UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the
month of July 2019
Commission
File Number 001-16429
ABB
Ltd
(Translation
of registrant’s name into English)
Affolternstrasse 44,
CH-8050, Zurich, Switzerland
(Address
of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
⬜
Note:
Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indication by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
⬜
Note:
Regulation S-T Rule 101(b)(7) only permits the submission in paper of
a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws
of the jurisdiction in which the registrant is incorporated, domiciled or
legally organized (the registrant’s “home country”), or under the rules of
the home country exchange on which the registrant’s securities are traded, as
long as the report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security holders, and, if
discussing a material event, has already been the subject of a Form 6-K
submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934.
If “Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated July 25, 2019 titled “Q2
2019 results”.
2.
Q2 2019 Financial Information.
3.
Announcements regarding transactions in ABB Ltd’s Securities made
by the directors or the members of the Executive Committee.
The information provided by Item 2 above is hereby incorporated by
reference into the Registration Statements on Form F-3 of ABB Ltd and ABB
Finance (USA) Inc. (File Nos. 333-223907 and 333-223907-01) and registration
statements on Form S-8 (File Nos. 333-190180, 333-181583, 333-179472,
333-171971 and 333-129271) each of which was previously filed with the
Securities and Exchange Commission.
2
—
ZURICH,
SWITZERLAND, JULY 25, 2019
Q2
2019 results
Continued
growth despite market headwinds; transformation progressing
– Total orders +1%
1
,
order backlog +7%
– Revenues +2%,
book-to-bill
2
1.03x
– Operational EBITA margin
2
11.5%, impacted 60 basis points by GEIS dilution and additional 90 basis points
by stranded costs
– Net income $64 million,
includes $455 million charge related to planned exit of solar inverter business
– Operational EPS
2
$0.34, -10%
3
– Cash flow from operating
activities zero, solid cash delivery expected for the full year
– Announced sale of solar
inverter business to streamline portfolio
“ABB continued to generate top-line momentum during the
second quarter despite macroeconomic headwinds and geopolitical uncertainty,”
said Peter Voser, Chairman and CEO of ABB. “Going forward we will drive
long-term growth across our businesses, while staying focused on costs and
portfolio management. We are instilling a new culture of empowerment to build
ABB into a stronger and more agile group.”
“Overall total orders and revenues continued to grow, led
by Electrification and Motion while Robotics and Discrete Automation in
particular felt the downturn in automotive and machine building,” said Timo
Ihamuotila, CFO of ABB. “At the same time, we are making good progress with the
carve-out of our Power Grids business, the integration of GEIS and the roll-out
of our ABB-OS operating model, which all are planned to make ABB more
profitable.”
Key figures
|
|
|
ChangE
|
|
|
ChangE
|
($ in millions, unless otherwise indicated)
|
Q2 2019
|
Q2 2018
|
US $
|
Comparable
1
|
H1 2019
|
H1 2018
|
US $
|
Comparable
1
|
Orders
|
7,401
|
7,133
|
+4%
|
+1%
|
15,014
|
14,688
|
+2%
|
+2%
|
Revenues
|
7,171
|
6,731
|
+7%
|
+2%
|
14,018
|
13,172
|
+6%
|
+3%
|
Income from
operations
|
123
|
708
|
-83%
|
|
713
|
1,334
|
-47%
|
|
Operational
EBITA
2
|
825
|
855
|
-4%
|
+1%
4
|
1,591
|
1,607
|
-1%
|
+5%
4
|
as % of
operational revenues
|
11.5%
|
12.6%
|
-1.1pts
|
|
11.4%
|
12.2%
|
-0.8pts
|
|
Income
(loss) from continuing operations, net of tax
|
-54
|
524
|
n.a.
|
|
361
|
938
|
-62%
|
|
Net income
attributable to ABB
|
64
|
681
|
-91%
|
|
599
|
1,253
|
-52%
|
|
Basic EPS
($)
|
0.03
|
0.32
|
-91%
3
|
|
0.28
|
0.59
|
-52%
3
|
|
Operational
EPS
($)
2
|
0.34
|
0.38
|
-10%
3
|
-10%
3
|
0.64
|
0.69
|
-7%
3
|
-4%
3
|
Cash flow
from operating activities
5
|
0
|
1,010
|
n.a.
|
|
-256
|
492
|
n.a.
|
|
On December 17, 2018, ABB announced an agreed sale of its Power Grids
business. Consequently, the results of the Power Grids business are presented
as discontinued operations. The company’s results for all periods have been
adjusted accordingly.
______
1
Growth rates for orders, order backlog and revenues are on a comparable
basis (local currency adjusted for acquisitions and divestitures).
2
For a reconciliation of non-GAAP measures, see “supplemental
reconciliations and definitions” in the attached Q2 2019 Financial Information
3
EPS growth rates are computed using unrounded amounts.
Comparable operational earnings per share is in constant currency (2014
exchange rates not adjusted for changes in the business portfolio).
4
Constant currency (not adjusted for portfolio changes).
5
Amount represents total for both
continuing and discontinued operations.
Short-term outlook
Macroeconomic indicators are mixed in Europe and China, while growth in
the US is more sustained. Global markets overall remain affected by
geopolitical uncertainties.
The end-markets ABB operates in are showing resilience, with headwinds in
some markets, particularly discrete industries. Oil prices and foreign exchange
translation effects are expected to continue to influence the company’s
results.
Q2 2019 Group results
Orders
Orders grew 1 percent (4 percent in US dollars) in the quarter
compared to the prior year period. Growth from Electrification and Motion was
dampened by lower demand in Robotics & Discrete Automation and lower large
orders in Industrial Automation. The order backlog rose 7
percent (3 percent lower in US dollars), ending the quarter at $14.0 billion.
Service orders represented 20 percent of total orders, growing in
the second quarter by 3 percent (2 percent lower in US dollars).
Changes in the business portfolio including impacts from the acquisition
of GE Industrial Solutions (“GEIS”) and from the establishment of the Linxon
Joint Venture (“JV”) resulted in a net positive impact of 8 percent on
total orders. Foreign exchange translation effects had a net negative impact of
5 percent on total orders.
Market overview
Regional performance was varied during the quarter:
– Orders from Europe were stable (3 percent lower in US dollars).
Strong growth in France, the Netherlands and Spain, plus robust growth from
Germany was more than offset by lower order levels from Italy, the UK, Finland
and Sweden. In Germany, orders were up 1 percent (2 percent lower in
US dollars).
– Orders from the Americas increased 7 percent (30 percent
in US dollars). Orders developed particularly well across South America
including Brazil and Chile. Orders from the United States rose 1 percent
(29 percent in US dollars).
– In Asia, Middle East and Africa (AMEA), orders were 3 percent
lower (6 percent in US dollars). Lower order levels from countries
including Japan, Saudi Arabia and China outweighed strong growth from South
Korea, South Africa and Australia and solid growth in India. In China, orders
were 1 percent lower (3 percent lower in US dollars).
Demand was mixed across ABB’s key customer segments:
– In process industries, ongoing opex driven demand for
electrification, automation and digitalization solutions reflected in continued
order growth from oil and gas, mining and pulp and paper customers.
– Traditional automotive and automotive-sector related industries, as
well as 3C and machine builders, were particularly challenged during the
quarter, which impacted ABB’s growth. Discrete industries softened during the
quarter although select end-markets such as food and beverage and logistics
proved resilient.
– In the transport and infrastructure sectors, investments in rail and
specialty marine vessels continued. Orders for ABB’s e-mobility offering and
for data center infrastructure grew well. Buildings demand was stable.
Revenues
Revenues improved 2 percent (7 percent in US dollars), with
growth in Electrification, Industrial Automation and Motion outweighing a
softer performance from Robotics & Discrete Automation.
Service revenues were up 1 percent (4 percent in US dollars).
Services represented 19 percent of total revenues.
Business portfolio changes including impacts from the acquisition of GEIS
and from the establishment of the Linxon JV contributed a net positive of 9 percent
to reported revenues. Changes in exchange rates resulted in a negative
translation impact on reported revenues of 4 percent.
The book-to-bill ratio for the quarter was 1.03x compared to 1.06x in the
previous year period.
Against a backdrop of more subdued activity in some end-markets ABB expects
slight growth in annual revenues on a comparable basis in 2019, supported by
its order backlog.
Operational EBITA
Operational EBITA of $825 million was 4 percent down in US dollars
(up 1 percent in local currencies). The operational EBITA margin of 11.5 percent
was 110 basis points lower year-on-year.
Drivers of the margin include an approximately 60 basis points
impact from GEIS dilution and a further 90 basis points impact from
stranded costs. Stranded costs are services provided by the group to Power
Grids that do not qualify to be reported as discontinued operations and which
the group expects to be predominantly transferred to Power Grids or eliminated
by the closing of the transaction. Stranded costs of $66 million were
recognized in the Corporate and Other operational EBITA result, $12 million
lower than in the second quarter of 2018.
ABB expects annual operational EBITA margins to improve in 2019, aided by
an improved GEIS performance, ongoing stranded cost elimination, non-core
improvement and ABB’s simplification program.
Net income, basic and operational earnings per share
Net loss from continuing operations was $54 million. The result
includes a $455 million charge recorded in the quarter further to the
announced agreement to divest the solar inverter business. Net income from
discontinued operations was $142 million.
Group net income attributable to ABB was $64 million. Basic earnings
per share was $0.03, 91 percent lower year on year. Operational earnings
per share of $0.34 was 10 percent lower.
Cash flow from operating activities
Cash flow from operating activities of $0 million compares to
$1,010 million in the second quarter of 2018. Versus the prior year
period, cash flow from operating activities in continuing operations declined
to -$69 million from $686 million, while cash flow from discontinued
operations fell to $69 million from $324 million.
Relative to a year ago, cash flow from continuing operating activities
primarily reflects timing of employee incentive payments, paid in the second
quarter this year, which in 2018 were paid in the first quarter. As well, cash
flow was impacted by less favorable movement in accounts payable compared to
the same period last year. Net working capital as a percentage of revenues was
13.6 percent. ABB expects solid cash delivery for the full year, not
including cash outflows for the simplification program and carve-out activities
and associated cash tax impacts.
Q2 business performance
($ in millions, unless otherwise indicated)
|
Orders
|
Change
|
Revenues
|
Change
|
Op
EBITA
|
CHANGE
|
US$
|
Comparable
1
|
US$
|
Comparable
1
|
Electrification
|
3,339
|
+22%
|
+5%
|
3,272
|
+22%
|
+4%
|
13.5%
|
-2.5pts
|
Industrial Automation
|
1,622
|
-8%
|
-4%
|
1,580
|
-2%
|
+3%
|
12.1%
|
-2.2pts
|
Motion
|
1,762
|
+0%
|
+4%
|
1,641
|
+1%
|
+5%
|
16.7%
|
+0.4pts
|
Robotics & Discrete Automation
|
883
|
-14%
|
-9%
|
845
|
-9%
|
-3%
|
12.3%
|
-2.6pts
|
Corporate & Other
|
(205)
|
|
|
(167)
|
|
|
(185)
|
|
ABB
Group
|
7,401
|
+4%
|
+1%
|
7,171
|
+7%
|
+2%
|
11.5%
|
-1.1pts
|
Effective October 1, 2018, the Power Grids business was moved from
continuing to discontinued operations. All previously reported amounts have
been restated consistent with these portfolio changes. Corporate & Other
result is inclusive of intersegment eliminations.
Electrification
Total orders
were up 5 percent (22 percent in US dollars). Order growth benefited
from strong demand for solutions, including excellent growth in key segments
such as rail, data centers, wind and EV infrastructure. Demand for buildings
remained stable. On a regional basis, orders grew well in the Americas and AMEA
regions, incl. China, and were up in Europe. Revenues improved 4 percent
(22 percent in US dollars). Operational EBITA margin was 250 basis
points lower year-on-year at 13.5 percent, reflecting 200 basis
points dilution from GEIS. Excluding GEIS, margins reflect a shift in
Electrification’s business mix.
Industrial Automation
Total orders
were 4 percent lower (8 percent in US dollars). Order development was
impacted by lower large orders in Europe and Middle East against a tough
comparison with the prior year period. Growth showed good momentum across
process industries and oil and gas, dampened in particular by weakness in
conventional power generation. The order backlog was steady (2 percent
lower in US dollars) at quarter-end compared to the prior year period. Revenues
were 3 percent higher (2 percent lower in US dollars). The
operational EBITA margin at 12.1 percent, 220 basis points lower
year-on-year, reflects project mix impacts and higher costs due to
under-absorption and investments in growth.
Motion
Total orders
were up 4 percent (steady in US dollars) driven by good order growth
particularly in drives and services including some larger orders for traction
equipment. On a regional basis, orders were strong in Europe, and stable
elsewhere. The order backlog ended the quarter up 5 percent (4 percent
in US dollars). Revenues grew 5 percent (1 percent in US dollars)
while the operational EBITA margin at 16.7 percent expanded 40 basis
points compared to the prior year period, primarily due to favorable volumes
and ongoing cost management.
Robotics & Discrete
Automation
Total orders
were 9 percent lower (14 percent in US dollars), reflecting a tough comparison
base and a challenging market. Weakness was most evident in the automotive, 3C
and machine builders markets, especially in short-cycle activities. Demand
remained strong for logistics automation, and the business continued to benefit
from orders for its automotive solutions. The regional result shows growth in
Europe and the Americas burdened by weakness from the AMEA region, particularly
China. The order backlog ended the quarter up 10 percent (8 percent
in US dollars). Revenues were 3 percent lower (9 percent in US
dollars). The operational EBITA margin of 12.3 percent was 260 basis
points below the prior year level, reflecting lower volumes and adverse mix.
Q2 business and transformation progress
ABB’s four
businesses became effective in the new structure as of April 1, 2019 and
continue to drive growth with a strong focus on costs and portfolio management.
The
reorganization to the new operating model is advancing. The group functions of
marketing and sales, operations and services were integrated in the businesses
during the quarter. The transfer of country resources in to the businesses,
following local labor relations, has also commenced.
As a result
of implementing ABB-OS, ABB expects a total of ~$500 million annual
run-rate cost reductions across the group and expects to meet the $150-200 million
run-rate targeted during 2019 and the full run-rate targeted during 2021.
Work to
carve-out Power Grids is ongoing. Approximately two-thirds of the legal
structures required have been incorporated, while country and functional teams
are making good progress with the scoping and implementation of the separation
in accordance with local laws and requirements. ABB expects to close the
transaction in the first half of 2020.
GEIS’
integration with Electrification is progressing well. Among other actions, the
Electrification business showcased the new ABB + GEIS combined portfolio during
the quarter and announced plans to optimize its combined US-based
medium-voltage manufacturing assets.
On July 9,
ABB announced an agreement to sell its solar inverter business to FIMER S.p.A,
the Italian solar company, evidencing ABB’s commitment to streamlining its
portfolio. The transaction is anticipated to close in the first quarter of
2020, subject to certain conditions, and is expected to support
Electrification’s progress toward its 15-19 percent target margin corridor.
More information
The Q2 results press release and presentation slides are available
on the ABB News Center at www.abb.com/news and on the Investor Relations
homepage at www.abb.com/investorrelations.
A conference call and webcast for analysts and investors is
scheduled to begin today at 2:00 p.m. CEST (1:00 p.m. BST, 08:00 a.m. EDT). To
pre-register for the conference call or to join the webcast, please refer to
the ABB website: new.abb.com/investorrelations/. A recorded session will be
available as a webcast one hour after the end of the conference call.
ABB
(ABBN: SIX Swiss Ex) is a pioneering technology leader with
a comprehensive offering for digital industries. With a history of innovation
spanning more than 130 years, ABB is today a leader in digital industries with
four customer-focused, globally leading businesses: Electrification, Industrial
Automation, Motion, and Robotics & Discrete Automation, supported by its
common ABB Ability™ digital platform. ABB’s market leading Power Grids business
will be divested to Hitachi in 2020. ABB operates in more than 100 countries
with about 147,000 employees. www.abb.com
|
Investor calendar 2019/20
|
Q3 2019
results
|
October
23, 2019
|
Electrification
investor event
|
November
5, 2019
|
Q4 2019
results
|
February
5, 2020
|
Important notice about forward-looking
information
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
“Short-term outlook”, “Revenues”, “Operational EBITA”, “Cash flow from
operating activities” and “Q2 business and transformation progress”. 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 Ltd. These expectations, estimates and projections are
generally identifiable by statements containing words such as “anticipates”,
“expects,” “believes,” “estimates,” “plans”, “targets” or similar expressions.
However, there are many risks and uncertainties, many of which are beyond our
control, that could cause our actual results to differ materially from the
forward-looking information and statements made in this press release and which
could affect our ability to achieve any or all of our stated targets. The
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.
Zurich, July 25, 2019
Peter Voser, Chairman and CEO
—
For more information, please contact:
|
Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com
|
Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
|
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
|
1
Q2
2019 Financial Information
2
Q2
2019 Financial Information
—
Key Figures
|
|
|
|
|
CHANGE
|
|
($ in
millions, unless otherwise indicated)
|
Q2 2019
|
Q2 2018
|
US$
|
Comparable
(1)
|
|
Orders
|
7,401
|
7,133
|
4%
|
1%
|
|
Order
backlog (end June)
|
14,016
|
14,379
|
-3%
|
7%
|
|
Revenues
|
7,171
|
6,731
|
7%
|
2%
|
|
Income
from operations
|
123
|
708
|
-83%
|
|
|
Operational
EBITA
(1)
|
825
|
855
|
-4%
|
1%
(2)
|
|
|
as % of
operational revenues
(1)
|
11.5%
|
12.6%
|
-1.1 pts
|
|
|
Income
(loss) from continuing operations, net of tax
|
(54)
|
524
|
-110%
|
|
|
Net
income attributable to ABB
|
64
|
681
|
-91%
|
|
|
Basic
earnings (loss) per share from continuing operations ($)
|
(0.03)
|
0.24
|
-114%
(3)
|
|
|
Basic
earnings per share ($)
|
0.03
|
0.32
|
-91%
(3)
|
|
|
Operational
earnings per share
(1)
($)
|
0.34
|
0.38
|
-10%
(3)
|
-10%
(3)
|
|
Cash
flow from operating activities
(4)
|
-
|
1,010
|
n.a
|
|
|
|
|
|
|
CHANGE
|
|
($ in
millions, unless otherwise indicated)
|
H1 2019
|
H1 2018
|
US$
|
Comparable
(1)
|
|
Orders
|
15,014
|
14,688
|
2%
|
2%
|
|
Revenues
|
14,018
|
13,172
|
6%
|
3%
|
|
Income
from operations
|
713
|
1,334
|
-47%
|
|
|
Operational
EBITA
(1)
|
1,591
|
1,607
|
-1%
|
5%
(2)
|
|
|
as % of
operational revenues
(1)
|
11.4%
|
12.2%
|
-0.8 pts
|
|
|
Income
from continuing operations, net of tax
|
361
|
938
|
-62%
|
|
|
Net
income attributable to ABB
|
599
|
1,253
|
-52%
|
|
|
Basic
earnings per share from continuing operations ($)
|
0.15
|
0.42
|
-64%
(3)
|
|
|
Basic
earnings per share ($)
|
0.28
|
0.59
|
-52%
(3)
|
|
|
Operational
earnings per share
(1)
($)
|
0.64
|
0.69
|
-7%
(3)
|
-4%
(3)
|
|
Cash
flow from operating activities
(4)
|
(256)
|
492
|
n.a
|
|
(1) For a
reconciliation of non-GAAP measures see “
Supplemental Reconciliations and
Definitions
” on
page 38.
(2) Constant
currency (not adjusted for portfolio changes).
(3) Earnings
per share growth rates are computed using unrounded amounts. Comparable
Operational earnings per share growth is in constant currency (2014 foreign
exchange rates and not adjusted for changes in the business portfolio).
(4)
Cash flow from operating activities includes both continuing and discontinued
operations.
3
Q2
2019 Financial Information
|
|
|
|
CHANGE
|
|
($ in
millions, unless otherwise indicated)
|
Q2 2019
|
Q2 2018
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB
Group
|
7,401
|
7,133
|
4%
|
9%
|
1%
|
|
|
Electrification
|
3,339
|
2,727
|
22%
|
27%
|
5%
|
|
|
Industrial
Automation
|
1,622
|
1,764
|
-8%
|
-4%
|
-4%
|
|
|
Motion
|
1,762
|
1,757
|
0%
|
4%
|
4%
|
|
|
Robotics
& Discrete Automation
|
883
|
1,031
|
-14%
|
-9%
|
-9%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(205)
|
(146)
|
|
Order
backlog (end June)
|
ABB
Group
|
14,016
|
14,379
|
-3%
|
-1%
|
7%
|
|
|
Electrification
|
4,553
|
4,449
|
2%
|
3%
|
10%
|
|
|
Industrial
Automation
|
5,240
|
5,344
|
-2%
|
0%
|
0%
|
|
|
Motion
|
3,050
|
2,939
|
4%
|
5%
|
5%
|
|
|
Robotics
& Discrete Automation
|
1,586
|
1,475
|
8%
|
10%
|
10%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(413)
|
172
|
|
Revenues
|
ABB
Group
|
7,171
|
6,731
|
7%
|
11%
|
2%
|
|
|
Electrification
|
3,272
|
2,673
|
22%
|
28%
|
4%
|
|
|
Industrial
Automation
|
1,580
|
1,613
|
-2%
|
3%
|
3%
|
|
|
Motion
|
1,641
|
1,629
|
1%
|
5%
|
5%
|
|
|
Robotics
& Discrete Automation
|
845
|
925
|
-9%
|
-3%
|
-3%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(167)
|
(109)
|
|
Income
from operations
|
ABB
Group
|
123
|
708
|
|
|
|
|
|
Electrification
|
(104)
|
353
|
|
|
|
|
|
Industrial
Automation
|
187
|
214
|
|
|
|
|
|
Motion
|
249
|
243
|
|
|
|
|
|
Robotics
& Discrete Automation
|
76
|
119
|
|
|
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(285)
|
(221)
|
|
Income
from operations %
|
ABB
Group
|
1.7%
|
10.5%
|
|
|
|
|
|
Electrification
|
(3.2)%
|
13.2%
|
|
|
|
|
|
Industrial
Automation
|
11.8%
|
13.3%
|
|
|
|
|
|
Motion
|
15.2%
|
14.9%
|
|
|
|
|
|
Robotics
& Discrete Automation
|
9.0%
|
12.9%
|
|
|
|
|
Operational
EBITA
|
ABB
Group
|
825
|
855
|
-4%
|
1%
|
|
|
|
Electrification
|
440
|
430
|
2%
|
7%
|
|
|
|
Industrial
Automation
|
190
|
231
|
-18%
|
-15%
|
|
|
|
Motion
|
275
|
266
|
3%
|
7%
|
|
|
|
Robotics
& Discrete Automation
|
105
|
138
|
-24%
|
-19%
|
|
|
|
Corporate
and Other
(1)
|
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(185)
|
(210)
|
|
|
|
|
Operational
EBITA %
|
ABB
Group
|
11.5%
|
12.6%
|
|
|
|
|
|
Electrification
|
13.5%
|
16.0%
|
|
|
|
|
|
Industrial
Automation
|
12.1%
|
14.3%
|
|
|
|
|
|
Motion
|
16.7%
|
16.3%
|
|
|
|
|
|
Robotics
& Discrete Automation
|
12.3%
|
14.9%
|
|
|
|
|
Cash
flow from operating activities
|
ABB
Group
|
–
|
1,010
|
|
|
|
|
|
Electrification
|
232
|
297
|
|
|
|
|
|
Industrial
Automation
|
(4)
|
179
|
|
|
|
|
|
Motion
|
152
|
254
|
|
|
|
|
|
Robotics
& Discrete Automation
|
67
|
127
|
|
|
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(516)
|
(171)
|
|
|
|
|
|
Discontinued
operations
|
69
|
324
|
|
|
|
|
(1)
Corporate and Other includes Stranded corporate costs of $66 million and $78
million for the three months ended June 30, 2019 and 2018, respectively.
|
4
Q2
2019 Financial Information
|
|
|
|
CHANGE
|
|
($ in
millions, unless otherwise indicated)
|
H1 2019
|
H1 2018
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB
Group
|
15,014
|
14,688
|
2%
|
8%
|
2%
|
|
|
Electrification
|
6,702
|
5,513
|
22%
|
28%
|
5%
|
|
|
Industrial
Automation
|
3,288
|
3,630
|
-9%
|
-5%
|
-5%
|
|
|
Motion
|
3,562
|
3,550
|
0%
|
5%
|
5%
|
|
|
Robotics
& Discrete Automation
|
1,850
|
2,075
|
-11%
|
-5%
|
-5%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(388)
|
(80)
|
|
|
|
|
Order
backlog (end June)
|
ABB
Group
|
14,016
|
14,379
|
-3%
|
-1%
|
7%
|
|
|
Electrification
|
4,553
|
4,449
|
2%
|
3%
|
10%
|
|
|
Industrial
Automation
|
5,240
|
5,344
|
-2%
|
0%
|
0%
|
|
|
Motion
|
3,050
|
2,939
|
4%
|
5%
|
5%
|
|
|
Robotics
& Discrete Automation
|
1,586
|
1,475
|
8%
|
10%
|
10%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(413)
|
172
|
|
Revenues
|
ABB
Group
|
14,018
|
13,172
|
6%
|
12%
|
3%
|
|
|
Electrification
|
6,329
|
5,167
|
22%
|
29%
|
4%
|
|
|
Industrial
Automation
|
3,098
|
3,233
|
-4%
|
1%
|
1%
|
|
|
Motion
|
3,246
|
3,178
|
2%
|
7%
|
7%
|
|
|
Robotics
& Discrete Automation
|
1,696
|
1,832
|
-7%
|
-1%
|
-1%
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(351)
|
(238)
|
|
Income
from operations
|
ABB
Group
|
713
|
1,334
|
|
|
|
|
|
Electrification
|
193
|
678
|
|
|
|
|
|
Industrial
Automation
|
382
|
441
|
|
|
|
|
|
Motion
|
500
|
447
|
|
|
|
|
|
Robotics
& Discrete Automation
|
153
|
238
|
|
|
|
|
|
Corporate
and Other
|
|
|
|
|
(incl.
intersegment eliminations)
|
(515)
|
(470)
|
|
Income
from operations %
|
ABB
Group
|
5.1%
|
10.1%
|
|
|
|
|
|
Electrification
|
3.0%
|
13.1%
|
|
|
|
|
|
Industrial
Automation
|
12.3%
|
13.6%
|
|
|
|
|
|
Motion
|
15.4%
|
14.1%
|
|
|
|
|
|
Robotics
& Discrete Automation
|
9.0%
|
13.0%
|
|
|
|
|
Operational
EBITA
|
ABB
Group
|
1,591
|
1,607
|
-1%
|
5%
|
|
|
|
Electrification
|
817
|
807
|
1%
|
7%
|
|
|
|
Industrial
Automation
|
395
|
462
|
-15%
|
-10%
|
|
|
|
Motion
|
538
|
496
|
8%
|
14%
|
|
|
|
Robotics
& Discrete Automation
|
200
|
277
|
-28%
|
-23%
|
|
|
|
Corporate
and Other
(1)
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(359)
|
(435)
|
|
|
|
|
Operational
EBITA %
|
ABB
Group
|
11.4%
|
12.2%
|
|
|
|
|
|
Electrification
|
12.9%
|
15.6%
|
|
|
|
|
|
Industrial
Automation
|
12.8%
|
14.3%
|
|
|
|
|
|
Motion
|
16.6%
|
15.6%
|
|
|
|
|
|
Robotics
& Discrete Automation
|
11.8%
|
15.0%
|
|
|
|
|
Cash
flow from operating activities
|
ABB
Group
|
(256)
|
492
|
|
|
|
|
|
Electrification
|
230
|
378
|
|
|
|
|
|
Industrial
Automation
|
40
|
230
|
|
|
|
|
|
Motion
|
295
|
306
|
|
|
|
|
|
Robotics
& Discrete Automation
|
95
|
176
|
|
|
|
|
|
Corporate
and Other
|
|
|
|
|
|
|
|
(incl.
intersegment eliminations)
|
(826)
|
(769)
|
|
|
|
|
|
Discontinued
operations
|
(90)
|
171
|
|
|
|
|
(1)
Corporate and Other includes Stranded corporate costs of $133 million and
$154 million for the six months ended June 30, 2019 and 2018,
respectively.
|
5
Q2
2019 Financial Information
Operational
EBITA
|
|
|
|
Industrial
|
|
Robotics & Discrete
|
|
|
ABB
|
Electrification
|
Automation
|
Motion
|
Automation
|
|
($ in
millions, unless otherwise indicated)
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
|
Revenues
|
7,171
|
6,731
|
3,272
|
2,673
|
1,580
|
1,613
|
1,641
|
1,629
|
845
|
925
|
|
FX/commodity
timing
|
|
|
|
|
|
|
|
|
|
|
|
differences
in total revenues
|
3
|
33
|
(4)
|
20
|
(5)
|
5
|
1
|
7
|
7
|
4
|
|
Operational
revenues
|
7,174
|
6,764
|
3,268
|
2,693
|
1,575
|
1,618
|
1,642
|
1,636
|
852
|
929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
123
|
708
|
(104)
|
353
|
187
|
214
|
249
|
243
|
76
|
119
|
|
Acquisition-related
amortization
|
67
|
62
|
30
|
19
|
1
|
2
|
13
|
16
|
19
|
21
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
|
|
|
|
implementation
costs
|
74
|
(1)
|
13
|
(1)
|
7
|
–
|
2
|
–
|
2
|
(1)
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
|
|
|
|
divested
businesses
|
4
|
10
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes
in pre-acquisition estimates
|
13
|
1
|
13
|
1
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains
and losses from sale of businesses
|
3
|
(1)
|
(4)
|
2
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Fair
value adjustment on assets and
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
held for sale
|
455
|
–
|
455
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Acquisition-
and divestment-related
|
|
|
|
|
|
|
|
|
|
|
|
expenses
and integration costs
|
30
|
48
|
29
|
44
|
–
|
1
|
–
|
–
|
1
|
–
|
|
Certain
other non-operational items
|
43
|
10
|
1
|
–
|
–
|
–
|
2
|
3
|
1
|
–
|
|
FX/commodity
timing
|
|
|
|
|
|
|
|
|
|
|
|
differences
in income from operations
|
13
|
18
|
7
|
12
|
(5)
|
14
|
9
|
4
|
6
|
(1)
|
|
Operational
EBITA
|
825
|
855
|
440
|
430
|
190
|
231
|
275
|
266
|
105
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
11.5%
|
12.6%
|
13.5%
|
16.0%
|
12.1%
|
14.3%
|
16.7%
|
16.3%
|
12.3%
|
14.9%
|
|
|
|
|
Industrial
|
|
Robotics & Discrete
|
|
|
ABB
|
Electrification
|
Automation
|
Motion
|
Automation
|
|
($ in
millions, unless otherwise indicated)
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
|
Revenues
|
14,018
|
13,172
|
6,329
|
5,167
|
3,098
|
3,233
|
3,246
|
3,178
|
1,696
|
1,832
|
|
FX/commodity
timing
|
|
|
|
|
|
|
|
|
|
|
|
differences
in total revenues
|
(8)
|
32
|
(9)
|
14
|
(5)
|
5
|
1
|
2
|
3
|
9
|
|
Operational
revenues
|
14,010
|
13,204
|
6,320
|
5,181
|
3,093
|
3,238
|
3,247
|
3,180
|
1,699
|
1,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
713
|
1,334
|
193
|
678
|
382
|
441
|
500
|
447
|
153
|
238
|
|
Acquisition-related
amortization
|
135
|
125
|
59
|
39
|
2
|
4
|
27
|
31
|
39
|
42
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
|
|
|
|
implementation
costs
|
142
|
6
|
53
|
3
|
12
|
2
|
5
|
3
|
3
|
(1)
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
|
|
|
|
divested
businesses
|
7
|
17
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes
in pre-acquisition estimates
|
13
|
1
|
13
|
1
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains
and losses from sale of businesses
|
4
|
5
|
(3)
|
2
|
–
|
3
|
–
|
–
|
–
|
–
|
|
Fair
value adjustment on assets and
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
held for sale
|
455
|
–
|
455
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Acquisition-
and divestment-related
|
|
|
|
|
|
|
|
|
|
|
|
expenses
and integration costs
|
54
|
73
|
51
|
68
|
–
|
2
|
–
|
–
|
1
|
–
|
|
Certain
other non-operational items
|
76
|
15
|
2
|
(2)
|
2
|
–
|
5
|
4
|
1
|
–
|
|
FX/commodity
timing
|
|
|
|
|
|
|
|
|
|
|
|
differences
in income from operations
|
(8)
|
31
|
(6)
|
18
|
(3)
|
10
|
1
|
11
|
3
|
(2)
|
|
Operational
EBITA
|
1,591
|
1,607
|
817
|
807
|
395
|
462
|
538
|
496
|
200
|
277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
11.4%
|
12.2%
|
12.9%
|
15.6%
|
12.8%
|
14.3%
|
16.6%
|
15.6%
|
11.8%
|
15.0%
|
6
Q2
2019 Financial Information
Depreciation and Amortization
|
|
|
|
Industrial
|
|
Robotics & Discrete
|
|
|
ABB
|
Electrification
|
Automation
|
Motion
|
Automation
|
|
($ in
millions)
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
Q2 19
|
Q2 18
|
|
Depreciation
|
160
|
139
|
63
|
50
|
12
|
12
|
28
|
30
|
11
|
11
|
|
Amortization
|
89
|
76
|
39
|
21
|
2
|
2
|
14
|
16
|
20
|
21
|
|
including
total acquisition-related amortization of:
|
67
|
62
|
30
|
19
|
1
|
2
|
13
|
16
|
19
|
21
|
|
|
|
|
|
|
Industrial
|
|
|
Robotics & Discrete
|
|
|
ABB
|
Electrification
|
Automation
|
Motion
|
Automation
|
|
($ in
millions)
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
H1 19
|
H1 18
|
|
Depreciation
|
304
|
280
|
128
|
102
|
23
|
24
|
56
|
60
|
22
|
21
|
|
Amortization
|
176
|
151
|
76
|
44
|
4
|
5
|
29
|
33
|
40
|
43
|
|
including
total acquisition-related amortization of:
|
135
|
125
|
59
|
39
|
2
|
4
|
27
|
31
|
39
|
42
|
Orders received and revenues by region
|
($ in
millions, unless otherwise indicated)
|
Orders received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
Q2 19
|
Q2 18
|
US$
|
Local
|
parable
|
Q2 19
|
Q2 18
|
US$
|
Local
|
parable
|
|
Europe
|
2,658
|
2,754
|
-3%
|
3%
|
0%
|
2,535
|
2,452
|
3%
|
10%
|
6%
|
|
The
Americas
|
2,379
|
1,834
|
30%
|
31%
|
7%
|
2,321
|
1,832
|
27%
|
28%
|
3%
|
|
Asia,
Middle East and Africa
|
2,321
|
2,477
|
-6%
|
-2%
|
-3%
|
2,258
|
2,376
|
-5%
|
0%
|
-2%
|
|
Intersegment
orders/revenues
(1)
|
43
|
68
|
|
|
|
57
|
71
|
|
|
|
|
ABB
Group
|
7,401
|
7,133
|
4%
|
9%
|
1%
|
7,171
|
6,731
|
7%
|
11%
|
2%
|
|
($ in
millions, unless otherwise indicated)
|
Orders received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
H1 19
|
H1 18
|
US$
|
Local
|
parable
|
H1 19
|
H1 18
|
US$
|
Local
|
parable
|
|
Europe
|
5,439
|
5,780
|
-6%
|
1%
|
-2%
|
4,982
|
4,928
|
1%
|
9%
|
5%
|
|
The
Americas
|
4,611
|
3,580
|
29%
|
31%
|
8%
|
4,519
|
3,551
|
27%
|
30%
|
5%
|
|
Asia,
Middle East and Africa
|
4,862
|
5,197
|
-6%
|
-2%
|
1%
|
4,407
|
4,563
|
-3%
|
2%
|
0%
|
|
Intersegment
orders/revenues
(1)
|
102
|
131
|
|
|
|
110
|
130
|
|
|
|
|
ABB
Group
|
15,014
|
14,688
|
2%
|
8%
|
2%
|
14,018
|
13,172
|
6%
|
12%
|
3%
|
(1) Intersegment
orders/revenues include sales to the Power Grids business which is presented as
discontinued operations and are not eliminated from Total orders/revenues.
7
Q2
2019 Financial Information
—
Consolidated Financial Information
|
ABB Ltd Consolidated
Income Statements (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions, except per share data in $)
|
Jun. 30, 2019
|
Jun. 30, 2018
|
Jun. 30, 2019
|
Jun. 30, 2018
|
|
Sales
of products
|
11,392
|
10,675
|
5,832
|
5,448
|
|
Sales
of services and other
|
2,626
|
2,497
|
1,339
|
1,283
|
|
Total
revenues
|
14,018
|
13,172
|
7,171
|
6,731
|
|
Cost of
sales of products
|
(7,946)
|
(7,375)
|
(4,069)
|
(3,777)
|
|
Cost of
services and other
|
(1,563)
|
(1,468)
|
(802)
|
(752)
|
|
Total
cost of sales
|
(9,509)
|
(8,843)
|
(4,871)
|
(4,529)
|
|
Gross
profit
|
4,509
|
4,329
|
2,300
|
2,202
|
|
Selling,
general and administrative expenses
|
(2,784)
|
(2,474)
|
(1,429)
|
(1,229)
|
|
Non-order
related research and development expenses
|
(583)
|
(546)
|
(298)
|
(273)
|
|
Other
income (expense), net
|
(429)
|
25
|
(450)
|
8
|
|
Income
from operations
|
713
|
1,334
|
123
|
708
|
|
Interest
and dividend income
|
37
|
48
|
18
|
26
|
|
Interest
and other finance expense
|
(123)
|
(122)
|
(61)
|
(33)
|
|
Non-operational
pension (cost) credit
|
44
|
52
|
21
|
25
|
|
Income
from continuing operations before taxes
|
671
|
1,312
|
101
|
726
|
|
Provision
for taxes
|
(310)
|
(374)
|
(155)
|
(202)
|
|
Income
(loss) from continuing operations, net of tax
|
361
|
938
|
(54)
|
524
|
|
Income
from discontinued operations, net of tax
|
291
|
379
|
142
|
193
|
|
Net
income
|
652
|
1,317
|
88
|
717
|
|
Net
income attributable to noncontrolling interests
|
(53)
|
(64)
|
(24)
|
(36)
|
|
Net
income attributable to ABB
|
599
|
1,253
|
64
|
681
|
|
|
|
|
|
|
|
Amounts
attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
325
|
903
|
(72)
|
504
|
|
Income
from discontinued operations, net of tax
|
274
|
350
|
136
|
177
|
|
Net
income
|
599
|
1,253
|
64
|
681
|
|
|
|
|
|
|
|
Basic
earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
0.15
|
0.42
|
(0.03)
|
0.24
|
|
Income
from discontinued operations, net of tax
|
0.13
|
0.16
|
0.06
|
0.08
|
|
Net
income
|
0.28
|
0.59
|
0.03
|
0.32
|
|
|
|
|
|
|
|
Diluted
earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
0.15
|
0.42
|
(0.03)
|
0.24
|
|
Income
from discontinued operations, net of tax
|
0.13
|
0.16
|
0.06
|
0.08
|
|
Net
income
|
0.28
|
0.58
|
0.03
|
0.32
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding (in millions) used to compute:
|
|
|
|
|
|
Basic
earnings per share attributable to ABB shareholders
|
2,132
|
2,132
|
2,132
|
2,130
|
|
Diluted
earnings per share attributable to ABB shareholders
|
2,134
|
2,142
|
2,132
|
2,138
|
|
Due to
rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to the Consolidated Financial Information
|
|
|
|
|
8
Q2
2019 Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
ABB Ltd Condensed
Consolidated Statements of Comprehensive
|
|
Income (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
Jun. 30, 2019
|
Jun. 30, 2018
|
Jun. 30, 2019
|
Jun. 30, 2018
|
|
Total
comprehensive income, net of tax
|
652
|
984
|
90
|
192
|
|
Total
comprehensive income attributable to noncontrolling interests, net of tax
|
(54)
|
(60)
|
(19)
|
(16)
|
|
Total
comprehensive income attributable to ABB shareholders, net of tax
|
598
|
924
|
71
|
176
|
|
Due to
rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to the Consolidated Financial Information
|
|
|
|
|
9
Q2
2019 Financial Information
|
—
|
|
|
|
ABB Ltd Consolidated
Balance Sheets (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions, except share data)
|
Jun. 30, 2019
|
Dec. 31, 2018
|
|
Cash
and equivalents
|
2,512
|
3,445
|
|
Marketable
securities and short-term investments
|
716
|
712
|
|
Receivables,
net
|
6,517
|
6,386
|
|
Contract
assets
|
1,159
|
1,082
|
|
Inventories,
net
|
4,456
|
4,284
|
|
Prepaid
expenses
|
250
|
176
|
|
Other
current assets
|
558
|
616
|
|
Current
assets held for sale
|
9,153
|
5,164
|
|
Total
current assets
|
25,321
|
21,865
|
|
|
|
|
|
Property,
plant and equipment, net
|
4,013
|
4,133
|
|
Operating
lease right-of-use assets
|
1,041
|
–
|
|
Goodwill
|
10,873
|
10,764
|
|
Other
intangible assets, net
|
2,428
|
2,607
|
|
Prepaid
pension and other employee benefits
|
90
|
83
|
|
Investments
in equity-accounted companies
|
89
|
87
|
|
Deferred
taxes
|
1,030
|
1,006
|
|
Other
non-current assets
|
579
|
469
|
|
Non-current
assets held for sale
|
–
|
3,427
|
|
Total
assets
|
45,464
|
44,441
|
|
|
|
|
|
Accounts
payable, trade
|
4,107
|
4,424
|
|
Contract
liabilities
|
1,610
|
1,707
|
|
Short-term
debt and current maturities of long-term debt
|
2,415
|
2,031
|
|
Current
operating leases
|
290
|
–
|
|
Provisions
for warranties
|
842
|
948
|
|
Other
provisions
|
1,385
|
1,372
|
|
Other
current liabilities
|
3,447
|
3,780
|
|
Current
liabilities held for sale
|
5,081
|
4,185
|
|
Total
current liabilities
|
19,177
|
18,447
|
|
|
|
|
|
Long-term
debt
|
7,913
|
6,587
|
|
Non-current
operating leases
|
768
|
–
|
|
Pension
and other employee benefits
|
1,730
|
1,828
|
|
Deferred
taxes
|
857
|
927
|
|
Other
non-current liabilities
|
1,636
|
1,689
|
|
Non-current
liabilities held for sale
|
–
|
429
|
|
Total
liabilities
|
32,081
|
29,907
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
Common
stock, CHF 0.12 par value
|
|
|
|
(2,168,148,264
issued shares at June 30, 2019, and December 31, 2018)
|
188
|
188
|
|
Additional
paid-in capital
|
62
|
56
|
|
Retained
earnings
|
18,800
|
19,839
|
|
Accumulated
other comprehensive loss
|
(5,349)
|
(5,311)
|
|
Treasury
stock, at cost
|
|
|
|
(35,325,803
and 36,185,858 shares at June 30, 2019, and December 31, 2018,
respectively)
|
(801)
|
(820)
|
|
Total
ABB stockholders’ equity
|
12,900
|
13,952
|
|
Noncontrolling
interests
|
483
|
582
|
|
Total
stockholders’ equity
|
13,383
|
14,534
|
|
Total liabilities
and stockholders’ equity
|
45,464
|
44,441
|
|
Due to
rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
See
Notes to the Consolidated Financial Information
|
|
|
10
Q2
2019 Financial Information
|
—
|
|
|
|
|
|
ABB Ltd Consolidated
Statements of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
Jun. 30, 2019
|
Jun. 30, 2018
|
Jun. 30, 2019
|
Jun. 30, 2018
|
|
Operating
activities:
|
|
|
|
|
|
Net
income
|
652
|
1,317
|
88
|
717
|
|
Less:
Income from discontinued operations, net of tax
|
(291)
|
(379)
|
(142)
|
(193)
|
|
Adjustments
to reconcile net income to
|
|
|
|
|
|
net
cash provided by (used in) operating activities:
|
|
|
|
|
|
Depreciation
and amortization
|
480
|
431
|
249
|
215
|
|
Deferred
taxes
|
(62)
|
50
|
(33)
|
54
|
|
Net
loss (gain) from derivatives and foreign exchange
|
(4)
|
61
|
22
|
–
|
|
Net
loss (gain) from sale of property, plant and equipment
|
(40)
|
(38)
|
(6)
|
(12)
|
|
Net
loss (gain) from sale of businesses
|
4
|
5
|
3
|
(1)
|
|
Fair
value adjustment on assets and liabilities held for sale
|
455
|
–
|
455
|
–
|
|
Share-based
payment arrangements
|
25
|
23
|
14
|
13
|
|
Other
|
(60)
|
(22)
|
(34)
|
(22)
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
Trade
receivables, net
|
(151)
|
(185)
|
(66)
|
(176)
|
|
Contract
assets and liabilities
|
(142)
|
(131)
|
(114)
|
13
|
|
Inventories,
net
|
(286)
|
(369)
|
(73)
|
(123)
|
|
Accounts
payable, trade
|
(195)
|
189
|
112
|
283
|
|
Accrued
liabilities
|
(285)
|
(139)
|
(439)
|
85
|
|
Provisions,
net
|
(5)
|
(130)
|
13
|
(37)
|
|
Income
taxes payable and receivable
|
(30)
|
(88)
|
(41)
|
(56)
|
|
Other
assets and liabilities, net
|
(231)
|
(274)
|
(77)
|
(74)
|
|
Net cash
provided by (used in) operating activities – continuing operations
|
(166)
|
321
|
(69)
|
686
|
|
Net cash
provided by (used in) operating activities – discontinued operations
|
(90)
|
171
|
69
|
324
|
|
Net
cash provided by (used in) operating activities
|
(256)
|
492
|
–
|
1,010
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Purchases
of investments
|
(680)
|
(34)
|
(150)
|
(17)
|
|
Purchases
of property, plant and equipment and intangible assets
|
(376)
|
(345)
|
(169)
|
(154)
|
|
Acquisition
of businesses (net of cash acquired)
|
|
|
|
|
|
and
increases in cost- and equity-accounted companies
|
(6)
|
(2,628)
|
(4)
|
(2,624)
|
|
Proceeds
from investments
|
540
|
293
|
120
|
16
|
|
Proceeds
from maturity of investments
|
80
|
124
|
80
|
–
|
|
Proceeds
from sales of property, plant and equipment
|
54
|
42
|
6
|
18
|
|
Proceeds
from sales of businesses (net of transaction costs
|
|
|
|
|
|
and cash
disposed) and cost- and equity-accounted companies
|
18
|
(9)
|
39
|
1
|
|
Net
cash from settlement of foreign currency derivatives
|
(51)
|
(29)
|
(53)
|
(34)
|
|
Other
investing activities
|
(4)
|
(14)
|
(4)
|
(6)
|
|
Net cash
used in investing activities – continuing operations
|
(425)
|
(2,600)
|
(135)
|
(2,800)
|
|
Net cash
used in investing activities – discontinued operations
|
(81)
|
(87)
|
(37)
|
(42)
|
|
Net
cash used in investing activities
|
(506)
|
(2,687)
|
(172)
|
(2,842)
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Net
changes in debt with original maturities of 90 days or less
|
916
|
1,244
|
460
|
1,031
|
|
Increase
in debt
|
2,230
|
1,900
|
1,369
|
1,896
|
|
Repayment
of debt
|
(1,533)
|
(92)
|
(93)
|
(52)
|
|
Delivery
of shares
|
–
|
42
|
–
|
40
|
|
Purchase
of treasury stock
|
–
|
(250)
|
–
|
–
|
|
Dividends
paid
|
(1,675)
|
(1,717)
|
(1,675)
|
(1,717)
|
|
Dividends
paid to noncontrolling shareholders
|
(73)
|
(83)
|
(71)
|
(78)
|
|
Other
financing activities
|
23
|
11
|
7
|
(4)
|
|
Net cash
provided by (used in) financing activities – continuing operations
|
(112)
|
1,055
|
(3)
|
1,116
|
|
Net cash
used in financing activities – discontinued operations
|
(51)
|
(48)
|
(27)
|
(45)
|
|
Net
cash provided by (used in) financing activities
|
(163)
|
1,007
|
(30)
|
1,071
|
|
|
|
|
|
|
|
Effects
of exchange rate changes on cash and equivalents
|
(8)
|
(55)
|
(20)
|
(118)
|
|
Net
change in cash and equivalents
|
(933)
|
(1,243)
|
(222)
|
(879)
|
|
|
|
|
|
|
|
Cash
and equivalents, beginning of period
|
3,445
|
4,526
|
2,734
|
4,162
|
|
Cash
and equivalents, end of period
|
2,512
|
3,283
|
2,512
|
3,283
|
|
|
|
|
|
|
|
Supplementary
disclosure of cash flow information:
|
|
|
|
|
|
Interest
paid
|
158
|
118
|
100
|
56
|
|
Income
taxes paid
|
487
|
531
|
261
|
237
|
|
Due to
rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to the Consolidated Financial Information
|
|
|
|
|
11
Q2
2019 Financial Information
|
—
|
|
|
|
|
|
|
|
|
|
ABB Ltd Consolidated
Statements of Changes in Stockholders’ Equity (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
Common stock
|
Additional paid-in capital
|
Retained earnings
|
Accumulated
other comprehensive loss
|
Treasury stock
|
Total ABB
stockholders’ equity
|
Non-
controlling interests
|
Total stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2018
|
188
|
29
|
19,594
|
(4,345)
|
(647)
|
14,819
|
530
|
15,349
|
|
Cumulative
effect of changes in
|
|
|
|
|
|
|
|
|
|
accounting
principles
|
|
|
(192)
|
(9)
|
|
(201)
|
|
(201)
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
1,253
|
|
|
1,253
|
64
|
1,317
|
|
Foreign
currency translation
|
|
|
|
|
|
|
|
|
|
adjustments,
net of tax of $1
|
|
|
|
(389)
|
|
(389)
|
(4)
|
(393)
|
|
Effect
of change in fair value of
|
|
|
|
|
|
|
|
|
|
available-for-sale
securities,
|
|
|
|
|
|
|
|
|
|
net of
tax of $(1)
|
|
|
|
(5)
|
|
(5)
|
|
(5)
|
|
Unrecognized
income (expense)
|
|
|
|
|
|
|
|
|
|
related
to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement
plans,
|
|
|
|
|
|
|
|
|
|
net of
tax of $25
|
|
|
|
84
|
|
84
|
|
84
|
|
Change
in derivatives qualifying as
|
|
|
|
|
|
|
|
|
|
cash
flow hedges, net of tax of $(3)
|
|
|
|
(19)
|
|
(19)
|
|
(19)
|
|
Total
comprehensive income
|
|
|
|
|
|
924
|
60
|
984
|
|
Changes
in noncontrolling interests
|
|
|
|
|
|
–
|
(18)
|
(18)
|
|
Noncontrolling
interests recognized in
|
|
|
|
|
|
|
|
|
|
connection
with business combination
|
|
|
|
|
|
–
|
107
|
107
|
|
Dividends
to
|
|
|
|
|
|
|
|
|
|
noncontrolling
shareholders
|
|
|
|
|
|
–
|
(126)
|
(126)
|
|
Dividends
paid to shareholders
|
|
|
(1,736)
|
|
|
(1,736)
|
|
(1,736)
|
|
Share-based
payment arrangements
|
|
28
|
|
|
|
28
|
|
28
|
|
Purchase
of treasury stock
|
|
|
|
|
(249)
|
(249)
|
|
(249)
|
|
Delivery
of shares
|
|
(30)
|
|
|
72
|
42
|
|
42
|
|
Balance
at June 30, 2018
|
188
|
26
|
18,919
|
(4,683)
|
(824)
|
13,626
|
553
|
14,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2019
|
188
|
56
|
19,839
|
(5,311)
|
(820)
|
13,952
|
582
|
14,534
|
|
Adoption
of accounting
|
|
|
|
|
|
|
|
|
|
standard
update
|
|
|
36
|
(36)
|
|
–
|
|
–
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
599
|
|
|
599
|
53
|
652
|
|
Foreign
currency translation
|
|
|
|
|
|
|
|
|
|
adjustments,
net of tax of $(4)
|
|
|
|
(54)
|
|
(54)
|
1
|
(53)
|
|
Effect
of change in fair value of
|
|
|
|
|
|
|
|
|
|
available-for-sale
securities,
|
|
|
|
|
|
|
|
|
|
net of
tax of $2
|
|
|
|
13
|
|
13
|
|
13
|
|
Unrecognized
income (expense)
|
|
|
|
|
|
|
|
|
|
related
to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement
plans,
|
|
|
|
|
|
|
|
|
|
net of
tax of $15
|
|
|
|
35
|
|
35
|
|
35
|
|
Change
in derivatives qualifying as
|
|
|
|
|
|
|
|
|
|
cash
flow hedges, net of tax of $0
|
|
|
|
5
|
|
5
|
|
5
|
|
Total
comprehensive income
|
|
|
|
|
|
598
|
54
|
652
|
|
Changes
in noncontrolling interests
|
|
(5)
|
|
|
|
(5)
|
(1)
|
(6)
|
|
Fair
value adjustment to
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests recognized
|
|
|
|
|
|
|
|
|
|
in
business combination
|
|
|
|
|
|
–
|
(44)
|
(44)
|
|
Dividends
to
|
|
|
|
|
|
|
|
|
|
noncontrolling
shareholders
|
|
|
|
|
|
–
|
(109)
|
(109)
|
|
Dividends
paid to shareholders
|
|
|
(1,675)
|
|
|
(1,675)
|
|
(1,675)
|
|
Share-based
payment arrangements
|
|
30
|
|
|
|
30
|
|
30
|
|
Delivery
of shares
|
|
(20)
|
|
|
20
|
–
|
|
–
|
|
Balance
at June 30, 2019
|
188
|
62
|
18,800
|
(5,349)
|
(801)
|
12,900
|
483
|
13,383
|
|
Due to
rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to the Consolidated Financial Information
|
12
Q2
2019 Financial Information
—
Notes to the Consolidated Financial Information (unaudited)
─
Note 1
The Company and
basis of presentation
ABB Ltd and its subsidiaries (collectively, the
Company) together form a pioneering technology leader with a comprehensive
offering for digital industries. ABB is a leader in digital industries with
customer-focused, globally leading businesses.
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, 2018.
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. The most significant, difficult and subjective of such accounting
assumptions
and estimates include:
·
estimates and assumptions used in determining the fair
values of assets and liabilities assumed in business combinations,
·
assumptions used in the determination of corporate
costs directly attributable to discontinued operations,
·
assumptions used in determining inventory obsolescence
and net realizable value,
·
estimates used to record expected costs for employee
severance in connection with restructuring programs,
·
assumptions and projections, principally related to
future material, labor and project related overhead costs, used in determining
the percentage of completion on projects,
as well as
the amount of variable consideration the Company expects to be entitled to,
·
estimates of loss contingencies associated with
litigation or threatened litigation and other claims and inquiries,
environmental damages, product warranties, self-insurance reserves, regulatory
and other proceedings,
·
assumptions used in the calculation of pension and
postretirement benefits and the fair value of pension plan assets,
·
estimates to determine valuation allowances for deferred
tax assets and amounts recorded for uncertain tax positions,
·
growth rates, discount rates and other assumptions
used to determine impairment of long lived assets and in testing goodwill for
impairment, and
·
assessment of the allowance for doubtful accounts.
The actual results and outcomes may differ from the Company’s
estimates and assumptions.
A portion of the Company’s activities (primarily long-term
construction activities) has an operating cycle that exceeds one year. For
classification of current assets and liabilities related to such activities,
the Company elected to use the duration of the individual contracts as its
operating cycle. Accordingly, there are accounts receivable, contract assets, inventories
and provisions related to these contracts which will not be realized within one
year that have been classified as current.
Basis of presentation
In the opinion of management, the unaudited Consolidated Financial
Information contains all necessary adjustments to present fairly the financial
position, results of operations and cash flows for the reported periods.
Management considers all such adjustments to be of a normal recurring nature. The
Consolidated Financial Information is presented in United States dollars ($)
unless otherwise stated. Due to rounding, numbers presented in the Consolidated
Financial Information may not add to the totals provided.
Certain amounts reported in the Consolidated Financial Information
for prior periods have been reclassified to conform to the current year’s
presentation. These changes relate primarily to discontinued operations (see
Note 3 for details) and the reorganization of the Company’s operating segments
(see Note 16 for details).
13
Q2
2019 Financial Information
─
Note 2
Recent accounting pronouncements
Applicable for current periods
Leases
In January 2019, the Company adopted a new
accounting standard that requires lessees to recognize lease assets and
corresponding lease liabilities on the balance sheet for all leases with terms
of more than twelve months with several practical expedients. The new
accounting standard continues to classify leases as either finance or
operating, with the classification determining the pattern of expense
recognition in the income statement. It also requires additional disclosures
about the Company’s leasing activities. The Company has elected to not
recognize lease assets and lease liabilities for leases with terms of less than
twelve months and to not separate lease and non‑lease components for
leases other than real estate.
The Company has adopted the standard on a
modified retrospective basis and has therefore recorded a cumulative-effect
adjustment to the opening balance of retained earnings on January 1, 2019. It
has elected to apply the package of practical expedients which permits the
Company to not reassess under the new standard prior conclusions about lease
identification, lease classification and initial direct costs. While the
adoption of this standard only had an insignificant impact on the Company’s
results of operations and cash flows, total assets and total liabilities
increased by $1,344 million and $1,360 million, respectively, of
which $148 million and $153 million, respectively, relate to assets and
liabilities held for sale. Comparable information has not been restated to
reflect the adoption of this new standard and continues to be measured and
reported under the accounting standard in effect for those periods presented.
Derivatives
and Hedging—Targeted improvements to accounting for hedging activities
In January 2019, the
Company adopted an accounting standard update which expands and refines hedge
accounting for both financial and non-financial risk components, aligns the
recognition and presentation of the effects of hedging instruments and hedge
items in the financial statements, and includes certain targeted improvements
to ease the application of current guidance related to the assessment of hedge
effectiveness.
This update was applied on a modified
retrospective basis for cash flow and net investment hedges and prospectively
for the amended presentation and disclosure guidance but did not have a
significant impact on the consolidated financial statements.
Reclassification
of certain tax effects from accumulated other comprehensive income
In January 2019, the
Company adopted an accounting standard update which allows a reclassification
of the stranded tax effects in accumulated other comprehensive income resulting
from the Tax Cuts and Jobs Act of 2017 to retained earnings. The updated
guidance was applied
in the period of adoption and
resulted in a reclassification of $36 million from accumulated other
comprehensive income to retained earnings.
Applicable for future periods
Measurement
of credit losses on financial instruments
In June 2016, an accounting standard update was
issued which replaces the existing incurred loss impairment methodology for
most financial assets with a new “current expected credit loss” model.
Additional related updates with targeted improvements and clarifications were
issued subsequently. The new model will result in the immediate recognition of
the estimated credit losses expected to occur over the remaining life of
financial assets such as trade and other receivables, held-to-maturity debt
securities, loans and other instruments. Measurement of expected credit losses
will be based on historical experience, current conditions, and reasonable and
supportable forecasts. The update also requires additional disclosures related
to estimates and judgments used to measure credit losses. Credit losses
relating to available-for-sale debt securities will be measured in a manner
similar to current GAAP, except that the losses will be recorded through an
allowance for credit losses rather than as a direct write-down of the security.
This
update is effective for the Company for annual and interim periods beginning
January 1, 2020. For financial assets carried at amortized cost a
cumulative-effect adjustment for the changes in the allowances for credit
losses will be recognized in retained earnings on the consolidated balance
sheet as of January 1, 2020. The Company is currently evaluating the impact of
this update on its consolidated financial statements, on its business
processes, systems and internal controls, and expects this update will result
in earlier recognition of credit losses than the current model.
Customer’s
accounting for implementation costs incurred in a cloud computing arrangement
that is a service contract
In August 2018, an
accounting standard update was issued which aligns the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a
service contract with the requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software. This update is effective
for the Company for annual and interim periods beginning January 1, 2020, with
early adoption in any interim period permitted. The Company is currently
evaluating the impact of this update on its consolidated financial statements.
Disclosure
Framework — Changes to the disclosure requirements for fair value measurement
In August 2018, an
accounting standard update was issued which modifies the disclosure requirements
for fair value measurements. The update eliminates the requirements to disclose
the amount of and reasons for transfers between Level 1 and 2 of the fair value
hierarchy, the timing of transfers between levels and the Level 3 valuation
process, while expanding the Level 3 disclosures to include the range and
weighted‑average used to develop significant unobservable inputs and the
changes in unrealized gains and losses on recurring fair value measurements. This
update is effective for the Company for annual and interim periods beginning
January 1, 2020, with early adoption permitted.
The
changes and modifications to the Level 3 disclosures are to be applied
prospectively, while all other amendments are to be applied retrospectively. The
Company is currently evaluating the impact of this update on its disclosures but
does not expect that it will have a material effect on its consolidated
financial statements.
14
Q2
2019 Financial Information
─
Note 3
Discontinued operations, business divestments and
assets held for sale
Discontinued operations
The
Company reports a disposal, or planned disposal, of a component or a group of
components as a discontinued operation if the disposal represents a strategic
shift that has or will have a major effect on the Company’s operations and
financial results. A strategic shift could include a disposal of a major
geographical area, a major line of business or other major parts of the
Company. A component may be a reportable segment or an operating segment, a
reporting unit, a subsidiary, or an asset group.
Assets
and liabilities of a component reported as a discontinued operation are
presented as held for sale in the Company’s Consolidated Balance Sheets.
Interest
that is not directly attributable to or related to the Company’s continuing business
or discontinued business is allocated to discontinued operations based on the
ratio of net assets to be sold less debt that is required to be paid as a
result of the planned disposal transaction to the sum of total net assets of
the Company plus consolidated debt. General corporate overhead is not allocated
to discontinued operations.
On December
17, 2018, the Company announced an agreement to divest 80.1 percent of its
Power Grids business to Hitachi Ltd. (Hitachi) valuing the business at $11
billion. The business also includes certain real estate properties which were
previously reported within Corporate and Other as the Company primarily manages
real estate assets centrally as corporate assets. As a result, this business,
along with the related real estate assets previously included in Corporate and
Other, have been reported as discontinued operations. The divestment is
expected to be completed in the first half of 2020, following the receipt of
customary regulatory approvals as well as the completion of certain legal
entity reorganizations expected to be completed before the sale. At June 30,
2019, all assets and liabilities in the discontinued operation have been classified
as current as the sale is expected to be completed within 12 months.
As this
planned divestment represents a strategic shift that will have a major effect
on the Company’s operations and financial results, the results of operations
for this business have been presented as discontinued operations and the assets
and liabilities are reflected as held-for-sale for all periods presented.
Financial information and disclosures previously reported as of and for the six
and three months ended June 30, 2018, have been retroactively recast to give
effect to the discontinued operations presentation. In addition, amounts
relating to stranded corporate costs have been excluded from discontinued
operations and are now included as a component of Corporate and Other. Stranded
costs represent overhead and other management costs which were previously able
to be included in the measure of segment profit (Operational EBITA) for the
former Power Grids operating segment but are not directly attributable to the
discontinued operation and thus do not qualify to be recorded as part of income
from discontinued operations.
Operating results of the discontinued operations
are summarized as follows:
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
Jun. 30, 2019
|
Jun. 30, 2018
|
Jun. 30, 2019
|
Jun. 30, 2018
|
|
Total
revenues
|
4,455
|
4,739
|
2,326
|
2,354
|
|
Total
cost of sales
|
(3,382)
|
(3,563)
|
(1,792)
|
(1,790)
|
|
Gross
profit
|
1,073
|
1,177
|
535
|
564
|
|
Expenses
|
(657)
|
(663)
|
(327)
|
(312)
|
|
Income
from operations
|
417
|
514
|
208
|
251
|
|
Net interest
and other finance expense
|
(28)
|
(25)
|
(14)
|
(7)
|
|
Non-operational
pension (cost) credit
|
6
|
6
|
3
|
3
|
|
Income
from discontinued operations before taxes
|
395
|
495
|
197
|
247
|
|
Provision
for taxes
|
(104)
|
(116)
|
(55)
|
(54)
|
|
Income
from discontinued operations, net of tax
|
291
|
379
|
142
|
193
|
Of the
total Income from discontinued operations before taxes in the table above, $379 million
and $460 million in the six months ended June 30, 2019 and 2018,
respectively, and $193 million and $228 million in the three months
ended June 30, 2019 and 2018, respectively, are attributable to the Company,
while the remainder is attributable to noncontrolling interests.
Income
from discontinued operations before taxes excludes stranded costs which were
previously able to be allocated to the Power Grids operating segment. As a
result, for the six months ended June 30, 2019 and 2018, $133 million
and $154 million, respectively, and for the three months ended
June 30, 2019 and 2018, $66 million and $78 million, respectively,
of allocated overhead and other management costs, which were previously able to
be included in the measure of segment profit for the Power Grids operating
segment are now reported as part of Corporate and Other. In the table above,
Net interest and other finance expense in the six months ended June 30,
2019 and 2018, includes $24 million and $21 million, respectively,
and
in the three months ended June 30, 2019 and
2018, includes $12 million and $11 million, respectively,
of interest expense which has been recorded on an allocated basis
in accordance with the Company’s accounting policy election.
In addition, as required by U.S. GAAP, subsequent to
December 17, 2018, the Company has not recorded depreciation or
amortization on the property, plant and equipment and intangible assets
reported as discontinued operations and as a result, a total of
$109 million and $58 million of depreciation and amortization expense
was not recorded in the six and three months ended June 30, 2019,
respectively.
Included
in the reported Total revenues of the Company for the six months ended
June 30, 2019 and 2018, are revenues from the Company’s operating segments
to the Power Grids business of $109 million and $130 million,
respectively, and for the three months ended June 30, 2019 and 2018, of
$56 million and $71 million, respectively, which represent intercompany
transactions that, prior to Power Grids being classified as a discontinued
operation, were eliminated in the Company’s Consolidated Financial Information
(see Note 16).
In
addition, the Company also has retained obligations (primarily for
environmental and taxes) related to other businesses disposed or otherwise
exited that qualified as discontinued operations. Changes to these retained
obligations are also included in Income from discontinued operations, net of
tax, above.
15
Q2
2019 Financial Information
The major components of assets and liabilities
held for sale in the Company’s Consolidated Balance Sheets are summarized as
follows:
|
($ in
millions)
|
Jun. 30, 2019
|
Dec. 31, 2018
|
|
Receivables,
net
|
2,397
|
2,377
|
|
Contract
assets
|
1,305
|
1,236
|
|
Inventories,
net
|
1,633
|
1,457
|
|
Property,
plant and equipment, net
|
1,614
|
–
|
|
Goodwill
|
1,625
|
–
|
|
Other
current assets
|
579
|
94
|
|
Current
assets held for sale
|
9,153
|
5,164
|
|
|
|
|
|
Property,
plant and equipment, net
|
–
|
1,477
|
|
Goodwill
|
–
|
1,620
|
|
Other
non-current assets
|
–
|
330
|
|
Non-current
assets held for sale
|
–
|
3,427
|
|
|
|
|
|
Accounts
payable, trade
|
1,631
|
1,732
|
|
Contract
liabilities
|
1,040
|
998
|
|
Pension
and other employee benefits
|
268
|
–
|
|
Other
current liabilities
|
1,716
|
1,455
|
|
Current
liabilities held for sale
|
4,655
|
4,185
|
|
|
|
|
|
Pension
and other employee benefits
|
–
|
268
|
|
Other
non-current liabilities
|
–
|
161
|
|
Non-current
liabilities held for sale
|
–
|
429
|
Planned business divestments classified as held for sale
The Company classifies its long-lived assets or
disposal groups to be sold as held for sale in the period in which all of the
held for sale criteria are met. The Company initially measures a long-lived
asset or disposal group that is classified as held for sale at the lower of its
carrying value or fair value less any costs to sell. Any resulting loss is
recognized in the period in which the held for sale criteria are met, while
gains are not recognized on the sale of a long-lived asset or disposal group
until the date of sale. The Company assesses the fair value of a long-lived
asset or disposal group less any costs to sell at each reporting period and
until the asset or disposal group is no longer classified as held for sale.
Management had made the decision to divest its
solar inverters business and concluded that, during the second quarter of 2019,
the held for sale criteria had been met. In July 2019, an agreement was reached
to sell the solar inverters business for no consideration. Under the agreement
the Company is obligated to transfer cash on the closing date to provide
minimum liquidity funding requirements and make additional payments through to
2025. At June 30, 2019, a total of EUR 288 million ($328 million) is estimated
to be due to the buyer. As a result, the Company recorded a non-tax-deductible
loss, of $455 million in “Other income (expense), net”, representing the excess
of the carrying value over the estimated fair value of this business. The
carrying value at June 30, 2019, includes a loss arising from the cumulative
translation adjustment of $99 million.
The fair value is based on the estimated current
market values using Level 3 inputs, considering the agreed-upon sale terms with
the buyer. The solar inverters business, which includes the solar invertor
business acquired as part of the Power-One acquisition in 2013, is part of the
Company’s Electrification segment.
The estimated loss is based on current exchange
rates and net assets of the business, any changes to these factors through to
the closing date of the transaction will result in adjustments to the loss
recognized on the planned sale.
The divestment is expected to be completed in the
first quarter of 2020.
16
Q2
2019 Financial Information
As this planned divestment does not qualify as a
discontinued operation, the results of operations for this business are
included in the Company’s continuing operations for all periods presented. The
assets and liabilities of this business are shown as assets and liabilities
held for sale in the Company’s Interim Consolidated Balance Sheet at June 30,
2019. The carrying amounts of the major classes of assets and liabilities held
for sale relating to this planned divestment are as follows:
|
($ in
millions)
|
|
Jun. 30, 2019
|
|
Assets
|
|
|
|
Receivables,
net
|
|
89
|
|
Inventories,
net
|
|
114
|
|
Property,
plant and equipment, net
|
|
54
|
|
Other
Intangible assets, net
|
|
30
|
|
Other
assets
|
|
36
|
|
Valuation
allowance on assets held for sale
|
|
(323)
|
|
Current
assets held for sale
|
|
–
|
|
|
|
|
|
Liabilities
|
|
|
|
Accounts
payable, trade
|
|
82
|
|
Contract
liabilities
|
|
34
|
|
Provisions
for warranties
|
|
125
|
|
Other
liabilities
|
|
54
|
|
Fair
value adjustment on disposal group
|
|
131
|
|
Current
liabilities held for sale
|
|
426
|
Including the loss of $455 million above, in
the six months and three months ended June 30, 2019, Income from continuing
operations before taxes includes net losses of $497 million and $483 million,
respectively, from the Solar invertors business. In the six months and three
months ended June 30, 2018, net losses of $32 million and $18 million,
respectively, from this business were included in Income from continuing
operations before taxes.
─
Note 4
Acquisitions
On
June 30, 2018, the Company acquired through numerous share and asset purchases
substantially all the assets, liabilities and business activities of
GE Industrial Solutions (GEIS)
, GE’s global
electrification solutions business. GEIS, headquartered in Atlanta, United
States, provides technologies that distribute and control electricity and
support the commercial, data center, health care, mining, renewable energy, oil
and gas, water and telecommunications sectors. The resulting cash outflows for
the Company amounted to $2,622 million (net of cash acquired of $192 million).
The acquisition strengthens the Company’s global position in electrification
and expands its access to the North American market through strong customer
relationships, a large installed base and extensive distribution networks. Consequently,
the goodwill acquired represents expected operating synergies and cost savings
as well as intangible assets that are not separable such as employee know-how
and expertise.
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 acquired assets
and liabilities becomes available.
The purchase
price allocation relating to the GEIS acquisition was finalized during the
second quarter of 2019 and, in the six and three months ended June 30, 2019,
resulted in net $92 million and $58
million,
respectively, of measurement period adjustments, increasing goodwill, primarily
related to changes in the valuation of net working capital, deferred tax
liabilities and intangible assets acquired.
17
Q2
2019 Financial Information
The final allocation (including measurement
period adjustments) of the purchase consideration for GEIS, is as follows:
|
|
Final
|
Weighted-average
|
|
|
($ in
millions)
|
allocated amounts
|
useful life
|
|
|
Technology
|
92
|
7 years
|
|
|
Customer
relationships
|
178
|
12 years
|
|
|
Trade
names
|
135
|
13 years
|
|
|
Supply
agreement
|
32
|
13 years
|
|
|
Intangible
assets
|
437
|
|
|
|
Property,
plant and equipment
|
373
|
|
|
|
Deferred
tax liabilities
|
(45)
|
|
|
|
Inventories
|
396
|
|
|
|
Other
assets and liabilities, net
(1)
|
(44)
|
|
|
|
Goodwill
(2)
|
1,568
|
|
|
|
Noncontrolling
interest
|
(63)
|
|
|
|
Total
consideration (net of cash acquired)
(3)
|
2,622
|
|
|
(1) Gross receivables totaled $658 million; the fair value of
which was $624 million after adjusting for contractual cash flows not expected
to be collected.
(2) The Company expects that goodwill recorded in certain
jurisdictions will be tax deductible.
(3) Cash acquired
totaled $192 million.
The unaudited pro
forma financial information in the table below summarizes the combined pro
forma results of the Company and GEIS for the six and three months ended June
30, 2018, as if GEIS had been acquired on January 1, 2017.
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
|
June 30, 2018
|
June 30, 2018
|
|
Total
revenues
|
|
|
14,446
|
7,392
|
|
Income
from continuing operations, net of tax
|
|
|
966
|
544
|
The pro forma
results are for information purposes only and do not include any anticipated
cost synergies or other effects of the planned integration of GEIS.
Accordingly, such pro forma amounts are not necessarily indicative of the
results that would have occurred had the acquisition been completed on the date
indicated, nor are they indicative of the future operating results of the
combined company.
The unaudited pro forma results above include certain
adjustments related to the GEIS acquisition. The table below summarizes the
adjustments necessary to present the pro forma financial information of the
combined entity as if GEIS had been acquired on January 1, 2017.
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
June 30, 2018
|
June 30, 2018
|
|
Impact
on cost of sales from additional amortization of intangible assets
|
(10)
|
(5)
|
|
Impact
on cost of sales from additional depreciation of property, plant and
equipment
|
(4)
|
(2)
|
|
Impact
on selling, general and administrative expenses from additional amortization
|
|
|
|
of
intangible assets
|
(5)
|
(3)
|
|
Impact
on selling, general and administrative expenses from acquisition-related
costs
|
44
|
34
|
|
Impact
on interest from financing costs
|
(15)
|
(1)
|
|
Taxation
adjustments
|
2
|
(2)
|
|
Total
pro forma adjustments
|
12
|
21
|
Goodwill
Changes in total goodwill were as follows:
|
($ in
millions)
|
|
|
Total Goodwill
|
|
Balance
at January 1, 2018
|
|
|
9,536
|
|
Goodwill
acquired during the year
(1)
|
|
|
1,472
|
|
Goodwill
allocated to disposals
|
|
|
(31)
|
|
Exchange
rate differences and other
|
|
|
(213)
|
|
Balance
at December 31, 2018
|
|
|
10,764
|
|
Goodwill
allocated to disposals
|
|
|
(2)
|
|
Measurement
period adjustments to goodwill acquired in previous periods
|
|
|
92
|
|
Exchange
rate differences and other
|
|
|
19
|
|
Balance
at June 30, 2019
|
|
|
10,873
|
(1) Includes goodwill in respect of GEIS, acquired in June
2018, which has been allocated to the Electrification Products operating
segment.
18
Q2
2019 Financial Information
─
Note 5
Cash and equivalents, marketable securities and
short-term investments
Cash and equivalents, marketable securities and
short-term investments consisted of the following:
|
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash and
|
and short-term
|
|
($ in
millions)
|
Cost basis
|
gains
|
losses
|
Fair value
|
equivalents
|
investments
|
|
Changes
in fair value
|
|
|
|
|
|
|
|
recorded
in net income
|
|
|
|
|
|
|
|
Cash
|
1,875
|
|
|
1,875
|
1,875
|
–
|
|
Time
deposits
|
638
|
–
|
–
|
638
|
637
|
1
|
|
Equity
securities
|
430
|
19
|
–
|
449
|
–
|
449
|
|
|
2,943
|
19
|
–
|
2,962
|
2,512
|
450
|
|
Changes
in fair value recorded
|
|
|
|
|
|
|
|
in
other comprehensive income
|
|
|
|
|
|
|
|
Debt
securities available-for-sale:
|
|
|
|
|
|
|
|
|
U.S.
government obligations
|
189
|
6
|
(1)
|
194
|
–
|
194
|
|
|
European
government obligations
|
10
|
–
|
–
|
10
|
–
|
10
|
|
|
Corporate
|
58
|
4
|
–
|
62
|
–
|
62
|
|
|
257
|
10
|
(1)
|
266
|
–
|
266
|
|
Total
|
3,200
|
29
|
(1)
|
3,228
|
2,512
|
716
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash and
|
and short-term
|
|
($ in
millions)
|
Cost basis
|
gains
|
losses
|
Fair value
|
equivalents
|
investments
|
|
Changes
in fair value
|
|
|
|
|
|
|
|
recorded
in net income
|
|
|
|
|
|
|
|
Cash
|
1,983
|
–
|
–
|
1,983
|
1,983
|
–
|
|
Time
deposits
|
1,463
|
–
|
–
|
1,463
|
1,462
|
1
|
|
Other
short-term investments
|
206
|
–
|
–
|
206
|
–
|
206
|
|
Equity
securities
|
206
|
–
|
(3)
|
203
|
–
|
203
|
|
|
3,858
|
–
|
(3)
|
3,855
|
3,445
|
410
|
|
Changes
in fair value recorded
|
|
|
|
|
|
|
|
in
other comprehensive income
|
|
|
|
|
|
|
|
Debt
securities available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government
obligations
|
217
|
–
|
(3)
|
214
|
–
|
214
|
|
|
Corporate
|
90
|
–
|
(2)
|
88
|
–
|
88
|
|
|
307
|
–
|
(5)
|
302
|
–
|
302
|
|
Total
|
4,165
|
–
|
(8)
|
4,157
|
3,445
|
712
|
Other short-term investments at December 31, 2018
were receivables of $206 million, representing reverse repurchase
agreements.
─
Note 6
Derivatives
financial instruments
The Company is exposed to certain currency, commodity, interest
rate and equity risks arising from its global operating, financing and
investing activities. The Company uses derivative instruments to reduce and
manage the economic impact of these exposures.
Currency risk
Due to the global nature of the Company’s
operations, many of its subsidiaries are exposed to currency risk in their
operating activities from entering into transactions in currencies other than
their functional currency. To manage such currency risks, the Company’s
policies require its subsidiaries to hedge their foreign currency exposures
from binding sales and purchase contracts denominated in foreign currencies.
For forecasted foreign currency denominated sales of standard products and the
related foreign currency denominated purchases, the Company’s policy is to
hedge up to a maximum of 100 percent of the forecasted foreign currency
denominated exposures, depending on the length of the forecasted exposures.
Forecasted exposures greater than 12 months are not hedged. Forward foreign
exchange contracts are the main
19
Q2
2019 Financial Information
instrument used to
protect the Company against the volatility of future cash flows (caused by
changes in exchange rates) of contracted and forecasted sales and purchases
denominated in foreign currencies. In addition, within its treasury operations,
the Company primarily uses foreign exchange swaps and forward foreign exchange
contracts to manage the currency and timing mismatches arising in its liquidity
management activities.
Commodity risk
Various commodity products are used in the
Company’s manufacturing activities. Consequently it is exposed to volatility in
future cash flows arising from changes in commodity prices. To manage the price
risk of commodities, the Company’s policies require that its subsidiaries hedge
the commodity price risk exposures from binding contracts, as well as at least
50 percent (up to a maximum of 100 percent) of the forecasted commodity
exposure over the next 12 months or longer (up to a maximum of 18 months).
Primarily swap contracts are used to manage the associated price risks of
commodities.
Interest rate risk
The Company has issued bonds at fixed rates.
Interest rate swaps are used to manage the interest rate risk associated with
certain debt and generally such swaps are designated as fair value hedges. In
addition, from time to time, the Company uses instruments such as interest rate
swaps, interest rate futures, bond futures or forward rate agreements to manage
interest rate risk arising from the Company’s balance sheet structure but does
not designate such instruments as hedges.
Equity risk
The Company is exposed to fluctuations in the
fair value of its warrant appreciation rights (WARs) issued under its
management incentive plan. A WAR gives its holder the right to receive
cash equal to the market price of an equivalent listed warrant on the date of
exercise. To eliminate such risk, the Company has purchased cash-settled call
options, indexed to the shares of the Company, which entitle the Company to
receive amounts equivalent to its obligations under the outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective
in its use of derivatives is to minimize exposures arising from its business,
certain derivatives are designated and qualify for hedge accounting treatment
while others either are not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign
exchange and interest rate derivatives (whether designated as hedges or not)
were as follows:
|
Type of
derivative
|
Total notional amounts at
|
|
($ in
millions)
|
June 30, 2019
|
December 31, 2018
|
June 30, 2018
|
|
Foreign
exchange contracts
|
12,977
|
13,612
|
15,233
|
|
Embedded
foreign exchange derivatives
|
774
|
733
|
902
|
|
Interest
rate contracts
|
4,453
|
3,300
|
3,934
|
Derivative commodity contracts
The Company uses derivatives to hedge its direct
or indirect exposure to the movement in the prices of commodities which are
primarily copper, silver and aluminum. The following table shows the notional
amounts of outstanding derivatives (whether designated as hedges or not), on a
net basis, to reflect the Company’s requirements for these commodities:
|
Type of
derivative
|
Unit
|
Total notional amounts at
|
|
|
|
June 30, 2019
|
December 31, 2018
|
June 30, 2018
|
|
Copper
swaps
|
metric
tonnes
|
44,936
|
46,143
|
31,908
|
|
Silver
swaps
|
ounces
|
2,461,631
|
2,861,294
|
2,213,132
|
|
Aluminum
swaps
|
metric
tonnes
|
8,443
|
9,491
|
2,651
|
Equity
derivatives
At June 30, 2019, December 31, 2018, and
June 30, 2018, the Company held 36 million, 41 million and 33 million
cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with
a total fair value of $7 million, $6 million and $15 million,
respectively.
Cash flow hedges
As noted above, the Company mainly uses forward
foreign exchange contracts to manage the foreign exchange risk of its
operations, commodity swaps to manage its commodity risks and cash-settled call
options to hedge its WAR liabilities. Where such instruments are designated and
qualify as cash flow hedges, 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.
At June 30, 2019, and December 31, 2018,
“Accumulated other comprehensive loss” included net unrealized losses of $11 million
and $16 million, respectively, net of tax, on derivatives designated as cash
flow hedges. Of the amount at June 30, 2019, net losses of $3 million are
expected to be reclassified to earnings in the following 12 months. At
June 30, 2019, the longest maturity of a derivative classified as a cash
flow hedge was 55 months.
The amount of gains or losses, net of tax,
reclassified into earnings due to the discontinuance of cash flow hedge
accounting and the amount of ineffectiveness in cash flow hedge relationships
directly recognized in earnings were not significant in the six and three
months ended June 30, 2019 and 2018.
20
Q2
2019 Financial Information
The pre-tax effects of derivative instruments,
designated and qualifying as cash flow hedges, on “Accumulated other
comprehensive loss” (OCI) and the Consolidated Income Statements were not
significant.
Fair value hedges
To reduce its interest rate exposure arising
primarily from its debt issuance activities, the Company uses interest rate
swaps. Where such instruments are designated as fair value hedges, the changes
in the fair value of these instruments, as well as the changes in the fair
value of the risk component of the underlying debt being hedged, are recorded
as offsetting gains and losses in “Interest and other finance expense”. Hedge
ineffectiveness of instruments designated as fair value hedges for the six and
three months ended June 30, 2019 and 2018, was not significant.
The effect of interest rate contracts, designated
and qualifying as fair value hedges, on the Consolidated Income Statements was
as follows:
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions)
|
2019
|
2018
|
2019
|
2018
|
|
Gains
(losses) recognized in Interest and other finance expense:
|
|
|
|
|
|
- on
derivatives designated as fair value hedges
|
57
|
(20)
|
31
|
5
|
|
- on
hedged item
|
(57)
|
20
|
(31)
|
(6)
|
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as
hedges or do not qualify as either cash flow or fair value hedges are economic
hedges used for risk management purposes. Gains and losses from changes in the
fair values of such derivatives are recognized in the same line in the income
statement as the economically hedged transaction.
Furthermore,
under certain circumstances, the Company is required to split and account
separately for foreign currency derivatives that are embedded within certain
binding sales or purchase contracts denominated in a currency other than the
functional currency of the subsidiary and the counterparty.
The gains (losses) recognized in the Consolidated
Income Statements on derivatives not designated in hedging relationships were
as follows:
|
Type of
derivative not
|
Gains (losses) recognized in income
|
|
designated
as a hedge
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions)
|
Location
|
2019
|
2018
|
2019
|
2018
|
|
Foreign
exchange contracts
|
Total
revenues
|
1
|
(107)
|
(2)
|
(117)
|
|
|
Total
cost of sales
|
(38)
|
50
|
(1)
|
41
|
|
|
SG&A
expenses
(1)
|
(1)
|
5
|
2
|
13
|
|
|
Non-order
related research
|
|
|
|
|
|
|
and
development
|
1
|
–
|
1
|
1
|
|
|
Interest
and other finance expense
|
(79)
|
37
|
(59)
|
12
|
|
Embedded
foreign exchange
|
Total
revenues
|
(3)
|
40
|
(1)
|
36
|
|
contracts
|
Total
cost of sales
|
–
|
(3)
|
–
|
(4)
|
|
|
SG&A
expenses
(1)
|
–
|
2
|
–
|
1
|
|
Commodity
contracts
|
Total
cost of sales
|
(2)
|
(13)
|
(20)
|
3
|
|
Other
|
Interest
and other finance expense
|
–
|
8
|
–
|
5
|
|
Total
|
|
(121)
|
19
|
(80)
|
(9)
|
(1)
SG&A
expenses
represent
“Selling,
general
and
administrative
expenses”.
The fair values of derivatives included in the
Consolidated Balance Sheets were as follows:
|
|
June 30, 2019
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
|
Current in
|
Non-current in
|
|
Current in
|
Non-current in
|
|
|
“Other current
|
“Other non-current
|
|
“Other current
|
“Other non-current
|
|
($ in
millions)
|
assets”
|
assets”
|
|
liabilities”
|
liabilities”
|
|
Derivatives
designated as hedging instruments:
|
|
|
|
|
|
|
Foreign
exchange contracts
|
–
|
–
|
|
2
|
5
|
|
Interest
rate contracts
|
–
|
91
|
|
–
|
–
|
|
Cash-settled
call options
|
4
|
3
|
|
–
|
–
|
|
Total
|
4
|
94
|
|
2
|
5
|
|
|
|
|
|
|
|
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
Foreign
exchange contracts
|
86
|
18
|
|
117
|
24
|
|
Commodity
contracts
|
3
|
–
|
|
14
|
–
|
|
Embedded
foreign exchange derivatives
|
20
|
6
|
|
10
|
3
|
|
Total
|
109
|
24
|
|
141
|
27
|
|
Total
fair value
|
113
|
118
|
|
143
|
32
|
21
Q2
2019 Financial Information
|
|
December 31, 2018
|
|
|
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
|
–
|
–
|
|
1
|
4
|
|
Commodity
contracts
|
–
|
–
|
|
2
|
–
|
|
Interest
rate contracts
|
–
|
35
|
|
–
|
1
|
|
Cash-settled
call options
|
3
|
3
|
|
–
|
–
|
|
Total
|
3
|
38
|
|
3
|
5
|
|
|
|
|
|
|
|
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
Foreign
exchange contracts
|
117
|
14
|
|
160
|
30
|
|
Commodity
contracts
|
8
|
1
|
|
21
|
1
|
|
Embedded
foreign exchange derivatives
|
15
|
10
|
|
8
|
1
|
|
Total
|
140
|
25
|
|
189
|
32
|
|
Total
fair value
|
143
|
63
|
|
192
|
37
|
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 June 30, 2019, and December 31, 2018, have been
presented on a gross basis.
The Company’s netting agreements and other similar
arrangements allow net settlements under certain conditions. At June 30,
2019, and December 31, 2018, information related to these offsetting
arrangements was as follows:
|
($ in
millions)
|
June 30, 2019
|
|
|
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
|
205
|
(102)
|
–
|
–
|
103
|
|
Total
|
205
|
(102)
|
–
|
–
|
103
|
|
|
|
|
|
|
|
|
($ in
millions)
|
June 30, 2019
|
|
|
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
|
162
|
(102)
|
–
|
–
|
60
|
|
Total
|
162
|
(102)
|
–
|
–
|
60
|
|
($ in
millions)
|
December 31, 2018
|
|
|
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
|
181
|
(121)
|
–
|
–
|
60
|
|
Reverse
repurchase agreements
|
206
|
–
|
–
|
(206)
|
–
|
|
Total
|
387
|
(121)
|
–
|
(206)
|
60
|
|
|
|
|
|
|
|
|
($ in millions)
|
December 31, 2018
|
|
|
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
|
220
|
(121)
|
–
|
–
|
99
|
|
Total
|
220
|
(121)
|
–
|
–
|
99
|
22
Q2
2019 Financial Information
─
Note 7
Fair values
The Company uses fair value measurement principles to
record certain financial assets and liabilities on a recurring basis and, when
necessary, to record certain non‑financial assets at fair value on a non‑recurring
basis, as well as to determine fair value disclosures for certain financial
instruments carried at amortized cost in the financial statements. Financial
assets and liabilities recorded at fair value on a recurring basis include
foreign currency, commodity and interest rate derivatives, as well as cash‑settled
call options and available‑for‑sale securities. Non‑financial
assets recorded at fair value on a non‑recurring basis include long‑lived
assets that are reduced to their estimated fair value due to impairments.
Fair value is
the price that would be received when selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. In determining fair value, the Company uses various valuation
techniques including the market approach (using observable market data for
identical or similar assets and liabilities), the income approach (discounted
cash flow models) and the cost approach (using costs a market participant would
incur to develop a comparable asset). Inputs used to determine the fair value
of assets and liabilities are defined by a three‑level hierarchy,
depending on the nature of those inputs. The Company has categorized its
financial assets and liabilities and non‑financial assets measured at
fair value within this hierarchy based on whether the inputs to the valuation
technique are observable or unobservable. An observable input is based on
market data obtained from independent sources, while an unobservable input
reflects the Company’s assumptions about market data.
The levels of
the fair value hierarchy are as follows:
Level
1:
Valuation inputs consist of quoted prices in an
active market for identical assets or liabilities (observable quoted prices).
Assets and liabilities valued using Level 1 inputs include certain actively traded
debt securities.
Level
2:
Valuation inputs consist of observable inputs (other
than Level 1 inputs) such as actively quoted prices for similar assets, quoted
prices in inactive markets and inputs other than quoted prices such as interest
rate yield curves, credit spreads, or inputs derived from other observable data
by interpolation, correlation, regression or other means. The adjustments
applied to quoted prices or the inputs used in valuation models may be both
observable and unobservable. In these cases, the fair value measurement is
classified as Level 2 unless the unobservable portion of the adjustment or the
unobservable input to the valuation model is significant, in which case the
fair value measurement would be classified as Level 3. Assets and liabilities
valued or disclosed using Level 2 inputs include investments in certain funds,
reverse repurchase agreements, certain debt securities that are not actively
traded, interest rate swaps, commodity swaps, cash‑settled call options,
forward foreign exchange contracts, foreign exchange swaps and forward rate
agreements, time deposits, as well as financing receivables and debt.
Level
3:
Valuation inputs are based on the Company’s
assumptions of relevant market data (unobservable input).
Whenever
quoted prices involve bid‑ask spreads, the Company ordinarily determines
fair values based on mid‑market quotes. However, for the purpose of
determining the fair value of cash‑settled call options serving as hedges
of the Company’s management incentive plan, bid prices are used.
When
determining fair values based on quoted prices in an active market, the Company
considers if the level of transaction activity for the financial instrument has
significantly decreased, or would not be considered orderly. In such cases, the
resulting changes in valuation techniques would be disclosed. If the market is
considered disorderly or if quoted prices are not available, the Company is
required to use another valuation technique, such as an income approach.
Recurring fair value measures
The fair values of financial assets and liabilities
measured at fair value on a recurring basis were as follows:
|
|
June 30, 2019
|
|
($ in
millions)
|
Level 1
|
Level 2
|
Level 3
|
Total fair value
|
|
Assets
|
|
|
|
|
|
Securities
in “Marketable securities and short-term investments”:
|
|
|
|
|
|
Equity
securities
|
–
|
449
|
–
|
449
|
|
Debt
securities—U.S. government obligations
|
194
|
–
|
–
|
194
|
|
Debt
securities—European government obligations
|
10
|
–
|
–
|
10
|
|
Debt
securities—Corporate
|
–
|
62
|
–
|
62
|
|
Derivative
assets—current in “Other current assets”
|
–
|
113
|
–
|
113
|
|
Derivative
assets—non-current in “Other non-current assets”
|
–
|
118
|
–
|
118
|
|
Total
|
204
|
742
|
–
|
946
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative
liabilities—current in “Other current liabilities”
|
–
|
143
|
–
|
143
|
|
Derivative
liabilities—non-current in “Other non-current liabilities”
|
–
|
32
|
–
|
32
|
|
Total
|
–
|
175
|
–
|
175
|
23
Q2
2019 Financial Information
|
|
December 31, 2018
|
|
($ in
millions)
|
Level 1
|
Level 2
|
Level 3
|
Total fair value
|
|
Assets
|
|
|
|
|
|
Securities
in “Marketable securities and short-term investments”:
|
|
|
|
|
|
Equity
securities
|
–
|
203
|
–
|
203
|
|
Debt
securities—U.S. government obligations
|
214
|
–
|
–
|
214
|
|
Debt
securities—Corporate
|
–
|
88
|
–
|
88
|
|
Derivative
assets—current in “Other current assets”
|
–
|
143
|
–
|
143
|
|
Derivative
assets—non-current in “Other non-current assets”
|
–
|
63
|
–
|
63
|
|
Total
|
214
|
497
|
–
|
711
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative
liabilities—current in “Other current liabilities”
|
–
|
192
|
–
|
192
|
|
Derivative
liabilities—non-current in “Other non-current liabilities”
|
–
|
37
|
–
|
37
|
|
Total
|
–
|
229
|
–
|
229
|
The Company uses the following methods and assumptions
in estimating fair values of financial assets and liabilities measured at fair
value on a recurring basis:
·
Securities in “Marketable securities and short-term
investments”:
If quoted market prices in active markets for
identical assets are available, these are considered Level 1 inputs; however,
when markets are not active, these inputs are considered Level 2. If such
quoted market prices are not available, fair value is determined using market
prices for similar assets or present value techniques, applying an appropriate
risk-free interest rate adjusted for nonperformance risk. The inputs used in
present value techniques are observable and fall into the Level 2 category.
·
Derivatives
: The fair values of
derivative instruments are determined using quoted prices of identical
instruments from an active market, if available (Level 1). If quoted prices are
not available, price quotes for similar instruments, appropriately adjusted, or
present value techniques, based on available market data, or option pricing
models are used. Cash-settled call options hedging the Company’s WAR liability
are valued based on bid prices of the equivalent listed warrant. The fair
values obtained using price quotes for similar instruments or valuation
techniques represent a Level 2 input unless significant unobservable inputs are
used.
Non-recurring fair value measures
In June 2019, the Company adjusted the
carrying value of the solar inverters business which is classified as held for
sale (See Note 3). There were no other significant non-recurring fair value
measurements during the six and three months ended June 30, 2019 and 2018.
Disclosure about financial instruments
carried on a cost basis
The fair values of financial instruments
carried on a cost basis were as follows:
|
|
June 30, 2019
|
|
($ 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
|
1,875
|
|
1,875
|
–
|
–
|
1,875
|
|
Time
deposits
|
637
|
|
–
|
637
|
–
|
637
|
|
Marketable
securities and short-term investments
|
|
|
|
|
|
|
|
(excluding
securities):
|
|
|
|
|
|
|
|
Time
deposits
|
1
|
|
–
|
1
|
–
|
1
|
|
Other
non-current assets:
|
|
|
|
|
|
|
|
Loans
granted
|
31
|
|
–
|
35
|
–
|
35
|
|
Restricted
time deposits
|
35
|
|
35
|
–
|
–
|
35
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term
debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding
capital lease obligations)
|
2,362
|
|
352
|
2,010
|
–
|
2,362
|
|
Long-term
debt (excluding capital lease obligations)
|
7,799
|
|
7,382
|
709
|
–
|
8,091
|
24
Q2
2019 Financial Information
|
|
December 31, 2018
|
|
($ 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
|
1,983
|
|
1,983
|
–
|
–
|
1,983
|
|
Time
deposits
|
1,462
|
|
–
|
1,462
|
–
|
1,462
|
|
Marketable
securities and short-term investments
|
|
|
|
|
|
|
|
(excluding
securities):
|
|
|
|
|
|
|
|
Time
deposits
|
1
|
|
–
|
1
|
–
|
1
|
|
Receivables
under reverse repurchase agreements
|
206
|
|
–
|
206
|
–
|
206
|
|
Other
non-current assets:
|
|
|
|
|
|
|
|
Loans
granted
|
30
|
|
–
|
31
|
–
|
31
|
|
Restricted
time deposits
|
39
|
|
39
|
–
|
–
|
39
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term
debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding
capital lease obligations)
|
2,008
|
|
1,480
|
528
|
–
|
2,008
|
|
Long-term
debt (excluding capital lease obligations)
|
6,457
|
|
5,839
|
707
|
–
|
6,546
|
The Company uses the following methods and
assumptions in estimating fair values of financial instruments carried on a
cost basis:
·
Cash and equivalents (excluding securities with
original maturities up to 3 months), and Marketable securities and short-term
investments (excluding securities)
: The carrying amounts
approximate the fair values as the items are short-term in nature.
·
Other non-current assets
: Includes
(i) loans granted whose fair values are based on the carrying amount adjusted
using a present value technique to reflect a premium or discount based on
current market interest rates (Level 2 inputs), and (ii) restricted time
deposits whose fair values approximate the carrying amounts (Level 1 inputs).
·
Short-term debt and current maturities of long-term
debt (excluding capital lease obligations)
:
Short-term debt includes commercial paper, bank borrowings and overdrafts. The
carrying amounts of short-term debt and current maturities of long-term debt,
excluding capital lease obligations, approximate their fair values.
·
Long-term debt (excluding capital lease obligations)
: Fair values of bonds are determined using quoted market prices
(Level 1 inputs), if available. For bonds without available quoted market
prices and other long-term debt, the fair values are determined using a
discounted cash flow methodology based upon borrowing rates of similar debt
instruments and reflecting appropriate adjustments for non-performance risk
(Level 2 inputs).
─
Note 8
Commitments and contingencies
Contingencies—Regulatory, Compliance and Legal
Regulatory
In April
2014, the European Commission announced its decision regarding its
investigation of anticompetitive practices in the cables industry and granted
the Company full immunity from fines under its leniency program.
In
February 2019, the Brazilian Antitrust Authority (CADE) announced its decision
regarding its investigation of anticompetitive practices in certain power
businesses of the Company, including flexible alternating current transmission
systems (FACTS) and power transformers, and granted the Company full immunity
from fines under its leniency program.
As a
result of an internal investigation, the Company self-reported to the
Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) in
the United States as well as to the Serious Fraud Office (SFO) in the United
Kingdom concerning certain of its past dealings with Unaoil and its
subsidiaries, including alleged improper payments made by these entities to
third parties. The SFO has commenced an investigation into this matter. The
Company is cooperating fully with the authorities. At this time, it is not
possible for the Company to make an informed judgment about the outcome of
these matters.
Based on
findings during an internal investigation, the Company self-reported to the SEC
and the DoJ, to various authorities in South Africa and other countries as well
as to certain multilateral financial institutions 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. Although the Company believes that there may be
an unfavorable outcome in one or more of these matters, at this time it is not
possible for the Company to make an informed judgment about the possible
financial impact.
General
The Company is aware of proceedings, or the
threat of proceedings, against it and others in respect of private claims by
customers and other third parties with regard to certain actual or alleged
anticompetitive practices. Also, the Company is subject to other claims and
legal proceedings, as well as investigations carried out by various law
enforcement authorities. With respect to the above-mentioned claims, regulatory
matters, and any related proceedings, the Company will bear the related costs,
including costs necessary to resolve them.
25
Q2
2019 Financial Information
Liabilities recognized
At June 30, 2019, and December 31,
2018, the Company had aggregate liabilities of $202 million and $221 million,
respectively, included in “Other provisions” and “Other non‑current
liabilities”, for the above regulatory, compliance and legal contingencies, and
none of the individual liabilities recognized was significant. As it is not
possible to make an informed judgment on, or reasonably predict, the outcome of
certain matters and as it is not possible, based on information currently
available to management, to estimate the maximum potential liability on other
matters, there could be material adverse outcomes beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data
regarding the Company’s third-party guarantees. The maximum potential payments
represent a “worst‑case scenario”, and do not reflect management’s
expected outcomes.
|
Maximum
potential payments
($ in millions)
|
June 30, 2019
|
December 31, 2018
|
|
Performance
guarantees
|
1,558
|
1,584
|
|
Financial
guarantees
|
7
|
10
|
|
Indemnification
guarantees
|
67
|
64
|
|
Total
(1)
|
1,632
|
1,658
|
(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
June 30, 2019, and December 31, 2018, 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 2027, 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 eight 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 June 30, 2019, and December 31, 2018, the
maximum potential payable under these guarantees amounts to $764 million
and $771 million, respectively, and these guarantees have various
maturities ranging from one to ten years.
Commercial
commitments
In addition, in the normal course of bidding for
and executing certain projects, the Company has entered into standby letters of
credit, bid/performance bonds and surety bonds (collectively “performance
bonds”) with various financial institutions. Customers can draw on such
performance bonds in the event that the Company does not fulfill its
contractual obligations. The Company would then have an obligation to reimburse
the financial institution for amounts paid under the performance bonds. At
June 30, 2019, and December 31, 2018, the total outstanding
performance bonds aggregated to $7.6 billion and $7.4 billion, respectively, of
each of these amounts, $4.3 billion relates to discontinued operations. There
have been no significant amounts reimbursed to financial institutions under
these types of arrangements in the six and three months ended June 30,
2019 and 2018.
Product and order-related contingencies
The Company calculates its provision for product
warranties based on historical claims experience and specific review of certain
contracts.
The reconciliation of the “Provisions for
warranties”, including guarantees of product performance, was as follows:
|
($ in
millions)
|
2019
|
2018
|
|
Balance
at January 1,
|
948
|
909
|
|
Net
change in warranties due to acquisitions, divestments and liabilities held
for sale
(1)
|
(105)
|
11
|
|
Claims
paid in cash or in kind
|
(137)
|
(139)
|
|
Net
increase in provision for changes in estimates, warranties issued and
warranties expired
|
138
|
94
|
|
Exchange
rate differences
|
(2)
|
(25)
|
|
Balance
at June 30,
|
842
|
850
|
(1) Includes adjustments to the initial
purchase price allocation recorded during the measurement period
26
Q2
2019 Financial Information
─
Note 9
Contract assets and liabilities
The following table provides information about
Contract Assets and Contract Liabilities:
|
($ in
millions)
|
June 30, 2019
|
December 31, 2018
|
June 30, 2018
|
|
Contract
assets
|
1,159
|
1,082
|
1,184
|
|
Contract
liabilities
|
1,610
|
1,707
|
1,719
|
Contract
assets primarily relate to the Company’s right to receive consideration for work
completed but for which no invoice has been issued at the reporting date. Contract
assets are transferred to receivables when rights to receive payment become
unconditional.
Contract
liabilities primarily relate to up-front advances received on orders from
customers as well as amounts invoiced to customers in excess of revenues
recognized 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:
|
|
Six months ended June 30,
|
|
|
2019
|
|
2018
|
|
|
Contract
|
|
Contract
|
|
Contract
|
|
Contract
|
|
($ in
millions)
|
assets
|
|
liabilities
|
|
assets
|
|
liabilities
|
|
Revenue
recognized, which was included in the Contract liabilities balance at Jan 1,
2019/2018
|
–
|
|
(543)
|
|
–
|
|
(715)
|
|
Additions
to Contract liabilities - excluding amounts recognized as revenue during the
period
|
–
|
|
482
|
|
–
|
|
679
|
|
Receivables
recognized that were included in the Contract asset balance at Jan 1,
2019/2018
|
(455)
|
|
–
|
|
(463)
|
|
–
|
At
June 30, 2019
, the
Company had unsatisfied performance obligations totaling $14,016 million
and, of this amount, the Company expects to fulfill approximately
56 percent of the obligations in 2019, approximately 28 percent of
the obligations in 2020 and the balance thereafter.
─
Note 10
Debt
The Company’s total debt at June 30, 2019,
and December 31, 2018, amounted to $10,328 million and $
8,618
million, respectively.
Short-term debt and current maturities of long-term debt
The Company’s “Short-term debt and current
maturities of long-term debt” consisted of the following:
|
($ in
millions)
|
June 30, 2019
|
December 31, 2018
|
|
Short-term
debt
|
2,047
|
561
|
|
Current
maturities of long-term debt
|
368
|
1,470
|
|
Total
|
2,415
|
2,031
|
Short-term
debt primarily represented issued commercial paper and short-term loans from
various banks. At June 30, 2019, and December 31, 2018, $1,252 million
and $
292
million, respectively, was outstanding under the
$2 billion commercial paper program in the United States. In addition, at
June 30, 2019, and December 31, 2018, $
689
million
and $
172
million was outstanding under the
$2 billion Euro-commercial paper program.
In March
2019, the Company repaid at maturity its EUR 1,250 million 2.625% Instruments,
equivalent to $1,414
million at date of payment.
Long-term debt
The Company’s long-term debt at June 30, 2019,
and December 31, 2018, amounted to $7,913 million and $6,587 million,
respectively.
27
Q2
2019 Financial Information
Outstanding bonds (including maturities within the
next 12 months) were as follows:
|
|
June 30, 2019
|
December 31, 2018
|
|
(in
millions)
|
Nominal outstanding
|
Carrying value
(1)
|
Nominal outstanding
|
Carrying value
(1)
|
|
Bonds:
|
|
|
|
|
|
|
|
|
|
2.625%
EUR Instruments, due 2019
|
|
|
|
–
|
EUR
|
1,250
|
$
|
1,431
|
|
2.8%
USD Notes, due 2020
|
USD
|
300
|
$
|
300
|
USD
|
300
|
$
|
299
|
|
Floating
EUR Notes, due 2020
|
EUR
|
1,000
|
$
|
1,139
|
|
|
|
–
|
|
4.0%
USD Notes, due 2021
|
USD
|
650
|
$
|
647
|
USD
|
650
|
$
|
646
|
|
2.25%
CHF Bonds, due 2021
|
CHF
|
350
|
$
|
376
|
CHF
|
350
|
$
|
373
|
|
5.625%
USD Notes, due 2021
|
USD
|
250
|
$
|
262
|
USD
|
250
|
$
|
265
|
|
2.875%
USD Notes, due 2022
|
USD
|
1,250
|
$
|
1,267
|
USD
|
1,250
|
$
|
1,242
|
|
3.375%
USD Notes, due 2023
|
USD
|
450
|
$
|
448
|
USD
|
450
|
$
|
448
|
|
0.625%
EUR Instruments, due 2023
|
EUR
|
700
|
$
|
815
|
EUR
|
700
|
$
|
807
|
|
0.75%
EUR Instruments, due 2024
|
EUR
|
750
|
$
|
878
|
EUR
|
750
|
$
|
862
|
|
0.3%
CHF Notes, due 2024
|
CHF
|
280
|
$
|
286
|
|
|
|
–
|
|
3.8%
USD Notes, due 2028
|
USD
|
750
|
$
|
746
|
USD
|
750
|
$
|
746
|
|
1.0%
CHF Notes, due 2029
|
CHF
|
170
|
$
|
174
|
|
|
|
–
|
|
4.375%
USD Notes, due 2042
|
USD
|
750
|
$
|
724
|
USD
|
750
|
$
|
723
|
|
Total
|
|
|
$
|
8,062
|
|
|
$
|
7,842
|
(1)
USD
carrying values include unamortized debt issuance costs, bond discounts or
premiums, as well as adjustments for fair value hedge accounting, where
appropriate.
In February 2019, the Company issued the following
notes with a principal of:
·
CHF 280 million,
due 2024, paying interest annually in arrears at a fixed rate of 0.3 percent
per annum, and
·
CHF 170
million, due 2029, paying interest annually in arrears at a fixed rate of 1.0 percent
per annum.
The aggregate net proceeds of these bond issues, after
underwriting discount and other fees, amounted to CHF 449 million
(equivalent to approximately $449 million on date of issuance).
In April 2019, the Company issued 18-month floating rate notes
with an aggregate principal of EUR 1,000 million, due in October 2020. These
notes pay interest quarterly in arrears at a variable interest rate of 35 basis
points above the 3-month EURIBOR, with a floor rate of zero. The aggregate net
proceeds amounted to EUR 1,002 million (equivalent to approximately $1,129
million on date of issuance).
─
Note 11
Employee benefits
The Company operates defined benefit pension
plans, defined contribution pension plans, and termination indemnity plans, in
accordance with local regulations and practices. These plans cover a large
portion of the Company’s employees and provide benefits to employees in the
event of death, disability, retirement, or termination of employment. Certain
of these plans are multi-employer plans. The Company also operates other
postretirement benefit plans including postretirement health care benefits, and
other employee-related benefits for active employees including long-service
award plans. The measurement date used for the Company’s employee benefit plans
is December 31. The funding policies of the Company’s plans are consistent with
the local government and tax requirements.
28
Q2
2019 Financial Information
The following tables include amounts relating to
defined benefit pension plans and other postretirement benefits for both continuing
and discontinued operations.
Net periodic benefit cost of the Company’s defined
benefit pension and other postretirement benefit plans consisted of the
following:
|
($ in
millions)
|
Defined pension benefits
|
|
Other postretirement
benefits
|
|
|
Switzerland
|
International
|
|
|
Six
months ended June 30,
|
2019
|
2018
|
2019
|
2018
|
|
2019
|
2018
|
|
Operational
pension cost:
|
|
|
|
|
|
|
|
|
Service
cost
|
38
|
46
|
56
|
62
|
|
–
|
–
|
|
Operational
pension cost
|
38
|
46
|
56
|
62
|
|
–
|
–
|
|
Non-operational
pension cost (credit):
|
|
|
|
|
|
|
|
|
Interest
cost
|
8
|
14
|
88
|
99
|
|
2
|
2
|
|
Expected
return on plan assets
|
(56)
|
(59)
|
(138)
|
(153)
|
|
–
|
–
|
|
Amortization
of prior service cost (credit)
|
(7)
|
(8)
|
1
|
1
|
|
(2)
|
(2)
|
|
Amortization
of net actuarial loss
|
–
|
–
|
54
|
48
|
|
(1)
|
–
|
|
Curtailments,
settlements and special termination benefits
|
–
|
–
|
1
|
–
|
|
–
|
–
|
|
Non-operational
pension cost (credit)
|
(55)
|
(53)
|
6
|
(5)
|
|
(1)
|
–
|
|
Net
periodic benefit cost
|
(17)
|
(7)
|
62
|
57
|
|
(1)
|
–
|
|
($ in
millions)
|
Defined pension benefits
|
|
Other postretirement
|
|
|
Switzerland
|
International
|
|
benefits
|
|
Three
months ended June 30,
|
2019
|
2018
|
2019
|
2018
|
|
2019
|
2018
|
|
Operational
pension cost:
|
|
|
|
|
|
|
|
|
Service
cost
|
19
|
23
|
28
|
28
|
|
–
|
–
|
|
Operational
pension cost
|
19
|
23
|
28
|
28
|
|
–
|
–
|
|
Non-operational
pension cost (credit):
|
|
|
|
|
|
|
|
|
Interest
cost
|
4
|
6
|
44
|
48
|
|
1
|
1
|
|
Expected
return on plan assets
|
(28)
|
(29)
|
(68)
|
(74)
|
|
–
|
–
|
|
Amortization
of prior service cost (credit)
|
(3)
|
(4)
|
–
|
1
|
|
(1)
|
(1)
|
|
Amortization
of net actuarial loss
|
–
|
–
|
27
|
24
|
|
–
|
–
|
|
Curtailments,
settlements and special termination benefits
|
–
|
–
|
–
|
–
|
|
–
|
–
|
|
Non-operational
pension cost (credit)
|
(27)
|
(27)
|
3
|
(1)
|
|
–
|
–
|
|
Net
periodic benefit cost
|
(8)
|
(4)
|
31
|
27
|
|
–
|
–
|
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. Net periodic benefit cost
includes $20 million and $24 million, for the six months ended June
30, 2019 and 2018, respectively, and $10 million and $13 million, for
the three months ended June 30, 2019 and 2018, respectively, related to
discontinued operations.
Employer contributions were as follows:
|
($ in
millions)
|
Defined pension benefits
|
|
Other postretirement
benefits
|
|
|
Switzerland
|
International
|
|
|
Six
months ended June 30,
|
2019
|
2018
|
2019
|
2018
|
|
2019
|
2018
|
|
Total
contributions to defined benefit pension and
|
|
|
|
|
|
|
|
|
other
postretirement benefit plans
|
48
|
45
|
44
|
50
|
|
4
|
4
|
|
Of
which, discretionary contributions to defined benefit
|
|
|
|
|
|
|
|
|
pension
plans
|
2
|
–
|
–
|
–
|
|
–
|
–
|
|
($ in
millions)
|
Defined pension benefits
|
|
Other postretirement
|
|
|
Switzerland
|
International
|
|
benefits
|
|
Three
months ended June 30,
|
2019
|
2018
|
2019
|
2018
|
|
2019
|
2018
|
|
Total
contributions to defined benefit pension and
|
|
|
|
|
|
|
|
|
other
postretirement benefit plans
|
25
|
22
|
20
|
27
|
|
2
|
2
|
|
Of
which, discretionary contributions to defined benefit
|
|
|
|
|
|
|
|
|
pension
plans
|
2
|
–
|
–
|
–
|
|
–
|
–
|
The
Company expects to make contributions totaling approximately $203 million
and $11 million to its defined benefit pension plans and other
postretirement benefit plans, respectively, for the full year 2019.
29
Q2
2019 Financial Information
─
Note 12
Stockholder's equity
At the Annual
General Meeting of Shareholders on May 2, 2019, shareholders approved the
proposal of the Board of Directors to distribute 0.80 Swiss francs per share to
shareholders. The declared dividend amounted to $1,675 million and was paid in the
second quarter of 2019.
─
Note 13
Earnings per share
Basic earnings per share is calculated by
dividing income by the weighted-average number of shares outstanding during the
period. Diluted earnings per share is calculated by dividing income by the
weighted-average number of shares outstanding during the period, assuming that
all potentially dilutive securities were exercised, if dilutive. Potentially
dilutive securities comprise outstanding written call options, and outstanding
options and shares granted subject to certain conditions under the Company’s
share-based payment arrangements.
|
Basic
earnings per share
|
|
|
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions, except per share data in $)
|
2019
|
2018
|
2019
|
2018
|
|
Amounts
attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
325
|
903
|
(72)
|
504
|
|
Income
from discontinued operations, net of tax
|
274
|
350
|
136
|
177
|
|
Net
income
|
599
|
1,253
|
64
|
681
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding (in millions)
|
2,132
|
2,132
|
2,132
|
2,130
|
|
|
|
|
|
|
|
Basic
earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
0.15
|
0.42
|
(0.03)
|
0.24
|
|
Income
from discontinued operations, net of tax
|
0.13
|
0.16
|
0.06
|
0.08
|
|
Net
income
|
0.28
|
0.59
|
0.03
|
0.32
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
|
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions, except per share data in $)
|
2019
|
2018
|
2019
|
2018
|
|
Amounts
attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
325
|
903
|
(72)
|
504
|
|
Income
from discontinued operations, net of tax
|
274
|
350
|
136
|
177
|
|
Net
income
|
599
|
1,253
|
64
|
681
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding (in millions)
|
2,132
|
2,132
|
2,132
|
2,130
|
|
Effect
of dilutive securities:
|
|
|
|
|
|
Call
options and shares
|
2
|
10
|
–
|
8
|
|
Adjusted
weighted-average number of shares outstanding (in millions)
|
2,134
|
2,142
|
2,132
|
2,138
|
|
|
|
|
|
|
|
Diluted
earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income
(loss) from continuing operations, net of tax
|
0.15
|
0.42
|
(0.03)
|
0.24
|
|
Income from
discontinued operations, net of tax
|
0.13
|
0.16
|
0.06
|
0.08
|
|
Net
income
|
0.28
|
0.58
|
0.03
|
0.32
|
30
Q2
2019 Financial Information
─
Note 14
Reclassifications out of accumulated other
comprehensive loss
The following table shows changes in “Accumulated
other comprehensive loss” (OCI) attributable to ABB, by component, net of tax:
|
|
|
Unrealized gains
|
Pension and
|
Unrealized gains
|
|
|
|
Foreign currency
|
(losses) on
|
other
|
(losses) of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow hedge
|
|
|
($ in
millions)
|
adjustments
|
securities
|
plan adjustments
|
derivatives
|
Total OCI
|
|
Balance
at January 1, 2018
|
(2,693)
|
8
|
(1,672)
|
12
|
(4,345)
|
|
Cumulative
effect of changes in
|
|
|
|
|
|
|
accounting
principles
(1)
|
–
|
(9)
|
–
|
–
|
(9)
|
|
Other
comprehensive (loss) income:
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
|
|
|
|
|
|
before
reclassifications
|
(404)
|
(5)
|
55
|
(32)
|
(386)
|
|
Amounts
reclassified from OCI
|
–
|
–
|
29
|
13
|
42
|
|
Changes
attributable to divestments
|
11
|
–
|
–
|
–
|
11
|
|
Total
other comprehensive (loss) income
|
(393)
|
(5)
|
84
|
(19)
|
(333)
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts
attributable to
|
|
|
|
|
|
|
noncontrolling
interests
|
(4)
|
–
|
–
|
–
|
(4)
|
|
Balance
at June 30, 2018
|
(3,082)
|
(6)
|
(1,588)
|
(7)
|
(4,683)
|
|
|
|
Unrealized gains
|
Pension and
|
Unrealized gains
|
|
|
|
Foreign currency
|
(losses) on
|
other
|
(losses) of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow hedge
|
|
|
($ in
millions)
|
adjustments
|
securities
|
plan adjustments
|
derivatives
|
Total OCI
|
|
Balance
at January 1, 2019
|
(3,324)
|
(4)
|
(1,967)
|
(16)
|
(5,311)
|
|
Adoption
of accounting standard update
(2)
|
–
|
–
|
(36)
|
–
|
(36)
|
|
Other
comprehensive (loss) income:
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
|
|
|
|
|
|
before
reclassifications
|
(53)
|
11
|
3
|
5
|
(34)
|
|
Amounts
reclassified from OCI
|
–
|
2
|
32
|
–
|
34
|
|
Total
other comprehensive (loss) income
|
(53)
|
13
|
35
|
5
|
–
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts
attributable to
|
|
|
|
|
|
|
noncontrolling
interests
|
1
|
–
|
–
|
–
|
1
|
|
Balance
at June 30, 2019
(3)
|
(3,378)
|
9
|
(1,968)
|
(11)
|
(5,349)
|
(1) Amounts relate to the adoption of two
accounting standard updates in 2018 regarding the Recognition and measurement
of financial assets and financial liabilities
and
Revenue from contracts with customers.
(2) Amounts relate to the adoption of an
accounting standard update in 2019 regarding the Tax Cuts and Jobs Act of 2017.
See “Applicable for current periods” section of Note 2 for more details.
(3) Due to rounding, numbers presented may
not add to the totals provided.
The following table reflects
amounts reclassified out of OCI in respect of Pension and other postretirement
plan adjustments:
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
Location
of (gains) losses
|
June 30,
|
June 30,
|
|
Details
about OCI components
|
reclassified
from OCI
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Pension
and other postretirement plan adjustments:
|
|
|
|
|
|
|
Amortization
of prior service cost (credit)
|
Non-operational
pension (cost) credit
(1)
|
(8)
|
(9)
|
(4)
|
(4)
|
|
Amortization
of net actuarial loss
|
Non-operational
pension (cost) credit
(1)
|
53
|
48
|
27
|
24
|
|
Total
before tax
|
|
45
|
39
|
23
|
20
|
|
Tax
|
Provision
for taxes
|
(13)
|
(10)
|
(6)
|
(5)
|
|
Amounts
reclassified from OCI
|
|
32
|
29
|
17
|
15
|
(1) Amounts
include
a total of $6 million for both the six months ended June 30, 2019 and
2018, and $3 million for both the three months ended June 30, 2019
and 2018, reclassified from OCI to Income from discontinued operations (see
Note 3).
The
amounts in respect of Unrealized gains (losses) on available-for-sale
securities and Unrealized gains (losses) of cash flow hedge derivatives
31
Q2
2019 Financial Information
were not significant for the six and three months ended
June 30, 2019 and 2018.
─
Note 15
Restructuring and related expenses
OS program
In
December 2018, the Company announced a two-year restructuring program with the
objective of simplifying its business model and structure through the
implementation of a new organizational structure driven by its businesses.
The program includes the elimination of the country and
regional structures within the current matrix organization, including the
elimination of the three regional Executive Committee roles.
The operating businesses will each be responsible for both
their customer-facing activities and business support functions, while the
remaining Group-level corporate activities will primarily focus on Group
strategy, portfolio and performance management, capital allocation, core
technologies and the ABB Ability
™
platform. The program is
expected to be performed over two years and incur restructuring expenses of
$350 million.
The following table outlines the costs incurred
in the six and three months ended June 30, 2019, the cumulative costs
incurred up to June 30, 2019, and the total amount of costs expected to be
incurred under the program per operating segment:
|
|
Cost incurred
|
Cost incurred
|
Cumulative net
|
|
|
|
Six months ended
|
Three months ended
|
cost incurred up to
|
Total
|
|
($ in
millions)
|
June 30, 2019
|
June 30, 2019
|
June 30, 2019
|
Expected Costs
|
|
Electrification
|
(4)
|
(2)
|
28
|
40
|
|
Industrial
Automation
|
2
|
2
|
23
|
90
|
|
Motion
|
1
|
1
|
2
|
55
|
|
Robotics
and Discrete Automation
|
3
|
3
|
3
|
20
|
|
Corporate
and Other
|
24
|
23
|
35
|
145
|
|
Total
|
26
|
27
|
91
|
350
|
Of the total expected costs of $350 million the
majority, including the total $91 million of costs incurred up to June 30,
2019, relates to employee severance costs.
Expenses, net of changes in estimates, associated with this
program are recorded in the following line items in the Consolidated Income
Statements:
|
|
|
Six months ended
|
Three months ended
|
|
($ in
millions)
|
|
June 30, 2019
|
June 30, 2019
|
|
Total
cost of sales
|
|
–
|
1
|
|
Selling,
general and administrative expenses
|
|
19
|
19
|
|
Other
income (expense), net
|
|
7
|
7
|
|
Total
|
|
26
|
27
|
Liabilities associated with the OS program are
primarily included in “Other provisions”. The following table shows the
activity from the beginning of the program to June 30, 2019, by expense type:
|
|
|
Employee
|
|
($ in
millions)
|
|
severance costs
|
|
Liability
at January 1, 2018
|
|
–
|
|
Expenses
|
|
65
|
|
Liability
at December 31, 2018
|
|
65
|
|
Expenses
|
|
35
|
|
Cash
payments
|
|
(8)
|
|
Change
in estimates
|
|
(9)
|
|
Exchange
rate differences
|
|
–
|
|
Liability
at June 30, 2019
|
|
83
|
Other restructuring-related activities
In the six months
and three months ended
June 30, 2019, the
Company executed various other restructuring‑related activities and
incurred expenses of $73 million and $22 million, respectively,
mainly related to employee severance costs. In the six months and three months
ended June 30, 2018, expenses relating to these various other
restructuring-related activities were not significant. These costs are included
in the following line items in the Consolidated Income Statements:
32
Q2
2019 Financial Information
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions)
|
2019
|
2018
|
2019
|
2018
|
|
Total
cost of sales
|
32
|
2
|
10
|
(4)
|
|
Selling,
general and administrative expenses
|
16
|
2
|
4
|
1
|
|
Non-order
related research and development expenses
|
(1)
|
–
|
(1)
|
–
|
|
Other
income (expenses), net
|
26
|
9
|
9
|
4
|
|
Total
|
73
|
13
|
22
|
1
|
─
Note 16
Operating segment data
The Chief Operating Decision Maker (CODM) is the
Chief Executive Officer. The CODM allocates resources to and assesses the
performance of each operating segment using the information outlined below.
The Company is organized into operating segments based on
products and services and these operating segments consist of Electrification,
Industrial Automation, Motion, and Robotics & Discrete Automation. The remaining
operations of the Company are included in Corporate and Other.
Effective April 1, 2019, the Company announced a
reorganization of its operating segments into four customer-focused,
entrepreneurial businesses. The Electrification Products segment was renamed
the Electrification segment. The Industrial Automation segment remains
unchanged except that it now excludes the Machine and Factory Automation
business line, which has been transferred, along with the Robotics business
line from the former Robotics and Motion segment, to the new Robotics &
Discrete Automation segment. The new Motion segment contains the remaining
business lines of the former Robotics and Motion segment.
Following the announcement in December 2018, to
sell its Powers Grids business, the Company reclassified the results of
operations for this business and certain related amounts previously included in
Corporate and Other to discontinued operations (See Note 3).
The segment information for the six and three
months ended June 30, 2018 and at December 31, 2018, has been recast to
reflect these changes.
A description of the types of products and
services provided by each reportable segment is as follows:
·
Electrification:
manufactures
and sells products and solutions which are designed to provide smarter and
safer electrical flow from the substation to the socket. The portfolio of increasingly
digital and connected solutions includes electric vehicle charging
infrastructure, solar power solutions, modular substation packages,
distribution automation products, switchboard and panelboards, switchgear, UPS
solutions, circuit breakers, measuring and sensing devices, control products,
wiring accessories, enclosures and cabling systems and intelligent home and
building solutions, designed to integrate and automate lighting, heating,
ventilation, security and data communication networks.
·
Industrial Automation:
develops
and sells integrated automation and electrification systems and solutions, such
as process and discrete control solutions, advanced process control software
and manufacturing execution systems, sensing, measurement and analytical
instrumentation and solutions, electric ship propulsion systems, as well as
large turbochargers. In addition, the business offers a comprehensive range of
services ranging from repair to advanced services such as remote monitoring,
preventive maintenance and cybersecurity services.
·
Motion:
manufactures and sells motors, generators,
drives, wind converters, mechanical power transmissions, complete electrical
powertrain systems and related services and digital solutions for a wide range
of applications in industry, transportation, infrastructure, and utilities.
·
Robotics & Discrete Automation:
develops and sells robotics and machinery automation solutions,
including robots, controllers, software, function packages, cells, programmable
logic controllers (PLC), industrial PCs (IPC), servo motion, engineered
manufacturing solutions, turn-key solutions and collaborative robot solutions
for a wide range of applications. In addition, the business offers a
comprehensive range of digital solutions as well as field and after sales
service.
·
Corporate and Other:
includes
headquarters, central research and development,
the Company’s real estate activities, Group Treasury Operations, historical
operating activities of certain divested businesses and other non-core
operating activities.
The primary measure of profitability on which the
operating segments are evaluated is Operational EBITA, which represents income
from operations excluding:
·
amortization expense on intangibles arising upon
acquisitions (acquisition-related amortization),
·
restructuring, related and implementation costs,
·
changes in the amount recorded for obligations
related to divested businesses occurring after the divestment date (changes in
obligations related to divested businesses),
·
changes in estimates relating to opening balance
sheets of acquired businesses (changes in pre-acquisition estimates),
·
gains and losses from sale of businesses
(including fair value adjustment on assets and liabilities held for sale),
·
acquisition- and divestment-related expenses and
integration costs,
·
certain other non-operational items, as well as
·
foreign exchange/commodity timing differences in
income from operations consisting of: (a) unrealized gains and losses on derivatives
(foreign exchange, commodities, embedded derivatives), (b) realized gains
and losses on derivatives where the underlying hedged transaction has not yet
been realized, and (c) unrealized foreign exchange movements on
receivables/payables (and related assets/liabilities).
Certain other
non-operational items generally includes: certain regulatory, compliance and
legal costs, certain asset write downs/impairments as
33
Q2
2019 Financial Information
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 six and three months ended June 30, 2019 and 2018, as well
as total assets at June 30, 2019, and December 31, 2018.
|
|
Six months ended June 30, 2019
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
1,995
|
1,194
|
929
|
830
|
35
|
4,983
|
|
The
Americas
|
2,325
|
777
|
1,182
|
232
|
3
|
4,519
|
|
Asia,
Middle East and Africa
|
1,784
|
1,069
|
881
|
603
|
70
|
4,407
|
|
|
6,104
|
3,040
|
2,992
|
1,665
|
108
|
13,909
|
|
End
Customer Markets
|
|
|
|
|
|
|
|
Utilities
|
1,060
|
526
|
334
|
–
|
42
|
1,962
|
|
Industry
|
2,502
|
1,816
|
1,952
|
1,630
|
49
|
7,949
|
|
Transport
& infrastructure
|
2,542
|
698
|
706
|
35
|
17
|
3,998
|
|
|
6,104
|
3,040
|
2,992
|
1,665
|
108
|
13,909
|
|
Product
type
|
|
|
|
|
|
|
|
Products
|
5,300
|
774
|
2,573
|
937
|
61
|
9,645
|
|
Systems
|
308
|
796
|
–
|
487
|
47
|
1,638
|
|
Services
and other
|
496
|
1,470
|
419
|
241
|
–
|
2,626
|
|
|
6,104
|
3,040
|
2,992
|
1,665
|
108
|
13,909
|
|
|
|
|
|
|
|
|
|
Third-party
revenues
|
6,104
|
3,040
|
2,992
|
1,665
|
108
|
13,909
|
|
Intersegment
revenues
(1)
|
225
|
58
|
254
|
31
|
(459)
|
109
|
|
Total
Revenues
|
6,329
|
3,098
|
3,246
|
1,696
|
(351)
|
14,018
|
|
|
Six months ended June 30, 2018
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
1,862
|
1,232
|
920
|
870
|
45
|
4,929
|
|
The
Americas
|
1,347
|
744
|
1,199
|
239
|
21
|
3,550
|
|
Asia,
Middle East and Africa
|
1,716
|
1,205
|
810
|
691
|
141
|
4,563
|
|
|
4,925
|
3,181
|
2,929
|
1,800
|
207
|
13,042
|
|
End
Customer Markets
|
|
|
|
|
|
|
|
Utilities
|
1,245
|
584
|
352
|
–
|
126
|
2,307
|
|
Industry
|
2,138
|
1,726
|
1,926
|
1,777
|
51
|
7,618
|
|
Transport
& infrastructure
|
1,542
|
871
|
651
|
23
|
30
|
3,117
|
|
|
4,925
|
3,181
|
2,929
|
1,800
|
207
|
13,042
|
|
Product
type
|
|
|
|
|
|
|
|
Products
|
4,281
|
780
|
2,526
|
1,034
|
36
|
8,657
|
|
Systems
|
298
|
922
|
–
|
497
|
171
|
1,888
|
|
Services
and other
|
346
|
1,479
|
403
|
269
|
–
|
2,497
|
|
|
4,925
|
3,181
|
2,929
|
1,800
|
207
|
13,042
|
|
|
|
|
|
|
|
|
|
Third-party
revenues
|
4,925
|
3,181
|
2,929
|
1,800
|
207
|
13,042
|
|
Intersegment
revenues
(1)
|
242
|
52
|
249
|
32
|
(445)
|
130
|
|
Total
Revenues
|
5,167
|
3,233
|
3,178
|
1,832
|
(238)
|
13,172
|
34
Q2
2019 Financial Information
|
|
Three months ended June 30, 2019
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
1,012
|
609
|
487
|
409
|
19
|
2,536
|
|
The
Americas
|
1,219
|
405
|
582
|
112
|
3
|
2,321
|
|
Asia,
Middle East and Africa
|
919
|
536
|
449
|
306
|
48
|
2,258
|
|
|
3,150
|
1,550
|
1,518
|
827
|
70
|
7,115
|
|
End
Customer Markets
|
|
|
|
|
|
|
|
Utilities
|
600
|
277
|
187
|
–
|
39
|
1,103
|
|
Industry
|
1,351
|
923
|
962
|
808
|
22
|
4,066
|
|
Transport
& infrastructure
|
1,199
|
350
|
369
|
19
|
9
|
1,946
|
|
|
3,150
|
1,550
|
1,518
|
827
|
70
|
7,115
|
|
Product
type
|
|
|
|
|
|
|
|
Products
|
2,723
|
419
|
1,306
|
460
|
22
|
4,930
|
|
Systems
|
168
|
379
|
–
|
251
|
48
|
846
|
|
Services
and other
|
259
|
752
|
212
|
116
|
–
|
1,339
|
|
|
3,150
|
1,550
|
1,518
|
827
|
70
|
7,115
|
|
|
|
|
|
|
|
|
|
Third-party
revenues
|
3,150
|
1,550
|
1,518
|
827
|
70
|
7,115
|
|
Intersegment
revenues
(1)
|
122
|
30
|
123
|
18
|
(237)
|
56
|
|
Total
Revenues
|
3,272
|
1,580
|
1,641
|
845
|
(167)
|
7,171
|
|
|
Three months ended June 30, 2018
|
|
|
|
|
|
Robotics &
|
Corporate
|
|
|
|
|
Industrial
|
|
Discrete
|
|
|
|
($ in
millions)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
925
|
603
|
462
|
440
|
23
|
2,453
|
|
The
Americas
|
699
|
388
|
618
|
115
|
11
|
1,831
|
|
Asia,
Middle East and Africa
|
916
|
596
|
427
|
352
|
85
|
2,376
|
|
|
2,540
|
1,587
|
1,507
|
907
|
119
|
6,660
|
|
End
Customer Markets
|
|
|
|
|
|
|
|
Utilities
|
673
|
287
|
186
|
–
|
64
|
1,210
|
|
Industry
|
1,086
|
883
|
954
|
895
|
38
|
3,856
|
|
Transport
& infrastructure
|
781
|
417
|
367
|
12
|
17
|
1,594
|
|
|
2,540
|
1,587
|
1,507
|
907
|
119
|
6,660
|
|
Product
type
|
|
|
|
|
|
|
|
Products
|
2,196
|
370
|
1,299
|
514
|
20
|
4,399
|
|
Systems
|
161
|
458
|
–
|
260
|
99
|
978
|
|
Services
and other
|
183
|
759
|
208
|
133
|
–
|
1,283
|
|
|
2,540
|
1,587
|
1,507
|
907
|
119
|
6,660
|
|
|
|
|
|
|
|
|
|
Third-party
revenues
|
2,540
|
1,587
|
1,507
|
907
|
119
|
6,660
|
|
Intersegment
revenues
(1)
|
133
|
26
|
122
|
18
|
(228)
|
71
|
|
Total
Revenues
|
2,673
|
1,613
|
1,629
|
925
|
(109)
|
6,731
|
(1) Intersegment revenues include sales to
the Power Grids business which is presented as discontinued operations and are
not eliminated from Total revenues.
35
Q2
2019 Financial Information
|
|
Six months ended
|
Three months ended
|
|
|
June 30,
|
June 30,
|
|
($ in
millions)
|
2019
|
2018
|
2019
|
2018
|
|
Operational
EBITA:
|
|
|
|
|
|
Electrification
|
817
|
807
|
440
|
430
|
|
Industrial
Automation
|
395
|
462
|
190
|
231
|
|
Motion
|
538
|
496
|
275
|
266
|
|
Robotics
& Discrete Automation
|
200
|
277
|
105
|
138
|
|
Corporate
and Other
(1)
|
(359)
|
(435)
|
(185)
|
(210)
|
|
Consolidated
Operational EBITA
|
1,591
|
1,607
|
825
|
855
|
|
Acquisition-related
amortization
|
(135)
|
(125)
|
(67)
|
(62)
|
|
Restructuring,
related and implementation costs
(2)
|
(142)
|
(6)
|
(74)
|
1
|
|
Changes
in obligations related to divested businesses
|
(7)
|
(17)
|
(4)
|
(10)
|
|
Changes
in pre-acquisition estimates
|
(13)
|
(1)
|
(13)
|
(1)
|
|
Gains
and losses from sale of businesses
|
(4)
|
(5)
|
(3)
|
1
|
|
Fair
value adjustment on assets and liabilities held for sale
|
(455)
|
–
|
(455)
|
–
|
|
Acquisition-
and divestment-related expenses and integration costs
|
(54)
|
(73)
|
(30)
|
(48)
|
|
Foreign
exchange/commodity timing differences in income from operations:
|
|
|
|
|
|
Unrealized
gains and losses on derivatives (foreign exchange,
|
|
|
|
|
|
commodities,
embedded derivatives)
|
13
|
(24)
|
7
|
(11)
|
|
Realized
gains and losses on derivatives where the underlying hedged
|
|
|
|
|
|
transaction
has not yet been realized
|
(3)
|
(2)
|
(2)
|
(11)
|
|
Unrealized
foreign exchange movements on receivables/payables (and
|
|
|
|
|
|
related
assets/liabilities)
|
(2)
|
(5)
|
(18)
|
4
|
|
Certain
other non-operational items:
|
|
|
|
|
|
Costs
for planned divestment of Power Grids
|
(58)
|
–
|
(38)
|
–
|
|
Regulatory,
compliance and legal costs
|
(8)
|
(16)
|
–
|
(13)
|
|
Division
transformation costs
|
(6)
|
(2)
|
(3)
|
–
|
|
Executive
Committee transition costs
|
(14)
|
–
|
(14)
|
–
|
|
Gain on
sale of investments
|
15
|
–
|
15
|
–
|
|
Other
non-operational items
|
(5)
|
3
|
(3)
|
3
|
|
Income
from operations
|
713
|
1,334
|
123
|
708
|
|
Interest
and dividend income
|
37
|
48
|
18
|
26
|
|
Interest
and other finance expense
|
(123)
|
(122)
|
(61)
|
(33)
|
|
Non-operational
pension (cost) credit
|
44
|
52
|
21
|
25
|
|
Income
from continuing operations before taxes
|
671
|
1,312
|
101
|
726
|
(1) Corporate and Other includes Stranded
corporate costs of $133 million and $154 million for the six months ended
June 30, 2019 and 2018, respectively, and $66 million and $78 million
for the three months ended June 30, 2019 and 2018, respectively.
(2) Amounts in 2019 include $43 million and
$24 million of implementation costs in relation to the OS program for the
six and three months ended June 30, 2019, respectively.
|
|
Total assets
(1), (2)
|
|
($ in
millions)
|
June 30, 2019
|
December 31, 2018
|
|
Electrification
|
12,076
|
12,052
|
|
Industrial
Automation
|
4,540
|
4,287
|
|
Motion
|
6,255
|
6,016
|
|
Robotics
& Discrete Automation
|
4,726
|
4,760
|
|
Corporate
and Other
|
17,867
|
17,326
|
|
Consolidated
|
45,464
|
44,441
|
(1) Total assets are after intersegment
eliminations and therefore reflect third-party assets only.
(2) Assets held for sale of $9,153 million
and $8,591 million are included in Corporate and Other at June 30, 2019 and
December 31, 2018, respectively (see Note 3).
36
Q2
2019 Financial Information
37
Q2
2019 Financial Information
—
Supplemental
Reconciliations and Definitions
The following reconciliations and definitions
include measures which ABB uses to supplement its Consolidated Financial
Information (unaudited) which is prepared in accordance with United States
generally accepted accounting principles (U.S. GAAP). Certain of these
financial measures are, or may be, considered non-GAAP financial measures as
defined in the rules of the U.S. Securities and Exchange Commission (SEC).
While ABB’s management believes that the non-GAAP
financial measures herein are useful in evaluating ABB’s operating results,
this information should be considered as supplemental in nature and not as a
substitute for the related financial information prepared in accordance with
U.S. GAAP. Therefore these measures should not be viewed in isolation but
considered together with the Consolidated Financial Information (unaudited)
prepared in accordance with U.S. GAAP as of and for the six and three months
ended June 30, 2019.
On January 1, 2018, the Company adopted a new
accounting standard, Revenue from contracts with customers, and consistent with
the method of adoption elected, comparative information for 2017 has not been
restated and continues to be reported under the accounting standards previously
in effect for that period (see Note 2 to the Consolidated Financial
Information). In addition, on January 1, 2019, the Company adopted a new
accounting standard for lease accounting. Consistent with the method of
adoption elected, comparable information has not been restated to reflect the
adoption of this new standard and continues to be measured and reported under
the accounting standard in effect for those period presented.
Comparable growth rates
Growth rates for certain key figures may be
presented and discussed on a “comparable” basis. The comparable growth rate
measures growth on a constant currency basis. Since we are a global company,
the comparability of our operating results reported in U.S. dollars is affected
by foreign currency exchange rate fluctuations. We calculate the impacts from
foreign currency fluctuations by translating the current-year periods’ reported
key figures into U.S. dollar amounts using the exchange rates in effect for the
comparable periods in the previous year.
Comparable growth rates are also adjusted for
changes in our business portfolio. Adjustments to our business portfolio occur
due to acquisitions, divestments, or by exiting specific business activities or
customer markets. The adjustment for portfolio changes is calculated as
follows: where the results of any business acquired or divested have not been
consolidated and reported for the entire duration of both the current and
comparable periods, the reported key figures of such business are adjusted to
exclude the relevant key figures of any corresponding quarters which are not
comparable when computing the comparable growth rate. Certain portfolio changes
which do not qualify as divestments under U.S. GAAP have been treated in a
similar manner to divestments. Changes in our portfolio where we have exited
certain business activities or customer markets are adjusted as if the relevant
business was divested in the period when the decision to cease business
activities was taken. We do not adjust for portfolio changes where the relevant
business has annualized revenues of less than $50 million.
The following tables provide reconciliations of
reported growth rates of certain key figures to their respective comparable growth
rate.
Comparable growth rate reconciliation by business
|
|
Q2 2019 compared to Q2 2018
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
22%
|
6%
|
-23%
|
5%
|
|
22%
|
6%
|
-24%
|
4%
|
|
Industrial
Automation
|
-8%
|
4%
|
0%
|
-4%
|
|
-2%
|
5%
|
0%
|
3%
|
|
Motion
|
0%
|
4%
|
0%
|
4%
|
|
1%
|
4%
|
0%
|
5%
|
|
Robotics
& Discrete Automation
|
-14%
|
5%
|
0%
|
-9%
|
|
-9%
|
6%
|
0%
|
-3%
|
|
ABB
Group
|
4%
|
5%
|
-8%
|
1%
|
|
7%
|
4%
|
-9%
|
2%
|
|
|
H1 2019 compared to H1 2018
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
22%
|
5%
|
-22%
|
5%
|
|
22%
|
6%
|
-24%
|
4%
|
|
Industrial
Automation
|
-9%
|
4%
|
0%
|
-5%
|
|
-4%
|
5%
|
0%
|
1%
|
|
Motion
|
0%
|
5%
|
0%
|
5%
|
|
2%
|
5%
|
0%
|
7%
|
|
Robotics
& Discrete Automation
|
-11%
|
6%
|
0%
|
-5%
|
|
-7%
|
6%
|
0%
|
-1%
|
|
ABB
Group
|
2%
|
6%
|
-6%
|
2%
|
|
6%
|
6%
|
-9%
|
3%
|
38
Q2
2019 Financial Information
Regional comparable growth rate reconciliation
|
|
Q2 2019 compared to Q2 2018
|
|
|
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%
|
6%
|
-3%
|
0%
|
|
3%
|
7%
|
-4%
|
6%
|
|
The
Americas
|
30%
|
1%
|
-24%
|
7%
|
|
27%
|
1%
|
-25%
|
3%
|
|
Asia, Middle
East and Africa
|
-6%
|
4%
|
-1%
|
-3%
|
|
-5%
|
5%
|
-2%
|
-2%
|
|
ABB
Group
|
4%
|
5%
|
-8%
|
1%
|
|
7%
|
4%
|
-9%
|
2%
|
|
|
H1 2019 compared to H1 2018
|
|
|
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
|
-6%
|
7%
|
-3%
|
-2%
|
|
1%
|
8%
|
-4%
|
5%
|
|
The
Americas
|
29%
|
2%
|
-23%
|
8%
|
|
27%
|
3%
|
-25%
|
5%
|
|
Asia, Middle
East and Africa
|
-6%
|
4%
|
3%
|
1%
|
|
-3%
|
5%
|
-2%
|
0%
|
|
ABB
Group
|
2%
|
6%
|
-6%
|
2%
|
|
6%
|
6%
|
-9%
|
3%
|
Order backlog growth rate reconciliation
|
|
June 30, 2019 compared to June 30, 2018
|
|
|
|
US$
|
Foreign
|
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
|
Electrification
|
2%
|
1%
|
7%
|
10%
|
|
|
Industrial
Automation
|
-2%
|
2%
|
0%
|
0%
|
|
|
Motion
|
4%
|
1%
|
0%
|
5%
|
|
|
Robotics
& Discrete Automation
|
8%
|
2%
|
0%
|
10%
|
|
|
ABB
Group
|
-3%
|
2%
|
8%
|
7%
|
|
Other growth rate reconciliations
|
|
Q2 2019 compared to Q2 2018
|
|
H1 2019 compared to H1 2018
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Service
orders
|
-2%
|
11%
|
-6%
|
3%
|
|
-1%
|
12%
|
-7%
|
4%
|
|
Service
revenues
|
4%
|
5%
|
-8%
|
1%
|
|
5%
|
6%
|
-7%
|
4%
|
Business realignment
Effective April 1, 2019, the Company announced a
reorganization of its operating segments into four customer-focused,
entrepreneurial businesses. The Electrification Products segment was renamed
the Electrification segment. The Industrial Automation segment remains
unchanged except that it now excludes the Machine and Factory Automation
business line, which has been transferred, along with the Robotics business
line from the former Robotics and Motion segment, to the new Robotics &
Discrete Automation segment. The new Motion segment contains the remaining
business lines of the former Robotics and Motion segment.
The following information presents a
reconciliation of growth rates of orders and revenues for prior periods to
reflect these organizational changes:
Comparable growth rate reconciliation by business
|
|
Q1 2018 compared to Q1 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
10%
|
-7%
|
0%
|
3%
|
|
9%
|
-7%
|
0%
|
2%
|
|
Industrial
Automation
|
11%
|
-7%
|
0%
|
4%
|
|
7%
|
-7%
|
0%
|
0%
|
|
Motion
|
21%
|
-7%
|
0%
|
14%
|
|
14%
|
-7%
|
0%
|
7%
|
|
Robotics
& Discrete Automation
|
49%
|
-13%
|
-31%
|
5%
|
|
61%
|
-14%
|
-36%
|
11%
|
|
ABB
Group
|
21%
|
-9%
|
-4%
|
8%
|
|
13%
|
-8%
|
-2%
|
3%
|
39
Q2
2019 Financial Information
|
|
Q2 2018 compared to Q2 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
9%
|
-3%
|
0%
|
6%
|
|
7%
|
-3%
|
0%
|
4%
|
|
Industrial
Automation
|
18%
|
-3%
|
0%
|
15%
|
|
2%
|
-3%
|
0%
|
-1%
|
|
Motion
|
15%
|
-2%
|
0%
|
13%
|
|
13%
|
-3%
|
0%
|
10%
|
|
Robotics
& Discrete Automation
|
46%
|
-7%
|
-31%
|
8%
|
|
43%
|
-7%
|
-32%
|
4%
|
|
ABB
Group
|
17%
|
-3%
|
-4%
|
10%
|
|
9%
|
-3%
|
-3%
|
3%
|
|
|
Q3 2018 compared to Q3 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
26%
|
4%
|
-24%
|
6%
|
|
23%
|
4%
|
-24%
|
3%
|
|
Industrial
Automation
|
4%
|
3%
|
0%
|
7%
|
|
-2%
|
4%
|
0%
|
2%
|
|
Motion
|
12%
|
3%
|
0%
|
15%
|
|
6%
|
3%
|
0%
|
9%
|
|
Robotics
& Discrete Automation
|
9%
|
3%
|
0%
|
12%
|
|
0%
|
3%
|
0%
|
3%
|
|
ABB
Group
|
9%
|
4%
|
-4%
|
9%
|
|
9%
|
4%
|
-8%
|
5%
|
|
|
Q4 2018 compared to Q4 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
23%
|
4%
|
-25%
|
2%
|
|
23%
|
5%
|
-25%
|
3%
|
|
Industrial
Automation
|
4%
|
4%
|
0%
|
8%
|
|
-5%
|
4%
|
0%
|
-1%
|
|
Motion
|
3%
|
4%
|
0%
|
7%
|
|
8%
|
4%
|
0%
|
12%
|
|
Robotics
& Discrete Automation
|
11%
|
5%
|
0%
|
16%
|
|
4%
|
4%
|
0%
|
8%
|
|
ABB
Group
|
10%
|
5%
|
-8%
|
7%
|
|
9%
|
4%
|
-8%
|
5%
|
|
|
Q1 2019 compared to Q1 2018
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
21%
|
7%
|
-22%
|
6%
|
|
23%
|
7%
|
-25%
|
5%
|
|
Industrial
Automation
|
-11%
|
6%
|
0%
|
-5%
|
|
-6%
|
6%
|
0%
|
0%
|
|
Motion
|
0%
|
6%
|
0%
|
6%
|
|
4%
|
5%
|
0%
|
9%
|
|
Robotics
& Discrete Automation
|
-7%
|
6%
|
0%
|
-1%
|
|
-6%
|
6%
|
0%
|
0%
|
|
ABB
Group
|
1%
|
6%
|
-4%
|
3%
|
|
6%
|
7%
|
-9%
|
4%
|
|
|
H1 2018 compared to H1 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Business
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification
|
9%
|
-5%
|
0%
|
4%
|
|
8%
|
-5%
|
0%
|
3%
|
|
Industrial
Automation
|
15%
|
-6%
|
0%
|
9%
|
|
5%
|
-5%
|
0%
|
0%
|
|
Motion
|
18%
|
-5%
|
0%
|
13%
|
|
13%
|
-4%
|
0%
|
9%
|
|
Robotics
& Discrete Automation
|
48%
|
-11%
|
-31%
|
6%
|
|
52%
|
-11%
|
-34%
|
7%
|
|
ABB
Group
|
19%
|
-6%
|
-4%
|
9%
|
|
11%
|
-5%
|
-3%
|
3%
|
40
Q2
2019 Financial Information
Operational EBITA margin
Definition
Operational
EBITA margin
Operational EBITA margin is Operational EBITA as
a percentage of Operational revenues.
Operational
EBITA
Operational
earnings before interest, taxes and acquisition-related amortization
(Operational EBITA) represents Income from operations excluding:
·
acquisition-related amortization (as defined below),
·
restructuring, related and implementation costs,
·
changes in the amount recorded for obligations related
to divested businesses occurring after the divestment date (changes in obligations
related to divested businesses),
·
changes in estimates relating to opening balance
sheets of acquired businesses (changes in pre-acquisition estimates),
·
gains and losses from sale of businesses (including
fair value adjustment on assets and liabilities held for sale),
·
acquisition- and divestment-related expenses and
integration costs,
·
certain other non-operational items, as well as
·
foreign exchange/commodity timing differences in
income from operations consisting of: (a) unrealized gains and losses on
derivatives (foreign exchange, commodities, embedded derivatives),
(b) realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized, and (c) unrealized foreign exchange
movements on receivables/payables (and related assets/liabilities).
Certain other non-operational items generally
includes: certain regulatory, compliance and legal costs, certain asset write
downs/impairments as well as other items which are determined by management on
a case-by-case basis.
Operational EBITA is our measure of segment
profit but is also used by management to evaluate the profitability of the
Company as a whole.
Acquisition-related
amortization
Amortization expense on intangibles arising upon
acquisitions.
Restructuring,
related and implementation costs
Restructuring, related and implementation costs
consists of restructuring and other related expenses, as well as internal and
external costs relating to the implementation of group-wide restructuring
programs.
Operational
revenues
The Company presents Operational revenues solely
for the purpose of allowing the computation of Operational EBITA margin.
Operational revenues are total revenues adjusted for foreign exchange/commodity
timing differences in total revenues of: (i) unrealized gains and losses on
derivatives, (ii) realized gains and losses on derivatives where the
underlying hedged transaction has not yet been realized, and
(iii) unrealized foreign exchange movements on receivables (and related
assets). Operational revenues are not intended to be an alternative measure to
Total Revenues, which represent our revenues measured in accordance with U.S.
GAAP.
Reconciliation
The following tables provide reconciliations of
consolidated Operational EBITA to Net Income and Operational EBITA Margin by business.
Reconciliation of consolidated Operational EBITA to Net
Income
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions)
|
2019
|
2018
|
2019
|
2018
|
|
Operational
EBITA
|
1,591
|
1,607
|
825
|
855
|
|
Acquisition-related
amortization
|
(135)
|
(125)
|
(67)
|
(62)
|
|
Restructuring,
related and implementation costs
(1)
|
(142)
|
(6)
|
(74)
|
1
|
|
Changes
in obligations related to divested businesses
|
(7)
|
(17)
|
(4)
|
(10)
|
|
Changes
in pre-acquisition estimates
|
(13)
|
(1)
|
(13)
|
(1)
|
|
Gains
and losses from sale of businesses
|
(4)
|
(5)
|
(3)
|
1
|
|
Fair
value adjustment on assets and liabilities held for sale
|
(455)
|
–
|
(455)
|
–
|
|
Acquisition-
and divestment-related expenses and integration costs
|
(54)
|
(73)
|
(30)
|
(48)
|
|
Certain
other non-operational items
|
(76)
|
(15)
|
(43)
|
(10)
|
|
Foreign
exchange/commodity timing differences in income from operations
|
8
|
(31)
|
(13)
|
(18)
|
|
Income
from operations
|
713
|
1,334
|
123
|
708
|
|
Interest
and dividend income
|
37
|
48
|
18
|
26
|
|
Interest
and other finance expense
|
(123)
|
(122)
|
(61)
|
(33)
|
|
Non-operational
pension (cost) credit
|
44
|
52
|
21
|
25
|
|
Income
from continuing operations before taxes
|
671
|
1,312
|
101
|
726
|
|
Provision
for taxes
|
(310)
|
(374)
|
(155)
|
(202)
|
|
Income
(loss) from continuing operations, net of tax
|
361
|
938
|
(54)
|
524
|
|
Income
from discontinued operations, net of tax
|
291
|
379
|
142
|
193
|
|
Net
income
|
652
|
1,317
|
88
|
717
|
(1) Amounts in the six and three months ended
June 30, 2019 include $43 million and $24 million of implementation costs in
relation to the OS program, respectively.
41
Q2
2019 Financial Information
Reconciliation
of Operational EBITA margin by business
|
|
Three months ended June 30, 2019
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
3,272
|
1,580
|
1,641
|
845
|
(167)
|
7,171
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(9)
|
(10)
|
–
|
6
|
(1)
|
(14)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
5
|
–
|
–
|
–
|
5
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
5
|
–
|
1
|
1
|
5
|
12
|
|
Operational
revenues
|
3,268
|
1,575
|
1,642
|
852
|
(163)
|
7,174
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
(104)
|
187
|
249
|
76
|
(285)
|
123
|
|
Acquisition-related
amortization
|
30
|
1
|
13
|
19
|
4
|
67
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
13
|
7
|
2
|
2
|
50
|
74
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
4
|
4
|
|
Changes
in pre-acquisition estimates
|
13
|
–
|
–
|
–
|
–
|
13
|
|
Gains
and losses from sale of businesses
|
(4)
|
–
|
–
|
–
|
7
|
3
|
|
Fair
value adjustment on assets and liabilities
|
|
|
|
|
|
|
|
held
for sale
|
455
|
–
|
–
|
–
|
–
|
455
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
29
|
–
|
–
|
1
|
–
|
30
|
|
Certain
other non-operational items
|
1
|
–
|
2
|
1
|
39
|
43
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
2
|
(11)
|
6
|
5
|
(9)
|
(7)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
(1)
|
3
|
–
|
(1)
|
1
|
2
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
6
|
3
|
3
|
2
|
4
|
18
|
|
Operational
EBITA
|
440
|
190
|
275
|
105
|
(185)
|
825
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
13.5%
|
12.1%
|
16.7%
|
12.3%
|
n.a.
|
11.5%
|
In the three months ended June 30, 2019, Certain other
non-operational items in the table above includes the following:
|
|
Three months ended June 30, 2019
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Consolidated
|
|
Certain
other non-operational items:
|
|
|
|
|
|
|
|
Costs
for planned divestment of Power Grids
|
–
|
–
|
–
|
–
|
38
|
38
|
|
Division
transformation costs
|
–
|
–
|
2
|
1
|
–
|
3
|
|
Executive
Committee transition costs
|
–
|
–
|
–
|
–
|
14
|
14
|
|
Gain on
sale of investments
|
–
|
–
|
–
|
–
|
(15)
|
(15)
|
|
Other
non-operational items
|
1
|
–
|
–
|
–
|
2
|
3
|
|
Total
|
1
|
–
|
2
|
1
|
39
|
43
|
42
Q2
2019 Financial Information
|
|
Three months ended June 30, 2018
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
2,673
|
1,613
|
1,629
|
925
|
(109)
|
6,731
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
31
|
9
|
11
|
8
|
2
|
61
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
3
|
–
|
(1)
|
6
|
8
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
(11)
|
(7)
|
(4)
|
(3)
|
(11)
|
(36)
|
|
Operational
revenues
|
2,693
|
1,618
|
1,636
|
929
|
(112)
|
6,764
|
|
|
|
|
|
|
|
|
|
Income (loss)
from operations
|
353
|
214
|
243
|
119
|
(221)
|
708
|
|
Acquisition-related
amortization
|
19
|
2
|
16
|
21
|
4
|
62
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
(1)
|
–
|
–
|
(1)
|
1
|
(1)
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
10
|
10
|
|
Changes
in pre-acquisition estimates
|
1
|
–
|
–
|
–
|
–
|
1
|
|
Gains
and losses from sale of businesses
|
2
|
–
|
–
|
–
|
(3)
|
(1)
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
44
|
1
|
–
|
–
|
3
|
48
|
|
Certain
other non-operational items
|
–
|
–
|
3
|
–
|
7
|
10
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
16
|
8
|
4
|
(1)
|
(16)
|
11
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
1
|
5
|
–
|
–
|
5
|
11
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
(5)
|
1
|
–
|
–
|
–
|
(4)
|
|
Operational
EBITA
|
430
|
231
|
266
|
138
|
(210)
|
855
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
16.0%
|
14.3%
|
16.3%
|
14.9%
|
n.a.
|
12.6%
|
In the three months ended June 30, 2018, Certain other
non-operational items in the table above includes the following:
|
|
Three months ended June 30, 2018
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Consolidated
|
|
Certain
other non-operational items:
|
|
|
|
|
|
|
|
Regulatory,
compliance and legal costs
|
–
|
–
|
–
|
–
|
13
|
13
|
|
Other
non-operational items
|
–
|
–
|
3
|
–
|
(6)
|
(3)
|
|
Total
|
–
|
–
|
3
|
–
|
7
|
10
|
43
Q2
2019 Financial Information
|
|
Six months ended June 30, 2019
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
6,329
|
3,098
|
3,246
|
1,696
|
(351)
|
14,018
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(10)
|
(9)
|
–
|
4
|
(2)
|
(17)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
1
|
–
|
(1)
|
1
|
1
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
1
|
3
|
1
|
–
|
3
|
8
|
|
Operational
revenues
|
6,320
|
3,093
|
3,247
|
1,699
|
(349)
|
14,010
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
193
|
382
|
500
|
153
|
(515)
|
713
|
|
Acquisition-related
amortization
|
59
|
2
|
27
|
39
|
8
|
135
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
53
|
12
|
5
|
3
|
69
|
142
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
7
|
7
|
|
Changes
in pre-acquisition estimates
|
13
|
–
|
–
|
–
|
–
|
13
|
|
Gains
and losses from sale of businesses
|
(3)
|
–
|
–
|
–
|
7
|
4
|
|
Fair
value adjustment on assets and liabilities
|
|
|
|
|
|
|
|
held
for sale
|
455
|
–
|
–
|
–
|
–
|
455
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
51
|
–
|
–
|
1
|
2
|
54
|
|
Certain
other non-operational items
|
2
|
2
|
5
|
1
|
66
|
76
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
(5)
|
(6)
|
–
|
3
|
(5)
|
(13)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
1
|
2
|
–
|
(1)
|
1
|
3
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
(2)
|
1
|
1
|
1
|
1
|
2
|
|
Operational
EBITA
|
817
|
395
|
538
|
200
|
(359)
|
1,591
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
12.9%
|
12.8%
|
16.6%
|
11.8%
|
n.a.
|
11.4%
|
In the six months ended June 30, 2019, Certain other
non-operational items in the table above includes the following:
|
|
Six months ended June 30, 2019
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Consolidated
|
|
Certain
other non-operational items:
|
|
|
|
|
|
|
|
Costs
for planned divestment of Power Grids
|
–
|
–
|
–
|
–
|
58
|
58
|
|
Regulatory,
compliance and legal costs
|
–
|
–
|
–
|
–
|
8
|
8
|
|
Division
transformation costs
|
–
|
–
|
5
|
1
|
–
|
6
|
|
Executive
Committee transition costs
|
–
|
–
|
–
|
–
|
14
|
14
|
|
Gain on
the sale of investments
|
–
|
–
|
–
|
–
|
(15)
|
(15)
|
|
Other
non-operational items
|
2
|
2
|
–
|
–
|
1
|
5
|
|
Total
|
2
|
2
|
5
|
1
|
66
|
76
|
44
Q2
2019 Financial Information
|
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
5,167
|
3,233
|
3,178
|
1,832
|
(238)
|
13,172
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
27
|
6
|
7
|
16
|
9
|
65
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
6
|
–
|
(1)
|
(5)
|
–
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
(13)
|
(7)
|
(5)
|
(6)
|
(2)
|
(33)
|
|
Operational
revenues
|
5,181
|
3,238
|
3,180
|
1,841
|
(236)
|
13,204
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
678
|
441
|
447
|
238
|
(470)
|
1,334
|
|
Acquisition-related
amortization
|
39
|
4
|
31
|
42
|
9
|
125
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
3
|
2
|
3
|
(1)
|
(1)
|
6
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
17
|
17
|
|
Changes
in pre-acquisition estimates
|
1
|
–
|
–
|
–
|
–
|
1
|
|
Gains
and losses from sale of businesses
|
2
|
3
|
–
|
–
|
–
|
5
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
68
|
2
|
–
|
–
|
3
|
73
|
|
Certain
other non-operational items
|
(2)
|
–
|
4
|
–
|
13
|
15
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
22
|
–
|
8
|
(1)
|
(5)
|
24
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
1
|
7
|
–
|
–
|
(6)
|
2
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
(5)
|
3
|
3
|
(1)
|
5
|
5
|
|
Operational
EBITA
|
807
|
462
|
496
|
277
|
-435
|
1,607
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
15.6%
|
14.3%
|
15.6%
|
15.0%
|
n.a.
|
12.2%
|
In the six months ended June 30, 2018, Certain other
non-operational items in the table above includes the following:
|
|
Six months ended June 30, 2018
|
|
|
|
|
|
Robotics &
|
|
|
|
|
|
Industrial
|
|
Discrete
|
Corporate
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
and Other
|
Consolidated
|
|
Certain
other non-operational items:
|
|
|
|
|
|
|
|
Regulatory,
compliance and legal costs
|
–
|
–
|
–
|
–
|
16
|
16
|
|
Division
transformation costs
|
–
|
–
|
1
|
–
|
1
|
2
|
|
Other
non-operational items
|
(2)
|
–
|
3
|
–
|
(4)
|
(3)
|
|
Total
|
(2)
|
–
|
4
|
–
|
13
|
15
|
45
Q2
2019 Financial Information
Operational EPS
Definition
Operational
EPS
Operational EPS is calculated as Operational net
income divided by the weighted-average number of shares outstanding used in
determining basic earnings per share.
Operational
net income
Operational net income is calculated as Net
income attributable to ABB adjusted for the following:
(i)
acquisition-related amortization,
(ii)
restructuring, related and implementation costs
(iii)
non-operational pension cost (credit),
(iv)
changes in obligations related to divested
businesses,
(v)
changes
in pre-acquisition estimates,
(vi)
gains and losses from sale of businesses (including
fair value adjustment on assets and liabilities held for sale),
(vii)
acquisition- and divestment-related expenses and integration
costs,
(viii)
certain other non-operational items,
(ix)
foreign exchange/commodity timing differences in
income from operations consisting of: (a) unrealized gains and losses on
derivatives (foreign exchange, commodities, embedded derivatives),
(b) realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized, and (c) unrealized foreign exchange
movements on receivables/payables (and related assets/liabilities), and
(x)
The amount of income tax on operational
adjustments either estimated using the Adjusted Group effective tax rate or in
certain specific cases, computed using the actual income tax effects of the
relevant item in (i) to (ix) above.
Acquisition-related
amortization
Amortization expense on intangibles arising upon
acquisitions.
Restructuring,
related and implementation costs
Restructuring,
related and implementation costs consists of restructuring and other related
expenses, as well as internal and external costs relating to the implementation
of group-wide restructuring programs.
Adjusted
Group effective tax rate
The Adjusted Group effective tax rate is computed
by dividing an adjusted provision for taxes by an adjusted income from
continuing operations before taxes. Certain amounts recorded in income from
continuing operations before taxes and the related provision for taxes (primarily
gains and losses from sale of businesses) are excluded from the computation.
Constant
currency Operational EPS adjustment and Operational EPS growth rate (constant currency)
In connection with ABB’s 2015-2020 targets,
Operational EPS growth is measured assuming 2014 as the base year and uses
constant exchange rates. We compute the constant currency operational net
income for all periods using the relevant monthly exchange rates which were in
effect during 2014 and any difference in computed Operational net income is
divided by the relevant weighted-average number of shares outstanding to identify
the constant currency Operational EPS adjustment.
Reconciliation
|
|
Six months ended June 30,
|
|
|
($ in
millions, except per share data in $)
|
2019
|
2018
|
Growth
(3)
|
|
Net
income (attributable to ABB)
|
599
|
1,253
|
|
|
Operational
adjustments:
|
|
|
|
|
Acquisition-related
amortization
|
135
|
125
|
|
|
Restructuring,
related and implementation costs
(1)
|
142
|
6
|
|
|
Non-operational
pension cost (credit)
|
(44)
|
(52)
|
|
|
Changes
in obligations related to divested businesses
|
7
|
17
|
|
|
Changes
in pre-acquisition estimates
|
13
|
1
|
|
|
Gains
and losses from sale of businesses
|
4
|
5
|
|
|
Fair
value adjustment on assets and liabilities held for sale
|
455
|
–
|
|
|
Acquisition-
and divestment-related expenses and integration costs
|
54
|
73
|
|
|
Certain
other non-operational items
|
76
|
15
|
|
|
FX/commodity
timing differences in income from operations
|
(8)
|
31
|
|
|
Operational
adjustments in discontinued operations
|
69
|
89
|
|
|
Tax on
operational adjustments
(2)
|
(127)
|
(85)
|
|
|
Operational
net income
|
1,375
|
1,478
|
-7%
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding (in millions)
|
2,132
|
2,132
|
|
|
|
|
|
|
|
Operational
EPS
|
0.64
|
0.69
|
-7%
|
|
Constant
currency Operational EPS adjustment
|
0.11
|
0.09
|
|
|
Operational
EPS (constant currency basis - 2014 exchange rates)
|
0.75
|
0.78
|
-4%
|
46
Q2
2019 Financial Information
|
|
Three months ended June 30,
|
|
|
($ in
millions, except per share data in $)
|
2019
|
2018
|
Growth
(3)
|
|
Net
income (attributable to ABB)
|
64
|
681
|
|
|
Operational
adjustments:
|
|
|
|
|
Acquisition-related
amortization
|
67
|
62
|
|
|
Restructuring,
related and implementation costs
(1)
|
74
|
(1)
|
|
|
Non-operational
pension cost (credit)
|
(21)
|
(25)
|
|
|
Changes
in obligations related to divested businesses
|
4
|
10
|
|
|
Changes
in pre-acquisition estimates
|
13
|
1
|
|
|
Gains
and losses from sale of businesses
|
3
|
(1)
|
|
|
Fair
value adjustment on assets and liabilities held for sale
|
455
|
–
|
|
|
Acquisition-
and divestment-related expenses and integration costs
|
30
|
48
|
|
|
Certain
other non-operational items
|
43
|
10
|
|
|
FX/commodity
timing differences in income from operations
|
13
|
18
|
|
|
Operational
adjustments in discontinued operations
|
63
|
54
|
|
|
Tax on
operational adjustments
(2)
|
(85)
|
(48)
|
|
|
Operational
net income
|
723
|
809
|
-10%
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding (in millions)
|
2,132
|
2,130
|
|
|
|
|
|
|
|
Operational
EPS
|
0.34
|
0.38
|
-10%
|
|
Constant
currency Operational EPS adjustment
|
0.05
|
0.05
|
|
|
Operational
EPS (constant currency basis - 2014 exchange rates)
|
0.39
|
0.43
|
-10%
|
(1) Amounts in the six and three months ended
June 30, 2019 include $43 million and $24 million of implementation costs in
relation to the OS program, respectively.
(2) Tax amount is computed by applying the
Adjusted Group effective tax rate to the operational adjustments, except for
gains and losses from sale of businesses (including fair value adjustment on
assets and liabilities held for sale), for which the actual provision for taxes
resulting from the gain or loss has been computed.
(3) Growth is computed using unrounded EPS
amounts.
Net debt
Definition
Net
debt
Net debt is defined as Total debt less Cash and
marketable securities.
Total
debt
Total debt is the sum of Short-term debt and
current maturities of long-term debt, and Long-term debt.
Cash
and marketable securities
Cash and marketable securities is the sum of Cash
and equivalents, and Marketable securities and short-term investments.
Reconciliation
|
($ in
millions)
|
June 30, 2019
|
December 31, 2018
|
|
Short-term
debt and current maturities of long-term debt
|
2,415
|
2,031
|
|
Long-term
debt
|
7,913
|
6,587
|
|
Total
debt
|
10,328
|
8,618
|
|
Cash
and equivalents
|
2,512
|
3,445
|
|
Marketable
securities and short-term investments
|
716
|
712
|
|
Cash
and marketable securities
|
3,228
|
4,157
|
|
Net
debt
|
7,100
|
4,461
|
47
Q2
2019 Financial Information
Net working capital as a percentage of revenues
Definition
Net
working capital as a percentage of revenues
Net working capital as a percentage of revenues
is calculated as Net working capital divided by Adjusted revenues for the
trailing twelve months.
Net
working capital
Net working capital is the sum of (i)
receivables, net, (ii) contract assets, (iii) inventories, net, and (iv)
prepaid expenses; less (v) accounts payable, trade, (vi) contract liabilities,
and (vii) other current liabilities (excluding primarily: (a) income taxes
payable, (b) current derivative liabilities, and (c) pension and other employee
benefits); 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
Adjusted revenues for the trailing twelve months
includes total revenues recorded by ABB in the twelve months preceding the
relevant balance sheet date adjusted to eliminate revenues of divested
businesses and the estimated impact of annualizing revenues of certain
acquisitions which were completed in the same trailing twelve-month period.
Reconciliation
|
($ in
millions, unless otherwise indicated)
|
June 30, 2019
|
June 30, 2018
|
|
Net
working capital:
|
|
|
|
Receivables,
net
|
6,517
|
6,644
|
|
Contract
assets
|
1,159
|
1,184
|
|
Inventories,
net
|
4,456
|
4,439
|
|
Prepaid
expenses
|
250
|
268
|
|
Accounts
payable, trade
|
(4,107)
|
(4,270)
|
|
Contract
liabilities
|
(1,610)
|
(1,719)
|
|
Other
current liabilities
(1)
|
(2,881)
|
(2,897)
|
|
Net
working capital in assets and liabilities held for sale
|
69
|
–
|
|
Net
working capital
|
3,853
|
3,649
|
|
Total
revenues for the three months ended:
|
|
|
|
June 30,
2019 / 2018
|
7,171
|
6,731
|
|
March
31, 2019 / 2018
|
6,847
|
6,441
|
|
December
31, 2018 / 2017
|
7,395
|
6,804
|
|
September
30, 2018 / 2017
|
7,095
|
6,486
|
|
Adjustment
to annualize/eliminate revenues of certain acquisitions/divestments
|
(119)
|
2,586
|
|
Adjusted
revenues for the trailing twelve months
|
28,389
|
29,048
|
|
Net
working capital as a percentage of revenues (%)
|
13.6%
|
12.6%
|
(1) Amounts exclude $566 million and $548 million
at June 30, 2019 and 2018, respectively, related primarily to (a) income
taxes payable, (b) current derivative liabilities, and (c) pension
and other employee benefits.
48
Q2
2019 Financial Information
Free cash flow conversion to net income
Definition
Free
cash flow conversion to net income
Free cash flow conversion to net income is
calculated as adjusted free cash flow divided by Net income attributable to
ABB.
Adjusted
free cash flow
Adjusted free cash flow is calculated as net cash
provided by operating activities adjusted for: (i) purchases of property, plant
and equipment and intangible assets, (ii) proceeds from sales of property,
plant and equipment, and (iii) changes in financing and other non-current
receivables, net (included in other investing activities).
Free
cash flow for the trailing twelve months
Free cash flow for the trailing twelve months
includes adjusted free cash flow recorded by ABB in the twelve months preceding
the relevant balance sheet date.
Net
income for the trailing twelve months
Net income for the trailing twelve months
includes net income recorded by ABB in the twelve months preceding the relevant
balance sheet date.
Free cash flow conversion to net income
|
|
Twelve months to
|
|
($ in
millions, unless otherwise indicated)
|
June 30, 2019
|
December 31, 2018
|
|
Net
cash provided by operating activities
|
2,176
|
2,924
|
|
Adjusted
for the effects of:
|
|
|
|
Continuing
operations:
|
|
|
|
Purchases
of property, plant and equipment and intangible assets
|
(803)
|
(772)
|
|
Proceeds
from sale of property, plant and equipment
|
84
|
72
|
|
Changes
in financing receivables and other non-current receivables
|
(8)
|
(8)
|
|
Discontinued
operations:
|
|
|
|
Purchases
of property, plant and equipment and intangible assets
|
(192)
|
(201)
|
|
Proceeds
from sale of property, plant and equipment
|
6
|
8
|
|
Changes
in financing receivables and other non-current receivables
|
–
|
1
|
|
Adjusted
free cash flow
|
1,263
|
2,024
|
|
Net
income attributable to ABB
|
1,519
|
2,173
|
|
Free
cash flow conversion to net income
|
83%
|
93%
|
Reconciliation of the trailing
twelve months to June 30, 2019
|
|
Net cash provided by operating activities
|
Continuing operations
|
|
Discontinued operations
|
Net income attributable
to ABB
|
|
($ in
millions)
|
Purchases of property, plant and equipment and intangible assets
|
Proceeds
from sale of property, plant and equipment
|
Changes in financing receivables
and other
non-current receivables
|
|
Purchases of property, plant and equipment and intangible assets
|
Proceeds
from sale of property, plant and equipment
|
Changes in
financing
receivables
and other
non-current
receivables
|
|
Q3 2018
|
565
|
(192)
|
7
|
(6)
|
|
(47)
|
1
|
–
|
603
|
|
Q4 2018
|
1,867
|
(235)
|
23
|
(1)
|
|
(64)
|
4
|
–
|
317
|
|
Q1 2019
|
(256)
|
(207)
|
48
|
2
|
|
(43)
|
–
|
–
|
535
|
|
Q2 2019
|
–
|
(169)
|
6
|
(3)
|
|
(38)
|
1
|
–
|
64
|
|
Total
for the trailing
|
|
|
|
|
|
|
|
|
|
|
twelve
months to
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
2,176
|
(803)
|
84
|
(8)
|
|
(192)
|
6
|
–
|
1,519
|
Finance net
Definition
Finance net is calculated as Interest and
dividend income less Interest and other finance expense.
Reconciliation
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions)
|
2019
|
2018
|
2019
|
2018
|
|
Interest
and dividend income
|
37
|
48
|
18
|
26
|
|
Interest
and other finance expense
|
(123)
|
(122)
|
(61)
|
(33)
|
|
Finance
net
|
(86)
|
(74)
|
(43)
|
(7)
|
49
Q2
2019 Financial Information
Book-to-bill
ratio
Definition
Book-to-bill ratio is calculated as Orders
received divided by Total revenues.
Reconciliation
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in
millions, unless otherwise indicated)
|
2019
|
2018
|
2019
|
2018
|
|
Orders
received
|
15,014
|
14,688
|
7,401
|
7,133
|
|
Total
revenues
|
14,018
|
13,172
|
7,171
|
6,731
|
|
Book-to-bill
ratio
|
1.07
|
1.12
|
1.03
|
1.06
|
50
Q2
2019 Financial Information
Reconciliation of Operational EBITA margin by business for prior
periods
The following tables provide operational EBITA
margin reconciliations for prior periods.
|
|
Three months ended March 31, 2019
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
3,057
|
1,518
|
1,605
|
851
|
(184)
|
6,847
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(1)
|
1
|
–
|
(2)
|
(1)
|
(3)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
(4)
|
–
|
(1)
|
1
|
(4)
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
(4)
|
3
|
–
|
(1)
|
(2)
|
(4)
|
|
Operational
revenues
|
3,052
|
1,518
|
1,605
|
847
|
(186)
|
6,836
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
297
|
195
|
251
|
77
|
(230)
|
590
|
|
Acquisition-related
amortization
|
29
|
1
|
14
|
20
|
4
|
68
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
40
|
5
|
3
|
1
|
19
|
68
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
3
|
3
|
|
Gains
and losses from sale of businesses
|
1
|
–
|
–
|
–
|
–
|
1
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and integration
costs
|
22
|
–
|
–
|
–
|
2
|
24
|
|
Certain
other non-operational items
|
1
|
2
|
3
|
–
|
27
|
33
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
(7)
|
5
|
(6)
|
(2)
|
4
|
(6)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
2
|
(1)
|
–
|
–
|
–
|
1
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
(8)
|
(2)
|
(2)
|
(1)
|
(3)
|
(16)
|
|
Operational
EBITA
|
377
|
205
|
263
|
95
|
(174)
|
766
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
12.4%
|
13.5%
|
16.4%
|
11.2%
|
n.a.
|
11.2%
|
51
Q2
2019 Financial Information
|
|
Three months ended December 31, 2018
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
3,320
|
1,723
|
1,671
|
892
|
(211)
|
7,395
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(4)
|
4
|
(10)
|
(8)
|
(5)
|
(23)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
5
|
–
|
–
|
4
|
9
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
8
|
(1)
|
1
|
–
|
(1)
|
7
|
|
Operational
revenues
|
3,324
|
1,731
|
1,662
|
884
|
(213)
|
7,388
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
221
|
198
|
226
|
106
|
(476)
|
275
|
|
Acquisition-related
amortization
|
35
|
1
|
15
|
20
|
4
|
75
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
76
|
31
|
3
|
5
|
14
|
129
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
14
|
14
|
|
Changes
in pre-acquisition estimates
|
17
|
–
|
–
|
(11)
|
–
|
6
|
|
Gains
and losses from sale of businesses
|
–
|
–
|
4
|
–
|
–
|
4
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
40
|
1
|
1
|
–
|
14
|
56
|
|
Certain
other non-operational items
|
–
|
2
|
3
|
1
|
19
|
25
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
–
|
5
|
(1)
|
(3)
|
1
|
2
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
6
|
–
|
(1)
|
7
|
12
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
(1)
|
(9)
|
(3)
|
(1)
|
–
|
(14)
|
|
Operational
EBITA
|
388
|
235
|
248
|
116
|
(403)
|
584
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
11.7%
|
13.6%
|
14.9%
|
13.1%
|
n.a.
|
7.9%
|
52
Q2
2019 Financial Information
|
|
Three months ended September 30, 2018
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
3,199
|
1,544
|
1,614
|
887
|
(149)
|
7,095
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(7)
|
(23)
|
(7)
|
(8)
|
(9)
|
(54)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
3
|
6
|
–
|
1
|
1
|
11
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
4
|
3
|
4
|
6
|
(1)
|
16
|
|
Operational
revenues
|
3,199
|
1,530
|
1,611
|
886
|
(158)
|
7,068
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
391
|
214
|
251
|
112
|
(351)
|
617
|
|
Acquisition-related
amortization
|
32
|
1
|
15
|
20
|
5
|
73
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
19
|
2
|
11
|
–
|
5
|
37
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
75
|
75
|
|
Changes
in pre-acquisition estimates
|
1
|
–
|
–
|
–
|
–
|
1
|
|
Gains
and losses from sale of businesses
|
(83)
|
–
|
–
|
–
|
17
|
(66)
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
60
|
1
|
1
|
–
|
13
|
75
|
|
Certain
other non-operational items
|
–
|
1
|
3
|
–
|
(4)
|
–
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
5
|
(18)
|
(3)
|
(1)
|
(8)
|
(25)
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
2
|
5
|
–
|
–
|
2
|
9
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
4
|
11
|
1
|
4
|
(2)
|
18
|
|
Operational
EBITA
|
431
|
217
|
279
|
135
|
(248)
|
814
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
13.5%
|
14.2%
|
17.3%
|
15.2%
|
n.a.
|
11.5%
|
53
Q2
2019 Financial Information
|
|
Three months ended March 31, 2018
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
Robotics &
|
Other and
|
|
|
|
|
Industrial
|
|
Discrete
|
Intersegment
|
|
|
($ in
millions, unless otherwise indicated)
|
Electrification
|
Automation
|
Motion
|
Automation
|
elimination
|
Consolidated
|
|
Total
revenues
|
2,494
|
1,620
|
1,549
|
907
|
(129)
|
6,441
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in total revenues:
|
|
|
|
|
|
|
|
Unrealized
gains and losses
|
|
|
|
|
|
|
|
on
derivatives
|
(4)
|
(3)
|
(4)
|
8
|
7
|
4
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where the
underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
3
|
–
|
–
|
(11)
|
(8)
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables (and related assets)
|
(2)
|
–
|
(1)
|
(3)
|
9
|
3
|
|
Operational
revenues
|
2,488
|
1,620
|
1,544
|
912
|
(124)
|
6,440
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
325
|
227
|
204
|
119
|
(249)
|
626
|
|
Acquisition-related
amortization
|
20
|
2
|
15
|
21
|
5
|
63
|
|
Restructuring,
related and
|
|
|
|
|
|
|
|
implementation
costs
|
4
|
2
|
3
|
–
|
(2)
|
7
|
|
Changes
in obligations related to
|
|
|
|
|
|
|
|
divested
businesses
|
–
|
–
|
–
|
–
|
7
|
7
|
|
Gains
and losses from sale of businesses
|
–
|
3
|
–
|
–
|
3
|
6
|
|
Acquisition-
and divestment-related expenses
|
|
|
|
|
|
|
|
and
integration costs
|
24
|
1
|
–
|
–
|
–
|
25
|
|
Certain
other non-operational items
|
(2)
|
–
|
1
|
–
|
6
|
5
|
|
Foreign
exchange/commodity timing
|
|
|
|
|
|
|
|
differences
in income from operations:
|
|
|
|
|
|
|
|
Unrealized
gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign
exchange, commodities,
|
|
|
|
|
|
|
|
embedded
derivatives)
|
6
|
(8)
|
4
|
–
|
11
|
13
|
|
Realized
gains and losses on derivatives
|
|
|
|
|
|
|
|
where
the underlying hedged
|
|
|
|
|
|
|
|
transaction
has not yet been realized
|
–
|
2
|
–
|
–
|
(11)
|
(9)
|
|
Unrealized
foreign exchange movements
|
|
|
|
|
|
|
|
on
receivables/payables
|
|
|
|
|
|
|
|
(and
related assets/liabilities)
|
–
|
2
|
3
|
(1)
|
5
|
9
|
|
Operational
EBITA
|
377
|
231
|
230
|
139
|
(225)
|
752
|
|
|
|
|
|
|
|
|
|
Operational
EBITA margin (%)
|
15.2%
|
14.3%
|
14.9%
|
15.2%
|
n.a.
|
11.7%
|
54
Q2
2019 Financial Information
—
ABB
Ltd
Corporate Communications
P.O.
Box
8131
805
0
Zurich
Switzerland
Tel:
+41
(0)43
317
71
11
Fax:
+41
(0)43
317
79
58
www.abb.com
55
Q2
2019 Financial Information
May
— June 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABB Ltd announces that the following
members of the Executive Committee or Board of Directors of ABB have
purchased, sold or been granted ABB’s registered shares, call options and
warrant appreciation rights (“WARs”), in the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date
|
|
Description
|
|
Received *
|
|
Purchased
|
|
Sold
|
|
Price
|
Peter Voser
|
|
May 06, 2019
|
|
Share
|
|
29,943
|
|
|
|
|
|
CHF
|
19.07
|
Matti Alahuhta
|
|
May 06, 2019
|
|
Share
|
|
3,210
|
|
|
|
|
|
CHF
|
19.07
|
Gunnar Brock
|
|
May 06, 2019
|
|
Share
|
|
3,311
|
|
|
|
|
|
CHF
|
19.07
|
David Constable
|
|
May 06, 2019
|
|
Share
|
|
3,511
|
|
|
|
|
|
CHF
|
19.07
|
Frederico Curado
|
|
May 06, 2019
|
|
Share
|
|
2,973
|
|
|
|
|
|
CHF
|
19.07
|
Lars Förberg
|
|
May 06, 2019
|
|
Share
|
|
7,970
|
|
|
|
|
|
CHF
|
19.07
|
Jennifer Xin-Zhe Li
|
|
May 06, 2019
|
|
Share
|
|
2,973
|
|
|
|
|
|
CHF
|
19.07
|
Geraldine Matchett
|
|
May 06, 2019
|
|
Share
|
|
4,326
|
|
|
|
|
|
CHF
|
19.07
|
David Meline
|
|
May 06, 2019
|
|
Share
|
|
4,013
|
|
|
|
|
|
CHF
|
19.07
|
Satish Pai
|
|
May 06, 2019
|
|
Share
|
|
3,066
|
|
|
|
|
|
CHF
|
19.07
|
Jacob Wallenberg
|
|
May 06, 2019
|
|
Share
|
|
4,515
|
|
|
|
|
|
CHF
|
19.07
|
Sami Atiya
|
|
June 06, 2019
|
|
Share
|
|
|
|
690
|
|
|
|
CHF
|
18.77
|
Sami Atiya
|
|
June 06, 2019
|
|
Share
|
|
24,435
|
|
|
|
|
|
CHF
|
18.84
|
Diane de Saint Victor
|
|
June 06, 2019
|
|
Share
|
|
43,767
|
|
|
|
|
|
CHF
|
18.84
|
Frank Duggan
|
|
June 06, 2019
|
|
Share
|
|
44,905
|
|
|
|
|
|
CHF
|
18.84
|
Claudio Facchin
|
|
June 06, 2019
|
|
Share
|
|
31,232
|
|
|
|
|
|
CHF
|
18.84
|
Chunyuan Gu
|
|
June 06, 2019
|
|
Share
|
|
16,855
|
|
|
|
|
|
CHF
|
18.84
|
Tarak Mehta
|
|
June 06, 2019
|
|
Share
|
|
29,541
|
|
|
|
|
|
CHF
|
18.84
|
Greg Scheu
|
|
June 06, 2019
|
|
Share
|
|
27,935
|
|
|
|
|
|
USD
|
19.08
|
Peter Terwiesch
|
|
June 06, 2019
|
|
Share
|
|
29,431
|
|
|
|
|
|
CHF
|
18.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Received instruments were delivered as
part of the ABB Ltd Director’s or Executive Committee Member’s compensation
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
ABB LTD
|
|
|
|
|
|
|
Date: July 25,
2019.
|
By:
|
|
|
|
Name:
|
Jessica Mitchell
|
|
|
Title:
|
Group Senior Vice
President and
Head of Investor Relations
|
|
|
|
|
|
|
Date: July 25,
2019.
|
By:
|
|
|
|
Name:
|
Richard A. Brown
|
|
|
Title:
|
Group Senior Vice
President and
Chief Counsel Corporate & Finance
|
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