Annual Report • Feb 1, 2024
Annual Report
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Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange
ZURICH, SWITZERLAND, FEBRUARY 1, 2024
—
| CHANGE | CHANGE | |||||||
|---|---|---|---|---|---|---|---|---|
| (\$ millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ Comparable1 | FY 2023 | FY 2022 | US\$ Comparable1 | ||
| Orders | 7,649 | 7,620 | 0% | 0% | 33,818 | 33,988 | -1% | 3% |
| Revenues | 8,245 | 7,824 | 5% | 6% | 32,235 | 29,446 | 9% | 14% |
| Gross Profit | 2,848 | 2,658 | 7% | 11,214 | 9,710 | 15% | ||
| as % of revenues | 34.5% | 34.0% | +0.5 pts | 34.8% | 33.0% | +1.8 pts | ||
| Income from operations | 1,116 | 1,185 | -6% | 4,871 | 3,337 | 46% | ||
| Operational EBITA1 | 1,333 | 1,146 | 16% | 13%3 | 5,427 | 4,510 | 20% | 20%3 |
| as % of operational revenues1 | 16.3% | 14.8% | +1.5 pts | 16.9% | 15.3% | +1.6 pts | ||
| Income from continuing operations, net of tax | 946 | 1,168 | -19% | 3,848 | 2,637 | 46% | ||
| Net income attributable to ABB | 921 | 1,132 | -19% | 3,745 | 2,475 | 51% | ||
| Basic earnings per share (\$) | 0.50 | 0.61 | -18%2 | 2.02 | 1.30 | 55%2 | ||
| Cash flow from operating activities4 | 1,897 | 687 | 176% | 4,290 | 1,287 | 233% |
1 For a reconciliation of non-GAAP measures, see "supplemental reconciliations and definitions" in the attached Q4 2023 Financial Information.
2 EPS growth rates are computed using unrounded amounts.
3 Constant currency (not adjusted for portfolio changes). 4 Amount represents total for both continuing and discontinued operations.
— "Our strong 2023 delivery was the result of both our leading market position in electrification and automation, as well as ABB being a more agile and efficient company in its execution. With our upgraded financial and sustainability targets we look to the future with confidence."
The fourth quarter of 2023, was a solid end to a fantastic year. We improved operational performance and delivered a very strong cash flow year-on-year. We increased the annual return on capital employed (ROCE) by 460bps1 to 21.1% and we are utilizing our strong balance sheet by recently signing seven small bolt-on acquisitions, with the majority adding additional embedded software and AI capabilities to our customer offerings. We delivered in line with our guidance, and I am pleased with the solid finish to the year.
Comparable order intake remained stable year-on-year, with increases noted in three out of four business areas. Most customer segments improved or remained stable, with softer demand noted mainly in residential construction and discrete automation, with the latter hampered by normalizing order patterns as well as by weakness in the robotics market. In tune with the historical fourth quarter pattern the book-to-bill ratio was below one, at 0.93, when revenues tend to be supported by end-of-theyear systems deliveries.
Revenues amounted to \$8,245 million and increased by 5% (6% comparable), supported by both higher volumes and contribution from earlier implemented price increases. Thanks to our ongoing focus on improving the quality of revenues, the gross margin improved by 50 basis points to 34.5%, contributing to the Operational EBITA margin improvement of 150 basis points to 16.3%. The contribution from mainly price and leverage on higher volumes clearly offset the impact mainly from higher labor costs. This represents the highest fourth quarter margin in recent history. The historical pattern of a sequentially softer fourth quarter margin repeated, as expected.
In the quarter we generated Cash flow from operating activities of \$1.9 billion. This contributed to Free Cash Flow of \$3.7 billion for the year, even stronger than what we originally expected.
In my view, the strong 2023 performance is evidence of ABB being a more efficient and agile company, but also of how demand for our offerings benefits from our leading position in markets accelerating the energy transition towards electrification and increased automation and
digitalization. We feel confident in future performance, which led us to raising our financial and sustainability targets at our Capital Markets Day in November. In short, we are targeting higher growth and higher returns while enabling a net zero world.
Looking to 2024, the geopolitical situation adds uncertainty, however we currently expect another year of good performance. We expect a positive book-to-bill and revenues to be supported by execution of parts of the \$21.6 billion order backlog. In the projects- and systems business we expect continued high customer activity, although we face high comparables from last year when large orders came through at a very high level. In total, order growth year-on-year should show stronger momentum in the latter part of the year when comparables ease. We expect to improve on comparable revenues as well as on Operational EBITA margin, and cash flow should benefit from continued strong operational performance and our continued focus on net working capital efficiency.
Considering the improving performance, robust cash flow and a solid balance sheet, the Board of Directors proposes an ordinary dividend of CHF0.87 per share, up from CHF 0.84 in the previous year. We also plan to continue utilizing share buybacks as a tool to return excess cash to shareholders also during 2024.
Björn Rosengren CEO
In the first quarter of 2024, we anticipate a low to midsingle digit comparable revenue growth and the Operational EBITA margin to remain stable or slightly improve year-on-year.
In full-year 2024, we expect a positive book-to-bill, comparable revenue growth to be about 5% and the Operational EBITA margin to slightly improve from the 2023 level of 16.9%.
Orders were flat year-on-year (comparable 0%) at \$7,649 million, with strong contribution from large orders, including one in business area Process Automation for approximately \$150 million. This offset a mid-single digit order decline in the short-cycle businesses, year-on-year. Comparable orders increased in three business areas, while Robotics & Discrete Automation declined sharply as customers for machine automation continued the sequential trend of normalizing order patterns, and due to inventory adjustments in a declining robotics market. These inventory adjustments are expected to level off towards the end of the first quarter.
Orders increased in two out of the three regions. Americas was up by 3% (comparable 3%) driven by strong improvement of 5% (comparable 6%) in the United States. Asia, Middle East and Africa remained overall stable (up comparable 2%) where the strong development in countries like India and South Korea more than offset the decline in China of 8% (comparable 7%). Europe softened by 2% (comparable 5%) due mainly to a double-digit decline in Germany.
Orders in the automotive segment softened slightly year-on-year due to timing impacts for some larger orders. General industry and consumer-related robotics segments declined. The machine builder segment
declined as customers normalized order patterns in the face of shortening delivery lead times.
In transport & infrastructure, there were positive developments in marine, ports and renewables.
The buildings segment declined overall, weighed down by the residential construction segment where the quarterly pattern included stabilization in Europe and declines in China and the United States. The commercial construction segment was broadly stable, compared with last year, in the United States and Europe while China declined.
Demand in the process-related businesses was strong in most segments, with particular strength in the oil & gas segment. It held up well also for refining, petrochemicals and the energy-related low carbon segments. Pulp & paper remained stable.
Revenues amounted to \$8,245 million and the growth of 5% year-on-year (comparable 6%) was driven by both higher volumes and a positive price development. Execution of the strong order backlog supported revenue growth and more than offset weakness in parts of the short-cycle demand. Consequently, three out of four business areas improved comparable revenues, with only Robotics & Discrete Automation declining.
| Change year-on-year | Q4 Orders |
Q4 Revenues |
|---|---|---|
| Comparable | 0% | 6% |
| FX | 1% | 1% |
| Portfolio changes | -1% | -2% |
| Total | 0% | 5% |
| (\$ in millions, unless otherwise |
CHANGE | |||
|---|---|---|---|---|
| indicated) | Q4 2023 | Q4 2022 | US\$ Comparable | |
| Europe | 2,554 | 2,604 | -2% | -5% |
| The Americas | 2,985 | 2,898 | 3% | 3% |
| Asia, Middle East and Africa |
2,110 | 2,118 | 0% | 2% |
| ABB Group | 7,649 | 7,620 | 0% | 0% |
| (\$ in millions, unless otherwise |
CHANGE | |||
|---|---|---|---|---|
| indicated) | Q4 2023 | Q4 2022 | US\$ Comparable | |
| Europe | 2,951 | 2,765 | 7% | 4% |
| The Americas | 2,847 | 2,555 | 11% | 14% |
| Asia, Middle East and Africa |
2,447 | 2,504 | -2% | 0% |
| ABB Group | 8,245 | 7,824 | 5% | 6% |
Gross profit increased by 7% (6% constant currency) to \$2,848 million, reflecting a gross margin improvement of 50 basis points to 34.5%. Gross margin improved in all four business areas.
Income from operations amounted to \$1,116 million and dropped by 6% year-on-year, mainly due to higher restructuring and transformation related costs year-on-year, and the provision release related to the non-core operations which supported last year's result. Margin on Income from operations was 13.5%, down by 160 basis points year-on-year.
Operational EBITA improved by 16% year-on-year to \$1,333 million and the margin was up by 150 basis points to 16.3%. Key drivers to the higher earnings were the impacts from robust pricing activities and operational leverage on higher volumes, which more than offset adverse impacts from mainly increased labor costs. Selling, general and administrative expenses increased in relation to revenues to 18%, from 16.6% last year. Operational EBITA in Corporate and Other amounted to -\$67 million, of which -\$34 million related to the underlying Corporate costs which were lower than expected mainly due to real estate book gains. The remaining-\$33 million related to the E-mobility business where operational performance was
hampered by the ongoing reorganization to ensure a more focused portfolio, and some inventory-related provisions. While E-mobility is on track towards the improved portfolio, the financial benefits may not be visible until towards the end of 2024. Thus, we only expect a slight improvement in the Emobility Operational EBITA, year-on-year.
Net finance expense was \$28 million, an increase from last year's level of \$1 million which was unusually low due to reversal of interest charges related to income tax risks.
In line with the historical pattern, the fourth quarter tax rate was low. Income tax expense was \$136 million with an effective tax rate of 12.6%, lower than expected mainly due to the geographical profit mix and releases of valuation allowances on deferred tax assets.
Net income attributable to ABB was \$921 million, representing a reduction of 19% from last year, as the improved operational performance this year did not offset the positive impacts from last year's benefits from the provision reduction in non-core operations and a reduction in tax valuation allowances. This resulted in basic earnings per share of \$0.50, down from \$0.61 year-on-year.
\$ per share
| (\$ millions) | Q4 2023 | Q4 2022 |
|---|---|---|
| Corporate and Other | ||
| E-mobility | (33) | (3) |
| Corporate costs, intersegment eliminations and other1 |
(34) | (72) |
| Total | (67) | (75) |
1 Majority of which relates to underlying corporate
Basic EPS
Net working capital amounted to \$3,257 million, increasing slightly year-on-year from \$3,216 million driven mainly by an increase in receivables on the back of higher revenues, which was however largely offset by customer advances. Net working capital decreased sequentially from \$4,041 million driven mainly by sound trade net working capital management resulting in lower inventories and receivables. Net working capital as a percentage of revenues1 was 10.2%, down sequentially from 12.8% and year-on-year 11.1%.
Purchases of property, plant and equipment and intangible assets amounted to \$264 million.
Net debt1 amounted to \$1,991 million at the end of the quarter and decreased from \$2,779 million year-on-year and declined sequentially from \$2,872 million. The sequential net debt decrease was driven by the strong free cash flow in the quarter.
| (\$ millions, unless otherwise indicated) |
Dec. 31 2023 |
Dec. 31 2022 |
|---|---|---|
| Short term debt and current maturities of long-term debt |
2,607 | 2,535 |
| Long-term debt | 5,221 | 5,143 |
| Total debt | 7,828 | 7,678 |
| Cash & equivalents | 3,891 | 4,156 |
| Restricted cash - current | 18 | 18 |
| Marketable securities and short-term investments |
1,928 | 725 |
| Cash and marketable securities | 5,837 | 4,899 |
| Net debt (cash)* | 1,991 | 2,779 |
| Net debt (cash)* to EBITDA ratio | 0.4 | 0.7 |
| Net debt (cash)* to Equity ratio | 0.14 | 0.21 |
* At Dec. 31, 2023 and Dec. 31, 2022, net debt(cash) excludes net pension (assets)/liabilities of \$(191) million and \$(276) million, respectively.
Cash flow from operating activities was \$1,897 million, representing a steep year-on-year increase from \$687 million. All business areas increased cash flow from operating activities in the quarter. The increase was driven by better operational performance and a strong sequential reduction of net working capital in the quarter driven by lower inventories and receivables as well as higher customer advances. Additionally, the prior year quarter was hampered by settlements for the Kusile project.
A share buyback program of up to \$1 billion was launched on April 3, 2023. During the fourth quarter, 6,143,500 shares were repurchased on the second trading line for approximately \$230 million. ABB's total number of issued shares, including shares held in treasury, amounts to 1,882,002,575.
—
Orders and revenues
Overall, the short-cycle businesses stabilized after some weak quarters, and customer activity in the project- and systems-related offering was robust. Total order intake was virtually unchanged from last year, limited by the divestment of the Power Conversion division (up comparable 2%) at \$3,395 million, to some extent hampered by timing-related impacts in medium voltage orders.
| Q4 | Q4 | |
|---|---|---|
| Change year-on-year | Orders | Revenues |
| Comparable | 2% | 8% |
| FX | 1% | 1% |
| Portfolio changes | -3% | -3% |
| Total | 0% | 6% |
• Revenues amounted to \$3,698 million, representing an improvement of 6% (comparable 8%) from last year, supported by both volumes and price impacts. This was supported by all divisions except for Smart Buildings division where the short-cycle weakness in residential segment weighed on the total.
Strong operational performance clearly offset the small adverse impact from portfolio changes and triggered a 26% improvement in Operational EBITA to \$725 million and 310 basis points rise in Operational EBITA margin, year-on-year.
• Strong gross margin improvement supported by contributions from price, leverage on higher volumes in production and improved operational efficiency. All of which more than offset slightly higher spend on labor, R&D and Selling, General and Administration.
| CHANGE | CHANGE | |||||||
|---|---|---|---|---|---|---|---|---|
| (\$ millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Comparable | FY 2023 | FY 2022 | US\$ | Comparable |
| Orders | 3,395 | 3,385 | 0% | 2% | 15,189 | 15,182 | 0% | 3% |
| Order backlog | 6,808 | 6,404 | 6% | 14% | 6,808 | 6,404 | 6% | 14% |
| Revenues | 3,698 | 3,498 | 6% | 8% | 14,584 | 13,619 | 7% | 10% |
| Operational EBITA | 725 | 575 | 26% | 2,937 | 2,343 | 25% | ||
| as % of operational revenues | 19.7% | 16.6% | +3.1 pts | 20.1% | 17.2% | +2.9 pts | ||
| Cash flow from operating activities | 1,068 | 857 | 25% | 3,211 | 2,115 | 52% | ||
| No. of employees (FTE equiv.) | 50,300 | 50,600 | -1% |
—
On continued robust performance in the long-cycle business with some large orders booked mainly in the Traction division, the total order intake reached \$1,937 million, up 17% (comparable 13%) from the relatively low comparable last year. Book-to-bill was at 1 for the quarter.
| Change year-on-year | Q4 Orders |
Q4 Revenues |
|---|---|---|
| Comparable | 13% | 2% |
| FX | 2% | 1% |
| Portfolio changes | 2% | 2% |
| Total | 17% | 5% |
revenue generation, with the improvement rate however hampered by lower deliveries in the motors business.
Operational EBITA remained stable year-on-year at \$318 million. Revenues increased and gross margin improved somewhat, however the Operational EBITA margin declined by 80 basis points to 16.6%.
| CHANGE | CHANGE | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (\$ millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Comparable | FY 2023 | FY 2022 | US\$ | Comparable | |
| Orders | 1,937 | 1,649 | 17% | 13% | 8,222 | 7,896 | 4% | 4% | |
| Order backlog | 5,343 | 4,726 | 13% | 8% | 5,343 | 4,726 | 13% | 8% | |
| Revenues | 1,946 | 1,845 | 5% | 2% | 7,814 | 6,745 | 16% | 15% | |
| Operational EBITA | 318 | 318 | 0% | 1,475 | 1,163 | 27% | |||
| as % of operational revenues | 16.6% | 17.4% | -0.8 pts | 18.9% | 17.3% | +1.6 pts | |||
| Cash flow from operating activities | 597 | 346 | 73% | 1,532 | 853 | 80% | |||
| No. of employees (FTE equiv.) | 22,300 | 21,100 | 6% |
—
Market demand remained robust and order intake was up 7% (comparable 5%) to \$1,870 million, with the fourth quarter being a strong finish to a year in which large orders contributed more than usual, which more than compensated for slowing momentum in the shortcycle offering. Fourth quarter orders included a booking of approximately \$150 million with long delivery schedule.
| Change year-on-year | Q4 Orders |
Q4 Revenues |
|---|---|---|
| Comparable | 5% | 10% |
| FX | 2% | 1% |
| Portfolio changes | 0% | 0% |
| Total | 7% | 11% |
Gross margin improved and revenues were higher, driving the 18% year-on-year increase in Operational EBITA to \$239 million and the 80 basis points rise in Operational EBITA margin to 14.0%.
| CHANGE | CHANGE | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (\$ millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Comparable | FY 2023 | FY 2022 | US\$ | Comparable | |
| Orders | 1,870 | 1,746 | 7% | 5% | 7,535 | 6,825 | 10% | 24% | |
| Order backlog | 7,519 | 6,229 | 21% | 19% | 7,519 | 6,229 | 21% | 19% | |
| Revenues | 1,727 | 1,551 | 11% | 10% | 6,270 | 6,044 | 4% | 16% | |
| Operational EBITA | 239 | 203 | 18% | 909 | 848 | 7% | |||
| as % of operational revenues | 14.0% | 13.2% | +0.8 pts | 14.5% | 14.0% | +0.5 pts | |||
| Cash flow from operating activities | 444 | 205 | 117% | 1,002 | 675 | 48% | |||
| No. of employees (FTE equiv.) | 21,100 | 20,100 | 5% |
—
Markets are still adjusting to shorter delivery lead times, putting pressure on order intake which amounted to \$550 million, representing a sharp drop of 31% (comparable 33%) year-on-year. Although the challenging market situation is expected to persist near-term, the fourth quarter of 2023 is anticipated to have been the trough quarter for absolute order intake.
| Change year-on-year | Q4 Orders |
Q4 Revenues |
|---|---|---|
| Comparable | -33% | -7% |
| FX | 2% | 3% |
| Portfolio changes | 0% | 0% |
| Total | -31% | -4% |
Operational EBITA of \$118 million softened by 6% year-onyear on the back of lower revenues. However, the Operational EBITA margin remained largely stable at 13.8%, down only 20 basis points from last year.
• Price impact and the positive mix from higher share of revenues from Machine Automation were key positive contributors to earnings, however slightly more than offset by the impact from underabsorption in production due to low Robotics volumes and increased cost for labor.
| CHANGE | CHANGE | |||||||
|---|---|---|---|---|---|---|---|---|
| (\$ millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Comparable | FY 2023 | FY 2022 | US\$ | Comparable |
| Orders | 550 | 798 | -31% | -33% | 3,066 | 4,116 | -26% | -25% |
| Order backlog | 2,141 | 2,679 | -20% | -20% | 2,141 | 2,679 | -20% | -20% |
| Revenues | 852 | 891 | -4% | -7% | 3,640 | 3,181 | 14% | 14% |
| Operational EBITA | 118 | 125 | -6% | 536 | 340 | 58% | ||
| as % of operational revenues | 13.8% | 14.0% | -0.2 pts | 14.7% | 10.7% | +4 pts | ||
| Cash flow from operating activities | 170 | 105 | 62% | 436 | 214 | 104% | ||
| No. of employees (FTE equiv.) | 11,300 | 10,700 | 5% |
—
energy efficiency set ups for its customers. Using the tool ABB identified an average energy-saving potential of 31 percent per motor across 2,000 motors assessed. These findings provide compelling evidence for both the financial and environmental benefits of using ABB's leading technology.
| Q4 2023 | Q4 2022 | CHANGE | 12M ROLLING | |
|---|---|---|---|---|
| CO₂e own operations emissions, Ktons scope 1 and 21 |
27 | 44 | -40% | 160 |
| Lost Time Injury Frequency Rate (LTIFR), frequency / 200,000 working hours2 |
0.09 | 0.10 | -10% | 0.13 |
| Share of females in senior management positions, % |
21.0 | 17.8 | +3.2 pts | 20.2 |
1 CO₂ equivalent emissions from site, energy use, SF₆ and fleet, previous quarter 2 Current quarter Includes all incidents reported until January 10, 2024
Ktons of CO₂ equivalent emissions (Scope 1&2) Ktons of CO₂ equivalent emissions (Scope 1&2), R12M
LTIFR, frequency/200,000 working hours LTIFR, frequency/200,000 working hours, R12M
In 2023 the overall demand for ABB's offering remained robust, with most customer segments improving or remaining stable. Weakness in the short-cycle businesses related primarily to residential construction and discrete automation was however more than offset by strong momentum in the project- and systems-related businesses. Orders remained stable or increased in three out of four business areas, with a decline noted only in Robotics & Discrete Automation. Orders amounted to \$33,818 million and were down 1% versus the prior year (up 3 % comparable).
Revenues were supported by execution of the large order backlog as supply chains normalized early in the year and amounted to \$32,235 million, up by 9% (14% comparable), overall implying a book-to-bill of 1.05.
Income from operations amounted to \$4,871 million, up from \$3,337 million year-on-year. This increase can be attributed mostly to an improved operational performance. In addition, the prior year was hampered by charges of approximately \$195 million due to the exit of the legacy full-train retrofit business as well as a provision of \$325 million related to the legacy Kusile project in South Africa awarded in 2015.
Operational EBITA increased by 20% year-on-year to \$5,427 million, up from \$4,510 million in last year's period and the Operational EBITA margin improved by 160 basis points to 16.9%. The increase was driven by
• On January 31, ABB announced that the Board of Directors will propose Johan Forssell and Mats Rahmström as new members for election at the company's Annual General Meeting (AGM) on March 21, 2024. They will replace Jacob Wallenberg and Gunnar Brock who have decided not to stand for reelection. ABB will publish its invitation to the 2024 AGM on February 23, 2024.
higher margins across all business areas. Main drivers of the margin expansion were operating leverage on higher volumes as well as the impacts from implemented price increases, which more than offset inflation in labor and input cost. Corporate and Other Operational EBITA amounted to -\$430 million. This includes a loss of \$167 million that can be attributed to the E-mobility business, which was negatively affected by the ongoing reorganization to ensure a more focused portfolio, and some inventory-related provisions.
Net finance expenses increased by \$52 million to \$110 million, primarily driven by higher interest rates on higher debt levels compared to the prior year. The nonoperational pension credits decreased by \$98 million to \$17 million in comparison to last year's period, reflecting the impact of higher interest rates. Income tax expense was \$930 million reflecting a tax rate of 19.5%. This includes a net benefit realized on a favorable resolution of a prior year tax matter relating to the Power Grids business.
Net income attributable to ABB was \$3,745 million, up from \$2,475 million year-on-year. Basic earnings per share was \$2.02, representing an increase of 55% compared with the prior year.
| Acquisitions | Company/unit | Closing date | Revenues, \$ million1 | No. of employees |
|---|---|---|---|---|
| 2023 | ||||
| Robotics & Discrete Automation | Sevensense | 21-Dec | <5 | 35 |
| E-mobility | Imagen Energy Inc | 13-Nov | <5 | 4 |
| Motion | Spring Point Solutions Llc | 1-Nov | <5 | 13 |
| E-mobility | Vourity AB | 25-Oct | <5 | 9 |
| Electrification | Eve Systems | 1-Jun | ~20 | 50 |
| Motion | Siemens low voltage NEMA Motors | 2-May | ~60 | 600 |
| Divestments | Company/unit | Closing date | Revenues, \$ million1 | No. of employees | |
|---|---|---|---|---|---|
| 2023 | |||||
| Electrification | Power Conversion division | 3-Jul | ~440 | 1,500 | |
| Electrification | Industrial Plugs & Sockets business | 3-Jul | ~12 | 2 | |
| Process Automation | UK technical engineering consultancy | ||||
| business | 1-May | ~20 | 160 |
Note: comparable growth calculation includes acquisitions and divestments with revenues of greater than \$50 million.
1 Represents the estimated revenues for the last fiscal year prior to the announcement of the respective acquisition/divestment unless otherwise stated.
| ABB Group | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 |
|---|---|---|---|---|---|---|---|---|---|---|
| EBITDA, \$ in million | 1,067 | 794 | 906 | 1,384 | 4,151 | 1,389 | 1,494 | 1,453 | 1,315 | 5,651 |
| Return on Capital Employed, % | n.a. | n.a. | n.a. | n.a. | 16.50 | n.a. | n.a. | n.a. | n.a. | 21.10 |
| Net debt/Equity | 0.20 | 0.34 | 0.34 | 0.21 | 0.21 | 0.30 | 0.31 | 0.21 | 0.14 | 0.14 |
| Net debt/ EBITDA 12M rolling | 0.4 | 0.7 | 0.7 | 0.7 | 0.7 | 0.9 | 0.8 | 0.5 | 0.4 | 0.4 |
| Net working capital, % of 12M rolling revenues |
12.1% | 12.8% | 11.7% | 11.1% | 11.1% | 13.9% | 14.7% | 12.8% | 10.2% | 10.2% |
| Earnings per share, basic, \$ | 0.31 | 0.20 | 0.19 | 0.61 | 1.30 | 0.56 | 0.49 | 0.48 | 0.50 | 2.02 |
| Earnings per share, diluted, \$ | 0.31 | 0.20 | 0.19 | 0.60 | 1.30 | 0.55 | 0.48 | 0.47 | 0.50 | 2.01 |
| Dividend per share, CHF | n.a. | n.a. | n.a. | n.a. | 0.84 | n.a. | n.a. | n.a. | n.a. | 0.87 * |
| Share price at the end of period, CHF1 | 29.12 | 24.57 | 24.90 | 28.06 | 28.06 | 31.37 | 35.18 | 32.80 | 37.30 | 37.30 |
| Share price at the end of period, \$1 | 30.76 | 25.43 | 24.41 | 30.46 | 30.46 | 34.30 | 39.32 | 35.86 | 44.32 | 44.32 |
| Number of employees (FTE equivalents) |
104,720 | 106,380 | 106,830 | 105,130 | 105,130 | 106,170 | 108,320 | 107,430 | 107,870 | 107,870 |
| No. of shares outstanding at end of period (in millions) |
1,929 | 1,892 | 1,875 | 1,865 | 1,865 | 1,862 | 1,860 | 1,849 | 1,842 | 1,842 |
1 Data prior to October 3, 2022, has been adjusted for the Accelleron spin-off (Source: FactSet).
* Dividend proposal subject to shareholder approval at the 2024 AGM
| (\$ in millions, unless otherwise stated) | FY 20241 | Q1 2024 |
|---|---|---|
| Corporate and Other Operational EBITA2 |
~(300) | ~(75) |
| Non-operating items | ||
| Acquisition-related amortization | ~(210) | ~(55) |
| Restructuring and related3 | ~(200) | ~(50) |
| ABB Way transformation | ~(180) | ~(55) |
| (\$ in millions, unless otherwise stated) | FY 2024 |
|---|---|
| Net finance expenses | ~(120) |
| Effective tax rate | ~25% 4 |
| Capital Expenditures | ~(900) |
1 Excludes one project estimated to a total of ~\$100 million, that is ongoing in the non-core business. Exact exit timing is difficult to assess due to legal proceedings etc.
2 Excludes Operational EBITA from E-mobility business.
3 Includes restructuring and restructuring-related as well as separation and integration costs.
4 Excludes the impact of acquisitions or divestments or any significant non-operational items.
This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business, including those in the sections of this release titled "CEO summary," "Outlook," and "Sustainability". These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB. These expectations, estimates and projections are generally identifiable by statements containing words such as "anticipates," "expects," "estimates," "plans," "targets," "guidance," "likely" or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements
made in this press release and which could affect our ability to achieve any or all of our stated targets. Some important factors that could cause such differences include, among others, business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd's filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.
The Q4 2023 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.
A conference call and webcast for analysts and investors is scheduled to begin at 10:00 a.m. CET.
Financial calendar
2024 March 21 Annual General Meeting, Zurich April 18 Q1 2024 results July 18 Q2 2024 results October 17 Q3 2024 results
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.
Media Relations Phone: +41 43 317 71 11 Email: [email protected] Investor Relations Phone: +41 43 317 71 11 Email: [email protected] ABB Ltd Affolternstrasse 44 8050 Zurich Switzerland
ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company's solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated. Building on over 140 years of excellence, ABB's more than 105,000 employees are committed to driving innovations that accelerate industrial transformation.
February 1, 2024
| ─ 03 |
07 | Key Figures |
|---|---|---|
08 ─ 33 Consolidated Financial Information (unaudited)
34 ─ 47 Supplemental Reconciliations and Definitions
| CHANGE | ||||
|---|---|---|---|---|
| (\$ in millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Comparable(1) |
| Orders | 7,649 | 7,620 | 0% | 0% |
| Order backlog (end December) | 21,567 | 19,867 | 9% | 9% |
| Revenues | 8,245 | 7,824 | 5% | 6% |
| Gross Profit | 2,848 | 2,658 | 7% | |
| as % of revenues | 34.5% | 34.0% | +0.5 pts | |
| Income from operations | 1,116 | 1,185 | -6% | |
| Operational EBITA(1) | 1,333 | 1,146 | 16% | 13%(2) |
| as % of operational revenues(1) | 16.3% | 14.8% | +1.5 pts | |
| Income from continuing operations, net of tax | 946 | 1,168 | -19% | |
| Net income attributable to ABB | 921 | 1,132 | -19% | |
| Basic earnings per share (\$) | 0.50 | 0.61 | -18%(3) | |
| Cash flow from operating activities(4) | 1,897 | 687 | 176% | |
| Cash flow from operating activities in continuing operations | 1,897 | 720 | 163% |
| CHANGE | ||||
|---|---|---|---|---|
| (\$ in millions, unless otherwise indicated) | FY 2023 | FY 2022 | US\$ | Comparable(1) |
| Orders | 33,818 | 33,988 | -1% | 3% |
| Revenues | 32,235 | 29,446 | 9% | 14% |
| Gross Profit | 11,214 | 9,710 | 15% | |
| as % of revenues | 34.8% | 33.0% | +1.8 pts | |
| Income from operations | 4,871 | 3,337 | 46% | |
| Operational EBITA(1) | 5,427 | 4,510 | 20% | 20%(2) |
| as % of operational revenues(1) | 16.9% | 15.3% | +1.6 pts | |
| Income from continuing operations, net of tax | 3,848 | 2,637 | 46% | |
| Net income attributable to ABB | 3,745 | 2,475 | 51% | |
| Basic earnings per share (\$) | 2.02 | 1.30 | 55%(3) | |
| Cash flow from operating activities(4) | 4,290 | 1,287 | 233% | |
| Cash flow from operating activities in continuing operations | 4,301 | 1,334 | 222% |
(1) For a reconciliation of non-GAAP measures see "Supplemental Reconciliations and Definitions" on page 34.
(2) Constant currency (not adjusted for portfolio changes).
(3) EPS growth rates are computed using unrounded amounts.
(4) Cash flow from operating activities includes both continuing and discontinued operations.
| CHANGE | ||||||
|---|---|---|---|---|---|---|
| (\$ in millions, unless otherwise indicated) | Q4 2023 | Q4 2022 | US\$ | Local | Comparable | |
| Orders | ABB Group | 7,649 | 7,620 | 0% | -1% | 0% |
| Electrification | 3,395 | 3,385 | 0% | -1% | 2% | |
| Motion | 1,937 | 1,649 | 17% | 15% | 13% | |
| Process Automation | 1,870 | 1,746 | 7% | 5% | 5% | |
| Robotics & Discrete Automation | 550 | 798 | -31% | -33% | -33% | |
| Corporate and Other | 125 | 257 | ||||
| Intersegment eliminations | (228) | (215) | ||||
| Order backlog (end December) | ABB Group | 21,567 | 19,867 | 9% | 7% | 9% |
| Electrification | 6,808 | 6,404 | 6% | 6% | 14% | |
| Motion | 5,343 | 4,726 | 13% | 9% | 8% | |
| Process Automation | 7,519 | 6,229 | 21% | 19% | 19% | |
| Robotics & Discrete Automation | 2,141 | 2,679 | -20% | -20% | -20% | |
| Corporate and Other | ||||||
| (incl. intersegment eliminations) | (244) | (171) | ||||
| Revenues | ABB Group | 8,245 | 7,824 | 5% | 4% | 6% |
| Electrification | 3,698 | 3,498 | 6% | 5% | 8% | |
| Motion | 1,946 | 1,845 | 5% | 4% | 2% | |
| Process Automation | 1,727 | 1,551 | 11% | 10% | 10% | |
| Robotics & Discrete Automation | 852 | 891 | -4% | -7% | -7% | |
| Corporate and Other | 229 | 258 | ||||
| Intersegment eliminations | (207) | (219) | ||||
| Income from operations | ABB Group | 1,116 | 1,185 | |||
| Electrification | 670 | 569 | ||||
| Motion | 292 | 316 | ||||
| Process Automation | 259 | 183 | ||||
| Robotics & Discrete Automation | 99 | 101 | ||||
| Corporate and Other | ||||||
| (incl. intersegment eliminations) | (204) | 16 | ||||
| Income from operations % | ABB Group | 13.5% | 15.1% | |||
| Electrification | 18.1% | 16.3% | ||||
| Motion | 15.0% | 17.1% | ||||
| Process Automation | 15.0% | 11.8% | ||||
| Robotics & Discrete Automation | 11.6% | 11.3% | ||||
| Operational EBITA | ABB Group | 1,333 | 1,146 | 16% | 13% | |
| Electrification | 725 | 575 | 26% | 24% | ||
| Motion | 318 | 318 | 0% | -1% | ||
| Process Automation | 239 | 203 | 18% | 19% | ||
| Robotics & Discrete Automation | 118 | 125 | -6% | -6% | ||
| (1) Corporate and Other |
||||||
| (incl. intersegment eliminations) | (67) | (75) | ||||
| Operational EBITA % | ABB Group | 16.3% | 14.8% | |||
| Electrification | 19.7% | 16.6% | ||||
| Motion | 16.6% | 17.4% | ||||
| Process Automation | 14.0% | 13.2% | ||||
| Robotics & Discrete Automation | 13.8% | 14.0% | ||||
| Cash flow from operating activities | ABB Group | 1,897 | 687 | |||
| Electrification | 1,068 | 857 | ||||
| Motion | 597 | 346 | ||||
| Process Automation | 444 | 205 | ||||
| Robotics & Discrete Automation | 170 | 105 | ||||
| Corporate and Other | ||||||
| (incl. intersegment eliminations) | (382) | (793) | ||||
| Discontinued operations | – | (33) |
(1) Corporate and Other at Q4 2023 and Q4 2022 includes losses of \$33 million and \$3 million, respectively, relating to E-mobility.
| FY 2023 FY 2022 US\$ Local Comparable (\$ in millions, unless otherwise indicated) Orders ABB Group 33,818 33,988 -1% 1% 3% Electrification 15,189 15,182 0% 1% 3% Motion 8,222 7,896 4% 5% 4% Process Automation 7,535 6,825 10% 12% 24% Robotics & Discrete Automation 3,066 4,116 -26% -25% -25% 720 787 Corporate and Other (914) (818) Intersegment eliminations Order backlog (end December) ABB Group 21,567 19,867 9% 7% 9% Electrification 6,808 6,404 6% 6% 14% Motion 5,343 4,726 13% 9% 8% Process Automation 7,519 6,229 21% 19% 19% Robotics & Discrete Automation 2,141 2,679 -20% -20% -20% Corporate and Other (244) (171) (incl. intersegment eliminations) Revenues ABB Group 32,235 29,446 9% 11% 14% Electrification 14,584 13,619 7% 8% 10% Motion 7,814 6,745 16% 17% 15% Process Automation 6,270 6,044 4% 5% 16% Robotics & Discrete Automation 3,640 3,181 14% 14% 14% 769 653 Corporate and Other (842) (796) Intersegment eliminations Income from operations ABB Group 4,871 3,337 Electrification 2,800 2,140 Motion 1,390 1,092 Process Automation 947 663 Robotics & Discrete Automation 446 247 Corporate and Other (712) (805) (incl. intersegment eliminations) Income from operations % ABB Group 15.1% 11.3% Electrification 19.2% 15.7% Motion 17.8% 16.2% Process Automation 15.1% 11.0% Robotics & Discrete Automation 12.3% 7.8% Operational EBITA ABB Group 5,427 4,510 20% 20% Electrification 2,937 2,343 25% 27% Motion 1,475 1,163 27% 27% Process Automation 909 848 7% 10% Robotics & Discrete Automation 536 340 58% 58% (1) Corporate and Other (430) (184) (incl. intersegment eliminations) Operational EBITA % ABB Group 16.9% 15.3% Electrification 20.1% 17.2% Motion 18.9% 17.3% Process Automation 14.5% 14.0% Robotics & Discrete Automation 14.7% 10.7% Cash flow from operating activities ABB Group 4,290 1,287 Electrification 3,211 2,115 Motion 1,532 853 Process Automation 1,002 675 Robotics & Discrete Automation 436 214 Corporate and Other (1,880) (2,523) (incl. intersegment eliminations) (11) (47) Discontinued operations |
||||
|---|---|---|---|---|
(1) Corporate and Other at FY 2023 and FY 2022 includes losses of \$167 million and \$15 million, respectively, relating to E-mobility.
| Process | Robotics & Discrete | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ABB | Electrification | Motion | Automation | Automation | ||||||
| (\$ in millions, unless otherwise indicated) | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 |
| Revenues | 8,245 | 7,824 | 3,698 | 3,498 | 1,946 | 1,845 | 1,727 | 1,551 | 852 | 891 |
| Foreign exchange/commodity timing | ||||||||||
| differences in total revenues | (66) | (62) | (15) | (31) | (35) | (22) | (21) | (12) | 2 | 1 |
| Operational revenues | 8,179 | 7,762 | 3,683 | 3,467 | 1,911 | 1,823 | 1,706 | 1,539 | 854 | 892 |
| Income from operations | 1,116 | 1,185 | 670 | 569 | 292 | 316 | 259 | 183 | 99 | 101 |
| Acquisition-related amortization | 56 | 55 | 22 | 24 | 9 | 8 | 1 | 1 | 20 | 19 |
| Restructuring, related and | ||||||||||
| implementation costs(1) | 127 | 47 | 50 | 10 | 41 | 5 | (4) | 23 | 6 | 2 |
| Changes in obligations related to | ||||||||||
| divested businesses | 2 | (71) | – | 1 | – | – | – | – | – | – |
| Gains and losses from sale of businesses | (4) | 3 | (4) | – | – | 3 | – | – | – | – |
| Acquisition- and divestment-related | ||||||||||
| expenses and integration costs | 19 | 24 | 7 | 5 | 2 | 3 | (4) | 12 | 7 | 2 |
| Certain other non-operational items | 76 | (28) | 5 | 11 | 2 | – | – | – | (14) | (8) |
| Foreign exchange/commodity timing | ||||||||||
| differences in income from operations | (59) | (69) | (25) | (45) | (28) | (17) | (13) | (16) | – | 9 |
| Operational EBITA | 1,333 | 1,146 | 725 | 575 | 318 | 318 | 239 | 203 | 118 | 125 |
| Operational EBITA margin (%) | 16.3% | 14.8% | 19.7% | 16.6% | 16.6% | 17.4% | 14.0% | 13.2% | 13.8% | 14.0% |
| Process | Robotics & Discrete | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ABB | Electrification | Motion | Automation | Automation | ||||||
| (\$ in millions, unless otherwise indicated) | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 |
| Revenues | 32,235 | 29,446 | 14,584 | 13,619 | 7,814 | 6,745 | 6,270 | 6,044 | 3,640 | 3,181 |
| Foreign exchange/commodity timing | ||||||||||
| differences in total revenues | (41) | 28 | (3) | (20) | (23) | (14) | (18) | 33 | 4 | 6 |
| Operational revenues | 32,194 | 29,474 | 14,581 | 13,599 | 7,791 | 6,731 | 6,252 | 6,077 | 3,644 | 3,187 |
| Income from operations | 4,871 | 3,337 | 2,800 | 2,140 | 1,390 | 1,092 | 947 | 663 | 446 | 247 |
| Acquisition-related amortization | 220 | 229 | 88 | 104 | 35 | 31 | 5 | 4 | 79 | 78 |
| Restructuring, related and | ||||||||||
| implementation costs(1) | 219 | 347 | 76 | 28 | 46 | 16 | 3 | 29 | 6 | 11 |
| Changes in obligations related to | ||||||||||
| divested businesses | (3) | (88) | 1 | 1 | – | – | – | – | – | – |
| Gains and losses from sale of businesses | (101) | 7 | (75) | (1) | – | 8 | (26) | – | – | – |
| Acquisition- and divestment-related | ||||||||||
| expenses and integration costs | 74 | 195 | 30 | 36 | 17 | 15 | (7) | 134 | 14 | 6 |
| Certain other non-operational items | 165 | 452 | 16 | 41 | 6 | – | – | – | (10) | (8) |
| Foreign exchange/commodity timing | ||||||||||
| differences in income from operations | (18) | 31 | 1 | (6) | (19) | 1 | (13) | 18 | 1 | 6 |
| Operational EBITA | 5,427 | 4,510 | 2,937 | 2,343 | 1,475 | 1,163 | 909 | 848 | 536 | 340 |
| Operational EBITA margin (%) | 16.9% | 15.3% | 20.1% | 17.2% | 18.9% | 17.3% | 14.5% | 14.0% | 14.7% | 10.7% |
(1) Includes impairment of certain assets.
| Process | Robotics & Discrete | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ABB | Electrification | Motion | Automation | Automation | |||||||
| (\$ in millions) | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 | Q4 23 | Q4 22 | |
| Depreciation | 133 | 130 | 66 | 62 | 28 | 27 | 12 | 13 | 14 | 16 | |
| Amortization | 66 | 69 | 28 | 31 | 10 | 10 | 2 | 3 | 20 | 19 | |
| including total acquisition-related amortization of: | 56 | 55 | 22 | 24 | 9 | 8 | 1 | 1 | 20 | 19 |
| Process | Robotics & Discrete | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ABB | Electrification Motion |
Automation | Automation | |||||||
| (\$ in millions) | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 | FY 23 | FY 22 |
| Depreciation | 517 | 531 | 256 | 253 | 108 | 105 | 47 | 64 | 57 | 62 |
| Amortization | 263 | 283 | 109 | 129 | 41 | 36 | 9 | 11 | 81 | 79 |
| including total acquisition-related amortization of: | 220 | 229 | 88 | 104 | 35 | 31 | 5 | 4 | 79 | 78 |
| (\$ in millions, unless otherwise indicated) | Orders received | CHANGE | Revenues | CHANGE | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Com- | Com | |||||||||
| Q4 23 | Q4 22 | US\$ | Local | parable | Q4 23 | Q4 22 | US\$ | Local | parable | |
| Europe | 2,554 | 2,604 | -2% | -7% | -5% | 2,951 | 2,765 | 7% | 2% | 4% |
| The Americas | 2,985 | 2,898 | 3% | 2% | 3% | 2,847 | 2,555 | 11% | 10% | 14% |
| of which United States | 2,277 | 2,167 | 5% | 4% | 6% | 2,105 | 1,898 | 11% | 11% | 15% |
| Asia, Middle East and Africa | 2,110 | 2,118 | 0% | 1% | 2% | 2,447 | 2,504 | -2% | 0% | 0% |
| of which China | 895 | 976 | -8% | -7% | -7% | 1,064 | 1,133 | -6% | -6% | -5% |
| ABB Group | 7,649 | 7,620 | 0% | -1% | 0% | 8,245 | 7,824 | 5% | 4% | 6% |
| (\$ in millions, unless otherwise indicated) | Orders received CHANGE |
Revenues | CHANGE | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Com- | Com | |||||||||
| FY 23 | FY 22 | US\$ | Local | parable | FY 23 | FY 22 | US\$ | Local | parable | |
| Europe | 11,458 | 11,778 | -3% | -4% | -1% | 11,568 | 10,285 | 12% | 11% | 14% |
| The Americas | 12,437 | 11,825 | 5% | 5% | 7% | 11,090 | 9,573 | 16% | 15% | 18% |
| of which United States | 9,204 | 8,920 | 3% | 3% | 5% | 8,248 | 7,023 | 17% | 17% | 21% |
| Asia, Middle East and Africa | 9,923 | 10,385 | -4% | 1% | 4% | 9,577 | 9,588 | 0% | 5% | 8% |
| of which China | 4,488 | 5,087 | -12% | -7% | -5% | 4,468 | 4,696 | -5% | -1% | 1% |
| ABB Group | 33,818 | 33,988 | -1% | 1% | 3% | 32,235 | 29,446 | 9% | 11% | 14% |
| Year ended | Three months ended | ||||
|---|---|---|---|---|---|
| (\$ in millions, except per share data in \$) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
| Sales of products | 27,010 | 24,471 | 6,800 | 6,525 | |
| Sales of services and other | 5,225 | 4,975 | 1,445 | 1,299 | |
| Total revenues | 32,235 | 29,446 | 8,245 | 7,824 | |
| Cost of sales of products | (17,938) | (16,804) | (4,545) | (4,365) | |
| Cost of services and other | (3,083) | (2,932) | (852) | (801) | |
| Total cost of sales | (21,021) | (19,736) | (5,397) | (5,166) | |
| Gross profit | 11,214 | 9,710 | 2,848 | 2,658 | |
| Selling, general and administrative expenses | (5,543) | (5,132) | (1,485) | (1,299) | |
| Non-order related research and development expenses | (1,317) | (1,166) | (366) | (322) | |
| Other income (expense), net | 517 | (75) | 119 | 148 | |
| Income from operations | 4,871 | 3,337 | 1,116 | 1,185 | |
| Interest and dividend income | 165 | 72 | 50 | 22 | |
| Interest and other finance expense | (275) | (130) | (78) | (23) | |
| Non-operational pension (cost) credit | 17 | 115 | (6) | 13 | |
| Income from continuing operations before taxes | 4,778 | 3,394 | 1,082 | 1,197 | |
| Income tax expense | (930) | (757) | (136) | (29) | |
| Income from continuing operations, net of tax | 3,848 | 2,637 | 946 | 1,168 | |
| Loss from discontinued operations, net of tax | (24) | (43) | (8) | (7) | |
| Net income | 3,824 | 2,594 | 938 | 1,161 | |
| Net income attributable to noncontrolling | |||||
| interests and redeemable noncontrolling interests | (79) | (119) | (17) | (29) | |
| Net income attributable to ABB | 3,745 | 2,475 | 921 | 1,132 | |
| Amounts attributable to ABB shareholders: | |||||
| Income from continuing operations, net of tax | 3,769 | 2,517 | 929 | 1,138 | |
| Loss from discontinued operations, net of tax | (24) | (42) | (8) | (6) | |
| Net income | 3,745 | 2,475 | 921 | 1,132 | |
| Basic earnings per share attributable to ABB shareholders: | |||||
| Income from continuing operations, net of tax | 2.03 | 1.33 | 0.50 | 0.61 | |
| Loss from discontinued operations, net of tax | (0.01) | (0.02) | 0.00 | 0.00 | |
| Net income | 2.02 | 1.30 | 0.50 | 0.61 | |
| Diluted earnings per share attributable to ABB shareholders: | |||||
| Income from continuing operations, net of tax | 2.02 | 1.32 | 0.50 | 0.60 | |
| Loss from discontinued operations, net of tax | (0.01) | (0.02) | 0.00 | 0.00 | |
| Net income | 2.01 | 1.30 | 0.50 | 0.60 | |
| Weighted-average number of shares outstanding (in millions) used to compute: | |||||
| Basic earnings per share attributable to ABB shareholders | 1,855 | 1,899 | 1,845 | 1,870 | |
| Diluted earnings per share attributable to ABB shareholders | 1,867 | 1,910 | 1,856 | 1,881 | |
| Due to rounding, numbers presented may not add to the totals provided. |
| Year ended | Three months ended | |||
|---|---|---|---|---|
| (\$ in millions) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 |
| Total comprehensive income, net of tax | 3,315 | 2,189 | 586 | 1,414 |
| Total comprehensive income attributable to noncontrolling interests and | ||||
| redeemable noncontrolling interests, net of tax | (84) | (87) | (30) | (29) |
| Total comprehensive income attributable to ABB shareholders, net of tax | 3,231 | 2,102 | 556 | 1,385 |
Due to rounding, numbers presented may not add to the totals provided.
—
| (\$ in millions) | Dec. 31, 2023 | Dec. 31, 2022 |
|---|---|---|
| Cash and equivalents | 3,891 | 4,156 |
| Restricted cash | 18 | 18 |
| Marketable securities and short-term investments | 1,928 | 725 |
| Receivables, net | 7,446 | 6,858 |
| Contract assets | 1,090 | 954 |
| Inventories, net | 6,149 | 6,028 |
| Prepaid expenses | 235 | 230 |
| Other current assets | 520 | 601 |
| Total current assets | 21,277 | 19,570 |
| Property, plant and equipment, net | 4,142 | 3,911 |
| Operating lease right-of-use assets | 893 | 841 |
| Investments in equity-accounted companies | 187 | 130 |
| Prepaid pension and other employee benefits | 780 | 916 |
| Intangible assets, net | 1,223 | 1,406 |
| Goodwill | 10,561 | 10,511 |
| Deferred taxes | 1,381 | 1,396 |
| Other non-current assets | 496 | 467 |
| Total assets | 40,940 | 39,148 |
| Accounts payable, trade | 4,847 | 4,904 |
| Contract liabilities | 2,844 | 2,216 |
| Short-term debt and current maturities of long-term debt | 2,607 | 2,535 |
| Current operating leases | 249 | 220 |
| Provisions for warranties | 1,210 | 1,028 |
| Other provisions | 1,201 | 1,171 |
| Other current liabilities | 5,046 | 4,455 |
| Total current liabilities | 18,004 | 16,529 |
| Long-term debt | 5,221 | 5,143 |
| Non-current operating leases | 666 | 651 |
| Pension and other employee benefits | 686 | 719 |
| Deferred taxes | 669 | 729 |
| Other non-current liabilities | 1,548 | 2,105 |
| Total liabilities | 26,794 | 25,876 |
| Commitments and contingencies | ||
| Redeemable noncontrolling interest | 89 | 85 |
| Stockholders' equity: | ||
| Common stock, CHF 0.12 par value | ||
| (1,882 million and 1,965 million shares issued at December 31, 2023 and 2022, respectively) | 163 | 171 |
| Additional paid-in capital | 7 | 141 |
| Retained earnings | 19,724 | 20,082 |
| Accumulated other comprehensive loss | (5,070) | (4,556) |
| Treasury stock, at cost | ||
| (40 million and 100 million shares at December 31, 2023 and 2022, respectively) | (1,414) | (3,061) |
| Total ABB stockholders' equity | 13,410 | 12,777 |
| Noncontrolling interests | 647 | 410 |
| Total stockholders' equity | 14,057 | 13,187 |
| Total liabilities and stockholders' equity | 40,940 | 39,148 |
Due to rounding, numbers presented may not add to the totals provided.
—
| Year ended | Three months ended | ||||
|---|---|---|---|---|---|
| (\$ in millions) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
| Operating activities: | |||||
| Net income | 3,824 | 2,594 | 938 | 1,161 | |
| Loss from discontinued operations, net of tax | 24 | 43 | 8 | 7 | |
| Adjustments to reconcile net income (loss) to | |||||
| net cash provided by operating activities: | |||||
| Depreciation and amortization | 780 | 814 | 199 | 199 | |
| Changes in fair values of investments | (29) | (33) | (1) | 6 | |
| Pension and other employee benefits | (48) | (125) | 19 | (18) | |
| Deferred taxes | (25) | (344) | 17 | (161) | |
| Loss from equity-accounted companies | 16 | 102 | 5 | 2 | |
| Net gain from derivatives and foreign exchange | (55) | (23) | (11) | (67) | |
| Net gain from sale of property, plant and equipment | (116) | (84) | (77) | (20) | |
| Net loss (gain) from sale of businesses Other |
(101) 158 |
7 66 |
(4) 43 |
3 5 |
|
| Changes in operating assets and liabilities: | |||||
| Trade receivables, net | (661) | (831) | 158 | (174) | |
| Contract assets and liabilities | 412 | 416 | 169 | 63 | |
| Inventories, net | (3) | (1,599) | 435 | 68 | |
| Accounts payable, trade | (106) | 395 | (69) | 5 | |
| Accrued liabilities | 254 | 136 | 114 | 84 | |
| Provisions, net | 211 | (70) | 105 | (382) | |
| Income taxes payable and receivable | (190) | (94) | (181) | (113) | |
| Other assets and liabilities, net | (44) | (36) | 30 | 52 | |
| Net cash provided by operating activities – continuing operations | 4,301 | 1,334 | 1,897 | 720 | |
| Net cash provided by (used in) operating activities – discontinued operations | (11) | (47) | – | (33) | |
| Net cash provided by operating activities | 4,290 | 1,287 | 1,897 | 687 | |
| Investing activities: | |||||
| Purchases of investments | (1,957) | (321) | (854) | (50) | |
| Purchases of property, plant and equipment and intangible assets | (770) | (762) | (264) | (259) | |
| Acquisition of businesses (net of cash acquired) | |||||
| and increases in cost- and equity-accounted companies | (225) | (288) | (65) | (62) | |
| Proceeds from sales of investments | 610 | 697 | 12 | 43 | |
| Proceeds from maturity of investments | 149 | 73 | 11 | 73 | |
| Proceeds from sales of property, plant and equipment | 147 | 127 | 80 | 42 | |
| Proceeds from sales of businesses (net of transaction costs | |||||
| and cash disposed) and cost- and equity-accounted companies | 553 | 1,541 | 1 | 1,549 | |
| Net cash from settlement of foreign currency derivatives | (109) | (166) | (33) | (12) | |
| Changes in loans receivable, net | 3 | 320 | (5) | 309 | |
| Other investing activities | 7 | (14) | (2) | (4) | |
| Net cash provided by (used in) investing activities – continuing operations | (1,592) | 1,207 | (1,119) | 1,629 | |
| Net cash used in investing activities – discontinued operations | (23) | (226) | (1) | (135) | |
| Net cash provided by (used in) investing activities | (1,615) | 981 | (1,120) | 1,494 | |
| Financing activities: | |||||
| Net changes in debt with original maturities of 90 days or less | (1,365) | 1,366 | (368) | (109) | |
| Increase in debt | 2,586 | 3,849 | 2 | 295 | |
| Repayment of debt | (1,567) | (2,703) | (130) | (678) | |
| Delivery of shares | 154 | 394 | 36 | 5 | |
| Purchase of treasury stock | (1,258) | (3,553) | (349) | (302) | |
| Dividends paid | (1,713) | (1,698) | – | – | |
| Cash associated with the spin-off of the Turbocharging Division | – | (172) | – | (172) | |
| Dividends paid to noncontrolling shareholders | (93) | (99) | (4) | (16) | |
| Proceeds from issuance of subsidiary shares Other financing activities |
328 31 |
216 6 |
– 27 |
216 64 |
|
| Net cash used in financing activities – continuing operations | (2,897) | (2,394) | (786) | (697) | |
| Net cash provided by financing activities – discontinued operations | – | – | – | – | |
| Net cash used in financing activities | (2,897) | (2,394) | (786) | (697) | |
| Effects of exchange rate changes on cash and equivalents and restricted cash | (43) | (189) | 31 | 2 | |
| Net change in cash and equivalents and restricted cash | (265) | (315) | 22 | 1,486 | |
| Cash and equivalents and restricted cash, beginning of period | 4,174 | 4,489 | 3,887 | 2,688 | |
| Cash and equivalents and restricted cash, end of period | 3,909 | 4,174 | 3,909 | 4,174 | |
| Supplementary disclosure of cash flow information: | |||||
| Interest paid | 250 | 90 | 99 | 43 | |
| Income taxes paid | 1,147 | 1,188 | 282 | 281 |
Due to rounding, numbers presented may not add to the totals provided.
| Accumulated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Additional | other | Total ABB | Non | Total | ||||
| (\$ in millions) | Common stock |
paid-in capital |
Retained earnings |
comprehensive loss |
Treasury stock |
stockholders' equity |
controlling interests |
stockholders' equity |
| Balance at January 1, 2022 | 178 | 22 | 22,477 | (4,088) | (3,010) | 15,579 | 378 | 15,957 |
| Net income(1) | 2,475 | 2,475 | 124 | 2,599 | ||||
| Foreign currency translation | ||||||||
| adjustments, net of tax of \$0 | (608) | (608) | (31) | (639) | ||||
| Effect of change in fair value of | ||||||||
| available-for-sale securities, | ||||||||
| net of tax of \$(5) | (21) | (21) | (21) | |||||
| Unrecognized income (expense) | ||||||||
| related to pensions and other | ||||||||
| postretirement plans, | ||||||||
| net of tax of \$86 | 256 | 256 | (1) | 255 | ||||
| Change in derivative instruments | ||||||||
| and hedges, net of tax of \$2 | – | – | – | |||||
| Issuance of subsidiary shares | 120 | 120 | 86 | 206 | ||||
| Other changes in | ||||||||
| noncontrolling interests | 10 | 10 | (34) | (24) | ||||
| Dividends to | ||||||||
| noncontrolling shareholders | – | (100) | (100) | |||||
| Dividends to shareholders | (1,700) | (1,700) | (1,700) | |||||
| Spin-off of the Turbocharging Division | (177) | (95) | (272) | (12) | (284) | |||
| Cancellation of treasury shares | (8) | (4) | (2,864) | 2,876 | – | – | ||
| Share-based payment arrangements | 42 | 42 | 42 | |||||
| Purchase of treasury stock | (3,502) | (3,502) | (3,502) | |||||
| Delivery of shares | (51) | (130) | 575 | 394 | 394 | |||
| Other | 2 | 2 | 2 | |||||
| Balance at December 31, 2022 | 171 | 141 | 20,082 | (4,556) | (3,061) | 12,777 | 410 | 13,187 |
| Balance at January 1, 2023 | 171 | 141 | 20,082 | (4,556) | (3,061) | 12,777 | 410 | 13,187 |
| Net income(1) | 3,745 | 3,745 | 83 | 3,828 | ||||
| Foreign currency translation | ||||||||
| adjustments, net of tax of \$(2) | (286) | (286) | 5 | (281) | ||||
| Effect of change in fair value of | ||||||||
| available-for-sale securities, | ||||||||
| net of tax of \$3 | 11 | 11 | 11 | |||||
| Unrecognized income (expense) | ||||||||
| related to pensions and other | ||||||||
| postretirement plans, | ||||||||
| net of tax of \$(45) | (237) | (237) | (237) | |||||
| Change in derivative instruments | ||||||||
| and hedges, net of tax of \$(1) | (2) | (2) | (2) | |||||
| Issuance of subsidiary shares | 170 | 170 | 168 | 338 | ||||
| Other changes in | ||||||||
| noncontrolling interests | (31) | (37) | (68) | 67 | (1) | |||
| Dividends to | ||||||||
| noncontrolling shareholders | – | (93) | (93) | |||||
| Dividends to shareholders | (1,706) | (1,706) | (1,706) | |||||
| Cancellation of treasury shares | (7) | (201) | (2,359) | 2,567 | – | – | ||
| Share-based payment arrangements | 101 | 101 | 2 | 103 | ||||
| Purchase of treasury stock | (1,247) | (1,247) | (1,247) | |||||
| Delivery of shares | (173) | 327 | 154 | 154 | ||||
| Other | (2) | (2) | 5 | 3 | ||||
| Balance at December 31, 2023 | 163 | 7 | 19,724 | (5,070) | (1,414) | 13,410 | 647 | 14,057 |
(1) Amounts attributable to noncontrolling interests for the year ended December 31, 2023 and 2022, exclude net losses of \$4 million and \$5 million, respectively, related to redeemable noncontrolling interests, which are reported in the mezzanine equity section on the Consolidated Balance Sheets. See Note 4 for details.
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
—
—
─
ABB Ltd and its subsidiaries (collectively, the Company) together form a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The Company's solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered, and operated.
The Company's Consolidated Financial Information is prepared in accordance with United States of America generally accepted accounting principles (U.S. GAAP) for interim financial reporting. As such, the Consolidated Financial Information does not include all the information and notes required under U.S. GAAP for annual consolidated financial statements. Therefore, such financial information should be read in conjunction with the audited consolidated financial statements in the Company's Annual Report for the year ended December 31, 2022.
The preparation of financial information in conformity with U.S. GAAP requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Information. These accounting assumptions and estimates include:
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.
In the opinion of management, the unaudited Consolidated Financial Information contains all necessary adjustments to present fairly the financial position, results of operations and cash flows for the reported periods. Management considers all such adjustments to be of a normal recurring nature. The Consolidated Financial Information is presented in United States dollars (\$) unless otherwise stated. Due to rounding, numbers presented in the Consolidated Financial Information may not add to the totals provided.
Certain amounts reported in the Consolidated Financial Information for prior periods have been reclassified to conform to the current year's presentation. These changes relate primarily to the reorganization of the Company's operating segments (see Note 17 for details).
In January 2023, the Company adopted an accounting standard update which requires entities to disclose information related to supplier finance programs. Under the update, the Company is required to disclose annually (i) the key terms of the program, (ii) the amount of the supplier finance obligations outstanding and where those obligations are presented in the balance sheet at the reporting date, and (iii) a rollforward of the supplier finance obligation program within the reporting period. The Company adopted this update retrospectively for all in-scope transactions, with the exception of the rollforward disclosures, which will be adopted prospectively for annual periods beginning January 1, 2024. Apart from the additional disclosure requirements, this update does not have a significant impact on the Company's consolidated financial statements.
The total outstanding supplier finance obligation included in "Accounts payable, trade" in the Consolidated Balance Sheets at December 31, 2023 and December 31, 2022, amounted to \$415 million and \$477 million, respectively. The Company's payment terms related to suppliers' finance programs are not impacted by the suppliers' decisions to sell amounts under the arrangements and are typically consistent with local market practices.
In January 2023, the Company adopted an accounting standard update which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The Company is applying this standard update as relevant contract and hedge accounting relationship modifications are made during the course of the transition period ending December 31, 2024. This update does not have a significant impact on the Company's consolidated financial statements.
In November 2023, an accounting standard update was issued which requires the Company to disclose additional reportable segment information primarily through enhanced disclosures about significant segment expenses and extending certain annual disclosure requirements to quarterly. This update is effective for the Company for annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025, and is to be applied retrospectively to each prior reporting period presented. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements.
In December 2023, an accounting standard update was issued which requires the Company to disclose additional information related to income taxes. Under the update, the Company is required to annually disclose by jurisdiction (i) additional disaggregated information within the tax rate reconciliation and (ii) income taxes paid. This update is effective for the Company prospectively, with retrospective adoption permitted, for annual periods beginning January 1, 2025. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements.
In 2020, the Company completed the divestment of its Power Grids business to Hitachi Ltd (Hitachi). As this divestment represented a strategic shift that would have a major effect on the Company's operations and financial results, the results of operations for this business are presented as discontinued operations. Certain of the business contracts in the Power Grids business continue to be executed by subsidiaries of the Company for the benefit/risk of Hitachi Energy. The remaining business activities of the Power Grids business being executed by the Company are not significant.
Upon closing of the sale, the Company entered into various transition services agreements (TSAs), some of which continue to have services performed. Pursuant to these TSAs, the Company and Hitachi Energy provide to each other, on a transitional basis, various services. The services provided by the Company primarily include finance, information technology, human resources and certain other administrative services. The TSAs were to be performed for up to 3 years with the possibility to agree on extensions on an exceptional basis for business-critical services which are reasonably necessary to avoid a material adverse impact on the business. The TSA for information technology services was extended until mid-2025. In the year and three months ended December 31, 2023, the Company has recognized within its continuing operations, general and administrative expenses incurred to perform the TSAs, offset by \$121 million and \$20 million in TSA-related income for such services that is reported in Other income (expense), net. In the year and three months ended December 31, 2022, the Company has recognized within its continuing operations, general and administrative expenses incurred to perform the TSAs, offset by \$162 million and \$47 million in TSA-related income for such services that is reported in Other income (expense), net.
In addition, the Company also has retained obligations (primarily for environmental and taxes) related to other businesses disposed or otherwise exited that qualified as discontinued operations at the time of their disposal. Changes to these retained obligations are also included in Loss from discontinued operations, net of tax.
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions, except number of acquired businesses) | 2023 | 2022 | 2023 | 2022 | |
| Purchase price for acquisitions (net of cash acquired)(1) | 175 | 195 | 61 | 46 | |
| Aggregate excess of purchase price over | |||||
| fair value of net assets acquired(2) | 142 | 229 | 87 | 24 | |
| Number of acquired businesses | 7 | 5 | 4 | 2 |
(1) Excluding changes in cost- and equity-accounted companies.
(2) Recorded as goodwill.
─
In the table above, the "Purchase price for acquisitions" and "Aggregate excess of purchase price over fair value of net assets acquired" amounts in the year ended December 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.
On January 26, 2022, the Company increased its ownership in In-Charge to a 60 percent controlling interest through a stock purchase agreement. In-Charge is headquartered in Santa Monica, USA, and is a provider of turn-key commercial electric vehicle charging hardware and software solutions. The resulting cash outflows for the Company amounted to \$134 million (net of cash acquired of \$4 million). The acquisition expands the market presence of the E-mobility operating segment, particularly in the North American market. In connection with the acquisition, the Company's pre-existing 13.2 percent ownership of In-Charge was revalued to fair value and a gain of \$32 million was recorded in "Other income (expense), net" in the year ended December 31, 2022. The Company entered into an agreement with the remaining noncontrolling shareholders allowing either party to put or call the remaining 40 percent of the shares until 2027. The amount for which either party can exercise their option is dependent on a formula based on revenues and thus, the amount is subject to change. As a result of this agreement, the noncontrolling interest is classified as Redeemable noncontrolling interest (i.e. mezzanine equity) in the Consolidated Balance Sheets and was initially recognized at fair value.
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the purchase price allocation for acquisitions is preliminary for up to 12 months after the acquisition date and is subject to refinement as more detailed analyses are completed and additional information about the fair values of the assets and liabilities becomes available.
In the year and three months ended December 31, 2023, the Company received proceeds (net of transaction costs and cash disposed) of \$553 million and \$1 million, respectively, relating to divestments of consolidated businesses and recorded gains of \$101 million and \$4 million, respectively, in "Other income (expense), net" on the sale of such businesses. These are primarily due the divestment of the Company's Power Conversion Division to AcBel Polytech Inc., which prior to its sale was part of the Company's Electrification operating segment. Certain amounts included in the net gain for the sale of Power Conversion Division are estimated or otherwise subject to change in value and, as a result, the Company may record additional adjustments to the gain in future periods which are not expected to have a material impact on the consolidated financial statements.
On September 7, 2022, the shareholders approved the spin-off of the Company's Turbocharging Division into an independent, publicly traded company, Accelleron Industries AG (Accelleron), which was completed through the distribution of common stock of Accelleron to the stockholders of ABB on October 3, 2022. As a result of the spin-off of this Division, the Company distributed net assets of \$272 million, net of amounts attributable to noncontrolling interests of \$12 million, which was reflected as a reduction in Retained earnings. In addition, total accumulated comprehensive income of \$95 million, including the cumulative translation adjustment, was reclassified to Retained earnings. Cash and cash equivalents distributed with Accelleron was \$172 million. The results of operations of the Turbocharging Division, are included in the continuing operations of the Process Automation operating segment for all periods presented through to the spin-off date. In the year ended December 31, 2022, Income continuing operations before taxes, included income of \$134 million from this Division. In anticipation of the spin-off, the Company granted to a subsidiary of Accelleron access to funds in the form of a short-term intercompany loan. At the spin-off date, this loan, having a principal amount of 300 million Swiss francs (\$306 million at the date of spin-off), was due to the Company and subsequently collected in October 2022.
In connection with the divestment of its Power Grids business to Hitachi in 2020 (see Note 3), the Company initially retained a 19.9 percent interest in the business until December 2022, when the retained investment was sold to Hitachi. During the Company's period of ownership of the retained 19.9 percent interest, based on its continuing involvement with the Power Grids business, including the membership in its governing board of directors, the Company concluded that it had significant influence over Hitachi Energy. As a result, the investment was accounted for using the equity method through to the date of its sale.
In September 2022, the Company and Hitachi agreed terms to sell the Company's remaining investment in Hitachi Energy to Hitachi and simultaneously settle certain outstanding contractual obligations relating to the initial sale of the Power Grids business, including certain indemnification guarantees (see Note 15). The sale of the remaining investment was completed in December 2022, resulting in cash proceeds of \$1,552 million and a gain of \$43 million which was recorded in "Other income (expense), net".
In the year and three months ended December 31, 2023 and 2022, the Company recorded its share of the earnings of investees accounted for under the equity method of accounting in Other income (expense), net, as follows:
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 | |
| Income (loss) from equity-accounted companies, net of taxes | (16) | (22) | (5) | 12 | |
| Basis difference amortization (net of deferred income tax benefit) | – | (80) | – | (14) | |
| Loss from equity-accounted companies | (16) | (102) | (5) | (2) |
─
Cash and equivalents, marketable securities and short-term investments consisted of the following:
| December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Cash and | Marketable | |||||
| Gross | Gross | equivalents | securities | |||
| unrealized | unrealized | and restricted | and short-term | |||
| (\$ in millions) | Cost basis | gains | losses | Fair value | cash | investments |
| Changes in fair value | ||||||
| recorded in net income | ||||||
| Cash | 1,449 | 1,449 | 1,449 | |||
| Time deposits | 2,923 | 2,923 | 2,460 | 463 | ||
| Equity securities | 1,250 | 32 | 1,282 | 1,282 | ||
| 5,622 | 32 | – | 5,654 | 3,909 | 1,745 | |
| Changes in fair value recorded | ||||||
| in other comprehensive income | ||||||
| Debt securities available-for-sale: | ||||||
| U.S. government obligations | 189 | 2 | (8) | 183 | 183 | |
| 189 | 2 | (8) | 183 | – | 183 | |
| Total | 5,811 | 34 | (8) | 5,837 | 3,909 | 1,928 |
| Of which: | ||||||
| Restricted cash, current | 18 |
| December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Cash and | Marketable | |||||
| Gross | Gross | equivalents | securities | |||
| unrealized | unrealized | and restricted | and short-term | |||
| (\$ in millions) | Cost basis | gains | losses | Fair value | cash | investments |
| Changes in fair value | ||||||
| recorded in net income | ||||||
| Cash | 1,715 | 1,715 | 1,715 | |||
| Time deposits | 2,459 | 2,459 | 2,459 | |||
| Equity securities | 345 | 10 | 355 | 355 | ||
| 4,519 | 10 | – | 4,529 | 4,174 | 355 | |
| Changes in fair value recorded | ||||||
| in other comprehensive income | ||||||
| Debt securities available-for-sale: | ||||||
| U.S. government obligations | 269 | 1 | (15) | 255 | 255 | |
| Other government obligations | 58 | 58 | 58 | |||
| Corporate | 64 | (7) | 57 | 57 | ||
| 391 | 1 | (22) | 370 | – | 370 | |
| Total | 4,910 | 11 | (22) | 4,899 | 4,174 | 725 |
| Of which: | ||||||
| Restricted cash, current | 18 |
─
The Company is exposed to certain currency, commodity and interest rate risks arising from its global operating, financing and investing activities. The Company uses derivative instruments to reduce and manage the economic impact of these exposures.
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.
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.
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.
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.
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) | December 31, 2023 | December 31, 2022 | |||
| Foreign exchange contracts | 12,335 | 13,509 | |||
| Embedded foreign exchange derivatives | 1,137 | 933 | |||
| Cross-currency interest rate swaps | 886 | 855 | |||
| Interest rate contracts | 1,606 | 2,830 |
The Company uses derivatives to hedge its direct or indirect exposure to the movement in the prices of commodities which are primarily copper, silver, steel and aluminum. The following table shows the notional amounts of outstanding derivatives (whether designated as hedges or not), on a net basis, to reflect the Company's requirements for these commodities:
| Type of derivative | Unit | Total notional amounts at | ||||
|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | |||||
| Copper swaps | metric tonnes | 35,015 | 29,281 | |||
| Silver swaps | ounces | 2,359,363 | 2,012,213 | |||
| Steel swaps | metric tonnes | 10,206 | – | |||
| Aluminum swaps | metric tonnes | 5,900 | 6,825 |
As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operations and commodity swaps to manage its commodity risks. The Company applies cash flow hedge accounting in only limited cases. In these cases, the effective portion of the changes in their fair value is recorded in "Accumulated other comprehensive loss" and subsequently reclassified into earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. For the year and three months ended December 31, 2023 and 2022, there were no significant amounts recorded for cash flow hedge accounting activities.
To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps and cross-currency interest rate swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in the fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in "Interest and other finance expense".
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows:
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 | |
| Gains (losses) recognized in Interest and other finance expense: | |||||
| Interest rate contracts | Designated as fair value hedges | 44 | (91) | 14 | (8) |
| Hedged item | (45) | 93 | (14) | 8 | |
| Cross-currency interest rate swaps | Designated as fair value hedges | 30 | (134) | 43 | (9) |
| Hedged item | (40) | 135 | (42) | 16 |
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 | Year ended December 31, | Three months ended December 31, | ||||
| (\$ in millions) | Location | 2023 | 2022 | 2023 | 2022 | |
| Foreign exchange contracts | Total revenues | 145 | (56) | 158 | 145 | |
| Total cost of sales | (71) | 21 | (51) | (36) | ||
| SG&A expenses(1) | 27 | 27 | 3 | (8) | ||
| Non-order related research | ||||||
| and development | (7) | – | (3) | (2) | ||
| Interest and other finance expense | (240) | (128) | (224) | 11 | ||
| Embedded foreign exchange | Total revenues | 18 | (3) | (21) | (15) | |
| contracts | Total cost of sales | 1 | (11) | 1 | 1 | |
| Commodity contracts | Total cost of sales | (3) | (47) | 4 | 25 | |
| Other | Interest and other finance expense | 1 | 4 | – | – | |
| Total | (129) | (193) | (133) | 121 |
(1) SG&A expenses represent "Selling, general and administrative expenses".
The fair values of derivatives included in the Consolidated Balance Sheets were as follows:
| December 31, 2023 | |||||
|---|---|---|---|---|---|
| Derivative assets | Derivative liabilities | ||||
| Current in | Non-current in | Current in | Non-current in | ||
| "Other current | "Other non-current | "Other current | "Other non-current | ||
| (\$ in millions) | assets" | assets" | liabilities" | liabilities" | |
| Derivatives designated as hedging instruments: | |||||
| Foreign exchange contracts | – | – | 5 | 2 | |
| Interest rate contracts | – | – | 18 | – | |
| Cross-currency interest rate swaps | – | – | – | 230 | |
| Other | 10 | – | – | – | |
| Total | 10 | – | 23 | 232 | |
| Derivatives not designated as hedging instruments: | |||||
| Foreign exchange contracts | 123 | 30 | 177 | 9 | |
| Commodity contracts | 8 | – | 3 | – | |
| Interest rate contracts | 1 | – | 1 | – | |
| Other equity contracts | 4 | – | – | – | |
| Embedded foreign exchange derivatives | 23 | 5 | 26 | 5 | |
| Total | 159 | 35 | 207 | 14 | |
| Total fair value | 169 | 35 | 230 | 246 |
| December 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 | – | – | 5 | 57 | ||
| Cross-currency interest rate swaps | – | – | – | 288 | ||
| Other | 15 | – | – | – | ||
| Total | 15 | – | 9 | 349 | ||
| Derivatives not designated as hedging instruments: | ||||||
| Foreign exchange contracts | 140 | 21 | 80 | 5 | ||
| Commodity contracts | 13 | – | 12 | – | ||
| Interest rate contracts | 5 | – | 3 | – | ||
| Embedded foreign exchange derivatives | 11 | 6 | 17 | 13 | ||
| Total | 169 | 27 | 112 | 18 | ||
| Total fair value | 184 | 27 | 121 | 367 |
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 December 31, 2023 and 2022, have been presented on a gross basis.
The Company's netting agreements and other similar arrangements allow net settlements under certain conditions. At December 31, 2023 and 2022, information related to these offsetting arrangements was as follows:
| (\$ in millions) | December 31, 2023 | ||||
|---|---|---|---|---|---|
| Gross amount | Derivative liabilities | Cash | Non-cash | ||
| Type of agreement or | of recognized | eligible for set-off | collateral | collateral | Net asset |
| similar arrangement | assets | in case of default | received | received | exposure |
| Derivatives | 176 | (111) | – | – | 65 |
| Total | 176 | (111) | – | – | 65 |
| (\$ in millions) | December 31, 2023 | ||||
| Gross amount | Derivative liabilities | Cash | Non-cash | ||
| Type of agreement or | of recognized | eligible for set-off | collateral | collateral | Net liability |
| similar arrangement | liabilities | in case of default | pledged | pledged | exposure |
| Derivatives | 445 | (111) | – | – | 334 |
| Total | 445 | (111) | – | – | 334 |
| (\$ in millions) | December 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 | 194 | (96) | – | – | 98 | |
| Total | 194 | (96) | – | – | 98 |
| (\$ in millions) | December 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 | 458 | (96) | – | – | 362 |
| Total | 458 | (96) | – | – | 362 |
─
Fair values
The Company uses fair value measurement principles to record certain financial assets and liabilities on a recurring basis and, when necessary, to record certain non-financial assets at fair value on a non-recurring basis, as well as to determine fair value disclosures for certain financial instruments carried at amortized cost in the financial statements. Financial assets and liabilities recorded at fair value on a recurring basis include foreign currency, commodity and interest rate derivatives, as well as available-for-sale securities. Non-financial assets recorded at fair value on a non-recurring basis include long-lived assets that are reduced to their estimated fair value due to impairments.
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation techniques including the market approach (using observable market data for identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost approach (using costs a market participant would incur to develop a comparable asset). Inputs used to determine the fair value of assets and liabilities are defined by a three-level hierarchy, depending on the nature of those inputs. The Company has categorized its financial assets and liabilities and non-financial assets measured at fair value within this hierarchy based on whether the inputs to the valuation technique are observable or unobservable. An observable input is based on market data obtained from independent sources, while an unobservable input reflects the Company's assumptions about market data.
The levels of the fair value hierarchy are as follows:
Level 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.
The fair values of financial assets and liabilities measured at fair value on a recurring basis were as follows:
| December 31, 2023 | ||||
|---|---|---|---|---|
| (\$ in millions) | Level 1 | Level 2 | Level 3 | Total fair value |
| Assets | ||||
| Securities in "Marketable securities and short-term investments": | ||||
| Equity securities | – | 1,282 | – | 1,282 |
| Debt securities—U.S. government obligations | 183 | – | – | 183 |
| Derivative assets—current in "Other current assets" | – | 169 | – | 169 |
| Derivative assets—non-current in "Other non-current assets" | – | 35 | – | 35 |
| Total | 183 | 1,486 | – | 1,669 |
| Liabilities | ||||
| Derivative liabilities—current in "Other current liabilities" | – | 230 | – | 230 |
| Derivative liabilities—non-current in "Other non-current liabilities" | – | 246 | – | 246 |
| Total | – | 476 | – | 476 |
| December 31, 2022 | ||||
|---|---|---|---|---|
| (\$ in millions) | Level 1 | Level 2 | Level 3 | Total fair value |
| Assets | ||||
| Securities in "Marketable securities and short-term investments": | ||||
| Equity securities | – | 355 | – | 355 |
| Debt securities—U.S. government obligations | 255 | – | – | 255 |
| Debt securities—European government obligations | – | 58 | – | 58 |
| Debt securities—Corporate | – | 57 | – | 57 |
| Derivative assets—current in "Other current assets" | – | 184 | – | 184 |
| Derivative assets—non-current in "Other non-current assets" | – | 27 | – | 27 |
| Total | 255 | 681 | – | 936 |
| Liabilities | ||||
| Derivative liabilities—current in "Other current liabilities" | – | 121 | – | 121 |
| Derivative liabilities—non-current in "Other non-current liabilities" | – | 367 | – | 367 |
| Total | – | 488 | – | 488 |
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:
There were no significant non-recurring fair value measurements during the years ended December 31, 2023 and 2022.
The fair values of financial instruments carried on a cost basis were as follows:
| December 31, 2023 | |||||
|---|---|---|---|---|---|
| (\$ in millions) | Carrying value | Level 1 | Level 2 | Level 3 | Total fair value |
| Assets | |||||
| Cash and equivalents (excluding securities with original | |||||
| maturities up to 3 months): | |||||
| Cash | 1,431 | 1,431 | – | – | 1,431 |
| Time deposits | 2,460 | – | 2,460 | – | 2,460 |
| Restricted cash | 18 | 18 | – | – | 18 |
| Marketable securities and short-term investments | |||||
| (excluding securities): | |||||
| Time deposits | 463 | – | 463 | – | 463 |
| Liabilities | |||||
| Short-term debt and current maturities of long-term debt | |||||
| (excluding finance lease obligations) | 2,576 | 2,521 | 55 | – | 2,576 |
| Long-term debt (excluding finance lease obligations) | 5,060 | 5,096 | 5 | – | 5,101 |
| December 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 | 1,697 | 1,697 | – | – | 1,697 |
| Time deposits | 2,459 | – | 2,459 | – | 2,459 |
| Restricted cash | 18 | 18 | – | – | 18 |
| Liabilities | |||||
| Short-term debt and current maturities of long-term debt | |||||
| (excluding finance lease obligations) | 2,500 | 1,068 | 1,432 | – | 2,500 |
| Long-term debt (excluding finance lease obligations) | 4,976 | 4,813 | 30 | – | 4,843 |
The Company uses the following methods and assumptions in estimating fair values of financial instruments carried on a cost basis:
─
The following table provides information about Contract assets and Contract liabilities:
| (\$ in millions) | December 31, 2023 | December 31, 2022 | December 31, 2021 |
|---|---|---|---|
| Contract assets | 1,090 | 954 | 990 |
| Contract liabilities | 2,844 | 2,216 | 1,894 |
Contract assets primarily relate to the Company's right to receive consideration for work completed but for which no invoice has been issued at the reporting date. Contract assets are transferred to receivables when rights to receive payment become unconditional. Management expects that the majority of the amounts will be collected within one year of the respective balance sheet date.
Contract liabilities primarily relate to up-front advances received on orders from customers as well as amounts invoiced to customers in excess of revenues recognized predominantly on long-term projects. Contract liabilities are reduced as work is performed and as revenues are recognized.
The significant changes in the Contract assets and Contract liabilities balances were as follows:
| Year ended December 31, | ||||
|---|---|---|---|---|
| 2023 2022 |
||||
| Contract | Contract | Contract | Contract | |
| (\$ in millions) | assets | liabilities | assets | liabilities |
| Revenue recognized, which was included in the Contract liabilities balance at Jan 1, 2023/2022 | (1,311) | (1,043) | ||
| Additions to Contract liabilities - excluding amounts recognized as revenue during the period | 1,845 | 1,481 | ||
| Receivables recognized that were included in the Contract assets balance at Jan 1, 2023/2022 | (622) | (591) |
The Company considers its order backlog to represent its unsatisfied performance obligations. At December 31, 2023, the Company had unsatisfied performance obligations totaling \$21,567 million and, of this amount, the Company expects to fulfill approximately 69 percent of the obligations in 2024, approximately 16 percent of the obligations in 2025 and the balance thereafter.
Debt
─
The Company's total debt at December 31, 2023 and 2022, amounted to \$7,828 million and \$7,678 million, respectively.
The Company's "Short-term debt and current maturities of long-term debt" consisted of the following:
| (\$ in millions) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Short-term debt | 87 | 1,448 |
| Current maturities of long-term debt | 2,520 | 1,087 |
| Total | 2,607 | 2,535 |
Short-term debt primarily represented issued commercial paper and short-term bank borrowings from various banks. At December 31, 2023, no amount was outstanding under the \$2 billion Euro-commercial paper program, while at December 31, 2022, \$1,383 million was outstanding under this program.
In September 2023, the Company repaid at maturity its CHF 275 million 0% Bonds, equivalent to \$302 million on date of repayment. In May 2023, the Company repaid at maturity its EUR 700 million 0.625% Instruments, equivalent to \$772 million on date of repayment.
The Company's long-term debt at December 31, 2023 and 2022, amounted to \$5,221 million and \$5,143 million, respectively.
Outstanding bonds (including maturities within the next 12 months) were as follows:
| December 31, 2023 | December 31, 2022 | ||||||
|---|---|---|---|---|---|---|---|
| (in millions) | Nominal outstanding | Carrying value(1) | Nominal outstanding | Carrying value(1) | |||
| Bonds: | |||||||
| 0.625% EUR Instruments, due 2023 | EUR | 700 | \$ | 742 | |||
| 0% CHF Bonds, due 2023 | CHF | 275 | \$ | 298 | |||
| 0.625% EUR Instruments, due 2024 | EUR | 700 | \$ 768 |
EUR | 700 | \$ | 720 |
| Floating Rate EUR Instruments, due 2024 | EUR | 500 | \$ 554 |
EUR | 500 | \$ | 536 |
| 0.75% EUR Instruments, due 2024 | EUR | 750 | \$ 819 |
EUR | 750 | \$ | 769 |
| 0.3% CHF Bonds, due 2024 | CHF | 280 | \$ 335 |
CHF | 280 | \$ | 303 |
| 2.1% CHF Bonds, due 2025 | CHF | 150 | \$ 179 |
CHF | 150 | \$ | 162 |
| 1.965% CHF Bonds, due 2026 | CHF | 325 | \$ 387 |
||||
| 3.25% EUR Instruments, due 2027 | EUR | 500 | \$ 551 |
||||
| 0.75% CHF Bonds, due 2027 | CHF | 425 | \$ 507 |
CHF | 425 | \$ | 460 |
| 3.8% USD Notes, due 2028(2) | USD | 383 | \$ 382 |
USD | 383 | \$ | 381 |
| 1.9775% CHF Bonds, due 2028 | CHF | 150 | \$ 179 |
||||
| 1.0% CHF Bonds, due 2029 | CHF | 170 | \$ 203 |
CHF | 170 | \$ | 184 |
| 0% EUR Instruments, due 2030 | EUR | 800 | \$ 749 |
EUR | 800 | \$ | 677 |
| 2.375% CHF Bonds, due 2030 | CHF | 150 | \$ 178 |
CHF | 150 | \$ | 162 |
| 3.375% EUR Instruments, due 2031 | EUR | 750 | \$ 818 |
||||
| 2.1125% CHF Bonds, due 2033 | CHF | 275 | \$ 327 |
||||
| 4.375% USD Notes, due 2042(2) | USD | 609 | \$ 591 |
USD | 609 | \$ | 590 |
| Total | \$ 7,527 |
\$ | 5,984 |
(1) USD carrying values include unamortized debt issuance costs, bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate. (2) Prior to completing a cash tender offer in November 2020, the original principal amount outstanding, on each of the 3.8% USD Notes, due 2028, and the 4.375% USD Notes, due 2042, was USD 750 million.
In January 2023, the Company issued the following EUR Instruments: (i) EUR 500 million of 3.25 percent Instruments, due 2027, and (ii) EUR 750 million of 3.375 percent Instruments, due 2031, both paying interest annually in arrears. The aggregate net proceeds of these EUR Instruments, after discount and fees, amounted to EUR 1,235 million (equivalent to approximately \$1,338 million on date of issuance).
In September 2023, the Company issued the following CHF Bonds: (i) CHF 325 million of 1.965 percent Bonds, due 2026, (ii) CHF 150 million of 1.9775 percent Bonds, due 2028, and (iii) CHF 275 million of 2.1125 percent Bonds, due 2033, all paying interest annually in arrears. The aggregate net proceeds of these CHF Bonds, after fees, amounted to CHF 748 million (equivalent to approximately \$825 million on date of issuance).
In January 2024, the Company issued the following EUR Instruments: (i) EUR 500 million of 3.125 percent notes, due 2029, and (ii) EUR 750 million of 3.375 percent notes, due 2034, both paying interest annually in arrears. The aggregate net proceeds of these EUR Instruments, after discount and fees, amounted to EUR 1,243 million (equivalent to approximately \$1,360 million on date of issuance).
─
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 SIU relating to improper payments and other compliance issues associated with the Controls and Instrumentation Contract, and its Variation Orders for Units 1 and 2 at Kusile. The Company made a provision of approximately \$325 million which was recorded in Other income (expense), net, during the third quarter of 2022. In December 2022, the Company settled with the SEC and DoJ as well as the authorities in South Africa and Switzerland. The matter is still pending with the authorities in Germany, but the Company does not believe that it will need to record any additional provisions for this matter.
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.
At December 31, 2023 and 2022, the Company had aggregate liabilities of \$101 million and \$86 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.
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) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Performance guarantees | 3,451 | 4,300 |
| Financial guarantees | 94 | 96 |
| Total(1) | 3,545 | 4,396 |
(1) Maximum potential payments include amounts in both continuing and discontinued operations.
The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects the Company's best estimate of future payments, which it may incur as part of fulfilling its guarantee obligations. In respect of the above guarantees, the carrying amounts of liabilities at December 31, 2023 and 2022, were not significant.
The Company is party to various guarantees providing financial or performance assurances to certain third parties. These guarantees, which have various maturities up to 2032, mainly consist of performance guarantees whereby (i) the Company guarantees the performance of a third party's product or service according to the terms of a contract and (ii) as member of a consortium/joint-venture that includes third parties, the Company guarantees not only its own performance but also the work of third parties. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. The original maturity dates for the majority of these performance guarantees range from one to ten years.
In conjunction with the divestment of the high-voltage cable and cables accessories businesses, the Company has entered into various performance guarantees with other parties with respect to certain liabilities of the divested business. At December 31, 2023 and 2022, the maximum potential payable under these guarantees amounts to \$874 million and \$843 million, respectively, and these guarantees have various original maturities ranging from five to ten years.
The Company retained obligations for financial and performance guarantees related to the sale of the Power Grids business (see Note 3 for details). At both December 31, 2023 and 2022, the performance and financial guarantees have been fully indemnified by Hitachi Ltd. These guarantees, which have various maturities up to 2032, 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 these guarantees at December 31, 2023 and 2022, is approximately \$2.2 billion and \$3.0 billion, respectively. On completing the sale of the Company's remaining 19.9 percent interest in Hitachi Energy Ltd. to Hitachi in 2022, the Company also settled certain existing indemnification guarantees that were due to be settled concurrent with such transaction. As a result, in 2022, the Company recorded \$136 million of cash outflows for the settlement of these liabilities (recorded in discontinued operations).
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 December 31, 2023 and 2022, the total outstanding performance bonds aggregated to \$3.1 billion and \$2.9 billion, respectively. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in the year and three months ended December 31, 2023 and 2022.
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) | 2023 | 2022 |
|---|---|---|
| Balance at January 1, | 1,028 | 1,005 |
| Net change in warranties due to acquisitions, divestments and spin-offs | – | (24) |
| Claims paid in cash or in kind | (171) | (157) |
| Net increase in provision for changes in estimates, warranties issued and warranties expired | 327 | 252 |
| Exchange rate differences | 26 | (48) |
| Balance at December 31, | 1,210 | 1,028 |
During the three months ended December 31, 2022, the Company reversed a provision of \$61 million it had previously recorded relating to one of its divested businesses based on a settlement proposal issued by the ruling court. As the provision related to a customer contractual obligation, the adjustment was reported as an increase in Sales of products and resulted in an increase in earnings per share (basic and diluted) of \$0.03 for both the year and three months ended December 31, 2022. In addition, as this amount relates to a divested business, it has been excluded from the Company's primary measure of segment performance, Operational EBITA (See Note 17).
The effective tax rate of 19.5 percent in the year ended December 31, 2023, was lower than the effective tax rate of 22.3 percent in the year ended December 31, 2022, primarily due to a net benefit realized on a favorable resolution of an uncertain tax position in the year ended December 31, 2023, while 2022 included positive impacts from a reversal of a valuation allowance in the Americas partially offset by the negative impact of non-deductible regulatory penalties in connection with the Kusile project.
In February 2023, on completion of a tax audit, the Company obtained resolution of the uncertain tax position for which an amount was recorded within Other non-current liabilities as of December 31, 2022. In the year ended December 31, 2023, the Company released the provision of \$206 million, due to the resolution of this matter, which resulted in an increase of \$0.11 in earnings per share (basic and diluted) for the year ended December 31, 2023.
The Company operates defined benefit pension plans, defined contribution pension plans, and termination indemnity plans, in accordance with local regulations and practices. At December 31, 2023, the Company's most significant defined benefit pension plans are in Switzerland as well as in Germany, the United Kingdom, and the United States. These plans cover a large portion of the Company's employees and provide benefits to employees in the event of death, disability, retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans including postretirement health care benefits and other employee-related benefits for active employees including long-service award plans. The measurement date used for the Company's employee benefit plans is December 31. The funding policies of the Company's plans are consistent with the local government and tax requirements.
Net periodic benefit cost of the Company's defined benefit pension and other postretirement benefit plans consisted of the following:
| (\$ in millions) | Defined pension benefits | Other postretirement | |||||
|---|---|---|---|---|---|---|---|
| Switzerland | International | benefits | |||||
| Year ended December 31, | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Operational pension cost: | |||||||
| Service cost | 40 | 50 | 30 | 38 | – | – | |
| Operational pension cost | 40 | 50 | 30 | 38 | – | – | |
| Non-operational pension cost (credit): | |||||||
| Interest cost | 48 | 13 | 166 | 87 | 2 | 1 | |
| Expected return on plan assets | (129) | (116) | (157) | (153) | – | – | |
| Amortization of prior service cost (credit) | (8) | (9) | (2) | (2) | (1) | (2) | |
| Amortization of net actuarial loss | – | – | 52 | 58 | (4) | (3) | |
| Curtailments, settlements and special termination benefits | 13 | 4 | 19 | 7 | (16) | – | |
| Non-operational pension cost (credit) | (76) | (108) | 78 | (3) | (19) | (4) | |
| Net periodic benefit cost (credit) | (36) | (58) | 108 | 35 | (19) | (4) |
| (\$ in millions) | Defined pension benefits | Other postretirement | ||||
|---|---|---|---|---|---|---|
| Switzerland | International | benefits | ||||
| Three months ended December 31, | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Operational pension cost: | ||||||
| Service cost | 11 | 10 | 9 | 12 | – | – |
| Operational pension cost | 11 | 10 | 9 | 12 | – | – |
| Non-operational pension cost (credit): | ||||||
| Interest cost | 13 | 11 | 44 | 26 | 1 | – |
| Expected return on plan assets | (35) | (29) | (41) | (40) | – | – |
| Amortization of prior service cost (credit) | (2) | (4) | – | – | – | (1) |
| Amortization of net actuarial loss | – | – | 13 | 14 | (1) | (1) |
| Curtailments, settlements and special termination benefits | 13 | 4 | 1 | 7 | – | – |
| Non-operational pension cost (credit) | (11) | (18) | 17 | 7 | – | (2) |
| Net periodic benefit cost (credit) | – | (8) | 26 | 19 | – | (2) |
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 | |||||
| Year ended December 31, | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Total contributions to defined benefit pension and | ||||||
| other postretirement benefit plans | 18 | 37 | 89 | 58 | 32 | 7 |
| Of which, discretionary contributions to defined benefit | ||||||
| pension plans | – | – | 67 | 18 | 25 | – |
| (\$ in millions) | Defined pension benefits | Other postretirement | |||||
|---|---|---|---|---|---|---|---|
| Switzerland | International | benefits | |||||
| Three months ended December 31, | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Total contributions to defined benefit pension and | |||||||
| other postretirement benefit plans | 10 | 4 | 4 | 34 | 3 | 2 | |
| Of which, discretionary contributions to defined benefit | |||||||
| pension plans | – | – | 11 | 18 | – | – |
─
At the Annual General Meeting of Shareholders (AGM) on March 23, 2023, shareholders approved the proposal of the Board of Directors to distribute 0.84 Swiss francs per share to shareholders. The declared dividend amounted to \$1,706 million, with the Company disbursing a portion in March and the remaining amounts in April.
In March 2023, the Company completed the share buyback program that was launched in April 2022. This program was executed on a second trading line on the SIX Swiss Exchange. Through this program, the Company purchased a total of 67 million shares for approximately \$2.0 billion, of which 8 million shares were purchased in the first quarter of 2023 (resulting in an increase in Treasury stock of \$253 million).
Also in March 2023, the Company announced a new share buyback program of up to \$1 billion. This program, which was launched in April 2023, is being executed on a second trading line on the SIX Swiss Exchange and is planned to run until the Company's 2024 AGM. Through this program, the Company purchased, from the program's launch in April 2023 to December 31, 2023, 17 million shares, resulting in an increase in Treasury stock of \$640 million.
In the second quarter of 2023, the Company cancelled 83 million shares which had been purchased under its share buyback program. This resulted in a decrease in Treasury stock of \$2,567 million and a corresponding total decrease in Capital stock, Additional paid-in capital and Retained earnings.
In addition to the share buyback programs, the Company purchased 9 million of its own shares on the open market in the year ended December 31, 2023, mainly for use in connection with its employee share plans, resulting in an increase in Treasury stock of \$354 million.
In the year ended December 31, 2023, the Company delivered, out of treasury stock, approximately 6 million shares in connection with its Management Incentive Plan.
In February 2023, the Company obtained funding through a private placement of shares in its ABB E-Mobility subsidiary, ABB E-mobility Holding Ltd (ABB E-Mobility), receiving gross proceeds of 325 million Swiss francs (approximately \$351 million) and reducing the Company's ownership in ABB E-Mobility from 92 percent to 81 percent. This resulted in an increase in Additional paid-in capital of \$170 million. In December 2023, an agreement was reached to increase the ownership percentage of the investors participating in these private placements to 25 percent for no additional consideration.
─
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options, and outstanding options and shares granted subject to certain conditions under the Company's share-based payment arrangements.
| Year ended December 31, | Three months ended December 31, | |||
|---|---|---|---|---|
| (\$ in millions, except per share data in \$) | 2023 | 2022 | 2023 | 2022 |
| Amounts attributable to ABB shareholders: | ||||
| Income from continuing operations, net of tax | 3,769 | 2,517 | 929 | 1,138 |
| Loss from discontinued operations, net of tax | (24) | (42) | (8) | (6) |
| Net income | 3,745 | 2,475 | 921 | 1,132 |
| Weighted-average number of shares outstanding (in millions) | 1,855 | 1,899 | 1,845 | 1,870 |
| Basic earnings per share attributable to ABB shareholders: | ||||
| Income from continuing operations, net of tax | 2.03 | 1.33 | 0.50 | 0.61 |
| Loss from discontinued operations, net of tax | (0.01) | (0.02) | 0.00 | 0.00 |
| Net income | 2.02 | 1.30 | 0.50 | 0.61 |
| Year ended December 31, | Three months ended December 31, | |||
|---|---|---|---|---|
| (\$ in millions, except per share data in \$) | 2023 | 2022 | 2023 | 2022 |
| Amounts attributable to ABB shareholders: | ||||
| Income from continuing operations, net of tax | 3,769 | 2,517 | 929 | 1,138 |
| Loss from discontinued operations, net of tax | (24) | (42) | (8) | (6) |
| Net income | 3,745 | 2,475 | 921 | 1,132 |
| Weighted-average number of shares outstanding (in millions) | 1,855 | 1,899 | 1,845 | 1,870 |
| Effect of dilutive securities: | ||||
| Call options and shares | 12 | 11 | 11 | 11 |
| Adjusted weighted-average number of shares outstanding (in millions) | 1,867 | 1,910 | 1,856 | 1,881 |
| Diluted earnings per share attributable to ABB shareholders: | ||||
| Income from continuing operations, net of tax | 2.02 | 1.32 | 0.50 | 0.60 |
| Loss from discontinued operations, net of tax | (0.01) | (0.02) | 0.00 | 0.00 |
| Net income | 2.01 | 1.30 | 0.50 | 0.60 |
─
The following table shows changes in "Accumulated other comprehensive loss" (OCI) attributable to ABB, by component, net of tax:
| Unrealized gains | Pension and | ||||
|---|---|---|---|---|---|
| Foreign currency | (losses) on | other | Derivative | ||
| translation | available-for-sale | postretirement | instruments | ||
| (\$ in millions) | adjustments securities plan adjustments and hedges (2,993) 2 (1,089) (8) (685) (23) 226 (12) 46 2 29 12 (639) (21) 255 – (93) – (5) – (34) – (1) – (3,691) (19) (838) (8) (290) 5 (283) (10) 9 6 46 8 (281) 11 (237) (2) 5 – – – |
Total OCI | |||
| Balance at January 1, 2022 | (4,088) | ||||
| Other comprehensive (loss) income: | |||||
| Other comprehensive (loss) income | |||||
| before reclassifications | (494) | ||||
| Amounts reclassified from OCI | 89 | ||||
| Total other comprehensive (loss) income | (405) | ||||
| Spin-off of the Turbocharging Division | (98) | ||||
| Less: | |||||
| Amounts attributable to | |||||
| noncontrolling interests | (35) | ||||
| Balance at December 31, 2022 | (4,556) | ||||
| Other comprehensive (loss) income: | |||||
| Other comprehensive (loss) income | |||||
| before reclassifications | (578) | ||||
| Amounts reclassified from OCI | 69 | ||||
| Total other comprehensive (loss) income | (509) | ||||
| Less: | |||||
| Amounts attributable to | |||||
| noncontrolling interests and | |||||
| redeemable noncontrolling interests | 5 | ||||
| Balance at December 31, 2023 | (3,977) | (8) | (1,075) | (10) | (5,070) |
The following table reflects amounts reclassified out of OCI in respect of Foreign currency translation adjustments and Pension and other postretirement plan adjustments:
| Year ended | Three months ended | ||||
|---|---|---|---|---|---|
| (\$ in millions) | Location of (gains) losses | December 31, | December 31, | ||
| Details about OCI components | reclassified from OCI | 2023 2022 |
2023 | 2022 | |
| Foreign currency translation adjustments: | |||||
| Changes attributable to divestments | Other income (expense), net | 9 | 41 | – | 41 |
| Net loss on complete or substantially complete | |||||
| liquidations of foreign subsidiaries | Other income (expense), net | – | 5 | – | – |
| Amounts reclassified from OCI | 9 | 46 | – | 41 | |
| Pension and other postretirement plan adjustments: | |||||
| Amortization of prior service cost (credit) | Non-operational pension (cost) credit | (11) | (13) | (2) | (5) |
| Amortization of net actuarial loss | Non-operational pension (cost) credit | 48 | 55 | 12 | 13 |
| Net gain (loss) from settlements and curtailments | Non-operational pension (cost) credit | 16 | 11 | 14 | 11 |
| Changes attributable to divestments | Other income (expense), net | 3 | (8) | 3 | (8) |
| Total before tax | 56 | 45 | 27 | 11 | |
| Tax | Income tax expense | (10) | (16) | (9) | (6) |
| Amounts reclassified from OCI | 46 | 29 | 18 | 5 |
The amounts in respect of Unrealized gains (losses) on available-for-sale securities and Derivative instruments and hedges were not significant for the year and three months ended December 31, 2023 and 2022.
─
Restructuring-related activities
In the year and three months ended December 31, 2023 and 2022, the Company executed various restructuring-related activities and incurred the following expenses:
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 | |
| Employee severance costs | 120 | 81 | 82 | 17 | |
| Estimated contract settlement, loss order and other costs | 7 | 209 | 3 | 4 | |
| Inventory and long-lived asset impairments | 49 | 7 | 31 | 2 | |
| Total | 176 | 297 | 116 | 23 |
Expenses associated with these activities are recorded in the following line items in the Consolidated Income Statements:
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 | |
| Total cost of sales | 65 | 24 | 46 | 11 | |
| Selling, general and administrative expenses | 52 | 40 | 38 | 1 | |
| Non-order related research and development expenses | 3 | 2 | 3 | – | |
| Other income (expense), net | 56 | 231 | 29 | 11 | |
| Total | 176 | 297 | 116 | 23 |
During the second quarter of 2022, the Company completed a plan to fully exit its full train retrofit business by transferring the remaining contracts to a third party. The Company recorded \$195 million of restructuring expenses in connection with this business exit primarily for contract settlement costs. Prior to exiting this business, the business was reported as part of the Company's non-core business activities within Corporate and Other.
At December 31, 2023 and 2022, \$250 million and \$198 million, respectively, was recorded for restructuring-related liabilities and is included primarily in Other provisions.
─
The Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The CODM allocates resources to and assesses the performance of each operating segment using the information outlined below. The Company is organized into the following segments, based on products and services: Electrification, Motion, Process Automation and Robotics & Discrete Automation. The remaining operations of the Company are included in Corporate and Other.
Effective January 1, 2023, the E-mobility Division is no longer managed within the Electrification segment and has become a separate operating segment. This new segment does not currently meet any of the size thresholds to be considered a reportable segment and as such is presented within Corporate and Other. The segment information for the year and three months ended December 31, 2023 and 2022, and at December 31, 2022, has been recast to reflect this change.
A description of the types of products and services provided by each reportable segment is as follows:
Motion: designs, manufactures, and sells drives, motors, generators and traction converters that are driving the low-carbon future for industries, cities, infrastructure and transportation. These products, digital technology and related services enable industrial customers to increase energy efficiency, improve safety and reliability, and achieve precise control of their processes. Building on over 140 years of cumulative experience in electric powertrains, Motion combines domain expertise and technology to deliver the optimum solution for a wide range of applications in all industrial segments. In addition, Motion, along with its partners, has a leading global service presence. These products and services are delivered through seven operating Divisions: Large Motors and Generators, IEC LV Motors, NEMA Motors, Drive Products, System Drives, Service and Traction.
Process Automation: offers a broad range of industry-specific, integrated automation, electrification and digital solutions, as well as lifecycle services for the process, hybrid and marine industries. The product portfolio includes control technologies, industrial software, advanced analytics, sensing and measurement technology, and marine propulsion systems. In addition, Process Automation offers a comprehensive range of services, from repair to advanced digital capabilities such as remote monitoring, preventive maintenance, asset performance management, emission monitoring and cybersecurity. The products, systems and services are currently delivered through four operating Divisions: Energy Industries, Process Industries, Marine & Ports and Measurement & Analytics, as well as, prior to its spin-off in October 2022, the Turbocharging Division (Accelleron).
Corporate and Other: Corporate includes headquarter costs, the Company's corporate real estate activities and the Corporate Treasury Operations while Other includes the E-mobility operating segment, other non-core operating activities as well as the operating activities of certain divested businesses.
The primary measure of profitability on which the operating segments are evaluated is Operational EBITA, which represents income from operations excluding:
Certain other non-operational items generally includes certain regulatory, compliance and legal costs, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates), as well as other items which are determined by management on a case-by-case basis.
The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments. Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at the Company's consolidated Operational EBITA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at current market prices.
The following tables present disaggregated segment revenues from contracts with customers, Operational EBITA, and the reconciliations of consolidated Operational EBITA to Income from continuing operations before taxes for the year and three months ended December 31, 2023 and 2022, as well as total assets at December 31, 2023 and 2022.
| Year ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions) | Electrification | Motion | Automation | Automation | and Other | Total |
| Geographical markets | ||||||
| Europe | 4,547 | 2,455 | 2,294 | 1,932 | 340 | 11,568 |
| The Americas | 5,926 | 2,562 | 1,738 | 573 | 291 | 11,090 |
| of which: United States | 4,456 | 2,123 | 1,076 | 358 | 235 | 8,248 |
| Asia, Middle East and Africa | 3,899 | 2,276 | 2,212 | 1,119 | 71 | 9,577 |
| of which: China | 1,775 | 1,148 | 707 | 804 | 34 | 4,468 |
| 14,372 | 7,293 | 6,244 | 3,624 | 702 | 32,235 | |
| Product type | ||||||
| Products | 13,437 | 6,219 | 3,661 | 3,063 | 630 | 27,010 |
| Services and other | 935 | 1,074 | 2,583 | 561 | 72 | 5,225 |
| 14,372 | 7,293 | 6,244 | 3,624 | 702 | 32,235 | |
| Third-party revenues | 14,372 | 7,293 | 6,244 | 3,624 | 702 | 32,235 |
| Intersegment revenues | 212 | 521 | 26 | 16 | (775) | – |
| Total revenues(1) | 14,584 | 7,814 | 6,270 | 3,640 | (73) | 32,235 |
| Year ended December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions) | Electrification | Motion | Automation | Automation | and Other | Total |
| Geographical markets | ||||||
| Europe | 4,199 | 2,031 | 2,248 | 1,494 | 313 | 10,285 |
| The Americas | 5,140 | 2,148 | 1,566 | 524 | 195 | 9,573 |
| of which: United States | 3,769 | 1,787 | 943 | 373 | 151 | 7,023 |
| Asia, Middle East and Africa | 4,053 | 2,101 | 2,199 | 1,155 | 80 | 9,588 |
| of which: China | 1,948 | 1,147 | 666 | 897 | 38 | 4,696 |
| 13,392 | 6,280 | 6,013 | 3,173 | 588 | 29,446 | |
| Product type | ||||||
| Products | 12,535 | 5,380 | 3,311 | 2,695 | 550 | 24,471 |
| Services and other | 857 | 900 | 2,702 | 478 | 38 | 4,975 |
| 13,392 | 6,280 | 6,013 | 3,173 | 588 | 29,446 | |
| Third-party revenues | 13,392 | 6,280 | 6,013 | 3,173 | 588 | 29,446 |
| Intersegment revenues | 227 | 465 | 31 | 8 | (731) | – |
| Total revenues(1) | 13,619 | 6,745 | 6,044 | 3,181 | (143) | 29,446 |
| Three months ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions) | Electrification | Motion | Automation | Automation | and Other | Total |
| Geographical markets | ||||||
| Europe | 1,136 | 597 | 631 | 476 | 111 | 2,951 |
| The Americas | 1,533 | 638 | 459 | 142 | 75 | 2,847 |
| of which: United States | 1,164 | 521 | 278 | 89 | 53 | 2,105 |
| Asia, Middle East and Africa | 987 | 577 | 632 | 233 | 18 | 2,447 |
| of which: China | 419 | 282 | 205 | 147 | 11 | 1,064 |
| 3,656 | 1,812 | 1,722 | 851 | 204 | 8,245 | |
| Product type | ||||||
| Products | 3,387 | 1,524 | 994 | 710 | 185 | 6,800 |
| Services and other | 269 | 288 | 728 | 141 | 19 | 1,445 |
| 3,656 | 1,812 | 1,722 | 851 | 204 | 8,245 | |
| Third-party revenues | 3,656 | 1,812 | 1,722 | 851 | 204 | 8,245 |
| Intersegment revenues Total revenues(1) |
42 3,698 |
134 1,946 |
5 1,727 |
1 852 |
(182) 22 |
– 8,245 |
| Three months ended December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions) | Electrification | Motion | Automation | Automation | and Other | Total |
| Geographical markets | ||||||
| Europe | 1,074 | 601 | 522 | 424 | 144 | 2,765 |
| The Americas | 1,341 | 574 | 431 | 147 | 62 | 2,555 |
| of which: United States | 992 | 480 | 262 | 106 | 58 | 1,898 |
| Asia, Middle East and Africa | 1,033 | 537 | 592 | 317 | 25 | 2,504 |
| of which: China | 442 | 259 | 168 | 251 | 13 | 1,133 |
| 3,448 | 1,712 | 1,545 | 888 | 231 | 7,824 | |
| Product type | ||||||
| Products | 3,207 | 1,449 | 891 | 760 | 218 | 6,525 |
| Services and other | 241 | 263 | 654 | 128 | 13 | 1,299 |
| 3,448 | 1,712 | 1,545 | 888 | 231 | 7,824 | |
| Third-party revenues | 3,448 | 1,712 | 1,545 | 888 | 231 | 7,824 |
| Intersegment revenues | 50 | 133 | 6 | 3 | (192) | – |
| Total revenues(1) | 3,498 | 1,845 | 1,551 | 891 | 39 | 7,824 |
(1) Due to rounding, numbers presented may not add to the totals provided.
| Year ended | Three months ended | |||
|---|---|---|---|---|
| December 31, | December 31, | |||
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 |
| Operational EBITA: | ||||
| Electrification | 2,937 | 2,343 | 725 | 575 |
| Motion | 1,475 | 1,163 | 318 | 318 |
| Process Automation | 909 | 848 | 239 | 203 |
| Robotics & Discrete Automation | 536 | 340 | 118 | 125 |
| Corporate and Other | ||||
| ‒ E-mobility | (167) | (15) | (33) | (3) |
| ‒ Corporate costs, Intersegment elimination and other | (263) | (169) | (34) | (72) |
| Total | 5,427 | 4,510 | 1,333 | 1,146 |
| Acquisition-related amortization | (220) | (229) | (56) | (55) |
| Restructuring, related and implementation costs(1) | (219) | (347) | (127) | (47) |
| Changes in obligations related to divested businesses | 3 | 88 | (2) | 71 |
| Gains and losses from sale of businesses | 101 | (7) | 4 | (3) |
| Acquisition- and divestment-related expenses and integration costs | (74) | (195) | (19) | (24) |
| Foreign exchange/commodity timing differences in income from operations: | ||||
| Unrealized gains and losses on derivatives (foreign exchange, | ||||
| commodities, embedded derivatives) | 19 | 32 | 77 | 139 |
| Realized gains and losses on derivatives where the underlying hedged | ||||
| transaction has not yet been realized | 12 | (48) | 20 | – |
| Unrealized foreign exchange movements on receivables/payables (and | ||||
| related assets/liabilities) | (13) | (15) | (38) | (70) |
| Certain other non-operational items: | ||||
| Other income/expense relating to the Power Grids joint venture | 36 | (57) | 9 | 10 |
| Regulatory, compliance and legal costs | – | (317) | – | 16 |
| Business transformation costs(2) | (205) | (152) | (66) | (38) |
| Changes in pre-acquisition estimates | (4) | (10) | – | (10) |
| Gains and losses from sale of investments in | ||||
| equity-accounted companies | – | 43 | – | 43 |
| Certain other fair value changes, including asset impairments | (10) | 45 | (13) | (13) |
| Other non-operational items | 18 | (4) | (6) | 20 |
| Income from operations | 4,871 | 3,337 | 1,116 | 1,185 |
| Interest and dividend income | 165 | 72 | 50 | 22 |
| Interest and other finance expense | (275) | (130) | (78) | (23) |
| Non-operational pension (cost) credit | 17 | 115 | (6) | 13 |
| Income from continuing operations before taxes | 4,778 | 3,394 | 1,082 | 1,197 |
(2) Amount includes ABB Way process transformation costs of \$188 million and \$131 million for year ended December 31, 2023 and 2022, respectively, and \$66 million and \$33 million for the three months ended December 31, 2023 and 2022, respectively.
| Total assets(1) | ||||
|---|---|---|---|---|
| (\$ in millions) | December 31, 2023 | December 31, 2022 | ||
| Electrification | 12,668 | 12,500 | ||
| Motion | 7,016 | 6,565 | ||
| Process Automation | 4,971 | 4,598 | ||
| Robotics & Discrete Automation | 5,047 | 4,901 | ||
| Corporate and Other(2) | 11,238 | 10,584 | ||
| Consolidated | 40,940 | 39,148 |
(1) Total assets are after intersegment eliminations and therefore reflect third-party assets only.
(2) At December 31, 2023 and 2022, respectively, Corporate and Other includes \$57 million and \$96 million of assets in the Power Grids business which is reported as discontinued operations (see Note 3).
The following reconciliations and definitions include measures which ABB uses to supplement its Consolidated Financial Inform ation (unaudited) which is prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). Certain of these financial measures are, or may be, considered non-GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission (SEC).
While ABB's management believes that the non-GAAP financial measures herein are useful in evaluating ABB's operating results, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in acco rdance with U.S. GAAP. Therefore these measures should not be viewed in isolation but considered together with the Consolidated Financial Info rmation (unaudited) prepared in accordance with U.S. GAAP as of and for the year and three months ended December 31, 2023.
Growth rates for certain key figures may be presented and discussed on a "comparable" basis. The comparable growth rate measures growth on a constant currency basis. Since we are a global company, the comparability of our operating results reported in U.S. dollars is affected by foreign currency exchange rate fluctuations. We calculate the impacts from foreign currency fluctuations by translating the current-year periods' reported key figures into U.S. dollar amounts using the exchange rates in effect for the comparable periods in the previous year.
Comparable growth rates are also adjusted for changes in our business portfolio. Adjustments to our business portfolio occur due to acquisitions, divestments, or by exiting specific business activities or customer markets. The adjustment for portfolio changes is calculated as follows: where the results of any business acquired or divested have not been consolidated and reported for the entire duration of both the current and comparable periods, the reported key figures of such business are adjusted to exclude the relevant key figures of any corresponding quarters which are not comparable when computing the comparable growth rate. Certain portfolio changes which do not qualify as divestments under U.S. GAAP have been treated in a similar manner to divestments. Changes in our portfolio where we have exited certain business activities or customer markets are adjusted as if the relevant business was divested in the period when the decision to cease business activities was taken. We do not adjust for portfolio changes where the relevant business has annualized revenues of less than \$50 million.
The following tables provide reconciliations of reported growth rates of certain key figures to their respective comparable growth rate.
| Q4 2023 compared to Q4 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||||
| US\$ | Foreign | US\$ | Foreign | |||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||||
| Business Area | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | ||
| Electrification | 0% | -1% | 3% | 2% | 6% | -1% | 3% | 8% | ||
| Motion | 17% | -2% | -2% | 13% | 5% | -1% | -2% | 2% | ||
| Process Automation | 7% | -2% | 0% | 5% | 11% | -1% | 0% | 10% | ||
| Robotics & Discrete Automation | -31% | -2% | 0% | -33% | -4% | -3% | 0% | -7% | ||
| ABB Group | 0% | -1% | 1% | 0% | 5% | -1% | 2% | 6% |
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Business Area | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Electrification | 0% | 1% | 2% | 3% | 7% | 1% | 2% | 10% |
| Motion | 4% | 1% | -1% | 4% | 16% | 1% | -2% | 15% |
| Process Automation | 10% | 2% | 12% | 24% | 4% | 1% | 11% | 16% |
| Robotics & Discrete Automation | -26% | 1% | 0% | -25% | 14% | 0% | 0% | 14% |
| ABB Group | -1% | 2% | 2% | 3% | 9% | 2% | 3% | 14% |
Regional comparable growth rate reconciliation for ABB Group - Quarter
| Q4 2023 compared to Q4 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||||
| US\$ | Foreign | US\$ | Foreign | |||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | ||
| Europe | -2% | -5% | 2% | -5% | 7% | -5% | 2% | 4% | ||
| The Americas | 3% | -1% | 1% | 3% | 11% | -1% | 4% | 14% | ||
| of which: United States | 5% | -1% | 2% | 6% | 11% | 0% | 4% | 15% | ||
| Asia, Middle East and Africa | 0% | 1% | 1% | 2% | -2% | 2% | 0% | 0% | ||
| of which: China | -8% | 1% | 0% | -7% | -6% | 0% | 1% | -5% | ||
| ABB Group | 0% | -1% | 1% | 0% | 5% | -1% | 2% | 6% |
Regional comparable growth rate reconciliation by Business Area - Quarter
| Q4 2023 compared to Q4 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||||
| US\$ | Foreign | US\$ | Foreign | |||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | ||
| Europe | 7% | -5% | 2% | 4% | 5% | -5% | 0% | 0% | ||
| The Americas | -1% | -1% | 3% | 1% | 14% | -1% | 8% | 21% | ||
| of which: United States | -3% | 0% | 4% | 1% | 17% | 0% | 11% | 28% | ||
| Asia, Middle East and Africa | -5% | 3% | 2% | 0% | -4% | 3% | 1% | 0% | ||
| of which: China | -9% | 1% | 2% | -6% | -4% | 1% | 1% | -2% | ||
| Electrification | 0% | -1% | 3% | 2% | 6% | -1% | 3% | 8% |
| Q4 2023 compared to Q4 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||||
| US\$ | Foreign | US\$ | Foreign | |||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | ||
| Europe | 30% | -8% | -4% | 18% | -1% | -5% | -1% | -7% | ||
| The Americas | 14% | -2% | -3% | 9% | 12% | -1% | -4% | 7% | ||
| of which: United States | 14% | -1% | -3% | 10% | 9% | -1% | -3% | 5% | ||
| Asia, Middle East and Africa | 10% | 2% | 0% | 12% | 6% | 2% | 0% | 8% | ||
| of which: China | 10% | 1% | 0% | 11% | 7% | 2% | 0% | 9% | ||
| Motion | 17% | -2% | -2% | 13% | 5% | -1% | -2% | 2% |
| Q4 2023 compared to Q4 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | ||||||||||
| US\$ | Foreign | US\$ | Foreign | ||||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | ||||||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | |||
| Europe | 0% | -4% | 0% | -4% | 21% | -3% | 0% | 18% | |||
| The Americas | 13% | -3% | 0% | 10% | 6% | -1% | 0% | 5% | |||
| of which: United States | 30% | -5% | 0% | 25% | 6% | -1% | 0% | 5% | |||
| Asia, Middle East and Africa | 10% | 1% | 0% | 11% | 7% | 1% | 0% | 8% | |||
| of which: China | -4% | -1% | 0% | -5% | 14% | 1% | 0% | 15% | |||
| Process Automation | 7% | -2% | 0% | 5% | 11% | -1% | 0% | 10% |
| Q4 2023 compared to Q4 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Europe | -34% | -4% | 0% | -38% | 12% | -5% | 0% | 7% |
| The Americas | -19% | -2% | 0% | -21% | -3% | -2% | 0% | -5% |
| of which: United States | -19% | 0% | 0% | -19% | -16% | 0% | 0% | -16% |
| Asia, Middle East and Africa | -33% | 2% | 0% | -31% | -28% | 1% | 0% | -27% |
| of which: China | -36% | 2% | 0% | -34% | -42% | 1% | 0% | -41% |
| Robotics & Discrete Automation | -31% | -2% | 0% | -33% | -4% | -3% | 0% | -7% |
Regional comparable growth rate reconciliation for ABB Group – Year to date
| FY 2023 compared to FY 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | ||||||||||
| US\$ | Foreign | US\$ | Foreign | ||||||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | ||||||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable | |||
| Europe | -3% | -1% | 3% | -1% | 12% | -1% | 3% | 14% | |||
| The Americas | 5% | 0% | 2% | 7% | 16% | -1% | 3% | 18% | |||
| of which: United States | 3% | 0% | 2% | 5% | 17% | 0% | 4% | 21% | |||
| Asia, Middle East and Africa | -4% | 5% | 3% | 4% | 0% | 5% | 3% | 8% | |||
| of which: China | -12% | 5% | 2% | -5% | -5% | 4% | 2% | 1% | |||
| ABB Group | -1% | 2% | 2% | 3% | 9% | 2% | 3% | 14% |
Regional comparable growth rate reconciliation by Business Area – Year to date
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Europe | 1% | -2% | 1% | 0% | 7% | -2% | 1% | 6% |
| The Americas | 1% | 0% | 2% | 3% | 15% | 0% | 4% | 19% |
| of which: United States | -1% | 0% | 3% | 2% | 18% | 0% | 5% | 23% |
| Asia, Middle East and Africa | -2% | 7% | 1% | 6% | -4% | 7% | 1% | 4% |
| of which: China | -9% | 5% | 1% | -3% | -9% | 5% | 1% | -3% |
| Electrification | 0% | 1% | 2% | 3% | 7% | 1% | 2% | 10% |
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Europe | 3% | -2% | -1% | 0% | 19% | -3% | -1% | 15% |
| The Americas | 5% | -1% | -2% | 2% | 20% | 0% | -4% | 16% |
| of which: United States | 3% | -1% | -2% | 0% | 19% | 0% | -3% | 16% |
| Asia, Middle East and Africa | 4% | 6% | 0% | 10% | 9% | 5% | 0% | 14% |
| of which: China | -1% | 5% | 0% | 4% | 1% | 5% | 0% | 6% |
| Motion | 4% | 1% | -1% | 4% | 16% | 1% | -2% | 15% |
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Europe | 13% | 1% | 13% | 27% | 2% | 0% | 12% | 14% |
| The Americas | 22% | -1% | 9% | 30% | 11% | -1% | 10% | 20% |
| of which: United States | 25% | -3% | 12% | 34% | 14% | 0% | 12% | 26% |
| Asia, Middle East and Africa | -2% | 4% | 12% | 14% | 0% | 5% | 12% | 17% |
| of which: China | -3% | 5% | 14% | 16% | 4% | 5% | 13% | 22% |
| Process Automation | 10% | 2% | 12% | 24% | 4% | 1% | 11% | 16% |
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Order growth rate | Revenue growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Region | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Europe | -28% | 0% | 0% | -28% | 30% | -3% | 0% | 27% |
| The Americas | -11% | -1% | 0% | -12% | 10% | -2% | 0% | 8% |
| of which: United States | -17% | 0% | 0% | -17% | -3% | -1% | 0% | -4% |
| Asia, Middle East and Africa | -29% | 4% | 0% | -25% | -3% | 4% | 0% | 1% |
| of which: China | -35% | 4% | 0% | -31% | -10% | 3% | 0% | -7% |
| Robotics & Discrete Automation | -26% | 1% | 0% | -25% | 14% | 0% | 0% | 14% |
| December 31, 2023 compared to December 31, 2022 | ||||
|---|---|---|---|---|
| US\$ | Foreign | |||
| (as | exchange | Portfolio | ||
| Business Area | reported) | impact | changes | Comparable |
| Electrification | 6% | 0% | 8% | 14% |
| Motion | 13% | -4% | -1% | 8% |
| Process Automation | 21% | -2% | 0% | 19% |
| Robotics & Discrete Automation | -20% | 0% | 0% | -20% |
| ABB Group | 9% | -2% | 2% | 9% |
| Q4 2023 compared to Q4 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Service orders growth rate | Services revenues growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Business Area | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Electrification | 10% | -1% | 0% | 9% | 11% | 0% | 0% | 11% |
| Motion | 32% | -1% | 0% | 31% | 9% | -1% | 0% | 8% |
| Process Automation | 29% | -3% | 0% | 26% | 11% | -1% | 0% | 10% |
| Robotics & Discrete Automation | 10% | -2% | 0% | 8% | 11% | -3% | 0% | 8% |
| ABB Group | 22% | -2% | 0% | 20% | 11% | -1% | 0% | 10% |
| FY 2023 compared to FY 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Service orders growth rate | Services revenues growth rate | |||||||
| US\$ | Foreign | US\$ | Foreign | |||||
| (as | exchange | Portfolio | (as | exchange | Portfolio | |||
| Business Area | reported) | impact | changes | Comparable | reported) | impact | changes | Comparable |
| Electrification | 7% | 1% | 0% | 8% | 9% | 1% | 0% | 10% |
| Motion | 13% | 2% | 0% | 15% | 19% | 2% | 0% | 21% |
| Process Automation | 4% | 0% | 21% | 25% | -4% | 1% | 18% | 15% |
| Robotics & Discrete Automation | 10% | 0% | 0% | 10% | 17% | 0% | 0% | 17% |
| ABB Group | 7% | 1% | 10% | 18% | 5% | 1% | 10% | 16% |
Operational EBITA margin
Operational EBITA margin is Operational EBITA as a percentage of operational revenues.
Operational earnings before interest, taxes and acquisition-related amortization (Operational EBITA) represents Income from operations excluding:
Certain other non-operational items generally includes certain regulatory, compliance and legal costs, certain asset write downs/impairments and certain other fair value changes, changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates), as well as other items which are determined by management on a case-by-case basis.
Operational EBITA is our measure of segment profit but is also used by management to evaluate the profitability of the Company as a whole.
Amortization expense on intangibles arising upon acquisitions.
Restructuring, related and implementation costs consists of restructuring and other related expenses, as well as internal and external costs relating to the implementation of group-wide restructuring programs.
The Company presents operational revenues solely for the purpose of allowing the computation of Operational EBITA margin. Operational revenues are Total revenues adjusted for foreign exchange/commodity timing differences in total revenues of: (i) unrealized gains and losses on derivatives, (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables (and related assets). Operational revenues are not intended to be an alternative measure to Total revenues, which represent our revenues measured in accordance with U.S. GAAP.
The following tables provide reconciliations of consolidated Operational EBITA to Net Income and Operational EBITA Margin by business.
| Year ended December 31, | Three months ended December 31, | |||
|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 |
| Operational EBITA | 5,427 | 4,510 | 1,333 | 1,146 |
| Acquisition-related amortization | (220) | (229) | (56) | (55) |
| Restructuring, related and implementation costs(1) | (219) | (347) | (127) | (47) |
| Changes in obligations related to divested businesses | 3 | 88 | (2) | 71 |
| Gains and losses from sale of businesses | 101 | (7) | 4 | (3) |
| Acquisition- and divestment-related expenses and integration costs | (74) | (195) | (19) | (24) |
| Certain other non-operational items | (165) | (452) | (76) | 28 |
| Foreign exchange/commodity timing differences in income from operations | 18 | (31) | 59 | 69 |
| Income from operations | 4,871 | 3,337 | 1,116 | 1,185 |
| Interest and dividend income | 165 | 72 | 50 | 22 |
| Interest and other finance expense | (275) | (130) | (78) | (23) |
| Non-operational pension (cost) credit | 17 | 115 | (6) | 13 |
| Income from continuing operations before taxes | 4,778 | 3,394 | 1,082 | 1,197 |
| Income tax expense | (930) | (757) | (136) | (29) |
| Income from continuing operations, net of tax | 3,848 | 2,637 | 946 | 1,168 |
| Loss from discontinued operations, net of tax | (24) | (43) | (8) | (7) |
| Net income | 3,824 | 2,594 | 938 | 1,161 |
(1) Includes impairment of certain assets.
| Reconciliation of Operational EBITA margin by business | |||
|---|---|---|---|
| Three months ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Corporate and | ||||||
| Robotics & | Other and | |||||
| Process | Discrete | Intersegment | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | elimination | Consolidated |
| Total revenues | 3,698 | 1,946 | 1,727 | 852 | 22 | 8,245 |
| Foreign exchange/commodity timing | ||||||
| differences in total revenues: | ||||||
| Unrealized gains and losses | ||||||
| on derivatives | (33) | (48) | (23) | (5) | (4) | (113) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | (3) | 1 | (10) | (1) | (2) | (15) |
| Unrealized foreign exchange movements | ||||||
| on receivables (and related assets) | 21 | 12 | 12 | 8 | 9 | 62 |
| Operational revenues | 3,683 | 1,911 | 1,706 | 854 | 25 | 8,179 |
| Income (loss) from operations | 670 | 292 | 259 | 99 | (204) | 1,116 |
| Acquisition-related amortization | 22 | 9 | 1 | 20 | 4 | 56 |
| Restructuring, related and | ||||||
| implementation costs(1) | 50 | 41 | (4) | 6 | 34 | 127 |
| Changes in obligations related to | ||||||
| divested businesses | – | – | – | – | 2 | 2 |
| Gains and losses from sale of businesses | (4) | – | – | – | – | (4) |
| Acquisition- and divestment-related expenses | ||||||
| and integration costs | 7 | 2 | (4) | 7 | 7 | 19 |
| Certain other non-operational items | 5 | 2 | – | (14) | 83 | 76 |
| Foreign exchange/commodity timing | ||||||
| differences in income from operations: | ||||||
| Unrealized gains and losses on derivatives | ||||||
| (foreign exchange, commodities, | ||||||
| embedded derivatives) | (31) | (36) | (12) | (2) | 4 | (77) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | (4) | 1 | (11) | (2) | (4) | (20) |
| Unrealized foreign exchange movements | ||||||
| on receivables/payables | ||||||
| (and related assets/liabilities) | 10 | 7 | 10 | 4 | 7 | 38 |
| Operational EBITA | 725 | 318 | 239 | 118 | (67) | 1,333 |
| Operational EBITA margin (%) | 19.7% | 16.6% | 14.0% | 13.8% | n.a. | 16.3% |
In the three months ended December 31, 2023, Certain other non-operational items in the table above includes the following:
| Three months ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | and Other | Consolidated |
| Certain other non-operational items: | ||||||
| Other income/expense relating to the | ||||||
| Power Grids joint venture | – | – | – | – | (9) | (9) |
| Business transformation costs(1) | 3 | – | – | (2) | 65 | 66 |
| Certain other fair values changes, | ||||||
| including asset impairments | 1 | 1 | – | (11) | 22 | 13 |
| Other non-operational items | 1 | 1 | – | (1) | 5 | 6 |
| Total | 5 | 2 | – | (14) | 83 | 76 |
(1) Amounts include ABB Way process transformation costs of \$66 million for the three months ended December 31, 2023.
| Three months ended December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Corporate and | ||||||
| Robotics & | Other and | |||||
| Process | Discrete | Intersegment | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | elimination | Consolidated |
| Total revenues | 3,498 | 1,845 | 1,551 | 891 | 39 | 7,824 |
| Foreign exchange/commodity timing | ||||||
| differences in total revenues: | ||||||
| Unrealized gains and losses | ||||||
| on derivatives | (64) | (35) | (25) | (10) | (15) | (149) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | – | (2) | (1) | 1 | 4 | 2 |
| Unrealized foreign exchange movements | ||||||
| on receivables (and related assets) | 33 | 15 | 14 | 10 | 13 | 85 |
| Operational revenues | 3,467 | 1,823 | 1,539 | 892 | 41 | 7,762 |
| Income (loss) from operations | 569 | 316 | 183 | 101 | 16 | 1,185 |
| Acquisition-related amortization | 24 | 8 | 1 | 19 | 3 | 55 |
| Restructuring, related and | ||||||
| implementation costs(1) | 10 | 5 | 23 | 2 | 7 | 47 |
| Changes in obligations related to | ||||||
| divested businesses | 1 | – | – | – | (72) | (71) |
| Gains and losses from sale of businesses | – | 3 | – | – | – | 3 |
| Acquisition- and divestment-related expenses | ||||||
| and integration costs | 5 | 3 | 12 | 2 | 2 | 24 |
| Certain other non-operational items | 11 | – | – | (8) | (31) | (28) |
| Foreign exchange/commodity timing | ||||||
| differences in income from operations: | ||||||
| Unrealized gains and losses on derivatives | ||||||
| (foreign exchange, commodities, | ||||||
| embedded derivatives) | (80) | (27) | (21) | 1 | (12) | (139) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | 1 | (1) | (2) | 1 | 1 | – |
| Unrealized foreign exchange movements | ||||||
| on receivables/payables | ||||||
| (and related assets/liabilities) | 34 | 11 | 7 | 7 | 11 | 70 |
| Operational EBITA | 575 | 318 | 203 | 125 | (75) | 1,146 |
| Operational EBITA margin (%) | 16.6% | 17.4% | 13.2% | 14.0% | n.a. | 14.8% |
In the three months ended December 31, 2022, Certain other non-operational items in the table above includes the following:
| Three months ended December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | and Other | Consolidated |
| Certain other non-operational items: | ||||||
| Other income/expense relating to the | ||||||
| Power Grids joint venture | – | – | – | – | (10) | (10) |
| Regulatory, compliance and legal costs | – | – | – | – | (16) | (16) |
| Business transformation costs(1) | 5 | – | – | – | 33 | 38 |
| Changes in pre-acquisition estimates | 9 | – | – | 1 | – | 10 |
| Gains and losses from sale of investments | ||||||
| in equity-accounted companies | – | – | – | – | (43) | (43) |
| Certain other fair values changes, | ||||||
| including asset impairments | – | – | – | 8 | 5 | 13 |
| Other non-operational items | (2) | – | – | (17) | (1) | (20) |
| Total | 12 | – | – | (8) | (32) | (28) |
(1) Amounts include ABB Way process transformation costs of \$33 million for the three months ended December 31, 2022.
| Year ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Corporate and | ||||||
| Robotics & | Other and | |||||
| Process | Discrete | Intersegment | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | elimination | Consolidated |
| Total revenues | 14,584 | 7,814 | 6,270 | 3,640 | (73) | 32,235 |
| Foreign exchange/commodity timing | ||||||
| differences in total revenues: | ||||||
| Unrealized gains and losses | ||||||
| on derivatives | 4 | (33) | (20) | (1) | 2 | (48) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | (8) | – | (2) | – | (1) | (11) |
| Unrealized foreign exchange movements | ||||||
| on receivables (and related assets) | 1 | 10 | 4 | 5 | (2) | 18 |
| Operational revenues | 14,581 | 7,791 | 6,252 | 3,644 | (74) | 32,194 |
| Income (loss) from operations | 2,800 | 1,390 | 947 | 446 | (712) | 4,871 |
| Acquisition-related amortization | 88 | 35 | 5 | 79 | 13 | 220 |
| Restructuring, related and | ||||||
| implementation costs(1) | 76 | 46 | 3 | 6 | 88 | 219 |
| Changes in obligations related to | ||||||
| divested businesses | 1 | – | – | – | (4) | (3) |
| Gains and losses from sale of businesses | (75) | – | (26) | – | – | (101) |
| Acquisition- and divestment-related expenses | ||||||
| and integration costs | 30 | 17 | (7) | 14 | 20 | 74 |
| Certain other non-operational items | 16 | 6 | – | (10) | 153 | 165 |
| Foreign exchange/commodity timing | ||||||
| differences in income from operations: | ||||||
| Unrealized gains and losses on derivatives | ||||||
| (foreign exchange, commodities, | ||||||
| embedded derivatives) | 11 | (21) | (13) | (1) | 5 | (19) |
| Realized gains and losses on derivatives | ||||||
| where the underlying hedged | ||||||
| transaction has not yet been realized | (5) | – | (4) | – | (3) | (12) |
| Unrealized foreign exchange movements | ||||||
| on receivables/payables | ||||||
| (and related assets/liabilities) | (5) | 2 | 4 | 2 | 10 | 13 |
| Operational EBITA | 2,937 | 1,475 | 909 | 536 | (430) | 5,427 |
| Operational EBITA margin (%) | 20.1% | 18.9% | 14.5% | 14.7% | n.a. | 16.9% |
In the year ended December 31, 2023, Certain other non-operational items in the table above includes the following:
| Year ended December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | and Other | Consolidated |
| Certain other non-operational items: | ||||||
| Other income/expense relating to the | ||||||
| Power Grids joint venture | – | – | – | – | (36) | (36) |
| Business transformation costs(1) | 15 | 1 | – | 1 | 188 | 205 |
| Changes in pre-acquisition estimates | 1 | – | – | – | 3 | 4 |
| Certain other fair values changes, | ||||||
| including asset impairments | 2 | 3 | – | (10) | 15 | 10 |
| Other non-operational items | (2) | 2 | – | (1) | (17) | (18) |
| Total | 16 | 6 | – | (10) | 153 | 165 |
(1) Amounts include ABB Way process transformation costs of \$188 million for the year ended December 31, 2023.
| Year ended December 31, 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Corporate and | |||||||
| Robotics & | Other and | ||||||
| Process | Discrete | Intersegment | |||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | elimination | Consolidated | |
| Total revenues | 13,619 | 6,745 | 6,044 | 3,181 | (143) | 29,446 | |
| Foreign exchange/commodity timing | |||||||
| differences in total revenues: | |||||||
| Unrealized gains and losses | |||||||
| on derivatives | (37) | (18) | 25 | 4 | (1) | (27) | |
| Realized gains and losses on derivatives | |||||||
| where the underlying hedged | |||||||
| transaction has not yet been realized | 11 | – | 10 | 1 | 33 | 55 | |
| Unrealized foreign exchange movements | |||||||
| on receivables (and related assets) | 6 | 4 | (2) | 1 | (9) | – | |
| Operational revenues | 13,599 | 6,731 | 6,077 | 3,187 | (120) | 29,474 | |
| Income (loss) from operations | 2,140 | 1,092 | 663 | 247 | (805) | 3,337 | |
| Acquisition-related amortization | 104 | 31 | 4 | 78 | 12 | 229 | |
| Restructuring, related and | |||||||
| implementation costs(1) | 28 | 16 | 29 | 11 | 263 | 347 | |
| Changes in obligations related to | |||||||
| divested businesses | 1 | – | – | – | (89) | (88) | |
| Gains and losses from sale of businesses | (1) | 8 | – | – | – | 7 | |
| Acquisition- and divestment-related expenses | |||||||
| and integration costs | 36 | 15 | 134 | 6 | 4 | 195 | |
| Certain other non-operational items | 41 | – | – | (8) | 419 | 452 | |
| Foreign exchange/commodity timing | |||||||
| differences in income from operations: | |||||||
| Unrealized gains and losses on derivatives | |||||||
| (foreign exchange, commodities, | |||||||
| embedded derivatives) | (30) | (5) | 6 | 4 | (7) | (32) | |
| Realized gains and losses on derivatives | |||||||
| where the underlying hedged | |||||||
| transaction has not yet been realized | 10 | – | 9 | 1 | 28 | 48 | |
| Unrealized foreign exchange movements | |||||||
| on receivables/payables | |||||||
| (and related assets/liabilities) | 14 | 6 | 3 | 1 | (9) | 15 | |
| Operational EBITA | 2,343 | 1,163 | 848 | 340 | (184) | 4,510 | |
| Operational EBITA margin (%) | 17.2% | 17.3% | 14.0% | 10.7% | n.a. | 15.3% | |
In the year ended December 31, 2022, certain other non-operational items in the table above includes the following:
| Year ended December 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Robotics & | ||||||
| Process | Discrete | Corporate | ||||
| (\$ in millions, unless otherwise indicated) | Electrification | Motion | Automation | Automation | and Other | Consolidated |
| Certain other non-operational items: | ||||||
| Other income/expense related to the | ||||||
| Power Grids joint venture | – | – | – | – | 57 | 57 |
| Regulatory, compliance and legal costs | – | – | – | – | 317 | 317 |
| Business transformation costs | 20 | – | – | – | 132 | 152 |
| Changes in pre-acquisition estimates | 11 | – | – | (1) | – | 10 |
| Gains and losses from sale of investments | ||||||
| in equity-accounted companies | – | – | – | – | (43) | (43) |
| Certain other fair values changes, | ||||||
| including asset impairments | (3) | – | – | 8 | (50) | (45) |
| Other non-operational items | 14 | – | – | (15) | 5 | 4 |
| Total | 42 | – | – | (8) | 418 | 452 |
(1) Amounts include ABB Way process transformation costs of \$131 million for the year ended December 31, 2022.
Net debt is defined as Total debt less Cash and marketable securities.
Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt.
Cash and marketable securities is the sum of Cash and equivalents, Restricted cash (current and non-current) and Marketable securities and short-term investments.
| (\$ in millions) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Short-term debt and current maturities of long-term debt | 2,607 | 2,535 | 1,384 |
| Long-term debt | 5,221 | 5,143 | 4,177 |
| Total debt | 7,828 | 7,678 | 5,561 |
| Cash and equivalents | 3,891 | 4,156 | 4,159 |
| Restricted cash - current | 18 | 18 | 30 |
| Marketable securities and short-term investments | 1,928 | 725 | 1170 |
| Restricted cash - non-current | – | – | 300 |
| Cash and marketable securities | 5,837 | 4,899 | 5,659 |
| Net debt (cash) | 1,991 | 2,779 | (98) |
Net debt/Equity ratio Net debt/Equity ratio is defined as Net debt divided by Equity.
Equity
Equity is defined as Total stockholders' equity.
| (\$ in millions, unless otherwise indicated) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Total stockholders' equity | 14,057 | 13,187 |
| Net debt (as defined above) | 1,991 | 2,779 |
| Net debt / Equity ratio | 0.14 | 0.21 |
Net debt/EBITDA
Net debt/EBITDA is defined as Net debt divided by EBITDA.
EBITDA
EBITDA is defined as Income from operations for the trailing twelve months preceding the balance sheet date before depreciation and amortization for the same trailing twelve-month period.
| (\$ in millions, unless otherwise indicated) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Income from operations | 4,871 | 3,337 |
| Depreciation and Amortization | 780 | 814 |
| EBITDA | 5,651 | 4,151 |
| Net debt (as defined above) | 1,991 | 2,779 |
| Net debt / EBITDA | 0.35 | 0.67 |
Net working capital as a percentage of revenues is calculated as Net working capital divided by Adjusted revenues for the trailing twelve months.
Net working capital is the sum of (i) receivables, net, (ii) contract assets, (iii) inventories, net, and (iv) prepaid expenses; less (v) accounts payable, trade, (vi) contract liabilities and (vii) other current liabilities (excluding primarily: (a) income taxes payable, (b) current derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program, (e) liabilities related to certain other restructuring-related activities and (f) liabilities related to the divestment of the Power Grids business); and including the amounts related to these accounts which have been presented as either assets or liabilities held for sale but excluding any amounts included in discontinued operations.
Adjusted revenues for the trailing twelve months includes total revenues recorded by ABB in the twelve months preceding the relevant balance sheet date adjusted to eliminate revenues of divested businesses and the estimated impact of annualizing revenues of certain acquisitions which were completed in the same trailing twelve-month period.
| Reconciliation | ||||||
|---|---|---|---|---|---|---|
| December 31, | ||||||
| (\$ in millions, unless otherwise indicated) | 2023 | 2022 | 2021 | |||
| Net working capital: | ||||||
| Receivables, net | 7,446 | 6,858 | 6,551 | |||
| Contract assets | 1,090 | 954 | 990 | |||
| Inventories, net | 6,149 | 6,028 | 4,880 | |||
| Prepaid expenses | 235 | 230 | 206 | |||
| Accounts payable, trade | (4,847) | (4,904) | (4,921) | |||
| Contract liabilities(1) | (2,844) | (2,275) | (1,894) | |||
| Other current liabilities(2) | (3,972) | (3,675) | (3,509) | |||
| Net working capital | 3,257 | 3,216 | 2,303 | |||
| Total revenues for the twelve months ended | 32,235 | 29,446 | 28,945 | |||
| Adjustment to annualize/eliminate revenues of certain acquisitions/divestments | (186) | (513) | (517) | |||
| Adjusted revenues for the trailing twelve months | 32,049 | 28,933 | 28,428 | |||
| Net working capital as a percentage of revenues (%) | 10.2% | 11.1% | 8.1% |
(1) Amount includes certain amounts relating to contract liabilities that are presented in other non-current liabilities.
(2) Amounts exclude \$999 million, \$648 million and \$858 million at December 31, 2023, 2022 and 2021, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program and (e) liabilities related to the divestment of the Power Grids business.
Free cash flow conversion to net income
Free cash flow conversion to net income is calculated as free cash flow divided by Adjusted net income attributable to ABB.
Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodwill, (ii) losses from extinguishment of debt, and (iii) gains arising on the sale of the Power Conversion Division, the Hitachi Energy Joint Venture and the Power Grids business, the latter being included in discontinued operations.
Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible assets and (ii) proceeds from sales of property, plant and equipment.
| Twelve months to | ||
|---|---|---|
| (\$ in millions, unless otherwise indicated) | December 31, 2023 | December 31, 2022 |
| Net cash provided by operating activities – continuing operations | 4,301 | 1,334 |
| Adjusted for the effects of continuing operations: | ||
| Purchases of property, plant and equipment and intangible assets | (770) | (762) |
| Proceeds from sale of property, plant and equipment | 147 | 127 |
| Free cash flow from continuing operations | 3,678 | 699 |
| Net cash used in operating activities – discontinued operations | (11) | (47) |
| Free cash flow | 3,667 | 652 |
| Adjusted net income attributable to ABB(1) | 3,686 | 2,442 |
| Free cash flow conversion to net income | 99% | 27% |
(1) Adjusted net income attributable to ABB for the year ended December 31, 2023, is adjusted to exclude the gain on sale of the Power Conversion Division of \$59 million. For the year ended December 31, 2022, Adjusted net income attributable to ABB, is adjusted to exclude the gain on the sale of Hitachi Energy Joint Venture of \$43 million and reductions to the gain on the sale of Power Grids of \$10 million.
Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense.
| Year ended December 31, | Three months ended December 31, | ||||
|---|---|---|---|---|---|
| (\$ in millions) | 2023 | 2022 | 2023 | 2022 | |
| Interest and dividend income | 165 | 72 | 50 | 22 | |
| Interest and other finance expense | (275) | (130) | (78) | (23) | |
| Net finance expenses | (110) | (58) | (28) | (1) |
Definition
Book-to-bill ratio is calculated as Orders received divided by Total revenues.
| Reconciliation | |||||||
|---|---|---|---|---|---|---|---|
| Year ended December 31, | |||||||
| 2023 | 2022 | ||||||
| (\$ in millions, except Book-to-bill presented as a ratio) | Orders | Revenues | Book-to-bill | Orders | Revenues | Book-to-bill | |
| Electrification | 15,189 | 14,584 | 1.04 | 15,182 | 13,619 | 1.11 | |
| Motion | 8,222 | 7,814 | 1.05 | 7,896 | 6,745 | 1.17 | |
| Process Automation | 7,535 | 6,270 | 1.20 | 6,825 | 6,044 | 1.13 | |
| Robotics & Discrete Automation | 3,066 | 3,640 | 0.84 | 4,116 | 3,181 | 1.29 | |
| Corporate and Other (incl. intersegment eliminations) | (194) | (73) | n.a. | (31) | (143) | n.a. | |
| ABB Group | 33,818 | 32,235 | 1.05 | 33,988 | 29,446 | 1.15 |
| Three months ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (\$ in millions, except Book-to-bill presented as a ratio) | Orders | Revenues | Book-to-bill | Orders | Revenues | Book-to-bill |
| Electrification | 3,395 | 3,698 | 0.92 | 3,385 | 3,498 | 0.97 |
| Motion | 1,937 | 1,946 | 1.00 | 1,649 | 1,845 | 0.89 |
| Process Automation | 1,870 | 1,727 | 1.08 | 1,746 | 1,551 | 1.13 |
| Robotics & Discrete Automation | 550 | 852 | 0.65 | 798 | 891 | 0.90 |
| Corporate and Other (incl. intersegment eliminations) | (103) | 22 | n.a. | 42 | 39 | n.a. |
| ABB Group | 7,649 | 8,245 | 0.93 | 7,620 | 7,824 | 0.97 |
Return on Capital employed is calculated as Operational EBITA after tax, divided by the average of the period's opening and closing Capital employed, adjusted to reflect impacts from the timing of significant acquisitions/divestments occurring during the period.
Capital employed is calculated as the sum of Adjusted total fixed assets and Net working capital (as defined above).
Adjusted total fixed assets is the sum of (i) property, plant and equipment, net, (ii) goodwill, (iii) other intangible assets, net, (iv) investments in equity-accounted companies, and (v) operating lease right-of-use assets, less (vi) deferred tax liabilities recognized in certain acquisitions.
The Notional tax on Operational EBITA is computed using the adjusted group effective tax rate multiplied by Operational EBITA.
The Adjusted Group effective tax rate is computed by dividing an adjusted income tax expense by an adjusted pre-tax income. Certain amounts recorded in income before taxes and the related income tax expense (primarily due to gains and losses from sale of businesses and in 2022, regulatory penalties in connection with the Kusile project) are removed from the reported amounts when computing these adjusted amounts. Certain other amounts recorded in income tax expense are also excluded from the computation to determine the Adjusted Group effective tax rate.
| Reconciliation |
|---|
| ---------------- |
| December 31, | |||
|---|---|---|---|
| (\$ in millions, unless otherwise indicated) | 2023 | 2022 | 2021 |
| Adjusted total fixed assets: | |||
| Property, plant and equipment, net | 4,142 | 3,911 | 4,045 |
| Goodwill | 10,561 | 10,511 | 10,482 |
| Other intangible assets, net | 1,223 | 1,406 | 1,561 |
| Investments in equity-accounted companies | 187 | 130 | 1,670 |
| Operating lease right-of-use assets | 893 | 841 | 895 |
| Total fixed assets | 17,006 | 16,799 | 18,653 |
| Less: Deferred taxes recognized in certain acquisitions(1) | (297) | (358) | (417) |
| Adjusted total fixed assets | 16,709 | 16,441 | 18,236 |
| Net working capital - (as defined above) | 3,257 | 3,216 | 2,303 |
| Capital employed | 19,966 | 19,657 | 20,539 |
| Average Capital employed: | |||
| Capital employed at the end of the previous year | 19,657 | 20,539 | 21,976 |
| Capital employed at the end of the current year | 19,966 | 19,657 | 20,539 |
| 19,812 | 20,098 | 21,258 | |
| Adjusted for timing of acquisitions/divestments | – | 948 | 224 |
| Average Capital employed | 19,812 | 21,046 | 21,482 |
| Operational EBITA for the year ended | 5,427 | 4,510 | 4,122 |
| Notional tax on Operational EBITA | (1,248) | (1,037) | (929) |
| Operational EBITA after tax | 4,179 | 3,473 | 3,193 |
| Return on Capital employed (ROCE) | 21.1% | 16.5% | 14.9% |
(1) Amount relates to GEIS acquired in 2018, B&R acquired in 2017, Thomas & Betts acquired in 2012 and Baldor acquired in 2011.
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