

─

Note 3

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 Hitachi 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 of

$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 June 30, 2021, $103 million of these

liabilities had been paid and are reported

as reductions in the cash consideration received, of which

$70 million and $26 million was paid during the six months

and three months ended June 30, 2021,

respectively. At June 30, 2021, the

remaining amount recorded was $381 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 in escrow pending completion of

the transfer process. At June 30, 2021, current restricted

cash includes $51 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 by the Company

primarily include finance, information technology,

human resources and certain other administrative services.

Under the current terms, the TSAs will continue for

up to 3 years, and can only be extended on an

exceptional basis for business-critical services for an additional period

which is reasonably necessary to avoid a material adverse

impact on the business. In the

six and three months ended June 30, 2021, the Company

has recognized within its continuing operations, general

and administrative expenses incurred to perform

the TSA, offset by $88 million and $41 million, respectively,

in TSA-related income for such services that is reported

in Other income (expense).

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 was required to be paid as

a result of the planned disposal

transaction to the sum of total net assets of the Company plus

consolidated debt. General corporate overhead

was not allocated to discontinued operations.

15 Q2

2021

FINANCIAL

INFORMATION

Operating results of the discontinued operations, are summarized

as follows:

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Total revenues

–

4,008

–

2,067

Total cost of sales

–

(3,058)

–

(1,587)

Gross profit

–

950

–

480

Expenses

(9)

(780)

(5)

(386)

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

(27)

–

(3)

–

Income (loss) from operations

(36)

170

(8)

Net interest and other finance expense

–

(5)

–

(2)

Non-operational pension (cost) credit

–

(94)

–

(97)

Income (loss) from discontinued operations before taxes

(36)

(8)

(6)

Income tax

–

(65)

–

(43)

Income (loss) from discontinued operations, net of tax

(36)

(8)

(49)

Of the total Income (loss) from discontinued operations

before taxes in the table above, $(36) million and $55 million

in the six months ended June 30, 2021 and

2020, respectively, and $(8) million

and $(17) million in the three months ended June 30,

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 excluded

stranded costs which were previously able to be allocated

to the

Power Grids operating segment.

As a result, for the six and three months ended June 30, 2020,

$40 million and $19 million, respectively,

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,

Net interest and other finance expense in the six and three

months ended June 30, 2020, included

$20 million and

$11 million, respectively,

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 recorded 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 six and three months ended

June 30, 2020, are revenues for sales from the Company’s

operating

segments to the Power Grids business of $108 million and

$61 million, respectively, which

represent intercompany 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.

In addition, the Company also has retained obligations (primarily

for environmental and taxes) related to other businesses

disposed or otherwise exited that

qualified as discontinued operations. Changes to these retained

obligations are also included in 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)

Jun. 30, 2021

(1)

Dec. 31, 2020

(1)

Receivables, net

187

280

Inventories, net

Other current assets

Current assets held for sale and in discontinued operations

192

282

Accounts payable, trade

144

188

Other liabilities

404

456

Current liabilities held for sale and in discontinued operations

548

644

Other non-current liabilities

190

197

Non-current liabilities held for sale and in discontinued

operations

190

197

(1) At

June 30, 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 4

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 on 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.

16 Q2

2021

FINANCIAL

INFORMATION

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.

June 30, 2021 and December 31, 2020, the reported value

of the investment in Hitachi ABB PG includes $1,547

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 June 30, 2021, 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 %)

June 30, 2021

December 31, 2020

Hitachi ABB Power Grids Ltd

19.9%

1,660

1,710

Others

Total

1,719

1,784

In the six and three months ended June 30, 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:

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Income from equity-accounted companies, net of taxes

Basis difference amortization (net of deferred income

tax benefit)

(61)

–

(30)

–

Loss from equity-accounted companies

(57)

(22)

Divestment of the solar inverters business

In February 2020, the Company completed the sale of its

solar inverters 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

buyer 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 year ended December 31, 2019, the Company recorded

a loss of $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 six months ended June 30,

2020, a loss of $19 million was included 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 related to the

business.

The fair value was 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,

in the six months ended June 30, 2020, Income from continuing

operations before taxes includes net losses of $33

million

from the solar inverters business prior to its sale.

17 Q2

2021

FINANCIAL

INFORMATION

─

Note 5

Cash and equivalents, marketable securities and short-term investments

Cash and equivalents, marketable securities and short

-term investments consisted of the following:

June 30, 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

1,975

Time deposits

1,267

1,256

Equity securities

679

695

3,921

–

3,937

3,231

706

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

196

(1)

207

European government obligations

Corporate

(1)

283

(2)

296

–

296

Total

4,204

(2)

4,233

3,231

1,002

Of which:

Restricted cash, current

Restricted cash, non-current

300

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

18 Q2

2021

FINANCIAL

INFORMATION

─

Note 6

Derivative financial instruments

The Company is exposed to certain currency,

commodity, interest rate

and equity risks arising from its global operating, financing

and investing activities. The

Company uses derivative instruments to reduce and manage

the economic impact of these exposures.

Currency risk

Due to the global nature of the Company’s operations,

many of its subsidiaries are exposed to currency risk

in their operating activities from entering into

transactions in currencies other than their functional currency.

To manage such

currency risks, the Company’s policies require its

subsidiaries to hedge their

foreign currency exposures from binding sales and purchase

contracts denominated in foreign currencies. For forecasted

foreign currency denominated sales of

standard products and the related foreign currency denominated

purchases, the Company’s policy is to hedge up to

a maximum of 100 percent of the forecasted

foreign currency denominated exposures, depending on

the length of the forecasted exposures. Forecasted

exposures greater than 12 months are not hedged.

Forward foreign exchange contracts are the main instrument

used to protect the Company against the volatility of future

cash flows (caused by changes in

exchange rates) of contracted and forecasted

sales and purchases denominated in foreign currencies.

In addition, within its treasury operations, the Company

primarily uses foreign exchange swaps and forward foreign exchange

contracts to manage the currency and timing mismatches

arising in its liquidity management

activities.

Commodity risk

Various commodity products are

used in the Company’s manufacturing activities. Consequently

it is exposed to volatility in future cash flows arising from

changes

in commodity prices. To

manage the price risk of commodities, the Company’s

policies require that its subsidiaries hedge the commodity price

risk exposures from

binding contracts, as well as at least 50 percent (up to a maximum

of 100 percent) of the forecasted commodity exposure

over the next 12 months or longer (up to

a maximum of 18 months). Primarily swap contracts are used

to manage the associated price risks of commodities.

Interest rate risk

The Company has issued bonds at fixed rates. Interest

rate swaps and cross-currency swaps are used to manage the

interest rate and foreign currency risk

associated with certain debt and generally such swaps are designated

as fair value hedges. In addition, from time to time, the

Company uses instruments such as

interest rate swaps, interest rate futures, bond futures or forward

rate agreements to manage interest rate risk arising from the

Company’s balance sheet structure

but does not designate such instruments as hedges.

Equity risk

The Company is exposed to fluctuations in the fair value of

its warrant appreciation rights (WARs)

issued under its management incentive plan. A WAR

gives its

holder the right to receive cash equal to the market price

of an equivalent listed warrant on the date of exercise.

To eliminate such

risk, the Company has

purchased cash-settled call options, indexed to the shares

of the Company, which entitle

the Company to receive amounts equivalent to its obligations

under the

outstanding WARs.

Volume of derivative activity

In general, while the Company’s primary objective

in its use of derivatives is to minimize exposures arising

from its business, certain derivatives are designated

and qualify for hedge accounting treatment while others either

are not designated or do not qualify for hedge accounting.

Foreign exchange and interest rate derivatives

The gross notional amounts of outstanding foreign exchange and

interest rate derivatives (whether designated as hedges

or not) were as follows:

Type of derivative

Total notional amounts at

($ in millions)

June 30, 2021

December 31, 2020

June 30, 2020

Foreign exchange contracts

9,309

12,610

16,505

Embedded foreign exchange derivatives

893

1,134

982

Cross currency swaps

951

–

Interest rate contracts

3,553

3,227

4,335

Derivative commodity contracts

The Company uses derivatives to hedge its direct or indirect

exposure to the movement in the prices of commodities which

are primarily copper, silver and

aluminum. The following table shows the notional amounts of

outstanding derivatives (whether designated as hedges

or not), on a net basis, to reflect the

Company’s requirements for these commodities:

Type of derivative

Unit

Total notional amounts at

June 30, 2021

December 31, 2020

June 30, 2020

Copper swaps

metric tonnes

37,340

39,390

38,935

Silver swaps

ounces

2,306,804

1,966,677

2,063,142

Aluminum swaps

metric tonnes

7,325

8,112

7,698

Equity derivatives

At June 30, 2021, December 31, 2020, and June 30, 2020, the

Company held 15 million, 22 million and 37 million cash-settled

call options indexed to ABB Ltd

shares (conversion ratio 5:1) with a total fair value of $34 million,

$21 million and $21 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.

these cases, the effective portion of the changes in

their fair value is recorded in “Accumulated other comprehensive

loss” and subsequently reclassified into

earnings in the same line item and in the same period as

the underlying hedged transaction affects earnings.

For the six and three months ended June, 30, 2021

and 2020, there were no significant amounts recorded for cash

flow hedge accounting activities.

Fair value hedges

To reduce its interest

rate exposure arising primarily from its debt issuance activities,

the Company uses interest rate swaps and cross-currency

swaps. Where

such instruments

are designated as fair value hedges, the changes in the fair

value of these instruments, as well as the changes in the fair

value of the risk

component of the underlying debt being hedged, are recorded

as offsetting gains and losses in “Interest and other finance

expense”.

19 Q2

2021

FINANCIAL

INFORMATION

The effect of derivative instruments, designated and qualifying

as fair value hedges, on the Consolidated Income

Statements was as follows:

Type of derivative designated

Six months ended June 30, 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

(27)

Interest and other finance expense

Cross-currency swaps

Interest and other finance expense

(25)

Interest and other finance expense

Total

(52)

Type of derivative designated

Six months ended June 30, 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

(27)

Total

(27)

Type of derivative designated

Three months ended June 30, 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

(13)

Interest and other finance expense

Cross-currency swaps

Interest and other finance expense

(2)

Interest and other finance expense

Total

(15)

Type of derivative designated

Three months ended June 30, 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

(2)

Total

(2)

Derivatives not designated in hedge relationships

Derivative instruments that are not designated as hedges

or do not qualify as either cash flow or fair value hedges

are economic hedges used for risk management

purposes. Gains and losses from changes in the fair values

of such derivatives are recognized in the same line in the

income statement as the economically

hedged transaction.

Furthermore, under certain circumstances, the Company is

required to split and account separately for foreign currency

derivatives that are embedded within

certain binding sales or purchase contracts denominated

in a currency other than the functional currency of the subsidiary

and the counterparty.

The gains (losses) recognized in the Consolidated Income Statements

on derivatives not designated in hedging relationships

were as follows:

Type of derivative not

Gains (losses) recognized in income

designated as a hedge

Six months ended June 30,

Three months ended June 30,

($ in millions)

Location

2021

2020

2021

2020

Foreign exchange contracts

Total revenues

(10)

(67)

Total cost of sales

(24)

(20)

(33)

SG&A expenses

(1)

(8)

(4)

Non-order related research

and development

(1)

–

Interest and other finance expense

(119)

(32)

(13)

Embedded foreign exchange

Total revenues

(13)

(26)

contracts

Total cost of sales

(2)

(1)

Commodity contracts

Total cost of sales

(12)

Other

Interest and other finance expense

Total

(106)

(60)

136

(1) SG&A

expenses represent “Selling, general

and administrative

expenses”.

20 Q2

2021

FINANCIAL

INFORMATION

The fair values of derivatives included in the Consolidated

Balance Sheets were as follows:

June 30, 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

Commodity contracts

–

Interest rate contracts

–

Embedded foreign exchange derivatives

Total

125

118

Total fair value

167

120

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 June 30, 2021, and December 31, 2020, have

been presented on a gross basis.

The Company’s netting agreements and other similar

arrangements allow net settlements under certain conditions.

At June 30, 2021, and December 31, 2020,

information related to these offsetting arrangements

was as follows:

($ in millions)

June 30, 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

220

(94)

–

126

Total

220

(94)

–

126

($ in millions)

June 30, 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

158

(94)

–

Total

158

(94)

–

21 Q2

2021

FINANCIAL

INFORMATION

($ 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 7

Fair values

The Company uses fair value measurement principles to record

certain financial assets and liabilities on a recurring

basis and, when necessary,

to record certain

non-financial assets at fair value on a non-recurring basis, as

well as to determine fair value disclosures for certain

financial instruments carried at amortized cost

in the financial statements. Financial assets and liabilities recorded

at fair value on a recurring basis include foreign currency,

commodity and interest rate

derivatives, as well as cash-settled call options and available

-for-sale securities. Non-financial assets recorded at fair

value on a non-recurring basis include

long-lived assets that are reduced to their estimated fair value

due to impairments.

Fair value is the price that would be received when selling

an asset or paid to transfer a liability in an orderly transaction

between market participants at the

measurement date. In determining fair value, the Company

uses various valuation techniques including the market approach

(using observable market data for

identical or similar assets and liabilities), the income approach (discounted

cash flow models) and the cost approach (using costs

a market participant would incur

to develop a comparable asset). Inputs used to determine

the fair value of assets and liabilities are defined by

a three-level hierarchy,

depending on the nature of

those inputs. The Company has categorized its financial assets

and liabilities and non-financial assets measured at fair

value within this hierarchy based on

whether the inputs to the valuation technique are observable

or unobservable. An observable input is based on market

data obtained from independent sources,

while an unobservable input reflects the Company’s

assumptions about market data.

The levels of the fair value hierarchy are as follows:

Level 1:

Valuation inputs consist of

quoted prices in an active market for identical assets

or liabilities (observable quoted prices). Assets and

liabilities valued

using Level 1 inputs include exchange

‑

traded equity securities, listed derivatives which are actively

traded such as commodity futures, interest rate

futures and certain actively traded debt securities.

Level 2:

Valuation inputs consist of

observable inputs (other than Level 1 inputs) such as

actively quoted prices for similar assets, quoted prices in

inactive

markets and inputs other than quoted prices such as interest rate

yield curves, credit spreads, or inputs derived from other

observable data by

interpolation, correlation, regression or other means. The adjustments

applied to quoted prices or the inputs used in valuation

models may be both

observable and unobservable. In these cases, the fair value

measurement is classified as Level 2 unless the unobservable

portion of the adjustment or

the unobservable input to the valuation model is significant, in

which case the fair value measurement would be classified

as Level 3. Assets and

liabilities valued or disclosed using Level 2 inputs include investments

in certain funds, certain debt securities that are not actively

traded, interest rate

swaps, cross-currency interest rate swaps, commodity swaps, cash-settled

call options, forward foreign exchange contracts, foreign

exchange swaps and

forward rate agreements, time deposits, as well as financing receivables

and debt.

Level 3:

Valuation inputs are based

on the Company’s assumptions of relevant market

data (unobservable input).

Whenever quoted prices involve bid-ask spreads, the Company

ordinarily determines fair values based on mid-market

quotes. However, for the purpose of

determining the fair value of cash-settled call options serving

as hedges of the Company’s management

incentive plan, bid prices are used.

When determining fair values based on quoted prices in an active

market, the Company considers if the level of transaction

activity for the financial instrument has

significantly decreased or would not be considered orderly.

In such cases, the resulting changes in valuation techniques

would be disclosed. If the market is

considered disorderly or if quoted prices are not available, the

Company is required to use another valuation technique,

such as an income approach.

22 Q2

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:

June 30, 2021

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

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

Equity securities

695

Debt securities—U.S. government obligations

207

Debt securities—European government obligations

Debt securities—Corporate

Debt securities—Other

Securities in “Other non-current assets”:

Debt securities—U.S. government obligations

Derivative assets—current in “Other current assets”

167

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

Total

302

999

–

1,301

Liabilities

Derivative liabilities—current in “Other current liabilities”

120

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

Total

–

185

–

185

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 observable and fall into the Level 2 category.

●

Derivatives

: The fair values of derivative instruments are determined

using quoted prices of identical instruments from

an active market, if available

(Level 1 inputs). If quoted prices are not available, price quotes

for similar instruments, appropriately adjusted, or present

value techniques, based on

available market data, or option pricing models are used. Cash-settled

call options hedging the Company’s WAR

liability are valued based on bid prices

of the equivalent listed warrant. The fair values obtained using

price quotes for similar instruments or valuation techniques represent

a Level 2 input

unless significant unobservable inputs are used.

Non-recurring fair value measures

The Company elects to record private equity investments without

readily determinable fair values at cost, less impairment,

adjusted by observable

price changes.

The Company reassesses at each reporting period whether

these investments continue to qualify for this treatment.

In the three months ended June 30, 2021 and

2020, the Company recognized,

in Other income (expense), net increases in fair value

of $99 million and $58 million, respectively,

related to certain of its private

equity investments based on observable market price changes

for an identical or similar investment of the same issuer (see

Note 1 for additional details). The fair

values of these investments at June 30, 2021 and 202

0, totaled $146 million and $81 million, respectively,

and were determined using level 2 inputs.

During the six months ended June 30,

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 transactions above, there were no additional significant

non-recurring fair value measurements during the six

and three months ended June 30,

2021 and 2020.

23 Q2

2021

FINANCIAL

INFORMATION

Disclosure about financial instruments carried on a

cost basis

The fair values of financial instruments carried on a cost basis

were as follows:

June 30, 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

1,604

Time deposits

1,256

Restricted cash

Restricted cash, non-current

300

Liabilities

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

(excluding finance lease obligations)

2,093

1,672

421

2,093

Long-term debt (excluding finance lease obligations)

4,202

4,407

4,482

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), if available. For

bonds without available quoted market prices and other

long-term debt, the fair values are determined using a discounted

cash flow methodology

based upon borrowing rates of similar debt instruments and reflecting

appropriate adjustments for non-performance risk (Level

2 inputs).

─

Note 8

Contract assets and liabilities

The following table provides information about Contract

assets and Contract liabilities:

($ in millions)

June 30, 2021

December 31, 2020

June 30, 2020

Contract assets

1,087

985

1,110

Contract liabilities

1,846

1,903

1,703

Contract assets primarily relate to the Company’s right

to receive consideration for work completed but for which

no invoice has been issued at the reporting date.

Contract assets are transferred to receivables when rights to

receive payment become unconditional.

Contract liabilities primarily relate to up-front advances received

on orders from customers as well as amounts invoiced

to customers in excess of revenues

recognized,

primarily for long-term projects. Contract liabilities are

reduced as work is performed and as revenues are

recognized.

24 Q2

2021

FINANCIAL

INFORMATION

The significant changes in the Contract assets and Contract

liabilities balances were as follows:

Six months ended June 30,

2021

2020

Contract

($ in millions)

assets

liabilities

assets

liabilities

Revenue recognized, which was included in the Contract liabilities

balance at Jan 1, 2021/2020

(818)

(600)

Additions to Contract liabilities - excluding amounts recognized

as revenue during the period

785

633

Receivables recognized that were included in the Contract asset

balance at Jan 1, 2021/2020

(411)

(373)

At June 30, 2021, the Company had unsatisfied performance

obligations totaling $15,424 million and, of this amount, the

Company expects to fulfill approximately

56 percent of the obligations in 2021, approximately 29 percent

of the obligations in 2022 and the balance thereafter.

─

Note 9

Debt

The Company’s total debt at June 30, 2021, and December

31, 2020, amounted to $6,492 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)

June 30, 2021

December 31, 2020

Short-term debt

423

153

Current maturities of long-term debt

1,694

1,140

Total

2,117

1,293

Short-term debt primarily represented issued commercial paper

and short-term bank borrowings from various banks.

At June 30, 2021, and December 31, 2020,

$365 million and $32 million, respectively,

was outstanding under the $2 billion commercial paper

program in the United States. No amount was outstanding

under

the $2 billion Euro-commercial paper program at June 30, 2021,

or December 31, 2020.

On June 15, 2021, the Company repaid at maturity its USD

650 million 4.0% Notes.

Long-term debt

The Company’s long-term debt at June 30, 2021, and December

31, 2020, amounted to $4,375 million and $4,828 million, respectively.

Outstanding bonds (including maturities within the next

12 months) were as follows:

June 30, 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

649

2.25% CHF Bonds, due 2021

CHF

350

381

CHF

350

403

2.875% USD Notes, due 2022

USD

1,250

1,270

USD

1,250

1,280

0.625% EUR Instruments, due 2023

EUR

700

843

EUR

700

875

0.75% EUR Instruments, due 2024

EUR

750

910

EUR

750

946

0.3% CHF Notes, due 2024

CHF

280

303

CHF

280

317

3.8% USD Notes, due 2028

(2)

USD

383

381

USD

383

381

1.0% CHF Notes, due 2029

CHF

170

184

CHF

170

192

0% EUR Notes, due 2030

EUR

800

917

–

4.375% USD Notes, due 2042

(2)

USD

609

589

USD

609

589

Total

5,778

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 exposures,

cross-currency interest rate swaps have been used to modify

the characteristics of the EUR 800 million Notes, due 2030.

After considering

the impact of these cross-currency interest rate swaps, the EUR

Notes, due 2030, effectively became a floating

rate U.S. dollar obligation.

Subsequent events

As of July 21, 2021, under its $2 billion Euro-commercial paper

program, the Company has issued commercial paper

with an aggregate value of EUR300 million

(equivalent to $354 million on the date of issue). There was no

significant change in the $2 billion commercial paper program

in the United States.

25 Q2

2021

FINANCIAL

INFORMATION

─

Note 10

Commitments and contingencies

Contingencies—Regulatory, Compliance

and Legal

Regulatory

As a result of an internal investigation, the Company self-reported

to the Securities and Exchange Commission (SEC) and

the Department of Justice (DoJ) in the

United States as well as to the Serious Fraud Office (SFO)

in the United Kingdom concerning certain of its past

dealings with Unaoil and its subsidiaries, including

alleged improper payments made by these entities to third parties.

In May 2020, the SFO closed its investigation, which it originally

announced in February 2017,

as the case did not meet the relevant test for prosecution

The Company continues to cooperate with the U.S. authorities

as requested. At this time, it is not

possible for the Company to make an informed judgment about

the outcome of this matter.

Based on findings during an internal investigation, the Company

self-reported to the SEC and the DoJ, in the United States,

to the Special Investigating Unit (SIU)

and the National Prosecuting Authority (NPA)

in South Africa as well as to various authorities in other

countries potential suspect payments and other compliance

concerns in connection with some of the Company’s

dealings with Eskom and related persons. Many of those

parties have expressed an interest in, or

commenced an investigation into, these matters and the Company

is cooperating fully with them. The Company paid $104 million

to Eskom in December 2020 as

part of a full and final settlement with Eskom and the Special

Investigating Unit relating to improper payments and other

compliance issues associated with the

Controls and Instrumentation Contract, and its Variation

Orders for Units 1 and 2 at Kusile. The Company continues

to cooperate fully with the 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 to make

an informed judgment about the possible

financial impact.

General

The Company is aware of proceedings, or the threat of proceedings,

against it and others in respect of private claims by customers

and other third parties with

regard to certain actual or alleged anticompetitive practices.

Also, the Company is subject to other claims and

legal proceedings, as well as investigations carried

out by various law enforcement authorities. With respect to the

above-mentioned claims, regulatory matters, and any related

proceedings, the Company will bear

the related costs, including costs necessary to resolve them.

Liabilities

recognized

At June 30, 2021, and December 31, 2020, the Company had aggregate

liabilities of $97 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 reasonably

predict, the outcome of certain matters and as it is

not possible, based on information currently

available to management, to estimate the maximum potential

liability on other matters, there could be adverse outco

mes beyond the amounts accrued.

Guarantees

General

The following table provides quantitative data regarding the Company’s

third-party guarantees. The maximum potential payments

represent a “worst-case

scenario”, and do not reflect management’s expected

outcomes.

Maximum potential payments

($ in millions)

June 30, 2021

December 31, 2020

Performance guarantees

5,695

6,726

Financial guarantees

313

339

Indemnification guarantees

(1)

129

177

Total

(2)

6,137

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

June 30, 2021, and December 31, 2020, amounted to

$129 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 2035, mainly consist of performance guarantees

whereby (i) the Company guarantees the performance

of a third party’s product or service

according to the terms of a contract and (ii) as member

of a consortium/joint-venture that includes third parties,

the Company guarantees not only its own

performance but also the work of third parties. Such guarantees

may include guarantees that a project will be completed

within a specified time. If the third party

does not fulfill the obligation, the Company will compensate

the guaranteed party in cash or in kind. The original maturity

dates for the majority of these

performance guarantees range from one to ten years.

In conjunction with the divestment of the high-voltage cable and

cables accessories businesses, the Company has entered

into various performance guarantees

with other parties with respect to certain liabilities of the divested

business. At June 30, 2021, and December 31, 2020,

the maximum potential payable under these

guarantees amounts to $960 million and $994 million, respectively,

and these guarantees have various maturities ranging from

five to ten years.

The Company retained obligations for financial, performance

and indemnification guarantees related to the Power

Grids business sold

on July 1, 2020 (see Note 3

for details). The performance and financial guarantees have

been indemnified by Hitachi, at the same proportion of its

ownership in Hitachi ABB Power Grids

(80.1 percent). These guarantees, which have various maturities

up to 2035, primarily consist of bank guarantees, standby

letters of credit,

business performance

guarantees and other trade-related guarantees, the majority

of which have original maturity dates ranging from

one to ten years. The maximum amount payable

under the guarantees at June 30, 2021, and December 31,

2020, are approximately $4.6 billion and $5.5 billion, respec

tively, and the carrying amounts

of liabilities

(recorded in discontinued operations) at June 30, 2021,

and December 31, 2020,

amounted to $129 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 June 30, 2021, and December 31, 2020, the total

outstanding performance bonds aggregated to $3.9 billion

and $4.3 billion, respectively,

of which

$0.3 billion

and $0.3 billion, respectively,

relate to discontinued operations. There have been no significant

amounts reimbursed to financial institutions under these

types of arrangements in the six and three months ended June

30, 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:

26 Q2

2021

FINANCIAL

INFORMATION

($ in millions)

2021

2020

Balance at January 1,

1,035

816

Net change in warranties due to acquisitions, divestments and

liabilities held for sale

Claims paid in cash or in kind

(127)

(100)

Net increase in provision for changes in estimates, warranties

issued and warranties expired

122

Exchange rate differences

(19)

(13)

Balance at June 30,

1,012

777

─

Note 11

Income taxes

In calculating income tax expense, the Company uses an estimate

of the annual effective tax rate based upon the facts

and 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,

as compared to those

forecasted at the beginning of the year and each interim

period thereafter.

The effective tax rate of 30.0 percent in the six months

ended June 30, 2021, was higher than the effective

tax rate of 22.5 percent in the six months ended

June 30, 2020, primarily because 2020 included a net benefit

from a favorable resolution of an uncertain tax position

in the first quarter, partially offset

by increases

to the valuation allowance in certain countries.

─

Note 12

Employee benefits

The Company operates defined benefit pension plans,

defined contribution pension plans, and termination indemnity

plans, in accordance with local regulations

and practices. These plans cover a large portion of the Company’s

employees and provide benefits to employees in the

event of death, disability, retirement,

termination of employment. Certain of these plans are multi

-employer plans. The Company also operates other postretirement

benefit plans including

postretirement health care benefits, and other employee

-related benefits for active employees including long

-service award plans. The measurement date used for

the Company’s employee benefit plans is December

The funding policies of the Company’s plans are

consistent with the local government and tax

requirements.

The following tables include amounts relating to defined benefit

pension plans and other postretirement benefits for

both continuing and discontinued operations.

Net periodic benefit cost of the Company’s defined

benefit pension and other postretirement benefit plans consisted

of the following:

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Six months ended June 30,

2021

2020

2021

2020

2021

2020

Operational pension cost:

Service cost

–

Operational pension cost

–

Non-operational pension cost (credit):

Interest cost

(2)

Expected return on plan assets

(58)

(65)

(91)

(133)

–

Amortization of prior service cost (credit)

(5)

(7)

(1)

Amortization of net actuarial loss

–

(1)

(2)

Curtailments, settlements and special termination benefits

(1)

–

(2)

108

–

Non-operational pension cost (credit)

(65)

(66)

(22)

(1)

(2)

Net periodic benefit cost (credit)

(35)

(21)

–

141

(1)

(2)

27 Q2

2021

FINANCIAL

INFORMATION

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Three months ended June 30,

2021

2020

2021

2020

2021

2020

Operational pension cost:

Service cost

–

Operational pension cost

–

Non-operational pension cost (credit):

Interest cost

(1)

–

Expected return on plan assets

(29)

(34)

(44)

(70)

–

Amortization of prior service cost (credit)

(3)

(1)

–

(1)

–

Amortization of net actuarial loss

–

(1)

Curtailments, settlements and special termination benefits

(1)

–

108

–

Non-operational pension cost (credit)

(33)

(4)

(1)

Net periodic benefit cost (credit)

(18)

(10)

119

(1)

(1) In

both the six and three months ended June 30, 2020, amounts Include $101 million in discontinued operations for the settlement of the pension plan in Sweden.

The components of net periodic benefit cost other than the

service cost component are included in the line “Non

-operational pension (cost) credit” in the income

statement. Net periodic benefit cost includes $121 million and

$109 million, for the six and three months ended June

30, 2020, respectively, related

to discontinued

operations.

Employer contributions were as follows:

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Six months ended June 30,

2021

2020

2021

2020

2021

2020

Total contributions

to defined benefit pension and

Other postretirement

Switzerland

International

benefits

Three months ended June 30,

2021

2020

2021

2020

2021

2020

Total contributions

to defined benefit pension and