UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2021

Commission File Number 001-16429

ABB Ltd

(Translation of registrant’s name into English)

Affolternstrasse 44, CH-8050, Zurich, Switzerland

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 Form 20-F

☒

 Form 40-F

⬜

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

⬜

Note:

 Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an

attached annual report to security holders.

Indication by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

⬜

Note:

 Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or

other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in

which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the

home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press

release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event,

has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing

the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 Yes

⬜

 No

☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

This Form 6-K consists of the following:

1.

Press release issued by ABB Ltd dated April 27, 2021 titled “Q1 2021 results: Strong start to the year”.

2.

Q1 2021 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

●

 Orders $7.8 billion, +6%; comparable

1

 +1% 

●

 Revenues $6.9 billion, +11%; comparable +7% 

●

 Income from operations $797 million; margin 11.5% 

●

 Operational EBITA

1

 $959 million; margin

1

 13.8%

●

 Basic EPS $0.25; +41%

2

●

 Cash flow from operating activities $543 million; cash flow from operating activities in continuing operations $523 million

KEY FIGURES

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

1

Orders

7,756

7,346

6%

1%

Revenues

6,901

6,216

11%

7%

Gross Profit

2,268

1,910

19%

as % of revenues

32.9%

30.7%

+2.2 pts

Income from operations

797

373

114%

Operational EBITA

1

959

636

51%

40%

 3

as % of operational revenues

1

13.8%

10.2%

+3.6 pts

Income from continuing operations, net of tax

551

326

69%

Net income (loss) attributable to ABB

502

376

34%

Basic earnings per share ($) 

0.25

0.18

41%

2

Cash flow from operating activities

4

543

(577)

n.a.

Cash flows from operating activities in continuing

operations

523

(396)

n.a.

1

For a reconciliation of non-GAAP measures, see “supplemental reconciliations and definitions” in the attached Q1 2021 Financial Information.

2

EPS growth rates are computed using unrounded amounts. 

3

Constant currency (not adjusted for portfolio changes).

4

Amount represents total for both continuing and discontinued operations.

—

ZURICH, SWITZERLAND, APRIL 27, 2021

Q1 2021 results

Strong start to the year

—

“After a busy year of creating the right set-up for the Group, we are now 

starting to show the real potential of our underlying business es. 

Through greater accountability, transparency and speed, we increasingly create

value for our stakeholders.”

Björn Rosengren

, CEO

ABB INTERIM REPORT

I

Q1 2021

 2

Market activity continued to recover from its lowest point

during the summer 2020. Demand was especially strong in

the short-cycle business, beyond our expectations. The

increased customer activity, in combination with the impact

from previously implemented cost measures, resulted in

double-digit growth in Operational EBITA, and a very high

first quarter margin of 13.8%. I am pleased to see good

performance also in cash flow, which was high for a first

quarter at $523 million. That said, while there was no

material impact on results in the period, the progressively

tighter supply of certain components such as semiconductors

and plastics, is a concern. We anticipate prolonged delivery

lead-times to customers in parts of our businesses in the

coming quarter. On a separate note, we made the important

launch of our new collaborative robot families. Through this

expansion of our offering, we aim to unlock customer groups

with currently a low level of automation.

In total, we registered order growth of 6% (1% comp-

arable), supported by a broad recovery in most of our short-

cycle businesses. To some extent, demand is likely to have

been driven by a stock build-up related to supply chain

concerns. On the downside, growth was hampered by a

weak development in the cruising and oil & gas segments -

albeit initial signs of stabilization were noted. Overall, orders

increased slightly in Europe and AMEA, with the latter

supported by a stellar growth in China. Underlying business

momentum improved in the Americas, driven by the US,

although the region faced high comparable numbers in the

previous period, which put pressure on growth rates.

I am pleased about the progress toward our 2023 margin

target, with all business areas increasing operational EBITA

margin by more than 100 basis points. That said, we are

taking actions to further improve operational performance in

Based on the current market situation, ABB anticipates

growth rates in the

second quarter of 2021

 to reflect the low

level of business activity in Q2 2020. Comparable orders and

revenues are expected to grow >10%, with orders growing

more than revenues. 

The Operational EBITA margin for the Group is 

expected to significantly improve year-on-year, to

approximately 14%.

As announced in the recent trading update, ABB anticipates

comparable revenue growth of ~5% or higher for

full-year

2021

, with the process industry related part of the business

expected to recover during the second half of the year.

In 2021, ABB expects a steady pace of improvement from

2020 toward the 2023 Operational EBITA margin target of

upper half of the 13%-16% range. This excludes the

combined adverse impact related to the Kusile project and

stranded costs, which weighed on margin in 2020.

Outlook

Process Automation, which should also benefit from an

anticipated improvement in end markets during the latter part

of the year.

We made good progress with the divestment process for the

three previously announced divisions and I expect us to sign

the first deal during the second half of the year.

Furthermore, we have turned our E-mobility business into a

separate division and initiated a carve out into a separate

legal structure. These steps will allow us to prepare for

a possible public listing, creating a platform for accelerated

growth and value creation in this business. 

We held the Annual General Meeting at which the proposed

dividend of CHF 0.80 was approved. Furthermore,

we

announced an additional share buyback program of up to

$4.3 billion, whereby re-confirming the intention to return

$7.8 billion of cash proceeds from the Power Grids divestment

to shareholders. 

Björn Rosengren

CEO

CEO summary

ABB INTERIM REPORT

I

Q1 2021

 3

OEM business more than offset the growth noted in the

tier-1 customer segment.

In the process related businesses, oil & gas declined,

although there were signs of improving customer activity. A

largely stable development was registered in the pulp &

paper, mining and power generation segments. However,

customer activity in the areas of chemicals as well as water

& wastewater was high.

In transport and infrastructure, there was a very strong

order development across the renewables, data centers

and e-mobility segments. Also, the buildings segment

improved with the residential segment outperforming non-

residential. In the marine segment however, orders

declined, due to weak demand in the cruising segment.

Revenues amounted to $6,901 million, increasing by 11%

(7% comparable). Three out of four business areas reported

revenue increases with only Process Automation declining.

The overall demand for ABB products and services

improved both year-on-year and sequentially, reflecting

strength in the short-cycle business supported by positive

developments in most customer segments. Demand related

to process industries was subdued. In total, orders for the

ABB Group amounted to $7,756 million, increasing by 6%

(1% comparable). 

On a sequential basis, the underlying general business

environment was positive in all three regions. Compared

with the corresponding period last year, growth in the

Americas was stable as the year-earlier period did not

include any significant adverse impacts from COVID-19, and

also benefited from higher large orders received. Asia,

Middle East and Africa (AMEA) improved by 8%

(2% comparable), driven by a sharp increase of 34%

(24% comparable) in China. Orders in Europe increased

10% (3% comparable), with a resilient performance in

Germany. 

Orders grew strongly in the machine builders, consumer

electronics and food & beverage segments as well as in

general industries overall. The automotive segment

declined, as the adverse development in the relatively larger

Revenues by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q1 2021

Q1 2020

US$

Comparable

Europe

2,551

2,371

8%

1%

The Americas

2,043

2,092

-2%

-2%

Asia, Middle East

and Africa

2,307

1,706

35%

30%

Intersegment

1

–

47

ABB Group

6,901

6,216

11%

7%

Growth

Q1

Q1

Change year-on-year

Orders

Revenues

Comparable

1%

7%

FX

5%

5%

Portfolio changes

0%

-1%

Total

6%

11%

Orders by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q1 2021

Q1 2020

US$

Comparable

Europe

3,102

2,813

10%

3%

The Americas

2,247

2,240

0%

0%

Asia, Middle East

and Africa

2,407

2,230

8%

2%

Intersegment

1

–

63

ABB Group

7,756

7,346

6%

1%

1

Intersegment orders/revenues until June 30, 2020, include sales to the Power Grids business

which is presented as discontinued operations and thus these sales are not eliminated from

total orders/revenues.

Orders and revenues

ABB INTERIM REPORT

I

Q1 2021

 4

Corporate and Other Operational EBITA improved by

$14 million to -$101 million, with the underlying ongoing

corporate EBITA largely stable at -$79 million.

Net finance expenses

The net finance expenses amounted to $44 million, higher

than the $4 million in 2020. While interest costs on debt

were significantly lower, 2020 included a reduction in

interest expense due to changes in tax contingencies. Net

finance expenses for 2021 is still estimated at $130 million. 

Income tax

Income tax expense was $252 million with a tax rate of

31.4% compared with 19.5% in the prior year, mostly due to

that 2020 included the impact of a favourable resolution of a

tax contingency. Tax rate for 2021 is still estimated at 26%. 

Net income and earnings per share

Net income attributable to ABB was $502 million and

increased by 34% year-on-year. Basic earnings per share

was $0.25 and increased by 41% year-on-year, including

the adverse impact of $0.01 from discontinued operations.

Gross profit

Gross margin increased to 32.9%, up 220 basis points

year-on-year, supported by the revenue growth and

structural improvements. Gross margin increased in three

out of four business areas. Gross profit improved by 19%

and amounted to $2,268 million.

Income from operations

Income from operations amounted to $797 million and more

than doubled from the year-earlier period driven by stronger

operational profit, lower negative impacts from hedging

timing differences and lower costs associated with the

divestment of Power Grids. Results include restructuring

activities progressing according to plan with restructuring

and restructuring related expenses of $35 million in the

period, primarily related to Electrification.

Operational EBITA

Operational EBITA showed a steep improvement of 51%

(40% constant currency) year-on-year, increasing the

margin by 360 basis points to 13.8%. The stronger

performance was driven by increased revenues in

combination with improved gross margin, the impact from

earlier implemented cost measures and general stringent

cost control, with some additional support from the impact

of exchange rate movements. Costs relating to selling,

general and administrative (SG&A) expenses remained

broadly stable, however the ratio in relation to revenues

declined to 18.3%, from 20.1% in the year-earlier period.

SG&A expenses increased by 1% (-4% constant currency),

partially held back by the abnormally low travel and sales

activities on the back of COVID-19 restrictions. R&D

expenses increased by 13% (6% constant currency).

Earnings

ABB INTERIM REPORT

I

Q1 2021

 5

Net working capital

Net working capital amounted to $2,904 million, and

decreased 12% year-on-year, while it increased from

$2,718 million in the prior quarter primarily due to higher

contract assets and inventories as well as lower accrual for

employee bonuses. Net working capital as a percentage of

revenues was 10.8%, compared with 12.3% in the

corresponding period last year.

Capital expenditures

Purchases of property, plant and equipment and intangible

assets in the quarter amounted to $142 million. 

Net debt

Net debt totalled $1,233 million, a significant reduction

compared with last year’s level of $6,221 million and a

sequential increase from $112 million. The sequential

increase reflects the impacts of the share buybacks during

the quarter as well as the initial dividend payment in the

period. The net debt to EBITDA ratio declined to 0.4 from

2.3 reported for the same period last year, while it increased

sequentially from 0.04.

Cash flows

Cash flow from operating activities in continuing operations

was $523 million, very strong for a first quarter which

normally is seasonally weak, and a significant improvement

of $919 million compared with the corresponding period last

year. All business areas contributed to the increase which

primarily related to the contribution from a higher

operational result, a lower build-up of working capital and

more favorable timing of tax payments.

Share buyback program

As

announced earlier, ABB intends to return $7.8 billion of

cash proceeds from the Power Grids divestment to

shareholders through share buybacks. After completion of

the initial program, a further share buyback program of up

to $4.3 billion was launched on April 9. It is being executed

on a second trading line on the SIX Swiss Exchange and is

planned to run until the company’s 2022 Annual General

Meeting. ABB intends to request shareholders to approve

the cancellation of the remaining shares purchased but not

approved for cancellation under the initial program as well

as those purchased under this new program at its 2022

AGM. 

($ millions, 

unless otherwise indicated)

Mar. 31

2021

Mar. 31

2020

Dec. 31

2020

Short term debt and current

maturities of long-term debt

1,336 

5,913 

1,293 

Long-term debt

5,619 

6,830 

4,828 

Total debt

6,955 

12,743 

6,121 

Cash & equivalents

3,466 

5,971 

3,278 

Restricted cash - current

72 

–

323 

Marketable securities and 

short-term investments

1,884 

551 

2,108 

Restricted cash - non-current

300 

–

300 

Cash and marketable securities

5,722 

6,522 

6,009 

Net debt*

1,233 

6,221 

112 

Net debt* to EBITDA ratio

0.4 

2.3 

0.04 

Net debt* to Equity ratio

0.09 

0.52 

0.01 

*

net debt excludes net pension liabilities $871 million

Balance sheet & Cash flow

ABB INTERIM REPORT

I

Q1 2021

 6

Orders and revenues

Order intake reached a high level of $3,531 million, a solid

increase of 13% (9% comparable). Revenues at

$3,140 million grew 13% (11% comparable) with strength

noted in most segments. 

●

Strong demand was further supported by customers stock-

building to manage the rising constraints of component

availability. Additionally, some accelerated orders from

customers due to expected price increases driven by rising

commodity prices also supported demand, although to a

smaller extent.

●

Demand improved in the buildings segment, with the

residential business outpacing the non-residential.

Customer activity was also high for the data centers, food &

beverage, rail and e-mobility segments. Activity in oil & gas

was muted, albeit the initial signs of a pick-up for the

service business was noted. 

●

Growth in AMEA was supported by stellar growth in China.

Orders grew strongly in both Europe and the Americas. 

Profit

All of the larger divisions improved both Operational EBITA

and margin, hence the business area result improved by

61% and margin increased by 480 basis points to 16.2%.

●

The strong performance reflects the impact from higher

utilization of fixed assets on increased volumes, improved

pricing, earlier implemented cost measures as well as

general stringent cost controls and constrained travel

expenses. 

●

While the adverse impact from rising raw material costs

was very limited in the period, this is expected to have an

increasingly negative impact in the coming quarters as

commodities bought at higher rates are moved out of

inventories. 

—

Electrification

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

3,531

3,121

13%

9%

Order backlog

4,699

4,386

7%

3%

Revenues

3,140

2,773

13%

11%

Operational EBITA

511

318

61%

as % of operational revenues 

16.2%

11.4%

+4.8 pts

Cash flow from operating activities

319

13

n.a.

No. of employees (FTE equiv.)

50,990

52,710

Growth

Q1

Q1

Change year-on-year

Orders

Revenues

Comparable

9%

11%

FX

5%

5%

Portfolio changes

-1%

-3%

Total

13%

13%

ABB INTERIM REPORT

I

Q1 2021

 7

Orders and revenues

In total, order intake was at a high level and amounted to

$1,917 million which increased by 1% 

(-4% comparable), although the high comparable from the

prior period weighed on the growth rate. Revenues

amounted to $1,667 million, representing growth of 10%

(6% comparable). 

●

Customer activity was high in all segments except oil &

gas, where activity declined. Order intake was driven by

the short-cycle business, however there were initial signs

of improving demand for projects. 

●

While orders declined in both AMEA and Europe due to

high comparables, it increased in the Americas. 

The concept of the “Energy Efficiency Movement” was

launched, calling upon governments and industries to

accelerate the adoption of high-efficiency motors and

variable speed drives to combat climate change. This puts

the technology leadership in focus, supporting Motion’s

long-term growth opportunities. 

Profit

Operational EBITA margin of 17.1% is a very high first-

quarter level, and the Operational EBITA increased by 26%,

relative to the same period last year. 

●

Operational EBITA and margin improvements were

supported by higher sales volumes, improved divisional

mix, stringent cost scrutiny and input costs still covered

by favorable hedging. 

●

Although a tightening supply of semiconductors was

noted in the industry, there was no material impact on

customer deliveries or results. 

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

1,917

1,901

1%

-4%

Order backlog

3,419

3,259

5%

-1%

Revenues

1,667

1,510

10%

6%

Operational EBITA

289

230

26%

as % of operational revenues 

17.1%

15.3%

+1.8 pts

Cash flow from operating activities

324

152

113%

No. of employees (FTE equiv.)

20,980

20,820

—

Motion

Growth

Q1

Q1

Change year-on-year

Orders

Revenues

Comparable

-4%

6%

FX

5%

4%

Portfolio changes

0%

0%

Total

1%

10%

ABB INTERIM REPORT

I

Q1 2021

 8

Orders and revenues

Customer activity in the process related segments was low

and orders and revenues declined year-on-year in most

divisions. Order intake amounted to $1,656 million, a

decrease of 6% (11% comparable). Revenues amounted to

$1,407 million, declining by 4% (9% comparable).

●

On the back of a lower demand for products, systems as

well as services, the marine and oil & gas segments

weighed on the total business area growth. This more

than offset the somewhat positive developments in pulp &

paper, ports, chemicals and water & waste-water.

●

Orders declined in all divisions, except for a slight growth

in the short-cycle related business of Measurement &

Analytics.

●

Revenues declined, mainly reflecting the subdued service

business, timing in execution of the order backlog and

cruise operators operating significantly below normal

levels.

Profit

Despite the decline in revenues the margin improved by

130 basis points year-on-year to 11.0% on improved

operational performance. Operational EBITA increased by

8%. 

●

The negative volume development had an adverse

impact on the Operational EBITA, however this was offset

by the positive impact from earlier implemented cost

measures, stronger operational execution and positive

impact from currency movements. 

●

There was no material impact from the rising constraints

of semiconductors supply. 

●

To take the next step in operational performance, a

management change at the head of the

Measurement & Analytics division was made. 

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

1,656

1,757

-6%

-11%

Order backlog

5,900

5,183

14%

6%

Revenues

1,407

1,462

-4%

-9%

Operational EBITA

155

144

8%

as % of operational revenues 

11.0%

9.7%

+1.3 pts

Cash flow from operating activities

233

(26)

n.a.

No. of employees (FTE equiv.)

22,000

22,980

—

Process Automation

Growth

Q1

Q1

Change year-on-year

Orders

Revenues

Comparable

-11%

-9%

FX

5%

5%

Portfolio changes

0%

0%

Total

-6%

-4%

ABB INTERIM REPORT

I

Q1 2021

 9

Orders and revenues

In total, order intake amounted to $841 million, 4% higher (-

3% comparable) year-on-year. Revenues grew strongly,

increasing 27% (19% comparable

) and amounted to

$853 million, supported by a strong execution of deliveries

from the order backlog as well as a generally strong

development in the short-cycle business.

●

Demand from machine builders was strong, driving a

steep order increase in Machine Automation, partially due

to some inventory build-up. Robotics orders improved in

most customer segments, except in the automotive

segment where the growth rate was also pressured by

the impact from the ongoing strategic selective order

approach, aimed at improving long-term profitability.

●

Orders grew in the AMEA region, outperforming the

declines in both the Americas and Europe. 

The collaborative robot portfolio was expanded with two

new cobot families offering higher payloads and speeds.

Importantly, they are intuitively designed so customers need

not rely on in-house programming specialists. The launch

CHANGE

($ millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

Orders

841

811

4%

-3%

Order backlog

1,362

1,454

-6%

-12%

Revenues

853

671

27%

19%

Operational EBITA

105

59

78%

as % of operational revenues 

12.4%

8.8%

+3.6 pts

Cash flow from operating activities

111

66

68%

No. of employees (FTE equiv.)

10,290

10,340

aims to unlock customer groups who currently have low

levels of automation.

Profit

Operational EBITA increased by 78% year-on-year and the

margin increased by 360 basis points to 12.4% with similar

improvements in both the Robotics and Machine

Automation divisions.

●

The margin improvement was primarily driven by the

better cost absorption from higher volumes, a positive

divisional mix, improved performance in the service

business and impacts from previously implemented cost

measures.

—

Robotics & Discrete Automation

Growth

Q1

Q1

Change year-on-year

Orders

Revenues

Comparable

-3%

19%

FX

7%

8%

Portfolio changes

0%

0%

Total

4%

27%

ABB INTERIM REPORT

I

Q1 2021

 10

ABB took important steps in the first quarter of 2021 to

establish the governance of its new ambitious 2030

sustainability strategy, which was launched in November

2020. There is a clear focus on areas with the biggest impact

– enabling a low-carbon society by reducing emissions,

preserving resources, and promoting social progress

underpinned by a strong commitment to integrity and

transparency. 

Quarterly highlights

●

ABB recorded a 22% year-on-year reduction of CO

₂

emissions in its own operations mainly due to increased use

of renewable electricity. This was underlined by the

unveiling of a new solar power generation and renewable

energy integration system at its low-voltage products

manufacturing site in Beijing. 

●

Reduction in LTIFR, defined below, of 31% year-on-year

partially due to the extra COVID-19 measures in addition to

our focus on safety overall at our sites. ABB is also

engaging in several initiatives to address mental health

issues, including rolling out business-led mental wellbeing

programs such as “Are you OK?” 

●

ABB Switzerland was awarded the “Swiss LGBTI-Label” for

the next three years on the basis of criteria such as

strategy, HR policy and quality management.

Q1 2021

Q1 2020

CHANGE

12M ROLLING

CO2e own operations emissions, 

kt scope 1 and 2

1

89

113

-22%

92

Lost Time Injury Frequency Rate (LTIFR), 

frequency / 200,000 working hours

0.126

0.182

-31%

0.149

Share of females in senior management

positions, %

14.3

12.3

+2.0pts

13.4

1

Data is for the end of previous quarter

Furthermore, ABB has set itself the target of increasing the

share of women in senior management roles to 25% by 2030.

●

ABB published its Annual Sustainability Report 2020,

achieving most of its targets and reducing greenhouse gas

emissions by 58% since 2013. 

●

ABB was named one of the world’s most sustainable

companies by Corporate Knights, an international media and

research organization. Ranked 33, ABB significantly improved

its score versus last year’s ranking.

Story of the quarter

In early March, ABB’s Motion business area called upon

governments and industry to accelerate the adoption of high-

efficiency motors and variable speed drives to combat climate

change. Motor and drive technologies have seen exceptionally

rapid advancement in the past decade. However, a significant

number of industrial electric motor-driven systems in operation

today – in the region of 300 million globally – are inefficient or

consume much more power than required, resulting in

monumental energy wastage. Independent research estimates

that if these systems were replaced with optimized, high-

efficiency equipment, the gains to be realized could reduce

global electricity consumption by up to 10 percent. Read more at

https://www.energyefficiencymovement.com

Q1 outcome

●

22% reduction of CO

₂

 emissions in own operations mainly

due to higher use of renewable electricity

●

31% reduction in LTIFR through COVID-19 related safety

measures

●

Diversity & Inclusion initiative strengthened through Swiss

LGBTI certification

—

Sustainability

ABB INTERIM REPORT

I

Q1 2021

 11

After Q1 2021

●

On April 9, ABB launched its previously announced

follow-up share buyback program of up to $4.3 billion.

Based on the share price at launch of the program this

represented a maximum of approximately 137 million

shares. The maximum number of shares that may be

repurchased under this new program on any given

trading day is 1,543,644.

●

On April 15, ABB issued a trading update following better-

than-anticipated performance in Q1. Additionally, it raised

its revenue guidance for full year 2021 outlook to

anticipating comparable revenue growth of ~5% or higher

(previously: comparable revenue growth to be broadly in

line with its long-term target range), including an

anticipated recovery in the process industry related part

of the business during the second half of the year.

●

On April 27, ABB announced it has separated the

E-mobility business into its own division

and initiated a carve out into a separate legal

structure. These steps will allow for preparation for

a possible public listing and create a platform for

accelerated growth and value creation in this business. 

During Q1 2021

●

On February 24, ABB announced it is expanding its

collaborative robot (cobot) portfolio with the new GoFa™

and SWIFTI™ cobot families. These offer higher

payloads and speeds and complement YuMi® and Single

Arm YuMi® in ABB’s cobot line-up. These stronger, faster

and more capable cobots will accelerate the company’s

expansion in high-growth segments including electronics,

healthcare, consumer goods, logistics and food and

beverage, amongst others, meeting the growing demand

for automation across multiple industries.

●

On March 25, ABB announced it had completed its initial

share buyback program that was launched in July 2020

as part of the company’s plan to return to shareholders

cash proceeds from the Power Grids divestment of $7.8

billion. Through the initial buyback program, ABB

repurchased a total of 128,620,589 shares – equivalent to

5.93% of its issued share capital at launch of the buyback

program – for a total amount of approximately $3.5 billion.

At the Annual General Meeting (AGM) shareholders

approved the cancellation of 115 million shares

purchased under the initial share buyback program.

Consistent with ABB’s capital structure optimization

program, ABB’s Board of Directors approved a further

share buyback program of up to $4.3 billion.

●

On March 25, at the 2021 AGM, Peter Voser was

confirmed as Chairman of the company’s Board of

Directors with 92.9 percent of the votes. With the

exception of Matti Alahuhta, who as announced earlier

did not stand for re-election, all other members of the

Board were re-elected for another term: Jacob

Wallenberg, Gunnar Brock, David Constable, Frederico

Fleury Curado, Lars Förberg, Jennifer Xin-Zhe Li,

Geraldine Matchett, David Meline and Satish Pai.

Significant events

ABB INTERIM REPORT

I

Q1 2021

 12

Divestments

Company/unit

Closing date

Revenues, $ million

1

No. of employees

2020

Power Grids

Power Grids

1-Jul

9,200

36,000

Note: comparable growth calculation includes acquisitions and divestments with revenues of greater than $50 million.

1

Represents the estimated annual revenues for the period prior to the announcement of the respective acquisition/divestment.

Additional figures

ABB Group

Q1 2020

Q2 2020

Q3 2020

Q4 2020

FY 2020

Q1 2021

EBITDA, $ in million

600

799

302

807

2,508

1,024

Return on Capital Employed, %

n.a.

n.a.

n.a.

n.a.

10.3%

n.a.

Net debt/Equity

0.50

0.60

(0.10)

0.01

0.01

0.09

Net debt/ EBITDA 12M rolling

2.3

2.5

(0.4)

0.04

0.04

0.4

Net working capital, % of 12M rolling revenues

12.3%

12.6%

12.5%

10.5%

10.5%

10.8%

Earnings per share, basic, $

0.18

0.15

2.14

(0.04)

2.44

0.25

Earnings per share, diluted, $

0.18

0.15

2.14

(0.04)

2.43

0.25

Dividend per share, CHF

n.a.

n.a.

n.a.

n.a.

0.80

n.a.

Share price at the end of period, CHF

17.01

21.33

23.45

24.71

24.71

28.56

Share price at the end of period, $

17.26

22.56

25.45

27.96

27.96

30.47

Number of employees (FTE equivalents)

143,320

142,310

106,420

105,520

105,520

105,330

No. of shares outstanding at end of period (in millions)

2,134

2,135

2,092

2,031

2,031

2,024

1

Excluding two main operational exposures that are ongoing in the non-core business and for which exit timing is dependent on circumstances beyond ABB’s control such as legal proceedings.

2

Excluding share of net income from JV.

($ in millions, unless otherwise stated)

FY 2021

Q2 2021

Net finance expenses

~(130)

 1

~(30)

unchanged

Non-operational pension

(cost) / credit

~180

~45

unchanged

Effective tax rate

~26%

~26%

unchanged

Capital Expenditures

~(750)

~(185)

unchanged

($ in millions, unless otherwise stated)

FY 2021

Q2 2021

Corporate and Other Operational costs

~(425)

 1

~(110)

unchanged

Non-operating items

Restructuring and restructuring related

~(200)

~(40)

unchanged

GEIS integration costs

~(20)

~(10)

from ~(30)

PPA-related amortization

~(255)

~(65)

unchanged

Certain other income and expenses

related to PG divestment

2

~(40)

~(15)

unchanged

Additional 2021 guidance

Acquisitions

Company/unit

Closing date

Revenues, $ million

1

No. of employees

2020

Robotics & Discrete Automation

Codian Robotics B.V.

1-Oct

9

16

Acquisitions and divestments, last twelve months

ABB INTERIM REPORT

I

Q1 2021

 13

To pre-register for the conference call or to join the

webcast, please refer to the ABB website:

www.abb.com/investorrelations. 

The recorded session will be available after the event on

ABB’s website.

The Q1 2021 results press release and presentation slides

are available on the ABB News Center at

www.abb.com/news and on the Investor Relations

homepage at www.abb.com/investorrelations. 

A conference call and webcast for analysts and investors is

scheduled to begin today at 10:00 a.m. CEST. 

Q1 results presentation on April 27, 2021

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 “Outlook”, “CEO Summary”, “Share

buyback program” and “Sustainability”. These statements

are based on current expectations, estimates and

projections about the factors that may affect our future

performance, including global economic conditions, the

economic conditions of the regions and industries that are

major markets for ABB. These expectations, estimates and

projections are generally identifiable by statements

containing words such as “intends” “anticipates”, “expects,”

“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.

ABB

 (ABBN: SIX Swiss Ex) is a leading global technology company that energizes the transformation of society and industry to

achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation and motion

portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching

back more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.

Media Relations

Phone: +41 43 317 71 11

Email: media.relations@ch.abb.com

Investor Relations

Phone: +41 43 317 71 11

Email: investor.relations@ch.abb.com

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

For additional information please contact:

2021

July 22

Q2 results

October 21

Q3 results

Financial calendar

Important notice about forward-looking information

1 Q1 2021 FINANCIAL INFORMATION

2 Q1 2021 FINANCIAL INFORMATION

—

Financial Information

Contents

03

─ 5 Key Figures

06 ─

32 Consolidated Financial Information (unaudited)

33 ─

 42 Supplemental Reconciliations and Definitions

3 Q1 2021 FINANCIAL INFORMATION

—

Key Figures

CHANGE

($ in millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Comparable

(1)

Orders

7,756

7,346

6%

1%

Order backlog (end March)

14,750

13,698

8%

2%

Revenues

6,901

6,216

11%

7%

Income from operations

797

373

114%

Operational EBITA

(1)

959

636

51%

40%

(2)

as % of operational revenues

(1)

13.8%

10.2%

+3.6 pts

Income from continuing operations, net of tax

551

326

69%

Net income attributable to ABB

502

376

34%

Basic earnings per share ($)

0.25

0.18

41%

(3)

Cash flow from operating activities

(4)

543

(577)

n.a.

(1) For a reconciliation of non- GAAP measures see

 on page 33 .

(2) Const ant currency (not adjusted for portfolio changes).

(3) EPS growth rates are computed using unrounded amounts.

(4) Cash flow from operating activities includes both continuing and discontinued operations.

4 Q1 2021 FINANCIAL INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

Q1 2021

Q1 2020

US$

Local

Comparable

Orders 

ABB Group

7,756

7,346

6%

1%

1%

Electrification

3,531

3,121

13%

8%

9%

Motion

1,917

1,901

1%

-4%

-4%

Process Automation

1,656

1,757

-6%

-11%

-11%

Robotics & Discrete Automation

841

811

4%

-3%

-3%

Corporate and Other 

(incl. intersegment eliminations)

(189)

(244)

Order backlog (end March)

ABB Group

14,750

13,698

8%

2%

2%

Electrification

4,699

4,386

7%

3%

3%

Motion

3,419

3,259

5%

-1%

-1%

Process Automation

5,900

5,183

14%

6%

6%

Robotics & Discrete Automation

1,362

1,454

-6%

-12%

-12%

Corporate and Other 

(incl. intersegment eliminations)

(630)

(584)

Revenues 

ABB Group

6,901

6,216

11%

6%

7%

Electrification

3,140

2,773

13%

8%

11%

Motion

1,667

1,510

10%

6%

6%

Process Automation

1,407

1,462

-4%

-9%

-9%

Robotics & Discrete Automation

853

671

27%

19%

19%

Corporate and Other 

(incl. intersegment eliminations)

(166)

(200)

Income from operations

ABB Group

797

373

Electrification

440

199

Motion

265

191

Process Automation

147

124

Robotics & Discrete Automation

82

32

Corporate and Other

(incl. intersegment eliminations)

(137)

(173)

Income from operations %

ABB Group

11.5%

6.0%

Electrification

14.0%

7.2%

Motion

15.9%

12.6%

Process Automation

10.4%

8.5%

Robotics & Discrete Automation

9.6%

4.8%

Operational EBITA

ABB Group

959

636

51%

40%

Electrification

511

318

61%

47%

Motion

289

230

26%

18%

Process Automation

155

144

8%

-1%

Robotics & Discrete Automation

105

59

78%

59%

Corporate and Other

(1)

(incl. intersegment eliminations)

(101)

(115)

Operational EBITA % 

ABB Group

13.8%

10.2%

Electrification

16.2%

11.4%

Motion

17.1%

15.3%

Process Automation

11.0%

9.7%

Robotics & Discrete Automation

12.4%

8.8%

Cash flow from operating activities

(2)

ABB Group

543

(577)

Electrification

319

13

Motion

324

152

Process Automation

233

(26)

Robotics & Discrete Automation

111

66

Corporate and Other 

(incl. intersegment eliminations)

(464)

(601)

Discontinued operations

20

(181)

(1)

Corporate and Other includes Stranded corporate costs of $21 million for the three months ended March 31, 2020.

(2)

Commencing Q3 2020, taxes and interest previously allocated to each individual operating segment are now fully allocated to Corporate and Other, and

commencing Q1 2021, depreciation relating to certain real estate assets, previously reported in Corporate and Other, has been reallocated to the individual 

operating segments utilizing these assets. Comparatives have been restated to reflect both changes.

5 Q1 2021 FINANCIAL INFORMATION

Operational EBITA

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

Automation

($ in millions, unless otherwise indicated)

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Revenues

6,901

6,216

3,140

2,773

1,667

1,510

1,407

1,462

853

671

Foreign exchange/commodity timing

differences in total revenues

33

25

10

10

19

(3)

5

17

(3)

(2)

Operational revenues

6,934

6,241

3,150

2,783

1,686

1,507

1,412

1,479

850

669

Income from operations

797

373

440

199

265

191

147

124

82

32

Acquisition-related amortization

65

65

29

28

13

13

1

1

20

19

Restructuring, related and 

implementation costs

35

40

17

15

1

2

3

3

5

7

Changes in obligations related to 

divested businesses

2

–

–

–

–

–

–

–

–

–

Changes in pre-acquisition estimates

6

–

6

–

–

–

–

–

–

–

Gains and losses from sale of businesses

3

1

3

1

–

–

–

–

–

–

Fair value adjustment on assets and 

liabilities held for sale

–

19

–

19

–

–

–

–

–

–

Acquisition- and divestment-related 

expenses and integration costs

10

11

6

11

3

–

1

–

–

–

Other income/expense relating to the 

Power Grids joint venture

17

–

–

–

–

–

–

–

–

–

Certain other non-operational items

12

47

(6)

–

–

5

–

–

–

1

Foreign exchange/commodity timing

differences in income from operations

12

80

16

45

7

19

3

16

(2)

–

Operational EBITA

959

636

511

318

289

230

155

144

105

59

Operational EBITA margin (%)

13.8%

10.2%

16.2%

11.4%

17.1%

15.3%

11.0%

9.7%

12.4%

8.8%

Depreciation and Amortization

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

Automation

($ in millions)

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Q1 21

Q1 20

Depreciation

(1)

144

145

64

68

32

31

19

17

13

12

Amortization

83

82

37

34

14

14

3

2

21

20

including total acquisition-related amortization of:

65

65

29

28

13

13

1

1

20

19

(1) Commencing Q1 2021, depreciation related to certain real estate assets, previously reported in Corporate and Other , has been re allocated to the individual operating

segments utilizing these assets. Comparatives have been restated .

Orders received and revenues by region

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

Com-

Q1 21

Q1 20

US$

Local

parable

Q1 21

Q1 20

US$

Local

parable

Europe

3,102

2,813

10%

2%

3%

2,551

2,371

8%

0%

1%

The Americas

2,247

2,240

0%

0%

0%

2,043

2,092

-2%

-3%

-2%

of which United States

1,679

1,710

-2%

-2%

-2%

1,532

1,615

-5%

-5%

-4%

Asia, Middle East and Africa

2,407

2,230

8%

2%

2%

2,307

1,706

35%

28%

30%

of which China

1,199

898

34%

24%

24%

1,176

667

76%

64%

69%

Intersegment orders/revenues

(1)

–

63

–

47

ABB Group

7,756

7,346

6%

1%

1%

6,901

6,216

11%

6%

7%

(1) Intersegment orders/revenues during the three months ended March 31, 2020, include sales to the Power Grids business which is presented as discontinued operations

and thus these s ales are not eliminated from Total orders/revenues.

6 Q1 2021 FINANCIAL INFORMATION

—

Consolidated Financial Information

ABB Ltd Interim Consolidated Income Statements (unaudited)

Three months ended

($ in millions, except per share data in $)

Mar. 31, 2021

Mar. 31, 2020

Sales of products

5,707

4,993

Sales of services and other

1,194

1,223

Total revenues

6,901

6,216

Cost of sales of products

(3,924)

(3,575)

Cost of services and other

(709)

(731)

Total cost of sales

(4,633)

(4,306)

Gross profit

2,268

1,910

Selling, general and administrative expenses

(1,263)

(1,252)

Non-order related research and development expenses

(293)

(259)

Other income (expense), net

85

(26)

Income from operations

797

373

Interest and dividend income

11

18

Interest and other finance expense

(55)

(22)

Non-operational pension (cost) credit

50

36

Income from continuing operations before taxes

803

405

Income tax expense

(252)

(79)

Income from continuing operations, net of tax

551

326

Income (loss) from discontinued operations, net of tax

(28)

54

Net income

523

380

Net income attributable to noncontrolling interests

(21)

(4)

Net income attributable to ABB

502

376

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

530

325

Income (loss) from discontinued operations, net of tax

(28)

51

Net income

502

376

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

Weighted-average number of shares outstanding (in millions) used to compute:

Basic earnings per share attributable to ABB shareholders

2,015

2,134

Diluted earnings per share attributable to ABB shareholders

2,034

2,138

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Interim Consolidated Financial Information

7 Q1 2021 FINANCIAL INFORMATION

—

ABB Ltd Interim Condensed Consolidated Statements of Comprehensive

Income (unaudited)

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Total comprehensive income (loss), net of tax

325

(127)

Total comprehensive (income) loss attributable to noncontrolling interests, net of tax

(24)

4

Total comprehensive income (loss) attributable to ABB shareholders, net of tax

301

(123)

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Interim Consolidated Financial Information

8 Q1 2021 FINANCIAL INFORMATION

—

ABB Ltd Consolidated Balance Sheets (unaudited)

($ in millions)

Mar. 31, 2021

Dec. 31, 2020

Cash and equivalents

3,466

3,278

Restricted cash

72

323

Marketable securities and short-term investments

1,884

2,108

Receivables, net

6,663

6,820

Contract assets

1,044

985

Inventories, net

4,475

4,469

Prepaid expenses

241

201

Other current assets

637

760

Current assets held for sale and in discontinued operations

241

282

Total current assets

18,723

19,226

Restricted cash, non-current

300

300

Property, plant and equipment, net

4,034

4,174

Operating lease right-of-use assets

972

969

Investments in equity-accounted companies

1,760

1,784

Prepaid pension and other employee benefits

362

360

Intangible assets, net

1,936

2,078

Goodwill

10,744

10,850

Deferred taxes

812

843

Other non-current assets

577

504

Total assets

40,220

41,088

Accounts payable, trade

4,453

4,571

Contract liabilities

1,855

1,903

Short-term debt and current maturities of long-term debt

1,336

1,293

Current operating leases

234

270

Provisions for warranties

1,012

1,035

Dividends payable to shareholders

874

–

Other provisions

1,471

1,519

Other current liabilities

3,921

4,181

Current liabilities held for sale and in discontinued operations

601

644

Total current liabilities

15,757

15,416

Long-term debt

5,619

4,828

Non-current operating leases

769

731

Pension and other employee benefits

1,158

1,231

Deferred taxes

678

661

Other non-current liabilities

1,992

2,025

Non-current liabilities held for sale and in discontinued operations

188

197

Total liabilities

26,161

25,089

Commitments and contingencies

Stockholders’ equity:

Common stock, CHF 0.12 par value

(2,168 million shares issued at March 31, 2021, and December 31, 2020)

188

188

Additional paid-in capital

–

83

Retained earnings

21,582

22,946

Accumulated other comprehensive loss

(4,203)

(4,002)

Treasury stock, at cost

(144 million and 137 million shares at March 31, 2021, and December 31, 2020, respectively)

(3,876)

(3,530)

Total ABB stockholders’ equity

13,691

15,685

Noncontrolling interests

368

314

Total stockholders’ equity

14,059

15,999

Total liabilities and stockholders’ equity

40,220

41,088

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

9 Q1 2021 FINANCIAL INFORMATION

—

ABB Ltd Consolidated Statements of Cash Flows (unaudited)

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Operating activities:

Net income

523

380

Loss (income) from discontinued operations, net of tax

28

(54)

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

227

227

Pension and other employee benefits

(50)

(49)

Deferred taxes

59

44

Net loss from derivatives and foreign exchange

20

73

Net gain from sale of property, plant and equipment

(11)

(8)

Fair value adjustment on assets and liabilities held for sale

–

19

Share-based payment arrangements

11

7

Other

34

13

Changes in operating assets and liabilities:

Trade receivables, net

(2)

(61)

Contract assets and liabilities

(90)

(41)

Inventories, net

(168)

(301)

Accounts payable, trade

42

(67)

Accrued liabilities

(76)

(59)

Provisions, net

1

(53)

Income taxes payable and receivable

(50)

(218)

Other assets and liabilities, net

25

(248)

Net cash provided by (used in) operating activities – continuing operations

523

(396)

Net cash provided by (used in) operating activities – discontinued operations

20

(181)

Net cash provided by (used in) operating activities

543

(577)

Investing activities:

Purchases of investments

(309)

(242)

Purchases of property, plant and equipment and intangible assets

(142)

(163)

Acquisition of businesses (net of cash acquired) and increases in cost- and equity-accounted companies

(4)

(73)

Proceeds from sales of investments

391

393

Proceeds from maturity of investments

80

–

Proceeds from sales of property, plant and equipment

20

23

Proceeds from sales of businesses (net of transaction costs and cash disposed) and cost- and

equity-accounted companies

(2)

(140)

Net cash from settlement of foreign currency derivatives

(61)

(129)

Other investing activities

(8)

(15)

Net cash used in investing activities – continuing operations

(35)

(346)

Net cash used in investing activities – discontinued operations

(44)

(37)

Net cash used in investing activities

(79)

(383)

Financing activities:

Net changes in debt with original maturities of 90 days or less

87

1,545

Increase in debt

991

2,247

Repayment of debt

(47)

(180)

Delivery of shares

760

–

Purchase of treasury stock

(1,386)

–

Dividends paid

(844)

–

Dividends paid to noncontrolling shareholders

(1)

(2)

Other financing activities

(36)

(104)

Net cash provided by (used in) financing activities – continuing operations

(476)

3,506

Net cash provided by (used in) financing activities – discontinued operations

–

(8)

Net cash provided by (used in) financing activities

(476)

3,498

Effects of exchange rate changes on cash and equivalents and restricted cash

(51)

(111)

Net change in cash and equivalents and restricted cash

(63)

2,427

Cash and equivalents and restricted cash, beginning of period

3,901

3,544

Cash and equivalents and restricted cash, end of period

3,838

5,971

Supplementary disclosure of cash flow information:

Interest paid

12

16

Income taxes paid

256

266

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

10 Q1 2021 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, 2020

188

73

19,640

(5,590)

(785)

13,526

454

13,980

Adoption of accounting

standard update

(78)

(78)

(9)

(87)

Comprehensive income:

Net income

376

376

4

380

Foreign currency translation

adjustments, net of tax of $0

(589)

(589)

(8)

(597)

Effect of change in fair value of

available-for-sale securities,

net of tax of $3

9

9

9

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $25

90

90

90

Change in derivative instruments

and hedges, net of tax of $0

(9)

(9)

(9)

Total comprehensive loss

(123)

(4)

(127)

Changes in noncontrolling interests

(3)

(3)

22

19

Dividends to

noncontrolling shareholders

–

(2)

(2)

Dividends to shareholders

(1,758)

(1,758)

(1,758)

Share-based payment arrangements

8

8

8

Delivery of shares

(2)

2

–

–

Balance at March 31, 2020

188

75

18,180

(6,089)

(784)

11,570

462

12,032

Balance at January 1, 2021

188

83

22,946

(4,002)

(3,530)

15,685

314

15,999

Comprehensive income:

Net income

502

502

21

523

Foreign currency translation

adjustments, net of tax of $3

(273)

(273)

3

(270)

Effect of change in fair value of

available-for-sale securities,

net of tax of $(3)

(12)

(12)

(12)

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $(2)

81

81

81

Change in derivative instruments

and hedges, net of tax of $(1)

3

3

3

Total comprehensive income

301

24

325

Changes in noncontrolling interests

(37)

(37)

34

(3)

Dividends to

noncontrolling shareholders

–

(4)

(4)

Dividends to shareholders

(1,730)

(1,730)

(1,730)

Share-based payment arrangements

11

11

11

Purchase of treasury stock

(1,300)

(1,300)

(1,300)

Delivery of shares

(58)

(136)

954

760

760

Balance at March 31, 2021

188

–

21,582

(4,203)

(3,876)

13,691

368

14,059

Due to rounding, numbers presented may not add to the totals provided.

See Notes to the Consolidated Financial Information

11 Q1 2021 FINANCIAL INFORMATION

—

Notes to the Consolidated Financial Information (unaudited)

─

Note 1

The Company and basis of presentation

ABB Ltd and its subsidiaries (collectively, the Company) together form a leading global technology company, connecting software to its electrification,

robotics, automation and motion portfolio to drive performance to new levels .

The Company’s Consolidated Financial Information is prepared in accordance with United States of America generally accepted accounting principles

(U.S. GAAP) for interim financial reporting. As such, the Consolidated Financial Information does not include all the information and notes required under

U.S. GAAP for annual consolidated financial statements. Therefore, such financi al information should be read in conjunction with the audited consolidated

financial statements in the Company’s Annual Report for the year ended December 31, 2020.

The preparation of financial information in conformity with U.S. GAAP requires management to make assumptions and esti mates that directly affect the

amounts reported in the Consolidated Financial Information. These accounti ng assumptions and estimates include:

●

growth rates, discount rates and other assumptions used to determine impairment of long -lived assets and in testing goodwill for impairment,

●

estimates to determine valuation allowances for deferred tax assets and amounts recorded for unrecognized tax benefits ,

●

assumptions used in determining inventory obsolescence and net realizable value,

●

estimates and assumptions used in determining the initial fair value of retained noncontrolling interest and certain obligations in connection with

divestments,

●

estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations,

●

assumptions used in the determination of corporate costs directly attributable to discontinued operations,

●

estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental damages,

product warranties, self-insurance reserves, regulatory and other proceedings,

●

estimates used to record expected costs for employee severance in connection with restructuring programs,

●

estimates related to credit losses expected to occur over the remaining life of financial assets such as trade and other receivables, loans and

other instruments,

●

assumptions used in the calculation of pension and postretirement benefits and the fair value of pension plan assets, and

●

assumptions and projections, principally related to fut ure material, labor and project -related overhead costs, used in determining the

percentage -of-completion on projects,

as well as the amount of variable consideration the Company expects to be entitled to.

The actual results and outcomes may differ from the Company’s estimates and assumptions.

A portion of the Company’s activities (primarily long-term construction activities) has an operating cycle that exceeds one year. For cla ssification 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 Interim Consolidated Financial Information for prior periods have been reclassified to conform to the current year’s

presentation. These changes primarily relate to the re allocation of certain real estate assets, previously reported within Corporate and Other, into the

operating segments which utilize the assets .

─

Note 2

Recent accounting pronouncements

Applicable for current periods

Simplifying the accounting for income taxes

In January 2021, the Company adopted a new accounting standard update , which enhances and simplifies various aspects of the income tax accounting

guidance related to intraperiod tax allocations, ownership changes in investments and certain aspects of interim period tax accounting. Depending on the

amendment, the adoption was applied on either a retrospective, modified retrospective, or prospective basis. This update does not have a significant

impact on the Company’s Consolidated Financial Statements.

Applicable for future periods

Facilitation of the effects of reference rate reform on financial reporting

In March 2020, an accounting standard update was issued which provid es temporary optional expedients and exceptions to the current guidance on

contract modifications and hedge accounting to ease the financial reporting burden s related to the expected market transition from the London Interbank

Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This update , along with clarifications outlined in a subsequent update

issued in January 2021, can be adopted and applied no later than December 31, 202 2, with early adoption permitted. The Company is currently evaluating

the impact of adopting this optional guidance on its Consolidated Financial Statements.

12 Q1 2021 FINANCIAL INFORMATION

─

Note 3

Discontinued operations

Divestment of the Power Grids business

On July 1, 2020, the Company completed the sale of 80.1 percent of its Power Grids business to Hita chi Ltd (Hitachi) . The transaction was executed

through the sale of 80.1 percent of the shares of Hitachi ABB Power Grids Ltd (“Hitachi ABB PG”). Cash consideration received at the closing date was

$9,241 million net of cash disposed . Further, for accounting purposes, the 19.9 percent ownership interest retained by the Company is deemed to have

been both divested and reacquired at its fair value on July

1, 2020 (see Note 4).

Certain amounts relating to the sale price for the Power Grids business

are currently estimated or otherwise subject to change in value and, as a result, the Company will record additional adjustments to the gain in future

periods which are not expected to have a material impact on the consolidated financial statements. 

At the date of the divestment, the Company recorded an initial liability in discontinued operations for estimated future costs and other cash payments of

$487 million for various contractual items relating to the sale of the business including required future cost reimbursements payable to Hitachi ABB PG,

costs incurred by the Company for the direct benefit of Hitachi ABB PG, and an amount due to Hitachi Ltd in connection with the expected purchase price

finalization of the closing debt and working capital balances. From the date of the disposal through March 31, 2021, $77 million of these liabilities had

been paid and are reported as reductions in the cash consideration received, of which $44 million was paid during the three months ended March 31,

2021. At March 31, 2021, the remaining amount recorded was $397 million.

Certain entities of the Power Grids business for which the legal process or other regulatory delays resulted in the Company not yet having transferred

legal titles to Hitachi have been accounted for as being sold since control of the business as well as all risks and rewards of the business have been fully

transferred to Hitachi ABB PG. The proceeds for these entities are included in the cash proceeds described above and certain funds have been placed in

escrow pending completion of the transfer process. At March 31, 2021, current restricte d cash includes $53 million in respect of these funds.

Upon closing of the sale, the Company entered into various transition services agreements (TSAs). Pursuant to these TSAs, the Company and Hitachi

ABB PG provide to each other, on an interim, transitional basis, various services. The services provided by the Company primaril y include finance,

information technology, human resources and certain other administrative services. Under the current terms, the TSAs will continue for up to 3 years, and

can only be extended on an exceptional basis for business -critical services for an additional period which is reasonably necessary to avoid a material

adverse impact on the business. In the three months ended March 31, 202 1, the Company has recognized within its continuing operations, general and

administrative expenses incurred to perform the TSA, offset by $47 million in TSA -related income for such services that is reported in Other income and

expense, net.

Discontinued operations

As a result of the sale of the Power Grids business, substantially all Power Grids-related assets and liabilities have been sold. As this divestment

represented a strategic shift that would have a major effect on the Company’s operations and financial results, the results of operations for this business

have been presented as discontinued operations and the assets and liabilities are presented as held for sale and in discontinued operations for all periods

presented. Certain of the business contracts in the Power Grids business continue to be executed by subsidiaries of the Company for the benefit /risk of

Hitachi ABB PG. Assets and liabilities relating to, as well as the net financial results of, these contracts will continue to be included in discontinued

operations until they have been completed or otherwise transferred to Hitachi ABB PG.

Prior to the divestment, interest expense that was not directly attributable to or related to the Company’s continuing business or discontinued business

was allocated to discontinued operations based on the ratio of net assets to be sold less debt that wa s required to be paid as a result of the planned

disposal transaction to the sum of total net assets of the Company plus con solidated debt. General corporate overhead was not allocated to discontinued

operations.

Operating results of the discontinued operations, are summarized as follows:

Three months ended

($ in millions)

Mar. 31, 2021

Mar. 31, 2020

Total revenues

–

1,941

Total cost of sales

–

(1,471)

Gross profit

–

470

Expenses

(4)

(394)

Change to net gain recognized on sale of the Power Grids business

(24)

–

Income (loss) from operations

(28)

76

Net interest and other finance expense

–

(3)

Non-operational pension (cost) credit

–

3

Income (loss) from discontinued operations before taxes

(28)

76

Income tax

–

(22)

Income (loss) from discontinued operations, net of tax

(28)

54

Of the total Income (loss) from discontinued operations before taxes in the table above, $ (28) million and $72 million in the three months ended March 31,

2021 and 2020, respectively, are attributable to the Company, while the remainder is attributable to noncontrolling interests.

Until the date of the divestment, Income from discontinued operations before taxes exclude d stranded costs which were previously able to be allocated to

the Power Grids operating segment . As a result, for the three months ended March 31, 20 20, $21 million of allocated overhead and other management

costs, which were previously included in the measure of segment profit for the Power Grids operating segment are reported as part of Corporate and

Other. In the table above, N et interest and other finance expense in the three months ended March 31, 2020, include d $9 million

of interest expense which

was recorded on an allocated basis in accordance with the Company’s accounting policy election until the divestment date. In addition, as required by U.S.

GAAP, subsequent to December 17, 2018, (the date of the original agreement to sell the Power Grids business) the Company has not record ed

depreciation or amortization on the property, plant and equipment, and intangible assets reported as discontinued operations.

Included in the reported Total revenues of the Company for the three months ended March 31, 20 20, are revenues for sales from the Company’s operating

segments to the Power Grids business of $47 million, which represent intercompa ny transactions that, prior to Power Grids being classified as a

discontinued operation, were eliminated in the Company’s consolidated financial statements (see Note 17). Subsequent to the divestment, sales to Hitachi

ABB PG are reported as third -party revenues.

13 Q1 2021 FINANCIAL INFORMATION

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 (loss) from discontinued operations, net of

tax, above.

The major components of assets and liabilities held for sale and in discontinued operations in the Company’s Consolidated Balance Sheets are

summarized as follows:

($ in millions)

Mar. 31, 2021

(1)

Dec. 31, 2020

(1)

Receivables, net

235

280

Inventories, net

4

1

Other current assets

2

1

Current assets held for sale and in discontinued operations

241

282

Accounts payable, trade

187

188

Other liabilities

414

456

Current liabilities held for sale and in discontinued operations

601

644

Other non-current liabilities

188

197

Non-current liabilities held for sale and in discontinued operations

188

197

(1) At March 31, 2021 and December 31, 2020, the balances reported as held for sale and in discontinued operations pertain to Power Grids activities and other obligations

which will remain with the Company until such time as the obligation is settled or the activities are fully wound down.

─

Note 4

Divestments and equity -accounted companies

Investments in equity -accounted companies

In connection with the divestment of its Power Grids business to Hitachi (see Note 3), the Company retained a 19.9 percent interest in the business and

obtained an option, exercisable commencing April 2023, granting it the right to require Hitachi to purchase this investment at fair value, subject to a

minimum floor price equivalent to a 10 percent discount compared to the price paid for the initial 80.1 percent . The Company has concluded that based on

its continuing involvement with the Power Grids business, including membership in its governing board of directors, it has significant influence over Hitachi

ABB PG. As a result, the investment (including the value of the option) is accounted for using the equity method.

At the date of the divestment of the Power Grids business, the fair value of Hitachi ABB PG exceeded the book value of the underlying net assets . At

March 31, 2021 and December 31, 2020, the reported value of the investment in Hitachi ABB PG includes $1,577 million and $1,597 million , respectively,

for the Company’s 19.9 percent share of this basis difference . The Company amortizes its share of these differences over the estimated remaining useful

lives of the underlying assets that gave rise to this difference, recording the amortization, net of related deferred tax benefit, as a reduction of income from

equity accounted companies. As of March 31, 202 1, the Company determined that no impairment of its equity accounted investments existed.

The carrying value of the Company’s investments in equity -accounted companies and respective percentage of ownership is as follows:

Ownership as of

Carrying value at

($ in millions, expect ownership share in %)

March 31, 2021

March 31, 2021

December 31, 2020

Hitachi ABB Power Grids Ltd

19.9%

1,678

1,710

Others

82

74

Total

1,760

1,784

In the three months ended March 31, 2021 and 2020 , the Company recorded its share of the earnings of investees accounted for under the equity method

of accounting in Other income (expense), net, as follows:

Three months ended March 31,

($ in millions)

2021

2020

Loss from equity-accounted companies, net of taxes

(3)

–

Basis difference amortization (net of deferred income tax benefit)

(32)

–

Loss from equity-accounted companies

(35)

–

14 Q1 2021 FINANCIAL INFORMATION

Divestment of the solar inverters business 

In February 2020, the Company completed the sale of its solar invert ers business for no consideration. Under the agreement, which was reached in July

2019, the Company was required to transfer $143 million of cash to the buy er on the closing date. In addition, payments totaling EUR 132 million

($145 million) are required to be transferred to the buyer from 2020 through 2025. In the y ear ended December 31, 2019, the Company recorded a loss of

$421 million , representing the excess of the carrying value, which includes a loss of $99 million arising from the cumulative translation adjustment , over

the estimated fair value of this business . During the three months ended March 31, 2020, a loss of $19 million was in cluded in “Other income (expense),

net” for changes in fair value of this business. The loss in 2020 includes the $99 million reclassification from other comprehensive income of the currency

translation adjustment related to the business.

The fair value wa s 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 inverters business acquired as part of the Power -One acquisition in 2013, was part of the Company ’s

Electrification segment. 

As this divestment does not qualify as a discontinued operation, the results of operations for this business prior to its disposal are included in the

Company’s continuing operations for all periods presented.

Including the above loss of $19 million , in the three months ended March 31, 2020, Income from continuing operations before taxes includes net loss es of

$33 million from the solar inverters business prior to its sale .

─

Note 5

Cash and equivalents, marketable securities and short -term investments

Cash and equivalents, marketable securities and short -term investments consisted of the following:

March 31, 2021

Cash and

Marketable

Gross

Gross

equivalents

securities

unrealized

unrealized

and restricted

and short-term

($ in millions)

Cost basis

gains

losses

Fair value

cash

investments

Changes in fair value 

recorded in net income

Cash

2,056

2,056

2,056

Time deposits

1,783

1,783

1,782

1

Equity securities

1,586

13

1,599

1,599

5,425

13

–

5,438

3,838

1,600

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

194

11

(2)

203

203

European government obligations

10

10

10

Corporate

69

3

(1)

71

71

273

14

(3)

284

–

284

Total

5,698

27

(3)

5,722

3,838

1,884

Of which: 

Restricted cash, current

72

Restricted cash, non-current

300

15 Q1 2021 FINANCIAL INFORMATION

December 31, 2020

Cash and

Marketable

Gross

Gross

equivalents

securities

unrealized

unrealized

and restricted

and short-term

($ in millions)

Cost basis

gains

losses

Fair value

cash

investments

Changes in fair value

recorded in net income

Cash

2,388

2,388

2,388

Time deposits

1,513

1,513

1,513

Equity securities

1,704

12

1,716

1,716

5,605

12

–

5,617

3,901

1,716

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

274

19

293

293

European government obligations

24

24

24

Corporate

69

6

75

75

367

25

–

392

–

392

Total

5,972

37

–

6,009

3,901

2,108

Of which:

Restricted cash, current

323

Restricted cash, non-current

300

─

Note 6

Derivative financial instruments

The Company is exposed to certain currency, commodity, interest rate and equity risks arising from its global operating, financing and investing activities.

The Company uses derivative instruments to reduce and manage the economic impact of these exposures.

Currency risk 

Due to the global nature of the Company’s operations, many of its subsidiaries are exposed to curr ency 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

denomin ated sales of standard products and the related foreign currency denominated purchases, the Company’s policy is to hedge up to a maximum of

100 percent of the forecasted foreign currency denominated exposures, depending on the length of the forecasted exposures. Forecasted exposures

greater than 12 months are not hedged. Forward foreign exchange contracts are the main instrument used to protect the Company against the volatility of

future cash flows (caused by changes in exchange rates) of contracted and forecasted sales and purchases denominated in foreign currencies. In

addition, within its treasury operatio ns, 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 Com pany’s policies require that its subsidiaries hedge the commodity price

risk exposures from binding contracts, as well as at least 50 percent (up to a maximum of 100 percent) of the forecasted commodity exposure over the

next 12 months or longer (up to a maximum of 18 months). Primarily swap contracts are used to manage the associated price risks of commodities.

Interest rate risk 

The Company has issued bonds at fixed rates. Interest rate swaps and cross -currency swaps are used to manage the interest rate and foreign currency

risk associated with certain debt and generally such swap s 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.

16 Q1 2021 FINANCIAL INFORMATION

Foreign exchange and interest rate derivatives

The gross notional amounts of outstanding foreign exchange and interest rate derivatives (whether designated as hedges or not) were as follows:

Type of derivative

Total notional amounts at

($ in millions)

March 31, 2021

December 31, 2020

March 31, 2020

Foreign exchange contracts

11,229

12,610

14,654

Embedded foreign exchange derivatives

1,313

1,134

975

Cross currency swaps

973

–

–

Interest rate contracts

3,122

3,227

4,195

Derivative commodity contracts

The Company uses derivatives to hedge its direct or indirect exposure to the movement in the prices of commodities which are primarily copper, silver and

aluminum. The following table shows the notional amounts of outstanding derivatives (whether designated as hedges or not), on a net basis, to reflect the

Company’s requirements for these commodities:

Type of derivative

Unit

Total notional amounts at

March 31, 2021

December 31, 2020

March 31, 2020

Copper swaps

metric tonnes

42,448

39,390

45,438

Silver swaps

ounces

2,217,821

1,966,677

2,075,488

Aluminum swaps

metric tonnes

7,450

8,112

9,770

Equity derivatives

At March 31, 2021, December 31, 2020, and March 31, 2020, the Company held 18 million, 22 million and 38 million cash-settled call options indexed to

ABB Ltd shares (conversion ratio 5:1) with a total fair value of $30 million, $21 million and $7 million, respectively. 

Cash flow hedges 

As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operations, commodity swaps to

manage its commodity risks and cash-settled call options to hedge its WAR liabilities. The Company applies cash flow hedge accounting in only limited

cases. In these cases, the effective portion of the changes in their fair value is recorde d in “Accumulated other comprehensive loss” and subsequently

reclassified into earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. For the three months ended

March, 31, 2021 and 2020, there were no significant amounts recorded for cash flow hedge accounting activities.

Fair value hedges

To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps and cross -currency swaps.

Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the cha nges in the fair value of

the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in “Interest and other finance expense”.

The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows:

Type of derivative designated

Three months ended March 31, 2021

as a fair value hedge

Gains (losses) recognized in income on

Gains (losses) recognized in income

derivatives designated as fair value hedges

on hedged item

($ in millions)

Location

Location

Interest rate contracts

Interest and other finance expense

(14)

Interest and other finance expense

15

Cross-currency swaps

Interest and other finance expense

(23)

Interest and other finance expense

22

Total

(37)

37

Type of derivative designated

Three months ended March 31, 2020

as a fair value hedge

Gains (losses) recognized in income on

Gains (losses) recognized in income

derivatives designated as fair value hedges

on hedged item

($ in millions)

Location

Location

Interest rate contracts

Interest and other finance expense

24

Interest and other finance expense

(25)

Total

24

(25)

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.

17 Q1 2021 FINANCIAL INFORMATION

The gains (losses) recognized in the Consolidated Income Statements on derivatives not designated in hedging relationships were as follows:

Type of derivative not 

Gains (losses) recognized in income

designated as a hedge

Three months ended March 31,

($ in millions)

Location

2021

2020

Foreign exchange contracts

Total revenues

(60)

(134)

Total cost of sales

(4)

76

SG&A expenses

(1)

7

8

Non-order related research and development

(1)

(1)

Interest and other finance expense

(106)

(106)

Embedded foreign exchange contracts

Total revenues

(14)

32

Total cost of sales

(1)

(4)

Commodity contracts

Total cost of sales

36

(66)

Other

Interest and other finance expense

–

(1)

Total

(143)

(196)

(1) SG&A expenses represent “Selling, general and administrative expenses”.

The fair values of derivatives included in the Consolidated Balance Sheets were as follows:

March 31, 2021

Derivative assets

Derivative liabilities

Current in

Non-current in

Current in

Non-current in

“Other current

“Other non-current

“Other current

“Other non-current

($ in millions)

assets”

assets”

liabilities”

liabilities”

Derivatives designated as hedging instruments:

Foreign exchange contracts

–

2

1

2

Interest rate contracts

4

65

–

–

Cross currency swaps

–

–

–

61

Cash-settled call options

15

15

–

–

Total

19

82

1

63

Derivatives not designated as hedging instruments:

Foreign exchange contracts

105

21

111

25

Commodity contracts

67

1

10

–

Interest rate contracts

1

–

2

–

Embedded foreign exchange derivatives

11

3

18

13

Total

184

25

141

38

Total fair value

203

107

142

101

December 31, 2020

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

2

4

Interest rate contracts

6

78

–

–

Cash-settled call options

10

11

–

–

Total

16

90

2

4

Derivatives not designated as hedging instruments:

Foreign exchange contracts

221

22

106

26

Commodity contracts

59

–

7

–

Interest rate contracts

2

–

2

–

Embedded foreign exchange derivatives

10

2

28

16

Total

292

24

143

42

Total fair value

308

114

145

46

Close- out netting agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties

on the occurrence of one or more pre-defined trigger events.

Although the Company is party to close -out netting agreements with most derivative counterparties, the fair values in the tables above and in the

Consolidated Balance Sheets at March 31, 2021, and December 31, 2020, have been presented on a gross basis.

18 Q1 2021 FINANCIAL INFORMATION

The Company’s netting agreements and other similar arrangements allow net settlements under certain conditions. At March 31, 2021, and December 31,

2020, information related to these offsetting arrangements was as follows:

($ in millions)

March 31, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

collateral

Net asset

similar arrangement

assets

in case of default

received

received

exposure

Derivatives

296

(151)

–

–

145

Total

296

(151)

–

–

145

($ in millions)

March 31, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or 

 of recognized

eligible for set-off

collateral

collateral

Net liability

similar arrangement

liabilities

in case of default

pledged

pledged

exposure

Derivatives

212

(151)

–

–

61

Total

212

(151)

–

–

61

($ in millions)

December 31, 2020

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

410

(106)

–

–

304

Total

410

(106)

–

–

304

($ in millions)

December 31, 2020

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

147

(106)

–

–

41

Total

147

(106)

–

–

41

─

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-li ved 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 liabili ties), 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 natu re 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 i nclude exchange

‑

traded equity securities, listed derivatives which are actively traded such as commodity futures,

interest rate futures and certain actively traded debt securities .

Level 2:

 Valuation inputs consist of observable inputs (other than Level 1 inputs) such as actively quoted prices for similar assets, quoted prices in

inactive markets and inputs other than quoted prices such as interest rate yield curves, credit spreads, or inputs derived from oth er observable

data by interpolation, correlation, regression or other means. The adjustments applied to quoted prices or the inputs used in valuation models

may be both observable and unobservable. In these cases, the fair value measurement is classified as Level 2 unless the unobservable portion

of the adjustment or the unobservable input to the valuation model is significant, in which case the fair value measurement would be classified as

Level 3. Assets and liabilities valued or disclosed using Level 2 inputs include investments in certain funds, certain debt securities that are not

actively traded, interest rate swaps, cross-currency interest rate swaps, commodity swaps, cash-settled call options, forward foreign exchange

contracts, foreign exchange swaps and forward rate agreements, time deposits, as well as financing receivables and debt.

Level 3:

 Valuation inputs are based on the Company’s assumptions of relevant market data (unobservable input). 

Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid-market quotes. However, for the purpose of

determining the fair value of cash-settled call options serving as hedges of the Company’s management incentive plan, bid prices are used.

When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for the financial

instrument has significantly decreased or would not be considered orderly. In such cases, the resulting changes in valuation techniques would be

disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use another valuation technique, such as

an income approach.

19 Q1 2021 FINANCIAL INFORMATION

Recurring fair value measures

The fair values of financial assets and liabilities measured at fair value on a recurring basis were as follows:

March 31, 2021

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

Securities in “Marketable securities and short-term investments”:

Equity securities

1,599

1,599

Debt securities—U.S. government obligations

203

203

Debt securities—European government obligations

10

10

Debt securities—Corporate

71

71

Securities in “Other non-current assets”:

Debt securities—U.S. government obligations

80

80

Derivative assets—current in “Other current assets”

203

203

Derivative assets—non-current in “Other non-current assets”

107

107

Total

293

1,980

–

2,273

Liabilities

Derivative liabilities—current in “Other current liabilities”

142

142

Derivative liabilities—non-current in “Other non-current liabilities”

101

101

Total

–

243

–

243

December 31, 2020

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

Securities in “Marketable securities and short-term investments”:

Equity securities

1,716

1,716

Debt securities—U.S. government obligations

293

293

Debt securities—European government obligations

24

24

Debt securities—Corporate

75

75

Derivative assets—current in “Other current assets”

308

308

Derivative assets—non-current in “Other non-current assets”

114

114

Total

317

2,213

–

2,530

Liabilities

Derivative liabilities—current in “Other current liabilities”

145

145

Derivative liabilities—non-current in “Other non-current liabilities”

46

46

Total

–

191

–

191

The Company uses the following methods and assumptions in estimating fair values of financial assets and liabilities measured at fair value on a recurring

basis:

●

 Securities in “Marketable securities and short -term investments ” and “Other non-current assets ”:

If quoted market prices in active markets for

identical assets are available, these are considered Level 1 inputs; however, when markets are not active, these inputs are considered Level 2.

If such quoted market prices are not available, fair value is determined using market prices for similar assets or present value techniques,

applying an appropriate risk-free interest rate adjusted for non -performance risk. The inputs used in present value techniques are ob servable

and fall into the Level 2 category.

●

 Derivatives

: The fair values of derivative instruments are determined using quoted prices of identical instruments from an active market, if

available (Level 1 inputs). If quoted prices are not available, price quotes for similar instruments, appropriately adjusted, or present value

techniques, based on available market data, or option pricing models are used. Cash-settled call options hedging the Company’s WAR liability

are valued based on bid prices of the equivalent listed warrant. The fair values obtained using price quotes for similar instruments or valuation

techniques represent a Level 2 input unless significant unobservable inputs are used. 

Non-recurring fair value measures 

During the three months ended March 31, 2020, the Company recorded a $19 million fair value adjustment for the solar inverters business which met the

criteria to be classified as held for sale in June 2019 and was sold in February 2020 ( see Note 4 for details ). 

Apart from the transaction above, t here were no additional significant non-recurring fair value measurements during the three months ended March 31,

2021 and 2020.

20 Q1 2021 FINANCIAL INFORMATION

Disclosure about f inancial instruments carried on a cost basis

The fair values of financial instruments carried on a cost basis were as follows:

March 31, 2021

($ in millions)

Carrying value

Level 1

Level 2

Level 3

Total fair value

Assets

Cash and equivalents (excluding securities with original 

maturities up to 3 months):

Cash

1,684

1,684

1,684

Time deposits

1,782

1,782

1,782

Restricted cash

72

72

72

Restricted cash, non-current

300

300

300

Liabilities

Short-term debt and current maturities of long-term debt

(excluding finance lease obligations)

1,311

417

894

1,311

Long-term debt (excluding finance lease obligations)

5,447

5,610

84

5,694

December 31, 2020

($ 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

1,765

1,765

1,765

Time deposits

1,513

1,513

1,513

Restricted cash

323

323

323

Restricted cash, non-current

300

300

300

Liabilities

Short-term debt and current maturities of long-term debt

(excluding finance lease obligations)

1,266

497

769

1,266

Long-term debt (excluding finance lease obligations)

4,668

4,909

89

4,998

The Company uses the following methods and assumptions in estimating fair values of financial instruments carried on a cost basis:

●

 Cash and equivalents (excluding securities with original maturities up to 3 months), Restricted cash, current and non -current, and Marketable

securities and short -term investments (excluding securities)

: The carrying amounts approximate the fair values as the items are short -term in

nature or, for cash held in banks, are equal to the deposit amount.

●

 Short-term debt and current maturities of long -term debt (excluding finance lease obligations)

: Short -term debt includes commercial paper,

bank borrowings and overdrafts. The carrying amounts of short -term debt and current maturities of long -term debt, excluding finance lease

obligations, approximate their fair values.

●

 Long-term debt (excluding finance lease obligations)

: Fair values of bonds are determined using quoted market prices (Level 1 inputs), if

available. For bonds without available quoted market prices and other long -term debt, the fair values are determined using a discounted cash

flow methodology based upon borrowing rates of similar debt instruments and reflecting appropriate adjustments for non -performance risk

(Level 2 inputs).

21 Q1 2021 FINANCIAL INFORMATION

─

Note 8

Contract assets and liabilities

The following table provides information about Contract assets and Contract liabilities:

($ in millions)

March 31, 2021

December 31, 2020

March 31, 2020

Contract assets

1,044

985

1,038

Contract liabilities

1,855

1,903

1,665

Contract assets primarily relate to the Company’s right to receive consideration for wo rk completed but for which no invoice has been issued at the

reporting date. Contract assets are transferred to receivables when rights to receive payment become unconditional. 

Contract liabilities primarily relate to up- front advances received on orders from customers as well as amounts invoiced to customers in excess of

revenues recognized , primarily for long -term projects. Contract liabilities are reduced as work is performed and as revenues are recognized .

The significant changes in the Contract assets and Contract liabilities balances were as follows:

Three months ended March 31,

2021

2020

Contract

Contract

Contract

Contract

($ in millions)

assets

liabilities

assets

liabilities

Revenue recognized, which was included in the Contract liabilities balance at Jan 1, 2021/2020

(497)

(513)

Additions to Contract liabilities - excluding amounts recognized as revenue during the period

493

526

Receivables recognized that were included in the Contract asset balance at Jan 1, 2021/2020

(275)

(276)

At

March 31, 2021

, the Company had unsatisfied performance obligations totaling $14,750 million and, of this amount, the Company expects to fulfill

approximately 66 percent of the obligations in 2021, approximately 21 percent of the obligations in 2022 and the balance thereafter.

─

Note 9

Debt

The Company’s total debt at March 31, 2021, and December 31, 2020, amounted to $6,955 million and $6, 121 million, respectively.

Short- term debt and current maturities of long -term debt 

The Company’s “Short- term debt and current maturities of long -term debt” consisted of the following:

($ in millions)

March 31, 2021

December 31, 2020

Short-term debt

239

153

Current maturities of long-term debt

1,097

1,140

Total

1,336

1,293

Short-term debt primarily represented issued commercial paper and short- term bank borrowings from various banks. At March 31, 20 21, and

December 31, 2020, $167 million and $

32

million, respectively, was outstanding under the $2 billion commercial paper progr am in the United States. No

amount was outstanding under the $2 billion Euro-commercial paper program at March 31, 2021 , or December 31, 2020.

Long-term debt

The Company’s long-term debt at March 31, 2021, and December 31, 2020, amounted to $5,619 million and $4,828 million, respectively. 

22 Q1 2021 FINANCIAL INFORMATION

Outstanding bonds (including maturities within the next 12 months) were as follows: 

March 31, 2021

December 31, 2020

(in millions)

Nominal outstanding

 Carrying value

(1)

Nominal outstanding

 Carrying value

(1)

Bonds:

4.0% USD Notes, due 2021 

USD

650

$

650

USD

650

$

649

2.25% CHF Bonds, due 2021 

CHF

350

$

375

CHF

350

$

403

2.875% USD Notes, due 2022 

USD

1,250

$

1,274

USD

1,250

$

1,280

0.625% EUR Instruments, due 2023

EUR

700

$

835

EUR

700

$

875

0.75% EUR Instruments, due 2024

EUR

750

$

901

EUR

750

$

946

0.3% CHF Notes, due 2024

CHF

280

$

296

CHF

280

$

317

3.8% USD Notes, due 2028

(2)

USD

383

$

381

USD

383

$

381

1.0% CHF Notes, due 2029

CHF

170

$

180

CHF

170

$

192

0% EUR Notes, due 2030

EUR

800

$

907

–

4.375% USD Notes, due 2042

(2)

USD

609

$

589

USD

609

$

589

Total

$

6,388

$

5,632

(1) USD carrying values include unamortized debt issuance costs, bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate.

(2) Prior to completing a cash tender offer in November 2020, the original principal amount outstanding , on each of the 3.8% USD Notes , due 2028 , and the 4.375% USD

Notes , due 2042 , was USD750 million .

In January 2021, the Company issued zero percent notes having a principal amount of EUR 800 million and due in 2030. The Company recorded net

proceeds (after underwriting fees) of EUR 791 million (equivalent to $960 million on the date of issuance). In line with the Company’s policy of reducing its

currency and interest rate exposure s, cross-currency interest rate swaps have been used to modify the characteristics of the EUR 800 million Notes, due

2030. After cons idering the impact of these cross-currency interest rate swaps , the EUR Notes, due 20 30, effectively became a floating rate U.S. dollar

obligation .

─

Note 10

Commitments and contingencies

Contingencies —Regulatory, Compliance and Legal

Regulatory

As a result of an internal investigation, the Company self-reported to the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ)

in the United States as well as to the Serious Fraud Office (SFO) in the United Kingdom concerning certain of its past dealings with Unaoil and its

subsidiaries, including alleged improper payments made by these entities to third parties. In May 2020, the SFO closed its investigation, which it originally

announced in February 2017, as the case did not meet the relevant test for prosecution . The Company continues to cooperate with the U.S. authorities as

requested. At this time, it is not possible for the Company to make an informed judgment about the outcome of this matter.

Based on findings during an internal investigation, the Company self-reporte d to the SEC and the DoJ, in the United States, to the Special Investigating

Unit (SIU) and the National Prosecuting Authority (NPA) in South Africa as well as to various authorities in other countries potential suspect payments and

other compliance concerns in connection with some of the Company’s dealings with Eskom and related persons. Many of those par ties have expressed an

interest in, or commenced an investigation into, these matters and the Company is cooperating fully with them. The Company paid $104 million to Eskom

in Dec ember 2020 as part of a full and final settlement with Eskom and the Special Investigating Unit relating to improper payments and other compliance

issues associated with the Controls and Instrumentation Contract, and its Variation Orders for Units 1 and 2 at Kusile. The Company continues to

cooperate fully with the National Prosecuting Authority in South Africa as well as other authorities in their review of the Kusile project. Although the

Company believes that there could be an unfavorable outcome in one or more of these ongoing reviews , at this time it is not possible for the Company to

make an informed judgment about the possible financial impact.

General

The Company is aware of proceedings, or the threat of proceedings, against it and others in respect of private claims by customers and other third parties

with regard to certain actual or alleged anticompetitive practices. Also, the Company is subject to other claims and legal proceedings, as well as

investigations carried out by various law enforcement authorities. With respect to the above-mentioned claims, regulatory matters, and any related

proceedings, the Company will bear the related costs, including costs necessary to resolve them.

Liabilities recognized

At March 31, 2021, and December 31, 2020, the Company had aggregate liabilities of $98 million and $100 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 re asonably predict, the outcome of certain matters and as it is not

possible, based on information currently available to management, to estimate the maximum potential liability on other matters, there could be adverse

outcomes beyond the amounts accrued.

23 Q1 2021 FINANCIAL INFORMATION

Guarantees 

General

The following table provides quantitative data regarding the Company’s third- party guarantees. The maximum potential payments represent a “worst -case

scenario”, and do not reflect management’s expected outcomes.

Maximum potential payments

($ in millions)

March 31, 2021

December 31, 2020

Performance guarantees

5,815

6,726

Financial guarantees

344

339

Indemnification guarantees

(1)

127

177

Total

(2)

6,286

7,242

(1) Certain indemnifications provided to Hitachi in connection with the divestment of Power Grids are without limit.

(2) Maximum potential payments include amounts in both continuing and discontinued operations .

The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects the Company’s best estimate of future payments, which it may

incur as part of fulfilling its guarantee obligations. In respect of the above guarantees, the carrying amounts of liabilities at March 31, 2021, and

December 31, 2020, amounted to $

127

 million and $

135

 million, respectively, which is included in discontinued operations .

The Company is party to various guarantees providing financial or performance assurances to certain third parties. These guarantees, which have various

maturities up to 20 35, 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 contra ct 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 specif ied time. If

the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. The original maturity dates for the

majority of these performance guarantees range from one to ten years.

In conjunction with the divestment of the high-voltage cable and cables accessories businesses, the Company has entered into various performance

guarantees with other parties with respect to certain liabilities of the divested business. At March 31, 2021, and December 31, 2020, the maximum

potential payable under these guarantees amounts to $

945

 million and $994 million, respectively, and these guarantees have various maturities ranging

from one to ten years.

The Company retained obligations for financial, performance and indemnification guarantees related to the Power Grids business sold on July 1, 2020

(see Note

3 for details). The performance and financial guarantees have been indemnified by Hitachi, at the same proportion of its ownership in Hitachi

ABB Power Grids (80.1 percent). These guarantees, which have various maturities up to 2035, primarily consist of bank guarantees, standby letters of

credit , business performance guarantees and other trade- related guarantees, the majority of which have original maturit y dates ranging from one to ten

years. The maximum amount payable under the guarantees at March 31, 2021, and December 31, 2020, are approximately $4.7 billion and $5.5 billion,

respectively , and the carrying amounts of liabilities (recorded in discontinued operations) at March 31,2021, and December 31, 2020 amounted to

$

127

 million and $135 million , respectively .

Commercial commitments

In addition, in the normal course of bidding for and executing certain projects, the Company has entered into standby letters of credit, bid/performance

bonds and surety bonds (collectively “performance bonds”) with various financial institutions. Customers can draw on such performance bonds in the

event that the Company does not fulfill its contractual obligations. The Company would then have an obligation to reimburse the financial institution for

amounts paid under the performance bonds. At March 31, 2021, and December 31, 2020, the total outstanding performance bonds aggregated to

$

4.0

 billion and $4.3 billion, respectively, of which $0.3 billion and $0. 3 billion , respectively, relate to discontinued operations. There have been no

significant amounts reimbursed to financial institutions under these types of arrangements in the three months ended March 31, 2021 and 2020.

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)

2021

2020

Balance at January 1,

1,035

816

Net change in warranties due to acquisitions, divestments and liabilities held for sale

(1)

1

7

Claims paid in cash or in kind

(54)

(52)

Net increase in provision for changes in estimates, warranties issued and warranties expired

63

28

Exchange rate differences

(33)

(29)

Balance at March 31,

1,012

770

(1) Includes adjustments to the initial purchase price allocation recorded during the measurement period.

─

Note 11

Income taxes

In calculating income tax expense, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstance known at each

interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as

compared to those forecasted at the beginning of the year and each interim period thereafter.

The effective tax rate of 31.4 percent in

the three months ended March 31, 2021, was

higher than the effective tax rate of 19.5 percent in thr ee months

ended March 31, 2020, primarily because 2020 included a net benefit from a favorable resolution of an uncertain tax position partially offset by increases

to the valuation allowance in certain countries .

24 Q1 2021 FINANCIAL INFORMATION

─

Note 12

Employee benefits

The Company operates defined benefit pension plans, defined contribution pension plans, and termination indemnity plans, in accordance with local

regulations and practices. These plans cover a large portion of the Company’s employees and provide benefits to employees in the event of death,

disability, retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement

benefit plans including postretirement health care benefits, and other employee -related benefits for active employees including long-service award plans.

The measurement date used for the Company’s employee benefit plans is December 31. The funding policies of the Company’s plans are consistent with

the local government and tax requirements.

The following tables include amounts relating to defined benefit pension plans and other postretirement benefits for 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

Switzerland

International

benefits

Three months ended March 31,

2021

2020

2021

2020

2021

2020

Operational pension cost:

Service cost

15

22

10

27

–

–

Operational pension cost

15

22

10

27

–

–

Non-operational pension cost (credit):

Interest cost

(1)

–

18

32

–

1

Expected return on plan assets

(29)

(31)

(47)

(63)

–

–

Amortization of prior service cost (credit)

(2)

(4)

–

1

–

(1)

Amortization of net actuarial loss

–

2

17

25

–

(1)

Curtailments, settlements and special termination benefits

–

–

(6)

–

–

–

Non-operational pension cost (credit)

(32)

(33)

(18)

(5)

–

(1)

Net periodic benefit cost (credit)

(17)

(11)

(8)

22

–

(1)

The components of net periodic benefit cost other than the service cost component are included in the line “Non-operational pension (cost) credit” in the

income statement. Net periodic benefit cost includes $12 million for the three months ended March 31, 2020, related to discontinued operations.

Employer contributions were as follows:

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Three months ended March 31,

2021

2020

2021

2020

2021

2020

Total contributions to defined benefit pension and 

other postretirement benefit plans

15

24

(3)

21

1

1

Of which, discretionary contributions to defined benefit

pension plans

–

–

(9)

–

–

–

The Company expects to make contributions totaling approximately $165 million and $8

million to its defined pension plans and other postretirement

benefit plans, re spectively, for the full year 2021.

─

Note 13

Stockholder's equity

At the Annual General Meeting of Shareholders (AGM) on March 25, 2021, shareholders approved the proposal of the Board of Directors to distribute

0.80 Swiss francs per share to shareholders. The declared dividend amounted to $1,730 million , with the Company disburs ing a portion in March and the

remaining amounts in April.

In March 2021, the Company completed its initial share buyback program which was launched in July 2020. The share buyback program was executed on

a second trading line on the SIX Swiss Exchange . Through this buyback program, the Company purchased a total of approximately 129 million shares for

approximately $3.5 billion, of which 20 mill ion shares were purchased in the first quarter of 2021 (resulting in an increase in Treasury stock of

$628 million ). At the AGM on March 25, 2021, share holders approved the cancellation of 115 million of the shares purchased under this buyback program.

In addition to the initial share buyback program, the Company purchased 22 million of its own shares on the open market in the first quarter of 2021,

mainly for use in connection with its employee share plans, resulting in an increase in Treasury stock of $672 million.

During the first quarter of 2021, the Company delivered, out of treasury stock, 35 million shares in connection with its Management Incentive Plan.

25 Q1 2021 FINANCIAL INFORMATION

In March 2021, the Company announced a follow -up share buyback program of up to $4.3 billion . This buyback program , which was launched in

April 2021 , is being executed on a second trading line on the SIX Swiss Exchange and is planned to run until the Company’s AGM in March 202 2. At the

March 2022 AGM, the Company intends to request shareholder approval to cancel the shares purchas ed through this follow -up share buyback program as

well as those shares purchased under the initial share buyback program that were not proposed for cancellation at the Company’s AGM in March 2021 . 

─

Note 14

Earnings per shar e

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

Three months ended March 31,

($ in millions, except per share data in $)

2021

2020

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

530

325

Income (loss) from discontinued operations, net of tax

(28)

51

Net income

502

376

Weighted-average number of shares outstanding (in millions)

2,015

2,134

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

Diluted earnings per share

Three months ended March 31,

($ in millions, except per share data in $)

2021

2020

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

530

325

Income (loss) from discontinued operations, net of tax

(28)

51

Net income

502

376

Weighted-average number of shares outstanding (in millions)

2,015

2,134

Effect of dilutive securities:

Call options and shares

19

4

Adjusted weighted-average number of shares outstanding (in millions)

2,034

2,138

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.26

0.15

Income (loss) from discontinued operations, net of tax

(0.01)

0.02

Net income

0.25

0.18

26 Q1 2021 FINANCIAL INFORMATION

─

Note 15

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

Foreign currency

(losses) on

other

Derivative

translation

available-for-sale

postretirement

instruments

($ in millions)

adjustments

securities

plan adjustments

and hedges

Total OCI

Balance at January 1, 2020

(3,450)

10

(2,145)

(5)

(5,590)

Other comprehensive (loss) income:

Other comprehensive (loss) income

before reclassifications

(696)

9

74

(19)

(632)

Amounts reclassified from OCI

99

–

16

10

125

Total other comprehensive (loss) income

(597)

9

90

(9)

(507)

Less:

Amounts attributable to

noncontrolling interests

(8)

–

–

–

(8)

Balance at March 31, 2020

(4,039)

19

(2,055)

(14)

(6,089)

Unrealized gains

Pension and

Foreign currency

(losses) on

other

Derivative

translation

available-for-sale

postretirement

instruments

($ in millions)

adjustments

securities

plan adjustments

and hedges

Total OCI

Balance at January 1, 2021

(2,460)

17

(1,556)

(3)

(4,002)

Other comprehensive (loss) income:

Other comprehensive (loss) income

before reclassifications

(270)

(11)

56

12

(213)

Amounts reclassified from OCI

–

(1)

25

(9)

15

Total other comprehensive (loss) income

(270)

(12)

81

3

(198)

Less:

Amounts attributable to

noncontrolling interests

3

–

–

–

3

Balance at March 31, 2021

(2,733)

5

(1,475)

–

(4,203)

The following table reflects amounts reclassified out of OCI in respect of Foreign currency translation adjustments and Pension and other postretirement

plan adjustments:

($ in millions)

Three months ended March 31,

Details about OCI components

Location of (gains) losses reclassified from OCI

2021

2020

Foreign currency translation adjustments:

Translation loss on solar inverters business (see Note 4)

Other income (expense), net

–

99

Pension and other postretirement plan adjustments:

Amortization of prior service cost

Non-operational pension (cost) credit

(1)

(2)

(4)

Amortization of net actuarial loss

Non-operational pension (cost) credit

(1)

11

26

Total before tax

9

22

Tax

Provision for taxes

16

(6)

Amounts reclassified from OCI

25

16

(1) Amounts include total credits of $3 million for the three months ended March 31, 20 20, reclassified from OCI to Income from discontinued operations.

The amounts in respect of Unrealized gains (losses) on available -for-sale securities and Derivative instruments and hedges were not significant for the

three months ended March 31, 2021 and 2020.

27 Q1 2021 FINANCIAL INFORMATION

─

Note 16

Restructuring and related expenses

OS program

From December 2018 to December 2020, the Company executed a two-year restructuring program with the objective to simplify the Company’s business

model and structure through the implementation of a new organizational structure driven by its businesses. The program resulted in the elimination of the

country and regional structures within the previous matrix organization, including the elimination of the three regional Executive Committee roles. The

operating businesses are now responsible for both their customer -facing activities and business support functi ons, while the remaining Group-level

corporate activities primarily focus on Group strategy, portfolio and performance management and capital allocation. 

As of December 31, 2020, the Company had incurred substantially all costs related to the OS program.

Liabilities associated with the OS program are included primarily in Other provisions. The following table shows the activity from the beginning of the program to

March 31, 2021, by expense type:

Employee

Contract settlement, 

($ in millions)

severance costs

loss order and other costs

Total

Liability at January 1, 2018

–

–

–

Expenses

65

–

65

Liability at December 31, 2018

65

–

65

Expenses 

111

1

112

Cash payments 

(44)

(1)

(45)

Change in estimates 

(30)

–

(30)

Exchange rate differences 

(3)

–

(3)

Liability at December 31, 2019

99

–

99

Expenses 

119

17

136

Cash payments 

(91)

(15)

(106)

Change in estimates 

(10)

–

(10)

Exchange rate differences 

4

–

4

Liability at December 31, 2020

121

2

123

Expenses 

8

1

9

Cash payments 

(29)

(1)

(30)

Change in estimates 

(3)

–

(3)

Exchange rate differences 

(4)

–

(4)

Liability at March 31, 2021

93

2

95

The following table outlines the costs incurred in the three months ended March 31, 2020, and the cumulat ive net costs incurred to December 31, 2020 :

Net cost incurred

Cumulative net 

Three months ended

cost incurred up to 

($ in millions)

March 31, 2020

December 31, 2020

Electrification

2

85

Motion

–

25

Process Automation

(1)

–

61

Robotics & Discrete Automation

6

18

Corporate and Other 

10

114

Total 

18

303

(1) Formerly named the Industrial Automation operating segment .

The Company recorded the following expenses, net of changes in estimates, under this program:

Cumulative costs

Three months ended

 incurred up to

($ in millions)

March 31, 2020

(1)

December 31, 2020

Employee severance costs

15

255

Estimated contract settlement, loss order and other costs

2

18

Inventory and long-lived asset impairments

1

30

Total

18

303

(1) Of which $3 million was recorded in Total cost of sales and $15 million in Other Income (expense ), net.

28 Q1 2021 FINANCIAL INFORMATION

Other restructuring -related activities

In addition, during 2021 and 2020, the Company executed various other restructuring-related activities and incurred the following charges, net of changes in

estimates: 

Three months ended March 31,

($ in millions)

2021

2020

Employee severance costs 

20

4

Estimated contract settlement, loss order and other costs

9

1

Inventory and long-lived asset impairments 

–

1

Total

29

6

Expenses associated with these activities are recorded in the following line items in the Consolidated Income Statements:

Three months ended March 31,

($ in millions)

2021

2020

Total cost of sales

14

–

Selling, general and administrative expenses

2

5

Other income (expenses), net

13

1

Total

29

6

At March 31, 2021, and December 31, 2020, $222 million and $233 million, respectively, were recorded for other restructuring-related liabilities and were included

primarily in Other provisions.

─

Note 17

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 the following segments, based on products and services:

Electrification, Motion, Process Automation, and Robotics & Discrete Automation. The remaining operations of the Company are included in Corporate and

Other. 

Effective January 1, 2021, the Industrial Automation segment was renamed the Process Automation segment. In addition, the Comp any changed its

method of allocating real estate assets to its operating segments whereby these assets are now accounted for directly in the individual operating segment

which utilizes the asset rather than as a cost recharged to the operating segment from Corpora te and Other. As a result, while this change had no impact

on segment revenues or profits (Operational EBITA), certain real estate assets previously reported within Corporate and Other have been allocated to the

total segment assets of each individual operating segment . Total assets at December 31, 20 20, has been recast to reflect this allocation change.

A description of the types of products and services provided by each reportable segment is as follows:

●

 Electrification:

manufactures and sells electrical products and solutions which are designed to provide safe, smart and sustainable electrical

flow from the substation to the socket. The portfolio of increasingly digital and connected solutions includes electric vehicle charging

infrastructure, renewable power solutions, modular substation packages, distribution automation products, switchbo ard 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 . The products and services are delivered through six operating Divisions: Distribution Solutions, Smart Power, Smart

Buildings, E-mobility , Installation Products and Power Conversion.

●

 Motion:

 manufactures and sells drives, motors, generators, traction converters and mechanical power transmission products that are driving the

low-carbon future for industries, cities, infrastructure and transportation. These products, digital technology and related services enable

industrial customers to increase energy efficiency, improve safety and reliability, and achieve precise control of their processes. Building on

over 130 years of cumulative experience in electric powertrains, the Business Area combines domain expertise and technology to deliver the

optimum solution for a wide range of applications in all industrial segments. In addition, the Business Area, along with partners, has an

unmatched global service presence. These products and services are delivered through eight operating Divisions: Large Motors and

Generators, IEC LV Motors, NEMA Motors , Drive Products, System Drives, Service, Traction and Mechani cal Power Transmission .

●

 Process Automation:

 develops and sells a broad range of industry -specific, integrated automation and electrification systems and solutions, as

well as digital solutions, lifecycle services and artificial intelligence applications for the process and hybrid industries. Products and solutions

include process and discrete control technologies, advanced process control software and manufacturing execution systems, sensing,

measureme nt and analytical instrumentation, electric ship propulsion systems and large turbochargers. In addition, the Business Area offers a

comprehensive range of services ranging from repair to advanced services such as remote monitoring, preventive maintenance, asset

performance management and cybersecurity services. The products and services are delivered through five operating Divisions: Energy

Industries, Process Industries, Marine & Ports, Turbocharging, and Measurement & Analytics.

●

 Robotics & Discrete Automation:

 delivers its products , solutions and services through two operating Divisions: Robotics and Machine

Automation. Robotics includes : industrial robots, software, robotic solutions and systems, field services, spare parts, and digital services.

Machine Automation specializes in solutions based on its programmable logic controllers (PLC), industrial PCs (IPC), servo motion, transport

systems and machine vision. Both D ivisions offer engineering and simulation software as well as a comprehensive range of digital solutions.

Corporate and Other:

 includes headquarters, the Company’s corporate real estate activities, Corporate Treasury Operations, historical operating activities

of certain divested businesses and other non-core operating activities .

29 Q1 2021 FINANCIAL INFORMATION

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 acquisition (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,

●

 other income/expense relating to the Power Grids joint venture ,

●

 certain other non -operational items, as well as 

●

 foreign exchange/commodity timing differences in inco me 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 and certain

other fair value changes, as well as other items which are determined by management on a case -by-case basis.

The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments.

Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at the Company’s consolidated

Operational EBITA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at current market prices.

The following tables present disaggregated segment revenues from contracts with customers , Operational EBITA, and the reconciliations of consolidated

Operational EBITA to Income from continuing operations before taxes for the three months ended March 31, 2021 and 2020, as well as total assets at

March 31, 2021, and December 31, 2020.

Three months ended March 31, 2021

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

Automation

and Other

Total

Geographical markets 

Europe 

1,100

469

563

418

1

2,551

The Americas 

1,058

588

290

106

1

2,043

of which: United States

800

494

163

75

–

1,532

Asia, Middle East and Africa 

929

503

542

326

7

2,307

of which: China

488

264

175

249

–

1,176

3,087

1,560

1,395

850

9

6,901

Product type 

Products

2,620

1,349

382

526

7

4,884

Systems

269

–

348

204

2

823

Services and other

198

211

665

120

–

1,194

3,087

1,560

1,395

850

9

6,901

Third-party revenues

3,087

1,560

1,395

850

9

6,901

Intersegment revenues

53

107

12

3

(175)

–

Total revenues

(2)

3,140

1,667

1,407

853

(166)

6,901

30 Q1 2021 FINANCIAL INFORMATION

Three months ended March 31, 2020

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

Automation

and Other

Total

Geographical markets 

Europe 

964

451

577

353

26

2,371

The Americas 

1,031

569

390

103

–

2,092

of which: United States

801

492

247

70

–

1,610

Asia, Middle East and Africa 

678

368

459

198

3

1,706

of which: China

283

154

110

119

–

666

2,673

1,388

1,426

654

28

6,169

Product type 

Products

2,362

1,198

306

387

25

4,278

Systems

112

–

396

157

3

668

Services and other

199

190

724

110

–

1,223

2,673

1,388

1,426

654

28

6,169

Third-party revenues

2,673

1,388

1,426

654

28

6,169

Intersegment revenues

(1)

100

122

36

17

(228)

47

Total revenues

(2)

2,773

1,510

1,462

671

(200)

6,216

(1) Intersegment revenues during three months ended March 3 1, 2020, include sales to the Power Grids business which is presented as discontinued operations and therefore

these sales are not eliminated from total revenues .

(2) Due to rounding, numbers presented may not add to the totals provided.

Three months ended

March 31,

($ in millions)

2021

2020

Operational EBITA:

Electrification

511

318

Motion

289

230

Process Automation

155

144

Robotics & Discrete Automation

105

59

Corporate and Other

‒

Non-core business activities

(22)

(11)

‒ Stranded corporate costs

–

(21)

‒ Corporate costs and intersegment elimination

(79)

(83)

Total

959

636

Acquisition-related amortization

(65)

(65)

Restructuring, related and implementation costs

(1)

(35)

(40)

Changes in obligations related to divested businesses

(2)

–

Changes in pre-acquisition estimates

(6)

–

Gains and losses from sale of businesses

(3)

(1)

Fair value adjustment on assets and liabilities held for sale

–

(19)

Acquisition- and divestment-related expenses and integration costs

(10)

(11)

Other income/expense relating to the Power Grids joint venture

(17)

–

Foreign exchange/commodity timing differences in income from operations:

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

(48)

(74)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

2

(4)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

34

(2)

Certain other non-operational items:

Costs for divestment of Power Grids

(3)

(44)

Regulatory, compliance and legal costs

(2)

–

Business transformation costs

(2)

(20)

(7)

Assets write downs/impairments & certain other fair value changes

18

–

Other non-operational items

(5)

4

Income from operations

797

373

Interest and dividend income

11

18

Interest and other finance expense

(55)

(22)

Non-operational pension (cost) credit

50

36

Income from continuing operations before taxes

803

405

(1) Amount include s implementat ion costs in relation to the OS program of $16 million for the three months ended March 31, 2020.

(2) Amount include s ABB Way process transformation costs of $15 million for the three months ended March 31 , 2021.

31 Q1 2021 FINANCIAL INFORMATION

Total assets

(1), (2)

($ in millions)

March 31, 2021

December 31, 2020

Electrification

12,775

12,800

Motion

6,481

6,495

Process Automation

4,881

5,008

Robotics & Discrete Automation

4,658

4,794

Corporate and Other

11,425

11,991

Consolidated

40,220

41,088

(1) Total assets are after intersegment eliminations and therefore reflect third-party assets only.

(2) At March 31, 2021, and December 31, 2020, respectively, Corporate and Other includes $241 million and $282 million of assets in the Power Grids business which is

reported as discontinued operations (see Note 3). In addition, at March 31, 2021, and December 31, 2020 , Corporate and Other includes $1,678 million and $1, 710 million ,

respectively, related to the equity investment in Hitachi ABB Power Grids Ltd (see Note 4).

32 Q1 2021 FINANCIAL INFORMATION

33 Q1 2021 FINA NCIAL 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 Commissi on (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 three months ended March 31, 2021.

On January 1, 2020, the Company adopted a new accounting update for the measurement of credit losses on financial instruments . Consistent with the

method of adoption elected, comparable information has not been restated to reflect the adoption of this new standard and accounting update and

continues to be measured and reported under the accounting standard in effect for those periods 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 Area

Q1 2021 compared to Q1 2020

Order growth rate

Revenue growth rate

US$

Foreign

US$

Foreign

(as

exchange

Portfolio

(as

exchange

Portfolio

Business Area

reported)

impact

changes

Comparable

reported)

impact

changes

Comparable

Electrification 

13%

-5%

1%

9%

13%

-5%

3%

11%

Motion

1%

-5%

0%

-4%

10%

-4%

0%

6%

Process Automation

-6%

-5%

0%

-11%

-4%

-5%

0%

-9%

Robotics & Discrete Automation

4%

-7%

0%

-3%

27%

-8%

0%

19%

ABB Group

6%

-5%

0%

1%

11%

-5%

1%

7%

Regional comparable growth rate reconciliation

Q1 2021 compared to Q1 2020

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

10%

-8%

1%

3%

8%

-8%

1%

1%

The Americas

0%

0%

0%

0%

-2%

-1%

1%

-2%

Asia, Middle East and Africa

8%

-6%

0%

2%

35%

-7%

2%

30%

ABB Group

6%

-5%

0%

1%

11%

-5%

1%

7%

34 Q1 2021 FINA NCIAL INFORMATION

Order backlog growth rate reconciliation

March 31, 2021 compared to March 31, 2020

US$

Foreign

(as

exchange

Portfolio

Business Area

reported)

impact

changes

Comparable

Electrification 

7%

-4%

0%

3%

Motion

5%

-6%

0%

-1%

Process Automation

14%

-8%

0%

6%

Robotics & Discrete Automation

-6%

-6%

0%

-12%

ABB Group

8%

-6%

0%

2%

Other growth rate reconciliations

Q1 2021 compared to Q1 2020

US$

Foreign

(as

exchange 

Portfolio

reported)

impact

changes

Comparable

Service orders

-2%

-4%

0%

-6%

Service revenues

-2%

-5%

0%

-7%

35 Q1 2021 FINA NCIAL INFORMATION

Operational EBITA as % of operational revenues (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,

●

 other income/expense relating to the Power Grids joint venture ,

●

 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 movemen ts 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 (including

impairment of goodwill) and certain other fair value changes, 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.

Other income/expense relating to the Power Grids joint venture

Other income/expense relating to the Power Grids joint venture consists of amounts recorded in Income from continuing operations before taxes relating

to the divested Power Grids business including the income/loss under the equity method for the investment in Hitachi ABB Power Grids Ltd. (Hitachi ABB

PG), amortization of deferred brand income as well as changes in value of other obligations relating to the divestment.

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) unrealize d 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

Three months ended March 31,

($ in millions)

2021

2020

Operational EBITA

959

636

Acquisition-related amortization

(65)

(65)

Restructuring, related and implementation costs

(1)

(35)

(40)

Changes in obligations related to divested businesses

(2)

–

Changes in pre-acquisition estimates

(6)

–

Gains and losses from sale of businesses

(3)

(1)

Fair value adjustment on assets and liabilities held for sale

–

(19)

Acquisition- and divestment-related expenses and integration costs

(10)

(11)

Other income/expense relating to the Power Grids joint venture

(17)

–

Certain other non-operational items

(12)

(47)

Foreign exchange/commodity timing differences in income from operations

(12)

(80)

Income from operations

797

373

Interest and dividend income

11

18

Interest and other finance expense

(55)

(22)

Non-operational pension (cost) credit

50

36

Income from continuing operations before taxes

803

405

Income tax expense

(252)

(79)

Income from continuing operations, net of tax

551

326

Income (loss) from discontinued operations, net of tax

(28)

54

Net income

523

380

(1) Amounts include implementation costs in relation to the OS program of $16 million for the three months ended March 31, 2020 .

36 Q1 2021 FINA NCIAL INFORMATION

Reconciliation of Operational EBITA margin by business

Three months ended March 31, 2021

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

Automation

elimination

Consolidated

Total revenues

3,140

1,667

1,407

853

(166)

6,901

Foreign exchange/commodity timing

differences in total revenues:

Unrealized gains and losses

on derivatives

29

27

12

5

4

77

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

–

–

(2)

(1)

–

(3)

Unrealized foreign exchange movements

on receivables (and related assets)

(19)

(8)

(5)

(7)

(2)

(41)

Operational revenues

3,150

1,686

1,412

850

(164)

6,934

Income (loss) from operations

440

265

147

82

(137)

797

Acquisition-related amortization

29

13

1

20

2

65

Restructuring, related and

implementation costs

17

1

3

5

9

35

Changes in obligations related to

divested businesses

–

–

–

–

2

2

Changes in pre-acquisition estimates

6

–

–

–

–

6

Gains and losses from sale of businesses

3

–

–

–

–

3

Acquisition- and divestment-related expenses

and integration costs

6

3

1

–

–

10

Other income/expense relating to the 

Power Grids joint venture

–

–

–

–

17

17

Certain other non-operational items

(6)

–

–

–

18

12

Foreign exchange/commodity timing 

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities, 

embedded derivatives)

25

14

10

1

(2)

48

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

–

–

(1)

–

(1)

(2)

Unrealized foreign exchange movements 

on receivables/payables

(and related assets/liabilities)

(9)

(7)

(6)

(3)

(9)

(34)

Operational EBITA

511

289

155

105

(101)

959

Operational EBITA margin (%)

16.2%

17.1%

11.0%

12.4%

n.a.

13.8%

In the three months ended March 31, 2021, Certain other non -operational items in the table above includes the following:

Three months ended March 31, 2021

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

Automation

and Other

Consolidated

Certain other non-operational items:

Costs for divestment of Power Grids

–

–

–

–

3

3

Regulatory, compliance and legal costs

–

–

–

–

2

2

Asset write downs/impairments and 

certain other fair value changes

(9)

–

–

–

(9)

(18)

Business transformation costs

(1)

3

–

–

–

17

20

Other non-operational items

(1)

–

1

–

5

5

Total

(7)

–

1

–

18

12

(1) Amount s include ABB Way process transformation costs of $15 million for the three months ended March 31, 2021.

37 Q1 2021 FINA NCIAL INFORMATION

Three months ended March 31, 2020

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

Automation

elimination

Consolidated

Total revenues

2,773

1,510

1,462

671

(200)

6,216

Foreign exchange/commodity timing 

differences in total revenues:

Unrealized gains and losses

on derivatives

38

10

29

6

3

86

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

1

–

8

–

(2)

7

Unrealized foreign exchange movements

on receivables (and related assets)

(29)

(13)

(20)

(8)

2

(68)

Operational revenues

2,783

1,507

1,479

669

(197)

6,241

Income (loss) from operations

199

191

124

32

(173)

373

Acquisition-related amortization

28

13

1

19

4

65

Restructuring, related and

implementation costs

15

2

3

7

13

40

Gains and losses from sale of businesses

1

–

–

–

–

1

Fair value adjustment on assets and liabilities

held for sale

19

–

–

–

–

19

Acquisition- and divestment-related expenses

and integration costs

11

–

–

–

–

11

Certain other non-operational items

–

5

–

1

41

47

Foreign exchange/commodity timing 

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities, 

embedded derivatives)

42

19

18

2

(7)

74

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

–

–

6

–

(2)

4

Unrealized foreign exchange movements 

on receivables/payables

(and related assets/liabilities)

3

–

(8)

(2)

9

2

Operational EBITA

318

230

144

59

(115)

636

Operational EBITA margin (%)

11.4%

15.3%

9.7%

8.8%

n.a.

10.2%

In the three months ended March 31, 2020, Certain other non -operational items in the table above includes the following:

Three months ended March 31, 2020

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

Automation

and Other

Consolidated

Certain other non-operational items:

Costs for planned divestment of Power Grids

–

–

–

–

44

44

Business transformation costs

–

4

–

1

2

7

Other non-operational items

–

1

–

–

(5)

(4)

Total

–

5

–

1

41

47

38 Q1 2021 FINA NCIAL INFORMATION

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, Restricted cash (current and non -current) and Marketable securities and short -term

investments.

Reconciliation

($ in millions)

March 31, 2021

December 31, 2020

Short-term debt and current maturities of long-term debt

1,336

1,293

Long-term debt

5,619

4,828

Total debt (gross debt)

6,955

6,121

Cash and equivalents

3,466

3,278

Restricted cash - current

72

323

Marketable securities and short-term investments

1,884

2,108

Restricted cash - non-current

300

300

Cash and marketable securities

5,722

6,009

Net debt

1,233

112

Net debt/EBITDA Ratio

Definition 

Net debt/EBITDA

Net debt/EBITDA is defined as Net debt divided by EBITDA.

EBITDA

EBITDA is defined as Income from operations for the trailing twelve months preceding the balance sheet date before depreciation and amortization

for the same trai ling twelve -month period. 

Reconciliation

($ in millions, unless otherwise indicated)

March 31, 2021

March 31, 2020

Income from operations for the three months ended

March 31, 2021/2020

797

373

December 31, 2020/2019

578

648

September 30, 2020/2019

71

577

June 30, 2020/2019

571

123

Depreciation and Amortization for the three months ended

March 31, 2021/2020

227

227

December 31, 2020/2019

229

246

September 30, 2020/2019

231

235

June 30, 2020/2019

228

249

EBITDA 

2,932

2,678

Net debt (as defined above)

1,233

6,221

Net debt / EBITDA

0.4

2.3

($ in millions, unless otherwise indicated)

June 30, 2020

Income from operations for the three months ended

June 30, 2020

571

March 31, 2020

373

December 31, 2019

648

September 30, 2019

577

Depreciation and Amortization for the three months ended

June 30, 2020

228

March 31, 2020

227

December 31, 2019

246

September 30, 2019

235

EBITDA 

3,105

Net debt (as defined above)

7,615

Net debt / EBITDA

2.5

39 Q1 2021 FINA NCIAL INFORMATION

Net debt/Equity Ratio

Definition 

Net debt/Equity

Net debt/ Equity is defined as Net debt divided by E quity .

Equity

Equity is defined as Total stockholders’ equity . 

Reconciliation

($ in millions, unless otherwise indicated)

Q1 2021

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Total stockholders equity

14,059

12,032

12,575

17,030

15,999

Net debt (as defined above)

1,233

6,221

7,615

(935)

112

Net debt / Equity

0.09

0.52

0.61

-0.05

0.01

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 primari ly: (a) income taxes payable, (b) current derivative liabilities, (c) pens ion and other

employee benefits,

(d) payables under the share buyback program and (e) liabilities related to the divestment of the Power Grids business ); and including

the amounts related to these accounts which have been presented as either assets or liabilities held for sale but excluding any amounts included in

discontinued operations .

Adjusted revenues for the trailing twelve months

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 ann ualizing revenues of certain acquisitions which were completed in

the same trailing twelve -month period.

Reconciliation

($ in millions, unless otherwise indicated)

March 31, 2021

March 31, 2020

Net working capital:

Receivables, net

6,663

6,288

Contract assets

1,044

1,038

Inventories, net

4,475

4,358

Prepaid expenses

241

266

Accounts payable, trade

(4,453)

(4,170)

Contract liabilities

(1,855)

(1,665)

Other current liabilities

(1)

(3,211)

(2,797)

Net working capital

2,904

3,318

Total revenues for the three months ended:

March 31, 2021 / 2020

6,901

6,216

December 31, 2020 / 2019

7,182

7,068

September 30, 2020 / 2019

6,582

6,892

June 30, 2020 / 2019

6,154

7,171

Adjustment to annualize/eliminate revenues of certain acquisitions/divestments

–

(404)

Adjusted revenues for the trailing twelve months

26,819

26,943

Net working capital as a percentage of revenues (%)

10.8%

12.3%

(1) Amounts exclude $710 million and $717 million at March 31, 2021 and 2020, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities,

(c) pension and other employee benefits and (d) liabilities related to the divestment of the Power Grids business .

40 Q1 2021 FINA NCIAL 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 free cash flow divided by Adjusted net income attributable to ABB

Adjusted net income attributable to ABB

Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodwill, (ii) losses from

extinguishment of debt, and (iii) gain on the sale of the Power Grids business included in discontinued operations .

Free cash flow

Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible assets,

and (ii) proceeds from sales of propert y, plant and equipment .

Free cash flow for the trailing twelve months

Free cash flow for the trailing twelve months includes 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 (as adjusted) 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)

March 31, 2021

December 31, 2020

Net cash provided by operating activities – continuing operations

2,794

1,875

Adjusted for the effects of continuing operations:

Purchases of property, plant and equipment and intangible assets

(673)

(694)

Proceeds from sale of property, plant and equipment

111

114

Free cash flow from continuing operations

2,232

1,295

Net cash provided by (used in) operating activities – discontinued operations

19

(182)

Adjusted for the effects of discontinued operations:

Purchases of property, plant and equipment and intangible assets

(75)

(108)

Proceeds from sale of property, plant and equipment

–

1

Free cash flow

2,176

1,006

Adjusted net income attributable to ABB

(1)

628

478

Free cash flow conversion to net income

346%

210%

(1) Adjusted net income attributable to ABB for the year ended December 31, 2020, is adjusted to exclude goodwill impairment charges of $311 million, loss from

extinguishment of debt of $162 million and the gain on the sale of the Power Grids business included in discontinued operations of $5,141 million.

Reconciliation of the trailing twelve months to March 31, 2021

Continuing operations

Discontinued operations

($ in millions)

Net cash

provided by

continuing

operating

activities

Purchases of

property, plant

and equipment

and intangible

assets

Proceeds 

from sale of

property, plant

and equipment

Net cash

provided by

discontinued

operating

activities

Purchases of

property, plant

and equipment

and intangible

assets

Proceeds 

from sale of

property, plant

and equipment

Adjusted net

income

attributable 

to ABB

(1)

Q2 2020

648

(140)

4

32

(60)

–

319

Q3 2020

398

(129)

41

10

–

–

(479)

Q4 2020

1,225

(262)

46

(43)

(15)

–

262

Q1 2021

523

(142)

20

20

–

–

526

Total for the trailing

twelve months to

March 31, 2021

2,794

(673)

111

19

(75)

–

628

(1) Adjusted net income attributable to ABB for Q3 2020 is adjusted to exclude goodwill impairment charges of $311 million, and the gain on the sale of the Power Grids

business included in discontinued operations of $5,320 million. Q4 2020 is adjusted to exclude the loss from extinguishment of debt of $162 million and the adjustment to

the gain on the sale of Power Grids of $179 million. Q1 2021 is adjusted to exclude the adjustment to the gain on the sale of Power Grids of $24 million.

41 Q1 2021 FINA NCIAL INFORMATION

Net f inance expenses 

Definition 

Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense and Losses from extinguishment of debt .

Reconciliation

Three months ended March 31,

($ in millions)

2021

2020

Interest and dividend income

11

18

Interest and other finance expense

(55)

(22)

Net finance expenses

(44)

(4)

Book -to- bill ratio

Definition 

Book-to -bill ratio is calculated as Orders received divided by Total revenues.

Reconciliation

Three months ended March 31,

2021

2020

($ in millions, unless otherwise indicated)

Orders

Revenues

Book-to-bill

Orders

Revenues

Book-to-bill

Electrification

3,531

3,140

1.12

3,121

2,773

1.13

Motion

1,917

1,667

1.15

1,901

1,510

1.26

Process Automation

1,656

1,407

1.18

1,757

1,462

1.20

Robotics & Discrete Automation

841

853

0.99

811

671

1.21

Corporate and Other

 (incl. intersegment eliminations)

(189)

(166)

n.a.

(244)

(200)

n.a.

ABB Group

7,756

6,901

1.12

7,346

6,216

1.18

42 Q1 2021 FINA NCIAL INFORMATION

—

ABB Ltd

Corporate Communications

P.O. Box 8131

8050 Zurich

Switzerland

Tel: +41 (0)43 317 71 11

www.abb.com

January 1 — April 6, 2021

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

Timo Ihamuotila

April 06, 2021

Share

13’886

CHF

29.25

Tarak Mehta

April 06, 2021

Share

12’980

CHF

29.25

Peter Terwiesch

April 06, 2021

Share

13’947

CHF

29.25

Morten Wierod

April 06, 2021

Share

8’778

CHF

29.25

Sami Atiya

April 06, 2021

Share

8’694

CHF

29.25

Theodor Swedjemark

March 09, 2021

Option

102’000

CHF

1.20

Peter Terwiesch

February 16, 2021

Share

10’000

CHF

26.48

Tarak Mehta

February 10, 2021

Share

75’000

CHF

26.04

Peter Terwiesch

February 10, 2021

Share

10’000

CHF

26.07

Key:

* Received instruments were delivered as part of the ABB Ltd Director’s or Executive Committee Member’s compensation as compensation for foregone

benefits

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: April 27, 2021.

By:

/s/ Ann-Sofie Nordh

Name:

Ann-Sofie Nordh

Title:

Group Senior Vice President and 

Head of Investor Relations

Date: April 27, 2021.

By:

/s/ Richard A. Brown

Name:

Richard A. Brown

Title:

Group Senior Vice President and

Chief Counsel Corporate & Finance