UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE
 
ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2022
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s name into English)
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant
 
files or will file annual reports
 
under cover of Form 20-F or Form
 
40-F.
 
Form 20-F
 
Form 40-F
Indicate by check mark if the registrant
 
is submitting the Form 6-K in paper
 
as permitted by Regulation S-T Rule
 
101(b)(1):
Note:
 
Regulation S-T Rule 101(b)(1) only
 
permits the submission in paper of
 
a Form 6-K if submitted solely to provide
 
an
attached annual report to security holders.
Indication by check mark if the registrant
 
is submitting the Form 6-K in paper
 
as permitted by Regulation S-T Rule
 
101(b)(7):
Note:
 
Regulation S-T Rule 101(b)(7) only
 
permits the submission in paper of
 
a Form 6-K if submitted to furnish
 
a report or
other document that the registrant foreign
 
private issuer must furnish
 
and make public under the laws of the
 
jurisdiction in
which the registrant is incorporated, domiciled
 
or legally organized (the registrant’s “home country”),
 
or under the rules of the
home country exchange on which the registrant’s securities
 
are traded, as long as the report or other
 
document is not a press
release, is not required to be and has
 
not been distributed to the registrant’s security holders,
 
and, if discussing a material
 
event,
has already been the subject of a Form
 
6-K submission or other Commission
 
filing on EDGAR.
Indicate by check mark whether the registrant
 
by furnishing the information
 
contained in this Form is also thereby
 
furnishing
the information to the Commission
 
pursuant to Rule 12g3-2(b) under
 
the Securities Exchange Act of 1934.
 
Yes
 
No
If “Yes” is marked, indicate below the file number assigned to the
 
registrant in connection with Rule 12g3-2(b):
 
82-
 
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated
 
April 21, 2022 titled “Q1 2022
 
results”.
2.
Q1 2022 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
abb2022q1fininfop3i7.jpg abb2022q1fininfop3i3.jpg abb2022q1fininfop3i1.jpg abb2022q1fininfop3i0.jpg abb2022q1fininfop3i8.jpg abb2022q1fininfop3i6.jpg abb2022q1fininfop3i4.jpg abb2022q1fininfop3i2.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB has started the year with a promising performance in the face of multiple external
uncertainties. I expect this year to result in improving profitability,
 
solid cash flow and
execution of our planned portfolio activities
Björn Rosengren
, CEO
ZURICH, SWITZERLAND, APRIL
 
21, 2022
Q1 2022 results
Solid performance in
 
an uncertain environment
 
Orders $9.4 billion,
 
+21%; comparable
1
 
+28%
 
 
Revenues $7.0 billion
 
,
 
+1%; comparable +7%
 
 
Income from operations
 
$857 million; margin 12.3%
 
 
Operational EBITA
1
 
$997 million; margin
1
 
14.3%
 
Basic EPS $0.31;
 
25%
2
 
Cash flow from operating
 
activities -$573 million;
 
cash flow from operating
 
activities in continuing oper
 
ations -$564 million
Ad hoc Announcement pursuant to Art.
 
53 Listing Rules of SIX Swiss Exchange
Q1 2022
First three months
Press Release
KEY FIGURES
CHANGE
($ millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
1
Orders
9,373
7,756
21%
28%
Revenues
6,965
6,901
1%
7%
Gross Profit
2,281
2,268
1%
as % of revenues
32.7%
32.9%
-0.2 pts
Income from operations
857
797
8%
Operational EBITA
1
997
959
4%
8%
 
3
as % of operational revenues
1
14.3%
13.8%
+0.5 pts
Income from continuing operations, net of tax
643
551
17%
Net income attributable to ABB
604
502
20%
Basic earnings per share ($)
 
0.31
0.25
25%
2
Cash flow from operating activities
4
(573)
543
n.a.
Cash flow from operating activities in continuing
operations
(564)
523
n.a.
1
For a reconciliation of non-GAAP measures, see “supplemental
 
reconciliations and definitions” in the attached Q1 2022
 
Financial Information.
2
EPS growth rates are computed using unrounded amounts.
 
3
Constant currency (not adjusted for portfolio
 
changes).
4
Amount represents total for both continuing and
 
discontinued operations.
abb2022q1fininfop4i0.jpg
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
2
In the first quarter
 
,
 
we witnessed the start of
 
the war in Ukraine
– a human tragedy
 
– and consequently one
 
of our key priorities
was to ensure the safety
 
and wellbeing of our people.
 
In an
effort to support
 
the people of Ukraine, we
 
have made a
significant donation
 
to the International Committee
 
of the Red
Cross. Prior to suspending
 
the intake of any new orders
 
in
Russia it represented
 
only 1-2% of ABB revenues.
Customer activity was
 
strong throughout the
 
quarter, resulting
in the very high order
 
growth of 21% year
 
-on-year
(28% comparable).
 
Most major customer segments
 
and regions
developed favorably and
 
three out of four business
 
areas
reported high double
 
-digit growth. Notably,
 
the high order intake
was driven by high
 
general customer activity
 
and not by large
orders, and includes
 
a de-booking of approximately
 
$190 million
in Process Automation.
We saw an increase
 
in revenues which improved
 
by 1%
(7% comparable),
 
supported by a positive
 
development in all
business areas except
 
for Robotics & Discrete
 
Automation, which
was hampered by component
 
shortages. The order
 
backlog
increased to $18.9 billion at
 
the end of the period, up by
 
28%
year-on-year (32%
 
comparable). The zero-Covid
 
strategy in
China had no material
 
impact on our ability to fulfill
 
customer
deliveries in the
 
first quarter.
 
That said, we are monitoring
 
the
situation and although
 
difficult to quantify,
 
we do not rule out
somewhat of an
 
adverse near-term impact
 
on operations due to
the local lock-downs.
In total,
 
we achieved an Operational
 
EBITA margin of
 
14.3%.
Due to the support
 
from higher volumes
 
and successful pricing
activities we managed
 
to offset the adverse
 
impacts from cost
inflation,
 
primarily related to
 
raw materials, certain components,
logistics and tight labor
 
markets. In addition, the
 
result was
supported by low costs
 
in Corporate & Other.
 
As a reminder,
last year’s Operational
 
EBITA margin
 
of 13.8%, was positively
impacted by 30 basis
 
points from the recently
 
divested
Mechanical Power
 
Transmission business.
 
Looking at the
underlying operations,
 
I am pleased that we
 
were able to
slightly improve the
 
Operational EBITA
 
margin in the current
environment of inflation
 
and strained value chain.
 
This reflects
that our hard work
 
towards increased accountability,
transparency and speed
 
is yielding results.
Cash flow from operating
 
activities, amounted to
 
-$573 million.
 
As expected, it declined
 
compared with last year,
but the drop was sharper
 
than anticipated due
 
primarily to a
higher-than-expected
 
build-up of net working capital
 
,
 
to support
deliveries from the
 
order backlog.
 
Cash delivery will clearly
 
be
in focus going forward
 
and I expect a solid full
 
-year cash flow.
We made overall
 
good progress towards our 2030
 
sustainability
goals in 2021, as publicized
 
in our Sustainability Report
 
in March.
As an example, we
 
reduced our own CO2e
 
emissions by 39%, from
the 2019 baseline.
 
Additionally,
 
our products, services and
solutions sold last year
 
will enable our customers
 
to reduce their
CO2e emissions by
 
11.5 megatons
 
after the first year,
 
which is a
good start towards
 
our target of more than
 
100 megatons by 2030.
We made progress
 
with the portfolio activities.
 
We plan for an
exit of the Turbocharging
 
business, although the
 
geo-political
uncertainties caused
 
us to delay the final decision
 
on a spin-off
or sale to the second
 
quarter. Prepar
 
ing for the separation, we
launched the new company
 
name and brand – Accelleron.
 
For
the E-mobility business
 
,
 
our plan for a separate
 
listing during
the second quarter
 
remains
 
intact,
 
assuming constructive
market conditions.
I look forward to
 
the impacts of the leadership
 
exchange in
Electrification and Motion.
 
I have great confidence
 
in both Tarak
and Morten and expect
 
them to continue to improve
 
operational
performance for both
 
growth and profitability.
 
The change was
effective as of April
 
1.
Finally,
 
I am pleased we announced
 
a continuation of share
buybacks of up to $3
 
billion, including the fulfillment
 
of the
promise to return the
 
remaining $1.2 billion
 
of proceeds related
to the divestment of
 
Power Grids. This new buyback
 
program
was launched on
 
April 1.
Björn Rosengren
CEO
In the
second quarter of 2022
, ABB anticipates the underlying
market activity to remain
 
broadly similar compared
 
with the prior
quarter.
 
Revenues in the second
 
quarter tend to be sequentially
stronger in absolute
 
terms, supporting a slight
 
sequential
margin increase,
 
assuming no escalation
 
of lock-downs in
China.
 
In full-year 2022
, we expect a steady margin
 
improvement
towards the 2023 target
 
of at least 15%, supported
 
by
increased efficiency
 
as we fully incorporate the
 
decentralized
operating model and performance
 
culture in all our divisions.
Furthermore, we expect
 
support from an anticipated
 
positive
market momentum
 
and our strong order backlog.
CEO summary
Outlook
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ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
3
Business momentum
 
in the first quarter was very
 
strong,
supported by most
 
major customer segments.
 
This generated a
strong positive order
 
development in all business
 
areas, despite
a smaller contribution
 
from large orders compared
 
with the prior
year and the order
 
de-booking to the amount
 
of $190 million in
the European region.
 
There were no unusual order
cancellations. Service-related
 
orders increased by
10%
 
(15%
 
comparable). In total, order
 
intake improved by
21% (28% comparable)
 
to $9,373 million, the highest
 
quarterly
level in recent years.
The positive development
 
was very strong in the segments
 
of
machine building,
 
food & beverage and
 
in general industries
 
as
well as in the automotive
 
segment due to broadly
 
accelerating
investments in the
 
EV segment.
In transport and infrastructure,
 
there was a very strong
 
order
development across
 
the renewables and e-mobility
 
business.
The buildings segment
 
improved in both the residential
 
and
non-residential segments.
 
In the marine segment a
 
positive
development was noted
 
for cruising as well as general
 
marine &
port demand. The process
 
-related business improved
 
across
the customer segments,
 
except for a stable
 
development in
power generation.
From a geographical
 
perspective, orders
 
increased by more
than 20% in all three
 
regions,
 
on a comparable basis.
 
Orders in
Europe increased by
 
14% (24% comparable).
 
Americas
improved by 29% (40%
 
comparable), supported by
 
a stellar
33% (46% comparable)
 
growth in the United States.
 
In Asia,
Middle East and
 
Africa orders increased by
22% (24%
 
comparable), with China
 
outperforming the region as
whole as it improved by
 
28% (26% comparable).
Compared with the
 
fourth quarter,
 
the level of component
constraints remained
 
broadly similar and as expected,
 
except
for a somewhat worse
 
than anticipated development
 
in
Robotics & Discrete
 
Automation where customer
 
deliveries
were delayed due to semiconductor
 
shortages. The sharp
revenue decline in
 
Robotics & Discrete Automation
 
was
however more than
 
offset by strong comparable
 
improvements
in the other business
 
areas. ABB Group revenues
 
increased by
1% (7% comparable)
 
to
 
$6,965 million, supported
 
by both volume growth and
 
good
pricing execution, but
 
adversely impacted by changed
exchange rates.
Orders and revenues
 
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2022
Q1 2021
US$
Comparable
Europe
3,534
3,102
14%
24%
The Americas
2,897
2,247
29%
40%
Asia, Middle East
and Africa
2,942
2,407
22%
24%
ABB Group
9,373
7,756
21%
28%
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
28%
7%
FX
-4%
-3%
Portfolio changes
-3%
-3%
Total
21%
1%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q1 2022
Q1 2021
US$
Comparable
Europe
2,518
2,551
-1%
7%
The Americas
2,169
2,043
6%
15%
Asia, Middle East
and Africa
2,278
2,307
-1%
0%
ABB Group
6,965
6,901
1%
7%
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ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
4
Gross profit
Gross margin decreased
 
to 32.7%, a slight decline
 
of
20 basis points year
 
-on-year,
 
primarily due to the divestment
 
of
Mechanical Power
 
Transmission, but
 
to some extent also to
 
a
decline in Robotics
 
& Discrete Automation.
 
Gross profit improved
slightly by 1% to $2,
 
281 million.
Income from operations
Income from operations
 
amounted to $857 million,
 
improving by
$60 million,
 
or 8%. The improvement
 
was mainly driven by
operational performance,
 
lower restructuring charges
 
and changes
in obligations related
 
to divested businesses,
 
which more than
offset increased
 
acquisition-
 
and divestment-related
 
costs.
 
Operational
 
EBITA
Operational EBITA
 
of $997 million
 
was 4% higher (8% constant
currency) year-on-year,
 
with the increased profit
 
in Process
Automation as the main
 
driver. Profitability
 
in both Motion and
Process Automation
 
improved, while it declined
 
in Electrification
and Robotics & Discrete
 
Automation.
 
The Operational
 
EBITA margin
 
increased by 50
 
basis points to
14.3%, supported by higher
 
profitability in operations and
 
improved
Operational EBITA
 
in Corporate and
 
Other, which was
 
up by $69
million to -$32 million
 
.
 
Last year’s Operational EBITA
 
margin for the
first quarter was 13.8%,
 
positively impacted by 30
 
basis points from
the divested Mechanical
 
Power Transmission
 
business.
Earnings were positively
 
impacted by higher volumes
 
and
successful pricing activities,
 
which combined more than
 
offset the
adverse effects
 
from cost inflation primarily
 
related to raw materials,
certain components,
 
logistics and tight labor
 
market. Selling,
general and administrative
 
(SG&A) expenses decreased
 
slightly by
2% (up 2% in constant
 
currency),
 
the combined impact
 
from
increased sales cost
 
s
 
to support the high demand
 
environment and
a decrease in General
 
& Administrative expenses.
Net finance expenses
Net finance expenses
 
declined to $9 million
 
from $44 million,
primarily reflecting
 
lower foreign exchange
 
losses and lower
interest charges on
 
borrowings as well as a
 
reduction in certain
income tax-related
 
risks.
Income tax
Income tax expense
 
was $241 million with an effective
 
tax rate of
27.3%, including $61
 
million in negative tax impacts
 
related to the
separation of E-mobility
 
and Turbocharging businesses.
 
Net income and earnings
 
per share
Net income attributable
 
to ABB was $604 million and
 
increased 20%
from last year,
 
mainly due to increased
 
earnings in continuing
operations and lower
 
net finance expenses.
 
Consequently,
 
basic
earnings per share was
 
$0.31,
 
and increased from $0.25,
 
year-on-
year.
Earnings
abb2022q1fininfop7i0.gif abb2022q1fininfop7i2.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop7i1.gif
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
5
Net working capital
Net working capital
 
amounted to $3,461 million,
 
increasing
both year-on-year from
 
$2,904 million and sequentially
 
from
$2,303 million.
 
The sequential increase
 
was driven primarily
by inventories to support
 
future deliveries to
 
the strong
market demand, as
 
well as receivables.
 
Net working capital
as a percentage of
 
revenues
1
 
was 12.1%.
Capital expenditures
Purchases of property,
 
plant and equipment and
 
intangible
assets amounted to
 
$187 million, somewhat higher
 
than
expected driven
 
mainly by Electrification and
 
Motion.
 
Net debt
Net debt
1
 
amounted to $2,772 million
 
at the end of the
quarter,
 
and increased from $1,233
 
million, year-on-year.
Sequentially,
 
the net cash position
 
of $98 million changed
 
to a
net debt position, as
 
increased debt more than
 
offset
increased Cash & equivalents
 
,
 
including paid dividend.
Cash flows
Cash flow from operating
 
activities in continuing operations
was -$564 million and
 
declined year-on-year from
$523 million. The
 
quarterly year-on-year decline
 
was driven
by a higher build-up
 
of trade net working capital,
 
mainly
related to inventories
 
to support future deliveries
 
on the high
order intake as well
 
as receivables, but also by
 
higher pay-
out of incentives due
 
to the strong financial
 
performance in
2021. It also reflects
 
approximately $170 million
 
of cash
paid for income taxes relating
 
to the E-mobility and
Turbocharging separations
 
.
 
ABB expects a solid cash
 
flow
delivery in 2022.
 
Share buyback program
ABB launched a new
 
share buyback program
 
of up to $3 billion
on April 1. As part of
 
this program, ABB intends
 
to return to its
shareholders the remaining
 
$1.2 billion of the $7.8
 
billion of
cash proceeds from the
 
Power Grids divestment. Shares
 
are
being repurchased
 
on the second trading line.
 
To
 
conclude the
previous buyback program,
 
31,438,500 shares were
repurchased in the
 
first quarter for the amount
 
of approximately
$1 billion. The total
 
number of ABB Ltd’s issued
 
shares is
2,053,148,264, including
 
those approved for
 
cancellation at
ABB's 2022 AGM.
 
($ millions,
 
unless otherwise indicated)
Mar. 31
2022
Mar. 31
2021
Dec. 31
2021
Short term debt and current
maturities of long-term debt
3,114
 
1,336
1,384
 
Long-term debt
6,171
 
5,619
4,177
 
Total debt
9,285
 
6,955
5,561
 
Cash & equivalents
5,216
 
3,466
4,159
 
Restricted cash - current
30
 
72
30
 
Marketable securities and
 
short-term investments
967
 
1,884
1,170
 
Restricted cash - non-current
300
 
300
300
 
Cash and marketable securities
6,513
 
5,722
5,659
 
Net debt (cash)*
2,772
 
1,233
(98)
Net debt (cash)* to EBITDA ratio
0.42
 
0.4
(0.01)
Net debt (cash)* to Equity ratio
0.20
 
0.09
(0.01)
*
At Mar. 31, 2022, Mar. 31, 2021 and Dec. 31, 2021, net debt(cash) excludes net
 
pension
(assets)/liabilities of $(13) million, $684 million and $45
 
million, respectively.
Balance sheet & Cash flow
abb2022q1fininfop8i2.gif abb2022q1fininfop8i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop8i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
6
Orders and revenues
Demand was very
 
strong across all customer
 
segments in the
first quarter,
 
resulting in an order growth of
25% (29% comparable)
 
to $4,397 million, the highest
 
level in
recent history.
 
Book-to-bill was 1.3 and the
 
order backlog
extended to a record
 
level of $6.5 billion.
All divisions reported
 
double-digit order growth,
 
including
the newly established
 
Service division. Momentum
 
was
clearly strongest
 
in E-mobility,
 
which more than doubled
 
its
orders.
All customer segments
 
contributed strongly to the
 
high
order intake.
 
Orders
 
increased at a steep
 
double-digit growth rate of
 
24%
(35% comparable)
 
in Europe, and by
42% (42% comparable)
 
in the Americas, including
 
a 50%
improvement in the
 
United States. Asia, Middle
 
East and
Africa increased by
 
6% (7% comparable) supported
 
by an
11% (9%
 
comparable) increase
 
in China.
Revenues improved by
 
6% (10% comparable) to
$3,327 million, with
 
strong contribution from pricing
 
actions,
although hampered
 
by low volumes in the largest
 
division,
Distribution Solutions
 
,
 
where customer deliveries
 
were
adversely impacted
 
by a tight supply chain.
 
Double-digit
growth rates were reported
 
in both the Americas and
Europe, while Asia,
 
Middle East and Africa improved
 
at a
mid-single digit rate.
During the quarter,
 
a new service division was
 
formed
through internal reorganization
 
.
 
Transparency
 
will improve
by moving the service
 
business mainly out of
 
Distribution
Solutions, with the
 
aim to increase focus on
 
its operational
performance.
 
Profit
The Operational
 
EBITA was $510
 
million, remaining stable,
while it improved by 5%
 
in constant currency
 
,
 
which on
higher revenues
 
resulted in a margin decline
 
of 80 basis
points to 15.4%.
The strained supply
 
chain impacted the largest
 
division,
Distribution Solutions,
 
due to its large systems
 
sales. This
and the impacts
 
from cost inflation - mainly
 
driven by higher
raw material costs
 
as the previous year period
 
benefited
from raw material hedges
 
at lower price point -
 
more than
offset the benefits
 
from higher volumes,
 
pricing and
operational efficiencies,
 
year-on-year.
 
Electrification
CHANGE
($ millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
Orders
4,397
3,531
25%
29%
Order backlog
6,504
4,699
38%
42%
Revenues
3,327
3,140
6%
10%
Operational EBITA
510
511
0%
as % of operational revenues
15.4%
16.2%
-0.8 pts
Cash flow from operating activities
39
319
-88%
No. of employees (FTE equiv.)
50,860
50,990
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
29%
10%
FX
-4%
-4%
Portfolio changes
0%
0%
Total
25%
6%
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abb2022q1fininfop9i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
7
Orders and revenues
Order intake increased
 
by 15%
 
(32% comparable) to
$2,202 million, the highest
 
level for several years,
 
despite
the full impact from
 
the divestment of Mechanical
 
Power
Transmission
 
(Dodge) as well as a
 
smaller contribution from
large orders,
 
year-on-year.
Customer activity was
 
high in all segments and
 
all
divisions contributed strongly
 
to order growth, except
 
for
Traction which
 
faced a high comparable
 
from last year.
Demand was strong in
 
all major regions. Orders
increased by 18% (31%
 
comparable) in Europe
 
and by
27% (29% comparable)
 
in Asia, Middle East and
 
Africa.
The Americas reported
 
largely stable orders (up
34% comparable) mainly
 
due to the divestment
 
of Dodge.
The divestment of Dodge
 
weighed on reported revenue
growth which decreased
 
by 6% (up 9% comparable).
Supply chain constraints
 
eased somewhat sequentially,
not least due to the
 
implemented redesigns
 
and validating
of alternative suppliers.
 
Most of the divisions contributed
to the comparable revenue
 
growth.
Profit
Despite the divestment
 
of the high margin Dodge
 
business,
the Operational EBITA
 
margin increased by
 
30 basis points
to 17.4%. Operational
 
EBITA amounted
 
to $274 million
.
The impacts from higher
 
volumes and strong pricing
execution more than offset
 
the adverse impacts from
 
cost
inflation, mainly related
 
to raw materials and freight.
The divestment of the
 
Dodge business had an
 
adverse
impact of 90 basis
 
points on the Operational
 
EBITA
margin, year-on-year.
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
32%
8%
FX
-5%
-4%
Portfolio changes
-12%
-10%
Total
15%
-6%
Motion
CHANGE
($ millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
Orders
2,202
1,917
15%
32%
Order backlog
4,317
3,419
26%
32%
Revenues
1,572
1,667
-6%
9%
Operational EBITA
274
289
-5%
as % of operational revenues
17.4%
17.1%
+0.3 pts
Cash flow from operating activities
(2)
324
n.a.
No. of employees (FTE equiv.)
20,330
20,980
abb2022q1fininfop10i2.gif abb2022q1fininfop10i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop10i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
8
Orders and revenues
On generally strong markets,
 
the order intake increased
 
by
2% (6% comparable)
 
and amounted to $1,692
 
million,
despite the order de
 
-booking valued at approximately
 
$190
million booked in
 
Europe.
Demand was strong across
 
most customer segments,
with a particularly strong
 
development in the
 
marine and
mining & metals segment
 
.
 
Only the power generation
segment remained stable
 
.
 
Service orders increased by
7% (12% comparable
 
).
The order de-booking triggered
 
a decline of 25% (20%
comparable) in total
 
order growth in Europe.
 
However,
steep order growth
 
was reported in both the
 
Americas,
22% (23% comparable)
 
and in Asia, Middle East and
Africa, 28% (31% comparable).
Revenues increased
 
by 7% (11%
 
comparable), supported
by a positive development
 
in most divisions and
 
with
higher-than-expected
 
deliveries towards the
 
end of the
quarter as the adverse
 
impact of semi-conductor
shortages
 
were somewhat lower than
 
anticipated.
 
Profit
All divisions reported
 
double-digit Operational EBITA
 
margin
with both earnings
 
and profitability improvements
 
noted in
most divisions,
 
year-on-year. In
 
total, the business area’s
Operational EBITA
 
increased by 26
 
%, to $196 million, and
the Operational EBITA
 
margin improved
 
to 13.0% from
11.0%.
The earnings and margin
 
increases
 
were driven by higher
volumes and efficiency
 
measures,
 
which more than offset
cost inflation mainly
 
in freight and a slight negative
divisional mix.
 
Impacts on profitability
 
from component shortages
 
were
limited in the period, although
 
may increase as the year
progresses.
 
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
6%
11%
FX
-4%
-4%
Portfolio changes
0%
0%
Total
2%
7%
Process Automation
CHANGE
($ millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
Orders
1,692
1,656
2%
6%
Order backlog
6,190
5,900
5%
7%
Revenues
1,506
1,407
7%
11%
Operational EBITA
196
155
26%
as % of operational revenues
13.0%
11.0%
+2 pts
Cash flow from operating activities
60
233
-74%
No. of employees (FTE equiv.)
21,920
22,000
abb2022q1fininfop11i2.gif abb2022q1fininfop11i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop11i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
9
Orders and revenues
Order intake reached
 
the highest quarterly level
 
for several
years and amounted
 
to $1,308 million, up by 56%
 
(60%
comparable), year-on-year.
 
Revenues on the other hand
declined by 14% (12%
 
comparable) to $730
 
million, materially
hampered by component
 
shortages. Consequently,
 
order
backlog increased to
 
the high level of $2.5
 
billion, and although
the supply chain
 
is expected to remain strained,
 
the first quarter
should have marked
 
the low point for Robotics
 
& Discrete
Automation.
The steep order
 
growth was driven by very
 
strong momentum
in both Robotics and
 
Machine Automation with
 
contribution
from a strong base
 
business as well as from large
 
orders in
Robotics.
 
All customer segments
 
increased at a double-digit
growth rate,
 
with particularly strong momentum
 
in automotive
– driven by EV investments
 
in China, general industry
 
and
machine builders.
All major regions benefited
 
from a very strong order
momentum. Europe
 
increased by 40% (49% comparable)
and the Americas close
 
to doubled at 89%
 
(89%
comparable). Asia,
 
Middle East and Africa improved
 
by 67%
(66% comparable)
 
with China growth reported
 
at 96% (93%
comparable).
Revenues in both divisions
 
were adversely impacted by
delayed customer deliveries
 
due to component shortages,
primarily related
 
to semi-conductors. The supply
 
situation
deteriorated somewhat
 
sequentially.
 
Despite the protracted
delivery times, there
 
were no cancellations.
 
The COVID-
related lock-downs
 
in China had no significant
 
impact in the
first quarter,
 
but some effects on
 
the business area’s
operations are anticipated
 
in the second quarter
 
on the
Shanghai manufacturing
 
site.
 
Profit
Both profit and profitability
 
declined year-on-year due
 
to the
low volumes and cost
 
inflation linked to the
 
tight supply
chain. Operational
 
EBITA declined
 
by 53% with a margin
deterioration of 570
 
basis points.
In total, the decline
 
in volumes
 
triggered underabsorption
of fixed costs,
 
which combined with
 
cost inflation related
to freight and input
 
costs more than offset
 
the contribution
from cost measures and
 
positive price execution,
 
year-
on-year.
 
Robotics & Discrete Automation
Growth
Q1
Q1
Change year-on-year
Orders
Revenues
Comparable
60%
-12%
FX
-6%
-3%
Portfolio changes
2%
1%
Total
56%
-14%
CHANGE
($ millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
Orders
1,308
841
56%
60%
Order backlog
2,495
1,362
83%
86%
Revenues
730
853
-14%
-12%
Operational EBITA
49
105
-53%
as % of operational revenues
6.7%
12.4%
-5.7 pts
Cash flow from operating activities
(29)
111
n.a.
No. of employees (FTE equiv.)
10,690
10,290
abb2022q1fininfop12i2.gif abb2022q1fininfop12i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop12i0.jpg
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
10
Quarterly highlights
ABB adopted the
 
United Nations (UN) Women’s
Empowerment Principles
 
to promote gender equality
 
and
women’s empowerment
 
in the workplace, marketplace
 
and
community.
 
As part of further promoting
 
an inclusive
culture,
 
more than 7,500 senior
 
managers at ABB have
taken part in unconscious
 
bias training.
ABB released its
 
Sustainability Report 2021, outlining
 
the
achievements of
 
the company under the
 
four pillars of its
ambitious 2030 sustainability
 
strategy.
 
Notably,
 
ABB made
strong progress on
 
its way towards reaching carbon
neutrality in its own
 
operations by 2030 as it
 
reduced its
CO2 emissions by
 
39 percent in 2021 vs. 2019.
ABB has entered into
 
an agreement with
 
leading global
transport solutions
 
provider, Scania,
 
to provide a
comprehensive range
 
of robotic solutions for
 
Scania’s new
highly automated battery
 
assembly plant in Sweden.
 
The
new facility will be a key
 
milestone on Scania’s
 
journey
towards the electrification
 
of heavy vehicles.
ABB and Ballard
 
Power Systems (Ballard)
 
have joined
forces in an industry
 
-first partnership to develop
 
high-
power fuel cell concept
 
capable of generating
3 megawatts (4,000
 
HP) of electrical power.
 
The aim is to
make zero-emission
 
hydrogen fuel cell technology
commercially available
 
for larger ships.
Story of the quarter
ABB published the
 
findings of a new global
 
study of
international business
 
and technology leaders
 
on industrial
transformation, looking
 
at the intersection of digitalization
and sustainability.
 
The study,
 
“Billions of better decisions:
industrial transformation’s
 
new imperative,” examines
 
the
current take-up of the
 
Industrial Internet of Things
 
(IoT) and
its potential for improving
 
energy efficiency,
 
lowering
greenhouse gas
 
emissions and driving change.
 
With more
than 70 percent of ABB’s
 
R&D resources dedicated
 
to
digital and software
 
innovations, and a robust
 
ecosystem of
digital partners, including
 
Microsoft, IBM and
 
Ericsson, the
company has established
 
a leading presence in
 
Industrial
IoT.
Q1 outcome
27% reduction of CO
 
emissions in own operations year
 
-on-
year
 
21% year-on-year increase in
 
LTIFR due
 
to a slight increase
in absolute lost time incidents
 
as COVID-related restrictions
loosened and less contractor
 
hours booked for March
 
3%-points increase in number
 
of women in senior
management supported by targeted
 
initiatives across all
business areas
Sustainability
Q1 2022
Q1 2021
CHANGE
12M ROLLING
CO2e own operations emissions,
 
kt scope 1 and 2
1
96
131
-27%
401
Lost Time Injury Frequency Rate (LTIFR),
 
frequency / 200,000 working hours
0.17
0.14
21%
0.15
Share of females in senior management
positions, %
16.9
14.3
+2.6 pts
15.5
1
CO
 
equivalent emissions from site, energy use and
 
fleet, previous quarter
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
 
11
During Q1 2022
On January 27, ABB announced
 
that it had increased its
shareholdings to approximately
 
60% in start-up company
InCharge Energy to
 
strengthen its E-mobility division
 
in
the North American
 
market and expand its software
 
and
digital services offering.
 
InCharge Energy tailors
 
end-to-
end EV charging infrastructure
 
solutions, including the
procurement, installation,
 
operation, and maintenance
 
of
charging systems,
 
and provides cloud-based
 
software
services for the optimization
 
of energy management.
On February 2, ABB announced
 
that Andrea Antonelli
was appointed General
 
Counsel and Member of
 
the
Executive Committee,
 
as of March 1, 2022.
 
Furthermore,
Andrea became
 
ABB’s Company Secretary
 
on March 24,
2022, following the
 
Annual General Meeting.
On February 25,
 
ABB announced changes
 
to Business
Area leadership in Executive
 
Committee. As of April 1,
2022, Morten Wierod,
 
who was President of
 
Motion,
became President of
 
Electrification, while Tarak
 
Mehta,
who was President
 
of Electrification, has become
President of Motion.
On March 24, ABB announced
 
its plans to launch a new
share buyback program
 
of up to $3 billion. The
 
program
was launched on
 
April 1.
 
On March 24, ABB announced
 
that shareholders
approved all proposals
 
at the 2022 Annual General
Meeting.
 
On March 28, ABB announced
 
that Karin Lepasoon had
been appointed Chief
 
Communications & Sustainability
Officer and Member
 
of the Executive
 
Committee.
Lepasoon will assume
 
her position latest on
 
October 1,
2022.
 
After Q1 2022
.
Significant events
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
12
1
Excludes one project estimated to a total of ~$100
 
million, that is ongoing in the non-core business. Exact
 
exit timing is difficult to assess due to legal proceedings
 
etc.
2
Excludes restructuring-related expenses of ~$200
 
million from the full exit of a product group within our
 
non-core businesses expected in Q2 2022.
3
Costs relating to the announced exits and the
 
potential E-mobility listing.
4
Excluding share of net income from JV.
5
Excluding impact of acquisitions or divestments or
 
any significant non-operational items.
($ in millions, unless otherwise stated)
FY 2022
Q2 2022
Net finance expenses
~(100)
~(30)
unchanged
Non-operational pension
(cost) / credit
~140
~35
unchanged
Effective tax rate
~25%
 
5
~27%
unchanged
Capital Expenditures
~(750)
~(200)
unchanged
($ in millions, unless otherwise stated)
FY 2022
1
Q2 2022
Corporate and Other Operational costs
~(300)
~(90)
from ~(330)
Non-operating items
Acquisition-related amortization
~(230)
~(60)
unchanged
Restructuring and restructuring related
~(130)
2
~(40)
from ~(150)
Separation costs
3
~(180)
~(70)
unchanged
ABB Way transformation
~(150)
~(40)
unchanged
Certain other income and expenses
related to PG divestment
4
~(25)
~(5)
from ~(20)
Additional 2022 guidance
Note: comparable growth calculation includes acquisitions
 
and divestments with revenues of greater than
 
$50 million.
1
Represents the estimated annual revenues for the
 
period prior to the announcement of the respective acquisition/divestment.
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2021
Motion
Mechanical Power Transmission
1-Nov
645
1,500
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2022
Electrification
InCharge Energy, Inc (majority stake)
26-Jan
16
40
2021
Electrification
Enervalis (majority stake)
26-Apr
1
22
Robotics & Discrete Automation
ASTI Mobile Robotics Group
2-Aug
36
300
Additional figures
ABB Group
Q1 2021
Q2 2021
Q3 2021
Q4 2021
FY 2021
Q1 2022
EBITDA, $ in million
1,024
1,324
1,072
3,191
6,611
1,067
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
14.90
n.a.
Net debt/Equity
0.09
0.16
0.13
(0.01)
(0.01)
0.20
Net debt/ EBITDA 12M rolling
0.4
0.7
0.5
(0.01)
(0.01)
0.42
Net working capital, % of 12M rolling revenues
10.8%
11.6%
10.2%
8.1%
8.1%
12.1%
Earnings per share, basic, $
0.25
0.37
0.33
1.34
2.27
0.31
Earnings per share, diluted, $
0.25
0.37
0.32
1.33
2.25
0.31
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.82
n.a.
Share price at the end of period, CHF
28.56
31.39
31.39
34.90
34.90
30.17
Share price at the end of period, $
30.47
33.99
33.36
38.17
38.17
32.34
Number of employees (FTE equivalents)
105,330
106,370
106,080
104,420
104,420
104,720
No. of shares outstanding at end of period (in millions)
2,024
2,006
1,993
1,958
1,958
1,929
Acquisitions and divestments, last twelve months
 
 
ABB
 
INTERIM
 
REPORT
I
Q1
 
2022
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
2022
Mid-May
 
Proposed timing to
 
receive dividend for shares
 
on US-NYSE
May 17
 
ABB Motion CMD in Helsinki
May 18
 
ABB Process Automation
 
CMD in Helsinki
July 21
Q2 2022 results
October 20
Q3 2022 results
This press release
 
includes forward-looking information
 
and
statements as well
 
as other statements concerning
 
the
outlook for our business,
 
including those in the sections
 
of
this release titled “CEO summary,”
 
“Outlook,” “Balance
sheet & cash flow”,
 
“Robotics and Discrete
 
Automation,”
and “Sustainability”.
 
These statements are based
 
on current
expectations, estimates
 
and projections about the
 
factors
that may affect
 
our future performance,
 
including global
economic conditions,
 
the economic conditions
 
of the
regions and industries
 
that are major markets for
 
ABB.
These expectations, estimates
 
and projections are generally
identifiable by statements
 
containing words such as
“intends,” “anticipates,”
 
“expects,” “estimates,” “plans,”
“targets” or similar
 
expressions. However,
 
there are many
risks and uncertainties,
 
many of which are beyond
 
our
control, that could cause
 
our actual results to differ
materially from the
 
forward-looking information
 
and
statements made in
 
this press release and which
 
could
affect our ability
 
to achieve any or all of our
 
stated targets.
Some important
 
factors that could cause such
 
differences
include, among others,
 
business risks associated
 
with the
volatile global economic
 
environment and political
conditions, costs associated
 
with compliance activities,
market acceptance
 
of new products and services,
 
changes
in governmental
 
regulations and currency exchange
 
rates
and such other factors
 
as may be discussed
 
from time to
time in ABB Ltd’s
 
filings with the U.S. Securities
 
and
Exchange Commission,
 
including its Annual Reports
 
on
Form 20-F.
 
Although ABB Ltd believes
 
that its expectations
reflected in any such
 
forward looking statement
 
are based
upon reasonable assumptions,
 
it can give no assurance
 
that
those expectations
 
will be achieved.
The Q1 2022
 
results press release
 
and presentation slides
are available on the
 
ABB News Center at
www.abb.com/news
 
and on the Investor
 
Relations
homepage at www.abb.com/investorrelations.
 
A conference call and
 
webcast for analysts
 
and investors is
scheduled to begin
 
today at 10:00 a.m. CET.
To
 
pre-register for the conference
 
call or to join the
webcast, please
 
refer to the ABB website:
www.abb.com/investorrelations.
 
The recorded session
 
will be available after
 
the event on
ABB’s website.
Q1 results presentation on April 21, 2022
Important notice about forward-looking information
ABB
 
(ABBN: SIX Swiss
 
Ex) is a leading global
 
technology company
 
that energizes the transformation
 
of society and industry to
achieve a more productive,
 
sustainable future. By connecting
 
software to its electrification,
 
robotics, automation and
 
motion
portfolio, ABB pushes
 
the boundaries of technology
 
to drive performance
 
to new levels. With a history
 
of excellence stretching
 
back
more than 130 years,
 
ABB’s success is
 
driven by about 105,000 talented
 
employees in over 100 countries.
abb2022q1fininfop16i1.jpg abb2022q1fininfop16i2.gif
1
 
Q1 2022
 
FINANCIAL
 
INFORMATION
April 21, 2022
Q1 2022
Financial information
abb2022q1fininfop17i0.jpg
2
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Financial
 
Information
Contents
03
─ 05
 
Key Figures
06 ─
30
 
Consolidated
 
Financial
 
Information
 
(unaudited)
31 ─
40
 
Supplemental
 
Reconciliations
 
and Definitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop18i0.jpg
3
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Comparable
(1)
Orders
9,373
7,756
21%
28%
Order backlog (end March)
18,901
14,750
28%
32%
Revenues
6,965
6,901
1%
7%
Gross Profit
2,281
2,268
1%
as % of revenues
32.7%
32.9%
-0.2 pts
Income from operations
857
797
8%
Operational EBITA
(1)
997
959
4%
8%
(2)
as % of operational revenues
(1)
14.3%
13.8%
+0.5 pts
Income from continuing operations, net of tax
643
551
17%
Net income attributable to ABB
604
502
20%
Basic earnings per share ($)
0.31
0.25
25%
(3)
Cash flow from operating activities
(4)
(573)
543
n.a.
Cash flow from operating activities in continuing operations
(564)
523
n.a.
(1)
 
For a reconciliation of non-GAAP measures see “
” on page 31.
(2)
 
Constant currency (not adjusted for portfolio changes).
(3)
 
EPS growth rates are computed using unrounded amounts.
(4)
 
Cash flow from operating activities includes both continuing and discontinued operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
Q1 2022
 
FINANCIAL
 
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q1 2022
Q1 2021
US$
Local
Comparable
Orders
 
ABB Group
9,373
7,756
21%
25%
28%
Electrification
4,397
3,531
25%
29%
29%
Motion
2,202
1,917
15%
20%
32%
Process Automation
1,692
1,656
2%
6%
6%
Robotics & Discrete Automation
1,308
841
56%
62%
60%
Corporate and Other
 
(incl. intersegment eliminations)
(226)
(189)
Order backlog (end March)
ABB Group
18,901
14,750
28%
32%
32%
Electrification
6,504
4,699
38%
42%
42%
Motion
4,317
3,419
26%
30%
32%
Process Automation
6,190
5,900
5%
7%
7%
Robotics & Discrete Automation
2,495
1,362
83%
87%
86%
Corporate and Other
 
(incl. intersegment eliminations)
(605)
(630)
Revenues
 
ABB Group
6,965
6,901
1%
4%
7%
Electrification
3,327
3,140
6%
10%
10%
Motion
1,572
1,667
-6%
-2%
9%
Process Automation
1,506
1,407
7%
11%
11%
Robotics & Discrete Automation
730
853
-14%
-11%
-12%
Corporate and Other
 
(incl. intersegment eliminations)
(170)
(166)
Income from operations
ABB Group
857
797
Electrification
506
440
Motion
254
265
Process Automation
151
147
Robotics & Discrete Automation
22
82
Corporate and Other
(incl. intersegment eliminations)
(76)
(137)
Income from operations %
ABB Group
12.3%
11.5%
Electrification
15.2%
14.0%
Motion
16.2%
15.9%
Process Automation
10.0%
10.4%
Robotics & Discrete Automation
3.0%
9.6%
Operational EBITA
ABB Group
997
959
4%
8%
Electrification
510
511
0%
5%
Motion
274
289
-5%
-3%
Process Automation
196
155
26%
31%
Robotics & Discrete Automation
49
105
-53%
-50%
Corporate and Other
(incl. intersegment eliminations)
(32)
(101)
Operational EBITA %
 
ABB Group
14.3%
13.8%
Electrification
15.4%
16.2%
Motion
17.4%
17.1%
Process Automation
13.0%
11.0%
Robotics & Discrete Automation
6.7%
12.4%
Cash flow from operating activities
ABB Group
(573)
543
Electrification
39
319
Motion
(2)
324
Process Automation
60
233
Robotics & Discrete Automation
(29)
111
Corporate and Other
 
(incl. intersegment eliminations)
(632)
(464)
Discontinued operations
(9)
20
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Revenues
6,965
6,901
3,327
3,140
1,572
1,667
1,506
1,407
730
853
Foreign exchange/commodity timing
differences in total revenues
(3)
33
(10)
10
3
19
(1)
5
5
(3)
Operational revenues
6,962
6,934
3,317
3,150
1,575
1,686
1,505
1,412
735
850
Income from operations
857
797
506
440
254
265
151
147
22
82
Acquisition-related amortization
60
65
31
29
8
13
1
1
21
20
Restructuring, related and
 
implementation costs
16
35
2
17
8
1
5
3
1
5
Changes in obligations related to
 
divested businesses
(14)
2
Changes in pre-acquisition estimates
1
6
1
6
Gains and losses from sale of businesses
3
3
Acquisition- and divestment-related
 
expenses and integration costs
59
10
19
6
5
3
33
1
1
Other income/expense relating to the
 
Power Grids joint venture
35
17
Certain other non-operational items
(2)
12
(30)
(6)
Foreign exchange/commodity timing
differences in income from operations
(15)
12
(19)
16
(1)
7
6
3
4
(2)
Operational EBITA
997
959
510
511
274
289
196
155
49
105
Operational EBITA margin (%)
14.3%
13.8%
15.4%
16.2%
17.4%
17.1%
13.0%
11.0%
6.7%
12.4%
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Q1 22
Q1 21
Depreciation
136
144
67
64
27
32
18
19
15
13
Amortization
74
83
37
37
9
14
3
3
21
21
including total acquisition-related amortization of:
60
65
31
29
8
13
1
1
21
20
Orders received and revenues by region
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
Q1 22
Q1 21
US$
Local
parable
Q1 22
Q1 21
US$
Local
parable
Europe
3,534
3,102
14%
24%
24%
2,518
2,551
-1%
7%
7%
The Americas
2,897
2,247
29%
29%
40%
2,169
2,043
6%
6%
15%
of which United States
2,225
1,679
33%
33%
46%
1,582
1,532
3%
3%
14%
Asia, Middle East and Africa
2,942
2,407
22%
24%
24%
2,278
2,307
-1%
0%
0%
of which China
1,537
1,199
28%
26%
26%
1,100
1,176
-6%
-8%
-8%
ABB Group
9,373
7,756
21%
25%
28%
6,965
6,901
1%
4%
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2022q1fininfop21i0.gif
6
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Consolidated Financial Information
ABB Ltd Interim Consolidated Income Statements (unaudited)
Three months ended
($ in millions, except per share data in $)
Mar. 31, 2022
Mar. 31, 2021
Sales of products
5,749
5,707
Sales of services and other
1,216
1,194
Total revenues
6,965
6,901
Cost of sales of products
(3,968)
(3,924)
Cost of services and other
(716)
(709)
Total cost of sales
(4,684)
(4,633)
Gross profit
2,281
2,268
Selling, general and administrative expenses
(1,239)
(1,263)
Non-order related research and development expenses
(277)
(293)
Other income (expense), net
92
85
Income from operations
857
797
Interest and dividend income
13
11
Interest and other finance expense
(22)
(55)
Non-operational pension (cost) credit
36
50
Income from continuing operations before taxes
884
803
Income tax expense
(241)
(252)
Income from continuing operations, net of
 
tax
643
551
Loss from discontinued operations, net of tax
(11)
(28)
Net income
632
523
Net income attributable to noncontrolling interests
(28)
(21)
Net income attributable to ABB
604
502
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
615
530
Loss from discontinued operations, net of tax
(11)
(28)
Net income
604
502
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.32
0.26
Loss from discontinued operations, net of tax
(0.01)
(0.01)
Net income
0.31
0.25
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
0.31
0.26
Loss from discontinued operations, net of tax
(0.01)
(0.01)
Net income
0.31
0.25
Weighted-average number of shares outstanding
 
(in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
1,936
2,015
Diluted earnings per share attributable to ABB shareholders
1,953
2,034
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Interim Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Q1 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Interim Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Three months ended
($ in millions)
Mar. 31, 2022
Mar. 31, 2021
Total comprehensive income, net of
 
tax
577
325
Total comprehensive income
 
attributable to noncontrolling interests, net of tax
(23)
(24)
Total comprehensive income attributable
 
to ABB shareholders, net of tax
554
301
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Interim Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
Q1 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Mar. 31, 2022
Dec. 31, 2021
Cash and equivalents
5,216
4,159
Restricted cash
30
30
Marketable securities and short-term investments
967
1,170
Receivables, net
6,851
6,551
Contract assets
1,072
990
Inventories, net
5,372
4,880
Prepaid expenses
289
206
Other current assets
537
573
Current assets held for sale and in discontinued operations
140
136
Total current assets
20,474
18,695
Restricted cash, non-current
300
300
Property, plant and equipment, net
4,044
4,045
Operating lease right-of-use assets
867
895
Investments in equity-accounted companies
1,626
1,670
Prepaid pension and other employee benefits
915
892
Intangible assets, net
1,572
1,561
Goodwill
10,637
10,482
Deferred taxes
1,319
1,177
Other non-current assets
517
543
Total assets
42,271
40,260
Accounts payable, trade
4,830
4,921
Contract liabilities
2,080
1,894
Short-term debt and current maturities of long-term debt
3,114
1,384
Current operating leases
218
230
Provisions for warranties
999
1,005
Dividends payable to shareholders
824
Other provisions
1,311
1,386
Other current liabilities
4,114
4,367
Current liabilities held for sale and in discontinued operations
365
381
Total current liabilities
17,855
15,568
Long-term debt
6,171
4,177
Non-current operating leases
671
689
Pension and other employee benefits
990
1,025
Deferred taxes
745
685
Other non-current liabilities
2,091
2,116
Non-current liabilities held for sale and in discontinued operations
30
43
Total liabilities
28,553
24,303
Commitments and contingencies
Redeemable noncontrolling interest
80
Stockholders’ equity:
Common stock, CHF 0.12 par value
(2,053 million shares issued at March 31, 2022, and December
 
31, 2021)
178
178
Additional paid-in capital
22
Retained earnings
21,278
22,477
Accumulated other comprehensive loss
(4,138)
(4,088)
Treasury stock, at cost
(124 million and 95 million shares at March 31, 2022, and December
 
31, 2021, respectively)
(4,071)
(3,010)
Total ABB stockholders’ equity
13,247
15,579
Noncontrolling interests
391
378
Total stockholders’ equity
13,638
15,957
Total liabilities and stockholders’
 
equity
42,271
40,260
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
Q1 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Three months ended
($ in millions)
Mar. 31, 2022
Mar. 31, 2021
Operating activities:
Net income
632
523
Loss from discontinued operations, net of tax
11
28
Adjustments to reconcile net income to net cash provided
 
by (used in) operating activities:
Depreciation and amortization
210
227
Changes in fair values of investments
(24)
(10)
Pension and other employee benefits
(46)
(50)
Deferred taxes
(116)
59
Loss from equity-accounted companies
48
35
Net loss (gain) from derivatives and foreign exchange
(28)
20
Net gain from sale of property,
 
plant and equipment
(32)
(11)
Other
36
20
Changes in operating assets and liabilities:
Trade receivables, net
(317)
(2)
Contract assets and liabilities
107
(90)
Inventories, net
(542)
(168)
Accounts payable, trade
7
42
Accrued liabilities
(390)
(76)
Provisions, net
(53)
1
Income taxes payable and receivable
14
(50)
Other assets and liabilities, net
(81)
25
Net cash provided by (used in) operating activities – continuing
 
operations
(564)
523
Net cash provided by (used in) operating activities – discontinued
 
operations
(9)
20
Net cash provided by (used in) operating activities
(573)
543
Investing activities:
Purchases of investments
(128)
(309)
Purchases of property, plant and
 
equipment and intangible assets
(187)
(142)
Acquisition of businesses (net of cash acquired) and increases
 
in cost-
 
and equity-accounted companies
(145)
(4)
Proceeds from sales of investments
305
391
Proceeds from maturity of investments
80
Proceeds from sales of property,
 
plant and equipment
35
20
Proceeds from sales of businesses (net of transaction costs
 
and cash disposed) and cost-
 
and
equity-accounted companies
(2)
Net cash from settlement of foreign currency derivatives
66
(61)
Other investing activities
10
(8)
Net cash used in investing activities – continuing operations
(44)
(35)
Net cash used in investing activities – discontinued
 
operations
(21)
(44)
Net cash used in investing activities
(65)
(79)
Financing activities:
Net changes in debt with original maturities of 90 days or less
1,305
87
Increase in debt
2,542
991
Repayment of debt
(41)
(47)
Delivery of shares
370
760
Purchase of treasury stock
(1,561)
(1,386)
Dividends paid
(889)
(844)
Dividends paid to noncontrolling shareholders
(1)
(1)
Other financing activities
(34)
(36)
Net cash provided by (used in) financing activities – continuing
 
operations
1,691
(476)
Net cash provided by financing activities – discontinued
 
operations
Net cash provided by (used in) financing activities
1,691
(476)
Effects of exchange rate changes on cash and equivalents
 
and restricted cash
4
(51)
Net change in cash and equivalents and restricted cash
1,057
(63)
Cash and equivalents and restricted cash, beginning of period
4,489
3,901
Cash and equivalents and restricted cash, end of period
5,546
3,838
Supplementary disclosure of cash flow information:
Interest paid
9
12
Income taxes paid
340
256
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
 
Q1 2022
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
($ in millions)
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total ABB
 
stockholders’
equity
Non-
controlling
interests
Total
stockholders’
equity
Balance at January 1, 2021
188
83
22,946
(4,002)
(3,530)
15,685
314
15,999
Comprehensive income:
Net income
502
502
21
523
Foreign currency translation
adjustments, net of tax of $3
(273)
(273)
3
(270)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(3)
(12)
(12)
(12)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $(2)
81
81
81
Change in derivative instruments
and hedges, net of tax of $(1)
3
3
3
Total comprehensive income
301
24
325
Changes in noncontrolling interests
(37)
(37)
34
(3)
Dividends to
noncontrolling shareholders
(4)
(4)
Dividends to shareholders
(1,730)
(1,730)
(1,730)
Share-based payment arrangements
11
11
11
Purchase of treasury stock
(1,300)
(1,300)
(1,300)
Delivery of shares
(58)
(136)
954
760
760
Balance at March 31, 2021
188
21,582
(4,203)
(3,876)
13,691
368
14,059
Balance at January 1, 2022
178
22
22,477
(4,088)
(3,010)
15,579
378
15,957
Comprehensive income:
Net income
604
604
28
632
Foreign currency translation
adjustments, net of tax of $0
(70)
(70)
(5)
(75)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(3)
(12)
(12)
(12)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $10
28
28
28
Change in derivative instruments
and hedges, net of tax of $2
4
4
4
Total comprehensive income
554
23
577
Changes in noncontrolling interests
(10)
(10)
(7)
(17)
Dividends to
noncontrolling shareholders
(3)
(3)
Dividends to shareholders
(1,700)
(1,700)
(1,700)
Share-based payment arrangements
12
12
12
Purchase of treasury stock
(1,561)
(1,561)
(1,561)
Delivery of shares
(26)
(104)
500
370
370
Other
2
2
2
Balance at March 31, 2022
178
21,278
(4,138)
(4,071)
13,247
391
13,638
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
11
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Notes to the Consolidated Financial Information (unaudited)
Note 1
The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively,
 
the Company) together form a leading global technology
 
company, connecting software
 
to its electrification, robotics,
automation and motion portfolio to drive performance to new
 
levels.
The Company’s Consolidated Financial Information is prepared
 
in accordance with United States of America generally accepted
 
accounting principles (U.S.
GAAP) for interim financial reporting. As such, the Consolidated
 
Financial Information does not include all the
 
information and notes required under U.S. GAAP
 
for
annual consolidated financial statements. Therefore, such financial
 
information should be read in conjunction with the audited
 
consolidated financial statements in
the Company’s Annual Report for the year ended December
 
31, 2021.
The preparation of financial information in conformity with U.S. GAAP
 
requires management to make assumptions
 
and estimates that directly affect the amounts
reported in the Consolidated Financial Information. These accounting
 
assumptions and estimates include:
growth rates, discount rates and other assumptions used to determine
 
impairment of long-lived assets and in testing goodwill
 
for impairment,
estimates to determine valuation allowances for deferred tax assets
 
and amounts recorded for unrecognized tax benefits,
assumptions used in determining inventory obsolescence and net
 
realizable value,
estimates and assumptions used in determining the initial fair value
 
of retained noncontrolling interest and certain obligations
 
in connection with
divestments,
estimates and assumptions used in determining the fair values
 
of assets and liabilities assumed in business
 
combinations,
estimates of loss contingencies associated with litigation or
 
threatened litigation and other claims and inquiries, environmental
 
damages, product
warranties, self-insurance reserves, regulatory and other proceedings,
estimates used to record expected costs for employee severance
 
in connection with restructuring programs,
estimates related to credit losses expected to occur over
 
the remaining life of financial assets such as trade and other
 
receivables, loans and other
instruments,
assumptions used in the calculation of pension and postretirement
 
benefits and the fair value of pension plan assets, and
assumptions and projections, principally related to future material,
 
labor and project-related overhead costs, used in determining the
 
percentage-of-
completion on projects, as well as the amount of variable consideration
 
the Company expects to be entitled to.
The actual results and outcomes may differ from the Company’s
 
estimates and assumptions.
A portion of the Company’s activities (primarily long-term
 
construction activities) has an operating cycle that
 
exceeds one year. For classification
 
of current assets
and liabilities related to such activities, the Company elected to
 
use the duration of the individual contracts as
 
its operating cycle. Accordingly,
 
there are accounts
receivable, contract assets, inventories and provisions related to
 
these contracts which will not be realized within one
 
year that have been classified as current.
Basis of presentation
In the opinion of management, the unaudited Consolidated Financial
 
Information contains all necessary
 
adjustments to present fairly the financial position, results
of operations and cash flows for the reported periods. Management considers
 
all such adjustments to be of a normal recurring nature. The
 
Consolidated Financial
Information is presented in United States dollars ($)
 
unless otherwise stated. Due to rounding, numbers presented
 
in the Consolidated Financial Information may
not add to the totals provided.
12
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 2
Recent accounting pronouncements
Applicable for current periods
Business Combinations — Accounting for contract
 
assets and contract liabilities from contracts with customers
In January 2022, the Company early adopted a new accounting
 
standard update, which provides guidance on the accounting for
 
revenue contracts acquired in a
business combination. The update requires contract assets
 
and liabilities acquired in a business combination to be recognized
 
and measured at the date of
acquisition in accordance with the principles for recognizing revenues
 
from contracts with customers.
 
The Company has applied this accounting standard update
prospectively starting with acquisitions closing after January 1, 2022.
Disclosures about government assistance
In January 2022, the Company adopted a new accounting standard
 
update,
 
which requires entities to disclose certain types of government
 
assistance. Under the
update, the Company is required to annually disclose (i) the
 
type of the assistance received, including any significant
 
terms and conditions, (ii) its related
accounting policy, and (iii) the effect
 
such transactions have on its financial statements. The Company
 
has applied this accounting standard update prospe
 
ctively.
This update does not have a significant impact on the Company’s
 
consolidated financial statements.
 
Applicable for future periods
Facilitation of the effects of reference rate reform on financial
 
reporting
In March 2020, an accounting standard update was issued
 
which provides temporary optional expedients and exceptions
 
to the current guidance on contract
modifications and hedge accounting to ease the financial reporting
 
burdens
 
related to the expected market transition from the London
 
Interbank Offered Rate
(LIBOR) and other interbank offered rates to alternative reference
 
rates. This update, along with clarifications outlined
 
in a subsequent update issued in January
2021, can be adopted and applied no later than December 31,
 
2022, with early adoption permitted. The Company does
 
not expect this update to have a significant
impact on its consolidated financial statements.
Note 3
Discontinued operations and assets held for sale
Divestment of the Power Grids business
On July 1, 2020, the Company completed the sale of 80.1 percent
 
of its Power Grids business to Hitachi Ltd (Hitachi).
 
The transaction was executed through the
sale of 80.1 percent of the shares of Hitachi Energy Ltd, formerly
 
Hitachi ABB Power Grids Ltd (“Hitachi Energy”).
 
Cash consideration received at the closing date
was $9,241 million net of cash disposed.
 
Further, for accounting purposes,
 
the 19.9 percent ownership interest retained by the Company
 
is deemed to have been
both divested and reacquired at its fair value on July 1, 2020 (see
 
Note 4).
At the date of the divestment, the Company recorded liabilities in discontinued
 
operations for estimated future costs and other cash payments
 
of $487 million for
various contractual items relating to the sale of the business
 
including required future cost reimbursements payable
 
to Hitachi Energy, costs to be
 
incurred by the
Company for the direct benefit of Hitachi Energy,
 
and an amount due to Hitachi Ltd in connection
 
with the expected purchase price finalization of the closing
 
debt
and working capital balances. From the date of the disposal
 
through March 31, 2022, $385 million of these liabilities had
 
been paid and are reported as reductions
in the cash consideration received, of which $21 million
 
and $44 million was paid during the three months
 
ended March 31, 2022 and 2021,
 
respectively. At
March 31, 2022,
 
the remaining amount recorded was $111
 
million.
Certain entities of the Power Grids business for which the legal
 
process or other regulatory delays resulted in the Company
 
not yet having transferred legal titles to
Hitachi were accounted for as being sold since control of the business
 
as well as all risks and rewards of the business
 
have been fully transferred to Hitachi
Energy. The proceeds for these entities
 
are included in the cash proceeds described above
 
and certain funds were placed in escrow pending completion
 
of the
transfer process. At both March 31, 2022, and December 31,
 
2021,
 
current restricted cash includes $12 million in respect
 
of these funds.
Upon closing of the sale, the Company entered into various
 
transition services agreements (TSAs). Pursuant to these
 
TSAs, the Company and Hitachi Energy
provide to each other, on an interim, transitional
 
basis, various services. The services
 
provided by the Company primarily include finance, information technology,
human resources and certain other administrative services.
 
Under the current terms, the TSAs will continue for up
 
to 3 years, and can only be extended on an
exceptional basis for business-critical services for an additional period which
 
is reasonably necessary to avoid a material adverse
 
impact on the business. In the
three months ended March 31, 2022 and 2021,
 
the Company has recognized within its continuing
 
operations, general and administrative expenses
 
incurred to
perform the TSA, offset by $38 million and $47 million, respectively,
 
in TSA-related income for such services that is reported
 
in Other income (expense).
Discontinued operations
As a result of the sale of the Power Grids business, substantially
 
all assets and liabilities related to Power Grids have
 
been sold. As this divestment represented
 
a
strategic shift that would have a major effect on the Company’s
 
operations and financial results, the
 
results of this business were presented as discontinued
operations and the assets and liabilities were presented as held
 
for sale and in discontinued operations. After the
 
date of sale, certain business contracts in the
Power Grids business continue to be executed by subsidiaries
 
of the Company for the benefit/risk of Hitachi Energy
 
.
 
Assets and liabilities relating to, as well as
 
the
net financial results of, these contracts will continue to be
 
included in discontinued operations until they have been completed
 
or otherwise transferred to Hitachi
Energy.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Amounts recorded in discontinued operations were as follows:
Three months ended
($ in millions)
Mar. 31, 2022
Mar. 31, 2021
Total revenues
Total cost of sales
Gross profit
Expenses
(6)
(4)
Change to net gain recognized on sale of the Power Grids business
(5)
(24)
Loss from operations
(11)
(28)
Net interest income (expense) and other finance expense
Non-operational pension (cost) credit
Loss from discontinued operations before taxes
(11)
(28)
Income tax
Loss from discontinued operations, net of
 
tax
(11)
(28)
Of the total Loss from discontinued operations before taxes
 
in the table above, $11 million
 
and $28 million in the three months ended March 31,
 
2022 and 2021,
respectively, are attributable to the Company.
In addition,
 
the Company also has retained obligations (primarily for
 
environmental and taxes) related to other businesses
 
disposed or otherwise exited that
qualified as discontinued operations. Changes to these retained obligations
 
are also included in Loss from discontinued operations,
 
net of tax, above.
The major components of assets and liabilities held for sale and
 
in discontinued operations in the Company’s Consolidated
 
Balance Sheets are summarized as
follows:
($ in millions)
Mar. 31, 2022
(1)
Dec. 31, 2021
(1)
Receivables, net
130
131
Other current assets
10
5
Current assets held for sale and in discontinued
 
operations
140
136
Accounts payable, trade
58
71
Other liabilities
307
310
Current liabilities held for sale and in discontinued
 
operations
365
381
Other non-current liabilities
30
43
Non-current liabilities held for sale and in discontinued
 
operations
30
43
(1)
 
At March 31, 2022, and December 31, 2021,
 
the balances reported as held for sale and in discontinued operations pertain to Power Grids activities and other obligations which will
remain with the Company until such time as the obligation is settled or the activities are fully wound down.
Note 4
Acquisitions and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Three months ended March 31,
($ in millions, except number of acquired businesses)
2022
2021
Purchase price for acquisitions (net of cash acquired)
(1)
138
-
Aggregate excess of purchase price
over fair value of net assets acquired
(2)
191
-
Number of acquired businesses
 
1
-
(1)
 
Excluding changes in cost- and equity-accounted companies.
(2)
 
Recorded as goodwill.
In the table above, the “Purchase price for acquisitions”
 
and “Aggregate excess of purchase price over fair value of
 
net assets acquired” amounts for the three
months ended March 31, 2022, relate primarily to the acquisition
 
of InCharge Energy,
 
Inc. (In-Charge).
Acquisitions of controlling interests have been accounted for under the
 
acquisition method and have been included in the Company’s
 
Consolidated Financial
Statements since the date of acquisition.
 
While the Company uses its best estimates and assumptions
 
as part of the purchase price allocation process
 
to value assets acquired and liabilities assumed
 
at
the acquisition date, the purchase price allocation for acquisitions
 
is preliminary for up to 12 months after the acquisition
 
date and is subject to refinement as more
detailed analyses are completed and additional information
 
about the fair values of the assets and liabilities becomes available.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
 
Q1 2022
 
FINANCIAL
 
INFORMATION
On January 26, 2022, the Company increased its ownership in
 
In-Charge to a 60 percent controlling interest through a stock
 
purchase agreement. The resulting
cash outflows for the Company amounted to $135 million (net
 
of cash acquired of $4 million). The acquisition expands
 
the market presence of the E-mobility
Division, particularly in the North American market. In connection with
 
the acquisition, the Company’s pre-existing
 
13.2 percent ownership of In-Charge was
revalued to fair value and a gain of $32 million was recorded
 
in Other income (expense) in the three months ended March
 
31, 2022. The Company entered into an
agreement with the remaining noncontrolling shareholders allowing ei
 
ther party to put or call the remaining 40 percent
 
of the shares until 2027. The amount for
which either party can exercise their option is dependent on
 
a formula based on revenues and thus, the amount
 
is subject to change. As a result of this agreement,
the noncontrolling interest is classified as Redeemable noncontrolling
 
interest (i.e. mezzanine equity) in the Consolidated Balance
 
Sheets and was initially
recognized at fair value.
There were no significant business acquisitions for the three months
 
ended March 31, 2021.
Investments in equity-accounted companies
In connection with the divestment of its Power Grids business
 
to Hitachi (see Note 3), the Company retained a 19.
 
9
 
percent interest in the business and obtained
an option, exercisable with three-months’ notice commencing
 
April 2023, granting it the right to require Hitachi to purchase
 
this investment at fair value, subject to
a minimum floor price equivalent to a 10 percent discount compared
 
to the price paid for the initial 80.1 percent. The
 
Company has concluded that based on its
continuing involvement with the Power Grids business, including
 
membership in its governing board of directors,
 
it has significant influence over Hitachi Energy.
 
As
a result, the investment (including the value of the option)
 
is accounted for using the equity method.
At the date of the divestment of the Power Grids business,
 
the fair value of Hitachi Energy exceeded the book
 
value of the underlying net assets.
 
At March 31,
2022, and December 31, 2021,
 
the reported value of the investment in Hitachi
 
Energy includes $1,442 million and $1,474 million, respectively,
 
for the Company’s
19.9 percent share of this basis difference. The Company
 
amortizes its share of these differences
 
over the estimated remaining useful lives of the underlying
assets that gave rise to this difference, recording the amortization,
 
net of related deferred tax benefit, as a reduction of
 
income from equity-accounted companies.
As of March 31, 2022, the Company determined that no
 
impairment of its equity-accounted investments existed.
The carrying value of the Company’s investments in equity-accounted
 
companies and respective percentage of ownership
 
is as follows:
Ownership as of
Carrying value at
($ in millions, except ownership share in %)
March 31, 2022
March 31, 2022
December 31, 2021
Hitachi Energy Ltd
19.9%
1,555
1,609
Others
71
61
Total
1,626
1,670
In the three months ended March 31, 2022 and 2021,
 
the Company recorded its share of the earnings of
 
investees accounted for under the equity method of
accounting in Other income (expense), net, as follows:
Three months ended March 31,
($ in millions)
2022
2021
Loss from equity-accounted companies, net of taxes
(11)
(3)
Basis difference amortization (net of deferred income tax benefit)
(37)
(32)
Loss from equity-accounted companies
(48)
(35)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 5
Cash and equivalents, marketable securities and short-term investments
Cash and equivalents, marketable securities and short-term
 
investments consisted of the following:
March 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
2,648
2,648
2,648
Time deposits
3,100
3,100
2,898
202
Equity securities
468
13
481
481
6,216
13
6,229
5,546
683
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
203
4
(7)
200
200
Other government obligations
12
12
12
Corporate
75
(3)
72
72
290
4
(10)
284
284
Total
6,506
17
(10)
6,513
5,546
967
Of which:
 
Restricted cash, current
30
Restricted cash, non-current
300
December 31, 2021
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
2,752
2,752
2,752
Time deposits
2,037
2,037
1,737
300
Equity securities
569
18
587
587
5,358
18
5,376
4,489
887
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
203
7
(1)
209
209
Corporate
74
1
(1)
74
74
277
8
(2)
283
283
Total
5,635
26
(2)
5,659
4,489
1,170
Of which:
Restricted cash, current
30
Restricted cash, non-current
300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 6
Derivative financial instruments
The Company is exposed to certain currency,
 
commodity, interest rate and equity
 
risks arising from its global operating, financing and
 
investing activities. The
Company uses derivative instruments to reduce and manage the
 
economic impact of these exposures.
Currency risk
 
Due to the global nature of the Company’s operations, many
 
of its subsidiaries are exposed to currency risk
 
in their operating activities from entering into
transactions in currencies other than their functional currency.
 
To manage such
 
currency risks, the Company’s policies require its
 
subsidiaries to hedge their
foreign currency exposures from binding sales and purchase
 
contracts denominated in foreign currencies. For forecasted foreign currency
 
denominated sales of
standard products and the related foreign currency denominated purchases,
 
the Company’s policy is to hedge up to a maximum of
 
100 percent of the forecasted
foreign currency denominated exposures, depending on the
 
length of the forecasted exposures. Forecasted
 
exposures greater than 12 months are not hedged.
Forward foreign exchange contracts are the main instrument used to
 
protect the Company against the volatility of future cash
 
flows (caused by changes in
exchange rates) of contracted and forecasted sales and purchases
 
denominated in foreign currencies. In addition, within
 
its treasury operations, the Company
primarily uses foreign exchange swaps and forward foreign exchange
 
contracts to manage the currency and timing mismatches
 
arising in its liquidity management
activities.
Commodity risk
Various commodity products
 
are used in the Company’s manufacturing activities.
 
Consequently it is exposed to volatility in future cash flows arising from
 
changes
in commodity prices. To
 
manage the price risk of commodities, the Company’s
 
policies require that its subsidiaries hedge the commodity
 
price risk exposures from
binding contracts, as well as at least 50 percent (up to a maximum
 
of 100 percent) of the forecasted commodity exposure over
 
the next 12 months or longer (up to
a maximum of 18 months). Primarily swap contracts are used to
 
manage the associated price risks of commodities.
Interest rate risk
 
The Company has issued bonds at fixed rates. Interest rate swaps
 
and cross-currency interest rate swaps are used to manage
 
the interest rate and foreign
currency risk associated with certain debt and generally such
 
swaps are designated as fair value hedges. In addition, from time
 
to time, the Company uses
instruments such as interest rate swaps, interest rate futures, bond
 
futures or forward rate agreements to manage interest
 
rate risk arising from the Company’s
balance sheet structure but does not designate such instruments
 
as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of
 
its warrant appreciation rights (WARs)
 
issued under its management
 
incentive plan. A WAR gives its
holder the right to receive cash equal to the market price of
 
an equivalent listed warrant on the date of exercise. To
 
eliminate such risk, the Company has
purchased cash-settled call options, indexed to the shares of the
 
Company, which entitle the Company
 
to receive amounts equivalent to its obligations
 
under the
outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective in
 
its use of derivatives is to minimize exposures arising from
 
its business, certain derivatives are designated
and qualify for hedge accounting treatment while others either are
 
not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange and
 
interest rate derivatives (whether designated as hedges
 
or not) were as follows:
Type of derivative
Total notional amounts
 
at
($ in millions)
March 31, 2022
December 31, 2021
March 31, 2021
Foreign exchange contracts
13,255
11,276
11,229
Embedded foreign exchange derivatives
863
815
1,313
Cross-currency interest rate swaps
888
906
973
Interest rate contracts
4,421
3,541
3,122
Derivative commodity contracts
The Company uses derivatives to hedge its direct or indirect exposure
 
to the movement in the prices of commodities which are
 
primarily copper, silver and
aluminum. The following table shows the notional amounts
 
of outstanding derivatives (whether designated as hedges
 
or not), on a net basis, to reflect the
Company’s requirements for these commodities:
Type of derivative
Unit
Total notional amounts
 
at
March 31, 2022
December 31, 2021
March 31, 2021
Copper swaps
metric tonnes
39,223
36,017
42,448
Silver swaps
ounces
2,634,550
2,842,533
2,217,821
Aluminum swaps
metric tonnes
6,950
7,125
7,450
Equity derivatives
At March 31, 2022, December 31, 2021, and March 31, 2021,
 
the Company held 9 million, 9 million and 18 million
 
cash-settled call options indexed to ABB Ltd
shares (conversion ratio 5:1) with a total fair value of $20
 
million, $29 million and $30 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 three months ended March 31, 2022
 
and
2021, there were no significant amounts recorded for cash
 
flow hedge accounting activities.
Fair value hedges
To reduce its interest
 
rate exposure arising primarily from its debt issuance activities,
 
the Company uses interest rate swaps
 
and cross-currency interest rate
swaps. Where such instruments are designated as fair value hedges,
 
the changes in the fair value of these instruments,
 
as well as the changes in the fair value of
the risk component of the underlying debt being hedged, are recorded
 
as offsetting gains and losses in “Interest
 
and other finance expense”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
 
Q1 2022
 
FINANCIAL
 
INFORMATION
The effect of derivative instruments, designated and qualifying
 
as fair value hedges, on the Consolidated Income
 
Statements was as follows:
Three months ended March 31,
($ in millions)
2022
2021
Gains (losses) recognized in Interest and other finance expense:
 
Interest rate contracts
Designated as fair value hedges
(29)
(14)
Hedged item
29
15
Cross-currency interest rate swaps
Designated as fair value hedges
(45)
(23)
Hedged item
44
22
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not
 
qualify as either cash flow or fair value hedges
 
are economic hedges used for risk management
purposes. Gains and losses from changes in the fair values
 
of such derivatives are recognized in the same line in the
 
income statement as the economically
hedged transaction.
Furthermore, under certain circumstances, the Company
 
is required to split and account separately for foreign currency
 
derivatives that are embedded within
certain binding sales or purchase contracts denominated
 
in a currency other than the functional currency of the subsidiary
 
and the counterparty.
The gains (losses) recognized in the Consolidated Income Statements
 
on derivatives not designated in hedging relationships
 
were as follows:
Type of derivative not
 
Gains (losses) recognized in income
designated as a hedge
Three months ended March 31,
($ in millions)
Location
2022
2021
Foreign exchange contracts
Total revenues
4
(60)
Total cost of sales
(6)
(4)
SG&A expenses
(1)
8
7
Non-order related research and development
1
(1)
Interest and other finance expense
22
(106)
Embedded foreign exchange contracts
Total revenues
(2)
(14)
Total cost of sales
1
(1)
Commodity contracts
Total cost of sales
35
36
Other
Interest and other finance expense
1
Total
64
(143)
(1)
 
SG&A expenses represent
 
“Selling, general and
 
administrative expenses”.
The fair values of derivatives included in the Consolidated Balance
 
Sheets were as follows:
March 31, 2022
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
4
4
Interest rate contracts
9
3
6
5
Cross-currency interest rate swaps
164
Cash-settled call options
20
Total
29
3
10
173
Derivatives not designated as hedging instruments:
Foreign exchange contracts
88
16
134
7
Commodity contracts
38
2
Interest rate contracts
1
Embedded foreign exchange derivatives
13
8
17
12
Total
140
24
153
19
Total fair value
169
27
163
192
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
 
Q1 2022
 
FINANCIAL
 
INFORMATION
December 31, 2021
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
3
5
Interest rate contracts
9
20
Cross currency swaps
109
Cash-settled call options
29
Total
38
20
3
114
Derivatives not designated as hedging instruments:
Foreign exchange contracts
108
14
107
7
Commodity contracts
19
5
Interest rate contracts
1
2
Embedded foreign exchange derivatives
10
7
16
10
Total
138
21
130
17
Total fair value
176
41
133
131
Close-out netting agreements provide for the termination, valuation
 
and net settlement of some or all outstanding transactions
 
between two counterparties on the
occurrence of one or more pre-defined trigger events.
Although the Company is party to close-out netting agreements
 
with most derivative counterparties, the fair values in the
 
tables above and in the Consolidated
Balance Sheets at March 31, 2022, and December 31, 2021,
 
have been presented on a gross basis.
The Company’s netting agreements and other similar arrangements
 
allow net settlements under certain conditions.
 
At March 31, 2022, and December 31, 2021,
information related to these offsetting arrangements was as
 
follows:
($ in millions)
March 31, 2022
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
assets
in case of default
received
received
exposure
Derivatives
175
(90)
85
Total
175
(90)
85
($ in millions)
March 31, 2022
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
 
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
326
(90)
236
Total
326
(90)
236
($ in millions)
December 31, 2021
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
 
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
 
assets
in case of default
received
received
exposure
Derivatives
200
(104)
96
Total
200
(104)
96
 
($ in millions)
December 31, 2021
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
of recognized
eligible for set-off
collateral
 
collateral
Net liability
similar arrangement
liabilities
 
in case of default
pledged
pledged
exposure
Derivatives
238
(104)
134
Total
238
(104)
134
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 7
Fair values
The Company uses fair value measurement principles to record certain
 
financial assets and liabilities on a recurring basis
 
and, when necessary,
 
to record certain
non-financial assets at fair value on a non-recurring basis,
 
as well as to determine fair value disclosures for certain financial
 
instruments carried at amortized cost
in the financial statements. Financial assets and liabilities recorded
 
at fair value on a recurring basis include foreign currency,
 
commodity and interest rate
derivatives, as well as cash-settled call options and available-for-sale
 
securities. Non-financial assets recorded at fair value
 
on a non-recurring basis include
long-lived assets that are reduced to their estimated fair value due
 
to impairments.
Fair value is the price that would be received when selling an
 
asset or paid to transfer a liability in an orderly transaction
 
between market participants at the
measurement date. In determining fair value, the Company
 
uses various valuation techniques including the market
 
approach (using observable market data for
identical or similar assets and liabilities), the income approach (discounted
 
cash flow models) and the cost approach (using costs
 
a market participant would incur
to develop a comparable asset). Inputs used to determine the fair
 
value of assets and liabilities are defined by a three-level
 
hierarchy, depending on the nature
 
of
those inputs. The Company has categorized its financial assets
 
and liabilities and non-financial assets measured at
 
fair value within this hierarchy based on
whether the inputs to the valuation technique are observable or unobservable.
 
An observable input is based on market data obtained from
 
independent sources,
while an unobservable input reflects the Company’s
 
assumptions about market data.
The levels of the fair value hierarchy are as follows:
Level 1:
 
Valuation inputs consist
 
of quoted prices in an active market for identical
 
assets or liabilities (observable quoted prices). Assets
 
and liabilities valued
using Level 1 inputs include exchange
traded equity securities, listed derivatives
 
which are actively traded such as commodity futures, interest
 
rate
futures and certain actively traded debt securities.
Level 2:
 
Valuation inputs consist
 
of observable inputs (other than Level 1 inputs)
 
such as actively quoted prices for similar assets, quoted prices
 
in inactive
markets and inputs other than quoted prices such
 
as interest rate yield curves, credit spreads, or inputs derived from
 
other observable data by
interpolation, correlation, regression or other means. The adjustments
 
applied to quoted prices or the inputs used in valuation
 
models may be both
observable and unobservable. In these cases, the fair value measurement
 
is classified as Level 2 unless the unobservable portion
 
of the adjustment or
the unobservable input to the valuation model is significant,
 
in which case the fair value measurement would be
 
classified as Level 3. Assets and
liabilities valued or disclosed using Level 2 inputs include investments
 
in certain funds, certain debt securities that are not actively
 
traded, interest rate
swaps, cross-currency interest rate swaps, commodity
 
swaps, cash-settled call options, forward foreign exchange
 
contracts, foreign exchange swaps and
forward rate agreements, time deposits, as well as financing receivables
 
and debt.
Level 3:
 
Valuation inputs are based on
 
the Company’s assumptions of relevant market
 
data (unobservable input).
 
Whenever quoted prices involve bid-ask spreads, the Company
 
ordinarily determines fair values based on mid-market
 
quotes. However, for the purpose of
determining the fair value of cash-settled call options serving
 
as hedges of the Company’s management incentive
 
plan, bid prices are used.
When determining fair values based on quoted prices
 
in an active market, the Company considers if the
 
level of transaction activity for the financial instrument
 
has
significantly decreased or would not be considered orderly.
 
In such cases, the resulting changes in valuation
 
techniques would be disclosed. If the market is
considered disorderly or if quoted prices are not available, the Company
 
is required to use another valuation technique, such
 
as an income approach.
Recurring fair value measures
The fair values of financial assets and liabilities measured at
 
fair value on a recurring basis were as follows:
March 31, 2022
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
481
481
Debt securities—U.S. government obligations
200
200
Debt securities—Other government obligations
12
12
Debt securities—Corporate
72
72
Derivative assets—current in “Other current assets”
169
169
Derivative assets—non-current in “Other non-current assets”
27
27
Total
200
761
961
Liabilities
Derivative liabilities—current in “Other current liabilities”
163
163
Derivative liabilities—non-current in “Other non-current liabilities”
192
192
Total
355
355
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
 
Q1 2022
 
FINANCIAL
 
INFORMATION
December 31, 2021
($ in millions)
Level 1
Level 2
Level 3
Total fair value
Assets
Securities in “Marketable securities and short-term investments”:
Equity securities
587
587
Debt securities—U.S. government obligations
209
209
Debt securities—Corporate
74
74
Derivative assets—current in “Other current assets”
176
176
Derivative assets—non-current in “Other non-current assets”
41
41
Total
209
878
1,087
Liabilities
Derivative liabilities—current in “Other current liabilities”
133
133
Derivative liabilities—non-current in “Other non-current liabilities”
131
131
Total
264
264
The Company uses the following methods and assumptions in
 
estimating fair values of financial assets
 
and liabilities measured at fair value on a recurring basis:
 
Securities in “Marketable securities and short-term investments”
 
and “Other non-current assets”:
If quoted market prices in active markets for identical
assets are available, these are considered Level 1 inputs; however,
 
when markets are not active, these inputs
 
are considered Level 2. If such quoted
market prices are not available, fair value is determined using
 
market prices for similar assets or
 
present value techniques, applying an appropriate risk-
free interest rate adjusted for non-performance risk. The inputs
 
used in present value techniques are observable and fall
 
into the Level 2 category.
 
 
Derivatives
: The fair values of derivative instruments are determined using
 
quoted prices of identical instruments from an
 
active market, if available
(Level 1 inputs). If quoted prices are not available, price quotes
 
for similar instruments, appropriately adjusted, or present
 
value techniques, based on
available market data, or option pricing models are used. Cash
 
-settled call options hedging the Company’s WAR
 
liability are valued based on bid prices
of the equivalent listed warrant. The fair values obtained using price
 
quotes for similar instruments or valuation techniques
 
represent a Level 2 input
unless significant unobservable inputs are used.
 
Non-recurring fair value measures
 
The Company elects to record private equity investments without readily
 
determinable fair values at cost, less impairment, adjusted by
 
observable price changes.
The Company reassesses at each reporting period whether these
 
investments continue to qualify for this treatment. During the
 
three months ended March 31,
2022 and 2021,
 
the Company recognized, in Other income (expense), net
 
fair value gains of $29 million and $10 million, respectively,
 
related to certain of its
private equity investments based on observable market price changes
 
for an identical or similar investment of the same
 
issuer. The fair values were determined
using level 2 inputs. The carrying values of investments, carried at
 
fair value on a non-recurring basis, at March 31,
 
2022, and December 31, 2021, totaled
$226 million and $228 million, respectively.
Apart from the transactions above, there were no additional significant
 
non-recurring fair value measurements during the
 
three months ended March 31, 2022 and
2021.
Disclosure about financial instruments carried on a cost
 
basis
The fair values of financial instruments carried on a cost
 
basis were as follows:
March 31, 2022
($ in millions)
Carrying value
Level 1
Level 2
Level 3
Total fair value
Assets
Cash and equivalents (excluding securities with original
 
maturities up to 3 months):
Cash
2,318
2,318
2,318
Time deposits
2,898
2,898
2,898
Restricted cash
30
30
30
Marketable securities and short-term investments
(excluding securities):
Time deposits
202
202
202
Restricted cash, non-current
300
300
300
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
3,084
1,488
1,596
3,084
Long-term debt (excluding finance lease obligations)
6,000
6,028
49
6,077
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
 
Q1 2022
 
FINANCIAL
 
INFORMATION
December 31, 2021
($ in millions)
Carrying value
Level 1
Level 2
Level 3
Total fair value
Assets
Cash and equivalents (excluding securities with original
 
maturities up to 3 months):
Cash
2,422
2,422
2,422
Time deposits
1,737
1,737
1,737
Restricted cash
30
30
30
Marketable securities and short-term investments
(excluding securities):
Time deposits
300
300
300
Restricted cash, non-current
300
300
300
Liabilities
Short-term debt and current maturities of long-term debt
(excluding finance lease obligations)
1,357
1,288
69
1,357
Long-term debt (excluding finance lease obligations)
4,043
4,234
58
4,292
The Company uses the following methods and assumptions in
 
estimating fair values of financial instruments carried
 
on a cost basis:
 
Cash and equivalents (excluding securities with original maturities
 
up to 3 months), Restricted cash, current
 
and non-current, and Marketable securities
and short-term investments (excluding securities):
The carrying amounts approximate the fair values as the
 
items are short-term in nature or, for cash
held in banks, are equal to the deposit amount.
 
Short-term debt and current maturities of long-term debt (excluding
 
finance lease obligations):
Short-term debt includes commercial paper,
 
bank
borrowings and overdrafts. The carrying amounts of short-term
 
debt and current maturities of long-term debt, excluding
 
finance lease obligations,
approximate their fair values.
 
Long-term debt (excluding finance lease obligations):
Fair values of bonds are determined using quoted market
 
prices (Level 1 inputs), if available. For
bonds without available quoted market prices and other long-term
 
debt, the fair values are determined using a discounted cash flow
 
methodology
based upon borrowing rates of similar debt instruments and reflecting
 
appropriate adjustments for non-performance risk
 
(Level 2 inputs).
Note 8
Contract assets and liabilities
The following table provides information about Contract assets
 
and Contract liabilities:
($ in millions)
March 31, 2022
December 31, 2021
March 31, 2021
Contract assets
1,072
990
1,044
Contract liabilities
2,080
1,894
1,855
Contract assets primarily relate to the Company’s right to receive
 
consideration for work completed but for which no invoice
 
has been issued at the reporting date.
Contract assets are transferred to receivables when rights
 
to receive payment become unconditional.
 
Contract liabilities primarily relate to up-front advances received on
 
orders from customers as well as amounts invoiced
 
to customers in excess of revenues
recognized, primarily for long-term projects. Contract
 
liabilities are reduced as work is performed and as revenues
 
are recognized.
The significant changes in the Contract assets and Contract liabilities
 
balances were as follows:
Three months ended March 31,
2022
2021
Contract
Contract
Contract
Contract
($ in millions)
assets
liabilities
assets
liabilities
Revenue recognized, which was included in the Contract liabilities
 
balance at Jan 1, 2022/2021
(518)
(497)
Additions to Contract liabilities - excluding amounts recognized as
 
revenue during the period
701
493
Receivables recognized that were included in the Contract
 
asset balance at Jan 1, 2022/2021
(318)
(275)
At March 31, 2022, the Company had unsatisfied performance obligations
 
totaling $18,901 million and, of this amount, the Company
 
expects to fulfill approximately
67 percent of the obligations in 2022, approximately 23 percent
 
of the obligations in 2023 and the balance thereafter.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 9
Debt
The Company’s total debt at March 31, 2022, and December
 
31, 2021, amounted to $9,285 million and $5,561 million,
 
respectively.
Short-term debt and current maturities of long-term debt
 
The Company’s “Short-term debt and current maturities of
 
long-term debt” consisted of the following:
($ in millions)
March 31, 2022
December 31, 2021
Short-term debt
1,812
78
Current maturities of long-term debt
1,302
1,306
Total
3,114
1,384
Short-term debt primarily represented issued commercial paper and
 
short-term bank borrowings from various banks.
 
At March 31, 2022,
 
$1,530 million was
outstanding under the $2 billion Euro- commercial paper program
 
in the United States, whereas at December 31, 2021, no
 
amount was outstanding under this
program.
Long-term debt
The Company’s long-term debt at March 31, 2022, and
 
December 31, 2021, amounted to $6,171 million and $4,177
 
million, respectively.
 
Outstanding bonds (including maturities within the next 12 months)
 
were as follows:
 
March 31, 2022
December 31, 2021
(in millions)
Nominal outstanding
 
Carrying value
(1)
Nominal outstanding
 
Carrying value
(1)
Bonds:
2.875% USD Notes, due 2022
 
USD
1,250
$
1,252
USD
1,250
$
1,258
0.625% EUR Instruments, due 2023
EUR
700
$
779
EUR
700
$
800
0% CHF Bonds, due 2023
CHF
275
$
297
0.625% EUR Instruments, due 2024
EUR
700
$
774
0% EUR Instruments, due 2024
EUR
500
$
559
0.75% EUR Instruments, due 2024
EUR
750
$
828
EUR
750
$
860
0.3% CHF Bonds, due 2024
CHF
280
$
302
CHF
280
$
306
0.75% CHF Bonds, due 2027
CHF
425
$
459
3.8% USD Notes, due 2028
(2)
USD
383
$
381
USD
383
$
381
1.0% CHF Bonds, due 2029
CHF
170
$
183
CHF
170
$
186
0% EUR Notes, due 2030
EUR
800
$
801
EUR
800
$
862
4.375% USD Notes, due 2042
(2)
USD
609
$
590
USD
609
$
589
Total
$
7,205
$
5,242
(1)
 
USD carrying values include unamortized debt issuance costs, bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate.
(2)
 
Prior to completing a cash tender offer in November 2020, the original principal amount outstanding,
 
on each of the 3.8% USD Notes,
 
due 2028,
 
and the 4.375% USD Notes,
 
due
2042, was USD 750 million.
In March 2022, the Company issued the following CHF bonds
 
:
 
(i) CHF 275 million of zero interest bonds, due 2023, and (ii) CHF
 
425 million of 0.75 percent bonds,
due 2027 with interest payable annually in arrears. The aggregate
 
net proceeds of these CHF bond issues,
 
after discount and fees, amounted to CHF 699 million
(equivalent to approximately $751 million on date of issuance).
Also in March 2022, the Company issued the following EUR notes,
 
both due in 2024, (i) EUR 700 million,
 
paying interest annually in arrears at a fixed rate of
0.625 percent per annum, and (ii) EUR 500 million floating
 
rate notes,
 
paying interest quarterly in arrears at a variable rate of
 
70 basis points above the 3-month
EURIBOR. In relation to these EUR Notes, the Company recorded net
 
proceeds (after the respective discount and premium,
 
as well as fees) of EUR 1,203 million
(equivalent to $1,335 million on the date of issuance).
In line with the Company’s policy of reducing its currency
 
and interest rate exposures, interest rate swaps have been used to
 
modify the characteristics of the
CHF 425 million Bonds, due 2027, and the EUR 700 million Notes,
 
due 2024. After considering the impact of these
 
interest rate swaps, the CHF 425 million
 
Bonds
and EUR 700 million Notes, effectively become floating rate
 
obligations.
Note 10
Commitments and contingencies
Contingencies—Regulatory, Compliance
 
and Legal
Regulatory
As a result of an internal investigation, the Company self-reported
 
to the Securities and Exchange Commission (SEC)
 
and the Department of Justice (DoJ) in the
United States as well as to the Serious Fraud Office (SFO)
 
in the United Kingdom concerning certain of its past dealings
 
with Unaoil and its subsidiaries, including
alleged improper payments made by these entities to third parties.
 
In May 2020, the SFO closed its investigation, which
 
it originally announced in February 2017,
as the case did not meet the relevant test for prosecution.
 
The Company continues to cooperate with the U.S.
 
authorities as requested. At this time, it is not
possible for the Company to make an informed judgment about
 
the outcome of this matter.
Based on findings during an internal investigation, the Company
 
self-reported to the SEC and the DoJ, in the United
 
States, to the Special Investigating Unit (SIU)
and the National Prosecuting Authority (NPA)
 
in South Africa as well as to various authorities in
 
other countries potential suspect payments and other compliance
concerns in connection with some of the Company’s dealings
 
with Eskom and related persons. Many of those parties
 
have expressed an interest in, or
commenced an investigation into, these matters and the Company is
 
cooperating fully with them. The Company paid $104
 
million to Eskom in December 2020 as
part of a full and final settlement with Eskom and the Special Investigating
 
Unit relating to improper payments and other compliance
 
issues associated with the
Controls and Instrumentation Contract, and its Variation
 
Orders for Units 1 and 2 at Kusile. The Company
 
continues to cooperate fully with the authorities in their
review of the Kusile project and is in discussions with them regarding
 
a coordinated resolution. Although the Company believes
 
that there could be an unfavorable
outcome in one or more of these ongoing reviews, at this time
 
it is not possible for the Company to make
 
an informed judgment about the possible financial impact.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
 
Q1 2022
 
FINANCIAL
 
INFORMATION
General
The Company is aware of proceedings, or the threat of proceedings,
 
against it and others in respect of private claims by
 
customers and other third parties with
regard to certain actual or alleged anticompetitive practices.
 
Also, the Company is subject to other claims and legal proceedings,
 
as well as investigations carried
out by various law enforcement authorities. With respect to the
 
above-mentioned claims, regulatory matters,
 
and any related proceedings, the Company will bear
the related costs, including costs necessary to resolve
 
them.
Liabilities recognized
At March 31, 2022, and December 31, 2021, the Company had
 
aggregate liabilities of $106 million and $104 million,
 
respectively, included in “Other
 
provisions”
and “Other non
current liabilities”, for the above regulatory,
 
compliance and legal contingencies, and none of the individual liabilities
 
recognized was significant. As
it is not possible to make an informed judgment on, or reasonably
 
predict, the outcome of certain matters
 
and as it is not possible, based on information currently
available to management, to estimate the maximum potential
 
liability on other matters, there could be adverse outcomes beyond
 
the amounts accrued.
Guarantees
 
General
The following table provides quantitative data regarding the
 
Company’s third-party guarantees. The maximum
 
potential payments represent a “worst-case
scenario”, and do not reflect management’s expected
 
outcomes.
Maximum potential payments
($ in millions)
March 31, 2022
December 31, 2021
Performance guarantees
4,320
4,540
Financial guarantees
54
52
Indemnification guarantees
(1)
134
136
Total
(2)
4,508
4,728
(1)
 
Certain indemnifications provided to Hitachi in connection with the divestment of Power Grids are without limit.
(2)
 
Maximum potential payments include amounts in both continuing and discontinued operations.
The carrying amount of liabilities recorded in the Consolidated
 
Balance Sheets reflects the Company’s best estimate of
 
future payments, which it may incur as
 
part
of fulfilling its guarantee obligations. In respect of the above guarantees,
 
the carrying amounts of liabilities at March
 
31, 2022, and December 31, 2021, amounted
to $148 million and $156 million, respectively,
 
the majority of which is included in discontinued operations
 
.
The Company is party to various guarantees providing financial
 
or performance assurances to certain third parties. These guarantees,
 
which have various
maturities up to 2035, mainly consist of performance guarantees
 
whereby (i) the Company guarantees
 
the performance of a third party’s product or service
according to the terms of a contract and (ii) as member
 
of a consortium/joint-venture that includes third parties, the
 
Company guarantees not only its own
performance but also the work of third parties. Such guarantees
 
may include guarantees that a project will be completed
 
within a specified time. If the third party
does not fulfill the obligation, the Company will compensate the
 
guaranteed party in cash or in kind. The original
 
maturity dates for the majority of these
performance guarantees range from one to ten years.
In conjunction with the divestment of the high-voltage cable
 
and cables accessories businesses, the Company has
 
entered into various performance guarantees
with other parties with respect to certain liabilities of the
 
divested business. At March 31, 2022, and December 31,
 
2021, the maximum potential payable under
these guarantees amounts to $891 million and $911
 
million, respectively, and these
 
guarantees have various original maturities ranging from five
 
to ten years.
The Company retained obligations for financial, performance
 
and indemnification guarantees related to the Power Grids
 
business sold on July 1, 2020 (see Note 3
for details). The performance and financial guarantees have been
 
indemnified by Hitachi, at the same proportion of its ownership
 
in Hitachi Energy Ltd
(80.1 percent). These guarantees, which have various maturities
 
up to 2035, primarily consist of bank guarantees, standby
 
letters of credit,
 
business performance
guarantees and other trade-related guarantees, the majority of which
 
have original maturity dates ranging from one to ten years.
 
The maximum amount payable
under the guarantees at March 31, 2022, and December 31,
 
2021, is approximately $3.1 billion and $3.2 billion,
 
respectively, and the carrying
 
amounts of liabilities
(recorded in discontinued operations) at March 31, 2022, and
 
December 31, 2021, amounted to $134 million and
 
$136 million, respectively.
Commercial commitments
In addition, in the normal course of bidding for and executing certain
 
projects, the Company has entered into standby
 
letters of credit, bid/performance bonds
 
and
surety bonds (collectively “performance bonds”) with various
 
financial institutions. Customers can draw on such
 
performance bonds in the event that the Company
does not fulfill its contractual obligations. The Company would
 
then have an obligation to reimburse the financial institution
 
for amounts paid under the performance
bonds. At both March 31, 2022, and December 31, 2021, the
 
total outstanding performance bonds aggregated to
 
$3.6 billion, of each of these amounts, $0.1
 
billion
relates to discontinued operations. There have been no significant
 
amounts reimbursed to financial institutions
 
under these types of arrangements in the three
months ended March 31, 2022 and 2021.
Product and order-related contingencies
The Company calculates its provision for product warranties
 
based on historical claims experience and specific review
 
of certain contracts. The reconciliation of the
“Provisions for warranties”, including guarantees of product performance,
 
was as follows:
($ in millions)
2022
2021
Balance at January 1,
1,005
1,035
Net change in warranties due to acquisitions, divestments and liabilities
 
held for sale
1
Claims paid in cash or in kind
(36)
(54)
Net increase in provision for changes in estimates, warranties
 
issued and warranties expired
38
63
Exchange rate differences
(8)
(33)
Balance at March 31,
999
1,012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
 
Q1 2022
 
FINANCIAL
 
INFORMATION
Note 11
Employee benefits
The Company operates defined benefit pension plans, defined contribution
 
pension plans, and termination indemnity
 
plans, in accordance with local regulations
and practices. These plans cover a large portion of the Company’s
 
employees and provide benefits to employees
 
in the event of death, disability,
 
retirement, or
termination of employment. Certain of these plans are multi-employer
 
plans. The Company also operates other postretirement benefit plans
 
including
postretirement health care benefits, and other employee-related
 
benefits for active employees including long-service
 
award plans. The measurement date used for
the Company’s employee benefit plans is December
 
31. The funding policies of the Company’s plans
 
are consistent with the local government and tax
requirements.
The following tables include amounts relating to defined benefit pension
 
plans and other postretirement benefits for continui
 
ng operations.
Net periodic benefit cost of the Company’s defined benefit
 
pension and other postretirement benefit plans consisted of
 
the following:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended March 31,
2022
2021
2022
2021
2022
2021
Operational pension cost:
Service cost
14
15
9
10
Operational pension cost
14
15
9
10
Non-operational pension cost (credit):
Interest cost
1
(1)
22
18
Expected return on plan assets
(30)
(29)
(41)
(47)
Amortization of prior service cost (credit)
(2)
(2)
(1)
Amortization of net actuarial loss
15
17
Curtailments, settlements and special termination benefits
(6)
Non-operational pension cost (credit)
(31)
(32)
(4)
(18)
(1)
Net periodic benefit cost (credit)
(17)
(17)
5
(8)
(1)
The components of net periodic benefit cost other than the service
 
cost component are included in the line “Non-operational
 
pension (cost) credit” in the income
statement.
Employer contributions were as follows:
($ in millions)
Defined pension benefits
Other postretirement
Switzerland
International
benefits
Three months ended March 31,
2022
2021
2022
2021
2022
2021
Total contributions
 
to defined benefit pension and
 
other postretirement benefit plans
16
15
10
(3)
3
1
Of which, discretionary contributions to defined benefit
pension plans
(9)
The Company expects to make contributions totaling approximately
 
$104 million and $6 million to its defined pension plans
 
and other postretirement benefit plans,
respectively, for the full year 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
 
Q1 2022
 
FINANCIAL
 
INFORMATION