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Form 6-K ABB LTD For: Jul 21

July 21, 2022 9:52 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE
 
ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2022
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s name into English)
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant
 
files or will file annual reports
 
under cover of Form 20-F or Form
 
40-F.
 
Form 20-F
 
Form 40-F
Indicate by check mark if the registrant
 
is submitting the Form 6-K in paper
 
as permitted by Regulation S-T Rule
 
101(b)(1):
Note:
 
Regulation S-T Rule 101(b)(1) only
 
permits the submission in paper of
 
a Form 6-K if submitted solely to provide
 
an
attached annual report to security holders.
Indication by check mark if the registrant
 
is submitting the Form 6-K in paper
 
as permitted by Regulation S-T Rule
 
101(b)(7):
Note:
 
Regulation S-T Rule 101(b)(7) only
 
permits the submission in paper of
 
a Form 6-K if submitted to furnish
 
a report or
other document that the registrant foreign
 
private issuer must furnish
 
and make public under the laws of the
 
jurisdiction in
which the registrant is incorporated, domiciled
 
or legally organized (the registrant’s “home country”),
 
or under the rules of the
home country exchange on which the registrant’s securities
 
are traded, as long as the report or other
 
document is not a press
release, is not required to be and has
 
not been distributed to the registrant’s security holders,
 
and, if discussing a material
 
event,
has already been the subject of a Form
 
6-K submission or other Commission
 
filing on EDGAR.
Indicate by check mark whether the registrant
 
by furnishing the information
 
contained in this Form is also thereby
 
furnishing
the information to the Commission
 
pursuant to Rule 12g3-2(b) under
 
the Securities Exchange Act of 1934.
 
Yes
 
No
If “Yes” is marked, indicate below the file number assigned to the
 
registrant in connection with Rule 12g3-2(b):
 
82-
 
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated
 
July 21, 2022 titled “Q2
 
2022 results”.
2.
Q2 2022 Financial Information.
3.
Announcements regarding transactions
 
in ABB Ltd’s Securities made by the directors or the members
 
of the
Executive Committee.
The information provided by Item 2
 
above is hereby incorporated by reference
 
into the Registration Statements on
 
Form F-3 of
ABB Ltd and ABB Finance (USA) Inc. (File
 
Nos. 333-223907 and 333-223907-01)
 
and registration statements on Form
 
S-8
(File Nos. 333-190180, 333-181583,
 
333-179472, 333-171971 and
 
333-129271) each of which was previously
 
filed with the
Securities and Exchange Commission.
2
abb2022q2fininfop3i6.jpg abb2022q2fininfop3i2.jpg abb2022q2fininfop3i0.jpg abb2022q2fininfop3i8.jpg abb2022q2fininfop3i7.jpg abb2022q2fininfop3i5.jpg abb2022q2fininfop3i3.jpg abb2022q2fininfop3i1.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
“I am pleased with our performance and thatwe
 
have taken yet another step toward our
long-term margin target. I am also delighted that we are moving ahead with the spin-off of
Accelleron and its planned listing in Switzerland.”
Björn Rosengren
, CEO
ZURICH, SWITZERLAND, JULY 21, 2022
Q2 2022 results
Strong demand and good
 
operational performance
 
 
Orders $8.8 billion,
 
+10%; comparable
1
 
+20%
 
 
Revenues $7.3 billion,
 
-3%; comparable +6%
 
 
Income from operations
 
$587 million; margin 8.1%
 
 
Operational EBITA
1
 
$1,136 million;
 
margin
1
 
15.5%
 
Basic EPS $0.20; -47%
2
 
Cash flow from operating
 
activities $382 million
Ad hoc Announcement pursuant to Art.
 
53 Listing Rules of SIX Swiss Exchange
Q2 2022
First six months
Press Release
KEY FIGURES
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
1
H1 2022
H1 2021
US$
Comparable
1
Orders
8,807
7,989
10%
20%
18,180
15,745
15%
24%
Revenues
7,251
7,449
-3%
6%
14,216
14,350
-1%
7%
Gross Profit
2,290
2,508
-9%
4,571
4,776
-4%
as % of revenues
31.6%
33.7%
-2.1 pts
32.2%
33.3%
-1.1 pts
Income from operations
587
1,094
-46%
1,444
1,891
-24%
Operational EBITA
1
1,136
1,113
2%
9%
 
3
2,133
2,072
3%
9%
 
3
as % of operational revenues
1
15.5%
15.0%
+0.5 pts
14.9%
14.4%
+0.5 pts
Income from continuing operations, net of tax
406
789
-49%
1,049
1,340
-22%
Net income attributable to ABB
379
752
-50%
983
1,254
-22%
Basic earnings per share ($)
 
0.20
0.37
-47%
2
0.51
0.62
-18%
2
Cash flow from operating activities
4
382
663
-42%
(191)
1,206
n.a.
Cash flow from operating activities in continuing
operations
385
663
-42%
(179)
1,186
-115%
1
For a reconciliation of non-GAAP measures, see “supplemental
 
reconciliations and definitions” in the attached
 
Q2 2022 Financial Information.
2
EPS growth rates are computed using unrounded amounts.
 
3
Constant currency (not adjusted for portfolio
 
changes).
4
Amount represents total for both continuing and
 
discontinued operations.
abb2022q2fininfop4i0.jpg
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
2
Overall, I am pleased
 
with how the teams delivered
 
strong order
growth as well as a
 
margin in line with our long-term
 
target. This
was achieved despite
 
the pressure from a tight
 
supply chain,
Covid-enforced lockdowns
 
in China and the inflationary
environment. Cash
 
flow came in higher than
 
in the first quarter,
and I expect a good
 
momentum in the second
 
half of the year.
 
We achieved a
 
strong order growth of 10
 
%
 
(20%
 
comparable)
and we saw a positive
 
development in all
 
major customer
segments. While changes
 
in exchange rates weighed
 
on the total,
comparable orders
 
increased at a double-digit
 
rate in all regions.
With all business areas
 
in double-digit growth,
 
order intake
amounted to $8,807
 
million and a record-high order
 
backlog of
$19.5 billion.
In total, revenues declined
 
by 3% (up 6% comparable)
 
,
 
year-on-
year.
 
Negative impact from change
 
s
 
in exchange rates and
portfolio changes outweighed
 
the positives of strong price
execution and increased
 
volumes, with the latter
 
somewhat held
back by the strained supply
 
chain. Comparable revenues
increased in all business
 
areas except for Robotics
 
& Discrete
Automation which together
 
with the Distribution Solutions
 
division
in Electrification, are
 
where customer deliveries
 
were materially
slowed by component
 
shortages. Overall, the supply
 
chain
constraints slightly
 
eased compared with the
 
previous quarter,
however we saw temporary
 
pressure on customer deliveries
 
in
China where lockdowns
 
slowed down logistics somewhat
 
more
than expected.
 
We anticipate further easing
 
of component supply
in the coming quarters.
I am pleased that we
 
managed to improve
 
the Operational
EBITA margin
 
to 15.5%. Notably,
 
our teams successfully
 
offset
inflationary effects
 
such as input costs and
 
freight through
strong pricing execution
 
and higher volumes.
 
Process
Automation noted a
 
sharp 180 basis point improvement
 
to its
margin, year-on-year
 
.
 
I am also pleased with the
 
performance
levels
 
in Electrification and Motion,
 
although margins declined
from last year’s high levels
 
.
 
Robotics & Discrete Automation
 
is
the area with operational
 
underperformance,
 
triggered by
customer deliveries
 
materially hampered by
 
lockdowns in China
and semiconductor
 
shortages. Additionally,
 
results were
supported by lower
 
than anticipated costs in
 
Corporate and
Other including a positive
 
margin impact of approximately
 
60
basis points related
 
to the exit of a legacy project
 
and a real
estate sale which came
 
through sooner than expected.
Looking at Income
 
from operations,
 
it included items impacting
comparability of
 
approximately $250 million.
These include the earlier
 
mentioned
 
charge of $195 million
triggered by us exiting
 
the largest legacy project
 
exposure in non-
core operations,
 
namely the full-train retrofit
 
business.
 
It also
includes the financial
 
impact of our decision
 
to exit the Russian
market, triggered by
 
the ongoing war in Ukraine
 
and impact of
related international
 
sanctions.
 
We have started the
 
process of
winding down the remaining
 
activities in Russia.
 
This triggered a
charge of $57 million
 
,
 
of which $23 million will
 
impact cash flow in
the third quarter.
 
The balance sheet
 
is robust,
 
although year-on-year the cash
 
flow
from operating activities
 
in continuing operations declined
 
to $385
million,
 
mainly on a higher build-up
 
of net working capital. That
said, we have continued
 
to execute on our share buyback
program, and just after
 
the close of the second
 
quarter we
successfully delivered
 
on our promise to return
 
to shareholders
the remaining $1.2
 
billion - out of the total of
 
$7.8 billion - from the
Power Grids proceeds.
 
We will now continue with
 
the execution of
our ongoing buyback
 
program of up to $3 billion.
On the back of the
 
volatile financial markets,
 
we decided to
 
postpone the planned
 
IPO of our E-mobility
 
business. We will
monitor the market
 
conditions and are fully
 
committed to proceed
with a listing on the
 
SIX Swiss Exchange as and
 
when market
conditions are constructive.
 
Meanwhile, building on
 
the earlier
seed stage investment
 
three years ago, the E-mobility
 
team has
agreed to acquire a
 
controlling interest in
 
Numocity,
 
a leading
digital platform for EV charging
 
in India. This deal
 
allows
 
E-
mobility to leverage
 
on the regional opportunity
 
from increasing
demand for charging
 
solutions for two and
 
three-wheelers, cars
and light commercial
 
vehicles. After the close
 
of the second
quarter,
 
we decided to spin off
 
the Accelleron business
(Turbocharging)
 
with a planned listing
 
on SIX Swiss Exchange
 
on
October 3, subject
 
to approval by the Extraordinary
 
General
Meeting. I am pleased
 
about this as it allows for
 
shareholders to
realize the full value
 
of Accelleron while allowing
 
ABB to focus on
its core areas of electrification
 
and automation.
 
Björn Rosengren
CEO
In the
third quarter of 2022
, we anticipate double-digit
comparable revenue
 
growth and the Operational
 
EBITA margin
to sequentially improve,
 
excluding the 60 basis
 
points positive
impact from special
 
items in the second quarter.
 
In full-year 2022
, we expect a steady margin
 
improvement
towards the 2023 target
 
of at least 15%, supported
 
by
increased efficiency
 
as we fully incorporate the
 
decentralized
operating model and performance
 
culture in all our divisions.
Furthermore, we expect
 
support from a positive
 
market
momentum and our
 
strong order backlog.
 
CEO summary
Outlook
abb2022q2fininfop5i0.gif abb2022q2fininfop5i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
3
Demand was strong across
 
all customer segments and
 
all
business areas reported
 
double-digit order growth
 
in the second
quarter,
 
supported by virtually all divisions.
 
Demand remained
strong throughout the
 
period.
 
Service-related orders
 
increased
by 4% (12%
 
comparable). In total,
 
high demand more than
offset the adverse
 
impact from changes
 
in exchange rates and
order intake improved
 
by 10% (20% comparable)
 
to $8,807
million.
The positive development
 
was very strong in the segments
 
of
machine building, food
 
& beverage and in general
 
industries as
well as in the automotive
 
segment due to accelerating
investments in the
 
EV segment.
In transport and infrastructure,
 
the order development was
strong in the renewables
 
and e-mobility business
 
es. In the
buildings segment there
 
was a positive development
 
in both the
non-residential and residential
 
areas, although some softness
 
in
residential building
 
in China was noted. In the
 
marine segment
a positive development
 
was noted for cruising as
 
well as
general marine & port
 
demand.
 
The process-related business
 
improved across the customer
segments.
Customer activity was
 
strong across the regions
 
but changes
 
in
exchange rates weighed
 
on reported order intake.
 
Europe was
stable at 0% (15%
 
comparable). The Americas
 
improved by
23%
 
(33% comparable), supported
 
by a stellar 21% (32%
comparable) in the
 
United States. In Asia, Middle
 
East and
Africa orders increased
 
by 9% (15% comparable),
 
including an
increase in China of
 
7% (10%
 
comparable).
Revenues were adversely
 
impacted by changes
 
in exchange
rates which more than
 
offset benefits from
 
a strong price
development and slightly
 
higher volumes. While
 
component
constraints eased somewhat
 
,
 
mainly semiconductors,
 
they still
impacted customer
 
deliveries, above all noticeable
 
in Robotics
& Discrete Automation
 
and in the Distribution Solutions
 
division
in Electrification.
 
An added challenge to customer
 
deliveries
stemmed from the
 
Covid-related lockdowns
 
in China which in
addition to forcing Robotics
 
to close its Shanghai production
 
for
five weeks followed
 
by a gradual re-opening, also
 
triggered a
general slow-down
 
of local logistics for part
 
of the quarter.
 
In
total, the revenue decline
 
in Robotics & Discrete
 
Automation
was however more
 
than offset by strong comparable
improvements in the other
 
business areas. In total,
 
ABB Group
revenues declined
 
by -3% (up 6% comparable)
 
and amounted
to $7,251 million.
Orders and revenues
 
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q2 2022
Q2 2021
US$
Comparable
Europe
2,958
2,954
0%
15%
The Americas
3,050
2,473
23%
33%
Asia, Middle East
and Africa
2,799
2,562
9%
15%
ABB Group
8,807
7,989
10%
20%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
20%
6%
FX
-7%
-7%
Portfolio changes
-3%
-2%
Total
10%
-3%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q2 2022
Q2 2021
US$
Comparable
Europe
2,508
2,697
-7%
7%
The Americas
2,397
2,284
5%
14%
Asia, Middle East
and Africa
2,346
2,468
-5%
0%
ABB Group
7,251
7,449
-3%
6%
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ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
4
Gross profit
Gross profit decreased
 
by 9% to $2,290 million,
 
primarily due to
changes
 
in exchange rates. Gross
 
margin was 31.6%, a decline
 
of
210 basis points
 
from last year’s very high level
 
driven primarily by
mark to market losses
 
on commodity derivatives
 
as well as under-
absorption of fixed
 
costs in Robotics & Discrete
 
Automation.
 
Income from operations
Income from operations
 
amounted to $587 million,
 
declining by
$507 million,
 
or 46%. The decline was
 
primarily related to
 
charges
totaling approximately
 
$250 million triggered by
 
the exit of a legacy
project in non-core
 
operations and the decision
 
to exit Russian
operations.
 
Additional adverse impact
 
related to changes
 
in
exchange rates,
 
commodity timing differences
 
and significantly less
support from fair value
 
adjustments of equity investments
 
.
 
Operational EBITA
Operational EBITA
 
of $1,136
 
million was 2% higher (9% constant
currency) year-on-year,
 
as contribution from operational
performance
 
offset the adverse
 
impact from mainly changes
 
in
exchange rates and
 
portfolio changes.
 
The Operational
 
EBITA margin increased
 
by 50 basis points
 
to
15.5% despite year-on-year
 
headwind from less support
 
from raw
material hedges,
 
mainly in Electrification. A positive
 
contribution
stemmed from operations
 
successfully offsetting
 
inflationary effects
such as input costs
 
and freight with impacts
 
from strong pricing
execution and slightly
 
higher volumes. Additional
 
support was due
to the lower than anticipated
 
costs in Corporate
 
and Other which
was up by $79 million
 
to -$13
 
million including a positive
 
margin
impact of approximately
 
60 basis points related
 
to the exit of a
legacy project and
 
a real estate sale. Operational
 
EBITA margin for
the second quarter
 
last year was 15.0%,
 
including 20 basis points
from the now divested
 
Mechanical Power Transmission
 
business.
Net finance expenses
Net finance expenses
 
remained stable at $20
 
million compared with
$21 million a year ago,
 
primarily reflecting lower
 
interest charges on
borrowings and lower
 
interest on tax risks offset
 
by certain fair
value adjustments
 
on investments.
 
Income tax
Income tax expense
 
was $193
 
million with an effective
 
tax rate of
32.2%, including a 7.
 
2% adverse tax impact
 
from the non-
deductibility of certain
 
non-operational charges.
 
Net income and earnings
 
per share
Net income attributable
 
to ABB was $379 million and
 
decreased by
50%
 
from last year,
 
with the decline primarily
 
related to the lower
Income from operations
 
.
 
Basic earnings per
 
share was $0.20, and declined
 
from $0.37,
 
year-
on-year, adversely
 
impacted by charges
 
mainly related to the exit of
the legacy full-train
 
retrofit project and the decision
 
to wind-down
operations in Russia,
 
but also by commodity timing
 
differences.
Earnings
abb2022q2fininfop7i2.gif abb2022q2fininfop7i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
5
Net working capital
Net working capital
 
amounted to $3,663 million,
 
increasing
both year-on-year from
 
$3,251 million and sequentially
 
from
$3,461 million.
 
The sequential increase
 
was driven primarily
by inventories to support
 
future deliveries to
 
help meet the
strong market dem
 
and, as well as receivables
 
.
 
Net working
capital as a percentage
 
of revenues
1
 
was 12.8%.
Capital expenditures
Purchases of property,
 
plant and equipment and
 
intangible
assets amounted to
 
$151 million.
 
Net debt
Net debt
1
 
amounted to $4,235 million
 
at the end of the
quarter,
 
and increased from $2,259
 
million, year-on-year.
Sequentially,
 
it increased from $2,772
 
million,
 
mainly due to
paid dividend and share
 
buybacks.
Cash flows
Cash flow from operating
 
activities in continuing operations
was $385
 
million and declined year
 
-on-year from
$663 million. The year
 
-on-year decline was
 
driven by a
higher build-up of trade
 
net working capital, mainly
 
related
to inventories to
 
support future deliveries and
 
payables.
ABB expects a solid cash
 
flow delivery in 2022.
 
Share buyback program
ABB launched a new
 
share buyback program
 
of up to $3 billion
on April 1. As part of
 
this program, ABB completed
 
just after the
close of the second
 
quarter, the
 
return to its shareholders
 
of the
remaining $1.2 billion
 
out of the $7.8 billion
 
of cash proceeds
from the Power Grids
 
divestment. During the
 
second quarter,
33,852,000 shares
 
were repurchased on
 
the second trading line
for the amount of approximately
 
$1,016 million. The total
number of ABB Ltd’s
 
issued shares is 1,964,745,075
 
,
 
after the
cancellation of 88,403,189
 
shares in June, as approved
 
at
ABB's 2022 AGM.
($ millions,
 
unless otherwise indicated)
Jun. 30
2022
Jun. 30
2021
Dec. 31
2021
Short term debt and current
maturities of long-term debt
2,830
 
2,117
1,384
 
Long-term debt
5,086
 
4,375
4,177
 
Total debt
7,916
 
6,492
5,561
 
Cash & equivalents
2,412
 
2,860
4,159
 
Restricted cash - current
23
 
71
30
 
Marketable securities and
 
short-term investments
945
 
1,002
1,170
 
Restricted cash - non-current
301
 
300
300
 
Cash and marketable securities
3,681
 
4,233
5,659
 
Net debt (cash)*
4,235
 
2,259
(98)
Net debt (cash)* to EBITDA ratio
0.7
 
0.7
(0.01)
Net debt (cash)* to Equity ratio
0.34
 
0.16
(0.01)
*
At Jun. 30, 2022, Jun. 30, 2021 and Dec. 31, 2021,
 
net debt(cash) excludes net pension
(assets)/liabilities of $(72) million, $633 million and $45
 
million, respectively.
Balance sheet & Cash flow
abb2022q2fininfop8i2.gif abb2022q2fininfop8i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop8i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
6
Orders and revenues
Order intake was strong
 
with a stable trend
 
throughout the
quarter except for some
 
temporary weakness in
 
China which
recovered towards
 
the end of the second
 
quarter. Order
intake amounted
 
to $4,037
 
million, improving by 9% (16%
comparable), year-on-year.
 
The order backlog extended
 
to a
record level of $6.7
 
billion.
Customer activity was
 
strong in most segments
 
with
softness noted only
 
in the residential construction
 
-related
segment in China.
Orders in the Asia,
 
Middle East and Africa region
 
improved
by 1% (7% comparable),
 
weighed down by China which
declined by 7% (5% comparable).
 
China came off from
 
the
high comparable last year
 
on lower demand in the
residential construction
 
segment, but also by a
 
temporary
general dampening of
 
customer activity during
 
the Covid-
related lockdowns
 
that started in April. A recovery
 
was
noted during the
 
quarter as restrictions progressively
eased. In Europe customer
 
activity was strong across
 
the
major countries, however
 
changes
 
in exchange rates
weighed on the total
 
which was down by 4% (up 10%
comparable).
 
The Americas improved
 
sharply by 29%
 
(30%
comparable).
Revenues improved
 
by 4% (10% comparable)
 
to
$3,531 million
 
with strong pricing execution
 
as the main
driver of comparable
 
revenue growth. Double
 
-digit growth
in comparable revenues
 
was reported in the Americas
 
and
Europe, while Asia,
 
Middle East and Africa
 
increased at a
mid-single digit rate.
 
In contrast to the other
 
divisions,
volume growth was
 
negative in Distribution
 
Solutions which
was held back by supply
 
constraints mainly
 
related to
semiconductors.
 
Additional challenges stemmed
 
from the
lockdowns in China
 
which slowed down local logistics,
although it gradually
 
improved
 
as the quarter progressed.
 
Profit
Operational EBITA
 
was $599 million, remaining
 
stable as a
reported headline number
 
but improving by 9% in constant
currency.
 
Operational EBITA
 
margin declined
 
by 50 basis
points to 16.9%.
Under-absorption of
 
fixed costs in the large
 
Distribution
Solutions
 
division triggered by component
 
shortages that
hampered customer deliveries
 
was the primary driver for
the business area’s
 
margin decline.
 
Electrification
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
16%
10%
FX
-7%
-6%
Portfolio changes
0%
0%
Total
9%
4%
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
4,037
3,693
9%
16%
8,434
7,224
17%
22%
Order backlog
6,706
5,029
33%
42%
6,706
5,029
33%
42%
Revenues
3,531
3,406
4%
10%
6,858
6,546
5%
10%
Operational EBITA
599
592
1%
1,109
1,103
1%
as % of operational revenues
16.9%
17.4%
-0.5 pts
16.1%
16.8%
-0.7 pts
Cash flow from operating activities
393
511
-23%
432
830
-48%
No. of employees (FTE equiv.)
51,600
51,700
0%
abb2022q2fininfop9i2.gif abb2022q2fininfop9i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop9i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
7
Orders and revenues
The second quarter
 
was another +$2 billion
 
quarter with
orders up by 7% (26%
 
comparable) to $2,079 million,
despite the adverse
 
impacts
 
from portfolio changes and
changes
 
in exchange rates. Both base
 
orders and large
orders increased year-on
 
-year.
Strong demand was seen
 
in all the customer segments
for the electrical
 
motors, drives and service
 
offerings and
all divisions reported
 
double-digit order growth.
Demand was strong in
 
all
 
major regions, although
reported order growth
 
was hampered by changes
 
in
exchange rates and
 
portfolio changes. Orders
 
increased
in Europe by 1% (17%
 
comparable) and by 17%
 
(24%
comparable) in Asia,
 
Middle East and Africa with no
material impact on
 
customer order patterns
 
from the
Covid-related lockdowns.
 
The Americas reported
 
orders
up by 3% (38% comparable)
 
reflecting the divestment
 
of
Mechanical Power
 
Transmission (Dodge).
The divestment of Dodge
 
and changes
 
in exchange rates
weighed on reported revenue
 
growth which decreased
by 12% (up 3% comparable).
 
Strong price execution
drove comparable growth,
 
but volumes were hampered
by the lockdowns in
 
China which slowed down
 
local
logistics.
 
That said, a gradual easing was
 
noted as the
quarter progressed.
 
The order backlog expanded
 
to
record-high $4.6 billion.
Profit
Operational EBITA
 
amounted to $266
 
million and declined
from last year due to
 
adverse impacts from
 
low volumes,
portfolio changes and
 
changes in exchange
 
rates.
Operational EBITA
 
margin was 16.4%,
 
with about half of the
130 basis points year
 
-on-year decline relating to
 
the
divestment of the
 
Dodge business.
Strong pricing execution
 
offset the increased
 
costs
related to such as commodities
 
and freight.
 
The Covid-related lockdowns
 
in China hampered
customer and supplier
 
deliveries and triggered
 
under-
absorption of fixed
 
costs.
 
In addition, there
 
was an adverse divisional
 
mix in
revenues.
Motion
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
2,079
1,947
7%
26%
4,281
3,864
11%
29%
Order backlog
4,568
3,558
28%
43%
4,568
3,558
28%
43%
Revenues
1,626
1,850
-12%
3%
3,198
3,517
-9%
6%
Operational EBITA
266
325
-18%
540
614
-12%
as % of operational revenues
16.4%
17.7%
-1.3 pts
16.9%
17.4%
-0.5 pts
Cash flow from operating activities
241
223
8%
239
547
-56%
No. of employees (FTE equiv.)
20,800
21,500
-3%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
26%
3%
FX
-7%
-6%
Portfolio changes
-12%
-9%
Total
7%
-12%
abb2022q2fininfop10i2.gif abb2022q2fininfop10i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop10i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
8
Orders and revenues
Customer demand
 
was strong across the segments
 
which
resulted in an order
 
growth of 17% (25% comparable),
although the headline
 
number was weighed
 
down by
changes
 
in exchange rates. Strong
 
demand was noted for
the product, system
 
s
 
and service businesses.
Double-digit order increases
 
were reported for all of the
divisions, supported
 
by base orders but also by
 
a higher
contribution from large
 
orders, year-on-year.
Demand was strong across
 
all customer segments,
 
with a
particularly strong development
 
in the metals & mining
and marine segment.
 
High customer activity
 
in the oil &
gas segment included
 
also the LNG business.
 
While
hydrogen is still a small
 
part of the business, customer
interest was high. Service
 
orders increased by 4%
 
(12%
comparable).
All regions improved,
 
and comparable order
 
intake
increased at a double
 
-digit rate. Europe was
 
up by 8%
(22%
 
comparable) and the
 
Americas by 53%
 
(55%
 
comparable). Asia,
 
Middle East and Africa was up
by 4% (11%
 
comparable).
Revenues declined
 
by 1% (up 7% comparable)
 
adversely
impacted by change
 
s
 
in exchange rates which
 
more than
offset the positive
 
impact of increased volumes
 
and
positive pricing. All
 
divisions contributed to
 
comparable
revenue growth.
Profit
Most divisions reported
 
double-digit Operational
 
EBITA
margin with both profit
 
and profitability improvements
 
,
 
year-
on-year.
 
Operational EBITA increased
 
by 17%
(28% constant currency)
 
,
 
to $224 million, and the
Operational EBITA
 
margin improved by
 
180 basis points to
14.3%.
Performance improvements
 
were driven by higher
volumes and efficiency
 
measures,
 
which more than offset
cost inflation mainly
 
in electrical components,
 
and freight
as well as a slight negative
 
divisional mix.
 
Process Automation
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
25%
7%
FX
-8%
-8%
Portfolio changes
0%
0%
Total
17%
-1%
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
1,819
1,555
17%
25%
3,511
3,211
9%
15%
Order backlog
6,170
5,980
3%
12%
6,170
5,980
3%
12%
Revenues
1,529
1,540
-1%
7%
3,035
2,947
3%
9%
Operational EBITA
224
192
17%
420
347
21%
as % of operational revenues
14.3%
12.5%
+1.8 pts
13.7%
11.8%
+1.9 pts
Cash flow from operating activities
193
228
-15%
253
461
-45%
No. of employees (FTE equiv.)
22,200
21,900
2%
abb2022q2fininfop11i2.gif abb2022q2fininfop11i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop11i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
9
Orders and revenues
On high customer demand
 
,
 
order intake improved
 
by 15% (23%
comparable) to $1,109
 
million.
 
However,
 
revenues were
significantly hampered
 
by both general supply
 
chain constraints
as well as Covid-related
 
lockdowns in China.
 
Consequently,
 
the
order backlog reached
 
a record-high level of $2.7
 
billion.
Semiconductor constraints
 
are expected to ease
 
in the third
quarter.
Both divisions noted strong
 
momentum and reported
 
double-
digit rates
 
in order growth. Demand
 
was stable throughout
the quarter.
Customer activity increased
 
in all segments with particularly
strong momentum
 
in general industry as
 
well as automotive
which was supported
 
by a strong development
 
in EV
investments in China.
Order momentum was
 
very strong in Europe at
 
9%
(22%
 
comparable) and Asia,
 
Middle East and Africa at
 
30%
(36%
 
comparable),
 
including orders in China
 
which improved
by 40%
 
(43%
 
comparable). The Americas
 
declined by 3%
(3% comparable) from
 
a high comparable last year
 
due to
large orders received.
Revenues declined
 
by 12% (5% comparable)
 
adversely
impacted by change
 
s
 
in exchange rates.
 
While price
increases supported comparable
 
growth, volumes declined
 
in
both divisions.
 
This was triggered by customer
 
deliveries
being adversely impacted
 
by the shortages in the
 
supply of
semiconductors
 
and the production halt
 
in the Robotics
division’s Shanghai
 
factory due to enforced
 
Covid-related
lockdowns.
 
As an additional challenge,
 
the lockdowns
triggered a general
 
slowdown in local logistics
 
in the
beginning of the second
 
quarter. After approximately
 
five
week’s shutdown,
 
production in the Shanghai
 
plant gradually
increased and ran
 
at close to full capacity
 
at the end of the
quarter.
Profit
Both profit and profitability
 
declined year-on-year due
 
to low
volumes and cost inflation
 
linked to the tight supply
 
chain.
Operational EBITA
 
declined by
 
38% with a margin
deterioration of
 
330 basis
 
points.
In total, the decline
 
in volumes triggered under-absorption
of fixed costs,
 
which combined with
 
cost inflation related
to freight and input
 
costs more than offset
 
the contribution
from cost measures and
 
positive price execution,
 
year-
on-year.
Robotics & Discrete Automation
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
H1 2022
H1 2021
US$
Comparable
Orders
1,109
968
15%
23%
2,417
1,809
34%
40%
Order backlog
2,728
1,501
82%
97%
2,728
1,501
82%
97%
Revenues
732
832
-12%
-5%
1,462
1,685
-13%
-9%
Operational EBITA
60
96
-38%
109
201
-46%
as % of operational revenues
8.2%
11.5%
-3.3 pts
7.4%
11.9%
-4.5 pts
Cash flow from operating activities
56
78
-28%
27
189
-86%
No. of employees (FTE equiv.)
10,800
10,300
5%
Growth
Q2
Q2
Change year-on-year
Orders
Revenues
Comparable
23%
-5%
FX
-9%
-7%
Portfolio changes
1%
0%
Total
15%
-12%
abb2022q2fininfop12i2.gif abb2022q2fininfop12i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop12i0.jpg
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
10
Quarterly highlights
Microsoft has joined
 
ABB’s Energy Efficiency
 
Movement.
Launched in March
 
2021 by ABB, the
#energyefficiencymovement
 
is a multi-stakeholder
initiative to raise awareness
 
and spur action to reduce
energy consumption and
 
carbon emissions to combat
climate change. Other
 
members include Deutsche
 
Post
DHL Group and Alfa Laval.
 
ABB has been assigned
 
by EPC contractor Aker
 
Solutions,
a leader in sustainable
 
energy solutions, to deliver
 
the main
electrical, automation
 
and safety systems for
 
Norway’s
Northern Lights project.
 
A joint venture between
 
Equinor,
Shell and TotalEnergies,
 
Northern Lights is the first
industrial carbon capture
 
and storage project to
 
develop an
open and flexible infrastructure
 
to safely store CO2 from
industries across
 
Europe.
ABB E-mobility has
 
signed a new global framework
agreement with Shell
 
to supply ABB’s end-to-end
 
portfolio
of AC and DC charging
 
stations. The portfolio
 
ranges
from the AC wallbox
 
for home, work or retail installations
to the Terra
 
360 which is ideal for refueling
 
stations,
urban charging stations,
 
retail parking and fleet
applications.
ABB celebrated this
 
year’s Pride Month in June
 
with a
clear focus on what
 
can be done on an individual
 
level to
support the LGBTQ+ community
 
and make the workplace
more inclusive. Since
 
last year,
 
the number of “Allies” in
LGBTQ+ Employee
 
Resource Groups across
 
ABB more
than doubled, now
 
having about 900 members.
From June 19-24, the Special
 
Olympics National
 
Summer
Games took place
 
in Berlin. Around 4,000
 
athletes
competed in 20 sport
 
disciplines, including
 
basketball,
beach volleyball, handball,
 
table tennis and triathlon,
 
at
the National Games –
 
and were supported and
 
cheered
on by about 100
 
volunteers from ABB. They submitted
time-off or vacation
 
to actively participate in
 
the largest
inclusive sports event
 
in Germany this year.
Story of the quarter
ABB has launched
 
a product label called
EcoSolutions™ targeting
 
its customers with full
transparency on
 
the circularity value and environmental
impact of ABB products
 
across all business areas.
 
By
scanning the QR code
 
on the EcoSolutions label
 
or by
visiting the product
 
page, customers can easily
 
have this
information at hand.
 
For customers, the ABB EcoSolutions
label is an assurance
 
that, where relevant, the
 
product they
are buying is designed
 
to last and has been
 
manufactured
with the maximum
 
amount of sustainably sourced
 
raw
materials; made
 
with processes that are designed
 
to avoid
waste and maximize
 
the use of sustainable
 
packaging
materials; designed
 
to increase resource and process
efficiency while
 
in use, be upgradable and
 
optimize the
lifetime of equipment
 
and facilities; supported
 
by take-back
services leading to
 
refurbishment, re-use or
 
recycling of
products and components,
 
and is accompanied by
instructions for responsible
 
end-of-life treatment.
Q2 outcome
22% reduction of CO
 
emissions in own operations year
 
-on-year
due to increased use of renewable
 
energy and energy efficient
projects on sites.
21% year-on-year increase
 
in LTIFR due
 
to a slight increase in
absolute incidents as well as fewer
 
hours booked during the
second quarter.
2.9%-points increase in number of women
 
in senior
management versus the prior
 
year continued to be supported
 
by
targeted initiatives across all business
 
areas.
Sustainability
Q2 2022
Q2 2021
CHANGE
12M ROLLING
CO2e own operations emissions,
 
kt scope 1 and 2
1
89
114
-22%
376
Lost Time Injury Frequency Rate (LTIFR),
 
frequency / 200,000 working hours
0.17
0.14
21%
0.16
Share of females in senior management
positions, %
16.8
13.9
+2.9 pts
16.3
1
CO
 
equivalent emissions from site, energy use and
 
fleet, previous quarter
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
 
11
During Q2 2022
On May 25, ABB announced
 
that its E-mobility division
had
 
agreed to acquire a controlling
 
stake in Numocity,
 
a
leading digital platform
 
for electric vehicle charging
 
in
India. ABB will increase
 
its shareholding to a controlling
majority of 72 percent
 
and has the right to become
 
sole
owner by 2026. The
 
transaction is part of ABB E-
mobility’s overall
 
growth strategy and will significantly
improve its position
 
across India, as well as
 
South
 
East
Asia and the Middle
 
East – target regions for
 
Numocity
given increasing demand
 
for charging solutions
 
for two
and three-wheelers,
 
cars and light commercial
 
vehicles.
On June 20, ABB announced
 
that it had decided
 
to
postpone its planned
 
IPO of the E-mobility business.
 
The
listing of the business
 
remains an important
 
part of ABB’s
strategy.
 
However, recent
 
market conditions made
 
it
challenging to proceed
 
with a planned share
 
offering in
the second quarter
 
of 2022. Consequently,
 
ABB is
monitoring market
 
conditions and is fully committed
 
to
proceed with a listing
 
of the business on
 
the SIX Swiss
Exchange as and when
 
market conditions are
constructive.
After the second quarter
On July 20, ABB announced
 
that it will spin off Accelleron
and list the company
 
on SIX Swiss Exchange,
 
assuming
shareholders approval
 
at the ABB Extraordinary
 
General
Meeting planned
 
for
September 7, 2022.
 
ABB shareholders would receive
 
1
Accelleron share for every
 
20 ABB shares held.
 
Planned
date for listing is
 
October 3, 2022. Accelleron
 
develops,
produces and services
 
turbochargers and large
turbocharging components
 
for engines, which enhance
propulsion and increase
 
fuel efficiency while
 
reducing
emissions. Its leading
 
products support clients
 
in sectors
such as marine, energy
 
and rail, helping to provide
sustainable and
 
reliable power and highest efficiencies.
Accelleron’s potential
 
is driven by its position,
 
built on its
very
 
long track record, as a global
 
market leader in
heavy-duty turbocharging
 
for mission-critical applicati
 
ons.
On July 21, ABB announced
 
it has decided to exit the
Russian market and started
 
the process to wind down
 
its
remaining activities
 
there. The financial impact
 
of this
decision amounted
 
to $57
 
million in the second quarter,
 
of
which $23 million will
 
impact cash flow in the
 
third quarter.
After Q2 2022
In the first six months
 
of 2022, demand for ABB’s
products increased
 
strongly year-on-year,
 
supported by
most customer segments.
 
Orders amounted to
$18,180 million and
 
improved by 15%
 
(24%
 
comparable)
and revenues amounted
 
to $14,216 million down by
 
-1%
(up 7% comparable),
 
implying a book-to-bill
 
of 1.28. In the
period demand increased
 
in both the product and
 
the
service business. Changes
 
in exchange rates had a
negative impact
 
on order intake and revenues
 
.
 
Income from operations
 
amounted to $1,444
 
million down
from $1,891 million
 
in the year-earlier period. Results
included
 
restructuring activities progressing
 
according to
plan with restructuring
 
and restructuring-related
 
expenses of
$280 million. This include
 
d
 
a project charge amounting
 
to
$195 million triggered
 
by the exit of the largest
 
legacy
project exposure
 
in non-core operations.
Operational EBITA
 
improved by 3%
 
year on year to
$2,133 million and
 
the Operational EBITA
 
margin increased
by 50 basis points to
 
14.9%. Performance was
 
driven by the
impacts from strong pricing
 
execution and higher
 
volumes
offsetting inflationary
 
impacts in for example
 
input costs
and freight, but not
 
offsetting the adverse
 
year-on-year
impact related to the commodity
 
hedges which supported
last year’s period.
Selling, general and
 
administrative (SG&A) expenses
decreased -1% in line
 
with revenues.
 
The ratio in relation to
revenues therefore
 
remained stable at 18.0%.
 
Corporate
and Other Operational
 
EBITA improved
 
by $148 million
to -$45 million. The
 
net finance expenses amounted
 
to
$29 million.
Income tax expense
 
was $434 million with a
 
tax rate of
29.3%.
Net income attributable
 
to ABB was $983 million and
decreased by -22%. Basic
 
earnings per share was
 
$0.51 and
decreased by -18%.
Significant events
First six months 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
12
1
Excludes one project estimated to a total of ~$100
 
million, that is ongoing in the non-core business. Exact
 
exit timing is difficult to assess due to legal proceedings
 
etc.
2
Includes restructuring-related expenses of $195 million
 
from the exit of the full train retrofit business
 
as well as $57 million respectively from the exit of the
 
Russian market in Q2 2022.
3
Costs relating to the announced exits and the
 
potential E-mobility listing.
4
Excluding share of net income from JV.
5
Excluding impact of acquisitions or divestments or
 
any significant non-operational items.
($ in millions, unless otherwise stated)
FY 2022
Q3 2022
Net finance expenses
~(100)
~(30)
unchanged
Non-operational pension
(cost) / credit
~120
~30
from ~(140)
Effective tax rate
~25%
 
5
~25%
 
5
unchanged
Capital Expenditures
~(750)
~(200)
unchanged
($ in millions, unless otherwise stated)
FY 2022
1
Q3 2022
Corporate and Other Operational costs
~(200)
~(80)
from ~(300)
Non-operating items
Acquisition-related amortization
~(230)
~(55)
unchanged
Restructuring and restructuring related
~(100)+(252)
2
~(35)
2
from ~(130)
Separation costs
3
~(180)
~(50)
unchanged
ABB Way transformation
~(150)
~(40)
unchanged
Certain other income and expenses
related to PG divestment
4
~(25)
-
unchanged
Additional 2022 guidance
Note: comparable growth calculation includes acquisitions
 
and divestments with revenues of greater than $50
 
million.
1
Represents the estimated annual revenues for the
 
period prior to the announcement of the respective acquisition/divestment.
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2021
Motion
Mechanical Power Transmission
1-Nov
645
1,500
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2022
Electrification
InCharge Energy, Inc (majority stake)
26-Jan
16
40
2021
Electrification
Enervalis (majority stake)
26-Apr
1
22
Robotics & Discrete Automation
ASTI Mobile Robotics Group
2-Aug
36
300
Additional figures
ABB Group
Q1 2021
Q2 2021
Q3 2021
Q4 2021
FY 2021
Q1 2022
Q2 2022
EBITDA, $ in million
1,024
1,324
1,072
3,191
6,611
1,067
794
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
14.90
n.a.
n.a.
Net debt/Equity
0.09
0.16
0.13
(0.01)
(0.01)
0.20
0.34
Net debt/ EBITDA 12M rolling
0.4
0.7
0.5
(0.01)
(0.01)
0.4
0.7
Net working capital, % of 12M rolling revenues
10.8%
11.6%
10.2%
8.1%
8.1%
12.1%
12.8%
Earnings per share, basic, $
0.25
0.37
0.33
1.34
2.27
0.31
0.20
Earnings per share, diluted, $
0.25
0.37
0.32
1.33
2.25
0.31
0.20
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.82
n.a.
n.a.
Share price at the end of period, CHF
28.56
31.39
31.39
34.90
34.90
30.17
25.46
Share price at the end of period, $
30.47
33.99
33.36
38.17
38.17
32.34
26.73
Number of employees (FTE equivalents)
105,330
106,370
106,080
104,420
104,420
104,720
106,380
No. of shares outstanding at end of period (in millions)
2,024
2,006
1,993
1,958
1,958
1,929
1,892
Acquisitions and divestments, last twelve months
 
 
ABB
 
INTERIM
 
REPORT
I
Q2
 
2022
13
For additional information please contact:
Media Relations
Phone: +41 43 317
 
71 11
Email:
Investor Relations
Phone: +41 43 317
 
71 11
Email:
ABB Ltd
Affolternstrasse
 
44
8050 Zurich
Switzerland
Financial calendar
2022
August 31
Accelleron Cap
ital Markets Day
September 7
Planned ABB Extraordinary General Meeting
October 3
 
Planned listing of
 
Accelleron on SIX Swiss Exchange
October 20
Q3 2022 results
2023
February
2
Q4
2022 results
This press release
 
includes forward-looking information
 
and
statements as well
 
as other statements concerning
 
the
outlook for our business,
 
including those in the sections
 
of
this release titled “CEO summary,”
 
“Outlook,” “Balance
sheet & cash flow”,
 
and “Robotics and Discrete
Automation”. These
 
statements are based on current
expectations, estimates
 
and projections about the
 
factors
that may affect
 
our future performance,
 
including global
economic conditions,
 
the economic conditions
 
of the
regions and industries
 
that are major markets for
 
ABB.
These expectations, estimates
 
and projections are generally
identifiable by statements
 
containing words such as
“intends,” “anticipates,”
 
“expects,” “estimates,” “plans,”
“targets” or similar
 
expressions. However,
 
there are many
risks and uncertainties,
 
many of which are beyond
 
our
control, that could cause
 
our actual results to differ
materially from the
 
forward-looking information
 
and
statements made in
 
this press release and which
 
could
affect our ability
 
to achieve any or all of our
 
stated targets.
Some important
 
factors that could cause such
 
differences
include, among others,
 
business risks associated
 
with the
volatile global economic
 
environment and political
conditions, costs associated
 
with compliance activities,
market acceptance
 
of new products and services,
 
changes
in governmental
 
regulations and currency exchange
 
rates
and such other factors
 
as may be discussed
 
from time to
time in ABB Ltd’s
 
filings with the U.S. Securities
 
and
Exchange Commission,
 
including its Annual Reports
 
on
Form 20-F.
 
Although ABB Ltd believes
 
that its expectations
reflected in any such
 
forward looking statement
 
are based
upon reasonable assumptions,
 
it can give no assurance
 
that
those expectations
 
will be achieved.
The Q2 2022
 
results press release
 
and presentation slides
are available on the
 
ABB News Center at
www.abb.com/news
 
and on the Investor
 
Relations
homepage at www.abb.com/investorrelations.
 
A conference call and
 
webcast for analysts
 
and investors is
scheduled to begin
 
today at 10:00 a.m. CET.
To
 
pre-register for the conference
 
call or to join the
webcast, please
 
refer to the ABB website:
www.abb.com/investorrelations.
 
The recorded session
 
will be available after
 
the event on
ABB’s website.
Important notice about forward-looking information
Q2 results presentation on July 21, 2022
ABB
 
(ABBN: SIX Swiss
 
Ex) is a leading global
 
technology company
 
that energizes the transformation
 
of society and industry to
achieve a more productive,
 
sustainable future. By connecting
 
software to its electrification,
 
robotics, automation and
 
motion
portfolio, ABB pushes
 
the boundaries of technology
 
to drive performance
 
to new levels. With a history
 
of excellence stretching
 
back
more than 130 years,
 
ABB’s success is
 
driven by about 105,000 talented
 
employees in over 100 countries.
abb2022q2fininfop16i1.jpg abb2022q2fininfop16i2.gif
1
 
Q2 2022
 
FINANCIAL
 
INFORMATION
July 21, 2022
Q2 2022
Financial information
abb2022q2fininfop17i0.jpg
2
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Financial
 
Information
Contents
03
─ 07
 
Key Figures
08 ─
34
 
Consolidated
 
Financial
 
Information
 
(unaudited)
35 ─
47
 
Supplemental
 
Reconciliations
 
and Definitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop18i0.jpg
3
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Comparable
(1)
Orders
8,807
7,989
10%
20%
Order backlog (end June)
19,477
15,424
26%
37%
Revenues
7,251
7,449
-3%
6%
Gross Profit
2,290
2,508
-9%
as % of revenues
31.6%
33.7%
-2.1 pts
Income from operations
587
1,094
-46%
Operational EBITA
(1)
1,136
1,113
2%
9%
(2)
as % of operational revenues
(1)
15.5%
15.0%
+0.5 pts
Income from continuing operations, net of tax
406
789
-49%
Net income attributable to ABB
379
752
-50%
Basic earnings per share ($)
0.20
0.37
-47%
(3)
Cash flow from operating activities
(4)
382
663
-42%
Cash flow from operating activities in continuing operations
385
663
-42%
CHANGE
($ in millions, unless otherwise indicated)
H1 2022
H1 2021
US$
Comparable
(1)
Orders
18,180
15,745
15%
24%
Revenues
14,216
14,350
-1%
7%
Gross Profit
4,571
4,776
-4%
as % of revenues
32.2%
33.3%
-1.1 pts
Income from operations
1,444
1,891
-24%
Operational EBITA
(1)
2,133
2,072
3%
9%
(2)
as % of operational revenues
(1)
14.9%
14.4%
+0.5 pts
Income from continuing operations, net of tax
1,049
1,340
-22%
Net income attributable to ABB
983
1,254
-22%
Basic earnings per share ($)
0.51
0.62
-18%
(3)
Cash flow from operating activities
(4)
(191)
1,206
n.a.
Cash flow from operating activities in continuing operations
(179)
1,186
n.a.
(1)
 
For a reconciliation of non-GAAP measures see “
” on page 35.
(2)
 
Constant currency (not adjusted for portfolio changes).
(3)
 
EPS growth rates are computed using unrounded amounts.
(4)
 
Cash flow from operating activities includes both continuing and discontinued operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
Q2 2022
 
FINANCIAL
 
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q2 2022
Q2 2021
US$
Local
Comparable
Orders
 
ABB Group
8,807
7,989
10%
17%
20%
Electrification
4,037
3,693
9%
16%
16%
Motion
2,079
1,947
7%
14%
26%
Process Automation
1,819
1,555
17%
25%
25%
Robotics & Discrete Automation
1,109
968
15%
24%
23%
Corporate and Other
 
(incl. intersegment eliminations)
(237)
(174)
Order backlog (end June)
ABB Group
19,477
15,424
26%
36%
37%
Electrification
6,706
5,029
33%
42%
42%
Motion
4,568
3,558
28%
40%
43%
Process Automation
6,170
5,980
3%
12%
12%
Robotics & Discrete Automation
2,728
1,501
82%
98%
97%
Corporate and Other
 
(incl. intersegment eliminations)
(695)
(644)
Revenues
 
ABB Group
7,251
7,449
-3%
4%
6%
Electrification
3,531
3,406
4%
10%
10%
Motion
1,626
1,850
-12%
-6%
3%
Process Automation
1,529
1,540
-1%
7%
7%
Robotics & Discrete Automation
732
832
-12%
-5%
-5%
Corporate and Other
 
(incl. intersegment eliminations)
(167)
(179)
Income from operations
ABB Group
587
1,094
Electrification
465
549
Motion
231
303
Process Automation
175
190
Robotics & Discrete Automation
43
74
Corporate and Other
(incl. intersegment eliminations)
(327)
(22)
Income from operations %
ABB Group
8.1%
14.7%
Electrification
13.2%
16.1%
Motion
14.2%
16.4%
Process Automation
11.4%
12.3%
Robotics & Discrete Automation
5.9%
8.9%
Operational EBITA
ABB Group
1,136
1,113
2%
9%
Electrification
599
592
1%
9%
Motion
266
325
-18%
-13%
Process Automation
224
192
17%
28%
Robotics & Discrete Automation
60
96
-38%
-29%
Corporate and Other
(incl. intersegment eliminations)
(13)
(92)
Operational EBITA %
 
ABB Group
15.5%
15.0%
Electrification
16.9%
17.4%
Motion
16.4%
17.7%
Process Automation
14.3%
12.5%
Robotics & Discrete Automation
8.2%
11.5%
Cash flow from operating activities
ABB Group
382
663
Electrification
393
511
Motion
241
223
Process Automation
193
228
Robotics & Discrete Automation
56
78
Corporate and Other
 
(incl. intersegment eliminations)
(498)
(377)
Discontinued operations
(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Q2 2022
 
FINANCIAL
 
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
H1 2022
H1 2021
US$
Local
Comparable
Orders
 
ABB Group
18,180
15,745
15%
21%
24%
Electrification
8,434
7,224
17%
22%
22%
Motion
4,281
3,864
11%
17%
29%
Process Automation
3,511
3,211
9%
15%
15%
Robotics & Discrete Automation
2,417
1,809
34%
42%
40%
Corporate and Other
(incl. intersegment eliminations)
(463)
(363)
Order backlog (end June)
ABB Group
19,477
15,424
26%
36%
37%
Electrification
6,706
5,029
33%
42%
42%
Motion
4,568
3,558
28%
40%
43%
Process Automation
6,170
5,980
3%
12%
12%
Robotics & Discrete Automation
2,728
1,501
82%
98%
97%
Corporate and Other
(incl. intersegment eliminations)
(695)
(644)
Revenues
 
ABB Group
14,216
14,350
-1%
5%
7%
Electrification
6,858
6,546
5%
10%
10%
Motion
3,198
3,517
-9%
-4%
6%
Process Automation
3,035
2,947
3%
9%
9%
Robotics & Discrete Automation
1,462
1,685
-13%
-8%
-9%
Corporate and Other
(incl. intersegment eliminations)
(337)
(345)
Income from operations
ABB Group
1,444
1,891
Electrification
971
989
Motion
485
568
Process Automation
326
337
Robotics & Discrete Automation
65
156
Corporate and Other
(incl. intersegment eliminations)
(403)
(159)
Income from operations %
ABB Group
10.2%
13.2%
Electrification
14.2%
15.1%
Motion
15.2%
16.2%
Process Automation
10.7%
11.4%
Robotics & Discrete Automation
4.4%
9.3%
Operational EBITA
ABB Group
2,133
2,072
3%
9%
Electrification
1,109
1,103
1%
7%
Motion
540
614
-12%
-8%
Process Automation
420
347
21%
29%
Robotics & Discrete Automation
109
201
-46%
-40%
Corporate and Other
(incl. intersegment eliminations)
(45)
(193)
Operational EBITA %
 
ABB Group
14.9%
14.4%
Electrification
16.1%
16.8%
Motion
16.9%
17.4%
Process Automation
13.7%
11.8%
Robotics & Discrete Automation
7.4%
11.9%
Cash flow from operating activities
ABB Group
(191)
1,206
Electrification
432
830
Motion
239
547
Process Automation
253
461
Robotics & Discrete Automation
27
189
Corporate and Other
(incl. intersegment eliminations)
(1,130)
(841)
Discontinued operations
(12)
20
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Revenues
7,251
7,449
3,531
3,406
1,626
1,850
1,529
1,540
732
832
Foreign exchange/commodity timing
differences in total revenues
70
(13)
22
2
(4)
(11)
32
(4)
1
2
Operational revenues
7,321
7,436
3,553
3,408
1,622
1,839
1,561
1,536
733
834
Income from operations
587
1,094
465
549
231
303
175
190
43
74
Acquisition-related amortization
59
64
30
29
7
13
1
1
19
21
Restructuring, related and
 
implementation costs
(1)
264
18
8
4
4
10
2
Changes in obligations related to
 
divested businesses
(3)
4
Changes in pre-acquisition estimates
(2)
2
2
(2)
Gains and losses from sale of businesses
4
(12)
1
4
(1)
(13)
Acquisition- and divestment-related
 
expenses and integration costs
50
20
10
12
3
4
36
3
2
Other income/expense relating to the
 
Power Grids joint venture
2
2
Certain other non-operational items
65
(86)
22
(9)
1
2
1
Foreign exchange/commodity timing
differences in income from operations
110
7
64
4
21
1
12
(1)
(5)
1
Operational EBITA
1,136
1,113
599
592
266
325
224
192
60
96
Operational EBITA margin (%)
15.5%
15.0%
16.9%
17.4%
16.4%
17.7%
14.3%
12.5%
8.2%
11.5%
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
Revenues
14,216
14,350
6,858
6,546
3,198
3,517
3,035
2,947
1,462
1,685
Foreign exchange/commodity timing
differences in total revenues
67
20
12
12
(1)
8
31
1
6
(1)
Operational revenues
14,283
14,370
6,870
6,558
3,197
3,525
3,066
2,948
1,468
1,684
Income from operations
1,444
1,891
971
989
485
568
326
337
65
156
Acquisition-related amortization
119
129
61
58
15
26
2
2
40
41
Restructuring, related and
implementation costs
(1)
280
53
10
21
8
5
5
13
3
5
Changes in obligations related to
 
divested businesses
(17)
6
Changes in pre-acquisition estimates
(1)
8
1
8
(2)
Gains and losses from sale of businesses
4
(9)
4
4
(1)
(13)
Acquisition- and divestment-related
 
expenses and integration costs
109
30
29
18
8
7
69
4
3
Other income/expense relating to the
 
Power Grids joint venture
37
19
Certain other non-operational items
63
(74)
(8)
(15)
1
2
1
Foreign exchange/commodity timing
differences in income from operations
95
19
45
20
20
8
18
2
(1)
(1)
Operational EBITA
2,133
2,072
1,109
1,103
540
614
420
347
109
201
Operational EBITA margin (%)
14.9%
14.4%
16.1%
16.8%
16.9%
17.4%
13.7%
11.8%
7.4%
11.9%
(1)
 
Includes impairment of certain assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Q2 22
Q2 21
Depreciation
136
148
67
68
26
32
16
19
15
15
Amortization
71
82
35
39
9
15
3
3
20
21
including total acquisition-related amortization of:
59
64
30
29
7
13
1
1
19
21
Process
Robotics & Discrete
 
ABB
Electrification
Motion
Automation
Automation
($ in millions)
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
H1 22
H1 21
Depreciation
272
292
134
132
53
64
34
38
30
28
Amortization
145
165
72
76
18
29
6
6
41
42
including total acquisition-related amortization of:
119
129
61
58
15
26
2
2
40
41
Orders received and revenues by region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q2 22
Q2 21
US$
Local
parable
Q2 22
Q2 21
US$
Local
parable
Europe
2,958
2,954
0%
15%
15%
2,508
2,697
-7%
7%
7%
The Americas
3,050
2,473
23%
24%
33%
2,397
2,284
5%
6%
14%
of which United States
2,234
1,846
21%
21%
32%
1,746
1,676
4%
4%
14%
Asia, Middle East and Africa
2,799
2,562
9%
15%
15%
2,346
2,468
-5%
0%
0%
of which China
1,409
1,322
7%
9%
10%
1,163
1,313
-11%
-9%
-9%
ABB Group
8,807
7,989
10%
17%
20%
7,251
7,449
-3%
4%
6%
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
H1 22
H1 21
US$
Local
parable
H1 22
H1 21
US$
Local
parable
Europe
6,492
6,056
7%
19%
19%
5,026
5,248
-4%
7%
7%
The Americas
5,947
4,720
26%
26%
36%
4,566
4,327
6%
7%
15%
of which United States
4,459
3,525
26%
27%
39%
3,328
3,208
4%
4%
14%
Asia, Middle East and Africa
5,741
4,969
16%
19%
19%
4,624
4,775
-3%
0%
0%
of which China
2,946
2,521
17%
17%
18%
2,263
2,489
-9%
-9%
-8%
ABB Group
18,180
15,745
15%
21%
24%
14,216
14,350
-1%
5%
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q2fininfop23i0.gif
8
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Six months ended
Three months ended
($ in millions, except per share data in $)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Sales of products
11,762
11,874
6,013
6,167
Sales of services and other
2,454
2,476
1,238
1,282
Total revenues
14,216
14,350
7,251
7,449
Cost of sales of products
(8,222)
(8,108)
(4,254)
(4,184)
Cost of services and other
(1,423)
(1,466)
(707)
(757)
Total cost of sales
(9,645)
(9,574)
(4,961)
(4,941)
Gross profit
4,571
4,776
2,290
2,508
Selling, general and administrative expenses
(2,556)
(2,577)
(1,317)
(1,314)
Non-order related research and development expenses
(572)
(601)
(295)
(308)
Other income (expense), net
1
293
(91)
208
Income from operations
1,444
1,891
587
1,094
Interest and dividend income
33
26
20
15
Interest and other finance expense
(62)
(91)
(40)
(36)
Non-operational pension (cost) credit
68
88
32
38
Income from continuing operations before taxes
1,483
1,914
599
1,111
Income tax expense
(434)
(574)
(193)
(322)
Income from continuing operations, net of
 
tax
1,049
1,340
406
789
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
1,029
1,304
397
781
Net income attributable to noncontrolling interests
(46)
(50)
(18)
(29)
Net income attributable to ABB
983
1,254
379
752
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
1,003
1,290
388
760
Loss from discontinued operations, net of tax
(20)
(36)
(9)
(8)
Net income
983
1,254
379
752
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.64
0.20
0.38
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.52
0.63
0.20
0.37
Loss from discontinued operations, net of tax
(0.01)
(0.02)
0.00
0.00
Net income
0.51
0.62
0.20
0.37
Weighted-average number of shares outstanding
 
(in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
1,922
2,015
1,909
2,016
Diluted earnings per share attributable to ABB shareholders
1,935
2,033
1,918
2,031
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
Q2 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Total comprehensive income, net of
 
tax
708
1,206
131
881
Total comprehensive income
 
attributable to noncontrolling interests, net of tax
(26)
(55)
(3)
(31)
Total comprehensive income attributable
 
to ABB shareholders, net of tax
682
1,151
128
850
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
 
Q2 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Jun. 30, 2022
Dec. 31, 2021
Cash and equivalents
2,412
4,159
Restricted cash
23
30
Marketable securities and short-term investments
945
1,170
Receivables, net
6,960
6,551
Contract assets
965
990
Inventories, net
5,595
4,880
Prepaid expenses
262
206
Other current assets
474
573
Current assets held for sale and in discontinued operations
122
136
Total current assets
17,758
18,695
Restricted cash, non-current
301
300
Property, plant and equipment, net
3,885
4,045
Operating lease right-of-use assets
783
895
Investments in equity-accounted companies
1,617
1,670
Prepaid pension and other employee benefits
908
892
Intangible assets, net
1,474
1,561
Goodwill
10,452
10,482
Deferred taxes
1,272
1,177
Other non-current assets
448
543
Total assets
38,898
40,260
Accounts payable, trade
4,805
4,921
Contract liabilities
2,141
1,894
Short-term debt and current maturities of long-term debt
2,830
1,384
Current operating leases
222
230
Provisions for warranties
972
1,005
Other provisions
1,144
1,386
Other current liabilities
4,277
4,367
Current liabilities held for sale and in discontinued operations
306
381
Total current liabilities
16,697
15,568
Long-term debt
5,086
4,177
Non-current operating leases
586
689
Pension and other employee benefits
925
1,025
Deferred taxes
696
685
Other non-current liabilities
2,214
2,116
Non-current liabilities held for sale and in discontinued operations
28
43
Total liabilities
26,232
24,303
Commitments and contingencies
Redeemable noncontrolling interest
80
Stockholders’ equity:
Common stock, CHF 0.12 par value
(1,965 million and 2,053 million shares issued at June 30,
 
2022, and December 31, 2021, respectively)
171
178
Additional paid-in capital
12
22
Retained earnings
18,767
22,477
Accumulated other comprehensive loss
(4,389)
(4,088)
Treasury stock, at cost
(72 million and 95 million shares at June 30, 2022, and December
 
31, 2021, respectively)
(2,290)
(3,010)
Total ABB stockholders’ equity
12,271
15,579
Noncontrolling interests
315
378
Total stockholders’ equity
12,586
15,957
Total liabilities and stockholders’
 
equity
38,898
40,260
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
 
Q2 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Operating activities:
Net income
1,029
1,304
397
781
Loss from discontinued operations, net of tax
20
36
9
8
Adjustments to reconcile net income (loss) to
 
net cash provided by operating activities:
Depreciation and amortization
417
457
207
230
Changes in fair values of investments
(15)
(113)
9
(103)
Pension and other employee benefits
(83)
(94)
(37)
(44)
Deferred taxes
(148)
109
(32)
50
Loss from equity-accounted companies
62
57
14
22
Net loss (gain) from derivatives and foreign exchange
77
44
105
24
Net loss (gain) from sale of property,
 
plant and equipment
(55)
(15)
(23)
(4)
Other
67
29
31
9
Changes in operating assets and liabilities:
Trade receivables, net
(621)
(414)
(304)
(412)
Contract assets and liabilities
252
(147)
145
(57)
Inventories, net
(1,083)
(293)
(541)
(125)
Accounts payable, trade
80
309
73
267
Accrued liabilities
(255)
53
135
129
Provisions, net
126
(60)
179
(61)
Income taxes payable and receivable
(52)
(56)
(66)
(6)
Other assets and liabilities, net
3
(20)
84
(45)
Net cash provided by (used in) operating activities – continuing
 
operations
(179)
1,186
385
663
Net cash provided by (used in) operating activities – discontinued
 
operations
(12)
20
(3)
Net cash provided by (used in) operating activities
(191)
1,206
382
663
Investing activities:
Purchases of investments
(256)
(347)
(128)
(38)
Purchases of property, plant and
 
equipment and intangible assets
(338)
(293)
(151)
(151)
Acquisition of businesses (net of cash acquired)
and increases in cost-
 
and equity-accounted companies
(179)
(28)
(34)
(24)
Proceeds from sales of investments
506
1,321
201
930
Proceeds from maturity of investments
80
Proceeds from sales of property,
 
plant and equipment
66
23
31
3
Proceeds from sales of businesses (net of transaction costs
and cash disposed) and cost-
 
and equity-accounted companies
(13)
47
(13)
49
Net cash from settlement of foreign currency derivatives
56
(72)
(10)
(11)
Other investing activities
(8)
(14)
(18)
(6)
Net cash provided by (used in) investing activities – continuing
 
operations
(166)
717
(122)
752
Net cash used in investing activities – discontinued
 
operations
(91)
(70)
(70)
(26)
Net cash provided by (used in) investing activities
(257)
647
(192)
726
Financing activities:
Net changes in debt with original maturities of 90 days or less
1,191
274
(114)
187
Increase in debt
3,181
1,004
639
13
Repayment of debt
(1,483)
(750)
(1,442)
(703)
Delivery of shares
370
766
6
Purchase of treasury stock
(2,661)
(1,971)
(1,100)
(585)
Dividends paid
(1,698)
(1,726)
(809)
(882)
Dividends paid to noncontrolling shareholders
(76)
(92)
(75)
(91)
Other financing activities
(53)
6
(19)
42
Net cash used in financing activities – continuing
 
operations
(1,229)
(2,489)
(2,920)
(2,013)
Net cash provided by financing activities – discontinued
 
operations
Net cash used in financing activities
(1,229)
(2,489)
(2,920)
(2,013)
Effects of exchange rate changes on cash and equivalents
 
and restricted cash
(76)
(34)
(80)
17
Net change in cash and equivalents and restricted cash
(1,753)
(670)
(2,810)
(607)
Cash and equivalents and restricted cash, beginning of period
4,489
3,901
5,546
3,838
Cash and equivalents and restricted cash, end of period
2,736
3,231
2,736
3,231
Supplementary disclosure of cash flow information:
Interest paid
36
58
27
46
Income taxes paid
638
543
298
287
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
 
Q2 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
($ in millions)
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total ABB
 
stockholders’
equity
Non-
controlling
interests
Total
stockholders’
equity
Balance at January 1, 2021
188
83
22,946
(4,002)
(3,530)
15,685
314
15,999
Comprehensive income:
Net income
1,254
1,254
50
1,304
Foreign currency translation
adjustments, net of tax of $2
(166)
(166)
5
(161)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(3)
(8)
(8)
(8)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $(3)
71
71
71
Change in derivative instruments
and hedges, net of tax of $0
Total comprehensive income
1,151
55
1,206
Changes in noncontrolling interests
(37)
(20)
(57)
57
Dividends to
noncontrolling shareholders
(92)
(92)
Dividends to shareholders
(1,730)
(1,730)
(1,730)
Cancellation of treasury shares
(10)
(17)
(3,130)
3,157
Share-based payment arrangements
37
37
37
Purchase of treasury stock
(1,924)
(1,924)
(1,924)
Delivery of shares
(58)
(136)
960
766
766
Other
2
2
2
Balance at June 30, 2021
178
10
19,185
(4,104)
(1,337)
13,932
334
14,266
Balance at January 1, 2022
178
22
22,477
(4,088)
(3,010)
15,579
378
15,957
Comprehensive income:
Net income
983
983
48
1,031
Foreign currency translation
adjustments, net of tax of $1
(392)
(392)
(22)
(414)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(4)
(17)
(17)
(17)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $37
106
106
106
Change in derivative instruments
and hedges, net of tax of $2
2
2
2
Total comprehensive income
682
26
708
Changes in noncontrolling interests
(2)
(2)
(13)
(15)
Dividends to
noncontrolling shareholders
(74)
(74)
Dividends to shareholders
(1,700)
(1,700)
(1,700)
Cancellation of treasury shares
(8)
(4)
(2,864)
2,876
Share-based payment arrangements
28
28
28
Purchase of treasury stock
(2,693)
(2,693)
(2,693)
Delivery of shares
(38)
(130)
538
370
370
Other
6
6
6
Balance at June 30, 2022
171
12
18,767
(4,389)
(2,290)
12,271
315
12,586
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
13
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Notes to the Consolidated Financial Information (unaudited)
Note 1
The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively,
 
the Company) together form a leading global technology
 
company, connecting software
 
to its electrification, robotics,
automation and motion portfolio to drive performance to new
 
levels.
The Company’s Consolidated Financial Information is prepared
 
in accordance with United States of America generally accepted
 
accounting principles (U.S.
GAAP) for interim financial reporting. As such, the Consolidated
 
Financial Information does not include all the
 
information and notes required under U.S. GAAP
 
for
annual consolidated financial statements. Therefore, such financial
 
information should be read in conjunction with the audited
 
consolidated financial statements in
the Company’s Annual Report for the year ended December
 
31, 2021.
The preparation of financial information in conformity with U.S. GAAP
 
requires management to make assumptions
 
and estimates that directly affect the amounts
reported in the Consolidated Financial Information. These accounting
 
assumptions and estimates include:
growth rates, discount rates and other assumptions used to determine
 
impairment of long-lived assets and in testing goodwill
 
for impairment,
estimates to determine valuation allowances for deferred tax assets
 
and amounts recorded for unrecognized tax benefits,
assumptions used in determining inventory obsolescence and net
 
realizable value,
estimates and assumptions used in determining the initial fair value
 
of retained noncontrolling interest and certain obligations
 
in connection with
divestments,
estimates and assumptions used in determining the fair values
 
of assets and liabilities assumed in business
 
combinations,
estimates of loss contingencies associated with litigation or
 
threatened litigation and other claims and inquiries, environmental
 
damages, product
warranties, self-insurance reserves, regulatory and other proceedings,
estimates used to record expected costs for employee severance
 
in connection with restructuring programs,
estimates related to credit losses expected to occur over
 
the remaining life of financial assets such as trade and other
 
receivables, loans and other
instruments,
assumptions used in the calculation of pension and postretirement
 
benefits and the fair value of pension plan assets, and
assumptions and projections, principally related to future material,
 
labor and project-related overhead costs, used in determining the
 
percentage-of-
completion on projects, as well as the amount of variable consideration
 
the Company expects to be entitled to.
The actual results and outcomes may differ from the Company’s
 
estimates and assumptions.
A portion of the Company’s activities (primarily long-term
 
construction activities) has an operating cycle that
 
exceeds one year. For classification
 
of current assets
and liabilities related to such activities, the Company elected to
 
use the duration of the individual contracts as
 
its operating cycle. Accordingly,
 
there are accounts
receivable, contract assets, inventories and provisions related to
 
these contracts which will not be realized within one
 
year that have been classified as current.
Basis of presentation
In the opinion of management, the unaudited Consolidated Financial
 
Information contains all necessary
 
adjustments to present fairly the financial position, results
of operations and cash flows for the reported periods. Management considers
 
all such adjustments to be of a normal recurring nature. The
 
Consolidated Financial
Information is presented in United States dollars ($)
 
unless otherwise stated. Due to rounding, numbers presented
 
in the Consolidated Financial Information may
not add to the totals provided.
14
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Note 2
Recent accounting pronouncements
Applicable for current periods
Business Combinations — Accounting for contract
 
assets and contract liabilities from contracts with customers
In January 2022, the Company early adopted a new accounting
 
standard update, which provides guidance on the accounting for
 
revenue contracts acquired in a
business combination. The update requires contract assets
 
and liabilities acquired in a business combination to be recognized
 
and measured at the date of
acquisition in accordance with the principles for recognizing revenues
 
from contracts with customers.
 
The Company has applied this accounting standard update
prospectively starting with acquisitions closing after January 1, 2022.
Disclosures about government assistance
In January 2022, the Company adopted a new accounting standard
 
update,
 
which requires entities to disclose certain types of government
 
assistance. Under the
update, the Company is required to annually disclose (i) the
 
type of the assistance received, including any significant
 
terms and conditions, (ii) its related
accounting policy, and (iii) the effect
 
such transactions have on its financial statements. The Company
 
has applied this accounting standard update prospe
 
ctively.
This update does not have a significant impact on the Company’s
 
consolidated financial statements.
 
Applicable for future periods
Facilitation of the effects of reference rate reform on financial
 
reporting
In March 2020, an accounting standard update was issued
 
which provides temporary optional expedients and exceptions
 
to the current guidance on contract
modifications and hedge accounting to ease the financial reporting
 
burdens
 
related to the expected market transition from the London
 
Interbank Offered Rate
(LIBOR) and other interbank offered rates to alternative reference
 
rates. This update, along with clarifications outlined
 
in a subsequent update issued in January
2021, can be adopted and applied no later than December 31,
 
2022, with early adoption permitted. The Company does
 
not expect this update to have a significant
impact on its consolidated financial statements.
Note 3
Discontinued operations and assets held for sale
Divestment of the Power Grids business
On July 1, 2020, the Company completed the sale of 80.1 percent
 
of its Power Grids business to Hitachi Ltd (Hitachi).
 
The transaction was executed through the
sale of 80.1 percent of the shares of Hitachi Energy Ltd, formerly
 
Hitachi ABB Power Grids Ltd (“Hitachi Energy”).
 
Cash consideration received at the closing date
was $9,241 million net of cash disposed.
 
Further, for accounting purposes,
 
the 19.9 percent ownership interest retained by the Company
 
is deemed to have been
both divested and reacquired at its fair value on July 1, 2020 (see
 
Note 4).
At the date of the divestment, the Company recorded liabilities in discontinued
 
operations for estimated future costs and other cash payments
 
of $487 million for
various contractual items relating to the sale of the business
 
including required future cost reimbursements payable
 
to Hitachi Energy, costs to be
 
incurred by the
Company for the direct benefit of Hitachi Energy,
 
and an amount due to Hitachi Ltd in connection
 
with the expected purchase price finalization of the closing
 
debt
and working capital balances. From the date of the disposal
 
through June 30, 2022,
 
$438 million of these liabilities had been paid and
 
are reported as reductions in
the cash consideration received, of which $74 million and $53
 
million was paid during the six and three months ended June 30,
 
2022,
 
respectively. In the six and
three months ended June 30, 2021, total cash payments made
 
in connection with these liabilities amounted to $70 million
 
and $26 million,
 
respectively. At
June 30, 2022,
 
the remaining amount recorded was $64 million.
During the second quarter of 2022,
 
the Company completed the legal title transfer
 
of the remaining entities of Power Grids business to Hitachi
 
Energy, resulting
 
in
the release of $12 million held in escrow and included in Current
 
Restricted Cash at December 31, 2021.
Upon closing of the sale, the Company entered into various
 
transition services agreements (TSAs). Pursuant to these
 
TSAs, the Company and Hitachi Energy
provide to each other, on an interim, transitional
 
basis, various services. The services
 
provided by the Company primarily include finance, information technology,
human resources and certain other administrative services.
 
Under the current terms, the TSAs will continue for up
 
to 3 years, and can only be extended on an
exceptional basis for business-critical services for an additional period which
 
is reasonably necessary to avoid a material adverse
 
impact on the business. In the
six and three months ended June 30, 2022, the Company has
 
recognized within its continuing operations, general
 
and administrative expenses incurred to perform
the TSA, offset by $76 million and $38 million, respectively,
 
in TSA-related income for such services
 
that is reported in Other income
 
(expense). In the six and
three months ended June 30, 2021, Other income (expense)
 
included $88 million and $41 million, respectively,
 
of TSA-related income for such services.
Discontinued operations
As a result of the sale of the Power Grids business, substantially
 
all assets and liabilities related to Power Grids have
 
been sold. As this divestment represented
 
a
strategic shift that would have a major effect on the Company’s
 
operations and financial results, the
 
results of this business were presented as discontinued
operations and the assets and liabilities were presented as held
 
for sale and in discontinued operations. After the
 
date of sale, certain business contracts in the
Power Grids business continue to be executed by subsidiaries
 
of the Company for the benefit/risk of Hitachi Energy
 
.
 
Assets and liabilities relating to, as well as
 
the
net financial results of, these contracts will continue to be
 
included in discontinued operations until they have been completed
 
or otherwise transferred to Hitachi
Energy.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Amounts recorded in discontinued operations were as follows:
Six months ended
Three months ended
($ in millions)
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Total revenues
Total cost of sales
Gross profit
Expenses
(11)
(9)
(5)
(5)
Change to net gain recognized on sale of the Power Grids business
(9)
(27)
(4)
(3)
Loss from operations
(20)
(36)
(9)
(8)
Net interest income (expense) and other finance expense
Non-operational pension (cost) credit
Loss from discontinued operations before taxes
(20)
(36)
(9)
(8)
Income tax
Loss from discontinued operations, net of
 
tax
(20)
(36)
(9)
(8)
In addition,
 
the Company also has retained obligations (primarily for environmental
 
and taxes) related to other businesses
 
disposed or otherwise exited that
qualified as discontinued operations. Changes to these retained obligations
 
are also included in Loss from discontinued operations,
 
net of tax, above.
The major components of assets and liabilities held for sale and
 
in discontinued operations in the Company’s Consolidated
 
Balance Sheets are summarized as
follows:
($ in millions)
Jun. 30, 2022
(1)
Dec. 31, 2021
(1)
Receivables, net
110
131
Other current assets
12
5
Current assets held for sale and in discontinued
 
operations
122
136
Accounts payable, trade
52
71
Other liabilities
254
310
Current liabilities held for sale and in discontinued
 
operations
306
381
Other non-current liabilities
28
43
Non-current liabilities held for sale and in discontinued
 
operations
28
43
(1)
 
At June 30, 2022, and December 31, 2021, the balances reported as held for sale and in discontinued operations pertain to Power Grids activities and other obligations which will
remain with the Company until such time as the obligation is settled or the activities are fully wound down.
Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Six months ended June 30,
Three months ended June 30,
($ in millions, except number of acquired businesses)
2022
2021
2022
2021
Purchase price for acquisitions (net of cash acquired)
(1)
138
26
26
Aggregate excess of purchase price
over fair value of net assets acquired
(2)
191
11
11
Number of acquired businesses
 
1
1
1
(1)
 
Excluding changes in cost- and equity-accounted companies.
(2)
 
Recorded as goodwill.
In the table above, the “Purchase price for acquisitions”
 
and “Aggregate excess of purchase price over fair value of
 
net assets acquired” amounts for the six
months ended June 30, 2022, relate primarily to the acquisition of
 
InCharge Energy, Inc.
 
(In-Charge).
Acquisitions of controlling interests have been accounted for
 
under the acquisition method and have been included in
 
the Company’s Consolidated Financial
Statements since the date of acquisition.
 
While the Company uses its best estimates and assumptions
 
as part of the purchase price allocation process
 
to value assets acquired and liabilities assumed
 
at
the acquisition date, the purchase price allocation for acquisitions
 
is preliminary for up to 12 months after the acquisition
 
date and is subject to refinement as more
detailed analyses are completed and additional information about
 
the fair values of the assets and liabilities becomes available.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
 
Q2 2022
 
FINANCIAL
 
INFORMATION
On January 26, 2022, the Company increased its ownership in
 
In-Charge to a 60 percent controlling interest through a stock
 
purchase agreement. The resulting
cash outflows for the Company amounted to $135 million (net
 
of cash acquired of $4 million). The acquisition expands
 
the market presence of the E-mobility
Division, particularly in the North American market. In connection with
 
the acquisition, the Company’s pre-existing
 
13.2 percent ownership of In-Charge was
revalued to fair value and a gain of $32 million was recorded
 
in Other income (expense) in the six months ended June
 
30, 2022. The Company entered into an
agreement with the remaining noncontrolling shareholders
 
allowing either party to put or call the remaining 40
 
percent of the shares until 2027. The amount for
which either party can exercise their option is dependent on
 
a formula based on revenues and thus, the amount
 
is subject to change. As a result of this agreement,
the noncontrolling interest is classified as Redeemable noncontrolling
 
interest (i.e. mezzanine equity) in the Consolidated
 
Balance Sheets and was initially
recognized at fair value.
There were no significant business acquisitions for the six months
 
ended June 30, 2021.
Investments in equity-accounted companies
In connection with the divestment of its Power Grids business
 
to Hitachi (see Note 3), the Company retained a 19.
 
9
 
percent interest in the business and obtained
an option, exercisable with three-months’ notice commencing
 
April 2023, granting it the right to require Hitachi to purchase
 
this investment at fair value, subject to
a minimum floor price equivalent to a 10 percent discount compared
 
to the price paid for the initial 80.1 percent. The
 
Company has concluded that based on its
continuing involvement with the Power Grids business, including
 
membership in its governing board of directors,
 
it has significant influence over Hitachi Energy.
 
As
a result, the investment (including the value of the option)
 
is accounted for using the equity method.
At the date of the divestment of the Power Grids business,
 
the fair value of Hitachi Energy exceeded the book
 
value of the underlying net assets.
 
At June 30, 2022,
and December 31, 2021,
 
the reported value of the investment in Hitachi
 
Energy includes $1,428 million and $1,474 million, respectively,
 
for the Company’s
19.9 percent share of this basis difference. The Company
 
amortizes its share of these differences
 
over the estimated remaining
 
useful lives of the underlying
assets that gave rise to this difference, recording the amortizati
 
on, net of related deferred tax benefit, as a reduction of
 
income from equity-accounted companies.
As of June 30, 2022, the Company determined that no impairment
 
of its equity-accounted investments existed.
The carrying value of the Company’s investments in equity-accounted
 
companies and respective percentage of ownership
 
is as follows:
Ownership as of
Carrying value at
($ in millions, except ownership share in %)
June 30, 2022
June 30, 2022
December 31, 2021
Hitachi Energy Ltd
19.9%
1,551
1,609
Others
66
61
Total
1,617
1,670
In the six and three months ended June 30, 2022 and 2021
 
,
 
the Company recorded its share of the earnings of
 
investees accounted for under the equity method of
accounting in Other income (expense), net, as follows:
Six months ended June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Income (loss) from equity-accounted companies, net of taxes
(10)
4
1
8
Basis difference amortization (net of deferred income tax benefit)
(52)
(61)
(15)
(30)
Loss from equity-accounted companies
(62)
(57)
(14)
(22)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Note 5
Cash and equivalents, marketable securities and short-term investments
Cash and equivalents, marketable securities and short-term
 
investments consisted of the following:
June 30, 2022
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
 
recorded in net income
Cash
1,752
1,752
1,752
Time deposits
1,074
1,074
984
90
Equity securities
411
5
416
416
3,237
5
3,242
2,736
506
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
270
2
(12)
260
260
Other government obligations
122
122
122
Corporate
63
(6)
57
57
455
2
(18)
439
439
Total
3,692
7
(18)
3,681
2,736
945
Of which:
 
Restricted cash, current
23
Restricted cash, non-current
301
December 31, 2021
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
2,752
2,752
2,752
Time deposits
2,037
2,037
1,737
300
Equity securities
569
18
587
587
5,358
18
5,376
4,489
887
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
203
7
(1)
209
209
Corporate
74
1
(1)
74
74
277
8
(2)
283
283
Total
5,635
26
(2)
5,659
4,489
1,170
Of which:
Restricted cash, current
30
Restricted cash, non-current
300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
 
Q2 2022
 
FINANCIAL
 
INFORMATION
Note 6
Derivative financial instruments
The Company is exposed to certain currency,
 
commodity, interest rate and equity
 
risks arising from its global operating, financing and
 
investing activities. The
Company uses derivative instruments to reduce and manage the
 
economic impact of these exposures.
Currency risk
 
Due to the global nature of the Company’s operations, many
 
of its subsidiaries are exposed to currency risk
 
in their operating activities from entering into
transactions in currencies other than their functional currency.
 
To manage such
 
currency risks, the Company’s policies require its
 
subsidiaries to hedge their
foreign currency exposures from binding sales and purchase
 
contracts denominated in foreign currencies. For forecasted foreign currency
 
denominated sales of
standard products and the related foreign currency denominated purchases,
 
the Company’s policy is to hedge up to a maximum of
 
100 percent of the forecasted
foreign currency denominated exposures, depending on the
 
length of the forecasted exposures. Forecasted
 
exposures greater than 12 months are not hedged.
Forward foreign exchange contracts are the main instrument used to
 
protect the Company against the volatility of future cash
 
flows (caused by changes in
exchange rates) of contracted and forecasted sales and purchases
 
denominated in foreign currencies. In addition, within
 
its treasury operations, the Company
primarily uses foreign exchange swaps and forward foreign exchange
 
contracts to manage the currency and timing mismatches
 
arising in its liquidity management
activities.
Commodity risk
Various commodity products
 
are used in the Company’s manufacturing activities.
 
Consequently it is exposed to volatility in future cash flows arising from
 
changes
in commodity prices. To
 
manage the price risk of commodities, the Company’s
 
policies require that its subsidiaries hedge the commodity
 
price risk exposures from
binding contracts, as well as at least 50 percent (up to a maximum
 
of 100 percent) of the forecasted commodity exposure over
 
the next 12 months or longer (up to
a maximum of 18 months). Primarily swap contracts are used to
 
manage the associated price risks of commodities.
Interest rate risk
 
The Company has issued bonds at fixed rates. Interest rate swaps
 
and cross-currency interest rate swaps are used to manage
 
the interest rate and foreign
currency risk associated with certain debt and generally such
 
swaps are designated as fair value hedges. In addition, from time
 
to time, the Company uses
instruments such as interest rate swaps, interest rate futures,
 
bond futures or forward rate agreements to manage
 
interest rate risk arising from the Company’s
balance sheet structure but does not designate such instruments
 
as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of
 
its warrant appreciation rights (WARs)
 
issued under its management
 
incentive plan. A WAR gives its
holder the right to receive cash equal to the market price of
 
an equivalent listed warrant on the date of exercise.
 
To eliminate
 
such risk, the Company has
purchased cash-settled call options, indexed to the shares of the
 
Company, which entitle the Company
 
to receive amounts equivalent to its obligations
 
under the
outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective in
 
its use of derivatives is to minimize exposures arising from
 
its business, certain derivatives are designated
and qualify for hedge accounting treatment while others either are
 
not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange and
 
interest rate derivatives (whether designated as hedges
 
or not) were as follows:
Type of derivative
Total notional amounts
 
at
($ in millions)
June 30, 2022
December 31, 2021
June 30, 2021
Foreign exchange contracts
14,470
11,276
9,309
Embedded foreign exchange derivatives
850
815
893
Cross-currency interest rate swaps
833
906
951
Interest rate contracts
3,049
3,541
3,553
Derivative commodity contracts
The Company uses derivatives to hedge its direct or indirect exposure
 
to the movement in the prices of commodities which are
 
primarily copper, silver and
aluminum. The following table shows the notional amounts of outstanding
 
derivatives (whether designated as hedges or not), on
 
a net basis, to reflect the
Company’s requirements for these commodities:
Type of derivative
Unit
Total notional amounts
 
at
June 30, 2022
December 31, 2021
June 30, 2021
Copper swaps
metric tonnes
42,961
36,017
37,340
Silver swaps
ounces
2,844,285
2,842,533
2,306,804
Aluminum swaps
metric tonnes
7,350
7,125
7,325
Equity derivatives
At June 30, 2022, December 31, 2021, and June 30, 2021, the
 
Company held 9 million, 9 million and 15 million cash
 
-settled call options indexed to ABB Ltd
shares (conversion ratio 5:1) with a total fair value of $12
 
million, $29 million and $34 million, respectively.
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange
 
contracts to manage the foreign exchange risk
 
of its operations, commodity swaps to
manage its commodity risks and cash-settled call options to
 
hedge its WAR liabilities. The Company applies cash
 
flow hedge accounting in only limited cases. In
these cases, the effective portion of the changes in their
 
fair value is recorded in “Accumulated other comprehensive
 
loss” and subsequently reclassified into
earnings in the same line item and in the same period as
 
the underlying hedged transaction affects
 
earnings. For the six and three months ended June 30,
 
2022
and 2021, there were no significant amounts recorded for
 
cash flow hedge accounting activities.
Fair value hedges
To reduce its interest
 
rate exposure arising primarily from its debt issuance activities,
 
the Company uses interest rate swaps
 
and cross-currency interest rate
swaps. Where such instruments are designated as fair value hedges,
 
the changes in the fair value of these instruments,
 
as well as the changes in the fair value of
the risk component of the underlying debt being hedged, are recorded
 
as offsetting gains and losses in “Interest
 
and other finance expense”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
 
Q2 2022
 
FINANCIAL
 
INFORMATION
The effect of derivative instruments, designated and qualifying
 
as fair value hedges, on the Consolidated Income
 
Statements was as follows:
Six months ended
 
June 30,
Three months ended June 30,
($ in millions)
2022
2021
2022
2021
Gains (losses) recognized in Interest and other finance expense:
 
Interest rate contracts
Designated as fair value hedges
(55)
(27)
(26)
(13)
Hedged item
56
28
27
13
Cross-currency interest rate swaps
Designated as fair value hedges
(94)
(25)
(49)
(2)
Hedged item
90
24
46
2
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not
 
qualify as either cash flow or fair value hedges
 
are economic hedges used for risk management
purposes. Gains and losses from changes in the fair values
 
of such derivatives are recognized in the same line
 
in the income statement as the economically
hedged transaction.
Furthermore, under certain circumstances, the Company
 
is required to split and account separately for foreign currency
 
derivatives that are embedded within
certain binding sales or purchase contracts denominated
 
in a currency other than the functional currency of the subsidiary
 
and the counterparty.
The gains (losses) recognized in the Consolidated Income Statements
 
on derivatives not designated in hedging relationships
 
were as follows:
Type of derivative not
Gains (losses) recognized in income
designated as a hedge
Six months ended June 30,
Three months ended June 30,
($ in millions)
Location
2022
2021
2022
2021
Foreign exchange contracts
Total revenues
(119)
(10)
(123)
50
Total cost of sales
34
(24)
40
(20)
SG&A expenses
(1)
23
(1)
15
(8)
Non-order related research
 
and development
1
(1)
Interest and other finance expense
(54)
(119)
(76)
(13)
Embedded foreign exchange
Total revenues
5
(13)
7
1
contracts
Total cost of sales
(2)
(2)
(3)
(1)
Commodity contracts
Total cost of sales
(51)
63
(86)
27
Other
Interest and other finance expense
3
1
2
1
Total
(160)
(106)
(224)
37
(1)
 
SG&A expenses represent
 
“Selling, general and
 
administrative expenses”.
The fair values of derivatives included in the Consolidated Balance
 
Sheets were as follows:
June 30, 2022
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
4
5
Interest rate contracts
2
4
24
Cross-currency interest rate swaps
268
Cash-settled call options
12
Total
14
8
297
Derivatives not designated as hedging instruments:
Foreign exchange contracts
82
21
251
12
Commodity contracts
3
56
Interest rate contracts
4
5
Embedded foreign exchange derivatives
19
3
14
9
Total
108
24
326
21
Total fair value
122
24
334
318