6-K
Abb Ltd (ABLZF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE
ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2024
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s name into English)
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether
the registrant files or will file
annual reports under cover of Form
20-F or Form 40-F.
Form 20-F
☒
Form 40-F
⬜
Indicate by check mark if the registrant
is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
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⬜
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permits the submission in paper of
a Form 6-K if submitted solely to provide
an
attached annual report to security
holders.
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is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
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⬜
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permits the submission in paper of
a Form 6-K if submitted to furnish a
report or
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private issuer must furnish
and make public under the laws of the
jurisdiction in
which the registrant is incorporated, domiciled
or legally organized (the registrant’s “home country”),
or under the rules of the
home country exchange on which
the registrant’s securities are traded, as long as the report
or other document is not a press
release, is not required to be and has
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and, if discussing a material
event,
has already been the subject of a Form
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the Securities Exchange Act of 1934.
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⬜
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registrant in connection with Rule 12g3-2(b):
82-
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated
April 18, 2024 titled “Q1 2024 results”.
2.
Q1 2024 Financial Information.
3.
Announcements regarding transactions
in ABB Ltd’s Securities made by the directors or the
members of the
Executive Committee.
The information provided by Item
2 above is hereby incorporated by reference
into the Registration Statements
on Form F-3 of
ABB Ltd and ABB Finance (USA) Inc.
(File Nos. 333-223907 and 333-223907-01)
and registration statements on Form
S-8
(File Nos. 333-190180, 333-181583,
333-179472, 333-171971 and
333-129271) each of which was
previously filed with the
Securities and Exchange Commission.
2
—
“Against high comparables, our Q1 performance shows the year has started off well with
stronger than expected order momentum, record-high margin and strong cash delivery. This
makes us confident to nudge up our margin expectation for 2024.”
Björn Rosengren
, CEO
—
ZURICH, SWITZERLAND, APRIL
18, 2024
Q1 2024 results
Positive book-to-bill, record-high
margin and
strong cash flow
●
Orders $8,974 million
,
-5%; comparable
1
-4%
●
Revenues $7,870 million,
0%; comparable
1
+2%
●
Income from operations
$1,217 million; margin
15.5%
●
Operational EBITA
1
$1,417 million;
margin
1
17.9%
●
Basic EPS $0.49;
-12%
2
●
Cash flow from operating
activities $726 million;
+157%
—
Q1 2024
First three months
Press Release
Ad hoc Announcement pursuant to Art.
53 Listing Rules of SIX Swiss Exchange
KEY FIGURES
CHANGE
($ millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
1
Orders
8,974
9,450
-5%
-4%
Revenues
7,870
7,859
0%
2%
Gross Profit
2,935
2,716
8%
as % of revenues
37.3%
34.6%
+2.7 pts
Income from operations
1,217
1,198
2%
Operational EBITA
1
1,417
1,277
11%
11%
3
as % of operational revenues
1
17.9%
16.3%
+1.6 pts
Income from continuing operations, net of tax
914
1,065
-14%
Net income attributable to ABB
905
1,036
-13%
Basic earnings per share ($)
0.49
0.56
-12%
2
Cash flow from operating activities
726
282
157%
Free cash flow
1
551
162
240%
1
For a reconciliation of non-GAAP measures, see “supplemental
reconciliations and definitions” in the attached
Q1 2024 Financial Information.
2
EPS growth rates are computed using unrounded amounts.
3
Constant currency (not adjusted for portfolio
changes).
ABB
INTERIM
REPORT
I
Q1
2024
2
My key take-aways
from the first quarter of
2024 are the better
than expected order
intake of $9 billion, positive
book-to-bill of
1.14 and record-high Operational
EBITA margin as
well as the
free cash flow of $551
million representing a strong
delivery for
a first quarter.
We published our sustainability
report,
where a
highlight was the proof
point of one of our core
customer value
propositions
- reduced greenhouse gas
(GHG) emissions. From
products sold in 2023,
and through their lifecycle,
we enabled
our customers to avoid
74 megatons of GHG emissions.
At the
current total of 139
megatons, we are on a
good path towards
our ambition of helping
customers avoid 600
megatons of CO
₂
e
emissions throughout
the lifetime of products sold
from 2022 to
2030.
As expected, orders declined
from last year’s record-high
comparable,
however the drop was
limited at 5% (4%
comparable). To
summarize the quarter,
we see a continued
high level of customer
activity in the project
and systems areas,
and I am encouraged
by the positive order development
in
Electrification’s
short-cycle businesses.
So, while ABB’s total
orders declined in the
first quarter,
I feel even more confident
about 2024 than
I did coming into the year.
It was impressive to see
new record-high order
intake in both
Electrification and Motion
business areas. Process
Automation
orders declined from
the all-time-high comparable,
but
remained fairly consistent
with strong recent quarterly
levels.
At
the start of this year,
we called the fourth quarter the
trough for
Robotics & Discrete
Automation order level.
This realized,
and
as expected order
intake increased sequentially
.
However, it
declined sharply year
-on-year on the back of customers
normalizing order patterns
after a pre-buy period.
Revenues remained stable
(up 2% comparable),
with
comparable growth
supported in equal parts by
price and
volumes. I was pleased
to see the positive gross
margin
improvement of
270 basis points to 37.3
%, supported by a
positive development
in all business areas.
A more efficient
execution of slightly
higher volumes and price
contributed to the
160 basis points
increase in Operational
EBITA margin to
the
new record-high of 17.9%.
In my view this is a good
sign that
there is still upside
potential in ABB and we can
make mid-term
improvements within
the new higher margin
target range
announced in November.
The strong cash
flow start to the year positions
us for what we
anticipate to be another
good annual free cash flow
delivery of
at least similar to last
year’s level. Using the cash
to expand
know-how and footprint
through acquisitions is
an important
path to creating long
-term shareholder value.
It was nice to see
the announced acquisition
of SEAM, which would add
energy
asset management
and advisory services to clients
across
industrial and commercial
building markets to the Electrification
Service division.
We have a good target pipeline,
including
some deals which are
slightly more sizeable
than most of the
recent announcements.
The share buyback program
is a tool
we use to distribute
residual excess cash, and
we announced
another annual program
of up to $1 billion which
launched on
April 1. The size of
the program is consistent
with last year’s,
although the time frame
for execution is shorter
as it runs until
the end of January
2025,
to align with the announcement
of Q4
2024 results and 2024
dividend proposal.
During the quarter
we announced my decision
to retire as CEO
from ABB. I remain
fully committed until the end
of July when
Morten Wierod takes
the reins, and thereafter
I will support the
transition in an advisory
role until the end of the
year. I am
happy to see Morten
take this step and I am confident
that the
ABB Way operating
model will be even
further engrained in our
ways of working under
his already proven leadership.
While we
regret to see him go,
I want to congratulate
Tarak
Mehta on his
new opportunity
outside of ABB. Tarak
has made an
outstanding contribution
to the success of our company
and I
wish him all the best
for this next step on his
journey. The
process to find new
leaders to the business
areas Electrification
and Motion is ongoing
and Morten looks to have
a full team in
place when he takes
office in August.
Björn Rosengren
CEO
In the
second quarter of 2024
, we anticipate a mid-single
-digit
comparable revenue
growth year-on-year and the
Operational
EBITA margin
to be slightly higher
than in the first quarter 2024.
In full-year 2024
, we expect a positive book
-to-bill, comparable
revenue growth to be
about 5% and the Operational
EBITA
margin to be about
18%.
CEO summary
Outlook
ABB
INTERIM
REPORT
I
Q1
2024
3
The first quarter order
intake of $8,974
million represents one of
the strongest quarterly
levels for ABB Group, yet
orders declined
by 5% (4% comparable)
from last year’s record-high. Two
business areas even
improved from last year’s all-time-highs
with Motion’s order
growth at 2% (1% comparable)
and
Electrification at a strong
6% (8% comparable).
In Electrification,
the year-on-year
improvement was supported
by a positive
development in both
the long- and short-cycle businesses.
In
Process Automation
the underlying market activity
remained
robust,
but year-on-year orders declined
by 20%
(20%
comparable) with growth
challenged by the record-high
comparable and
the timing of orders in the
current quarter.
In
Robotics & Discrete
Automation, orders declined
sharply by 30%
(30%
comparable) due to the
still on-going normalization
of
order patterns in discrete
automation and a softer
robotics
market.
Orders in the Americas
dropped by 3% (3% comparable)
as a
positive comparable development
in the United States was
offset by declines
elsewhere and mainly due
to the timing of
large orders. Europe
declined by 8% (9% comparable)
weighed
down by important
markets like Germany and
Italy.
Asia, Middle
East and Africa declined
by 4% (0% comparable)
where the
strong comparable
development in countries
like India, Japan
and Australia offset
a sharp decline in China.
In transport & infrastructure,
there were positive developments
in
marine, ports and rail
.
Industrial areas with particularly
strong development in
all regions
were utilities and datacenters.
Orders in the buildings
segment improved overall,
due to the
combined impact from
a positive development
in the commercial
area driven by the United
States, while the residential
segment
remained stable
in the US and softened
slightly in other regions.
In the robotics-related
segments, orders declined
in the
automotive,
general industry and consumer
-related segments.
The machine builder segment
declined as customers normalized
order patterns after
earlier pre-buys.
On a very challenging
comparable, orders declined
in the large
process-related segments
of oil & gas, pulp & paper
and mining.
However,
a positive development
was recorded in the still
less
sizeable low carbon-related
areas such as nuclear,
carbon capture,
hydrogen etc. The underlying
market sentiment remained
robust
across the board.
Revenues remained stable
(up 2% comparable) and amounted
to
$7,870
million. On a business area
level there were variances,
with
strong growth in
Electrification and Process
Automation, while
Motion and Robotics
& Discrete Automation declined.
Group
revenues were supported
by execution of the strong
order backlog
which more than offset
weakness in parts of
the short-cycle
businesses. In total,
price and volume contributed
in equal parts to
comparable growth.
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2024
Q1 2023
US$
Comparable
Europe
2,748
2,872
-4%
-5%
The Americas
2,789
2,653
5%
7%
Asia, Middle East
and Africa
2,333
2,334
0%
5%
ABB Group
7,870
7,859
0%
2%
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2024
Q1 2023
US$
Comparable
Europe
3,298
3,582
-8%
-9%
The Americas
2,904
2,985
-3%
-3%
Asia, Middle East
and Africa
2,772
2,883
-4%
0%
ABB Group
8,974
9,450
-5%
-4%
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
-4%
2%
FX
0%
-1%
Portfolio changes
-1%
-1%
Total
-5%
0%
Orders and revenues
ABB
INTERIM
REPORT
I
Q1
2024
4
Gross profit
Gross profit increased
by 8% (9% constant currency)
to
$2,935
million, reflecting a gross
margin improvement of 270
basis
points to 37.3%. Gross margin
improved in all four business
areas.
Income from operations
Income from operations
amounted to $1,217 million
and improved
by 2% year-on-year.
Compared with the last year
period,
the
earnings improvement
was supported by a strong
er operational
performance partially
offset by higher expenses
related to the ABB
Way transformation
program and adverse currency
hedging
impacts. Margin on
Income from operations
was 15.5%, up by
30 basis points year
-on-year.
Operational EBITA
Despite limited revenue
growth, the Operational
EBITA improved
by 11%
year-on-year to $1,417
million and the margin increased
by 160 basis points
to a new all-time-high of 17.
9%. Contribution
from operational
leverage on slightly higher
volumes, a positive
price impact and effects
from continuous efficiency
measures more
than offset the higher
expenses related to labor
costs, Research &
development (R&D) and
Selling, general and administrative
(SG&A) expenses.
Operational EBITA in
Corporate and
Other
amounted to -$1
18 million, of which -$6
4
million related to the
underlying Corporate
costs. The remaining
-$54
million related to
the E-mobility business
where operational performance
was
hampered by the ongoing
reorganization to ensure
a more focused
portfolio, and some
inventory-related provisions.
While E-mobility
is on track towards
the improved portfolio, the
financial benefits will
not be visible until towards
the end of 2024.
Finance net
Net finance income
contributed with a positive
$20 million, an
improvement from
last year’s expense of $21
million.
The year-on-
year improvement
is due to a combination
of a lower net debt
position and favorable
mix of interest rates between
borrowings and
cash deposits.
Income tax
Income tax expense
was $339 million with an
effective tax rate of
27%. This is higher than
last year’s rate of 10%, which
was low due
to favorable resolution
of a prior year tax matter
relating to the
divestment of the
Power Grids business.
Net income and earnings
per share
Net income attributable
to ABB was $905 million,
representing a
reduction of 13% from
last year, as
the improved operational
performance this year
did not offset last
year’s positive benefits from
the low tax rate.
This resulted in basic earnings
per share of $0.49,
down from $0.56 in the
last year period.
Operational EBITA
($ in millions)
Q1 2024
Q1 2023
Corporate and Other
E-mobility
(54)
(28)
Corporate costs, intersegment
eliminations and other
1
(64)
(83)
Total
(118)
(111)
1
Majority of which relates to underlying corporate
Earnings
ABB
INTERIM
REPORT
I
Q1
2024
5
Net working capital
Net working capital
amounted to $3,588 million,
decreasing
year-on-year from $4,164
million as higher receivables
and
contract assets were
more than offset by higher
customer
advances,
and accounts payables.
Net working capital as a
percentage of revenues
1
was 11.2%
which declined from
13.9% one year ago.
Capital expenditures
Purchases of property,
plant and equipment and
intangible
assets amounted to
$181 million.
Net debt
Net debt
1
amounted to $2,086 million
at the end of the quarter
and decreased from $3,826
million year-on-year.
The
sequential increase
from $1,991 million was
mainly due to the
initial dividend payment.
Cash flows
Cash flow from operating
activities was $726
million,
representing a steep
year-on-year increase
from
$282 million. Three
out of four business areas
increased cash
flow from operating activities.
The increase was driven
by better
operational performance
and a lower build-up of
net working
capital year-on-year mostly
linked to trade receivables
and
inventories.
Share buyback program
ABB has completed
its share buyback program that
was
launched in April 2023.
Through this buyback program,
ABB
repurchased a total
of 21,387,687 shares –
equivalent to 1.09%
of its issued share
capital at launch of the buyback
program –
for a total amount of approximately
$0.83 billion. A new share
buyback program of up
to $1 billion was launched
on April 1,
2024, and will run to 31
January,
2025. ABB’s total
number of
issued shares, including
shares held in treasury,
amounts to
1,882,002,575.
($ in millions,
unless otherwise indicated)
Mar. 31
2024
Mar. 31
2023
Dec. 31
2023
Short term debt and current
maturities of long-term debt
1,957
3,433
2,607
Long-term debt
6,346
5,230
5,221
Total debt
8,303
8,663
7,828
Cash & equivalents
4,102
3,438
3,891
Restricted cash - current
18
19
18
Marketable securities and
short-term investments
2,097
1,380
1,928
Cash and marketable securities
6,217
4,837
5,837
Net debt (cash)*
2,086
3,826
1,991
Net debt (cash)* to EBITDA ratio
0.4
0.9
0.4
Net debt (cash)* to Equity ratio
0.16
0.30
0.14
*
At March 31, 2024, March, 31, 2023 and Dec. 31, 2023,
net debt(cash) excludes net pension
(assets)/liabilities of $(189) million, $(301) million and
$(191) million, respectively.
Balance sheet & Cash flow
ABB
INTERIM
REPORT
I
Q1
2024
6
Orders and revenues
The first quarter order
intake of $4,392
million represents a
new record level, and
increased by 6% (8%
comparable)
from last year.
Continued robust demand
for the project and
systems businesses
which this quarter was coupled
with
strong year-on-year growth
in the short-cycle businesses.
The book-to-bill ratio
was 1.19.
●
Orders remained stable
or increased in most customer
segments with particular
strength in datacenters
and
utilities. The overall
buildings segment improved,
as a
positive development
in the commercial area
driven by
the United States more
than offset a slight weakness
in
the residential segment
,
which was stable in the
US, and
softened slightly
in other regions.
●
From a geographical
perspective order intake
improved in
all three regions.
Europe was up by 3% (2% comparable).
Growth in the Americas
was 9% (11%
comparable) with
the United States outpacing
the region at 13% (17%
comparable). In Asia,
Middle East and Africa orders
improved by 6% (11%
comparable) with strong growth
in
countries like India
offsetting a slight drop
in China of 7%
(2% comparable).
●
Revenues increased
by 3% (6% comparable)
to
$3,680 million with a positive
development in most
divisions. Higher volumes
were the main driver
to
comparable growth,
with the added support from
slightly
increased pricing. Execution
of the order backlog
combined with higher
demand in the short-cycle
businesses supported
the quarterly revenue
generation.
Profit
Record-high Operational
EBITA of $826
million and all-
time-high Operational
EBITA margin of
22.4%, up by 340
basis points year-on
-year.
●
Operational leverage
on higher volumes and
impact from
continuous improvement
measures were the key drivers
to the higher margin
,
year-on-year.
●
A positive price impact
more than offset
higher salary-
related costs as well as
an increase in R&D and SG&A
spend.
●
Margins improved
or remained stable in all
divisions.
CHANGE
($ millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
Orders
4,392
4,141
6%
8%
Order backlog
7,389
7,101
4%
12%
Revenues
3,680
3,590
3%
6%
Operational EBITA
826
677
22%
as % of operational revenues
22.4%
19.0%
+3.4 pts
Cash flow from operating activities
547
395
38%
No. of employees (FTE equiv.)
50,700
51,130
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
8%
6%
FX
0%
0%
Portfolio changes
-2%
-3%
Total
6%
3%
—
Electrification
ABB
INTERIM
REPORT
I
Q1
2024
7
Orders and revenues
Robust customer activity
in the projects-
and systems-related
businesses offset
some weakness in the short
-cycle areas. In
total, a new all-time-high
order level of $2,303
million was
achieved, representing
an improvement of 2% (1%
comparable) from last
year. Book-to-bill
was 1.26. Some initial
encouraging sequential
trading signs in the short
-cycle
businesses were noted.
●
The Traction division
was the engine for order growth,
including a large order
of $150 million to supply
complete
traction packages for
65 new six-car passenger
trains for
the Queensland Train
Manufacturing Program. The
new
trains are to be operational
in time for the Brisbane
2032
Olympics.
●
Besides the rail segment,
a stronger order momentum
was
noted in the process
-related segments of oil
& gas and
power generation including
grid stabilization equipment.
Some slowness
from last year’s high level was
noted in
food & beverage, pulp
& paper,
metals and chemicals.
HVAC remained
muted.
●
Orders in Asia, Middle
East and Africa were up
by 16% (21%
comparable), supported
by the large order in
Australia, while
China declined by 12%
(8% comparable). The Americas
softened by 1% (4% comparable)
including the decline of
4%
(6% comparable) in
the United States. Europe
declined by
8% (11%
comparable).
●
Revenues amounted to
$1,829
million and declined by
6%
(6% comparable) due
to weakness in the short
-cycle
businesses and parts
of the backlog execution
impacted by
some delivery timing
changes.
Profit
Operational EBITA
of $343
million declined by 6% and
the
Operational EBITA
margin softened
by 40 basis points to 18.5%.
●
Operational leverage
on the lower production
volumes in the
short-cycle businesses
weighed on results.
●
The positive price impact
and the stringent cost
focus more
than offset the adverse
impacts from the higher
expenses
related to salaries,
R&D and SG&A, year-on-year.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
1%
-6%
FX
0%
-1%
Portfolio changes
1%
1%
Total
2%
-6%
—
Motion
CHANGE
($ millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
Orders
2,303
2,262
2%
1%
Order backlog
5,612
5,102
10%
11%
Revenues
1,829
1,940
-6%
-6%
Operational EBITA
343
366
-6%
as % of operational revenues
18.5%
18.9%
-0.4 pts
Cash flow from operating activities
352
149
136%
No. of employees (FTE equiv.)
22,380
21,000
ABB
INTERIM
REPORT
I
Q1
2024
8
Orders and revenues
The underlying markets
remained buoyant. However,
last
year’s record high comparable
was strongly supported
by
the timing of large orders
received, and in contrast
some
timing delay in orders
in the current quarter
were noted.
Order intake declined
by 20% (20% comparable)
and
amounted to $1,697
million, a level broadly similar
to recent
quarters. Book-to-bill
was positive at 1.06.
●
On a very challenging
comparable, orders declined
in the
large process-related
segments oil & gas, pulp
& paper
and mining. However,
a positive development
was
recorded for ports and
in the less sizeable low
carbon-
related areas such
as nuclear, carbon
capture, hydrogen
etc. The underlying market
sentiment remained robust
across the board.
●
On execution of the
high order backlog, revenues
increased strongly
at 11% (12%
comparable) and
amounted to $1,601
million with a positive contribution
from all divisions,
supported by strong contribution
from
the service business
.
Profit
With support from all
divisions, the Operational
EBITA
margin improved by 140
basis points to the
new record-
high level of 15.6%
and the Operational EBITA
improved by
23% to $253
million.
●
Profitability was supported
by the mix in execution
of the
order backlog which host
s
a higher gross margin, whilst
keeping SG&A expenses
on a stable percentage
of
revenues.
●
A slight positive price
impact offset increased
salary-
related expenses, year
-on-year.
●
Operational EBITA
margin improved in
all divisions with
all now in the “teens”
margin range.
CHANGE
($ millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
Orders
1,697
2,113
-20%
-20%
Order backlog
7,343
6,893
7%
9%
Revenues
1,601
1,436
11%
12%
Operational EBITA
253
205
23%
as % of operational revenues
15.6%
14.2%
+1.4 pts
Cash flow from operating activities
229
112
104%
No. of employees (FTE equiv.)
21,340
20,500
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
-20%
12%
FX
0%
-1%
Portfolio changes
0%
0%
Total
-20%
11%
—
Process Automation
ABB
INTERIM
REPORT
I
Q1
2024
9
Orders and revenues
As anticipated, order
intake improved from
the fourth quarter,
with the strongest increase
recorded in the Robotics division.
However,
total orders declined
by 30% (30% comparable)
from last year’s high comparable
and amounted to $701
million.
●
Orders declined
at a double-digit rate in both divisions,
although more pronounced
in Machine Automation.
●
The
Robotics
demand declined
in all customer segments
year-on-year.
The sequential pattern
was encouraging and
inventory levels in the
channels did seemingly
align with the
current market situation
towards the end of quarter.
●
Machine Automation
customers held
off placing orders
while awaiting deliveries
from the recent pre-buy period.
Order backlog remains
high and supports
deliveries into the
latter part of the summer.
●
From a geographical
perspective, orders in
the Americas
declined by 24%
(26% comparable).
The decline in Europe
was 31% (32% comparable).
In Asia, Middle East and
Africa
orders
declined by 32% (28%
comparable), hampered
by
China being down
by 46%
(43% comparable).
●
Revenues of $864
million represented a decline
of 8% (7%
comparable) from last
year, including
a positive price impact.
This is the combined
effect of a strong
increase in the Machine
Automation division
executing the order backlog;
and a decline in
the larger robotics division
where the order backlog has
normalized and the
short-cycle business was under
pressure.
Profit
Operational leverage
on lower volumes put
pressure on the
Operational EBITA
which declined by
19%
to $113
million and the
Operational EBITA
margin which dropped
by 170 basis points year-
on-year to 13.2%.
●
A solid execution of
higher volumes resulted
in improved
profitability in the
Machine Automation business.
This was
however more than
offset by lower production
volumes
triggering underabsorption
of fixed costs in the short
-cycle
Robotics business.
●
A
positive price contribution
from order backlog deliveries
and
the efficiency
measures activated as a response
to the soft
market climate broadly
offset adverse impacts
from increased
labor,
SG&A and R&D expenses
.
CHANGE
($ millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
Orders
701
1,001
-30%
-30%
Order backlog
1,918
2,782
-31%
-29%
Revenues
864
937
-8%
-7%
Operational EBITA
113
140
-19%
as % of operational revenues
13.2%
14.9%
-1.7 pts
Cash flow from operating activities
95
130
-27%
No. of employees (FTE equiv.)
11,380
10,850
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
-30%
-7%
FX
0%
-1%
Portfolio changes
0%
0%
Total
-30%
-8%
—
Robotics & Discrete Automation
ABB
INTERIM
REPORT
I
Q1
2024
10
Events from the Quarter
●
ABB and CERN, the
European Laboratory
for Particle
Physics, have collaborated
on a strategic research
partnership to enhance
energy efficiency
in cooling and
ventilation systems
at CERN’s particle physics
institute in
Geneva, Switzerland.
Through energy efficiency
audits,
they identified a 17.4%
energy-saving potential across
a
fleet of 800 motors.
This translates to annual energy
savings of up to 31 gigawatt
-hours (GWh) - enough
to
power over 18,000
European households and
avoid 4
kilotonnes of CO
₂
emissions. The initiative
surpassed
CERN’s goal of reducing
cooling and ventilation
energy
use by 10-15%.
●
SEV, the
main electricity supplier
in the Faroe Islands,
contracted ABB to enhance
grid stability during the
transition to green energy.
ABB is providing synchronous
condenser (SC) technology
to stabilize the power grid
as
fossil-fueled plants
are phased out in favor
of renewable
generation. The latest
SC will be deployed on
the island
of Borðoy where
it will reinforce the local electricity
supply
for around 5,000 people.
●
ABB will deliver
a shore-to-ship power supply solution
allowing DEME’s diverse
fleet to avoid emissions
when
berthed in the port
of Vlissingen, the Netherlands.
The
technology supports
DEME’s long-term decarbonization
strategy,
providing flexibility
to adapt to changing grid
capabilities. ABB will install
shore power for suitably
equipped vessels calling
at Vlissingen’s
DEME base by
the end of 2024,
as part of a government-supported
initiative stimulating the
use of shore power facilities
in
Dutch seaports. Connecting
to shore power while
at berth
is expected to become
mandatory at main EU ports
from
2030 under FuelEU Maritime
regulations.
●
ABB Electrification’s
facility in Vaasa
has achieved a 1,400t
CO
2
e reduction in Scope
1 & 2 emissions since
- This
progress is driven by
a company-wide culture of
sustainability,
employee-led energy savings,
and
investment in renewable
energy sourcing. The
teams at
ABB Vaasa
have contributed over
100 energy-saving ideas,
resulting in a 20
percent reduction in consumption
(equivalent to 1,082
MWh) since 2019. Automation,
smart
energy solutions, and
a commitment to net
zero have
played pivotal roles.
ABB Vaasa, a
global center for
electrical low-voltage
switches and protection
relays,
exemplifies empowered
employees leading the way
toward
sustainability.
●
In March,
ABB teams across the
world celebrated
International Women’s
Day and Women’s
History Month
with numerous events,
mentor programs, panel
discussions, networking
sessions and campaigns
that
highlighted the importance
of gender equality,
whilst
promoting initiatives
to foster inclusion in the
workplace and
society at large.
Q1 outcome
●
28%
reduction year-on-year
of CO
₂
e emissions due to a
shift to green electricity and a lower
use of fossil fuels in
our operations.
●
7% decrease year-on-year in
LTIFR,
continuing to remain
at a low level.
●
2.5%-points increase year-on-year in
the proportion of
women in senior management
roles, demonstrating
strong progress towards our target
.
—
Sustainability
Q1 2024
Q1 2023
CHANGE
12M ROLLING
CO
₂
e own operations emissions,
Ktons scope 1 and 2
1
35
49
-28%
143
Lost Time Injury Frequency Rate (LTIFR),
frequency / 200,000 working hours
2
0.14
0.15
-7%
0.13
Proportion of women in senior management
roles in %
21.5
19.0
+2.5 pts
20.8
1
CO
₂
equivalent emissions from site, energy use, SF
₆
and fleet, previous quarter
2
Current quarter Includes all incidents reported until
April 5, 2024
ABB
INTERIM
REPORT
I
Q1
2024
11
During Q1 2024
●
On February 23,
ABB announced that Morten
Wierod will
succeed Björn Rosengren
as CEO on August 1, 2024.
From August 1, 2024,
until his retirement at
the end of
the year,
Björn Rosengren will advise
and assist Morten
Wierod and the Executive
Committee to ensure
a
seamless transition.
Morten Wierod joined ABB in 1998
and has been serving
as a member of ABB's Executive
Committee since 2019,
currently as President of the
Electrification Business
Area and previously as
President
of the Motion Business
Area. The search process
for the
position of President,
Electrification Business Area
has
been launched.
●
On March 21, the Annual
General Meeting elected two
new Board members,
namely Johan Forssell and
Mats
Rahmström. They replace
Jacob Wallenberg
and Gunnar
Brock who decided
not to stand for re-election.
●
On March 21, ABB announced
that the Board of
Directors has approved
a new share buyback program
for capital reduction
purposes of up to
$1 billion. This new
program launched on April
- It will
be executed on a second
trading line on the SIX Swiss
Exchange and is planned
to run until January 31,
2025,
to adjust the timing of
its share buyback cycle
to align
with the announcement
of its Q4 2024 results and
2024
dividend proposal.
●
On March 27, ABB announced
that Tarak
Mehta,
President Motion
Business Area and Member
of the
Executive Committee,
has decided to leave
ABB to
accept the role as CEO of
another company.
Tarak
will
leave ABB at the end
of July this year.
The search
process for the position
of President, Motion Business
Area has been launched.
Significant events
ABB
INTERIM
REPORT
I
Q1
2024
12
Divestments
Company/unit
Closing date
Revenues, $ in
millions
1
No. of employees
2023
Electrification
Power Conversion division
3-Jul
~440
1,500
Electrification
Industrial Plugs & Sockets business
3-Jul
~12
2
Process Automation
UK technical engineering consultancy
business
1-May
~20
160
Note: comparable growth calculation includes acquisitions
and divestments with revenues of greater than
$50 million.
1
Represents the estimated revenues for the last fiscal
year prior to the announcement of the respective
acquisition/divestment unless otherwise stated.
Additional 2024 guidance
($ in millions, unless otherwise stated)
FY 2024
Net finance expenses
↓
~(50)
from ~(120)
Effective tax rate
~25%
4
Capital Expenditures
~(900)
($ in millions, unless otherwise stated)
FY 2024
1
Q2 2024
Corporate and Other Operational EBITA
2
~(300)
~(75)
Non-operating items
Acquisition-related amortization
~(210)
~(60)
Restructuring and related
3
~(200)
~(60)
ABB Way transformation
↑
~(200)
~(50)
from ~(180)
Additional figures
ABB Group
Q1 2023
Q2 2023
Q3 2023
Q4 2023
FY 2023
Q1 2024
EBITDA, $ in million
1,389
1,494
1,453
1,315
5,651
1,418
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
21.10
n.a.
Net debt/Equity
0.30
0.31
0.21
0.14
0.14
0.16
Net debt/ EBITDA 12M rolling
0.9
0.8
0.5
0.4
0.4
0.4
Net working capital, % of 12M rolling revenues
13.9%
14.7%
12.8%
10.2%
10.2%
11.2%
Earnings per share, basic, $
0.56
0.49
0.48
0.50
2.02
0.49
Earnings per share, diluted, $
0.55
0.48
0.47
0.50
2.01
0.49
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.87
n.a.
Share price at the end of period, CHF
31.37
35.18
32.80
37.30
37.30
41.89
Number of employees (FTE equivalents)
106,170
108,320
107,430
107,870
107,870
108,700
No. of shares outstanding at end of period (in millions)
1,862
1,860
1,849
1,842
1,842
1,851
1
Excludes one project estimated to a total of ~$100
million, that is ongoing in the non-core business. Exact
exit timing is difficult to assess due to legal proceedings
etc.
2
Excludes Operational EBITA from E-mobility business.
3
Includes restructuring and restructuring-related as
well as separation and integration costs.
4
Excludes the impact of acquisitions or divestments
or any significant non-operational items.
Acquisitions
Company/unit
Closing date
Revenues, $ in
millions
1
No. of employees
2024
Process Automation
Real Tech Water
1-Feb
6
38
Robotics & Discrete Automation
Meshmind
1-Feb
<5
50
2023
Robotics & Discrete Automation
Sevensense
21-Dec
<5
35
E-mobility
Imagen Energy Inc
13-Nov
<5
4
Motion
Spring Point Solutions Llc
1-Nov
<5
13
E-mobility
Vourity AB
25-Oct
<5
9
Electrification
Eve Systems
1-Jun
~20
50
Motion
Siemens low voltage NEMA Motors
2-May
~60
600
Acquisitions and divestments, last twelve months
ABB
INTERIM
REPORT
I
Q1
2024
13
For additional information please contact:
Media Relations
Phone: +41 43 317
71 11
Email:
Investor Relations
Phone: +41 43 317
71 11
Email:
ABB Ltd
Affolternstrasse
44
8050 Zurich
Switzerland
Financial calendar
2024
July 18
Q2 2024 results
October 17
Q3 2024 results
This press release
includes forward-looking information
and
statements as well
as other statements concerning
the
outlook for our business,
including those in the sections
of
this release titled “CEO summary,”
“Outlook,” and
“Sustainability”. These
statements are based on current
expectations, estimates
and projections about the
factors
that may affect
our future performance,
including global
economic conditions,
the economic conditions
of the
regions and industries
that are major markets
for ABB.
These expectations, estimates
and projections are generally
identifiable by statements
containing words such as
“anticipates,” “expects,”
“estimates,” “plans,” “targets
,”
“guidance,”
“likely” or similar expressions.
However, there
are many risks and
uncertainties, many of which
are beyond
our control, that could
cause our actual results
to differ
materially from the
forward-looking information
and
statements
made in this press
release and which could
affect our ability
to achieve any or all of
our stated targets. Some important
factors that could cause
such differences include,
among
others, business risks
associated with the volatile
global
economic environment
and political conditions,
costs
associated with compliance
activities, market acceptance
of
new products and services,
changes in governmental
regulations and currency
exchange rates and such
other
factors as may be discussed
from time to time in
ABB Ltd’s
filings with the U.S. Securities
and Exchange Commission,
including its Annual
Reports on Form 20-F.
Although ABB
Ltd believes that
its expectations reflected in any
such
forward looking statement
are based upon reasonable
assumptions, it can
give no assurance that those
expectations will be
achieved.
The Q1 2024
results press release
and presentation slides
are available on the
ABB News Center at
www.abb.com/news
and on the Investor
Relations
homepage at www.abb.com/investorrelations.
A conference call and
webcast for analysts
and investors is
scheduled to begin
at 10:00 a.m. CET.
To
pre-register for the conference
call or to join the
webcast, please
refer to the ABB website:
www.abb.com/investorrelations.
The recorded session
will be available after
the event on
ABB’s website.
Important notice about forward-looking information
Q1 results presentation on April 18, 2024
ABB
is a technology leader
in electrification and automation,
enabling a more sustainable
and resource-efficient
future. The
company’s solutions
connect engineering know
-how and software to
optimize how things are
manufactured, moved, powered
and
operated. Building on
over 140 years of excellence,
ABB’s more than
105,000 employees are
committed to driving innovations
that
accelerate industrial
transformation.
1
Q1 2024 FINANCIAL INFORMATION
April 18, 2024
Q1 2024
Financial information
2
Q1 2024 FINANCIAL INFORMATION
—
Financial
Information
Contents
03
─ 05
Key Figures
06 ─
27
Consolidated Financial Information
(unaudited)
28 ─
38
Supplemental Reconciliations and Definitions
3
Q1 2024 FINANCIAL INFORMATION
—
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Comparable
(1)
Orders
8,974
9,450
-5%
-4%
Order backlog (end March)
22,015
21,607
2%
6%
Revenues
7,870
7,859
0%
2%
Gross Profit
2,935
2,716
8%
as % of revenues
37.3%
34.6%
+2.7 pts
Income from operations
1,217
1,198
2%
Operational EBITA
(1)
1,417
1,277
11%
11%
(2)
as % of operational revenues
(1)
17.9%
16.3%
+1.6 pts
Income from continuing operations, net of tax
914
1,065
-14%
Net income attributable to ABB
905
1,036
-13%
Basic earnings per share ($)
0.49
0.56
-12%
(3)
Cash flow from operating activities
726
282
157%
Free cash flow
(1)
551
162
240%
(1)
For a reconciliation
of non-GAAP measures
see “
Supplemental
Reconciliations
and Definitions
” on page 28.
(2)
Constant currency
(not adjusted
for portfolio
changes).
(3)
EPS growth rates
are computed
using unrounded
amounts.
4
Q1 2024 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q1 2024
Q1 2023
US$
Local
Comparable
Orders
ABB Group
8,974
9,450
-5%
-5%
-4%
Electrification
4,392
4,141
6%
6%
8%
Motion
2,303
2,262
2%
2%
1%
Process Automation
1,697
2,113
-20%
-20%
-20%
Robotics & Discrete Automation
701
1,001
-30%
-30%
-30%
Corporate and Other
142
196
Intersegment eliminations
(261)
(263)
Order backlog (end March)
ABB Group
22,015
21,607
2%
4%
6%
Electrification
7,389
7,101
4%
6%
12%
Motion
5,612
5,102
10%
11%
11%
Process Automation
7,343
6,893
7%
9%
9%
Robotics & Discrete Automation
1,918
2,782
-31%
-29%
-29%
Corporate and Other
(incl. intersegment eliminations)
(247)
(271)
Revenues
ABB Group
7,870
7,859
0%
1%
2%
Electrification
3,680
3,590
3%
3%
6%
Motion
1,829
1,940
-6%
-5%
-6%
Process Automation
1,601
1,436
11%
12%
12%
Robotics & Discrete Automation
864
937
-8%
-7%
-7%
Corporate and Other
125
169
Intersegment eliminations
(229)
(213)
Income from operations
ABB Group
1,217
1,198
Electrification
769
655
Motion
301
353
Process Automation
234
200
Robotics & Discrete Automation
91
115
Corporate and Other
(incl. intersegment eliminations)
(178)
(125)
Income from operations %
ABB Group
15.5%
15.2%
Electrification
20.9%
18.2%
Motion
16.5%
18.2%
Process Automation
14.6%
13.9%
Robotics & Discrete Automation
10.5%
12.3%
Operational EBITA
ABB Group
1,417
1,277
11%
11%
Electrification
826
677
22%
23%
Motion
343
366
-6%
-6%
Process Automation
253
205
23%
23%
Robotics & Discrete Automation
113
140
-19%
-18%
Corporate and Other
(incl. intersegment eliminations)
(118)
(111)
Operational EBITA %
ABB Group
17.9%
16.3%
Electrification
22.4%
19.0%
Motion
18.5%
18.9%
Process Automation
15.6%
14.2%
Robotics & Discrete Automation
13.2%
14.9%
Cash flow from operating activities
ABB Group
726
282
Electrification
547
395
Motion
352
149
Process Automation
229
112
Robotics & Discrete Automation
95
130
Corporate and Other
(incl. intersegment eliminations)
(497)
(504)
5
Q1 2024 FINANCIAL INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Revenues
7,870
7,859
3,680
3,590
1,829
1,940
1,601
1,436
864
937
Foreign exchange/commodity timing
differences in total revenues
65
(16)
13
(22)
29
–
25
10
(5)
1
Operational revenues
7,935
7,843
3,693
3,568
1,858
1,940
1,626
1,446
859
938
Income from operations
1,217
1,198
769
655
301
353
234
200
91
115
Acquisition-related amortization
56
54
23
22
9
8
1
1
21
20
Restructuring, related and
implementation costs
(1)
26
28
10
8
8
1
7
2
–
–
Changes in obligations related to
divested businesses
–
3
–
–
–
–
–
–
–
–
Gains and losses from sale of businesses
2
–
–
–
–
–
–
–
–
–
Acquisition- and divestment-related
expenses and integration costs
19
19
10
7
–
4
–
3
2
2
Certain other non-operational items
63
(1)
3
3
3
2
–
–
1
2
Foreign exchange/commodity timing
differences in income from operations
34
(24)
11
(18)
22
(2)
11
(1)
(2)
1
Operational EBITA
1,417
1,277
826
677
343
366
253
205
113
140
Operational EBITA margin (%)
17.9%
16.3%
22.4%
19.0%
18.5%
18.9%
15.6%
14.2%
13.2%
14.9%
(1)
Includes impairment of certain assets.
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Q1 24
Q1 23
Depreciation
133
125
66
62
28
26
12
11
15
14
Amortization
68
66
28
27
10
10
2
2
22
20
including total acquisition-related amortization of:
56
54
23
22
9
8
1
1
21
20
Orders received and revenues by region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q1 24
Q1 23
US$
Local
parable
Q1 24
Q1 23
US$
Local
parable
Europe
3,298
3,582
-8%
-9%
-9%
2,748
2,872
-4%
-6%
-5%
The Americas
2,904
2,985
-3%
-3%
-3%
2,789
2,653
5%
5%
7%
of which United States
2,139
2,130
0%
0%
2%
2,110
1,984
6%
6%
10%
Asia, Middle East and Africa
2,772
2,883
-4%
0%
0%
2,333
2,334
0%
5%
5%
of which China
1,050
1,355
-23%
-19%
-18%
998
1,155
-14%
-9%
-9%
ABB Group
8,974
9,450
-5%
-5%
-4%
7,870
7,859
0%
1%
2%
6
Q1 2024 FINANCIAL INFORMATION
—
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Three months ended
($ in millions, except per share data in $)
Mar. 31, 2024
Mar. 31, 2023
Sales of products
6,503
6,644
Sales of services and other
1,367
1,215
Total revenues
7,870
7,859
Cost of sales of products
(4,145)
(4,418)
Cost of services and other
(790)
(725)
Total cost of sales
(4,935)
(5,143)
Gross profit
2,935
2,716
Selling, general and administrative expenses
(1,381)
(1,339)
Non-order related research and development expenses
(363)
(304)
Other income (expense), net
26
125
Income from operations
1,217
1,198
Interest and dividend income
57
40
Interest and other finance expense
(37)
(61)
Non-operational pension (cost) credit
16
7
Income from continuing operations before taxes
1,253
1,184
Income tax expense
(339)
(119)
Income from continuing operations, net of
tax
914
1,065
Loss from discontinued operations, net of tax
(1)
(5)
Net income
913
1,060
Net income attributable to noncontrolling interests and redeemable noncontrolling
interests
(8)
(24)
Net income attributable to ABB
905
1,036
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
906
1,041
Loss from discontinued operations, net of tax
(1)
(5)
Net income
905
1,036
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.49
0.56
Loss from discontinued operations, net of tax
–
–
Net income
0.49
0.56
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.49
0.56
Loss from discontinued operations, net of tax
–
–
Net income
0.49
0.55
Weighted-average number of shares outstanding
(in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
1,839
1,861
Diluted earnings per share attributable to ABB shareholders
1,852
1,874
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
7
Q1 2024 FINANCIAL INFORMATION
—
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Three months ended
($ in millions)
Mar. 31, 2024
Mar. 31, 2023
Total comprehensive income, net of
tax
1,063
1,153
Total comprehensive (income)
loss attributable to noncontrolling interests and
redeemable noncontrolling interests, net of tax
8
(30)
Total comprehensive income attributable
to ABB shareholders, net of tax
1,071
1,123
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
8
Q1 2024 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Mar. 31, 2024
Dec. 31, 2023
Cash and equivalents
4,102
3,891
Restricted cash
18
18
Marketable securities and short-term investments
2,097
1,928
Receivables, net
7,385
7,446
Contract assets
1,135
1,090
Inventories, net
6,170
6,149
Prepaid expenses
314
235
Other current assets
563
520
Total current assets
21,784
21,277
Property, plant and equipment, net
4,047
4,142
Operating lease right-of-use assets
863
893
Investments in equity-accounted companies
178
187
Prepaid pension and other employee benefits
755
780
Intangible assets, net
1,128
1,223
Goodwill
10,494
10,561
Deferred taxes
1,375
1,381
Other non-current assets
488
496
Total assets
41,112
40,940
Accounts payable, trade
5,018
4,847
Contract liabilities
2,866
2,844
Short-term debt and current maturities of long-term debt
1,957
2,607
Current operating leases
242
249
Provisions for warranties
1,191
1,210
Dividends payable to shareholders
857
–
Other provisions
1,056
1,201
Other current liabilities
4,595
5,046
Total current liabilities
17,782
18,004
Long-term debt
6,346
5,221
Non-current operating leases
642
666
Pension and other employee benefits
668
686
Deferred taxes
664
669
Other non-current liabilities
1,539
1,548
Total liabilities
27,641
26,794
Commitments and contingencies
Redeemable noncontrolling interest
89
89
Stockholders’ equity:
Common stock, CHF 0.12 par value
(1,882 million shares issued at March 31, 2024, and December
31, 2023)
163
163
Additional paid-in capital
9
7
Retained earnings
18,622
19,724
Accumulated other comprehensive loss
(4,904)
(5,070)
Treasury stock, at cost
(31 million and 40 million shares at March 31, 2024, and December
31, 2023, respectively)
(1,150)
(1,414)
Total ABB stockholders’ equity
12,740
13,410
Noncontrolling interests
642
647
Total stockholders’ equity
13,382
14,057
Total liabilities and stockholders’
equity
41,112
40,940
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
9
Q1 2024 FINANCIAL INFORMATION
—
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Three months ended
($ in millions)
Mar. 31, 2024
Mar. 31, 2023
Operating activities:
Net income
913
1,060
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
201
191
Changes in fair values of investments
(13)
(13)
Pension and other employee benefits
(13)
1
Deferred taxes
(6)
25
Loss from equity-accounted companies
5
7
Net gain from derivatives and foreign exchange
(8)
(37)
Net gain from sale of property,
plant and equipment
(5)
(26)
Net loss (gain) from sale of businesses
2
–
Other
27
27
Changes in operating assets and liabilities:
Trade receivables, net
(33)
(362)
Contract assets and liabilities
38
10
Inventories, net
(205)
(264)
Accounts payable, trade
82
22
Accrued liabilities
(473)
(324)
Provisions, net
37
42
Income taxes payable and receivable
122
(115)
Other assets and liabilities, net
55
38
Net cash provided by operating activities
726
282
Investing activities:
Purchases of investments
(877)
(660)
Purchases of property, plant and
equipment and intangible assets
(181)
(151)
Acquisition of businesses (net of cash acquired) and increases
in cost-
and equity-accounted companies
(30)
(19)
Proceeds from sales of investments
727
20
Proceeds from sales of property,
plant and equipment
6
31
Proceeds from sales of businesses (net of transaction costs
and cash disposed) and cost-
and
equity-accounted companies
(8)
(5)
Net cash from settlement of foreign currency derivatives
31
36
Changes in loans receivable, net
1
8
Other investing activities
–
(1)
Net cash used in investing activities
(331)
(741)
Financing activities:
Net changes in debt with original maturities of 90 days or less
(20)
(714)
Increase in debt
1,358
1,633
Repayment of debt
(565)
(36)
Delivery of shares
390
95
Purchase of treasury stock
(291)
(274)
Dividends paid
(919)
(1,294)
Dividends paid to noncontrolling shareholders
–
(3)
Proceeds from issuance of subsidiary shares
–
341
Other financing activities
(3)
12
Net cash used in financing activities
(50)
(240)
Effects of exchange rate changes on cash and equivalents
and restricted cash
(134)
(5)
Adjustment for the net change in cash and equivalents and restricted
cash in Assets held for sale
–
(13)
Net change in cash and equivalents and restricted cash
211
(717)
Cash and equivalents and restricted cash, beginning of period
3,909
4,174
Cash and equivalents and restricted cash, end of period
4,120
3,457
Supplementary disclosure of cash flow information:
Interest paid
94
48
Income taxes paid
228
207
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
10
Q1 2024 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, 2023
171
141
20,082
(4,556)
(3,061)
12,777
410
13,187
Net income
(1)
1,036
1,036
25
1,061
Foreign currency translation
adjustments, net of tax of $(1)
79
79
6
85
Effect of change in fair value of
available-for-sale securities,
net of tax of $1
5
5
5
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $1
–
–
–
Change in derivative instruments
and hedges, net of tax of $0
3
3
3
Issuance of subsidiary shares
170
170
168
338
Other changes in
noncontrolling interests
–
(1)
(1)
Dividends to
noncontrolling shareholders
–
(5)
(5)
Dividends to shareholders
(1,706)
(1,706)
(1,706)
Share-based payment arrangements
22
22
1
23
Purchase of treasury stock
(253)
(253)
(253)
Delivery of shares
(53)
148
95
95
Other
(2)
(2)
(2)
Balance at March 31, 2023
171
279
19,411
(4,469)
(3,165)
12,227
604
12,831
Balance at January 1, 2024
163
7
19,724
(5,070)
(1,414)
13,410
647
14,057
Net income
(1)
905
905
9
914
Foreign currency translation
adjustments, net of tax of $3
131
131
(16)
115
Effect of change in fair value of
available-for-sale securities,
net of tax of $0
(1)
(1)
(1)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $16
33
33
33
Change in derivative instruments
and hedges, net of tax of $0
3
3
3
Changes in noncontrolling interests
(1)
(30)
(31)
1
(30)
Dividends to
noncontrolling shareholders
–
(1)
(1)
Dividends to shareholders
(1,804)
(1,804)
(1,804)
Share-based payment arrangements
20
20
1
21
Purchase of treasury stock
(314)
(314)
(314)
Delivery of shares
(14)
(174)
578
390
390
Other
(3)
(3)
2
(1)
Balance at March 31, 2024
163
9
18,622
(4,904)
(1,150)
12,740
642
13,382
(1)
Amounts attributable to noncontrolling interests for the three months ended March 31, 2024 and 2023, exclude net losses of $1 million and $1 million, respectively, related to
redeemable noncontrolling interests, which are reported in the mezzanine equity section on the Consolidated Balance Sheets.
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
11
Q1 2024 FINANCIAL INFORMATION
—
Notes to the Consolidated Financial Information (unaudited)
─
Note 1
The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively,
the Company) together form a technology
leader in electrification and automation, enabling a more sustainable
and
resource-efficient future. The Company’s solutions connect
engineering know-how and software to optimize how things
are manufactured, moved, powered, and
operated.
The Company’s Consolidated Financial Information is prepared
in accordance with United States of America generally accepted
accounting principles (U.S.
GAAP) for interim financial reporting. As such, the Consolidated
Financial Information does not include all the
information and notes required under U.S. GAAP for
annual consolidated financial statements. Therefore, such financial
information should be read in conjunction with the audited
consolidated financial statements in
the Company’s Annual Report for the year ended December
31, 2023.
The preparation of financial information in conformity with U.S. GAAP
requires management to make assumptions
and estimates that directly affect the amounts
reported in the Consolidated Financial Information. These accounting
assumptions and estimates include:
●
estimates to determine valuation allowances for deferred tax assets
and amounts recorded for unrecognized tax benefits,
●
estimates related to credit losses expected to occur over
the remaining life of financial assets such as trade and other
receivables, loans and other
instruments,
●
estimates of loss contingencies associated with litigation or
threatened litigation and other claims and inquiries, environmental
damages, product
warranties, self-insurance reserves, regulatory and other proceedings,
●
assumptions and projections, principally related to future material,
labor and project-related overhead costs, used in determining the
percentage-of-
completion on projects where revenue is recognized over time,
as well as the amount of variable consideration the
Company expects to be entitled to,
●
assumptions used in the calculation of pension and postretirement
benefits and the fair value of pension plan assets,
●
estimates used to record expected costs for employee severance
in connection with restructuring programs,
●
assumptions used in determining inventory obsolescence and net
realizable value,
●
growth rates, discount rates and other assumptions used to determine
impairment of long-lived assets and in testing goodwill
for impairment,
●
estimates and assumptions used in determining the fair values
of assets and liabilities assumed in business
combinations, and
●
estimates and assumptions used in determining the initial fair value
of retained noncontrolling interests
and certain obligations in connection with
divestments.
The actual results and outcomes may differ from the Company’s
estimates and assumptions.
A portion of the Company’s activities (primarily long-term
construction activities) has an operating cycle that
exceeds one year. For classification of
current assets
and liabilities related to such activities, the Company elected to
use the duration of the individual contracts
as its operating cycle. Accordingly,
there are accounts
receivable, contract assets, inventories and provisions related to
these contracts which will not be realized within one
year that have been classified as current.
Basis of presentation
In the opinion of management, the unaudited Consolidated Financial
Information contains all necessary
adjustments to present fairly the financial position, results
of operations and cash flows for the reported periods. Management considers
all such adjustments to be of a normal recurring nature. The
Consolidated Financial
Information is presented in United States dollars ($)
unless otherwise stated. Due to rounding, numbers presented
in the Consolidated Financial Information may
not add to the totals provided.
Certain amounts reported in the Consolidated Financial Information for
prior periods have been reclassified to conform to the
current year’s presentation.
Change in accounting policy
Effective January 1, 2024, the Company changed
the presentation of discontinued operations
in its statement of cas
h
flows to an alternate allowable
policy. As a result, the
total cash flows for operating, investing
and financing activities from discontinued
operations are no longer shown separately but
instead all cash flows in discontinued operations
are presented within each line item as appropriate
in the statement of cash flows. As
this presentation
change represents a change in accounting
policy, all prior periods presented
have been reclassified to conform to the
current period presentation and
there was no material impact
for the three months ended March 31,
2023.
12
Q1 2024 FINANCIAL INFORMATION
─
Note 2
Recent accounting pronouncements
Applicable for current periods
Improvements to reportable segment disclosures
In January 2024, the Company adopted an accounting standard
update which requires the Company to disclose additional reportable
segment information
primarily through enhanced disclosures about significant segment expenses
and extending certain annual disclosure requirements
to a quarterly frequency.
The
update will be applied retrospectively for all periods presented
in the Company’s annual consolidated financial statements
and then commencing from the first
quarter of 2025, in its interim consolidated financial information.
Other than these additional disclosures,
this update does not have a significant impact on the
Company’s consolidated financial statements.
Applicable for future periods
Improvements to Income tax disclosures
In December 2023, an accounting standard update was issued which
requires the Company to disclose additional information
related to income taxes. Under the
update, the Company is required to annually disclose by jurisdiction
(i) additional disaggregated information within the
tax rate reconciliation and (ii) income taxes
paid. This update is effective for the Company prospectively,
with retrospective adoption permitted, for annual
periods beginning January 1, 2025. The Company
is
currently evaluating the impact of adopting this update on
its consolidated financial statements.
─
Note 3
Cash and equivalents, marketable securities and short-term investments
Cash and equivalents, marketable securities and short-term
investments consisted of the following:
March 31, 2024
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
1,789
1,789
1,789
Time deposits
2,817
2,817
2,331
486
Equity securities
1,391
37
1,428
1,428
5,997
37
–
6,034
4,120
1,914
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
190
2
(9)
183
183
190
2
(9)
183
–
183
Total
6,187
39
(9)
6,217
4,120
2,097
Of which:
Restricted cash, current
18
December 31, 2023
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
1,449
1,449
1,449
Time deposits
2,923
2,923
2,460
463
Equity securities
1,250
32
1,282
1,282
5,622
32
–
5,654
3,909
1,745
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
189
2
(8)
183
183
189
2
(8)
183
–
183
Total
5,811
34
(8)
5,837
3,909
1,928
Of which:
Restricted cash, current
18
13
Q1 2024 FINANCIAL INFORMATION
─
Note 4
Derivative financial instruments
The Company is exposed to certain currency,
commodity and interest rate risks arising from its global
operating, financing and investing activities. The Company
uses derivative instruments to reduce and manage the economic
impact of these exposures.
Currency risk
Due to the global nature of the Company’s operations, many
of its subsidiaries are exposed to currency risk
in their 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 purchas
es, the Company’s policy is to hedge up to a maximum
of 100 percent of the forecasted
foreign currency denominated exposures, depending on the
length of the forecasted exposures. Forecasted exposures
greater than 12 months are not hedged.
Forward foreign exchange contracts are the main instrument used to
protect the Company against the volatility of future cash
flows (caused by changes in
exchange rates) of contracted and forecasted sales and purchases
denominated in foreign currencies. In addition, within
its treasury operations, the Company
primarily uses foreign exchange swaps and forward foreign exchange
contracts to manage the currency and timing mismatches
arising in its liquidity management
activities.
Commodity risk
Various commodity products
are used in the Company’s manufacturing activities.
Consequently it is exposed to volatility in future cash flows
arising from changes
in commodity prices. To
manage the price risk of commodities, the Company’s
policies require that its subsidiaries hedge the commodity
price risk exposures from
binding contracts, as well as at least 50 percent (up to a maximum
of 100 percent) of the forecasted commodity exposure over
the next 12 months or longer (up to
a maximum of 18 months). Primarily swap contracts are used to
manage the associated price risks of commodities.
Interest rate risk
The Company has issued bonds at fixed rates. Interest rate swaps
and cross-currency interest rate swaps are used to manage
the interest rate and foreign
currency risk associated with certain debt and generally such
swaps are designated as fair value hedges. In addition, from time
to time, the Company uses
instruments such as interest rate swaps, interest rate futures, bond
futures or forward rate agreements to manage
interest rate risk arising from the Company’s
balance sheet structure but does not designate such instruments
as hedges.
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 accou
nting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange and
interest rate derivatives (whether designated as hedges
or not) were as follows:
Type of derivative
Total notional amounts
at
($ in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Foreign exchange contracts
14,331
12,335
13,273
Embedded foreign exchange derivatives
1,106
1,137
1,104
Cross-currency interest rate swaps
863
886
870
Interest rate contracts
3,075
1,606
2,963
Derivative commodity contracts
The Company uses derivatives to hedge its direct or indirect exposure
to the movement in the prices of commodities which are
primarily copper, silver,
steel and
aluminum. The following table shows the notional amounts of outstanding
derivatives (whether designated as hedges or not), on
a net basis, to reflect the
Company’s requirements for these commodities:
Type of derivative
Unit
Total notional amounts
at
March 31, 2024
December 31, 2023
March 31, 2023
Copper swaps
metric tonnes
38,116
35,015
27,920
Silver swaps
ounces
2,689,981
2,359,363
2,392,353
Steel swaps
metric tonnes
10,251
10,206
6,804
Aluminum swaps
metric tonnes
5,875
5,900
6,750
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange
contracts to manage the foreign exchange risk
of its operations and commodity swaps to
manage its commodity risks. The Company applies cash flow
hedge accounting in only limited cases. In these cases, the
effective portion of the changes in their
fair value is recorded in Accumulated other comprehensive loss
and subsequently reclassified into earnings in the same
line item and in the same period as the
underlying hedged transaction affects earnings. For the three
months ended March 31, 2024 and 2023, there were
no significant amounts recorded for cash flow
hedge accounting activities.
Fair value hedges
To reduce its interest
rate exposure arising primarily from its debt issuance activities,
the Company uses interest rate swaps and cross
-currency interest rate
swaps. Where such instruments are designated as fair value hedges,
the changes in the fair value of these instruments,
as well as the changes in the fair value of
the risk component of the underlying debt being hedged, are recorded
as offsetting gains and losses
in Interest and other finance expense.
The effect of derivative instruments, designated and qualifying
as fair value hedges, on the Consolidated Income
Statements was as follows:
Three months ended March 31,
($ in millions)
2024
2023
Gains (losses) recognized in Interest and other finance expense:
Interest rate contracts
Designated as fair value hedges
13
10
Hedged item
(14)
(10)
Cross-currency interest rate swaps
Designated as fair value hedges
(3)
(11)
Hedged item
3
2
14
Q1 2024 FINANCIAL INFORMATION
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not
qualify as either cash flow or fair value hedges
are economic hedges used for risk management
purposes. Gains and losses from changes in the fair values
of such derivatives are recognized in the same line in the
income statement as the economically
hedged transaction.
Furthermore, under certain circumstances, the Company
is required to split and account separately for foreign currency
derivatives that are embedded within
certain binding sales or purchase contracts denominated
in a currency other than the functional currency of the subsidiary
and the counterparty.
The gains (losses) recognized in the Consolidated Income Statements
on derivatives not designated in hedging relationships
were as follows:
Type of derivative not
Gains (losses) recognized in income
designated as a hedge
Three months ended March 31,
($ in millions)
Location
2024
2023
Foreign exchange contracts
Total revenues
(168)
11
Total cost of sales
47
(1)
SG&A expenses
(1)
13
6
Non-order related research and development
(2)
–
Interest and other finance expense
247
42
Embedded foreign exchange contracts
Total revenues
18
7
Total cost of sales
(4)
(1)
Commodity contracts
Total cost of sales
9
11
Other
Interest and other finance expense
(2)
–
Total
158
75
(1)
SG&A expenses represent
“Selling, general and
administrative expenses”.
The fair values of derivatives included in the Consolidated Balance
Sheets were as follows:
March 31, 2024
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
–
–
2
–
Interest rate contracts
–
–
4
3
Cross-currency interest rate swaps
–
–
–
256
Other
7
–
–
–
Total
7
–
6
259
Derivatives not designated as hedging instruments:
Foreign exchange contracts
179
19
97
13
Commodity contracts
17
–
1
–
Interest rate contracts
–
–
–
–
Embedded foreign exchange derivatives
24
5
11
1
Other
–
3
–
–
Total
220
27
109
14
Total fair value
227
27
115
273
December 31, 2023
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
–
–
5
2
Interest rate contracts
–
–
18
–
Cross-currency interest rate swaps
–
–
–
230
Other
10
–
–
–
Total
10
–
23
232
Derivatives not designated as hedging instruments:
Foreign exchange contracts
123
30
177
9
Commodity contracts
8
–
3
–
Interest rate contracts
1
–
1
–
Other equity contracts
4
–
–
–
Embedded foreign exchange derivatives
23
5
26
5
Total
159
35
207
14
Total fair value
169
35
230
246
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.
15
Q1 2024 FINANCIAL INFORMATION
Although the Company is party to close-out netting agreements
with most derivative counterparties, the fair values in the
tables above and in the Consolidated
Balance Sheets at March 31, 2024, and December 31, 2023,
have been presented on a gross basis.
The Company’s netting agreements and other similar arrangements
allow net settlements under certain conditions.
At March 31, 2024, and December 31, 2023,
information related to these offsetting arrangements was as
follows:
($ in millions)
March 31, 2024
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
assets
in case of default
received
received
exposure
Derivatives
225
(71)
–
–
154
Total
225
(71)
–
–
154
($ in millions)
March 31, 2024
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
376
(71)
–
–
305
Total
376
(71)
–
–
305
($ in millions)
December 31, 2023
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
assets
in case of default
received
received
exposure
Derivatives
176
(111)
–
–
65
Total
176
(111)
–
–
65
($ in millions)
December 31, 2023
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
445
(111)
–
–
334
Total
445
(111)
–
–
334
16
Q1 2024 FINANCIAL INFORMATION
─
Note 5
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 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, 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. When determining fair values based
on quoted prices in an active market, the Company considers
if the level of transaction activity for the financial instrument
has significantly decreased or would not
be considered orderly. In such cases,
the resulting changes in valuation techniques would be disclosed.
If the market is considered disorderly or if quoted
prices
are not available, the Company is required to use another valuation
technique, such as an income approach.
Recurring fair value measures
The fair values of financial assets and liabilities measured at
fair value on a recurring basis were as follows:
March 31, 2024
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
–
1,428
–
1,428
Debt securities—U.S. government obligations
183
–
–
183
Derivative assets—current in “Other current assets”
–
227
–
227
Derivative assets—non-current in “Other non-current assets”
–
27
–
27
Total
183
1,682
–
1,865
Liabilities
Derivative liabilities—current in “Other current liabilities”
–
115
–
115
Derivative liabilities—non-current in “Other non-current liabilities”
–
273
–
273
Total
–
388
–
388
December 31, 2023
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
–
1,282
–
1,282
Debt securities—U.S. government obligations
183
–
–
183
Derivative assets—current in “Other current assets”
–
169
–
169
Derivative assets—non-current in “Other non-current assets”
–
35
–
35
Total
183
1,486
–
1,669
Liabilities
Derivative liabilities—current in “Other current liabilities”
–
230
–
230
Derivative liabilities—non-current in “Other non-current liabilities”
–
246
–
246
Total
–
476
–
476
17
Q1 2024 FINANCIAL INFORMATION
The Company uses the following methods and assumptions in
estimating fair values of financial assets
and liabilities measured at fair value on a recurring basis:
●
Securities in “Marketable securities and short-term investments”:
If quoted market prices in active markets for identical assets
are available, these are
considered Level 1 inputs; however,
when markets are not active, these inputs are
considered Level 2. If such quoted market prices are not
available,
fair value is determined using market prices for similar assets
or present value techniques, applying an 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. The fair
values obtained using price quotes for similar
instruments or valuation techniques
represent a Level 2 input unless significant unobservable inputs
are used.
Non-recurring fair value measures
There were no significant non-recurring fair value measurements
during the three months ended March 31, 2024 and
2023.
Disclosure about financial instruments carried on a cost
basis
The fair values of financial instruments carried on a cost
basis were as follows:
March 31, 2024
($ 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
1,771
1,771
–
–
1,771
Time deposits
2,331
–
2,331
–
2,331
Restricted cash
18
18
–
–
18
Marketable securities and short-term investments
(excluding securities):
Time deposits
486
–
486
–
486
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
1,927
1,890
37
–
1,927
Long-term debt (excluding finance lease obligations)
6,192
6,211
8
–
6,219
December 31, 2023
($ in millions)
Carrying value
Level 1
Level 2
Level 3
Total fair value
Assets
Cash and equivalents (excluding securities with original
maturities up to 3 months):
Cash
1,431
1,431
–
–
1,431
Time deposits
2,460
–
2,460
–
2,460
Restricted cash
18
18
–
–
18
Marketable securities and short-term investments
(excluding securities):
Time deposits
463
–
463
–
463
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
2,576
2,521
55
–
2,576
Long-term debt (excluding finance lease obligations)
5,060
5,096
5
–
5,101
The Company uses the following methods and assumptions in
estimating fair values of financial instruments carried
on a cost basis:
●
Cash and equivalents (excluding securities with original maturities
up to 3 months), Restricted cash, and Marketable
securities and short-term
investments (excluding securities):
The carrying amounts approximate the fair
values as the items are short-term in nature or,
for cash held in banks,
are equal to the deposit amount.
●
Short-term debt and current maturities of long-term debt (excluding
finance lease obligations):
Short-term debt includes commercial paper,
bank
borrowings and overdrafts. The carrying amounts of short-term debt
and current maturities of long-term debt, excluding finance
lease obligations,
approximate their fair values.
●
Long-term debt (excluding finance lease obligations):
Fair values of bonds are determined using quoted market
prices (Level 1 inputs), if available. For
bonds without available quoted market prices and other long-term
debt, the fair values are determined using a discounted cash flow
methodology
based upon borrowing rates of similar debt instruments and reflecting
appropriate adjustments for non-performance risk
(Level 2 inputs).
18
Q1 2024 FINANCIAL INFORMATION
─
Note 6
Contract assets and liabilities
The following table provides information about Contract assets
and Contract liabilities:
($ in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Contract assets
1,135
1,090
1,009
Contract liabilities
2,866
2,844
2,339
Contract assets primarily relate to the Company’s right to receive
consideration for work completed but for which no invoice
has been issued at the reporting date.
Contract assets are transferred to receivables when rights
to receive payment become unconditional. Management expects
that the majority of the amounts will be
collected within one year of the respective balance sheet date.
Contract liabilities primarily relate to up-front advances received on
orders from customers as well as amounts invoiced
to customers in excess of revenues
recognized predominantly on long-term projects. Contract liabilities
are reduced as work is performed and as revenues are recognized
.
The significant changes in the Contract assets and Contract liabilities
balances were as follows:
Three months ended March 31,
2024
2023
Contract
Contract
Contract
Contract
($ in millions)
assets
liabilities
assets
liabilities
Revenue recognized, which was included in the Contract liabilities balance
at Jan 1, 2024/2023
(724)
(651)
Additions to Contract liabilities
- excluding amounts recognized as
revenue during the period
819
707
Receivables recognized that were included in the Contract
assets balance at Jan 1, 2024/2023
(408)
(325)
The Company considers its order backlog to represent its
unsatisfied performance obligations. At March 31, 2024, the Company
had unsatisfied performance
obligations totaling $22,015 million and, of this amount, the Company
expects to fulfill approximately 61 percent of the obligations
in 2024, approximately
23 percent of the obligations in 2025 and the balance thereafter.
─
Note 7
Supplier finance programs
The Company has several supplier finance programs, all with similar
characteristics, with various financial institutions acting
as paying agent. These programs
allow qualifying suppliers access to bank facilities which permit earlier
payment at a cost to the supplier.
The Company’s payment terms related to suppliers’
finance programs are not impacted by the suppliers’ decisions
to sell amounts under the arrangements and are typically consistent
with local market practices.
Outstanding supplier finance obligations are included in “Accounts
payable, trade” in the Consolidated Balance Sheets
and are reported as operating or investing
(if capitalized) activities in the Consolidated Statement of Cash Flows
when paid. At March 31, 2024, and December
31, 2023, the total obligation outstanding
under supplier finance programs amounted to $442 million and
$415 million, respectively.
19
Q1 2024 FINANCIAL INFORMATION
─
Note 8
Debt
The Company’s total debt at March 31, 2024, and December
31, 2023, amounted to $8,303
million and $7,828 million, respectively.
Short-term debt and current maturities of long-term debt
The Company’s “Short-term debt and current maturities of
long-term debt” consisted of the following:
($ in millions)
March 31, 2024
December 31, 2023
Short-term debt
50
87
Current maturities of long-term debt
1,907
2,520
Total
1,957
2,607
Short-term debt primarily represented short-term bank borrowings
from various banks.
In March 2024, the Company repaid at maturity its EUR
500 million Floating Rate Instruments, equivalent to $539
million on date of repayment.
Long-term debt
The Company’s long-term debt at March 31, 2024, and
December 31, 2023, amounted to $6,346 million and
$5,221 million, respectively.
Outstanding bonds (including maturities within the next 12 months)
were as follows:
March 31, 2024
December 31, 2023
(in millions)
Nominal outstanding
Carrying value
(1)
Nominal outstanding
Carrying value
(1)
Bonds:
Floating Rate EUR Instruments, due 2024
EUR
500
$
554
0.625% EUR Instruments, due 2024
EUR
700
$
755
EUR
700
$
768
0.75% EUR Instruments, due 2024
EUR
750
$
805
EUR
750
$
819
0.3% CHF Bonds, due 2024
CHF
280
$
309
CHF
280
$
335
2.1% CHF Bonds, due 2025
CHF
150
$
165
CHF
150
$
179
1.965% CHF Bonds, due 2026
CHF
325
$
358
CHF
325
$
387
3.25% EUR Instruments, due 2027
EUR
500
$
536
EUR
500
$
551
0.75% CHF Bonds, due 2027
CHF
425
$
468
CHF
425
$
507
3.8% USD Notes, due 2028
(2)
USD
383
$
382
USD
383
$
382
1.9775% CHF Bonds, due 2028
CHF
150
$
165
CHF
150
$
179
3.125% EUR Instruments, due 2029
EUR
500
$
536
1.0% CHF Bonds, due 2029
CHF
170
$
188
CHF
170
$
203
0% EUR Instruments, due 2030
EUR
800
$
723
EUR
800
$
749
2.375% CHF Bonds, due 2030
CHF
150
$
165
CHF
150
$
178
3.375% EUR Instruments, due 2031
EUR
750
$
797
EUR
750
$
818
2.1125% CHF Bonds, due 2033
CHF
275
$
303
CHF
275
$
327
3.375% EUR Instruments, due 2034
EUR
750
$
802
4.375% USD Notes, due 2042
(2)
USD
609
$
591
USD
609
$
591
Total
$
8,048
$
7,527
(1)
USD carrying values include unamortized debt issuance costs, bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate.
(2)
Prior to completing a cash tender offer in November 2020, the original principal amount outstanding,
on each of the 3.8% USD Notes,
due 2028,
and the 4.375% USD Notes,
due
2042, was USD 750 million.
In January 2024, the Company issued the following EUR Instruments:
(i) EUR 500 million of 3.125 percent Instruments, due
2029, and (ii) EUR 750 million of
3.375 percent Instruments, due 2034, both paying interest
annually in arrears. The aggregate net proceeds
of these EUR Instruments, after discount and fees,
amounted to EUR 1,243 million (equivalent to approximately
$1,360 million on date of issuance).
Subsequent events
On April 2, 2024, the Company repaid at maturity its EUR 700
million 0.625% EUR Instruments, equivalent to $752
million on date of repayment.
20
Q1 2024 FINANCIAL INFORMATION
─
Note 9
Commitments and contingencies
Contingencies—Regulatory, Compliance
and Legal
Regulatory
Based on findings during an internal investigation, the Company
self-reported to the Securities Exchange Commission (SEC)
and the Department of Justice (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 SIU relating
to improper payments and other compliance
issues associated with the Controls and Instrumentation Contract,
and its Variation Orders
for Units 1 and 2 at Kusile. The Company made a provision
of
approximately $325 million which was recorded in Other income (expense),
net, during the third quarter of 2022. In December
2022, the Company settled with the
SEC and DoJ as well as the authorities in South Africa and Switzerland.
In March 2024, the Company settled its final pending
matter with the authorities in
Germany. The Company does not
believe that it will need to record any additional provisions
for this matter.
General
The Company is aware of proceedings, or the threat of proceedings,
against it and others in respect of private claims by
customers and other third parties with
regard to certain actual or alleged anticompetitive practices.
Also, the Company is subject to other claims and legal
proceedings, as well as investigations carried
out by various law enforcement authorities. With respect to the
above-mentioned claims, regulatory matters,
and any related proceedings, the Company will bear
the related costs, including costs necessary to resolve
them.
Liabilities recognized
At March 31, 2024, and December 31, 2023, the Company had
aggregate liabilities of $92 million and $101
million, respectively, included
in Other provisions and
Other non
‑
current liabilities, for the above regulatory,
compliance and legal contingencies, and none of the
individual liabilities recognized was significant. As
it is
not possible to make an informed judgment on, or reasonably predict,
the outcome of certain matters and as it
is not possible, based on information currently
available to management, to estimate the maximum potential
liability on other matters, there could be adverse outcomes beyond
the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the Company’s
third-party guarantees. The maximum potential payments
represent a “worst-case
scenario”, and do not reflect management’s expected
outcomes.
Maximum potential payments
($ in millions)
March 31, 2024
December 31, 2023
Performance guarantees
3,370
3,451
Financial guarantees
93
94
Total
(1)
3,463
3,545
(1)
Maximum potential payments include amounts in both continuing and discontinued operations.
The carrying amount of liabilities recorded in the Consolidated
Balance Sheets reflects the Company’s best estimate of
future payments, which it may incur as
part
of fulfilling its guarantee obligations. In respect of the above guarantees,
the carrying amounts of liabilities at March
31, 2024, and December 31, 2023, were not
significant.
The Company is party to various guarantees providing financial
or performance assurances to certain third parties. These guarantees,
which have various
maturities up to 2032, mainly consist of performance guarantees
whereby (i) the Company guarantees
the performance of a third party’s product or service
according to the terms of a contract and (ii) as member
of a consortium/joint-venture that includes third parties, the
Company guarantees not only its own
performance but also the work of third parties. Such guarantees
may include guarantees that a project will be
completed within a specified time. If the third party
does not fulfill the obligation, the Company will compensate the
guaranteed party in cash or in kind. The original
maturity dates for the majority of these
performance guarantees range from one to ten years.
In conjunction with the divestment of the high-voltage cable
and cables accessories businesses, the Company has
entered into various performance guarantees
with other parties with respect to certain liabilities of the
divested business. At March 31, 2024, and December 31,
2023, the maximum potential payable under
these guarantees amounts to $843 million and $874 million, respectively,
and these guarantees have various original maturities
ranging from five to ten years.
The Company retained obligations for financial and performance guarantees
related to its former Power Grids business
(reported as discontinued operations prior
to its sale to Hitachi Ltd in 2020), which at both March
31, 2024, and December 31, 2023, have been fully
indemnified by Hitachi Ltd. These guarantees, having
various maturities up to 2032, primarily consist of bank guarantees,
standby letters of credit, business performance guarante
es and other trade-related guarantees,
the majority of which have original maturity dates ranging from
one to ten years. The maximum amount payable under
these guarantees at both March 31, 2024,
and December 31, 2023, was approximately $2.2 billion.
Commercial commitments
In addition, in the normal course of bidding for and executing certain
projects, the Company has entered into standby
letters of credit, bid/performance bonds
and
surety bonds (collectively “performance bonds”) with various
financial institutions. Customers can draw on such
performance bonds in the event that the Company
does not fulfill its contractual obligations. The Company would
then have an obligation to reimburse the financial institution
for amounts paid under the performance
bonds. At March 31, 2024, and December 31, 2023, the total outstanding
performance bonds aggregated to $3.2 billion and $3
.1 billion, respectively. There
have
been no significant amounts reimbursed to financial institutions
under these types of arrangements in the three
months ended March 31, 2024 and 2023.
21
Q1 2024 FINANCIAL INFORMATION
Product and order-related contingencies
The Company calculates its provision for product warranties
based on historical claims experience and specific review
of certain contracts. The reconciliation
of the
Provisions for warranties, including guarantees of product performance,
was as follows:
($ in millions)
2024
2023
Balance at January 1,
1,210
1,028
Claims paid in cash or in kind
(37)
(40)
Net increase in provision for changes in estimates, warranties
issued and warranties expired
55
65
Exchange rate differences
(37)
7
Balance at March 31,
1,191
1,060
─
Note 10
Income taxes
In calculating income tax expense, the Company uses an estimate
of the annual effective tax rate based
upon the facts and circumstances known at each
interim
period. On a quarterly basis, the actual effective tax rate
is adjusted, as appropriate, based upon changed facts and circumstances,
if any, as compared to those
forecasted at the beginning of the year and each interim period
thereafter.
The effective tax rate of 27.1 percent in the three months
ended March 31, 2024, was higher than the effective
tax rate of 10.1 percent in the three months ended
March 31, 2023,
primarily due to a net benefit of $206 million realized
on a favorable resolution of an uncertain tax position
in the three months ended March 31,
- The release of the corresponding provision resulted in
an increase of $0.11 in earnings
per share (basic and diluted) for the three months ended
March 31,
2023.
─
Note 11
Employee benefits
The Company operates defined benefit pension plans, defined contribution
pension plans, and termination indemnity plans,
in accordance with local regulations
and practices. At March 31, 2024, the Company’s most significant
defined benefit pension plans are in Switzerland as well as
in Germany, the United Kingdom,
and the United States. These plans cover a large portion of the
Company’s employees and provide benefits to employees
in the event of death, disability,
retirement, or termination of employment. Certain of these plans are
multi-employer plans. The Company also operates
other postretirement benefit plans including
postretirement health care benefits and other employee-related
benefits for active employees including long-service
award plans. The postretirement benefit plans
are not significant. The measurement date used for the Company’s
employee benefit plans is December 31. The funding policies
of the Company’s plans are
consistent with the local government and tax requirements.
Net periodic benefit cost of the Company’s defined benefit
pension plans consisted of the following:
($ in millions)
Defined pension benefits
Switzerland
International
Three months ended March 31,
2024
2023
2024
2023
Operational pension cost:
Service cost
11
9
8
8
Operational pension cost
11
9
8
8
Non-operational pension cost (credit):
Interest cost
9
12
39
40
Expected return on plan assets
(31)
(33)
(43)
(39)
Amortization of prior service cost (credit)
(2)
–
(1)
–
Amortization of net actuarial loss
–
–
13
13
Non-operational pension cost (credit)
(24)
(21)
8
14
Net periodic benefit cost (credit)
(13)
(12)
16
22
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
Consolidated Income Statements.
Employer contributions were as follows:
($ in millions)
Defined pension benefits
Switzerland
International
Three months ended March 31,
2024
2023
2024
2023
Total contributions
to defined benefit pension plans
13
2
11
11
The Company expects to make contributions totaling approximately
$87 million to its defined pension plans for the full year
2024.
22
Q1 2024 FINANCIAL INFORMATION
─
Note 12
Stockholder's equity
At the Annual General Meeting of Shareholders (AGM) on March
21, 2024, shareholders approved the proposal of the
Board of Directors to distribute 0.87
Swiss
francs per share to shareholders. The declared dividend amounted
to $1,804 million, with the Company disburs
ing a portion in March and the remaining amounts
scheduled to be paid in the second quarter of 2024.
In March 2024, the Company completed the share buyback
program that was launched in April 2023. This program was executed
on a second trading line on the
SIX Swiss Exchange. Through this program, the Company purchased
a total of 21 million shares for approximately
$0.8 billion, of which 4 million shares were
purchased in the first quarter of 2024 (resulting in an
increase in Treasury stock of $187 million
).
Also in March 2024, the Company announced a new share buyback
program of up to $1 billion. This program, which was
launched in April 2024, is being executed
on a second trading line on the SIX Swiss Exchange and is planned
to run until January 2025.
During the first quarter of 2024,
the Company delivered, out of treasury stock,
approximately 16 million shares in connection with its Management
Incentive Plan.
─
Note 13
Earnings per share
Basic earnings per share is calculated by dividing income by the
weighted-average number of shares outstanding during
the period. Diluted earnings per share is
calculated by dividing income by the weighted-average number of shares
outstanding during the period, assuming that all potentially
dilutive securities were
exercised, if dilutive. Potentially dilutive securities comprise outstanding
written call options, and outstanding options and
shares granted subject to certain
conditions under the Company’s share-based payment arrangements.
Basic earnings per share
Three months ended March 31,
($ in millions, except per share data in $)
2024
2023
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
906
1,041
Loss from discontinued operations, net of tax
(1)
(5)
Net income
905
1,036
Weighted-average number of shares outstanding
(in millions)
1,839
1,861
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.49
0.56
Loss from discontinued operations, net of tax
–
–
Net income
0.49
0.56
Diluted earnings per share
Three months ended March 31,
($ in millions, except per share data in $)
2024
2023
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
906
1,041
Loss from discontinued operations, net of tax
(1)
(5)
Net income
905
1,036
Weighted-average number of shares outstanding (in millions)
1,839
1,861
Effect of dilutive securities:
Call options and shares
13
13
Adjusted weighted-average number of shares outstanding
(in millions)
1,852
1,874
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.49
0.56
Loss from discontinued operations, net of tax
–
–
Net income
0.49
0.55
23
Q1 2024 FINANCIAL INFORMATION
─
Note 14
Reclassifications out of accumulated other comprehensive loss
The following table shows changes in “Accumulated other comprehensive
loss” (OCI) attributable to ABB, by component, net
of tax:
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2023
(3,691)
(19)
(838)
(8)
(4,556)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
85
4
(8)
2
83
Amounts reclassified from OCI
–
1
8
1
10
Total other comprehensive (loss)
income
85
5
–
3
93
Less:
Amounts attributable to
noncontrolling interests and
redeemable noncontrolling interests
6
–
–
–
6
Balance at March 31, 2023
(3,612)
(14)
(838)
(5)
(4,469)
Unrealized gains
Pension and
Foreign currency
(losses) on
other
Derivative
translation
available-for-sale
postretirement
instruments
($ in millions)
adjustments
securities
plan adjustments
and hedges
Total OCI
Balance at January 1, 2024
(3,977)
(8)
(1,075)
(10)
(5,070)
Other comprehensive (loss) income:
Other comprehensive (loss) income
before reclassifications
115
(1)
27
–
141
Amounts reclassified from OCI
–
–
6
3
9
Total other comprehensive (loss)
income
115
(1)
33
3
150
Less:
Amounts attributable to
noncontrolling interests and
redeemable noncontrolling interests
(16)
–
–
–
(16)
Balance at March 31, 2024
(3,846)
(9)
(1,042)
(7)
(4,904)
The amounts reclassified out of OCI for the three months
ended March 31, 2024 and 2023, were not significant.
24
Q1 2024 FINANCIAL INFORMATION
─
Note 15
Operating segment data
The Chief Operating Decision Maker (CODM) is the Chief
Executive Officer. The CODM
allocates resources to and assesses the performance
of each operating
segment using the information outlined below. The
Company is organized into the following segments, based
on products and services: Electrification, Motion,
Process Automation and Robotics & Discrete Automation. The remaining
operations of the Company are included in
Corporate and Other.
A description of the types of products and services
provided by each reportable segment is as follows:
●
Electrification:
manufactures and sells electrical products and solutions
which are designed to provide safe, smart and
sustainable electrical flow from
the substation to the socket. The portfolio of increasingly digital and
connected solutions includes renewable power
solutions, modular substation
packages, distribution automation products, switchboards and
panelboards, switchgear, UPS solutions,
circuit breakers, measuring and sensing
devices, control products, wiring accessories, enclosures and cabling
systems and intelligent home and building solutions,
designed to integrate and
automate lighting, heating, ventilation, security and data communication
networks.
The products and services are currently delivered through five
operating Divisions: Distribution Solutions, Smart Power,
Smart Buildings, Installation Products and Service, as
well as, prior to its sale in July 2023, the
Power Conversion Division.
●
Motion:
designs, manufactures, and sells drives, motors, generators
and traction converters that are driving the low-carbon future
for industries, cities,
infrastructure and transportation. These products, digital technology
and related services enable industrial customers
to increase energy efficiency,
improve safety and reliability, and achieve
precise control of their processes. Building on over 140
years of cumulative experience in electric
powertrains, Motion combines domain expertise and technology
to deliver the optimum solution for a wide range of applications
in all industrial
segments. In addition, Motion, along with its partners,
has a leading global service presence. These products and services
are delivered through seven
operating Divisions: Large Motors and Generators, IEC LV
Motors, NEMA Motors, Drive Products, System Drives,
Service and Traction.
●
Process Automation:
offers a broad range of industry-specific,
integrated automation, electrification and digital solutions,
as well as lifecycle services for
the process,
hybrid and marine industries. The product portfolio includes
control technologies, industrial software, advanced
analytics, sensing and
measurement technology, and marine
propulsion systems. In addition,
Process Automation offers a comprehensive range
of services,
from repair to
advanced digital capabilities such as remote monitoring, preventive
maintenance, asset performance management, emission
monitoring and
cybersecurity.
The products, systems and services are delivered through four operating
Divisions: Energy Industries, Process Industries, Marine &
Ports and Measurement & Analytics.
●
Robotics & Discrete Automation:
delivers its products, solutions and services
through two operating Divisions. Robotics provides industrial and
collaborative robots, autonomous mobile robotics, mapping and
navigation solutions, robotic solutions, field services,
spare parts and digital services.
Machine Automation specializes in automation solutions based
on its programmable logic controllers (PLC), industrial
PCs (IPC), servo motion,
transport systems and machine vision. Both divisions offer
software across the entire life cycle, including
engineering and simulation software as well as
a comprehensive range of digital solutions.
Corporate and Other:
Corporate includes headquarter costs, the Company’s
corporate real estate activities and Corporate Treasury
while Other includes the E-
mobility operating segment, other non-core operating activities as
well as the operating activities of certain divested businesses.
The primary measure of profitability on which the operating segments
are evaluated is Operational EBITA, which
represents income from operations excluding:
●
amortization expense on intangibles arising upon acquisition (acquisition
-related amortization),
●
restructuring, related and implementation costs,
●
changes in the amount recorded for obligations related to divested
businesses occurring after the divestment date (changes
in obligations related to
divested businesses),
●
gains and losses from sale of businesses (including fair value adjustment
on assets and liabilities held for sale,
if any),
●
acquisition- and divestment-related expenses and integration costs,
●
certain other non-operational items, as well as
●
foreign exchange/commodity timing differences in income
from operations consisting of: (a) unrealized gains
and losses on derivatives (foreign
exchange, commodities, embedded derivatives), (b) realized
gains and losses on derivatives where the underlying hedged
transaction has not yet been
realized, and (c) unrealized foreign exchange movements on receivables/payables
(and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory,
compliance and legal costs, certain asset write downs/impairments
and certain other fair
value changes, as well as other items which are determined
by management on a case-by-case
basis.
The CODM primarily reviews the results of each segment on
a basis that is before the elimination of profits
made on inventory sales between segments. Segment
results below are presented before these eliminations, with a total deduction
for intersegment profits to arrive at the Company’s
consolidated Operational EBITA.
Intersegment sales and transfers are accounted for as if the sales
and transfers were to third parties, at current market prices.
The following tables present disaggregated segment revenues from
contracts with customers, Operational EBITA,
and the reconciliations of consolidated
Operational EBITA to Income from continuing
operations before taxes for the three months ended March
31, 2024 and 2023, as well as total assets at March 31,
2024, and December 31, 2023.
25
Q1 2024 FINANCIAL INFORMATION
Three months ended March 31, 2024
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,154
488
555
490
61
2,748
The Americas
1,529
630
447
140
43
2,789
of which: United States
1,186
516
285
85
38
2,110
Asia, Middle East and Africa
936
558
593
231
15
2,333
of which: China
415
256
165
157
5
998
3,619
1,676
1,595
861
119
7,870
Product type
Products
3,380
1,395
911
711
106
6,503
Services and other
239
281
684
150
13
1,367
3,619
1,676
1,595
861
119
7,870
Third-party revenues
3,619
1,676
1,595
861
119
7,870
Intersegment revenues
61
153
6
3
(223)
–
Total revenues
(1)
3,680
1,829
1,601
864
(104)
7,870
Three months ended March 31, 2023
Robotics &
Process
Discrete
Corporate
($ in millions)
Electrification
Motion
Automation
Automation
and Other
Total
Geographical markets
Europe
1,162
638
519
474
79
2,872
The Americas
1,407
632
421
136
57
2,653
of which: United States
1,043
533
264
91
53
1,984
Asia, Middle East and Africa
957
549
489
324
15
2,334
of which: China
457
281
162
248
7
1,155
3,526
1,819
1,429
934
151
7,859
Product type
Products
3,306
1,583
827
791
137
6,644
Services and other
220
236
602
143
14
1,215
3,526
1,819
1,429
934
151
7,859
Third-party revenues
3,526
1,819
1,429
934
151
7,859
Intersegment revenues
64
121
7
3
(195)
–
Total revenues
(1)
3,590
1,940
1,436
937
(44)
7,859
(1)
Due to rounding,
numbers presented
may not add
to the totals
provided.
26
Q1 2024 FINANCIAL INFORMATION
Three months ended
March 31,
($ in millions)
2024
2023
Operational EBITA:
Electrification
826
677
Motion
343
366
Process Automation
253
205
Robotics & Discrete Automation
113
140
Corporate and Other
‒
E-mobility
(54)
(28)
‒ Corporate costs, intersegment eliminations and other
(64)
(83)
Total
1,417
1,277
Acquisition-related amortization
(56)
(54)
Restructuring, related and implementation costs
(1)
(26)
(28)
Changes in obligations related to divested businesses
–
(3)
Gains and losses from sale of businesses
(2)
–
Acquisition- and divestment-related expenses and integration
costs
(19)
(19)
Foreign exchange/commodity timing differences in
income from operations:
Unrealized gains and losses on derivatives (foreign exchange,
commodities, embedded derivatives)
(77)
22
Realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized
1
(5)
Unrealized foreign exchange movements on receivables/payables (and
related assets/liabilities)
42
7
Certain other non-operational items:
Other income/expense relating to the Power Grids joint venture
8
13
Regulatory, compliance and legal costs
(3)
–
Business transformation costs
(2)
(50)
(34)
Certain other fair value changes, including asset impairments
(14)
(1)
Other non-operational items
(4)
23
Income from operations
1,217
1,198
Interest and dividend income
57
40
Interest and other finance expense
(37)
(61)
Non-operational pension (cost) credit
16
7
Income from continuing operations before taxes
1,253
1,184
(1)
Includes impairment
of certain
assets.
(2)
Amount includes
ABB Way process
transformation
costs of
$46 million
and $30 million
for the three
months ended
March 31, 2024
and 2023,
respectively.
Total assets
(1)
($ in millions)
March 31, 2024
December 31, 2023
Electrification
12,837
12,668
Motion
6,947
7,016
Process Automation
4,952
4,971
Robotics & Discrete Automation
4,982
5,047
Corporate and Other
11,394
11,238
Consolidated
41,112
40,940
(1)
Total assets are after intersegment eliminations and therefore reflect third
-party assets only.
27
Q1 2024 FINANCIAL INFORMATION
28
Q1 2024 FINANCIAL INFORMATION
—
Supplemental Reconciliations
and Definitions
The following reconciliations and definitions include measures
which ABB uses to supplement its Consolidated
Financial Information (unaudited) which is
prepared in accordance with United
States generally accepted accounting principles (U.S. GAAP). Certain
of these financial measures are, or may
be,
considered non-GAAP financial measures as defined in the
rules of the U.S. Securities and Exchange
Commission (SEC).
While ABB’s management believes that
the non-GAAP financial measures herein are useful
in evaluating ABB’s operating results,
this information should
be considered as supplemental in nature
and not as a substitute for the related financial information
prepared in accordance with U.S.
GAAP. Therefore
these measures should not be viewed in
isolation but considered together with the
Consolidated Financial Information (unaudited) prepared in accordance
with U.S. GAAP as of and for
the three months ended March 31,
2024.
Comparable growth rates
Growth rates for certain key figures may be presented and discussed
on a “comparable” basis. The comparable growth rate measures growth on
a constant
currency basis. Since we are a global company,
the comparability of our operating results reported
in U.S. dollars is affected by foreign
currency exchange rate
fluctuations. We calculate the impacts from foreign currency
fluctuations by translating the current-year periods’ reported key
figures into U.S. dollar amounts using
the exchange rates in effect for the comparable periods
in the previous year.
Comparable growth rates are also adjusted for changes
in our business portfolio. Adjustments to our business
portfolio occur due to acquisitions, divestments,
or
by exiting specific business activities or customer markets. The adjustment
for portfolio changes is calculated as follows: where
the results of any business
acquired or divested have not been consolidated and reported for the
entire duration of both the current and comparable
periods, the reported key figures of such
business are adjusted to exclude the relevant key figures of any corresponding
quarters which are not comparable when computing the comparable
growth rate.
Certain portfolio changes which do not qualify as divestments under
U.S. GAAP have been treated in a similar manner to
divestments. Changes in our portfolio
where we have exited certain business activities or customer markets
are adjusted as if the relevant business
was divested in the period when the decision to
cease business activities was taken. We do not adjust
for portfolio changes where the relevant business
has annualized revenues of less than $50 million.
The following tables provide reconciliations of reported growth rates
of certain key figures to their respective comparable growth
rate.
Comparable growth rate reconciliation by Business Area
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Electrification
6%
0%
2%
8%
3%
0%
3%
6%
Motion
2%
0%
-1%
1%
-6%
1%
-1%
-6%
Process Automation
-20%
0%
0%
-20%
11%
1%
0%
12%
Robotics & Discrete Automation
-30%
0%
0%
-30%
-8%
1%
0%
-7%
ABB Group
-5%
0%
1%
-4%
0%
1%
1%
2%
29
Q1 2024 FINANCIAL INFORMATION
Regional comparable growth rate reconciliation
Regional comparable growth rate reconciliation for ABB Group
- Quarter
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-8%
-1%
0%
-9%
-4%
-2%
1%
-5%
The Americas
-3%
0%
0%
-3%
5%
0%
2%
7%
of which: United States
0%
0%
2%
2%
6%
0%
4%
10%
Asia, Middle East and Africa
-4%
4%
0%
0%
0%
5%
0%
5%
of which: China
-23%
4%
1%
-18%
-14%
5%
0%
-9%
ABB Group
-5%
0%
1%
-4%
0%
1%
1%
2%
Regional comparable growth rate reconciliation by Business
Area - Quarter
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
3%
-1%
0%
2%
-2%
-1%
1%
-2%
The Americas
9%
-1%
3%
11%
9%
-1%
7%
15%
of which: United States
13%
0%
4%
17%
14%
0%
9%
23%
Asia, Middle East and Africa
6%
4%
1%
11%
-1%
5%
1%
5%
of which: China
-7%
4%
1%
-2%
-9%
4%
1%
-4%
Electrification
6%
0%
2%
8%
3%
0%
3%
6%
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-8%
-3%
0%
-11%
-20%
-2%
0%
-22%
The Americas
-1%
0%
-3%
-4%
0%
0%
-4%
-4%
of which: United States
-4%
1%
-3%
-6%
-3%
0%
-3%
-6%
Asia, Middle East and Africa
16%
5%
0%
21%
5%
6%
0%
11%
of which: China
-12%
4%
0%
-8%
-9%
4%
0%
-5%
Motion
2%
0%
-1%
1%
-6%
1%
-1%
-6%
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-10%
0%
0%
-10%
7%
-1%
0%
6%
The Americas
-26%
0%
0%
-26%
6%
0%
0%
6%
of which: United States
-13%
0%
0%
-13%
8%
0%
0%
8%
Asia, Middle East and Africa
-27%
2%
0%
-25%
21%
5%
0%
26%
of which: China
-37%
3%
0%
-34%
2%
5%
0%
7%
Process Automation
-20%
0%
0%
-20%
11%
1%
0%
12%
Q1 2024 compared to Q1 2023
Order growth rate
Revenue growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Region
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Europe
-31%
-1%
0%
-32%
4%
-2%
0%
2%
The Americas
-24%
-2%
0%
-26%
2%
-1%
0%
1%
of which: United States
-34%
0%
0%
-34%
-7%
0%
0%
-7%
Asia, Middle East and Africa
-32%
4%
0%
-28%
-29%
4%
0%
-25%
of which: China
-46%
3%
0%
-43%
-37%
3%
0%
-34%
Robotics & Discrete Automation
-30%
0%
0%
-30%
-8%
1%
0%
-7%
30
Q1 2024 FINANCIAL INFORMATION
Order backlog growth rate reconciliation
March 31, 2024 compared to March 31, 2023
US$
Foreign
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
Electrification
4%
2%
6%
12%
Motion
10%
1%
0%
11%
Process Automation
7%
2%
0%
9%
Robotics & Discrete Automation
-31%
2%
0%
-29%
ABB Group
2%
2%
2%
6%
Other growth rate reconciliations
Q1 2024 compared to Q1 2023
Service orders growth rate
Services revenues growth rate
US$
Foreign
US$
Foreign
(as
exchange
Portfolio
(as
exchange
Portfolio
Business Area
reported)
impact
changes
Comparable
reported)
impact
changes
Comparable
Electrification
17%
1%
0%
18%
9%
0%
0%
9%
Motion
4%
1%
0%
5%
19%
4%
0%
23%
Process Automation
3%
0%
0%
3%
14%
0%
0%
14%
Robotics & Discrete Automation
1%
-1%
0%
0%
4%
1%
0%
5%
ABB Group
6%
0%
0%
6%
12%
2%
0%
14%
31
Q1 2024 FINANCIAL INFORMATION
Operational EBITA as
% of operational revenues (Operational EBITA margin)
Definition
Operational EBITA margin
Operational EBITA margin is Operational
EBITA as a percentage of
operational revenues.
Operational EBITA
Operational earnings before interest, taxes and acquisition-related
amortization (Operational EBITA)
represents Income from operations excluding:
●
acquisition-related amortization (as defined below),
●
restructuring, related and implementation costs,
●
changes in the amount recorded for obligations related to divested
businesses occurring after the divestment date (changes
in obligations related to
divested businesses),
●
gains and losses from sale of businesses (including fair value adjustment
on assets and liabilities held for sale,
if any),
●
acquisition- and divestment-related expenses and integration costs,
●
certain other non-operational items, as well as
●
foreign exchange/commodity timing differences in income
from operations consisting of: (a) unrealized gains
and losses on derivatives (foreign
exchange, commodities, embedded derivatives), (b) realized
gains and losses on derivatives where the underlying hedged
transaction has not yet been
realized, and (c) unrealized foreign exchange movements on receivables/payables
(and related assets/liabilities).
Certain other non-operational items generally includes certain regulatory,
compliance and legal costs, certain asset write downs/
impairments and certain other fair
value changes, as well as other items which are determined
by management on a case-by-case
basis.
Operational EBITA is our measure of
segment profit but is also used by management to evaluate
the profitability of the Company
as a whole.
Acquisition-related amortization
Amortization expense on intangibles arising upon acquisitions.
Restructuring, related and implementation costs
Restructuring, related and implementation costs consists
of restructuring and other related expenses, as well as internal and external
costs relating to the
implementation of group-wide restructuring programs.
Operational revenues
The Company presents operational revenues solely for the purpose
of allowing the computation of Operational EBITA
margin. Operational revenues are Total
revenues adjusted for foreign exchange/commodity timing differences
in total revenues of: (i) unrealized gains and losses
on derivatives, (ii) realized gains and
losses on derivatives where the underlying hedged transaction
has not yet been realized, and (iii) unrealized foreign
exchange movements on receivables (and
related assets). Operational revenues are not intended to be an
alternative measure to Total
revenues, which represent our revenues measured
in accordance
with U.S. GAAP.
Reconciliation
The following tables provide reconciliations of consolidated Operational
EBITA to Net Income and Operational
EBITA margin by business.
Reconciliation of consolidated Operational EBITA
to Net Income
Three months ended March 31,
($ in millions)
2024
2023
Operational EBITA
1,417
1,277
Acquisition-related amortization
(56)
(54)
Restructuring, related and implementation costs
(1)
(26)
(28)
Changes in obligations related to divested businesses
–
(3)
Gains and losses from sale of businesses
(2)
–
Acquisition- and divestment-related expenses and integration
costs
(19)
(19)
Certain other non-operational items
(63)
1
Foreign exchange/commodity timing differences in
income from operations
(34)
24
Income from operations
1,217
1,198
Interest and dividend income
57
40
Interest and other finance expense
(37)
(61)
Non-operational pension (cost) credit
16
7
Income from continuing operations before taxes
1,253
1,184
Income tax expense
(339)
(119)
Income from continuing operations, net of
tax
914
1,065
Loss from discontinued operations, net of tax
(1)
(5)
Net income
913
1,060
(1)
Includes impairment of certain assets.
32
Q1 2024 FINANCIAL INFORMATION
Reconciliation of Operational EBITA
margin by business
Three months ended March 31, 2024
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,680
1,829
1,601
864
(104)
7,870
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
47
46
44
6
5
148
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(3)
–
2
–
–
(1)
Unrealized foreign exchange movements
on receivables (and related assets)
(31)
(17)
(21)
(11)
(2)
(82)
Operational revenues
3,693
1,858
1,626
859
(101)
7,935
Income (loss) from operations
769
301
234
91
(178)
1,217
Acquisition-related amortization
23
9
1
21
2
56
Restructuring, related and
implementation costs
(1)
10
8
7
–
1
26
Gains and losses from sale of businesses
–
–
–
–
2
2
Acquisition- and divestment-related expenses
and integration costs
10
–
–
2
7
19
Certain other non-operational items
3
3
–
1
56
63
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
22
33
22
4
(4)
77
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
–
1
–
(1)
(1)
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(10)
(11)
(12)
(6)
(3)
(42)
Operational EBITA
826
343
253
113
(118)
1,417
Operational EBITA margin (%)
22.4%
18.5%
15.6%
13.2%
n.a.
17.9%
(1)
Includes impairment
of certain
assets.
In the three months ended March 31, 2024, Certain other non
-operational items in the table above includes the following:
Three months ended March 31, 2024
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
(8)
(8)
Regulatory, compliance and legal costs
–
–
–
–
3
3
Business transformation costs
(1)
2
1
–
1
46
50
Certain other fair values changes,
including asset impairments
1
2
–
–
11
14
Other non-operational items
–
–
–
–
4
4
Total
3
3
–
1
56
63
(1)
Amounts include
ABB Way process
transformation
costs of
$46 million
for the three
months ended
March 31, 2024.
33
Q1 2024 FINANCIAL INFORMATION
Three months ended March 31, 2023
Corporate and
Robotics &
Other and
Process
Discrete
Intersegment
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
elimination
Consolidated
Total revenues
3,590
1,940
1,436
937
(44)
7,859
Foreign exchange/commodity timing
differences in total revenues:
Unrealized gains and losses
on derivatives
(14)
4
13
2
(4)
1
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
(1)
–
1
–
2
2
Unrealized foreign exchange movements
on receivables (and related assets)
(7)
(4)
(4)
(1)
(3)
(19)
Operational revenues
3,568
1,940
1,446
938
(49)
7,843
Income (loss) from operations
655
353
200
115
(125)
1,198
Acquisition-related amortization
22
8
1
20
3
54
Restructuring, related and
implementation costs
(1)
8
1
2
–
17
28
Changes in obligations related to
divested businesses
–
–
–
–
3
3
Acquisition- and divestment-related expenses
and integration costs
7
4
3
2
3
19
Certain other non-operational items
3
2
–
2
(8)
(1)
Foreign exchange/commodity timing
differences in income from operations:
Unrealized gains and losses on derivatives
(foreign exchange, commodities,
embedded derivatives)
(15)
–
(2)
2
(7)
(22)
Realized gains and losses on derivatives
where the underlying hedged
transaction has not yet been realized
–
–
2
–
3
5
Unrealized foreign exchange movements
on receivables/payables
(and related assets/liabilities)
(3)
(2)
(1)
(1)
–
(7)
Operational EBITA
677
366
205
140
(111)
1,277
Operational EBITA margin (%)
19.0%
18.9%
14.2%
14.9%
n.a.
16.3%
(1)
Includes impairment
of certain
assets.
In the three months ended March 31, 2023, Certain other non
-operational items in the table above includes the following:
Three months ended March 31, 2023
Robotics &
Process
Discrete
Corporate
($ in millions, unless otherwise indicated)
Electrification
Motion
Automation
Automation
and Other
Consolidated
Certain other non-operational items:
Other income/expense relating to the
Power Grids joint venture
–
–
–
–
(13)
(13)
Certain other fair values changes,
including asset impairments
1
1
–
1
(2)
1
Business transformation costs
(1)
4
–
–
1
29
34
Other non-operational items
(2)
1
–
–
(22)
(23)
Total
3
2
–
2
(8)
(1)
(1)
Amounts include
ABB Way process
transformation
costs of
$30 million
for the three
months ended
March 31, 2023.
34
Q1 2024 FINANCIAL INFORMATION
Net debt
Definition
Net debt
Net debt is defined as Total
debt less Cash and marketable securities.
Total debt
Total debt is the sum
of Short-term debt and current maturities of long-term
debt, and Long-term debt.
Cash and marketable securities
Cash and marketable securities is the sum of Cash and equivalents,
Restricted cash and Marketable securities and short-term
investments.
Reconciliation
($ in millions)
March 31, 2024
December 31, 2023
Short-term debt and current maturities of long-term debt
1,957
2,607
Long-term debt
6,346
5,221
Total debt
8,303
7,828
Cash and equivalents
4,102
3,891
Restricted cash
18
18
Marketable securities and short-term investments
2,097
1,928
Cash and marketable securities
6,217
5,837
Net debt
2,086
1,991
Net debt/Equity ratio
Definition
Net debt/Equity ratio
Net debt/Equity ratio is defined as Net debt divided by Equity.
Equity
Equity is defined as Total
stockholders’ equity.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2024
December 31, 2023
Total stockholders'
equity
13,382
14,057
Net debt (as defined above)
2,086
1,991
Net debt / Equity ratio
0.16
0.14
Net debt/EBITDA ratio
Definition
Net debt/EBITDA ratio
Net debt/EBITDA ratio is defined as Net debt divided by
EBITDA.
EBITDA
EBITDA is defined as Income from operations for the trailing
twelve months preceding the balance sheet date before depreciation
and amortization for the same
trailing twelve-month period.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2024
March 31, 2023
Income from operations for the three months ended:
June 30, 2023 / 2022
1,298
587
September 30, 2023 / 2022
1,259
708
December 31, 2023 / 2022
1,116
1,185
March 31, 2024 / 2023
1,217
1,198
Depreciation and Amortization for the three months
ended:
June 30, 2023 / 2022
196
207
September 30, 2023 / 2022
194
198
December 31, 2023 / 2022
199
199
March 31, 2024 / 2023
201
191
EBITDA
5,680
4,473
Net debt (as defined above)
2,086
3,826
Net debt / EBITDA
0.4
0.9
35
Q1 2024 FINANCIAL INFORMATION
Net working capital as a percentage of revenues
Definition
Net working capital as a percentage of revenues
Net working capital as a percentage of revenues is calculated
as Net working capital divided by Adjusted revenues for the
trailing twelve months.
Net working capital
Net working capital is the sum of (i) receivables, net, (ii) contract
assets, (iii) inventories, net, and (iv) prepaid expenses; less
(v) accounts payable, trade, (vi)
contract liabilities and (vii) other current liabilities (excluding primarily:
(a) income taxes payable, (b) current derivative
liabilities, (c) pension and other employee
benefits, (d) payables under the share buyback program and (e)
liabilities related to certain other restructuring-related activities);
and including the amounts related
to these accounts which have been presented as either assets
or liabilities held for sale.
Adjusted revenues for the trailing twelve months
Adjusted revenues for the trailing twelve months includes total revenues
recorded by ABB in the twelve months preceding the relevant
balance sheet date adjusted
to eliminate revenues of divested businesses and the estimated
impact of annualizing revenues of certain acquisitions
which were completed in the same trailing
twelve-month period.
Reconciliation
($ in millions, unless otherwise indicated)
March 31, 2024
March 31, 2023
Net working capital:
Receivables, net
7,385
7,174
Contract assets
1,135
1,009
Inventories, net
6,170
6,269
Prepaid expenses
314
304
Accounts payable, trade
(5,018)
(4,945)
Contract liabilities
(2,866)
(2,339)
Other current liabilities
(1)
(3,532)
(3,444)
Net working capital in assets and liabilities held for sale
–
136
Net working capital
3,588
4,164
Total revenues for the three months
ended:
June 30, 2023 / 2022
8,163
7,251
September 30, 2023 / 2022
7,968
7,406
December 31, 2023 / 2022
8,245
7,824
March 31, 2024 / 2023
7,870
7,859
Adjustment to annualize/eliminate revenues of certain acquisitions/divestments
(106)
(340)
Adjusted revenues for the trailing twelve months
32,140
30,000
Net working capital as a percentage of revenues (%)
11.2%
13.9%
(1)
Amounts exclude
$1,063 million
and $668 million
at March 31,
2024 and 2023,
respectively,
related primarily
to (a) income
taxes payable,
(b) current
derivative liabilities,
(c) pension
and other
employee benefits,
(d) payables
under the
share buyback
program
and (e) liabilities
related to certain
restructuring-related
activities.
36
Q1 2024 FINANCIAL INFORMATION
Free cash flow
Definition
Free cash flow
Free cash flow is calculated as net cash provided by operating activities
adjusted for: (i) purchases of property,
plant and equipment and intangible assets,
and (ii)
proceeds from sales of property,
plant and equipment.
Reconciliation
Three months ended March 31,
($ in millions, unless otherwise indicated)
2024
2023
Net cash provided by operating activities
726
282
Adjusted for the effects of operations:
Purchases of property, plant and
equipment and intangible assets
(181)
(151)
Proceeds from sale of property, plant and
equipment
6
31
Free cash flow
551
162
Free cash flow conversion to net income
Definition
Free cash flow conversion to net income
Free cash flow conversion to net income is calculated as free cash
flow divided by Adjusted net income attributable to
ABB.
Adjusted net income attributable to ABB
Adjusted net income attributable to ABB is calculated as net income
attributable to ABB adjusted for gains or
losses arising on sale of certain businesses and
certain other significant items within net income which are also
excluded / adjusted for when calculating operating
cashflows.
Free cash flow for the trailing twelve months
Free cash flow for the trailing twelve months includes free cash flow
recorded by ABB in the twelve months preceding the
relevant balance sheet date.
Net income for the trailing twelve months
Net income for the trailing twelve months includes net income
recorded by ABB (as adjusted) in the twelve months preceding
the relevant balance sheet date.
Reconciliation
Trailing twelve months to
($ in millions, unless otherwise indicated)
March 31, 2024
December 31, 2023
Net cash provided by operating activities
4,734
4,290
Adjusted for the effects of operations:
Purchases of property, plant and
equipment and intangible assets
(800)
(770)
Proceeds from sale of property, plant and
equipment
122
147
Free cash flow
4,056
3,667
Adjusted net income attributable to ABB
(1)
3,555
3,686
Free cash flow conversion to net income
114%
99%
(1)
Adjusted net income attributable to ABB for the year ended December 31, 2023, is adjusted to exclude the gain on sale of the Power Conversion Division of $59 million.
Reconciliation of the trailing twelve months to
March 31, 2024
($ in millions)
Net cash provided by
operating activities
Purchases of
property, plant and
equipment and
intangible assets
Proceeds
from sale of property,
plant and equipment
Adjusted net income
attributable to ABB
(1)
Q2 2023
760
(180)
26
906
Q3 2023
1,351
(175)
10
829
Q4 2023
1,897
(264)
80
915
Q1 2024
726
(181)
6
905
Total for the trailing twelve
months to March 31, 2024
4,734
(800)
122
3,555
(1)
Adjusted net income
attributable
to ABB for
Q3 2023, is adjusted
to exclude the
gain on sale
of the Power
Conversion
Division of
$53 million.
In Q4 2023,
an additional
$6 million
was adjusted
for the gain
on sale of
the Power
Conversion
Division.
37
Q1 2024 FINANCIAL INFORMATION
Net finance income (expense)
Definition
Net finance income (expense)
is calculated as Interest and dividend income less
Interest and other finance expense.
Reconciliation
Three months ended March 31,
($ in millions)
2024
2023
Interest and dividend income
57
40
Interest and other finance expense
(37)
(61)
Net finance income (expense)
20
(21)
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by Total
revenues.
Reconciliation
Three months ended March 31,
2024
2023
($ in millions, except Book-to-bill presented as a ratio)
Orders
Revenues
Book-to-bill
Orders
Revenues
Book-to-bill
Electrification
4,392
3,680
1.19
4,141
3,590
1.15
Motion
2,303
1,829
1.26
2,262
1,940
1.17
Process Automation
1,697
1,601
1.06
2,113
1,436
1.47
Robotics & Discrete Automation
701
864
0.81
1,001
937
1.07
Corporate and Other
(incl. intersegment eliminations)
(119)
(104)
n.a.
(67)
(44)
n.a.
ABB Group
8,974
7,870
1.14
9,450
7,859
1.20
38
Q1 2024 FINANCIAL INFORMATION
Free cash flow for past periods
Effective January 1, 2024, the Company changed the
presentation of discontinued operations in its statement of
cash flows to an alternate allowable policy.
As a
result, the total cash flows for operating, investing and financing
activities within discontinued operations are no longer shown
separately but instead all cash flows
in discontinued operations are presented within each line item
as appropriate in the statement of cash flows. As this
presentation change represents a change
in
accounting policy, all prior periods
presented have been reclassified to conform to the current period
presentation.
The table below presents the reconciliation of Free cash flow as
defined on page 36 for 2023 and 2022 by quarter,
restated to reflect this change in presentation.
Reconciliation:
($ in millions)
Net cash provided by
(used in) operating
activities
Purchases of
property, plant and
equipment and
intangible assets
Proceeds
from sale of property,
plant and equipment
Free cash flow
For the three months ended:
March 31, 2022
(573)
(187)
35
(725)
June 30, 2022
382
(151)
31
262
September 30, 2022
791
(165)
19
645
December 31, 2022
687
(259)
42
470
March 31, 2023
282
(151)
31
162
June 30, 2023
760
(180)
26
606
September 30, 2023
1,351
(175)
10
1,186
December 31, 2023
1,897
(264)
80
1,713
39
Q1 2024 FINANCIAL INFORMATION
—
ABB Ltd
Corporate Communications
P.O. Box
8131
8050
Zurich
Switzerland
Tel:
+41 (0)43
317 71
11
www.abb.com
January 1 — March 31, 2024
ABB Ltd announces that the following
members of the Executive Committee
or Board of Directors of ABB
have purchased,
sold or been granted ABB’s registered shares, call options
and warrant appreciation rights (“WARs”), in the following amounts:
Name
Date
Type of Instrument
Received*
Purchased
Sold
Price / Instrument
Timo Ihamuotila
February 05, 2024
Share
27,000
CHF
37.37
Key:
* Received instruments were delivered
as part of the ABB Ltd Director’s or
Executive Committee Member’s
compensation or as compensation
for foregone
benefits
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant
has duly caused this report to be signed
on
its behalf by the undersigned, thereunto
duly authorized.
ABB LTD
Date: April 18, 2024.
By:
/s/ Ann-Sofie Nordh
Name:
Ann-Sofie Nordh
Title:
Group Senior Vice President and
Head of Investor Relations
Date: April 18, 2024.
By:
/s/ Natalia Shehadeh
Name:
Natalia Shehadeh
Title:
Chief Integrity Officer, Interim General
Counsel and Corporate Secretary