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 October 2023
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 October
 
18, 2023 titled “Q3
 
2023 results”.
2.
Q3 2023 Financial Information.
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
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abb2023q3fininfop3i0
ZURICH, SWITZERLAND, OCTOBER
 
18,
 
2023
Q3 2023 results
Positive book-to-bill,
 
high margin and strong
 
cash flow
delivery
 
Orders $8,052 million,
 
-2%; comparable
1
 
+2%
 
 
Revenues $7,968 million,
 
+8%; comparable
1
 
+11%
 
 
Income from operations
 
$1,259 million;
 
margin 15.8%
 
 
Operational EBITA
1
 
$1,392 million;
 
margin
1
 
17.4%
 
Basic EPS $0.48;
 
+149%
2
 
Cash flow from operating
 
activities
4
 
$1,351 million; +71%
Ad hoc Announcement pursuant to Art. 53
 
Listing Rules of SIX Swiss Exchange
Q3 2023
First nine months
Press Release
“Q3 2023 was a strong
 
quarter for ABB including
 
a positive book-to-bill
 
ratio, Operational EBITA
margin again above
 
17% and a strong cash flow
 
delivery putting
 
us in a good position to
achieve an annual free cash
 
flow of about $3
 
billion.”
Björn Rosengren
, CEO
KEY FIGURES
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
1
9M 2023
9M 2022
US$
Comparable
1
Orders
8,052
8,188
-2%
2%
26,169
26,368
-1%
4%
Revenues
7,968
7,406
8%
11%
23,990
21,622
11%
16%
Gross Profit
2,762
2,481
11%
8,366
7,052
19%
as % of revenues
34.7%
33.5%
+1.2 pts
34.9%
32.6%
+2.3 pts
Income from operations
1,259
708
78%
3,755
2,152
74%
Operational EBITA
1
1,392
1,231
13%
11%
 
3
4,094
3,364
22%
22%
 
3
as % of operational
 
revenues
1
17.4%
16.6%
+0.8 pts
17.0%
15.5%
+1.5 pts
Income from continuing
 
operations, net of
 
tax
905
420
115%
2,902
1,469
98%
Net income attributable
 
to ABB
882
360
145%
2,824
1,343
110%
Basic earnings
 
per share ($)
 
0.48
0.19
149%
2
1.52
0.70
116%
2
Cash flow from
 
operating activities
4
1,351
791
71%
2,393
600
299%
1
For a reconciliation of non-GAAP measures, see “supplemental reconciliations and
 
definitions” in the attached Q3 2023 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.
 
abb2023q3fininfop4i0
 
 
ABB INTERIM
 
REPORT
I
Q3
 
2023
 
2
The third quarter developed
 
largely as planned,
 
and I am
pleased about the comparable
 
order growth of 2%
 
supporting a
book-to-bill ratio of 1.01.
 
This means we delivered
 
on our
quarterly expectation of
 
book-to-bill in positive
 
territory, despite
a double-digit comparable
 
increase in revenues.
 
We had yet
another quarter with
 
strong operational
 
performance across
 
the
business areas, and
 
this time coupled with
 
a very strong cash
flow generation,
 
setting
 
us up to achieve
 
free cash flow of about
$3 billion in 2023.
 
In total, Operational
 
EBITA increased by 13% and we
 
achieved
an Operational EBITA margin of
 
17.4%, an improvement
 
of 80
basis points from the
 
corresponding period
 
last year.
 
This was
supported by a strong
 
price contribution
 
which outweighed
 
the
impacts from inflation in labor
 
costs, with additional
 
support
from efficient execution
 
of higher volumes
 
in production. It was
good to see that our
 
focus on cash conversion
 
yielded results
with Cash flow from operating
 
activities at $1.4
 
billion, an
increase of $560 million
 
from last year supported
 
mainly by
higher earnings
 
and better Net working
 
capital management.
As in recent quarters,
 
the order development
 
was strong in
 
the
project-
 
and systems-related
 
businesses that is often
 
linked to
our various medium voltage
 
offerings. This more
 
than offset the
impact from a decline in
 
parts of the short-cycle
 
businesses.
 
In
total, most customer segments
 
remained overall
 
stable or
improved, with declines
 
mainly noted in
 
the discrete automation
and construction segments.
 
Order growth was
 
strongest in
business area Process
 
Automation,
 
supported by a
 
strong
underlying market and
 
the added contribution
 
from a large order
amounting to approximately
 
$285 million.
 
In contrast, order
intake in Robotics & Discrete
 
Automation was hampered
 
by
customers normalizing
 
order patterns in a period
 
of shortening
delivery lead times, with
 
added pressure
 
from inventory
adjustments among
 
robotics-related distribution
 
channels in
China.
From a geographical
 
perspective, the Americas
 
region was the
growth engine for orders,
 
driven by double-digit
 
comparable
growth in the United
 
States and supported
 
by the timing of
 
large
orders booked. Also,
 
Asia, Middle East
 
and Africa improved
 
on
a comparable basis where
 
India noted yet another
 
quarter with
strong year-on-year development.
 
In contrast, orders in China
declined at a low single-digit
 
comparable growth rate
particularly hampered
 
by weakness in robotics
 
and construction
demand.
 
Outside of these segments
 
and towards the
 
end of the
quarter we noted some
 
indications of the
 
underlying Chinese
market stabilizing,
 
although uncertainty
 
is admittedly
 
high.
Europe declined
 
to the tune of a low double-digit
 
rate, and while
the underlying market
 
softened,
 
the rate of decline
 
was
accentuated by a high
 
comparable last year
 
due to timing of
larger orders booked.
Sustainability is embedded
 
in everything we do,
 
and I was
pleased to see this
 
being recognized
 
by MSCI and the upgrade
of ABB to the highest
 
ESG rating of AAA,
 
meaning we score
 
in
the top 10%
 
of the peer universe.
During the quarter, Process Automation
 
expanded its
partnership with Northvolt,
 
providing electrification
 
and
automation technologies
 
to power the world’s largest
 
battery
recycling facility, Revolt Ett.
 
The recycling site will
 
process
125,000 tons of end-of-life
 
batteries and battery
 
production
waste each year – making
 
it the largest plant
 
of its kind in
 
the
world.
We recently took additional
 
steps to support our
 
customers on
their journey towards
 
more sustainable
 
and flexible production
with Robotics & Discrete
 
Automation expanding
 
its robot family
with four models in 22
 
variants and energy
 
savings of up
 
to 20
percent. We have also
 
announced our plans
 
to invest $280
million in our Robotics
 
business in Sweden.
 
The site will serve
as a European hub, and
 
further strengthen
 
our capabilities in
serving our customers in
 
Europe with locally manufactured
products in a growing
 
market. This is to
 
replace the existing
 
old
robotics facilities at the
 
site, and the new
 
Campus is planned
 
to
open in late 2026.
To
 
mark the completion
 
of all divisional
 
portfolio divestments
announced at the end of
 
2020, we successfully
 
closed the
divestment of the Power
 
Conversion division.
 
Going forward we
will continuously
 
review the product groups
 
within all divisions
to optimize the portfolio
 
as part of the ABB
 
Way operating
model.
Björn Rosengren
CEO
In the
fourth quarter of 2023
, we anticipate low-
 
to mid single
digit comparable revenue
 
growth.
 
Additionally, we expect the
historical pattern to repeat
 
with
 
the Operational EBITA
 
margin in
Q4 to be sequentially
 
lower from Q3, and
 
to be around 16%.
In full-year 2023
, we anticipate comparable
 
revenue growth
 
to
be in the low teens
 
range and we expect
 
Operational EBITA
margin to be in the range
 
of 16.5%
 
- 17.0%.
Outlook
CEO summary
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
3
Strong demand for the
 
project-
 
and systems-related
businesses,
 
often linked to the
 
medium voltage
 
offerings,
more than offset a decline
 
in parts of the short-cycle
businesses hampered
 
by inventory adjustments
 
among
channel partners and
 
normalizing order
 
patterns. In total,
orders
 
declined by 2% (up comparable
 
2%) year-on-year to
8,052 million. Comparable
 
order growth was driven
 
by the
higher contribution
 
from large orders, including
 
the one in the
Process Automation business
 
area for $285
 
million, which
will be executed over
 
a multi-year period.
 
Timing of booking significant
 
orders supported
 
the Americas
growth of 9% (comparable
 
13%).
 
Orders in Asia, Middle
 
East
and Africa declined by 5%
 
(up comparable 4%) as
 
the
decline in China
 
of 10% (comparable 3%) was
 
more than
offset by strength elsewhere
 
in the region, including
 
strong
growth in India. The sharp
 
order decline
 
of 11% (comparable
13%) in Europe was
 
the result of softer markets
 
including the
impact from customers
 
normalizing inventory
 
levels, but also
impacted by last year’s
 
high comparable
 
supported by timing
of customers placing large
 
orders.
 
Demand in the automotive
 
segment improved,
 
supported
by EV-related investments, while
 
the general industry
 
and
consumer-related robotics
 
segments declined.
 
In transport
& infrastructure, there were
 
positive developments
 
in
marine,
 
ports and renewables.
The machine builder
 
segment declined as
 
customers
normalized order patterns
 
in the face of
 
shortening delivery
lead times.
In buildings,
 
there was weakness
 
in all three regions
 
in
residential-related
 
demand. In the commercial
 
construction
segment the United States
 
stood out with a
 
continued
robust momentum and
 
outperformed a
 
broadly stable
Europe and declining
 
China.
 
Demand in the process-related
 
businesses was
 
strong
across the board, with particular
 
strength in the oil
 
& gas
segment, and it held up
 
well also for refining,
petrochemicals and the energy-related
 
low carbon
segments.
Revenues increased
 
by 8% (11% comparable) to
$7,968 million and
 
benefitted primarily from
 
increased
volumes through execution
 
of the order backlog,
 
combined
with a strong price contribution.
 
These benefits
 
more than
offset a slight adverse impact
 
from portfolio changes.
Revenues increased
 
in all business areas,
 
supported by
comparable growth in
 
most divisions as
 
the order backlog
was executed.
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q3 2023
Q3 2022
US$
Comparable
Europe
2,810
2,494
13%
10%
The Americas
2,775
2,452
13%
16%
Asia, Middle East
and Africa
2,383
2,460
-3%
6%
ABB Group
7,968
7,406
8%
11%
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q3 2023
Q3 2022
US$
Comparable
Europe
2,391
2,682
-11%
-13%
The Americas
3,258
2,980
9%
13%
Asia, Middle East
and Africa
2,403
2,526
-5%
4%
ABB Group
8,052
8,188
-2%
2%
Growth
Q3
Q3
Change year-on-year
Orders
Revenues
Comparable
2%
11%
FX
0%
1%
Portfolio changes
-4%
-4%
Total
-2%
8%
Orders and revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
4
Gross profit
Gross profit increased
 
strongly by 11% (9% constant
 
currency) to
$2,762 million, reflecting
 
a strong gross margin
 
improvement of
120 basis points to 34.7%.
 
Gross margin improved
 
in three out of
four business areas,
 
with only Process
 
Automation declining
 
mainly
due to the absence
 
of the exited high
 
margin Turbocharging
division (Accelleron).
 
Income from operations
Income from operations
 
amounted to
 
$1,259 million and
 
increased
by 78% year-on-year.
 
The improvement
 
was driven by operational
performance and contribution
 
from gains of $71
 
million from selling
businesses, including
 
the divestment of the
 
Power Conversion
division,
 
but also by last year’s
 
period being burdened
 
by the
recording of a provision
 
of $325 million
 
relating to the legacy
 
Kusile
project.
 
Margin on Income
 
from operations reached
 
15.8%, up by
620 basis points year-on-year.
Operational EBITA
 
Operational EBITA improved by 13%
 
year-on-year to $1,392
 
million
and the margin was up
 
by 80 basis points
 
to 17.4%. Key drivers
 
to
the higher earnings
 
were the impacts
 
from robust price activities
and operational
 
leverage on higher
 
volumes, which more
 
than
offset adverse impacts
 
from inflation in labor
 
costs and from
divestments. Selling, general
 
and administrative expenses
 
declined
in relation to revenues
 
to 16.7%, from 17.2%
 
last year, mostly due
to the absence of
 
costs related to the spin-off
 
of the Accelleron
business in last year’s
 
period.
 
Operational EBITA in Corporate
 
and
Other amounted to -$109
 
million, of which
 
-$39 million related
 
to
the E-mobility business
 
where operational
 
performance was
hampered by the ongoing
 
reorganization to ensure
 
a more focused
portfolio, and some
 
inventory-related provisions.
Net finance expenses
Net finance expense was
 
$36 million and
 
increased slightly from
last year’s $28
 
million.
Income tax
Income tax expense was
 
$326 million with
 
an effective tax rate of
26.5%.
Net income and earnings
 
per share
Net income attributable
 
to ABB was $882
 
million
 
and more than
doubled from last year
 
driven by improved
 
operational performance
and lower non-operational
 
items.
 
This resulted in basic
 
earnings per
share of $0.48, up
 
from $0.19 last year.
Operational EBITA
($ millions)
Q3 2023
Q3 2022
Corporate and Other
E-mobility
(39)
(4)
Corporate costs, intersegment
eliminations and other
1
(70)
(52)
Total
(109)
(56)
1
Majority of which relates to underlying corporate
Earnings
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
5
Net working capital
Net working capital amounted
 
to $4,041 million,
 
increasing
year-on-year from $3,407
 
million driven mainly
 
by the
increase in inventories
 
and receivables. Net
 
working capital
decreased sequentially
 
from $4,585 million
 
driven mainly by
strong trade net working
 
capital management
 
and an
increase in accrued
 
expenses
 
related to the timing
 
of
payments of accruals.
 
Net working capital
 
as a percentage
of revenues
1
 
was 12.8%, down sequentially
 
from 14.7%.
Capital expenditures
Purchases of property, plant and equipment
 
and intangible
assets amounted to $175
 
million.
 
Net debt
Net debt
1
 
amounted to $2,872
 
million at the end
 
of the quarter
and decreased from $4,117 million
 
year-on-year,
 
and
declined sequentially
 
from $4,165 million.
 
The sequential
 
net
decrease was driven by
 
the strong operational
 
cash flow in
the quarter, and further supported
 
by the proceeds
 
from the
sale of the Power Conversion
 
business.
Cash flows
Cash flow from operating
 
activities was $1,351
 
million,
representing a steep year-on-year
 
increase from $791
 
million.
This was driven by strong
 
improvements in all
 
business areas
on the back of higher
 
earnings and a reduction
 
of net working
capital this quarter versus
 
a build-up of net
 
working capital in
the prior year mainly
 
related to inventories.
Share buyback program
A share buyback program
 
of up to $1 billion
 
was launched on
April 3, 2023. During
 
the third quarter, 5,244,809
 
shares were
repurchased on the second
 
trading line for approximately
 
$200
million. ABB’s total number
 
of issued shares,
 
including shares
held in treasury, amounts to 1,882,002,575.
($ millions,
 
unless otherwise
 
indicated)
Sep. 30
2023
Sep. 30
2022
Dec. 31
2022
Short term debt and
 
current
maturities of long
 
-term debt
2,951
 
3,068
 
2,535
 
Long-term debt
4,899
 
4,530
 
5,143
 
Total debt
7,850
 
7,598
 
7,678
 
Cash & equivalents
3,869
 
2,365
 
4,156
 
Restricted cash
 
- current
18
 
323
 
18
 
Marketable securities
 
and
 
short-term investments
1,091
 
793
 
725
 
Restricted cash
 
- non-current
Cash and marketable
 
securities
4,978
 
3,481
 
4,899
 
Net debt (cash)*
2,872
 
4,117
 
2,779
 
Net debt (cash)*
 
to EBITDA ratio
0.5
 
0.7
 
0.7
 
Net debt (cash)*
 
to Equity ratio
0.21
 
0.34
 
0.21
 
*
At Sep. 30, 2023, Sep. 30, 2022 and Dec. 31, 2022,
 
net debt(cash) excludes net pension
(assets)/liabilities of $(414) million $(114) million and $(276) million,
 
respectively.
Balance sheet & Cash flow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
6
Orders and revenues
Demand linked to the
 
medium-voltage offerings
 
noted
strong year-on-year development
 
and more than offset
market softness in parts
 
of the short-cycle
 
business which
was hampered by distributors
 
normalizing inventory
 
levels in
the face of shortening
 
delivery lead times.
 
Total orders
amounted to $3,693
 
million and declined
 
2% (up
comparable 1%) impacted
 
by the divestment
 
of the Power
Conversion division
 
early in the quarter.
 
Demand was particularly
 
strong in the datacenters
 
and
chemical, oil & gas segments
 
with a solid development
noted in rail and green
 
energy-linked areas
 
like solar.
However, weakness was noted
 
in construction with
 
the
residential segment down
 
in all three regions
 
while in
commercial construction
 
the United States
 
stood out with
a continued robust
 
momentum and outperformed
 
a
broadly stable Europe
 
and declining
 
China.
 
In Asia, Middle East and
 
Africa orders decreased
 
by 5%
(up comparable 2%)
 
including a slight
 
comparable
improvement in China,
 
where signs of
 
sequential
stabilization emerged
 
towards the latter part
 
of the quarter
outside of the construction
 
segment.
 
The Americas
declined by 2% (up comparable
 
4%) with United States
down by 2% (up comparable
 
6%). Europe was stable
(down comparable
 
3%), including a 6% decline
 
in
Germany where weakness
 
in the residential
 
construction
market weighed on the
 
Smart Buildings
 
division.
Revenues amounted
 
to $3,561 million
 
and weakness in
the buildings segment
 
weighed on growth
 
in Smart
Buildings and Installation
 
Products, while the remaining
divisions contributed
 
to revenue growth
 
of 3%
(comparable 6%) with a
 
strong contribution
 
from price as
the key driver.
 
Profit
Operational EBITA increased by 15%
 
year-on-year and
amounted to $748 million,
 
supported by strong
 
operational
performance which more
 
than offset the absent
 
earnings
from portfolio changes.
 
The Operational EBITA margin
remained sequentially
 
strong at 20.8%, representing
 
an
improvement of 210 basis
 
points year-on-year.
Benefits
 
from a strong price execution
 
was the main
driver to the earnings
 
improvement, with
 
some additional
support from operational
 
leverage on slightly
 
higher
volumes.
 
The positive impact
 
from lower commodity
 
costs year-on-
year, was virtually offset by inflation
 
linked to labor.
 
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
9M 2023
9M 2022
US$
Comparable
Orders
3,693
3,772
-2%
1%
11,794
11,797
0%
3%
Order backlog
6,994
6,317
11%
16%
6,994
6,317
11%
16%
Revenues
3,561
3,471
3%
6%
10,886
10,121
8%
11%
Operational EBITA
748
651
15%
2,212
1,768
25%
as % of operational
 
revenues
20.8%
18.7%
+2.1 pts
20.3%
17.4%
+2.9 pts
Cash flow from
 
operating activities
1,051
715
47%
2,143
1,258
70%
No. of employees (FTE equiv.)
50,500
50,500
0%
Growth
Q3
Q3
Change year-on
 
-year
Orders
Revenues
Comparable
1%
6%
FX
0%
1%
Portfolio changes
-3%
-4%
Total
-2%
3%
Electrification
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
7
Orders and revenues
Total orders declined due to a high level
 
of larger bookings
 
in
last year’s period. Looking
 
beyond this impact,
 
it was a more
stable development
 
with a strong order
 
momentum reported
 
for
the long-cycle businesses,
 
while weakness was
 
noted in parts
of the short-cycle businesses.
 
Order intake amounted
 
to
$1,886 million, representing
 
a decrease of 4% (7%
comparable).
Demand improved in
 
the process-related
 
segments of
chemicals, oil & gas, pulp
 
& paper and mining,
 
however
declined in the more
 
short-cycle segments including
 
HVAC
linked to weakness in construction,
 
food & beverage and
electronics.
 
Order intake increased
 
by 10% (comparable
 
15%) in Asia,
Middle East and Africa,
 
supported by a double-digit
comparable growth in
 
China. Europe declined
 
sharply by
22%
 
(comparable 28%) mainly
 
due to the Traction-related
high order level last
 
year. The Americas increased
 
by 3%
(down comparable
 
3%) as the acquired
 
contribution was
more than offset by softness
 
in demand for the
 
low voltage
motors.
Execution of the order backlog
 
resulted in high revenues
 
of
$1,947
 
million, representing
 
an increase of 14%
 
(comparable
11%) year-on-year. Higher volumes
 
and earlier implemented
pricing activities both
 
contributed strongly
 
to comparable
growth.
 
Profit
 
All divisions contributed
 
to the strong 28%
 
year-on-year
improvement in Operational
 
EBITA to $390
 
million, driving the
Operational EBITA margin up by
 
200 basis points
 
to 19.8%.
 
Results were mainly supported
 
by the benefits from
 
a strong
price execution which
 
more than offset cost
 
inflation related
 
to
labor and raw materials.
Higher volume output
 
supported the
 
fixed cost absorption
 
in
production.
Strongest profitability improvements
 
were reported in
 
the motor
divisions, with Large Motors
 
& Generators as
 
the outperformer.
 
Divisional mix was slightly
 
positive due to strong
 
deliveries from
the drives and service-related
 
businesses.
Growth
Q3
Q3
Change year-on-year
Orders
Revenues
Comparable
-7%
11%
FX
1%
1%
Portfolio changes
2%
2%
Total
-4%
14%
Motion
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
9M 2023
9M 2022
US$
Comparable
Orders
1,886
1,966
-4%
-7%
6,285
6,247
1%
1%
Order backlog
5,108
4,613
11%
5%
5,108
4,613
11%
5%
Revenues
1,947
1,702
14%
11%
5,868
4,900
20%
20%
Operational EBITA
390
305
28%
1,157
845
37%
as % of operational
 
revenues
19.8%
17.8%
+2 pts
19.7%
17.2%
+2.5 pts
Cash flow from
 
operating activities
466
268
74%
935
507
84%
No. of employees (FTE equiv.)
22,100
20,700
7%
 
 
 
 
 
 
 
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
8
Orders and revenues
On a broad robust underlying
 
activity across the
 
customer
segments,
 
with the added
 
contribution of large
 
orders, order
intake reached $1,883 million
 
and increased
 
by 20%
(comparable 38%) year-on-year.
Order intake included
 
the booking of an order
 
at a value
of $285 million with fulfillment
 
due over a
 
multi-year
period.
The Energy Industries division
 
benefited from
 
strong
demand in the traditional
 
oil & gas segment,
 
but also
seeing high activity levels
 
in low carbon-related
 
areas
such as hydrogen,
 
LNG and carbon capture.
 
One
example of how Energy
 
Industries builds
 
further on its
value creation offer enabling
 
the clean energy transition,
is that it was contracted
 
to support the Danish
 
company
H2 Energy Esbjerg
 
ApS with electrical engineering
 
at its
hydrogen production
 
and distribution hub.
 
The plant will
convert renewable
 
electricity from offshore
 
wind into
about 90,000 tons of green
 
hydrogen per
 
year – the
equivalent of 1.9
 
million barrels of oil, supporting
 
the
decarbonization
 
of heavy industry and
 
road
transportation.
All divisions contributed
 
with a double-digit
 
growth in
revenues, which amounted
 
to $1,554 million, up
 
by 7%
(comparable 23%) year-on-year,
 
supported mainly by
volumes but also by a
 
positive price development.
 
Total
revenue growth was hampered
 
mainly by the absence
 
of
the Accelleron business
 
which
 
was spun-off in early
October 2022, meaning
 
this is the last quarter
 
of structural
impact.
Profit
The Operational EBITA was largely
 
stable year-on-year
 
at
$226
 
million, the result of a
 
strong revenue execution
 
which
offset the absence of earnings
 
related to the exited
Accelleron business.
 
The Operational EBITA margin
amounted to 14.6%,
 
representing a
 
decline of 70 basis
points as operational
 
improvements did
 
not quite offset the
adverse impact of 190
 
basis points due
 
to the portfolio
change.
Operational EBITA margin remained
 
stable or increased
in all divisions except
 
for a decline in Marine
 
& Ports,
which was somewhat impacted
 
by an adverse
 
mix due to
lower share of revenues
 
stemming from the arctic
 
marine
propulsion business.
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
9M 2023
9M 2022
US$
Comparable
Orders
1,883
1,568
20%
38%
5,665
5,079
12%
31%
Order backlog
7,135
6,006
19%
20%
7,135
6,006
19%
20%
Revenues
1,554
1,458
7%
23%
4,543
4,493
1%
19%
Operational EBITA
226
225
0%
670
645
4%
as % of operational
 
revenues
14.6%
15.3%
-0.7 pts
14.7%
14.2%
+0.5 pts
Cash flow from
 
operating activities
258
217
19%
558
470
19%
No. of employees (FTE equiv.)
20,900
22,400
-6%
Growth
Q3
Q3
Change year-on
 
-year
Orders
Revenues
Comparable
38%
23%
FX
2%
1%
Portfolio changes
-20%
-17%
Total
20%
7%
Process Automation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
 
9
Orders and revenues
With both divisions in
 
negative growth, total
 
orders declined
by 26% (comparable
 
27%), weighed
 
down by normalizing
order patterns and weakening
 
of the Chinese robotics
 
market.
Although it is difficult
 
to exactly assess, we
 
expect these
pressures to persist also
 
in the next couple
 
of quarters.
In Machine Automation
 
order intake was impacted
 
by
customers normalizing
 
order patterns to align
 
with
shortening delivery
 
lead times,
 
and awaiting deliveries
 
from
the Machine Automation
 
order backlog which
 
extends into
the second half of 2024.
In the Robotics division, orders
 
declined at a mid-single
digit rate.
 
This was driven by
 
a sequential softening
 
of the
underlying Chinese
 
market, with some additional
 
pressure
from local inventory reductions
 
among channel
 
partners
outside of the automotive
 
segment. Outside of
 
China
demand was more resilient
 
with growth in
 
the United States
and the decline in
 
Europe limited to a mid-single
 
digit rate.
From a geographical
 
perspective, orders in
 
the Americas
declined by 10%
 
(12%
 
comparable). The decline
 
in Europe
was 35% (comparable
 
38%) triggered
 
by machine
automation-related customers
 
normalizing order
 
patterns. In
Asia, Middle East and
 
Africa orders
 
declined by 20%
(comparable 17%), hampered
 
by China being
 
down by 32%
(comparable 28%) weighed
 
down mainly by robotics-related
channel partners adjusting
 
inventories.
Revenues increased
 
in both divisions as
 
the order backlog
was executed and amounted
 
to $929 million,
 
an
improvement of 12% (comparable
 
9%), supported
 
by
positive impacts from
 
both price and volumes.
 
Profit
Steep improvement of 29%
 
in Operational
 
EBITA to
$137 million was supported
 
by both divisions, and
 
Operational
EBITA margin was up by 190 basis
 
points and reached
 
14.7%.
Higher gross margin was
 
the key contributor
 
to the strong
earnings improvement,
 
mainly supported by positive
 
impacts
from earlier implemented
 
price increases
 
and improved
operational execution,
 
which more than offset
 
the impacts
from higher labor costs as
 
well as increased spend
 
in
Research & Development.
 
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
9M 2023
9M 2022
US$
Comparable
Orders
665
901
-26%
-27%
2,516
3,318
-24%
-22%
Order backlog
2,363
2,659
-11%
-14%
2,363
2,659
-11%
-14%
Revenues
929
828
12%
9%
2,788
2,290
22%
23%
Operational EBITA
137
106
29%
418
215
94%
as % of operational
 
revenues
14.7%
12.8%
+1.9 pts
15.0%
9.4%
+5.6 pts
Cash flow from
 
operating activities
92
82
12%
266
109
144%
No. of employees (FTE equiv.)
11,000
10,700
3%
Growth
Q3
Q3
Change year-on
 
-year
Orders
Revenues
Comparable
-27%
9%
FX
1%
3%
Portfolio changes
0%
0%
Total
-26%
12%
Robotics & Discrete Automation
 
 
 
 
 
 
 
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ABB INTERIM
 
REPORT
I
Q3
 
2023
10
Quarterly highlights
ABB was upgraded
 
from AA to AAA in
 
the MSCI ESG
rating. ESG ratings from
 
MSCI ESG Research
 
are
designed to measure
 
a company’s resilience
 
to financially
material environmental,
 
societal and governance
 
(ESG)
risks.
 
Achieving the highest
 
possible rating
 
of AAA, ABB
ranks in the top ten
 
percent of industry
 
peers.
As part of its commitment
 
to increase the circularity
 
of its
low-voltage solutions,
 
ABB expanded
 
its portfolio of
electrification products
 
that are made of sustainable
plastics in the Nordics,
 
Germany and Spain.
 
ABB’s Smart
Buildings division
 
is progressively substituting
 
about
1,000 tonnes per year
 
of conventional
 
fossil-based
plastics with sustainable
 
alternatives including
mechanically recycled
 
or bio-based plastics.
ABB’s Motion business area
 
and WindESCo have
 
signed
a strategic partnership,
 
where ABB has
 
acquired a
minority stake in the
 
company. US-based WindESCo
 
is
the leading analytics
 
software provider for
 
improving the
performance and reliability
 
of wind turbines. Leveraging
WindESCo’ solutions,
 
the investment will strengthen
ABB’s position as a key
 
enabler of a low
 
carbon society
and its position in the
 
renewable power
 
generation sector.
 
ABB will deliver complete
 
power, propulsion
 
and
automation systems
 
for two newbuild
 
short-sea container
ships of global logistics
 
company Samskip
 
Group. The
vessels will be among
 
the world’s first of their
 
kind to use
hydrogen as a fuel.
 
Both vessels will be
 
operating between
Oslo Fjord and Rotterdam,
 
a distance of approximately
 
700
nautical miles.
ABB has expanded
 
its large robot range
 
with four new
models and 22 variants
 
offering more choice,
 
increased
coverage and greater
 
performance.
 
The next generation
models offer customers superior
 
performance and
 
up to
20% energy savings thanks
 
to their lighter robot
 
design and
use of regenerative braking.
In August and September
 
2023, ABB organized
 
a range of
courses and trainings
 
for its employees
 
to better
understand the differences
 
between generations,
 
how to
challenge biases,
 
and benefit from intergenerational
collaboration. The events
 
were part of the company’s
commitment to the generations
 
dimension of its
 
D&I
strategy that is focused
 
on ensuring that
 
all generations are
welcomed and skills
 
and strengths are utilized
 
and bridged
across.
Q3 outcome
34% reduction year-on-year of CO
e emissions in own
operations mainly driven by shifting
 
to green electricity in
our operations.
9% increase year-on-year in LTIFR
 
due to a slight
increase in incidents in absolute numbers
 
.
3%-points increase year-on-year in share
 
of women in
senior management,
 
demonstrating steady progress
towards our target.
Sustainability
Q3 2023
Q3 2022
CHANGE
12M ROLLING
CO
e own operations
 
emissions,
 
Ktons scope 1 and 2
1
36
55
-34%
182
Lost Time Injury
 
Frequency
 
Rate (LTIFR),
 
frequency / 200,000
 
working hours
2
0.15
0.14
9%
0.13
Share of females
 
in senior management
positions, %
20.4
17.4
+3 pts
19.4
1
CO
 
equivalent emissions from site, energy use,
 
SF
 
and fleet, previous quarter
2
Current quarter Includes all incidents reported until October
 
5, 2023
 
 
 
 
 
ABB INTERIM
 
REPORT
I
Q3
 
2023
11
During Q3 2023
On July 3, ABB announced
 
the closing of
 
the divestment
of the Power Conversion
 
division at around $530
 
million.
As a result, ABB recorded
 
a non-operational
 
book gain of
$53 million in Income
 
from operations in
 
the third quarter
of 2023. Net cash impact
 
was approximately
 
$500
million. With this transaction,
 
ABB has completed all
divisional portfolio
 
divestments announced
 
at the end of
2020.
The demand for ABB’s offering
 
was robust in the
 
first nine
months of 2023.
 
Weakness in the short-cycle
 
businesses
from last year's high level
 
was offset by strong
 
momentum in
the project-
 
and systems businesses.
 
Orders remained stable
or increased in three out
 
of four business
 
areas, with a
decline noted only
 
in Robotics & Discrete
 
Automation, for a
combined total decrease
 
of 1% (up 4% comparable)
 
at
$26,169 million.
 
Revenues were supported
 
by strong
execution of the order backlog
 
and amounted
 
to
$23,990 million, up by 11% (16% comparable),
 
overall
implying a book-to-bill
 
of 1.09.
Income from operations
 
amounted to
 
$3,755 million, up from
$2,152 million year-on-year.
 
This increase can be
 
attributed
mostly to an improved
 
operational performance.
 
In addition,
the result in the first
 
three quarters last
 
year was hampered
 
by
charges of approximately
 
$195 million due
 
to the exit of a
legacy project in non-core
 
business as well
 
as a provision of
$325 million related
 
to the legacy Kusile
 
project.
Operational EBITA increased by 22%
 
year-on-year to
$4,094 million,
 
up from $3,364 million
 
in last year’s period
and the Operational
 
EBITA margin improved by 150 basis
points to 17.0%. The increase
 
was driven by higher
 
margins
across all business areas.
 
Main drivers of
 
the margin
expansion were operating
 
leverage on higher
 
volumes from
backlog execution
 
as well as the impacts
 
from earlier
implemented price increases,
 
which more
 
than offset
inflation in labor and
 
input cost. Corporate and
 
Other
Operational EBITA amounted to
 
-$363 million.
 
Thereof, an
amount of -$134 million
 
can be attributed to
 
the E-mobility
business, which was negatively
 
affected by the ongoing
reorganization to ensure
 
a more focused
 
portfolio, and
some inventory-related
 
provisions.
Net finance expenses increased
 
by $25 million
 
to
$82 million, whereas
 
non-operational
 
pension credits
decreased by $79 million
 
to $23 million in comparison
 
to
last year’s period,
 
reflecting the impact
 
of higher interest
rates. Income tax expense
 
was $794 million
 
reflecting a tax
rate of 21.5%. This includes
 
a net benefit realized
 
on a
favorable resolution
 
of a prior year tax matter
 
relating to the
Power Grids business
 
in the current year, as well
 
as the
impact of non-deductible
 
regulatory penalties
 
related to the
Kusile project in the prior
 
year.
Net income attributable
 
to ABB was $2,824
 
million, up from
$1,343
 
million year-on-year. Basic earnings
 
per share was
$1.52, representing an
 
increase of 116% compared
 
with the
first nine months last year.
Significant events
First nine months 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB INTERIM
 
REPORT
I
Q3
 
2023
12
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2023
Electrification
Power Conversion
 
division
3-Jul
~440
1,500
Electrification
Industrial Plugs
 
& Sockets business
3-Jul
~12
2
Process Automation
UK technical engineering
 
consultancy
 
business
1-May
~20
160
2022
Hitachi Energy JV (Power
 
Grids, 19.9%
 
stake)
28-Dec
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2023
Electrification
Eve Systems
1-Jun
~20
50
Motion
Siemens low voltage
 
NEMA Motors
2-May
~60
600
2022
Motion
PowerTech
 
Converter business
1-Dec
~60
300
Note: comparable growth calculation includes acquisitions and
 
divestments with revenues of greater than $50 million.
1
Represents the estimated revenues for the last
 
fiscal year prior to the announcement of the
 
respective acquisition/divestment unless otherwise stated.
ABB Group
Q1 2022
Q2 2022
Q3 2022
Q4 2022
FY 2022
Q1 2023
Q2 2023
Q3 2023
EBITDA, $ in million
1,067
794
906
1,384
4,151
1,389
1,494
1,453
Return on Capital
 
Employed, %
n.a.
n.a.
n.a.
n.a.
16.50
n.a.
n.a.
n.a.
Net debt/Equity
0.20
0.34
0.34
0.21
0.21
0.30
0.31
0.21
Net debt/ EBITDA 12M
 
rolling
0.4
0.7
0.7
0.7
0.7
0.9
0.8
0.5
Net working capital,
 
% of 12M rolling
 
revenues
12.1%
12.8%
11.7%
11.1%
11.1%
13.9%
14.7%
12.8%
Earnings per share,
 
basic, $
0.31
0.20
0.19
0.61
1.30
0.56
0.49
0.48
Earnings per share,
 
diluted, $
0.31
0.20
0.19
0.60
1.30
0.55
0.48
0.47
Dividend per share,
 
CHF
n.a.
n.a.
n.a.
n.a.
0.84
n.a.
n.a.
n.a.
Share price at the end
 
of period, CHF
1
29.12
24.57
24.90
28.06
28.06
31.37
35.18
32.80
Share price at the
 
end of period, $
1
30.76
25.43
24.41
30.46
30.46
34.30
39.32
35.86
Number of employees
 
(FTE equivalents)
104,720
106,380
106,830
105,130
105,130
106,170
108,320
107,430
No. of shares outstanding
 
at end of period (in
millions)
1,929
1,892
1,875
1,865
1,865
1,862
1,860
1,849
1
Data prior to October 3, 2022, has been adjusted
 
for the Accelleron spin-off (Source: FactSet).
Additional figures
Additional 2023 guidance
($ in millions,
 
unless otherwise
 
stated)
FY 2023
Net finance expenses
~(100)
from ~(130)
Effective tax
 
rate
~21%
 
4
unchanged
Capital Expenditures
~(800)
unchanged
($ in millions, unless
 
otherwise stated)
FY 2023
1
Q4 2023
Corporate and Other
 
Operational EBITA
2
~(300)
~(75)
unchanged
Non-operating items
Acquisition-related amortization
~(220)
~(55)
unchanged
Restructuring and related
3
~(180)
~(40)
from ~(150)
ABB Way transformation
~(180)
~(55)
unchanged
1
Excludes one project estimated to a total of ~$100 million,
 
that is ongoing in the non-core business. Exact exit timing
 
is difficult to assess due to legal proceedings etc.
2
Excludes Operational EBITA from E-mobility business.
3
Includes restructuring and restructuring-related as well as separation
 
and integration costs.
4
Includes net positive tax impact of $206 million linked
 
to a favorable resolution of certain prior year tax
 
matters in Q1 2023 but excludes the impact
 
of acquisitions or divestments or any
significant non-operational items.
Acquisitions and divestments, last twelve months
 
 
 
 
 
 
 
ABB INTERIM
 
REPORT
I
Q3
 
2023
13
For additional information please contact:
Media Relations
Phone: +41 43 317 71 11
Email:
media.relations@ch.abb.com
Investor Relations
Phone: +41 43 317 71 11
Email:
investor.relations@ch.abb.com
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Financial calendar
2023
 
November 30
 
Capital Markets Day in
 
Frosinone, Italy
 
2024
February 1
Q4 and FY 2023 results
March 21
Annual General Meeting,
 
Zurich
April 18
 
Q1 2024 results
July 18
 
Q2 2024 results
October 17
 
Q3 2024 results
This press release includes
 
forward-looking information
 
and
statements as well as
 
other statements
 
concerning the
outlook for our business,
 
including those
 
in the sections
 
of
this release titled “CEO
 
summary,” “Outlook,” and
“Sustainability”. These
 
statements are based
 
on current
expectations, estimates
 
and projections about
 
the factors
that may affect our future
 
performance, including
 
global
economic conditions,
 
the economic conditions
 
of the
regions and industries
 
that are major markets
 
for ABB.
These expectations, estimates
 
and projections are
 
generally
identifiable by statements
 
containing words
 
such as
“anticipates,” “expects,”
 
“estimates,” “plans,”
 
“targets,”
“guidance,”
 
“likely” or similar
 
expressions. However,
 
there
are many risks and uncertainties,
 
many of which
 
are beyond
our control, that could
 
cause our actual results
 
to differ
materially from the
 
forward-looking information
 
and
statements
made in this press release
 
and which could
 
affect our ability
to achieve any or all
 
of our stated targets.
 
Some important
factors that could cause
 
such differences
 
include, among
others, business risks associated
 
with the volatile global
economic environment
 
and political conditions,
 
costs
associated with compliance
 
activities, market
 
acceptance of
new products and services,
 
changes in governmental
regulations and
 
currency exchange rates
 
and such other
factors as may be discussed
 
from time to time in
 
ABB Ltd’s
filings with the U.S. Securities
 
and Exchange
 
Commission,
including its Annual
 
Reports on Form 20-F. Although ABB
Ltd believes that its expectations
 
reflected in any
 
such
forward looking statement
 
are based upon
 
reasonable
assumptions, it can give
 
no assurance that
 
those
expectations will be
 
achieved.
The Q3 2023
 
results press release
 
and presentation
 
slides
are available on
 
the ABB News Center
 
at
www.abb.com/news and on
 
the Investor Relations
homepage at www.abb.com/investorrelations.
 
A conference call and
 
webcast for analysts
 
and investors is
scheduled to begin
 
at 10:00 a.m. CET.
To
 
pre-register for the conference
 
call or to join the
webcast, please refer
 
to the ABB website:
www.abb.com/investorrelations.
 
The recorded session will
 
be available after
 
the event on
ABB’s website.
Important notice about forward-looking information
Q3 results presentation on October 18, 2023
ABB
 
(ABBN: SIX Swiss Ex)
 
is a technology leader
 
in electrification
 
and automation,
 
enabling a more
 
sustainable and
 
resource-
efficient future. The company’s
 
solutions connect
 
engineering
 
know-how and software
 
to optimize how
things are manufactured,
 
moved, powered and
 
operated. Building
 
on more than 130
 
years of excellence,
ABB’s ~105,000 employees
 
are committed to driving
 
innovations
 
that accelerate industrial
 
transformation.
 
abb2023q3fininfop16i1 abb2023q3fininfop16i2
1
Q3 2023 FINANCIAL INFORMATION
October 18,
 
2023
Q3 2023
Financial information
abb2023q3fininfop17i0
2
Q3 2023 FINANCIAL INFORMATION
Financial
Information
Contents
03
─ 07
 
Key Figures
08 ─
33
 
Consolidated
 
Financial
 
Information
 
(unaudited)
 
34 ─
46
 
Supplemental Reconciliations
 
and Definitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2023q3fininfop18i0
3
Q3 2023 FINANCIAL INFORMATION
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Comparable
(1)
Orders
8,052
8,188
-2%
2%
Order backlog (end
 
September)
21,445
19,393
11%
11%
Revenues
7,968
7,406
8%
11%
Gross Profit
2,762
2,481
11%
as % of revenues
34.7%
33.5%
+1.2 pts
Income from operations
1,259
708
78%
Operational EBITA
(1)
1,392
1,231
13%
11%
(2)
as % of operational
 
revenues
(1)
17.4%
16.6%
+0.8 pts
Income from continuing
 
operations, net of
 
tax
905
420
115%
Net income attributable
 
to ABB
882
360
145%
Basic earnings
 
per share ($)
0.48
0.19
149%
(3)
Cash flow from
 
operating activities
(4)
1,351
791
71%
Cash flow from
 
operating activities
 
in continuing operations
1,361
793
72%
CHANGE
($ in millions, unless otherwise indicated)
9M 2023
9M 2022
US$
Comparable
(1)
Orders
26,169
26,368
-1%
4%
Revenues
23,990
21,622
11%
16%
Gross Profit
8,366
7,052
19%
as % of revenues
34.9%
32.6%
+2.3 pts
Income from operations
3,755
2,152
74%
Operational EBITA
(1)
4,094
3,364
22%
22%
(2)
as % of operational
 
revenues
(1)
17.0%
15.5%
+1.5 pts
Income from continuing
 
operations, net of
 
tax
2,902
1,469
98%
Net income attributable
 
to ABB
2,824
1,343
110%
Basic earnings
 
per share ($)
1.52
0.70
116%
(3)
Cash flow from
 
operating activities
(4)
2,393
600
299%
Cash flow from
 
operating activities
 
in continuing operations
2,404
614
n.a.
(1)
 
For a reconciliation of non-GAAP
 
measures see “
” on page 34.
(2)
 
Constant currency (not adjusted
 
for portfolio changes).
(3)
 
EPS growth rates are computed
 
using unrounded amounts.
(4)
 
Cash flow from operating activit
 
ies includes both continuing
 
and discontinued operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
Q3 2023 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q3 2023
Q3 2022
US$
Local
Comparable
Orders
 
ABB Group
8,052
8,188
-2%
-2%
2%
Electrification
3,693
3,772
-2%
-2%
1%
Motion
1,886
1,966
-4%
-5%
-7%
Process Automation
1,883
1,568
20%
18%
38%
Robotics & Discrete
 
Automation
665
901
-26%
-27%
-27%
Corporate and Other
 
135
147
Intersegment eliminations
(210)
(166)
Order backlog
 
(end September)
ABB Group
21,445
19,393
11%
8%
11%
Electrification
6,994
6,317
11%
9%
16%
Motion
5,108
4,613
11%
6%
5%
Process Automation
7,135
6,006
19%
16%
20%
Robotics & Discrete
 
Automation
2,363
2,659
-11%
-14%
-14%
Corporate and Other
 
(incl. intersegment eliminations)
(155)
(202)
Revenues
 
ABB Group
7,968
7,406
8%
7%
11%
Electrification
3,561
3,471
3%
2%
6%
Motion
1,947
1,702
14%
13%
11%
Process Automation
1,554
1,458
7%
6%
23%
Robotics & Discrete
 
Automation
929
828
12%
9%
9%
Corporate and Other
 
194
141
Intersegment eliminations
(217)
(194)
Income from operations
ABB Group
1,259
708
Electrification
762
616
Motion
365
291
Process Automation
218
154
Robotics & Discrete
 
Automation
113
81
Corporate and Other
(incl. intersegment eliminations)
(199)
(434)
Income from operations
 
%
ABB Group
15.8%
9.6%
Electrification
21.4%
17.7%
Motion
18.7%
17.1%
Process Automation
14.0%
10.6%
Robotics & Discrete
 
Automation
12.2%
9.8%
Operational EBITA
ABB Group
1,392
1,231
13%
11%
Electrification
748
651
15%
14%
Motion
390
305
28%
25%
Process Automation
226
225
0%
0%
Robotics & Discrete
 
Automation
137
106
29%
27%
Corporate and Other
(1)
(incl. intersegment eliminations)
(109)
(56)
Operational EBITA
 
%
 
ABB Group
17.4%
16.6%
Electrification
20.8%
18.7%
Motion
19.8%
17.8%
Process Automation
14.6%
15.3%
Robotics & Discrete
 
Automation
14.7%
12.8%
Cash flow from operating
 
activities
ABB Group
1,351
791
Electrification
1,051
715
Motion
466
268
Process Automation
258
217
Robotics & Discrete
 
Automation
92
82
Corporate and Other
 
(incl. intersegment eliminations)
(506)
(489)
Discontinued
 
operations
(10)
(2)
(1)
Corporate and Other at Q3
 
2023 and Q3
 
2022 includes losses of $39
 
million and $4 million,
 
respectively, relating to E-mobility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Q3 2023 FINANCIAL INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
9M 2023
9M 2022
US$
Local
Comparable
Orders
 
ABB Group
26,169
26,368
-1%
1%
4%
Electrification
11,794
11,797
0%
2%
3%
Motion
6,285
6,247
1%
2%
1%
Process Automation
5,665
5,079
12%
14%
31%
Robotics & Discrete
 
Automation
2,516
3,318
-24%
-22%
-22%
Corporate and Other
595
530
Intersegment eliminations
(686)
(603)
Order backlog
 
(end September)
ABB Group
21,445
19,393
11%
8%
11%
Electrification
6,994
6,317
11%
9%
16%
Motion
5,108
4,613
11%
6%
5%
Process Automation
7,135
6,006
19%
16%
20%
Robotics & Discrete
 
Automation
2,363
2,659
-11%
-14%
-14%
Corporate and Other
(incl. intersegment eliminations)
(155)
(202)
Revenues
 
ABB Group
23,990
21,622
11%
13%
16%
Electrification
10,886
10,121
8%
10%
11%
Motion
5,868
4,900
20%
22%
20%
Process Automation
4,543
4,493
1%
3%
19%
Robotics & Discrete
 
Automation
2,788
2,290
22%
23%
23%
Corporate and Other
540
395
Intersegment eliminations
(635)
(577)
Income from operations
ABB Group
3,755
2,152
Electrification
2,130
1,571
Motion
1,098
776
Process Automation
688
480
Robotics & Discrete
 
Automation
347
146
Corporate and Other
(incl. intersegment eliminations)
(508)
(821)
Income from operations
 
%
ABB Group
15.7%
10.0%
Electrification
19.6%
15.5%
Motion
18.7%
15.8%
Process Automation
15.1%
10.7%
Robotics & Discrete
 
Automation
12.4%
6.4%
Operational EBITA
ABB Group
4,094
3,364
22%
22%
Electrification
2,212
1,768
25%
27%
Motion
1,157
845
37%
38%
Process Automation
670
645
4%
6%
Robotics & Discrete
 
Automation
418
215
94%
98%
Corporate and Other
(1)
(incl. intersegment eliminations)
(363)
(109)
Operational EBITA
 
%
 
ABB Group
17.0%
15.5%
Electrification
20.3%
17.4%
Motion
19.7%
17.2%
Process Automation
14.7%
14.2%
Robotics & Discrete
 
Automation
15.0%
9.4%
Cash flow from operating
 
activities
ABB Group
2,393
600
Electrification
2,143
1,258
Motion
935
507
Process Automation
558
470
Robotics & Discrete
 
Automation
266
109
Corporate and Other
(incl. intersegment eliminations)
(1,498)
(1,730)
Discontinued
 
operations
(11)
(14)
(1)
Corporate and Other at 9M
 
2023 and 9M
 
2022 includes losses of $134
 
million and $12
 
million, respectively, relating to E-mobility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Q3 2023 FINANCIAL INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless
 
otherwise indicated)
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Revenues
7,968
7,406
3,561
3,471
1,947
1,702
1,554
1,458
929
828
Foreign exchange/commodity
 
timing
differences
 
in total revenues
51
23
32
3
23
9
(7)
14
2
(1)
Operational revenues
8,019
7,429
3,593
3,474
1,970
1,711
1,547
1,472
931
827
Income from operations
1,259
708
762
616
365
291
218
154
113
81
Acquisition-related amortization
55
55
22
24
9
8
1
1
20
19
Restructuring, related
 
and
 
implementation costs
(1)
51
20
14
8
3
3
3
1
6
Changes in obligations
 
related to
 
divested businesses
Gains and losses
 
from sale of businesses
(71)
(71)
(1)
1
Acquisition-
 
and divestment
 
-related
 
expenses and
 
integration costs
10
62
4
3
3
4
(4)
53
3
1
Certain other non-operational
 
items
49
381
2
7
1
1
1
Foreign exchange/commodity
 
timing
differences
 
in income from operations
39
5
15
(6)
9
(2)
8
16
(2)
Operational EBITA
1,392
1,231
748
651
390
305
226
225
137
106
Operational EBITA
 
margin (%)
17.4%
16.6%
20.8%
18.7%
19.8%
17.8%
14.6%
15.3%
14.7%
12.8%
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless
 
otherwise indicated)
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
Revenues
23,990
21,622
10,886
10,121
5,868
4,900
4,543
4,493
2,788
2,290
Foreign exchange/commodity
 
timing
differences
 
in total revenues
25
90
12
11
12
8
3
45
2
5
Operational revenues
24,015
21,712
10,898
10,132
5,880
4,908
4,546
4,538
2,790
2,295
Income from operations
3,755
2,152
2,130
1,571
1,098
776
688
480
347
146
Acquisition-related amortization
164
174
66
80
26
23
4
3
59
59
Restructuring, related
 
and
implementation costs
(1)
92
300
26
18
5
11
7
6
9
Changes in obligations
 
related to
 
divested businesses
(5)
(17)
1
Gains and losses
 
from sale of businesses
(97)
4
(71)
(1)
5
(26)
Acquisition-
 
and divestment
 
-related
 
expenses and
 
integration costs
55
171
23
31
15
12
(3)
122
7
4
Certain other non-operational
 
items
89
480
11
30
4
4
Foreign exchange/commodity
 
timing
differences
 
in income from operations
41
100
26
39
9
18
34
1
(3)
Operational EBITA
4,094
3,364
2,212
1,768
1,157
845
670
645
418
215
Operational EBITA
 
margin (%)
17.0%
15.5%
20.3%
17.4%
19.7%
17.2%
14.7%
14.2%
15.0%
9.4%
(1)
 
Includes impairment of certain
 
assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
Q3 2023 FINANCIAL INFORMATION
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Q3 23
Q3 22
Depreciation
130
129
64
62
27
25
12
17
14
16
Amortization
64
69
27
30
11
8
2
2
21
19
including total acquisition-related
 
amortization of:
55
55
22
24
9
8
1
1
20
19
Process
Robotics & Discrete
 
ABB
Electrification
Motion
Automation
Automation
($ in millions)
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
9M 23
9M 22
Depreciation
384
401
190
191
80
78
35
51
43
46
Amortization
197
214
81
98
31
26
7
8
61
60
including total acquisition-related
 
amortization of:
164
174
66
80
26
23
4
3
59
59
Orders received and
 
revenues by
 
region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q3 23
Q3 22
US$
Local
parable
Q3 23
Q3 22
US$
Local
parable
Europe
2,391
2,682
-11%
-16%
-13%
2,810
2,494
13%
6%
10%
The Americas
3,258
2,980
9%
8%
13%
2,775
2,452
13%
12%
16%
of which United
 
States
2,479
2,294
8%
7%
13%
2,067
1,796
15%
15%
19%
Asia, Middle East
 
and Africa
2,403
2,526
-5%
0%
4%
2,383
2,460
-3%
2%
6%
of which China
1,044
1,166
-10%
-5%
-3%
1,075
1,300
-17%
-13%
-10%
ABB Group
8,052
8,188
-2%
-2%
2%
7,968
7,406
8%
7%
11%
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
9M 23
9M 22
US$
Local
parable
9M 23
9M 22
US$
Local
parable
Europe
8,904
9,174
-3%
-3%
0%
8,617
7,520
15%
14%
17%
The Americas
9,452
8,927
6%
5%
8%
8,243
7,018
17%
17%
20%
of which United
 
States
6,928
6,753
3%
2%
5%
6,143
5,124
20%
20%
23%
Asia, Middle East
 
and Africa
7,813
8,267
-5%
1%
5%
7,130
7,084
1%
7%
12%
of which China
3,593
4,114
-13%
-7%
-5%
3,404
3,563
-4%
1%
4%
ABB Group
26,169
26,368
-1%
1%
4%
23,990
21,622
11%
13%
16%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2023q3fininfop3i0
8
Q3 2023 FINANCIAL INFORMATION
Consolidated Financial Information
ABB Ltd Consolidated
 
Income Statements
 
(unaudited)
Nine months ended
Three months ended
($ in millions, except per share data in $)
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Sales of products
20,210
17,946
6,680
6,184
Sales of services
 
and other
3,780
3,676
1,288
1,222
Total revenues
23,990
21,622
7,968
7,406
Cost of sales
 
of products
(13,393)
(12,439)
(4,447)
(4,217)
Cost of services
 
and other
(2,231)
(2,131)
(759)
(708)
Total cost of
 
sales
(15,624)
(14,570)
(5,206)
(4,925)
Gross profit
8,366
7,052
2,762
2,481
Selling, general and administrative
 
expenses
(4,058)
(3,833)
(1,331)
(1,277)
Non-order related research
 
and development
 
expenses
(951)
(844)
(314)
(272)
Other income (expense),
 
net
398
(223)
142
(224)
Income from operations
3,755
2,152
1,259
708
Interest and dividend
 
income
115
50
37
17
Interest and other
 
finance expense
(197)
(107)
(73)
(45)
Non-operational pension
 
(cost) credit
23
102
8
34
Income from continuing
 
operations before
 
taxes
3,696
2,197
1,231
714
Income tax expense
(794)
(728)
(326)
(294)
Income from continuing
 
operations, net
 
of tax
2,902
1,469
905
420
Loss from discontinued
 
operations, net of
 
tax
(16)
(36)
(7)
(16)
Net income
2,886
1,433
898
404
Net income attributable
 
to noncontrolling
 
interests and
 
redeemable noncontrolling
 
interests
(62)
(90)
(16)
(44)
Net income attributable
 
to ABB
2,824
1,343
882
360
Amounts attributable
 
to ABB shareholders:
Income from continuing
 
operations, net of
 
tax
2,840
1,379
889
376
Loss from discontinued
 
operations, net of
 
tax
(16)
(36)
(7)
(16)
Net income
2,824
1,343
882
360
Basic earnings per share
 
attributable to
 
ABB shareholders:
Income from continuing
 
operations, net of
 
tax
1.53
0.72
0.48
0.20
Loss from discontinued
 
operations, net of
 
tax
(0.01)
(0.02)
0.00
(0.01)
Net income
1.52
0.70
0.48
0.19
Diluted earnings
 
per share attributable
 
to ABB shareholders:
Income from continuing
 
operations, net of
 
tax
1.52
0.72
0.48
0.20
Loss from discontinued
 
operations, net of
 
tax
(0.01)
(0.02)
0.00
(0.01)
Net income
1.51
0.70
0.47
0.19
Weighted-average
 
number of shares
 
outstanding
 
(in millions)
 
used to compute:
Basic earnings
 
per share attributable
 
to ABB shareholders
1,859
1,909
1,854
1,882
Diluted earnings per share
 
attributable to
 
ABB shareholders
1,871
1,920
1,865
1,889
Due to rounding, numbers
 
presented may not add
 
to the totals provided.
See Notes to the Consolidated
 
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
Q3 2023 FINANCIAL INFORMATION
ABB Ltd Condensed Consolidated
 
Statements of Comprehensive
Income (unaudited)
Nine months ended
Three months ended
($ in millions)
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Total comprehensive
 
income, net of
 
tax
2,729
775
815
67
Total comprehensive
 
income attributable
 
to noncontrolling
 
interests and
 
redeemable noncontrolling
 
interests, net of
 
tax
(54)
(58)
(11)
(32)
Total comprehensive
 
income attributable
 
to ABB shareholders,
 
net of tax
2,675
717
804
35
Due to rounding, numbers
 
presented may not add
 
to the totals provided.
See Notes to the Consolidated
 
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
Q3 2023 FINANCIAL INFORMATION
ABB Ltd Consolidated
 
Balance Sheets (unaudited)
($ in millions)
Sep. 30, 2023
Dec. 31, 2022
Cash and equivalents
3,869
4,156
Restricted cash
18
18
Marketable securities
 
and short-term investments
1,091
725
Receivables,
 
net
7,586
6,858
Contract assets
1,073
954
Inventories, net
6,332
6,028
Prepaid expenses
280
230
Other current assets
527
505
Current assets held
 
for sale and in
 
discontinued
 
operations
60
96
Total current
 
assets
20,836
19,570
Property, plant
 
and equipment, net
3,891
3,911
Operating lease right
 
-of-use assets
850
841
Investments in equity
 
-accounted companies
186
130
Prepaid pension
 
and other employee
 
benefits
969
916
Intangible assets,
 
net
1,181
1,406
Goodwill
10,356
10,511
Deferred taxes
1,366
1,396
Other non-current assets
464
467
Total assets
40,099
39,148
Accounts payable,
 
trade
4,777
4,904
Contract liabilities
2,610
2,216
Short-term debt and
 
current maturities
 
of long-term debt
2,951
2,535
Current operating
 
leases
234
220
Provisions for warranties
1,108
1,028
Other provisions
1,114
1,171
Other current liabilities
4,597
4,323
Current liabilities held
 
for sale and
 
in discontinued
 
operations
79
132
Total current
 
liabilities
17,470
16,529
Long-term debt
4,899
5,143
Non-current operating
 
leases
643
651
Pension and
 
other employee
 
benefits
642
719
Deferred taxes
675
729
Other non-current liabilities
1,908
2,085
Non-current liabilities
 
held for sale and
 
in discontinued
 
operations
19
20
Total liabilities
26,256
25,876
Commitments and contingencies
Redeemable
 
noncontrolling interest
89
85
Stockholders’ equity:
Common stock, CHF
 
0.12 par value
(1,882 million and 1,965
 
million shares issued
 
at September
 
30, 2023, and December
 
31, 2022, respectively)
163
171
Additional paid-in capital
19
141
Retained earnings
18,840
20,082
Accumulated
 
other comprehensive
 
loss
(4,705)
(4,556)
Treasury stock, at
 
cost
(33 million and 100
 
million shares at
 
September 30, 2023,
 
and December
 
31, 2022, respectively)
(1,111)
(3,061)
Total ABB stockholders’ equity
13,206
12,777
Noncontrolling interests
548
410
Total stockholders’
 
equity
13,754
13,187
Total liabilities
 
and stockholders’
 
equity
40,099
39,148
Due to rounding, numbers
 
presented may not add
 
to the totals provided.
See Notes to the Consolidated
 
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
Q3 2023 FINANCIAL INFORMATION
ABB Ltd Consolidated
 
Statements of Cash
 
Flows (unaudited)
Nine months ended
Three months ended
($ in millions)
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Operating activities:
Net income
2,886
1,433
898
404
Loss from discontinued
 
operations, net of
 
tax
16
36
7
16
Adjustments to reconcile
 
net income (loss)
 
to
 
net cash provided
 
by operating activities:
Depreciation and
 
amortization
581
615
194
198
Changes in fair
 
values of investments
(28)
(39)
(4)
(24)
Pension and
 
other employee benefits
(67)
(107)
(55)
(24)
Deferred taxes
(42)
(183)
(79)
(35)
Loss from equity
 
-accounted companies
11
100
4
38
Net loss (gain) from
 
derivatives
 
and foreign exchange
(44)
44
10
(33)
Net gain from sale of
 
property,
 
plant and equipment
(39)
(64)
(6)
(9)
Net loss (gain) from
 
sale of businesses
(97)
4
(71)
Other
115
61
23
(2)
Changes in operating
 
assets and
 
liabilities:
Trade receivables,
 
net
(819)
(657)
(152)
(36)
Contract assets and
 
liabilities
243
353
164
101
Inventories, net
(438)
(1,667)
12
(584)
Accounts payable,
 
trade
(37)
390
(35)
177
Accrued liabilities
140
52
342
307
Provisions, net
106
312
50
186
Income taxes payable
 
and receivable
(9)
19
77
71
Other assets and
 
liabilities, net
(74)
(88)
(18)
42
Net cash provided
 
by operating activities
 
– continuing
 
operations
2,404
614
1,361
793
Net cash used
 
in operating activities
 
– discontinued
 
operations
(11)
(14)
(10)
(2)
Net cash provided
 
by operating activities
2,393
600
1,351
791
Investing activities:
Purchases
 
of investments
(1,103)
(271)
(343)
(15)
Purchases
 
of property, plant
 
and equipment
 
and intangible assets
(506)
(503)
(175)
(165)
Acquisition of businesses
 
(net of cash acquired)
and increases
 
in cost- and equity-accounted
 
companies
(160)
(226)
(25)
(47)
Proceeds from
 
sales of investments
598
654
422
148
Proceeds from
 
maturity of investments
138
Proceeds from
 
sales of property,
 
plant and equipment
67
85
10
19
Proceeds from
 
sales of businesses
 
(net of transaction costs
and cash disposed)
 
and cost- and
 
equity-accounted
 
companies
552
(8)
509
5
Net cash from settlement
 
of foreign currency
 
derivatives
(76)
(154)
(58)
(210)
Changes in loans
 
receivable, net
8
11
7
2
Other investing activities
9
(10)
7
Net cash provided
 
by (used in)
 
investing activities
 
– continuing
 
operations
(473)
(422)
347
(256)
Net cash provided
 
by (used in)
 
investing activities
 
– discontinued
 
operations
(22)
(91)
(1)
Net cash provided
 
by (used in)
 
investing activities
(495)
(513)
346
(256)
Financing activities:
Net changes
 
in debt with original
 
maturities of 90
 
days or less
(997)
1,475
(962)
284
Increase in debt
2,584
3,554
936
373
Repayment of
 
debt
(1,437)
(2,025)
(309)
(542)
Delivery of shares
118
389
22
19
Purchase of
 
treasury stock
(909)
(3,251)
(433)
(590)
Dividends paid
(1,713)
(1,698)
Dividends paid
 
to noncontrolling shareholders
(89)
(83)
(6)
(7)
Proceeds from
 
issuance of subsidiary
 
shares
328
Other financing
 
activities
4
(58)
4
(5)
Net cash used
 
in financing activities
 
– continuing
 
operations
(2,111)
(1,697)
(748)
(468)
Net cash provided
 
by financing
 
activities –
 
discontinued operations
Net cash used
 
in financing activities
(2,111)
(1,697)
(748)
(468)
Effects of
 
exchange rate changes
 
on cash and equivalents
 
and restricted cash
(74)
(191)
(32)
(115)
Adjustment for the net
 
change in cash
 
and equivalents
 
and restricted cash
in Assets held for
 
sale
28
Net change in cash
 
and equivalents
 
and restricted
 
cash
(287)
(1,801)
945
(48)
Cash and equivalents
 
and restricted cash,
 
beginning of
 
period
4,174
4,489
2,942
2,736
Cash and equivalents
 
and restricted
 
cash, end of
 
period
3,887
2,688
3,887
2,688
Supplementary disclosure
 
of cash flow
 
information:
Interest paid
151
47
43
11
Income taxes paid
865
907
338
269
Due to rounding, numbers
 
presented may not add
 
to the totals provided.
See Notes to the Consolidated
 
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Q3 2023 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, 2022
178
22
22,477
(4,088)
(3,010)
15,579
378
15,957
Net income
(1)
1,343
1,343
93
1,436
Foreign currency
 
translation
adjustments, net of
 
tax of $1
(774)
(774)
(32)
(806)
Effect of change
 
in fair value of
available-for-sale securities,
net of tax of $(6)
(24)
(24)
(24)
Unrecognized income
 
(expense)
related to pensions
 
and other
postretirement plans,
net of tax of $57
172
172
172
Change in derivative
 
instruments
and hedges, net of tax of $3
Changes in noncontrolling
 
interests
(3)
(3)
(22)
(25)
Dividends to
noncontrolling shareholders
(81)
(81)
Dividends to shareholders
(1,700)
(1,700)
(1,700)
Cancellation of
 
treasury shares
(8)
(4)
(2,864)
2,876
Share-based payment
 
arrangements
33
33
33
Purchase of
 
treasury stock
(3,201)
(3,201)
(3,201)
Delivery of shares
(46)
(130)
565
389
389
Other
7
7
7
Balance at September
 
30, 2022
171
9
19,127
(4,715)
(2,770)
11,822
336
12,158
Balance at January
 
1, 2023
171
141
20,082
(4,556)
(3,061)
12,777
410
13,187
Net income
(1)
2,824
2,824
65
2,889
Foreign currency
 
translation
adjustments, net of
 
tax of $0
(177)
(177)
(8)
(185)
Effect of change
 
in fair value of
available-for-sale securities,
net of tax of $1
6
6
6
Unrecognized income
 
(expense)
related to pensions
 
and other
postretirement plans,
net of tax of $8
19
19
19
Change in derivative
 
instruments
and hedges, net of tax of $0
3
3
3
Issuance of subsidiary
 
shares
170
170
168
338
Other changes
 
in
noncontrolling interests
(7)
(7)
5
(2)
Dividends to
noncontrolling shareholders
(93)
(93)
Dividends to shareholders
(1,706)
(1,706)
(1,706)
Cancellation of
 
treasury shares
(7)
(201)
(2,359)
2,567
Share-based payment
 
arrangements
82
82
1
83
Purchase of
 
treasury stock
(898)
(898)
(898)
Delivery of shares
(163)
281
118
118
Other
(4)
(4)
(4)
Balance at September
 
30, 2023
163
19
18,840
(4,705)
(1,111)
13,206
548
13,754
(1)
Amounts attributable to noncontrolling
 
interests for the nine months
 
ended September
 
30, 2023 and 2022,
 
exclude net losses of $3 million
 
and $3 million, respectively, related to
redeemable noncontrolling
 
interests, which
 
are reported in the mezzanine
 
equity section on the Consolidated
 
Balance Sheets. See
 
Note 4 for details.
Due to rounding, numbers
 
presented may not add
 
to the totals provided.
See Notes to the Consolidated
 
Financial Information
13
Q3 2023 FINANCIAL INFORMATION
Notes to the Consolidated
 
Financial Information (unaudited)
Note 1
The Company and basis
 
of presentation
ABB Ltd and its subsidiaries
 
(collectively,
 
the Company)
 
together form a
 
technology
 
leader in electrification
 
and automation,
 
enabling a more
 
sustainable and
resource-efficient
 
future. The Company’s
 
solutions connect
 
engineering know
 
-how and software
 
to optimize how
 
things are manufactured,
 
moved, powered
 
and
operated.
The Company’s
 
Consolidated
 
Financial Information
 
is prepared in accordance
 
with United States
 
of America generally
 
accepted accounting
 
principles (U.S.
GAAP) for interim
 
financial reporting.
 
As such, the Consolidated
 
Financial Information
 
does not include
 
all the information
 
and notes
 
required under U.S.
 
GAAP for
annual consolidated
 
financial statements. Therefore,
 
such financial
 
information should
 
be read in conjunction
 
with the audited
 
consolidated
 
financial statements
 
in
the Company’s
 
Annual Report for
 
the year ended
 
December 31, 2022.
The preparation of
 
financial information
 
in conformity with
 
U.S. GAAP requires
 
management
 
to make assumptions
 
and estimates that
 
directly affect
 
the amounts
reported in the Consolidated
 
Financial Information.
 
These accounting
 
assumptions
 
and estimates include:
estimates to determine
 
valuation allowances
 
for deferred tax
 
assets and
 
amounts recorded
 
for unrecognized
 
tax benefits,
estimates related
 
to credit losses
 
expected to occur
 
over the remaining
 
life of financial
 
assets such
 
as trade and other rece
 
ivables, loans and
 
other
instruments,
estimates used
 
to record expected
 
costs for employee
 
severance
 
in connection with restructuring
 
programs,
estimates of loss
 
contingencies
 
associated with litigation
 
or threatened litigation
 
and other claims
 
and inquiries, environmental
 
damages, product
warranties, self-insurance
 
reserves, regulatory
 
and other proceedings,
assumptions
 
and projections, principally
 
related to future material,
 
labor and project-related
 
overhead costs,
 
used in determining
 
the percentage
 
-of-
completion on projects
 
where revenue
 
is recognized over
 
time,
 
as well as the amount
 
of variable consideration
 
the Company expects
 
to be entitled to,
assumptions
 
used in the calculation
 
of pension
 
and postretirement benefits
 
and the fair value
 
of pension
 
plan assets,
assumptions
 
used in determining
 
inventory obsolescence
 
and net realizable value,
growth rates, discount
 
rates and other
 
assumptions
 
used to determine
 
impairment of long
 
-lived assets and
 
in testing goodwill for
 
impairment,
estimates and assumptions
 
used in determining the fair
 
values of assets
 
and liabilities assumed
 
in business combinations,
 
and
estimates and ass
 
umptions used
 
in determining the initial
 
fair value of
 
retained noncontrolling
 
interests
 
and certain obligations
 
in connection with
divestments.
The actual results and
 
outcomes may
 
differ from the
 
Company’s
 
estimates and assumptions.
A portion of the Company’s
 
activities (primarily
 
long-term construction
 
activities) has an
 
operating cycle
 
that exceeds
 
one year. For classification
 
of current assets
and liabilities related
 
to such activities,
 
the Company elected
 
to use the duration
 
of the individual contracts
 
as its operating
 
cycle. Accordingly,
 
there are accounts
receivable, contract
 
assets, inventories
 
and provisions
 
related to these
 
contracts which
 
will not be realized
 
within one year
 
that have been
 
classified as
 
current.
Basis of presentation
In the opinion of management,
 
the unaudited Consolidated
 
Financial Information
 
contains all necessary
 
adjustments to present
 
fairly the financial
 
position, results
of operations
 
and cash flows
 
for the reported periods.
 
Management
 
considers
 
all such adjustments
 
to be of a normal
 
recurring nature. The
 
Consolidated
 
Financial
Information is presented
 
in United States
 
dollars ($) unless
 
otherwise stated.
 
Due to rounding,
 
numbers presented
 
in the Consolidated
 
Financial Information
 
may
not add to the totals
 
provided.
Certain amounts
 
reported in the Consolidated
 
Financial Information
 
for prior periods have
 
been reclassified
 
to conform to the
 
current year’s presentation.
 
These
changes
 
relate primarily to the reorganization
 
of the Company’s
 
operating segments
 
(see Note 17 for
 
details).
14
Q3 2023 FINANCIAL INFORMATION
Note 2
Recent accounting pronouncements
Applicable for current
 
periods
Disclosure about supplier
 
finance program
 
obligations
In January 202
 
3, the Company adopted
 
an accounting
 
standard update
 
which requires entities to
 
disclose information
 
related to supplier finance
 
programs. Under
the update, the Company
 
is required to
 
disclose annually
 
(i) the key terms of
 
the program, (ii) the
 
amount of
 
the supplier finance
 
obligations outstanding
 
and where
those obligations
 
are presented in
 
the balance sheet
 
at the reporting date,
 
and (iii) a
 
rollforward of the supplier
 
finance obligation
 
program within
 
the reporting
period. The Company
 
adopted this update
 
retrospectively
 
for all in-scope
 
transactions, with
 
the exception of
 
the rollforward disclosures,
 
which will be adopted
prospectively
 
for annual periods
 
beginning January
 
1, 2024. Apart from the additional
 
disclosure requirements,
 
this update does
 
not have a significant
 
impact on
the Company’s
 
consolidated
 
financial statements.
The total outstanding
 
supplier finance
 
obligation included
 
in “Accounts payable,
 
trade” in the Consolidated
 
Balance Sheets
 
at September 30,
 
2023 and
December 31, 2022,
 
amounted to $448
 
million and $477
 
million,
 
respectively.
 
The Company’s
 
payment terms
 
related to suppliers’
 
finance programs
 
are not
impacted by the suppliers’
 
decisions to sell
 
amounts under
 
the arrangements
 
and are typically
 
consistent with
 
local market practices.
Facilitation of the effects
 
of reference
 
rate reform on
 
financial reporting
In January 202
 
3, the Company adopted
 
an accounting
 
standard update
 
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.
 
The Company
 
is applying this standard
 
update as
 
relevant contract and
 
hedge
accounting
 
relationship modifications
 
are made during
 
the course of
 
the transition period
 
ending December
 
31, 2024. This
 
update does
 
not have a significant
impact on the Company’s
 
consolidated
 
financial statements.
Note 3
Discontinued operations
 
and assets held for
 
sale
Divestment of the
 
Power Grids business
In 2020, the Company
 
completed the divestment
 
of its Power Grids
 
business to Hitachi
 
Ltd (Hitachi)
 
.
 
Upon closing
 
of the sale, the Company
 
entered into various
transition services agreements
 
(TSAs),
 
some of which
 
continue to have
 
services performed
 
.
 
Pursuant to these
 
TSAs, the
 
Company and
 
Hitachi Energy provide
 
to
each other, on
 
a transitional basis,
 
various services.
 
The services
 
provided by the
 
Company primarily
 
include finance,
 
information technology,
 
human resources
and certain other administrative
 
services. The
 
TSAs were
 
to be performed for
 
up to 3 years
 
with the possibility
 
to agree on extensions
 
on an exceptional
 
basis for
business-critical services
 
which are reasonably
 
necessary
 
to avoid a material adverse
 
impact on the business.
 
The TSA for
 
information technology
 
services was
extended until mid-2025.
 
In the nine and
 
three months ended
 
September 30,
 
2023, the Company
 
has recognized
 
within its continuing
 
operations, general
 
and
administrative expenses
 
incurred to perform
 
the TSAs, offset
 
by $114
 
million and $38 million
 
in TSA-related
 
income for such
 
services that is reported
 
in Other
income (expense),
 
net.
 
In the nine and
 
three months ended
 
September 30, 2022,
 
the Company has
 
recognized within
 
its continuing
 
operations, general
 
and
administrative expenses
 
incurred to perform
 
the TSAs, offset
 
by $115
 
million and $39 million
 
in TSA-related
 
income for such
 
services that is reported
 
in Other
income (expense),
 
net.
Discontinued op
 
erations
As a result of the sale
 
of the Power
 
Grids business,
 
substantially all
 
Power Grids-related
 
assets and
 
liabilities have been
 
sold. As this divestment
 
represented a
strategic shift that
 
would have
 
a major effect
 
on the Company’s
 
operations and
 
financial results, the
 
results of operations
 
for this business
 
are presented as
discontinued
 
operations and
 
the assets and
 
liabilities are presented
 
as held for sale
 
and in discontinued
 
operations.
 
Certain of the business
 
contracts in the
 
Power
Grids business
 
continue to be executed
 
by subsidiaries
 
of the Company
 
for the benefit/risk of Hitachi
 
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.
 
The remaining busin
 
ess activities of
 
the Power Grids
 
business being
 
executed by the Company
 
are not significant.
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 at the time
 
of their disposal
 
.
 
Changes to these
 
retained obligations
 
are also included
 
in Loss from discontinued
 
operations, net
of tax.
At September 30,
 
2023, the balances
 
reported as held for
 
sale and
 
in discontinued
 
operations pertaining
 
to the activities
 
of the Power Grids
 
business
 
and other
obligations will remain
 
with the Company
 
until such time as
 
the obligations
 
are settled or
 
the activities are
 
fully wound down
 
.
 
These balanc
 
es amounted
 
to
$60 million of current
 
assets, $79 million
 
of current liabilities
 
and $19 million
 
of non-current
 
liabilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
Q3 2023 FINANCIAL INFORMATION
Note 4
Acquisitions and equity
 
-accounted companies
Acquisition of controlling
 
interests
Acquisitions of
 
controlling interests
 
were as follows:
Nine months ended
 
September 30,
Three months ended September 30,
($ in millions, except
 
number of acquired
 
businesses)
2023
2022
2023
2022
Purchase price
 
for acquisitions
 
(net of cash acquired)
(1)
115
150
1
12
Aggregate excess
 
of purchase price
 
over
fair value of net
 
assets acquired
(2)
55
205
1
14
Number of acquired
 
businesses
 
3
3
1
2
(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
 
in the nine
months ended
 
September 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 acquisi
 
tion.
 
On January 26,
 
2022, the Company
 
increased its ownership
 
in In-Charge to a 60
 
percent controlling
 
interest through a
 
stock purchase
 
agreement. In-Charge is
headquartered
 
in Santa Monica, USA,
 
and is a provider
 
of turn-key commercial
 
electric vehicle
 
charging hardware
 
and software
 
solutions. The resulting
 
cash
outflows for the
 
Company amounted
 
to $134
 
million (net of cash
 
acquired of $4
 
million). The acquisition
 
expands
 
the market presence
 
of the E-mobility operating
segment, 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)
 
,
 
net” in the nine
 
months ended
 
September 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.
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.
 
Business divestments
In the nine and three
 
months ended
 
September 30, 2023,
 
the Company received
 
proceeds (net of
 
transaction costs
 
and cash disposed)
 
of $552 million and
$509 million,
 
respectively,
 
relating to divestments
 
of consolidated
 
businesses and
 
recorded gains
 
of $97 million and
 
$71 million, respectively,
 
in “Other income
(expense), net” on
 
the sale of such
 
businesses. These
 
are primarily due the
 
divestment of the
 
Company’s
 
Power Conversion
 
Division to AcBel
 
Polytech Inc.,
 
which
prior to its sale was
 
part of the Company’s
 
Electrification operating
 
segment. Certain
 
amounts
 
included in the net gain
 
for the sale of
 
Power Conversion
 
Division
are estimated or otherwise
 
subject to change
 
in value and, as a
 
result, the Company
 
may record additional
 
adjustments
 
to the gain in future
 
periods which are
 
not
expected to have
 
a material impact on the
 
consolidated
 
financial statements.
 
Investments in equity
 
-accounted companies
In connection with the
 
divestment
 
of its Power Grids
 
business to Hitachi
 
in 2020 (see Note 3),
 
the Company
 
initially retained
 
a 19.9 percent interest
 
in the business
until December 2022,
 
when the retained
 
investment
 
was sold to Hitachi.
 
During the
 
Company’s
 
period of ownership
 
of the retained 19.9
 
percent interest,
 
based on
its continuing involvement
 
with the Power
 
Grids business,
 
including the membership
 
in its governing
 
board of directors,
 
the Company concluded
 
that it had
significant influence
 
over Hitachi Energy.
 
As a result, the
 
investment was
 
accounted
 
for using the equity
 
method through
 
to the date of its sale.
In the nine and three
 
months ended
 
September 30, 2023
 
and 2022, 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:
Nine months ended
 
September 30,
Three months ended September 30,
($ in millions)
2023
2022
2023
2022
Loss from equity
 
-accounted companies,
 
net of taxes
(11)
(34)
(4)
(24)
Basis difference
 
amortization (net of
 
deferred income
 
tax benefit)
(66)
(14)
Loss from equity
 
-accounted companies
(11)
(100)
(4)
(38)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
Q3 2023 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:
September 30, 2023
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair
 
value
 
recorded in net income
Cash
1,425
1,425
1,425
Time deposits
2,709
2,709
2,462
247
Equity securities
620
24
644
644
4,754
24
4,778
3,887
891
Changes in fair
 
value recorded
in other comprehensive
 
income
Debt securities available
 
-for-sale:
U.S. government obligations
200
1
(13)
188
188
European government
 
obligations
12
12
12
212
1
(13)
200
200
Total
4,966
25
(13)
4,978
3,887
1,091
Of which:
 
Restricted cash, current
18
December 31, 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
1,715
1,715
1,715
Time deposits
2,459
2,459
2,459
Equity securities
345
10
355
355
4,519
10
4,529
4,174
355
Changes in fair
 
value recorded
in other comprehensive
 
income
Debt securities available
 
-for-sale:
U.S. government obligations
269
1
(15)
255
255
Other government obligations
58
58
58
Corporate
64
(7)
57
57
391
1
(22)
370
370
Total
4,910
11
(22)
4,899
4,174
725
Of which:
Restricted cash, current
18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
Q3 2023 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 managemen
 
t
 
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)
September 30, 2023
December 31, 2022
September 30, 2022
Foreign exchange
 
contracts
13,090
13,509
15,501
Embedded
 
foreign exchange
 
derivatives
1,291
933
864
Cross-currency interest
 
rate swaps
849
855
781
Interest rate contracts
1,751
2,830
2,598
Derivative commodity
 
contracts
The Company
 
uses derivatives
 
to hedge its direct or indirect
 
exposure to the
 
movement in the prices
 
of commodities
 
which are
 
primarily copper,
 
silver, steel and
aluminum.
 
The following table
 
shows the notional
 
amounts of outstanding
 
derivatives (whether
 
designated as
 
hedges or not), on a net
 
basis, to reflect
 
the
Company’s
 
requirements for these
 
commodities:
Type of derivat
 
ive
Unit
Total notional amounts at
September 30, 2023
December 31, 2022
September 30, 2022
Copper swaps
metric tonnes
32,223
29,281
36,264
Silver swaps
ounces
1,702,359
2,012,213
2,787,909
Steel swaps
metric tonnes
11,476
Aluminum swaps
metric tonnes
5,800
6,825
6,925
Equity derivatives
At September 30,
 
2023, December
 
31, 2022, and September
 
30, 2022, the
 
Company held
 
3 million, 8 million
 
and 8 million
 
cash-settled call options
 
indexed to ABB
Ltd shares (conversion
 
ratio 5:1) with a
 
total fair value of
 
$9 million, $15 million
 
and $11
 
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 nine
 
and three months
 
ended September
 
30,
2023 and 2022,
 
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”.