abb2021q2fininfo

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE

ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 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

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

⬜

☒

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:

Press release issued by ABB Ltd dated July 22,

2021 titled “Q2 2021 results: Strong performance in a recovery

quarter”.

Q2 2021 Financial Information.

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.

—

“I am very encouraged that we have delivered a clearly improved performance. The strong

upturn in Operational EBITA

margin reflects the recovery in demand in combination with

increased internal efficiency and the strength of ABB’s electrification and automation

offerings. We will continue to sharpen our focus on profitability through innovation,

sustainability and digitalization, while actively managing our portfolio.”

Björn Rosengren

, CEO

—

ZURICH, SWITZERLAND, JULY

22, 2021

Q2 2021 results

Strong performance in a recovery quarter

●

Orders $8.0 billion, +32%; comparable

+24%

●

Revenues $7.4 billion, +21%; comparable +14%

●

Income from operations $1,094 million; margin 14.7%

●

Operational EBITA

$1,113 million; margin

15.0%

●

Basic EPS $0.37; +150%

●

Cash flow from operating activities and from operating activities continuing operations was $663 million

Ad hoc Announcement pursuant to Art. 53 Listing

Rules of SIX Swiss Exchange

—

Q2 2021

First six months

Press Release

KEY FIGURES

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

7,989

6,054

32%

24%

15,745

13,400

18%

11%

Revenues

7,449

6,154

21%

14%

14,350

12,370

16%

11%

Gross Profit

2,508

1,987

26%

4,776

3,897

23%

as % of revenues

33.7%

32.3%

+1.4 pts

33.3%

31.5%

+1.8 pts

Income from operations

1,094

571

92%

1,891

944

100%

Operational EBITA

1,113

651

71%

59%

2,072

1,287

61%

50%

as % of operational revenues

15.0%

10.6%

+4.4 pts

14.4%

10.4%

+4 pts

Income from continuing operations, net of tax

789

395

100%

1,340

721

86%

Net income (loss) attributable to ABB

752

319

136%

1,254

695

80%

Basic earnings per share ($)

0.37

0.15

150%

0.62

0.33

91%

Cash flow from operating activities

663

680

-3%

1,206

103

n.a.

Cash flows from operating activities in continuing

operations

663

648

1,186

252

n.a.

For a reconciliation of non-GAAP measures, see “supplemental

reconciliations and definitions” in the attached Q2 2021 Financial

Information.

EPS growth rates are computed using unrounded amounts.

Constant currency (not adjusted for portfolio changes).

Amount represents total for both continuing and discontinued

operations.

ABB

INTERIM

REPORT

2021

The underlying customer activity in the second quarter

increased slightly on a sequential basis. However, orders

and revenues increased significantly compared with last

year’s low levels, when the adverse business impact of the

COVID-19 pandemic was at its peak. Double-digit order

growth was reported in all business areas driven by a

broad-based improvement across most short-cycle

customer segments and a positive development in several

process-related businesses. Growth was to some extent

supported by customers stock-building.

We improved Operational EBITA by 71% and the

Operational EBITA margin increased to the high level of

15.0%, up 440 basis points, year-on-year. Results were

supported by the recovery in demand in combination with

the impact from earlier implemented cost measures, as well

as ongoing restricted travel spending.

An additional effect

was derived from proactive price measures taken to

mitigate the expected increase in headwinds from higher

commodity prices. I am pleased to see how well the team

has handled certain component shortages, whereby

managing to limit the impact on customer deliveries.

Despite active management of the situation the tight supply

of certain components, such as semiconductors, is

expected to continue in the coming quarter. The strong

earnings converted into cash flow from operating activities

in continuing operations of $663 million, improving slightly

from last year. I am pleased with how the team managed to

keep net working capital broadly stable year-on-year in this

strong growth environment. Our strong cash generation in

the first half of the year provides a good base to deliver on

our guidance of a solid cash flow in 2021.

During the second quarter Robotics & Discrete Automation

broadened its automation offering to the construction

segment. Robotic automation is not yet widely used in this

industry and we see potential to increase efficiency in areas

such as fabrication of modular homes, welding and material

handling. Additionally, it was good to receive the prestigious

Innovation and Entrepreneurship in Robotics & Automation

(IERA) award for our PixelPaint robotic non-overspray

technology for the automotive industry.

We made further progress toward our long-term

sustainability target of reducing emissions and achieving

carbon neutrality in our own operations by 2030 by joining

three initiatives led by the international non-profit Climate

Group. They include electrifying our fleet of more than

10,000 vehicles, sourcing 100% renewable electricity, as

well as establishing energy efficiency targets and continuing

to deploy energy management systems at our sites.

Furthermore, our targets have received approval by the

Science Based Targets initiative (SBTi)

confirming they are

in line with the Paris Agreement.

ABB also joined the

Business Ambition for 1.5°C Campaign, a global coalition of

UN agencies, business and industry leaders, led by the UN

Global Compact (UNGC).

I am pleased to see that our increased focus on acquired

growth resulted in Robotics & Discrete Automation acquiring

ASTI, after the close of the second quarter. It is a leading

global mobile robotics manufacturer and this transaction will

expand our offering to make ABB the only company to offer

a holistic automation portfolio for the entire value chain,

helping customers replace today’s linear production lines

with fully flexible networks. Going forward, I expect to see

more of these small- to mid-sized bolt-on deals as the

divisions fill up their target pipelines. We have also made

good progress with the announced portfolio changes and I

expect to announce an agreement for a divestment during

the third quarter.

Björn Rosengren

CEO

ABB anticipates growth rates in the

third quarter

of 2021 to

reflect the low level of business activity in Q3 2020. Based

on the current market situation, comparable revenues are

expected to grow ~10%, with orders growing more than

revenues.

In the

third quarter

, higher demand and service revenues

should be supportive to the Operational EBITA margin year-

on-year, however some sequential adverse impact is

expected from rising raw material costs, component

shortages as well as increasing travel spend as pandemic-

related restrictions ease.

ABB anticipates comparable revenue growth of just below

10% (update from ~5% or more) 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 strong (update from steady) pace of

improvement from 2020 toward the 2023 operational EBITA

margin target of the upper half of the 13%-16% range.

CEO summary

Outlook

ABB

INTERIM

REPORT

2021

Demand increased significantly compared with the prior year

period, when the adverse business effects of the COVID-19

pandemic were at their peak. In total, orders amounted to

$7,989 million, increasing by 32%

(24% comparable), including

a 28% (20% comparable)

step-up in the service business.

Revenues amounted to $7,449 million, increasing by 21% (14%

comparable). On a sequential basis, the customer demand

improved.

Orders grew strongly in the machine builders, consumer

electronics and food & beverage segments as well as in general

industries overall. Orders in the automotive segment declined,

mainly due to the strategic selective order approach aimed at

improving long-term profitability.

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 a

positive development for both the residential and non-

residential segments. The marine segment recovered, including

a slight positive development in the cruise segment with

customers initiating service spend in anticipation of upcoming

cruising activities.

The process-related business improved slightly overall

supported by positive developments

in pulp & paper, mining,

water & wastewater and chemicals. Demand in the oil & gas

segment recovered primarily due to a somewhat positive

development in the Americas. Customer activity improved in

power generation,

albeit from a low level.

On a sequential basis, the general business environment

improved slightly in all three regions. Compared with the

corresponding period last year, growth was very strong in all

three regions reflecting the recovery from last year’s low levels

due to the impact from the pandemic. In the Americas orders

improved by 44% (41% comparable) including growth in the

United States of 39% (39% comparable). Europe improved by

33% (23% comparable) with growth in all of the most significant

countries. In Asia, Middle East and Africa (AMEA) where

business had already started to recover in the second quarter of

2020, orders improved more moderately by 25% (15%

comparable), including 26% (15%

comparable) in China.

Orders and revenues

Orders by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q2 2021

Q2 2020

US$

Comparable

Europe

2,954

2,219

33%

23%

The Americas

2,473

1,720

44%

41%

Asia, Middle East

and Africa

2,562

2,056

25%

15%

Intersegment

–

ABB Group

7,989

6,054

32%

24%

Growth

Change year-on-year

Orders

Revenues

Comparable

24%

14%

Portfolio changes

Total

32%

21%

Revenues by region

($ in millions,

unless otherwise

indicated)

CHANGE

Q2 2021

Q2 2020

US$

Comparable

Europe

2,697

2,217

22%

12%

The Americas

2,284

1,872

22%

19%

Asia, Middle East

and Africa

2,468

2,004

23%

15%

Intersegment

–

ABB Group

7,449

6,154

21%

14%

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.

ABB

INTERIM

REPORT

2021

Gross profit

Gross margin increased to 33.7%, up 140 basis points year-

on-year, supported by the revenue growth and structural

improvements. Gross margins were higher in three out of

four business areas. Gross profit improved by 26%

and

amounted to $2,508 million.

Income from operations

Income from operations amounted to $1,094 million and

close to doubled from the year-earlier period driven

primarily by stronger Operational EBITA,

lower restructuring

related expenses and a positive impact from fair value

adjustments of equity investments of $96 million. Results

include restructuring activities with restructuring and

restructuring related expenses of

$18 million, primarily related to Process Automation.

Operational EBITA

Operational EBITA of $1,113

million was 71% higher (59%

constant currency) year-on-year. The margin improved by

440 basis points to 15.0%. Three out of four business areas

improved their margin,

with Motion remaining stable at an

already high level. 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 additional support from the

impacts of exchange rate movements. Selling, general and

administrative (SG&A) expenses increased by 11%

(4% in

local currency),

driven by higher sales expenses. However,

the ratio in relation to revenues declined to 17.6%, from

19.2% in the year-earlier period. R&D expenses increased

by 18% (9% constant currency). Corporate and Other

Operational EBITA improved by $42 million to -$92 million,

reflecting primarily the elimination of stranded costs and

our

new decentralized operating model.

The underlying ongoing

corporate Operational EBITA was -$85 million,

compared to

-$107 million last year

Net finance expenses

The net finance expenses

amounted to $21 million,

reflecting lower interest costs on debt and lower costs on

uncertain tax positions compared with last year. Net finance

expenses for 2021 are still expected at

$130 million.

Income tax

Income tax expense was $322 million with a tax rate of

29.0% compared with 24.8% in the prior year. The higher

rate is primarily due to timing differences between tax

recognition and underlying profit.

Tax rate for 2021 is still

estimated at 26%

Net income and earnings per share

Net income attributable to ABB was $752 million and

increased by 136% with last year’s second quarter being

the period most severely impacted by the pandemic. Basic

earnings per share was $0.37 and increased by 150%.

Excludes impact of acquisitions or divestments or any significant

non-operational items

Earnings

ABB

INTERIM

REPORT

2021

Net working capital

Net working capital amounted to $3,251 million, remaining

broadly stable year-on-year. However, it increased from

$2,904 million in the prior quarter, primarily due to receivables

from higher business volumes. In total, the reduction of net

working capital in Process Automation partially offset the

increase in the other three business areas. Net working

capital as a percentage of revenues

was 11.6%.

Capital expenditures

Purchases of property, plant and equipment and intangible

assets amounted to $151 million.

Net debt

totaled $2,259 million, a significant reduction

compared with last year’s level of $7,615 million and a

sequential increase from $1,233 million. The sequential

increase reflects the impacts of the share buybacks during the

quarter as well as the remaining payment of the annual

dividend payment. The net debt to EBITDA ratio

declined to

0.7 from 2.5 reported for the same period last year, while it

increased sequentially from 0.4.

Cash flows

Cash flow from operating activities in continuing operations was

$663 million, a slight improvement of $15 million compared with

the corresponding period last year. Three out of four business

areas contributed to the improvement which was driven by

higher earnings and included a sequential build-up of net

working capital reflecting the increase in customer deliveries.

Share buyback program

As approved at the Annual General Meeting, 115,000,000

shares repurchased under the initial share buyback program

were cancelled. The total number of ABB Ltd’s issued shares is

2,053,148,264, compared with 2,168,148,264 before the

cancellation. At the end of the period, ABB holding of treasury

shares amounted to 47,370,987 which corresponds to 2.3%

the total number of issued shares of which 28,554,689 have

been purchased for cancellation in connection with share

buyback activities on the second trading line.

The previously announced follow-up share buyback program of

up to $4.3 billion was launched in early April. This follow-up

program is part of the plan to return

$7.8 billion of cash proceeds from the Power Grids divestment

to shareholders. Under the initial program a total of

128,620,589 shares were repurchased for an amount of

approximately $3.5 billion. In Q2 a total of 14,934,100 shares

were repurchased on the second trading line.

($ millions,

unless otherwise indicated)

Jun. 30

2021

Jun. 30

2020

Dec. 31

2020

Short term debt and current

maturities of long-term debt

2,117

6,383

1,293

Long-term debt

4,375

6,237

4,828

Total debt

6,492

12,620

6,121

Cash & equivalents

2,860

2,518

3,278

Cash and equivalents in

discontinued operations

–

609

–

Restricted cash - current

–

323

Marketable securities and

short-term investments

1,002

1,878

2,108

Restricted cash - non-current

300

–

300

Cash and marketable securities

4,233

5,005

6,009

Net debt*

2,259

7,615

112

Net debt* to EBITDA ratio

0.7

2.5

0.04

Net debt* to Equity ratio

0.16

0.61

0.01

net debt excludes net pension liabilities $871 million

Balance sheet & Cash flow

ABB

INTERIM

REPORT

2021

Orders and revenues

Demand recovered from the low levels in the year-earlier

period when business activities were the most affected by the

effects of the pandemic.

Orders increased to the high level of

$3,693 million, an increase of 35%

(28% comparable).

Revenues amounted to $3,406 million, up by 23%

(17% comparable).

●

Strong comparable order growth represents a double-digit

growth rate in all divisions.

●

Demand improved in the buildings segment, with a positive

development for both residential and non-residential

business. Customer activity was also high for the data

centers, food & beverage, rail and e-mobility segments.

Activity in oil & gas was moderate.

●

Orders increased at double-digit rates in all three regions

although at a higher pace of >40% (>30% comparable) in

the Americas and Europe while AMEA increased by 20%

(11% comparable).

●

Comparable growth was to some extent supported by

customers stock-building to manage the constraints of

component availability as well as solid pricing execution.

While component shortages had no material impact on

customer deliveries in the period, delays are expected in

the coming quarter.

Profit

All of the larger divisions improved both Operational EBITA

and margin, hence the business area result improved by 70%

and margin increased by 480 basis points to 17.4%.

●

The strong performance reflects the impact from higher

volumes, capacity utilization, improved pricing, cost controls

and constrained travel expenses.

●

While the adverse impact from rising raw material costs

was limited in the period, it is expected to have an

increasingly negative impact in the coming quarters as

commodities bought at higher rates are used in production.

Some increase in travel expenses is also expected, as

pandemic-related travel restrictions ease.

Growth

Change year-on-year

Orders

Revenues

Comparable

28%

17%

Portfolio changes

Total

35%

23%

—

Electrification

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

3,693

2,737

35%

28%

7,224

5,858

23%

18%

Order backlog

5,029

4,465

13%

5,029

4,465

13%

Revenues

3,406

2,764

23%

17%

6,546

5,537

18%

14%

Operational EBITA

592

348

70%

1,103

666

66%

as % of operational revenues

17.4%

12.6%

+4.8 pts

16.8%

12.0%

+4.8 pts

Cash flow from operating activities

511

402

27%

830

415

100%

No. of employees (FTE equiv.)

51,700

ABB

INTERIM

REPORT

2021

Orders and revenues

Both orders and revenues were at high absolute levels, and

growth was additionally supported by low comparables in the

year-earlier period. In total, order intake amounted to $1,947

million, up by 23% (16% comparable). Revenues amounted to

$1,850 million, representing growth of 17% (11% comparable).

●

Customer activity improved in all segments. Order intake was

driven by the short-cycle product business as well as service,

with emerging signs of improving demand for projects.

●

Orders increased in all three regions, with the Americas

outperforming Europe and AMEA.

Profit

Operational EBITA margin of 17.7% remained stable compared

with the high comparable from last year. Operational EBITA

increased by 16%, relative to the same period last year and

reached the high quarterly level of

$325 million.

●

Operational EBITA margin was supported by the impact of

higher sales volumes, however there was an offsetting effect

from the geographical mix from the strong recovery in both

Europe and the Americas.

●

Although a tightening supply of semiconductors was noted in

the industry, there was no material impact on customer

deliveries or results. However, longer lead-times in customer

deliveries are anticipated in the coming quarter.

●

While the adverse impact from rising raw material costs was

limited in the period, it is expected to have an increasingly

negative impact in the coming quarters as commodities

bought at higher rates are used in production.

Growth

Change year-on-year

Orders

Revenues

Comparable

16%

11%

Portfolio changes

Total

23%

17%

—

Motion

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

1,947

1,586

23%

16%

3,864

3,487

11%

Order backlog

3,558

3,384

3,558

3,384

Revenues

1,850

1,583

17%

11%

3,517

3,093

14%

Operational EBITA

325

279

16%

614

509

21%

as % of operational revenues

17.7%

0 pts

17.4%

16.5%

+0.9 pts

Cash flow from operating activities

223

328

-32%

547

480

14%

No. of employees (FTE equiv.)

21,500

20,700

ABB

INTERIM

REPORT

2021

Orders and revenues

Orders improved in all segments and divisions, although from

the low level in the year-earlier period when demand was

significantly impacted by the spread of the pandemic. Order

intake amounted to $1,555 million, an increase of 19% (11%

comparable). Revenues turned to growth and amounted to

$1,540 million, up by 11% (4% comparable).

●

In total, both the products and service business improved

in orders year-on-year.

●

The process-related business improved overall supported

by positive developments

in pulp & paper, mining, water

& wastewater and chemicals. Demand in the oil & gas

segment recovered

primarily due to a positive

development in the Americas. Customer activity improved

in power generation, albeit from a low level.

●

The marine segment improved, including a slight positive

development in the cruise segment with customers

initiating service spend in anticipation of upcoming

cruising activities.

●

The increase in revenues reflects

the low comparable

from last year, backlog execution and a broad-based

recovery in demand with all divisions reporting stable to

positive growth.

Profit

All divisions improved their Operational EBITA and

margin

year-on-year. In total, profit increased by 67% and margin

rose by 410 basis points to 12.5%.

●

The result was supported by positive volume

development, improved mix from higher share of service

revenues, impact from earlier implemented cost

measures and impact from currency movements.

●

There was no material impact from the rising constraints

of semiconductors supply.

Growth

Change year-on-year

Orders

Revenues

Comparable

11%

Portfolio changes

Total

19%

11%

—

Process Automation

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

1,555

1,305

19%

11%

3,211

3,062

-2%

Order backlog

5,980

5,210

15%

5,980

5,210

15%

Revenues

1,540

1,382

11%

2,947

2,844

-3%

Operational EBITA

192

115

67%

347

259

34%

as % of operational revenues

12.5%

8.4%

+4.1 pts

11.8%

9.1%

+2.7 pts

Cash flow from operating activities

228

120

90%

461

390%

No. of employees (FTE equiv.)

21,900

22,900

-5%

ABB

INTERIM

REPORT

2021

Orders and revenues

Both divisions contributed strongly to the total order growth

of 52% (41% comparable) from last year’s low level. In total,

orders amounted to $968 million. Revenues increased by

32% (22% comparable) to $832 million, to some degree

adversely impacted by extended lead times in customer

deliveries. This was due to component shortages which are

anticipated to persist near-term.

●

Robotics orders improved significantly in all customer

segments, except in automotive where orders were

adversely impacted by the ongoing strategic selective

order approach, aimed at improving long-term profitability.

Demand from machine builders was very strong with

orders to some extent supported by inventory build-up.

●

All regions improved strongly, with the Americas and

Europe outgrowing the AMEA region.

After the close of the second quarter, the acquisition of

ASTI Mobile Robotics Group (ASTI) was announced. It is a

leading global autonomous mobile robotics (AMR)

manufacturer with a portfolio across all major applications

enabled by the company’s software suite. The acquisition

adds to Robotics and Machine Automation solutions to

deliver a unique automation portfolio, further expanding into

new industry segments.

Profit

Operational EBITA more than doubled year-on-year and the

margin increased by 470 basis points to 11.5% with

substantial improvement in both divisions.

●

The margin improvement was primarily driven by the

better cost absorption from higher volumes. Mix improved

through higher service revenues and a positive divisional

mix as well as additional support from previously

implemented cost measures.

Growth

Change year-on-year

Orders

Revenues

Comparable

41%

22%

11%

10%

Portfolio changes

Total

52%

32%

—

Robotics & Discrete Automation

CHANGE

($ millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

H1 2021

H1 2020

US$

Comparable

Orders

968

638

52%

41%

1,809

1,449

25%

16%

Order backlog

1,501

1,478

-4%

1,501

1,478

-4%

Revenues

832

629

32%

22%

1,685

1,300

30%

20%

Operational EBITA

123%

201

102

97%

as % of operational revenues

11.5%

6.8%

+4.7 pts

11.9%

7.8%

+4.1 pts

Cash flow from operating activities

15%

189

134

41%

No. of employees (FTE equiv.)

10,300

ABB

INTERIM

REPORT

2021

Quarterly highlights

●

ABB is launching a gender-neutral global parental leave

program granting 12 weeks of paid leave for primary

caregivers and 4 weeks for secondary caregivers across

the global organization.

●

As part of its new Sustainability Strategy and its ambition

to enable a low-carbon society, ABB joined three

initiatives led by the international non-profit Climate

Group in line with its action plan and focus areas

identified to reduce its own emissions: EV 100: ABB

commits to electrifying its fleet of more than 10,000

vehicles by 2030. RE 100: ABB commits to sourcing 100

percent renewable electricity by 2030. EP 100: ABB

commits to establishing energy efficiency targets and

continue deploying energy management systems at the

company’s sites. Furthermore, the company’s own

reduction targets have now also received approval by

the Science Based Targets initiative (SBTi) confirming

that they are in line with the 1.5°C scenario of the Paris

Agreement. ABB also joined the Business Ambition for

1.5°C Campaign, a global coalition of UN agencies,

business and industry leaders, led by the UN Global

Compact (UNGC).

●

ABB Azipod® electric propulsion technology celebrated in

April 30 years of excellence at sea. From its creation

three decades ago to its market leading position in global

shipping today, Azipod® propulsion has revolutionized

marine transport with its unparalleled performance,

efficiency, sustainability and reliability.

●

ABB has become

the Official Global Partner of the FIA

Girls on Track – ABB Formula E Project – a grassroots

program to inspire the next generation of women.

Story of the quarter

In the Pride Month of June, ABB highlighted the real strides it

has made with respect to LGBTQ+, including governance and

policy, inclusive leadership and culture, and partnerships. It has

already signed the Standards of Conduct for Business Tackling

Discrimination against Lesbian, Gay, Bisexual, Trans and

Intersex People, put forth by the Office of the United Nations

High Commissioner for Human Rights. Additionally,

partnerships with Stonewall and Open for Business have been

established. ABB has instituted mandatory training on how to

interrupt unconscious bias for all leaders on a worldwide basis.

Also, “Count on us!” campaigns have been initiated to support

LGBTQ+ employees in coming out. In recent months, LGBTQ+

Employee Resource Groups (ERGs) have been launched in

Europe, the United States, Latin America and Poland.

Collectively, LGBTQ+ ERGs across ABB now boast more than

400 members, creating a critical mass of committed people

working to support education, foster empathy and drive

engagement on this important topic.

Q2 outcome

●

14%

reduction of CO

₂

emissions in own operations mainly

due to continuation of renewable energy and energy

efficiency programs

●

13%

year on year decline in LTIFR but a slight increase

sequentially due to easing Covid-19 restrictions

●

Diversity & Inclusion initiative strengthened through

celebration of Pride Month in June

—

Sustainability

Q2 2021

Q2 2020

CHANGE

12M ROLLING

CO2e own operations emissions,

kt scope 1 and 2

105

-14%

Lost Time Injury Frequency Rate (LTIFR),

frequency / 200,000 working hours

0.147

0.168

-13%

0.153

Share of females in senior management

positions, %

13.9

12.5

+1.4 pts

13.8

From energy use, previous quarter

ABB

INTERIM

REPORT

2021

During Q2 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 this follow-up

program this represents

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 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.

After Q2 2021

●

On 20 July, ABB announced the acquisition of ASTI

Mobile Robotics Group to drive next generation of flexible

automation with Autonomous Mobile Robots. ASTI is

global leader in high growth Autonomous Mobile Robot

(AMR) market with broad portfolio of vehicles and

software. Acquisition adds to RA’s solutions to deliver a

unique automation portfolio further expanding into new

industry segments. Since 2015, the company has enjoyed

close to 30%

annual growth and is targeting

approximately $50 million in revenue in 2021.

In the first six months of 2021, demand for ABB’s products

increased strongly from the low level in the previous year

period when the adverse business impact of the COVID-19

pandemic was at its peak. Orders amounted to $15,745

million and improved by 18% (11% comparable) and

revenues amounted to $14,350 million up by 16% (11%

comparable), implying a book-to-bill of 1.10. The recovery

was mostly driven by the short-cycle business as from the

first quarter, while the process-related business

predominantly picked up during the second quarter. In the

period demand increased in both the product and the

service business. Additionally, exchange rates had a

positive impact on order intake and revenues.

Income from operations amounted to $1,891 million and

doubled from the year-earlier period driven primarily by

stronger Operational EBITA. Results include restructuring

activities progressing according to plan with restructuring

and restructuring-related expenses of $53

million.

Operational EBITA improved by 61% year on year to $2,072

million and the Operational EBITA margin increased by 400

basis points to 14.4%. 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 additional support

from the impacts of exchange rate movements. While

revenues increased by 16%, the expenses related to

selling, general and administrative (SG&A) increased by a

more limited 6%, driven by higher sales expenses. The ratio

in relation to revenues declined to 18.0%, from 19.7% in the

year-earlier period. R&D expenses increased by 15%.

Corporate and Other Operational EBITA improved by $56

million to -$193 million. The net finance expenses amounted

to -$65 million.

Income tax expense was $574 million with a tax rate of

30.0%.

Net income attributable to ABB was $1,254 million and

increased by 80% with last year’s period being the period

most severely impacted by the pandemic. Basic earnings

per share was $0.62 and increased by 91%.

Significant events

First six months 2021

ABB

INTERIM

REPORT

2021

($ in millions, unless otherwise stated)

FY 2021

Q3 2021

Net finance expenses

~(130)

~(30)

unchanged

Non-operational pension

(cost) / credit

~180

~40

unchanged

Effective tax rate

~26%

<26%

unchanged

Capital Expenditures

~(750)

~(200)

unchanged

($ in millions, unless otherwise stated)

FY 2021

Q3 2021

Corporate and Other Operational costs

~(400)

~(100)

from ~(425)

Non-operating items

Restructuring and restructuring related

~(150)

~(40)

from ~(200)

GEIS integration costs

~(20)

~(5)

unchanged

Separation costs

~(130)

~(50)

new

PPA-related amortization

~(255)

~(65)

unchanged

Certain other income and expenses

related to PG divestment

~(40)

~(15)

unchanged

Additional 2021 guidance

Additional figures

ABB Group

Q1 2020

Q2 2020

Q3 2020

Q4 2020

FY 2020

Q1 2021

Q2 2021

EBITDA, $ in million

600

799

302

807

2,508

1,024

1,324

Return on Capital Employed, %

n.a.

10.3%

n.a.

Net debt/Equity

0.52

0.61

(0.05)

0.01

0.09

0.16

Net debt/ EBITDA 12M rolling

2.3

2.5

(0.4)

0.04

0.4

0.7

Net working capital, % of 12M rolling revenues

12.3%

12.6%

12.5%

10.5%

10.8%

11.6%

Earnings per share, basic, $

0.18

0.15

2.14

(0.04)

2.44

0.25

0.37

Earnings per share, diluted, $

0.18

0.15

2.14

(0.04)

2.43

0.25

0.37

Dividend per share, CHF

n.a.

0.80

n.a.

Share price at the end of period, CHF

17.01

21.33

23.45

24.71

28.56

31.39

Share price at the end of period, $

17.26

22.56

25.45

27.96

30.47

33.99

Number of employees (FTE equivalents)

143,320

142,310

106,420

105,520

105,330

106,370

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

2,134

2,135

2,092

2,031

2,024

2,006

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.

Costs relating to the announced exits and the potential E-mobility

listing.

Excluding share of net income from JV.

Excludes impact of acquisitions or divestments or any significant

non-operational items.

Note: comparable growth calculation includes acquisitions and

divestments with revenues of greater than $50 million.

Represents the estimated annual revenues for the period

prior to the announcement of the respective acquisition/divestment.

Divestments

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Power Grids

1-Jul

9,200

36,000

Acquisitions

Company/unit

Closing date

Revenues, $ million

No. of employees

2020

Robotics & Discrete Automation

Codian Robotics B.V.

1-Oct

2021

Electrification

Enervalis (majority stake)

26-Apr

Acquisitions and divestments, last twelve months

ABB

INTERIM

REPORT

2021

For additional information please contact:

Media Relations

Phone: +41 43 317 71 11

Email:

media.relations@ch.abb.com

Investor Relations

Phone: +41 43 317 71 11

Email:

investor.relations@ch.abb.com

ABB Ltd

Affolternstrasse 44

8050 Zurich

Switzerland

Financial calendar

2021

September 28-29 ABB Motion CMD in Helsinki

October 21 Q3 results

December 7 ABB Group CMD in Zurich

2022

February 3 Q4

results

This press release includes forward-looking information and

statements as well as other statements concerning the

outlook for our business, including those in the sections of

this release titled “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.

The Q2

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.

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.

Q2 results presentation on July 22,

2021

Important notice about forward-looking information

ABB

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

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

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

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

1 Q2

2021

FINANCIAL

INFORMATION

July 22, 2021

Q2 2021

Financial information

2 Q2

2021

FINANCIAL

INFORMATION

—

Financial

Information

Contents

─ 07

Key Figures

08 ─

35 Consolidated

Financial

Information

(unaudited)

36 ─

48 Supplemental

Reconciliations

and Definitions

3 Q2

2021

FINANCIAL

INFORMATION

—

Key Figures

CHANGE

($ in millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Comparable

(1)

Orders

7,989

6,054

32%

24%

Order backlog (end June)

15,424

13,917

11%

Revenues

7,449

6,154

21%

14%

Gross Profit

2,508

1,987

26%

as % of revenues

33.7%

32.3%

+1.4 pts

Income from operations

1,094

571

92%

Operational EBITA

(1)

1,113

651

71%

59%

(2)

as % of operational revenues

(1)

15.0%

10.6%

+4.4 pts

Income from continuing operations, net of tax

789

395

100%

Net income attributable to ABB

752

319

136%

Basic earnings per share ($)

0.37

0.15

150%

(3)

Cash flow from operating activities

(4)

663

680

-3%

Cash flows from operating activities in continuing operations

663

648

CHANGE

($ in millions, unless otherwise indicated)

H1 2021

H1 2020

US$

Comparable

(1)

Orders

15,745

13,400

18%

11%

Revenues

14,350

12,370

16%

11%

Gross Profit

4,776

3,897

23%

as % of revenues

33.3%

31.5%

+1.8 pts

Income from operations

1,891

944

100%

Operational EBITA

(1)

2,072

1,287

61%

50%

(2)

as % of operational revenues

(1)

14.4%

10.4%

+4 pts

Income from continuing operations, net of tax

1,340

721

86%

Net income attributable to ABB

1,254

695

80%

Basic earnings per share ($)

0.62

0.33

91%

(3)

Cash flow from operating activities

(4)

1,206

103

n.a.

Cash flow from operating activities in continuing operations

1,186

252

n.a.

(1) For

a reconciliation of non-GAAP measures see

“Supplemental Reconciliations and Definitions”

on page 36.

(2) Constant

currency (not adjusted for portfolio changes).

(3) EPS

growth rates are computed using unrounded amounts.

(4) Cash

flow from operating activities includes both continuing and discontinued operations.

4 Q2

2021

FINANCIAL

INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

Q2 2021

Q2 2020

US$

Local

Comparable

Orders

ABB Group

7,989

6,054

32%

24%

Electrification

3,693

2,737

35%

28%

Motion

1,947

1,586

23%

16%

Process Automation

1,555

1,305

19%

11%

Robotics & Discrete Automation

968

638

52%

41%

Corporate and Other

(incl. intersegment eliminations)

(174)

(212)

Order backlog (end June)

ABB Group

15,424

13,917

11%

Electrification

5,029

4,465

13%

Motion

3,558

3,384

Process Automation

5,980

5,210

15%

Robotics & Discrete Automation

1,501

1,478

-4%

Corporate and Other

(incl. intersegment eliminations)

(644)

(620)

Revenues

ABB Group

7,449

6,154

21%

14%

Electrification

3,406

2,764

23%

16%

17%

Motion

1,850

1,583

17%

11%

Process Automation

1,540

1,382

11%

Robotics & Discrete Automation

832

629

32%

22%

Corporate and Other

(incl. intersegment eliminations)

(179)

(204)

Income from operations

ABB Group

1,094

571

Electrification

549

305

Motion

303

284

Process Automation

190

117

Robotics & Discrete Automation

Corporate and Other

(incl. intersegment eliminations)

(22)

(153)

Income from operations %

ABB Group

14.7%

9.3%

Electrification

16.1%

11.0%

Motion

16.4%

17.9%

Process Automation

12.3%

8.5%

Robotics & Discrete Automation

8.9%

2.9%

Operational EBITA

ABB Group

1,113

651

71%

59%

Electrification

592

348

70%

55%

Motion

325

279

16%

Process Automation

192

115

67%

52%

Robotics & Discrete Automation

123%

107%

Corporate and Other

(1)

(incl. intersegment eliminations)

(92)

(134)

Operational EBITA %

ABB Group

15.0%

10.6%

Electrification

17.4%

12.6%

Motion

17.7%

Process Automation

12.5%

8.4%

Robotics & Discrete Automation

11.5%

6.8%

Cash flow from operating activities

(2)

ABB Group

663

680

Electrification

511

402

Motion

223

328

Process Automation

228

120

Robotics & Discrete Automation

Corporate and Other

(incl. intersegment eliminations)

(377)

(270)

Discontinued operations

–

(1)

Corporate and Other includes Stranded corporate costs of $19 million for the three months ended June 30, 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 Q2

2021

FINANCIAL

INFORMATION

CHANGE

($ in millions, unless otherwise indicated)

H1 2021

H1 2020

US$

Local

Comparable

Orders

ABB Group

15,745

13,400

18%

11%

Electrification

7,224

5,858

23%

17%

18%

Motion

3,864

3,487

11%

Process Automation

3,211

3,062

-2%

Robotics & Discrete Automation

1,809

1,449

25%

16%

Corporate and Other

(incl. intersegment eliminations)

(363)

(456)

Order backlog (end June)

ABB Group

15,424

13,917

11%

Electrification

5,029

4,465

13%

Motion

3,558

3,384

Process Automation

5,980

5,210

15%

Robotics & Discrete Automation

1,501

1,478

-4%

Corporate and Other

(incl. intersegment eliminations)

(644)

(620)

Revenues

ABB Group

14,350

12,370

16%

10%

11%

Electrification

6,546

5,537

18%

13%

14%

Motion

3,517

3,093

14%

Process Automation

2,947

2,844

-3%

Robotics & Discrete Automation

1,685

1,300

30%

20%

Corporate and Other

(incl. intersegment eliminations)

(345)

(404)

Income from operations

ABB Group

1,891

944

Electrification

989

504

Motion

568

475

Process Automation

337

241

Robotics & Discrete Automation

156

Corporate and Other

(incl. intersegment eliminations)

(159)

(326)

Income from operations %

ABB Group

13.2%

7.6%

Electrification

15.1%

9.1%

Motion

16.2%

15.4%

Process Automation

11.4%

8.5%

Robotics & Discrete Automation

9.3%

3.8%

Operational EBITA

ABB Group

2,072

1,287

61%

50%

Electrification

1,103

666

66%

52%

Motion

614

509

21%

13%

Process Automation

347

259

34%

23%

Robotics & Discrete Automation

201

102

97%

79%

Corporate and Other

(1)

(incl. intersegment eliminations)

(193)

(249)

Operational EBITA %

ABB Group

14.4%

10.4%

Electrification

16.8%

12.0%

Motion

17.4%

16.5%

Process Automation

11.8%

9.1%

Robotics & Discrete Automation

11.9%

7.8%

Cash flow from operating activities

(2)

ABB Group

1,206

103

Electrification

830

415

Motion

547

480

Process Automation

461

Robotics & Discrete Automation

189

134

Corporate and Other

(incl. intersegment eliminations)

(841)

(871)

Discontinued operations

(149)

(1)

Corporate and Other includes Stranded corporate costs of $40 million for the six months ended June 30, 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.

6 Q2

2021

FINANCIAL

INFORMATION

Operational EBITA

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions, unless otherwise indicated)

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Revenues

7,449

6,154

3,406

2,764

1,850

1,583

1,540

1,382

832

629

Foreign exchange/commodity timing

differences in total revenues

(13)

(16)

–

(11)

(4)

(18)

Operational revenues

7,436

6,138

3,408

2,764

1,839

1,579

1,536

1,364

834

633

Income from operations

1,094

571

549

305

303

284

190

117

Acquisition-related amortization

Restructuring, related and

implementation costs

–

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

(12)

(1)

–

(13)

–

Acquisition-

and divestment-related

expenses and integration costs

–

Other income/expense relating to the

Power Grids joint venture

–

Certain other non-operational items

(86)

–

(9)

(7)

–

Foreign exchange/commodity timing

differences in income from operations

(73)

(28)

(31)

(1)

(17)

Operational EBITA

1,113

651

592

348

325

279

192

115

Operational EBITA margin (%)

15.0%

10.6%

17.4%

12.6%

17.7%

12.5%

8.4%

11.5%

6.8%

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions, unless otherwise indicated)

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

Revenues

14,350

12,370

6,546

5,537

3,517

3,093

2,947

2,844

1,685

1,300

Foreign exchange/commodity timing

differences in total revenues

(7)

(1)

Operational revenues

14,370

12,379

6,558

5,547

3,525

3,086

2,948

2,843

1,684

1,302

Income from operations

1,891

944

989

504

568

475

337

241

156

Acquisition-related amortization

129

130

Restructuring, related and

implementation costs

107

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

(9)

(1)

–

(13)

–

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

(74)

(15)

(7)

–

Foreign exchange/commodity timing

differences in income from operations

(12)

(1)

Operational EBITA

2,072

1,287

1,103

666

614

509

347

259

201

102

Operational EBITA margin (%)

14.4%

10.4%

16.8%

12.0%

17.4%

16.5%

11.8%

9.1%

11.9%

7.8%

7 Q2

2021

FINANCIAL

INFORMATION

Depreciation and Amortization

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions)

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Q2 21

Q2 20

Depreciation

(1)

148

147

Amortization

including total acquisition-related amortization of:

Process

Robotics & Discrete

ABB

Electrification

Motion

Automation

($ in millions)

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

H1 21

H1 20

Depreciation

(1)

292

132

139

Amortization

165

163

including total acquisition-related amortization of:

129

130

(1) Commencing

Q1 2021, depreciation related 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.

Orders received and revenues by region

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

Q2 21

Q2 20

US$

Local

parable

Q2 21

Q2 20

US$

Local

parable

Europe

2,954

2,219

33%

23%

2,697

2,217

22%

12%

The Americas

2,473

1,720

44%

41%

2,284

1,872

22%

19%

of which United States

1,846

1,327

39%

1,676

1,469

14%

Asia, Middle East and Africa

2,562

2,056

25%

16%

15%

2,468

2,004

23%

14%

15%

of which China

1,322

1,049

26%

15%

1,313

1,012

30%

18%

19%

Intersegment orders/revenues

(1)

–

ABB Group

7,989

6,054

32%

24%

7,449

6,154

21%

14%

($ in millions, unless otherwise indicated)

Orders received

CHANGE

Revenues

CHANGE

Com-

H1 21

H1 20

US$

Local

parable

H1 21

H1 20

US$

Local

parable

Europe

6,056

4,994

21%

13%

5,248

4,588

14%

The Americas

4,720

3,998

18%

17%

4,327

3,964

of which United States

3,525

3,037

16%

3,208

3,079

Asia, Middle East and Africa

4,969

4,286

16%

4,775

3,710

29%

21%

22%

of which China

2,521

1,947

29%

19%

2,489

1,678

48%

36%

38%

Intersegment orders/revenues

(1)

–

122

–

108

ABB Group

15,745

13,400

18%

11%

14,350

12,370

16%

10%

11%

(1) Intersegment

orders/revenues during the six months ended 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.

8 Q2

2021

FINANCIAL

INFORMATION

—

Consolidated Financial Information

ABB Ltd Consolidated Income Statements (unaudited)

Six months ended

Three months ended

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

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Sales of products

11,874

10,028

6,167

5,035

Sales of services and other

2,476

2,342

1,282

1,119

Total revenues

14,350

12,370

7,449

6,154

Cost of sales of products

(8,108)

(7,039)

(4,184)

(3,464)

Cost of services and other

(1,466)

(1,434)

(757)

(703)

Total cost of sales

(9,574)

(8,473)

(4,941)

(4,167)

Gross profit

4,776

3,897

2,508

1,987

Selling, general and administrative expenses

(2,577)

(2,432)

(1,314)

(1,180)

Non-order related research and development expenses

(601)

(521)

(308)

(262)

Other income (expense), net

293

–

208

Income from operations

1,891

944

1,094

571

Interest and dividend income

Interest and other finance expense

(91)

(112)

(36)

(90)

Non-operational pension (cost) credit

Income from continuing operations before taxes

1,914

930

1,111

525

Income tax expense

(574)

(209)

(322)

(130)

Income from continuing operations, net of tax

1,340

721

789

395

Income (loss) from discontinued operations, net of tax

(36)

(8)

(49)

Net income

1,304

726

781

346

Net income attributable to noncontrolling interests

(50)

(31)

(29)

(27)

Net income attributable to ABB

1,254

695

752

319

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

1,290

703

760

378

Income (loss) from discontinued operations, net of tax

(36)

(8)

(59)

Net income

1,254

695

752

319

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.64

0.33

0.38

0.18

Income (loss) from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.63

0.33

0.37

0.18

Income (loss) from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

Weighted-average number of shares outstanding (in

millions) used to compute:

Basic earnings per share attributable to ABB shareholders

2,015

2,134

2,016

2,134

Diluted earnings per share attributable to ABB shareholders

2,033

2,137

2,031

2,137

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

See Notes to the Consolidated Financial Information

9 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Condensed Consolidated Statements of Comprehensive

Income (unaudited)

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Total comprehensive income, net

of tax

1,206

484

881

611

Total comprehensive

income attributable to noncontrolling interests, net of tax

(55)

(27)

(31)

Total comprehensive income attributable

to ABB shareholders, net of tax

1,151

457

850

580

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

See Notes to the Consolidated Financial Information

10 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Balance Sheets (unaudited)

($ in millions)

Jun. 30, 2021

Dec. 31, 2020

Cash and equivalents

2,860

3,278

Restricted cash

323

Marketable securities and short-term investments

1,002

2,108

Receivables, net

7,158

6,820

Contract assets

1,087

985

Inventories, net

4,700

4,469

Prepaid expenses

229

201

Other current assets

579

760

Current assets held for sale and in discontinued operations

192

282

Total current assets

17,878

19,226

Restricted cash, non-current

300

Property, plant and equipment, net

4,079

4,174

Operating lease right-of-use assets

983

969

Investments in equity-accounted companies

1,719

1,784

Prepaid pension and other employee benefits

400

360

Intangible assets, net

1,877

2,078

Goodwill

10,798

10,850

Deferred taxes

828

843

Other non-current assets

559

504

Total assets

39,421

41,088

Accounts payable, trade

4,708

4,571

Contract liabilities

1,846

1,903

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

2,117

1,293

Current operating leases

233

270

Provisions for warranties

1,012

1,035

Other provisions

1,454

1,519

Other current liabilities

4,029

4,181

Current liabilities held for sale and in discontinued operations

548

644

Total current liabilities

15,947

15,416

Long-term debt

4,375

4,828

Non-current operating leases

779

731

Pension and other employee benefits

1,144

1,231

Deferred taxes

748

661

Other non-current liabilities

1,972

2,025

Non-current liabilities held for sale and in discontinued operations

190

197

Total liabilities

25,155

25,089

Commitments and contingencies

Stockholders’ equity:

Common stock, CHF 0.12 par value

(2,053 million and 2,168 million shares issued at June 30,

2021, and December 31, 2020, respectively)

178

188

Additional paid-in capital

Retained earnings

19,185

22,946

Accumulated other comprehensive loss

(4,104)

(4,002)

Treasury stock, at cost

(47 million and 137 million shares at June 30, 2021, and December

31, 2020, respectively)

(1,337)

(3,530)

Total ABB stockholders’ equity

13,932

15,685

Noncontrolling interests

334

314

Total stockholders’ equity

14,266

15,999

Total liabilities and stockholders’

equity

39,421

41,088

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

See Notes to the Consolidated Financial Information

11 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd Consolidated Statements of Cash Flows (unaudited)

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Operating activities:

Net income

1,304

726

781

346

Loss (income) from discontinued operations, net of tax

(5)

Adjustments to reconcile net income (loss) to

net cash provided by operating activities:

Depreciation and amortization

457

455

230

228

Changes in fair values of investments

(113)

(61)

(103)

(66)

Pension and other employee benefits

(94)

(82)

(44)

(33)

Deferred taxes

109

(1)

(45)

Net loss (gain) from derivatives and foreign exchange

(48)

Net loss (gain) from sale of property,

plant and equipment

(15)

(4)

Fair value adjustment on assets and liabilities held for sale

–

Other

Changes in operating assets and liabilities:

Trade receivables, net

(414)

(412)

127

Contract assets and liabilities

(147)

(87)

(57)

(46)

Inventories, net

(293)

(199)

(125)

102

Accounts payable, trade

309

(200)

267

(133)

Accrued liabilities

(8)

129

Provisions, net

(60)

(61)

(7)

Income taxes payable and receivable

(56)

(157)

(6)

Other assets and liabilities, net

(20)

(239)

(45)

Net cash provided by operating activities – continuing operations

1,186

252

663

648

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

operations

(149)

–

Net cash provided by operating activities

1,206

103

663

680

Investing activities:

Purchases of investments

(347)

(1,614)

(38)

(1,372)

Purchases of property, plant and equipment

and intangible assets

(293)

(303)

(151)

(140)

Acquisition of businesses (net of cash acquired)

and increases in cost- and equity-accounted companies

(28)

(80)

(24)

(7)

Proceeds from sales of investments

1,321

455

930

Proceeds from maturity of investments

–

Proceeds from sales of property, plant

and equipment

Proceeds from sales of businesses (net of transaction costs

and cash disposed) and cost- and equity-accounted companies

(142)

(2)

Net cash from settlement of foreign currency derivatives

(72)

(76)

(11)

Other investing activities

(14)

(6)

Net cash provided by (used in) investing activities –

continuing operations

717

(1,747)

752

(1,401)

Net cash used in investing activities – discontinued operations

(70)

(110)

(26)

(73)

Net cash provided by (used in) investing activities

647

(1,857)

726

(1,474)

Financing activities:

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

274

3,582

187

(146)

Increase in debt

1,004

315

251

Repayment of debt

(750)

(568)

(703)

(388)

Delivery of shares

766

–

Purchase of treasury stock

(1,971)

–

(585)

–

Dividends paid

(1,726)

(1,736)

(882)

(1,736)

Dividends paid to noncontrolling shareholders

(92)

(71)

(91)

(69)

Other financing activities

(104)

–

Net cash provided by (used in) financing activities –

continuing operations

(2,489)

1,418

(2,013)

(2,088)

Net cash provided by financing activities – discontinued

operations

–

Net cash provided by (used in) financing activities

(2,489)

1,435

(2,013)

(2,063)

Effects of exchange rate changes on cash and equivalents

and restricted cash

(34)

(98)

Adjustment for the net change in cash and equivalents and restricted

cash

in discontinued operations

–

(609)

–

(609)

Net change in cash and equivalents and restricted cash

(670)

(1,026)

(607)

(3,453)

Cash and equivalents and restricted cash, beginning of period

3,901

3,544

3,838

5,971

Cash and equivalents and restricted cash, end of period

3,231

2,518

3,231

2,518

Supplementary disclosure of cash flow information:

Interest paid

102

Income taxes paid

543

462

287

196

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

See Notes to the Consolidated Financial Information

12 Q2

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

19,640

(5,590)

(785)

13,526

454

13,980

Adoption of accounting

standard update

(82)

(9)

(91)

Comprehensive income:

Net income

695

726

Foreign currency translation

adjustments, net of tax of $(2)

(283)

(4)

(287)

Effect of change in fair value of

available-for-sale securities,

net of tax of $4

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $7

Change in derivative instruments

and hedges, net of tax of $0

(4)

Total comprehensive income

457

484

Changes in noncontrolling interests

(16)

Dividends to

noncontrolling shareholders

–

(88)

Dividends to shareholders

(1,758)

Share-based payment arrangements

Delivery of shares

(24)

–

Balance at June 30, 2020

188

18,495

(5,828)

(761)

12,156

419

12,575

Balance at January 1, 2021

188

22,946

(4,002)

(3,530)

15,685

314

15,999

Comprehensive income:

Net income

1,254

1,304

Foreign currency translation

adjustments, net of tax of $2

(166)

(161)

Effect of change in fair value of

available-for-sale securities,

net of tax of $(3)

(8)

Unrecognized income (expense)

related to pensions and other

postretirement plans,

net of tax of $(3)

Change in derivative instruments

and hedges, net of tax of $0

–

Total comprehensive income

1,151

1,206

Changes in noncontrolling interests

(37)

(20)

(57)

–

Dividends to

noncontrolling shareholders

–

(92)

Dividends to shareholders

(1,730)

Cancellation of treasury shares

(10)

(17)

(3,130)

3,157

–

Share-based payment arrangements

Purchase of treasury stock

(1,924)

Delivery of shares

(58)

(136)

960

766

Other

Balance at June 30, 2021

178

19,185

(4,104)

(1,337)

13,932

334

14,266

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

See Notes to the Consolidated Financial Information

13 Q2

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 financial

information should be read in conjunction with the audited

consolidated financial statements in

the Company’s Annual Report for the year ended December

31, 2020.

The preparation of financial information in conformity with

U.S. GAAP requires management to make assumptions

and estimates that directly affect the amounts

reported in the Consolidated Financial Information. These accounting

assumptions and estimates include:

●

growth rates, discount rates and other assumptions used to

determine impairment of long-lived assets and in testing

goodwill for impairment,

●

estimates to determine valuation allowances for deferred tax assets

and amounts recorded for unrecognized tax benefits,

●

assumptions used in determining inventory obsolescence and

net realizable value,

●

estimates and assumptions used in determining the initial fair

value of retained noncontrolling interest and certain obligations

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 future material,

labor and project-related overhead costs, used in determining

the percentage-of-

completion on projects, as well as the amount of variable consideration

the Company expects to be entitled to.

The actual results and outcomes may differ from

the Company’s estimates and assumptions.

A portion of the Company’s activities (primarily long

-term construction activities) has an operating cycle that exceeds

one year. For classification of current

assets

and liabilities related to such activities, the Company elected to

use the duration of the individual contracts as its operating

cycle. Accordingly, there are

accounts

receivable, contract assets, inventories

and provisions related to these contracts which will not be realized

within one year that have been classified as current.

Basis of presentation

In the opinion of management, the unaudited Consolidated

Financial Information contains all necessary adjustments

to present fairly the financial position, results

of operations and cash flows for the reported periods. Management

considers all such adjustments to be of a normal recurring

nature. The Consolidated Financial

Information is presented in United States dollars ($) unless otherwise

stated. Due to rounding, numbers presented in the

Consolidated Financial Information may

not add to the totals provided.

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 reallocation of certain real

estate assets, previously reported within Corporate

and Other, into the operating segments

which

utilize the assets.

Adjustment related to prior periods

In the three months ended June 30, 2020, the Company recorded

a cumulative adjustment to increase the value of certain

privately-held equity investments to fair

value based on observable market price changes for an identical

or similar investment of the same issuer (Level 2 inputs).

These changes in fair value primarily

occurred in 2019 and 2018. The correction resulted in a gain

of $58 million being recorded in Other income (expense)

in the Interim Consolidated Income

Statements for the three months ended June 30, 2020. The

Company evaluated the impact of the correction

on both a quantitative and qualitative basis under the

guidance of ASC 250, Accounting Changes and Error Corrections,

and determined that there were no material impacts

on the trend of net income, cash flows or

liquidity for previously issued annual financial statements.

14 Q2

2021

FINANCIAL

INFORMATION

─

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 provides temporary optional expedients and exceptions

to the current guidance on contract

modifications and hedge accounting to ease the financial reporting

burdens

related to the expected market transition from the

London Interbank Offered Rate

(LIBOR) and other interbank offered rates to alternative

reference rates.

This update, along with clarifications outlined in a subsequent

update issued in January

2021, can be adopted and applied no later than December

31, 2022, with early adoption permitted. The Company

is currently evaluating the impact of adopting

this optional guidance on its Consolidated Financial Statements.

─

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 Hitachi 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 June 30, 2021, $103 million of these

liabilities had been paid and are reported

as reductions in the cash consideration received, of which

$70 million and $26 million was paid during the six months

and three months ended June 30, 2021,

respectively. At June 30, 2021, the

remaining amount recorded was $381 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 June 30, 2021, current restricted

cash includes $51 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

primarily include finance, information technology,

human resources and certain other administrative services.

Under the current terms, the TSAs will continue for

up to 3 years, and can only be extended on an

exceptional basis for business-critical services for an additional period

which is reasonably necessary to avoid a material adverse

impact on the business. In the

six and three months ended June 30, 2021, the Company

has recognized within its continuing operations, general

and administrative expenses incurred to perform

the TSA, offset by $88 million and $41 million, respectively,

in TSA-related income for such services that is reported

in Other income (expense).

Discontinued operations

As a result of the sale of the Power Grids business, substantially

all 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 was required to be paid as

a result of the planned disposal

transaction to the sum of total net assets of the Company plus

consolidated debt. General corporate overhead

was not allocated to discontinued operations.

15 Q2

2021

FINANCIAL

INFORMATION

Operating results of the discontinued operations, are summarized

as follows:

Six months ended

Three months ended

($ in millions)

Jun. 30, 2021

Jun. 30, 2020

Jun. 30, 2021

Jun. 30, 2020

Total revenues

–

4,008

–

2,067

Total cost of sales

–

(3,058)

–

(1,587)

Gross profit

–

950

–

480

Expenses

(9)

(780)

(5)

(386)

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

(27)

–

(3)

–

Income (loss) from operations

(36)

170

(8)

Net interest and other finance expense

–

(5)

–

(2)

Non-operational pension (cost) credit

–

(94)

–

(97)

Income (loss) from discontinued operations before taxes

(36)

(8)

(6)

Income tax

–

(65)

–

(43)

Income (loss) from discontinued operations, net of tax

(36)

(8)

(49)

Of the total Income (loss) from discontinued operations

before taxes in the table above, $(36) million and $55 million

in the six months ended June 30, 2021 and

2020, respectively, and $(8) million

and $(17) million in the three months ended June 30,

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 excluded

stranded costs which were previously able to be allocated

to the

Power Grids operating segment.

As a result, for the six and three months ended June 30, 2020,

$40 million and $19 million, respectively,

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,

Net interest and other finance expense in the six and three

months ended June 30, 2020, included

$20 million and

$11 million, respectively,

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 recorded 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 six and three months ended

June 30, 2020, are revenues for sales from the Company’s

operating

segments to the Power Grids business of $108 million and

$61 million, respectively, which

represent intercompany transactions that, prior to Power

Grids being

classified as a discontinued operation, were eliminated in the

Company’s consolidated financial statements (see

Note 17). Subsequent to the divestment, sales to

Hitachi ABB PG are reported as third-party revenues.

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)

Jun. 30, 2021

(1)

Dec. 31, 2020

(1)

Receivables, net

187

280

Inventories, net

Other current assets

Current assets held for sale and in discontinued operations

192

282

Accounts payable, trade

144

188

Other liabilities

404

456

Current liabilities held for sale and in discontinued operations

548

644

Other non-current liabilities

190

197

Non-current liabilities held for sale and in discontinued

operations

190

197

(1) At

June 30, 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.

16 Q2

2021

FINANCIAL

INFORMATION

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.

June 30, 2021 and December 31, 2020, the reported value

of the investment in Hitachi ABB PG includes $1,547

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 June 30, 2021, 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 %)

June 30, 2021

December 31, 2020

Hitachi ABB Power Grids Ltd

19.9%

1,660

1,710

Others

Total

1,719

1,784

In the six and three months ended June 30, 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:

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Income from equity-accounted companies, net of taxes

Basis difference amortization (net of deferred income

tax benefit)

(61)

–

(30)

–

Loss from equity-accounted companies

(57)

(22)

Divestment of the solar inverters business

In February 2020, the Company completed the sale of its

solar inverters 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

buyer 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 year 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 six months ended June 30,

2020, a loss of $19 million was included 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 was 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 six months ended June 30, 2020, Income from continuing

operations before taxes includes net losses of $33

million

from the solar inverters business prior to its sale.

17 Q2

2021

FINANCIAL

INFORMATION

─

Note 5

Cash and equivalents, marketable securities and short-term investments

Cash and equivalents, marketable securities and short

-term investments consisted of the following:

June 30, 2021

Cash and

Marketable

Gross

equivalents

securities

unrealized

and restricted

and short-term

($ in millions)

Cost basis

gains

losses

Fair value

cash

investments

Changes in fair value

recorded in net income

Cash

1,975

Time deposits

1,267

1,256

Equity securities

679

695

3,921

–

3,937

3,231

706

Changes in fair value recorded

in other comprehensive income

Debt securities available-for-sale:

U.S. government obligations

196

(1)

207

European government obligations

Corporate

(1)

283

(2)

296

–

296

Total

4,204

(2)

4,233

3,231

1,002

Of which:

Restricted cash, current

Restricted cash, non-current

300

December 31, 2020

Cash and

Marketable

Gross

equivalents

securities

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

Time deposits

1,513

Equity securities

1,704

1,716

5,605

–

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

293

European government obligations

Corporate

367

–

392

–

392

Total

5,972

–

6,009

3,901

2,108

Of which:

Restricted cash, current

323

Restricted cash, non-current

300

18 Q2

2021

FINANCIAL

INFORMATION

─

Note 6

Derivative financial instruments

The Company is exposed to certain currency,

commodity, interest rate

and equity risks arising from its global operating, financing

and investing activities. The

Company uses derivative instruments to reduce and manage

the economic impact of these exposures.

Currency risk

Due to the global nature of the Company’s operations,

many of its subsidiaries are exposed to currency risk

in their operating activities from entering into

transactions in currencies other than their functional currency.

To manage such

currency risks, the Company’s policies require its

subsidiaries to hedge their

foreign currency exposures from binding sales and purchase

contracts denominated in foreign currencies. For forecasted

foreign currency denominated sales of

standard products and the related foreign currency denominated

purchases, the Company’s policy is to hedge up to

a maximum of 100 percent of the forecasted

foreign currency denominated exposures, depending on

the length of the forecasted exposures. Forecasted

exposures greater than 12 months are not hedged.

Forward foreign exchange contracts are the main instrument

used to protect the Company against the volatility of future

cash flows (caused by changes in

exchange rates) of contracted and forecasted

sales and purchases denominated in foreign currencies.

In addition, within its treasury operations, the Company

primarily uses foreign exchange swaps and forward foreign exchange

contracts to manage the currency and timing mismatches

arising in its liquidity management

activities.

Commodity risk

Various commodity products are

used in the Company’s manufacturing activities. Consequently

it is exposed to volatility in future cash flows arising from

changes

in commodity prices. To

manage the price risk of commodities, the Company’s

policies require that its subsidiaries hedge the commodity price

risk exposures from

binding contracts, as well as at least 50 percent (up to a maximum

of 100 percent) of the forecasted commodity exposure

over the next 12 months or longer (up to

a maximum of 18 months). Primarily swap contracts are used

to manage the associated price risks of commodities.

Interest rate risk

The Company has issued bonds at fixed rates. Interest

rate swaps and cross-currency swaps are used to manage the

interest rate and foreign currency risk

associated with certain debt and generally such swaps are designated

as fair value hedges. In addition, from time to time, the

Company uses instruments such as

interest rate swaps, interest rate futures, bond futures or forward

rate agreements to manage interest rate risk arising from the

Company’s balance sheet structure

but does not designate such instruments as hedges.

Equity risk

The Company is exposed to fluctuations in the fair value of

its warrant appreciation rights (WARs)

issued under its management incentive plan. A WAR

gives its

holder the right to receive cash equal to the market price

of an equivalent listed warrant on the date of exercise.

To eliminate such

risk, the Company has

purchased cash-settled call options, indexed to the shares

of the Company, which entitle

the Company to receive amounts equivalent to its obligations

under the

outstanding WARs.

Volume of derivative activity

In general, while the Company’s primary objective

in its use of derivatives is to minimize exposures arising

from its business, certain derivatives are designated

and qualify for hedge accounting treatment while others either

are not designated or do not qualify for hedge accounting.

Foreign exchange and interest rate derivatives

The gross notional amounts of outstanding foreign exchange and

interest rate derivatives (whether designated as hedges

or not) were as follows:

Type of derivative

Total notional amounts at

($ in millions)

June 30, 2021

December 31, 2020

June 30, 2020

Foreign exchange contracts

9,309

12,610

16,505

Embedded foreign exchange derivatives

893

1,134

982

Cross currency swaps

951

–

Interest rate contracts

3,553

3,227

4,335

Derivative commodity contracts

The Company uses derivatives to hedge its direct or indirect

exposure to the movement in the prices of commodities which

are primarily copper, silver and

aluminum. The following table shows the notional amounts of

outstanding derivatives (whether designated as hedges

or not), on a net basis, to reflect the

Company’s requirements for these commodities:

Type of derivative

Unit

Total notional amounts at

June 30, 2021

December 31, 2020

June 30, 2020

Copper swaps

metric tonnes

37,340

39,390

38,935

Silver swaps

ounces

2,306,804

1,966,677

2,063,142

Aluminum swaps

metric tonnes

7,325

8,112

7,698

Equity derivatives

At June 30, 2021, December 31, 2020, and June 30, 2020, the

Company held 15 million, 22 million and 37 million cash-settled

call options indexed to ABB Ltd

shares (conversion ratio 5:1) with a total fair value of $34 million,

$21 million and $21 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.

these cases, the effective portion of the changes in

their fair value is recorded in “Accumulated other comprehensive

loss” and subsequently reclassified into

earnings in the same line item and in the same period as

the underlying hedged transaction affects earnings.

For the six and three months ended June, 30, 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 changes in the fair

value of the risk

component of the underlying debt being hedged, are recorded

as offsetting gains and losses in “Interest and other finance

expense”.

19 Q2

2021

FINANCIAL

INFORMATION

The effect of derivative instruments, designated and qualifying

as fair value hedges, on the Consolidated Income

Statements was as follows:

Type of derivative designated

Six months ended June 30, 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

Interest rate contracts

Interest and other finance expense

(27)

Interest and other finance expense

Cross-currency swaps

Interest and other finance expense

(25)

Interest and other finance expense

Total

(52)

Type of derivative designated

Six months ended June 30, 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

Interest rate contracts

Interest and other finance expense

(27)

Total

(27)

Type of derivative designated

Three months ended June 30, 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

Interest rate contracts

Interest and other finance expense

(13)

Interest and other finance expense

Cross-currency swaps

Interest and other finance expense

(2)

Interest and other finance expense

Total

(15)

Type of derivative designated

Three months ended June 30, 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

Interest rate contracts

Interest and other finance expense

(2)

Total

(2)

Derivatives not designated in hedge relationships

Derivative instruments that are not designated as hedges

or do not qualify as either cash flow or fair value hedges

are economic hedges used for risk management

purposes. Gains and losses from changes in the fair values

of such derivatives are recognized in the same line in the

income statement as the economically

hedged transaction.

Furthermore, under certain circumstances, the Company is

required to split and account separately for foreign currency

derivatives that are embedded within

certain binding sales or purchase contracts denominated

in a currency other than the functional currency of the subsidiary

and the counterparty.

The gains (losses) recognized in the Consolidated Income Statements

on derivatives not designated in hedging relationships

were as follows:

Type of derivative not

Gains (losses) recognized in income

designated as a hedge

Six months ended June 30,

Three months ended June 30,

($ in millions)

Location

2021

2020

2021

2020

Foreign exchange contracts

Total revenues

(10)

(67)

Total cost of sales

(24)

(20)

(33)

SG&A expenses

(1)

(8)

(4)

Non-order related research

and development

(1)

–

Interest and other finance expense

(119)

(32)

(13)

Embedded foreign exchange

Total revenues

(13)

(26)

contracts

Total cost of sales

(2)

(1)

Commodity contracts

Total cost of sales

(12)

Other

Interest and other finance expense

Total

(106)

(60)

136

(1) SG&A

expenses represent “Selling, general

and administrative

expenses”.

20 Q2

2021

FINANCIAL

INFORMATION

The fair values of derivatives included in the Consolidated

Balance Sheets were as follows:

June 30, 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”

liabilities”

Derivatives designated as hedging instruments:

Foreign exchange contracts

Interest rate contracts

–

Cross currency swaps

–

Cash-settled call options

–

Total

Derivatives not designated as hedging instruments:

Foreign exchange contracts

Commodity contracts

–

Interest rate contracts

–

Embedded foreign exchange derivatives

Total

125

118

Total fair value

167

120

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”

liabilities”

Derivatives designated as hedging instruments:

Foreign exchange contracts

–

Interest rate contracts

–

Cash-settled call options

–

Total

Derivatives not designated as hedging instruments:

Foreign exchange contracts

221

106

Commodity contracts

–

Interest rate contracts

–

Embedded foreign exchange derivatives

Total

292

143

Total fair value

308

114

145

Close-out netting agreements provide for the termination, valuation

and net settlement of some or all outstanding transactions between

two counterparties on the

occurrence of one or more pre-defined trigger events.

Although the Company is party to close-out netting agreements

with most derivative counterparties, the fair values in the tables

above and in the Consolidated

Balance Sheets at June 30, 2021, and December 31, 2020, have

been presented on a gross basis.

The Company’s netting agreements and other similar

arrangements allow net settlements under certain conditions.

At June 30, 2021, and December 31, 2020,

information related to these offsetting arrangements

was as follows:

($ in millions)

June 30, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net asset

similar arrangement

assets

in case of default

received

exposure

Derivatives

220

(94)

–

126

Total

220

(94)

–

126

($ in millions)

June 30, 2021

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net liability

similar arrangement

liabilities

in case of default

pledged

exposure

Derivatives

158

(94)

–

Total

158

(94)

–

21 Q2

2021

FINANCIAL

INFORMATION

($ in millions)

December 31, 2020

Gross amount

Derivative liabilities

Cash

Non-cash

Type of agreement or

of recognized

eligible for set-off

collateral

Net asset

similar arrangement

assets

in case of default

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

Net liability

similar arrangement

liabilities

in case of default

pledged

exposure

Derivatives

147

(106)

–

Total

147

(106)

–

─

Note 7

Fair values

The Company uses fair value measurement principles to record

certain financial assets and liabilities on a recurring

basis and, when necessary,

to record certain

non-financial assets at fair value on a non-recurring basis, as

well as to determine fair value disclosures for certain

financial instruments carried at amortized cost

in the financial statements. Financial assets and liabilities recorded

at fair value on a recurring basis include foreign currency,

commodity and interest rate

derivatives, as well as cash-settled call options and available

-for-sale securities. Non-financial assets recorded at fair

value on a non-recurring basis include

long-lived assets that are reduced to their estimated fair value

due to impairments.

Fair value is the price that would be received when selling

an asset or paid to transfer a liability in an orderly transaction

between market participants at the

measurement date. In determining fair value, the Company

uses various valuation techniques including the market approach

(using observable market data for

identical or similar assets and liabilities), the income approach (discounted

cash flow models) and the cost approach (using costs

a market participant would incur

to develop a comparable asset). Inputs used to determine

the fair value of assets and liabilities are defined by

a three-level hierarchy,

depending on the nature of

those inputs. The Company has categorized its financial assets

and liabilities and non-financial assets measured at fair

value within this hierarchy based on

whether the inputs to the valuation technique are observable

or unobservable. An observable input is based on market

data obtained from independent sources,

while an unobservable input reflects the Company’s

assumptions about market data.

The levels of the fair value hierarchy are as follows:

Level 1:

Valuation inputs consist of

quoted prices in an active market for identical assets

or liabilities (observable quoted prices). Assets and

liabilities valued

using Level 1 inputs include exchange

‑

traded equity securities, listed derivatives which are actively

traded such as commodity futures, interest rate

futures and certain actively traded debt securities.

Level 2:

Valuation inputs consist of

observable inputs (other than Level 1 inputs) such as

actively quoted prices for similar assets, quoted prices in

inactive

markets and inputs other than quoted prices such as interest rate

yield curves, credit spreads, or inputs derived from other

observable data by

interpolation, correlation, regression or other means. The adjustments

applied to quoted prices or the inputs used in valuation

models may be both

observable and unobservable. In these cases, the fair value

measurement is classified as Level 2 unless the unobservable

portion of the adjustment or

the unobservable input to the valuation model is significant, in

which case the fair value measurement would be classified

as Level 3. Assets and

liabilities valued or disclosed using Level 2 inputs include investments

in certain funds, certain debt securities that are not actively

traded, interest rate

swaps, cross-currency interest rate swaps, commodity swaps, cash-settled

call options, forward foreign exchange contracts, foreign

exchange swaps and

forward rate agreements, time deposits, as well as financing receivables

and debt.

Level 3:

Valuation inputs are based

on the Company’s assumptions of relevant market

data (unobservable input).

Whenever quoted prices involve bid-ask spreads, the Company

ordinarily determines fair values based on mid-market

quotes. However, for the purpose of

determining the fair value of cash-settled call options serving

as hedges of the Company’s management

incentive plan, bid prices are used.

When determining fair values based on quoted prices in an active

market, the Company considers if the level of transaction

activity for the financial instrument has

significantly decreased or would not be considered orderly.

In such cases, the resulting changes in valuation techniques

would be disclosed. If the market is

considered disorderly or if quoted prices are not available, the

Company is required to use another valuation technique,

such as an income approach.

22 Q2

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:

June 30, 2021

($ in millions)

Level 1

Level 2

Level 3

Total fair value

Assets

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

Equity securities

695

Debt securities—U.S. government obligations

207

Debt securities—European government obligations

Debt securities—Corporate

Debt securities—Other

Securities in “Other non-current assets”:

Debt securities—U.S. government obligations

Derivative assets—current in “Other current assets”

167

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

Total

302

999

–

1,301

Liabilities

Derivative liabilities—current in “Other current liabilities”

120

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

Total

–

185

–

185

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

Debt securities—U.S. government obligations

293

Debt securities—European government obligations

Debt securities—Corporate

Derivative assets—current in “Other current assets”

308

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

114

Total

317

2,213

–

2,530

Liabilities

Derivative liabilities—current in “Other current liabilities”

145

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

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 observable and fall into the Level 2 category.

●

Derivatives

: The fair values of derivative instruments are determined

using quoted prices of identical instruments from

an active market, if available

(Level 1 inputs). If quoted prices are not available, price quotes

for similar instruments, appropriately adjusted, or present

value techniques, based on

available market data, or option pricing models are used. Cash-settled

call options hedging the Company’s WAR

liability are valued based on bid prices

of the equivalent listed warrant. The fair values obtained using

price quotes for similar instruments or valuation techniques represent

a Level 2 input

unless significant unobservable inputs are used.

Non-recurring fair value measures

The Company elects to record private equity investments without

readily determinable fair values at cost, less impairment,

adjusted by observable

price changes.

The Company reassesses at each reporting period whether

these investments continue to qualify for this treatment.

In the three months ended June 30, 2021 and

2020, the Company recognized,

in Other income (expense), net increases in fair value

of $99 million and $58 million, respectively,

related to certain of its private

equity investments based on observable market price changes

for an identical or similar investment of the same issuer (see

Note 1 for additional details). The fair

values of these investments at June 30, 2021 and 202

0, totaled $146 million and $81 million, respectively,

and were determined using level 2 inputs.

During the six months ended June 30,

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 transactions above, there were no additional significant

non-recurring fair value measurements during the six

and three months ended June 30,

2021 and 2020.

23 Q2

2021

FINANCIAL

INFORMATION

Disclosure about financial instruments carried on a

cost basis

The fair values of financial instruments carried on a cost basis

were as follows:

June 30, 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

1,604

Time deposits

1,256

Restricted cash

Restricted cash, non-current

300

Liabilities

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

(excluding finance lease obligations)

2,093

1,672

421

2,093

Long-term debt (excluding finance lease obligations)

4,202

4,407

4,482

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

Time deposits

1,513

Restricted cash

323

Restricted cash, non-current

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

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).

─

Note 8

Contract assets and liabilities

The following table provides information about Contract

assets and Contract liabilities:

($ in millions)

June 30, 2021

December 31, 2020

June 30, 2020

Contract assets

1,087

985

1,110

Contract liabilities

1,846

1,903

1,703

Contract assets primarily relate to the Company’s right

to receive consideration for work completed but for which

no invoice has been issued at the reporting date.

Contract assets are transferred to receivables when rights to

receive payment become unconditional.

Contract liabilities primarily relate to up-front advances received

on orders from customers as well as amounts invoiced

to customers in excess of revenues

recognized,

primarily for long-term projects. Contract liabilities are

reduced as work is performed and as revenues are

recognized.

24 Q2

2021

FINANCIAL

INFORMATION

The significant changes in the Contract assets and Contract

liabilities balances were as follows:

Six months ended June 30,

2021

2020

Contract

($ in millions)

assets

liabilities

assets

liabilities

Revenue recognized, which was included in the Contract liabilities

balance at Jan 1, 2021/2020

(818)

(600)

Additions to Contract liabilities - excluding amounts recognized

as revenue during the period

785

633

Receivables recognized that were included in the Contract asset

balance at Jan 1, 2021/2020

(411)

(373)

At June 30, 2021, the Company had unsatisfied performance

obligations totaling $15,424 million and, of this amount, the

Company expects to fulfill approximately

56 percent of the obligations in 2021, approximately 29 percent

of the obligations in 2022 and the balance thereafter.

─

Note 9

Debt

The Company’s total debt at June 30, 2021, and December

31, 2020, amounted to $6,492 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)

June 30, 2021

December 31, 2020

Short-term debt

423

153

Current maturities of long-term debt

1,694

1,140

Total

2,117

1,293

Short-term debt primarily represented issued commercial paper

and short-term bank borrowings from various banks.

At June 30, 2021, and December 31, 2020,

$365 million and $32 million, respectively,

was outstanding under the $2 billion commercial paper

program in the United States. No amount was outstanding

under

the $2 billion Euro-commercial paper program at June 30, 2021,

or December 31, 2020.

On June 15, 2021, the Company repaid at maturity its USD

650 million 4.0% Notes.

Long-term debt

The Company’s long-term debt at June 30, 2021, and December

31, 2020, amounted to $4,375 million and $4,828 million, respectively.

Outstanding bonds (including maturities within the next

12 months) were as follows:

June 30, 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

649

2.25% CHF Bonds, due 2021

CHF

350

381

CHF

350

403

2.875% USD Notes, due 2022

USD

1,250

1,270

USD

1,250

1,280

0.625% EUR Instruments, due 2023

EUR

700

843

EUR

700

875

0.75% EUR Instruments, due 2024

EUR

750

910

EUR

750

946

0.3% CHF Notes, due 2024

CHF

280

303

CHF

280

317

3.8% USD Notes, due 2028

(2)

USD

383

381

USD

383

381

1.0% CHF Notes, due 2029

CHF

170

184

CHF

170

192

0% EUR Notes, due 2030

EUR

800

917

–

4.375% USD Notes, due 2042

(2)

USD

609

589

USD

609

589

Total

5,778

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 exposures,

cross-currency interest rate swaps have been used to modify

the characteristics of the EUR 800 million Notes, due 2030.

After considering

the impact of these cross-currency interest rate swaps, the EUR

Notes, due 2030, effectively became a floating

rate U.S. dollar obligation.

Subsequent events

As of July 21, 2021, under its $2 billion Euro-commercial paper

program, the Company has issued commercial paper

with an aggregate value of EUR300 million

(equivalent to $354 million on the date of issue). There was no

significant change in the $2 billion commercial paper program

in the United States.

25 Q2

2021

FINANCIAL

INFORMATION

─

Note 10

Commitments and contingencies

Contingencies—Regulatory, Compliance

and Legal

Regulatory

As a result of an internal investigation, the Company self-reported

to the Securities and Exchange Commission (SEC) and

the Department of Justice (DoJ) in the

United States as well as to the Serious Fraud Office (SFO)

in the United Kingdom concerning certain of its past

dealings with Unaoil and its subsidiaries, including

alleged improper payments made by these entities to third parties.

In May 2020, the SFO closed its investigation, which it originally

announced in February 2017,

as the case did not meet the relevant test for prosecution

The Company continues to cooperate with the U.S. authorities

as requested. At this time, it is not

possible for the Company to make an informed judgment about

the outcome of this matter.

Based on findings during an internal investigation, the Company

self-reported to the SEC and the DoJ, in the United States,

to the Special Investigating Unit (SIU)

and the National Prosecuting Authority (NPA)

in South Africa as well as to various authorities in other

countries potential suspect payments and other compliance

concerns in connection with some of the Company’s

dealings with Eskom and related persons. Many of those

parties have expressed an interest in, or

commenced an investigation into, these matters and the Company

is cooperating fully with them. The Company paid $104 million

to Eskom in December 2020 as

part of a full and final settlement with Eskom and the Special

Investigating Unit relating to improper payments and other

compliance issues associated with the

Controls and Instrumentation Contract, and its Variation

Orders for Units 1 and 2 at Kusile. The Company continues

to cooperate fully with the 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 June 30, 2021, and December 31, 2020, the Company had aggregate

liabilities of $97 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 reasonably

predict, the outcome of certain matters and as it is

not possible, based on information currently

available to management, to estimate the maximum potential

liability on other matters, there could be adverse outco

mes beyond the amounts accrued.

Guarantees

General

The following table provides quantitative data regarding the Company’s

third-party guarantees. The maximum potential payments

represent a “worst-case

scenario”, and do not reflect management’s expected

outcomes.

Maximum potential payments

($ in millions)

June 30, 2021

December 31, 2020

Performance guarantees

5,695

6,726

Financial guarantees

313

339

Indemnification guarantees

(1)

129

177

Total

(2)

6,137

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

June 30, 2021, and December 31, 2020, amounted to

$129 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 2035, mainly consist of performance guarantees

whereby (i) the Company guarantees the performance

of a third party’s product or service

according to the terms of a contract and (ii) as member

of a consortium/joint-venture that includes third parties,

the Company guarantees not only its own

performance but also the work of third parties. Such guarantees

may include guarantees that a project will be completed

within a specified time. If the third party

does not fulfill the obligation, the Company will compensate

the guaranteed party in cash or in kind. The original maturity

dates for the majority of these

performance guarantees range from one to ten years.

In conjunction with the divestment of the high-voltage cable and

cables accessories businesses, the Company has entered

into various performance guarantees

with other parties with respect to certain liabilities of the divested

business. At June 30, 2021, and December 31, 2020,

the maximum potential payable under these

guarantees amounts to $960 million and $994 million, respectively,

and these guarantees have various maturities ranging from

five to ten years.

The Company retained obligations for financial, performance

and indemnification guarantees related to the Power

Grids business sold

on July 1, 2020 (see Note 3

for details). The performance and financial guarantees have

been indemnified by Hitachi, at the same proportion of its

ownership in Hitachi 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 maturity dates ranging from

one to ten years. The maximum amount payable

under the guarantees at June 30, 2021, and December 31,

2020, are approximately $4.6 billion and $5.5 billion, respec

tively, and the carrying amounts

of liabilities

(recorded in discontinued operations) at June 30, 2021,

and December 31, 2020,

amounted to $129 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 June 30, 2021, and December 31, 2020, the total

outstanding performance bonds aggregated to $3.9 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 six and three months ended June

30, 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:

26 Q2

2021

FINANCIAL

INFORMATION

($ in millions)

2021

2020

Balance at January 1,

1,035

816

Net change in warranties due to acquisitions, divestments and

liabilities held for sale

Claims paid in cash or in kind

(127)

(100)

Net increase in provision for changes in estimates, warranties

issued and warranties expired

122

Exchange rate differences

(19)

(13)

Balance at June 30,

1,012

777

─

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 30.0 percent in the six months

ended June 30, 2021, was higher than the effective

tax rate of 22.5 percent in the six months ended

June 30, 2020, primarily because 2020 included a net benefit

from a favorable resolution of an uncertain tax position

in the first quarter, partially offset

by increases

to the valuation allowance in certain countries.

─

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,

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

Six months ended June 30,

2021

2020

2021

2020

2021

2020

Operational pension cost:

Service cost

–

Operational pension cost

–

Non-operational pension cost (credit):

Interest cost

(2)

Expected return on plan assets

(58)

(65)

(91)

(133)

–

Amortization of prior service cost (credit)

(5)

(7)

(1)

Amortization of net actuarial loss

–

(1)

(2)

Curtailments, settlements and special termination benefits

(1)

–

(2)

108

–

Non-operational pension cost (credit)

(65)

(66)

(22)

(1)

(2)

Net periodic benefit cost (credit)

(35)

(21)

–

141

(1)

(2)

27 Q2

2021

FINANCIAL

INFORMATION

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Three months ended June 30,

2021

2020

2021

2020

2021

2020

Operational pension cost:

Service cost

–

Operational pension cost

–

Non-operational pension cost (credit):

Interest cost

(1)

–

Expected return on plan assets

(29)

(34)

(44)

(70)

–

Amortization of prior service cost (credit)

(3)

(1)

–

(1)

–

Amortization of net actuarial loss

–

(1)

Curtailments, settlements and special termination benefits

(1)

–

108

–

Non-operational pension cost (credit)

(33)

(4)

(1)

Net periodic benefit cost (credit)

(18)

(10)

119

(1)

(1) In

both the six and three months ended June 30, 2020, amounts Include $101 million in discontinued operations for the settlement of the pension plan in Sweden.

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 $121 million and

$109 million, for the six and three months ended June

30, 2020, respectively, related

to discontinued

operations.

Employer contributions were as follows:

($ in millions)

Defined pension benefits

Other postretirement

Switzerland

International

benefits

Six months ended June 30,

2021

2020

2021

2020

2021

2020

Total contributions

to defined benefit pension and

Other postretirement

Switzerland

International

benefits

Three months ended June 30,

2021

2020

2021

2020

2021

2020

Total contributions

to defined benefit pension and

other postretirement benefit plans

169

Of which, discretionary contributions to defined benefit

pension plans

–

143

–

The Company expects to make contributions totaling approximately

$175 million and $8 million to its defined pension

plans and other postretirement benefit plans,

respectively, 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 disbursing 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 million 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, shareholders approved the cancellation

of 115 million of the shares purchased

under this buyback program and the cancellation

was

completed in the second quarter of 2021,

resulting in a decrease in Treasury stock of

$3,157 million and a corresponding total decrease in Capital

stock,

Additional

paid-in capital and Retained earnings.

Also 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 2022. Through this follow-up

buyback program, the Company purchased,

in the second quarter of 2021, approximately 15 million shares

resulting in an increase in Treasury stock of

$501 million. At the March 2022 AGM, the Company intends to

request shareholder approval to cancel the shares purchased

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.

In addition to the share buyback programs, the Company purchased

26 million of its own shares on the open market in the first

half of 2021, mainly for use in

connection with its employee share plans, resulting in an increase

Treasury stock of $795 million.

28 Q2

2021

FINANCIAL

INFORMATION

During the first quarter of 2021, the Company delivered, out

of treasury stock, 35 million shares in connection with

its Management Incentive Plan.

─

Note 14

Earnings per share

Basic earnings per share is calculated by dividing income by

the weighted-average number of shares outstanding during

the period. Diluted earnings per share is

calculated by dividing income by the weighted-average number

of shares outstanding during the period, assuming that all potentially

dilutive securities were

exercised, if dilutive. Potentially dilutive securities comprise

outstanding written call options, and outstanding options and

shares granted subject to certain

conditions under the Company’s share-based payment

arrangements.

Basic earnings per share

Six months ended June 30,

Three months ended June 30,

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

2021

2020

2021

2020

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

1,290

703

760

378

Loss from discontinued operations, net of tax

(36)

(8)

(59)

Net income

1,254

695

752

319

Weighted-average number of shares outstanding (in

millions)

2,015

2,134

2,016

2,134

Basic earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.64

0.33

0.38

0.18

Loss from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

Diluted earnings per share

Six months ended June 30,

Three months ended June 30,

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

2021

2020

2021

2020

Amounts attributable to ABB shareholders:

Income from continuing operations, net of tax

1,290

703

760

378

Loss from discontinued operations, net of tax

(36)

(8)

(59)

Net income

1,254

695

752

319

Weighted-average number of shares outstanding (in millions)

2,015

2,134

2,016

2,134

Effect of dilutive securities:

Call options and shares

Adjusted weighted-average number of shares outstanding

(in millions)

2,033

2,137

2,031

2,137

Diluted earnings per share attributable to ABB shareholders:

Income from continuing operations, net of tax

0.63

0.33

0.37

0.18

Loss from discontinued operations, net of tax

(0.02)

0.00

(0.03)

Net income

0.62

0.33

0.37

0.15

─

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)

(2,145)

(5)

(5,590)

Other comprehensive (loss) income:

Other comprehensive (loss) income

before reclassifications

(386)

(89)

(6)

(463)

Amounts reclassified from OCI

(3)

123

221

Total other comprehensive (loss)

income

(287)

(4)

(242)

Less:

Amounts attributable to

noncontrolling interests

(4)

–

(4)

Balance at June 30, 2020

(3,733)

(2,111)

(9)

(5,828)

29 Q2

2021

FINANCIAL

INFORMATION

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)

(1,556)

(3)

(4,002)

Other comprehensive (loss) income:

Other comprehensive (loss) income

before reclassifications

(161)

(7)

(120)

Amounts reclassified from OCI

–

(1)

(14)

Total other comprehensive (loss)

income

(161)

(8)

–

(98)

Less:

Amounts attributable to

noncontrolling interests

–

Balance at June 30, 2021

(1)

(2,625)

(1,485)

(3)

(4,104)

(1) Due

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

The following table reflects amounts reclassified out of OCI

in respect of Foreign currency translation adjustments

and Pension and other postretirement plan

adjustments:

Six months ended

Three months ended

($ in millions)

Location of (gains) losses

June 30,

Details about OCI components

reclassified from OCI

2021

2020

2021

2020

Foreign currency translation adjustments:

Translation loss on solar inverters business (see Note

Other income (expense), net

–

Amounts reclassified from OCI

–

Pension and other postretirement plan adjustments:

Amortization of prior service cost (credit)

Non-operational pension (cost) credit

(1)

(7)

(5)

(3)

Amortization of net actuarial loss

Non-operational pension (cost) credit

(1)

Net gain (loss) from pension settlements and curtailments

Non-operational pension (cost) credit

(1)

(2)

108

(2)

108

Total before tax

159

137

Tax

Income tax expense

(36)

(4)

(30)

Amounts reclassified from OCI

123

107

(1) Amounts

include total credits of $94 million and $97 million for the six and three months ended June 30, 2020, respectively, 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 six and

three months ended June 30, 2021 and 2020.

─

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 functions, while the remaining Group-level

corporate activities primarily focus on

Group strategy, portfolio and

performance management and capital allocation.

30 Q2

2021

FINANCIAL

INFORMATION

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

June 30, 2021, by expense type:

Employee

Contract settlement,

($ in millions)

severance costs

loss order and other costs

Total

Liability at January 1, 2018

–

Expenses

–

Liability at December 31, 2018

–

Expenses

111

112

Cash payments

(44)

(1)

(45)

Change in estimates

(30)

–

(30)

Exchange rate differences

(3)

–

(3)

Liability at December 31, 2019

–

Expenses

119

136

Cash payments

(91)

(15)

(106)

Change in estimates

(10)

–

(10)

Exchange rate differences

–

Liability at December 31, 2020

121

123

Expenses

Cash payments

(50)

(1)

(51)

Change in estimates

(5)

–

(5)

Exchange rate differences

(4)

–

(4)

Liability at June 30, 2021

The following table outlines the costs incurred in the six and

three months ended June 30, 2020, and the cumulative

net costs incurred to December 31, 2020:

Net cost incurred

Cumulative net

Six months ended

Three months ended

cost incurred up to

($ in millions)

June 30, 2020

December 31, 2020

Electrification

Motion

Process Automation

(1)

Robotics & Discrete Automation

Corporate and Other

114

Total

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

Six months ended

Three months ended

incurred up to

($ in millions)

June 30, 2020

(1)

June 30, 2020

(2)

December 31, 2020

Employee severance costs

255

Estimated contract settlement, loss order and other costs

Inventory and long-lived asset impairments

Total

303

(1) Of

which $11 million was recorded in Total

cost of sales and $39 million in Other Income (expense), net.

(2) Of

which $8 million was recorded in Total cost of sales and $24 million in Other Income (expense), net.

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:

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Employee severance costs

Estimated contract settlement, loss order and other costs

Inventory and long-lived asset impairments

Total

31 Q2

2021

FINANCIAL

INFORMATION

Expenses associated with these activities are recorded in the

following line items in the Consolidated Income Statements:

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Total cost of sales

Selling, general and administrative expenses

Other income (expense), net

Total

At June 30, 2021, and December 31, 2020,

$211 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 Company 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 Corporate and Other. As a result,

while this change had no impact on segment revenues

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, 2020, 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, switchboard and panelboards, switchgear,

UPS solutions, circuit

breakers, measuring and sensing devices, control products,

wiring accessories, enclosures and cabling systems and

intelligent home and building

solutions, designed to integrate and automate lighting, heating, ventilation,

security and data communication networks.

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 Mechanical Power

Transmission.

●

Process Automation:

develops and sells a broad range of industry-specific, integrated

automation and electrification systems and solutions, as well

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, measurement

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 Divisions 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.

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 income

from operations consisting of: (a) unrealized gains and

losses on derivatives (foreign

exchange, commodities, embedded derivatives), (b) realized

gains and losses on derivatives where the underlying hedged

transaction has not yet been

realized, and (c) unrealized foreign exchange movements on receivables/payables

(and related assets/liabilities).

Certain other non-operational items generally includes certain

regulatory, compliance and

legal costs, certain other fair value changes and certain

asset

impairments,

as well as other items which are determined by management

on a case-by-case basis.

32 Q2

2021

FINANCIAL

INFORMATION

The CODM primarily reviews the results of each segment

on a basis that is before the elimination of profits made

on inventory sales between segments. Segment

results below are presented before these eliminations, with

a total deduction for intersegment profits to arrive at the

Company’s consolidated Operational EBITA.

Intersegment sales and transfers are accounted for as if the

sales and transfers were to third parties, at current market

prices.

The following tables present disaggregated segment revenues

from contracts with customers,

Operational EBITA, and the reconciliations

of consolidated

Operational EBITA to Income from

continuing operations before taxes for the six and three

months ended June 30, 2021 and 2020, as well as total

assets at

June 30, 2021, and December 31, 2020.

Six months ended June 30, 2021

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

and Other

Total

Geographical markets

Europe

2,266

1,020

1,142

814

5,248

The Americas

2,221

1,223

658

224

4,327

of which: United States

1,655

1,029

363

161

–

3,208

Asia, Middle East and Africa

1,950

1,047

1,125

642

4,775

of which: China

1,053

577

376

483

–

2,489

6,437

3,290

2,925

1,680

14,350

Product type

Products

5,557

2,845

800

1,058

10,270

Systems

450

–

760

386

1,604

Services and other

430

445

1,365

236

–

2,476

6,437

3,290

2,925

1,680

14,350

Third-party revenues

6,437

3,290

2,925

1,680

14,350

Intersegment revenues

109

227

(363)

–

Total revenues

(2)

6,546

3,517

2,947

1,685

(345)

14,350

Six months ended June 30, 2020

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

and Other

Total

Geographical markets

Europe

1,842

937

1,126

652

4,588

The Americas

1,971

1,115

689

187

3,964

of which: United States

1,550

955

445

128

3,079

Asia, Middle East and Africa

1,513

797

959

428

3,710

of which: China

761

370

268

279

–

1,678

5,326

2,849

2,774

1,267

12,262

Product type

Products

4,636

2,444

634

754

8,509

Systems

289

–

800

317

1,411

Services and other

401

405

1,340

196

–

2,342

5,326

2,849

2,774

1,267

12,262

Third-party revenues

5,326

2,849

2,774

1,267

12,262

Intersegment revenues

(1)

211

244

(450)

108

Total revenues

(2)

5,537

3,093

2,844

1,300

(404)

12,370

33 Q2

2021

FINANCIAL

INFORMATION

Three months ended June 30, 2021

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

and Other

Total

Geographical markets

Europe

1,166

551

579

396

2,697

The Americas

1,163

635

368

118

–

2,284

of which: United States

855

535

200

–

1,676

Asia, Middle East and Africa

1,021

544

583

316

2,468

of which: China

565

313

201

234

–

1,313

3,350

1,730

1,530

830

7,449

Product type

Products

2,937

1,496

418

532

5,386

Systems

181

–

412

182

781

Services and other

232

234

700

116

–

1,282

3,350

1,730

1,530

830

7,449

Third-party revenues

3,350

1,730

1,530

830

7,449

Intersegment revenues

120

(188)

–

Total revenues

(2)

3,406

1,850

1,540

832

(179)

7,449

Three months ended June 30, 2020

Robotics &

Process

Discrete

Corporate

($ in millions)

Electrification

Motion

Automation

and Other

Total

Geographical markets

Europe

878

486

549

299

2,217

The Americas

940

546

299

1,872

of which: United States

749

463

198

1,469

Asia, Middle East and Africa

835

429

500

230

2,004

of which: China

478

216

158

160

1,012

2,653

1,461

1,348

613

6,093

Product type

Products

2,274

1,246

328

367

4,231

Systems

177

–

404

160

743

Services and other

202

215

616

–

1,119

2,653

1,461

1,348

613

6,093

Third-party revenues

2,653

1,461

1,348

613

6,093

Intersegment revenues

(1)

111

122

(222)

Total revenues

(2)

2,764

1,583

1,382

629

(204)

6,154

(1) Intersegment

revenues until June 30, 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.

34 Q2

2021

FINANCIAL

INFORMATION

Six months ended

Three months ended

June 30,

($ in millions)

2021

2020

2021

2020

Operational EBITA:

Electrification

1,103

666

592

348

Motion

614

509

325

279

Process Automation

347

259

192

115

Robotics & Discrete Automation

201

102

Corporate and Other

‒

Non-core and divested businesses

(29)

(19)

(7)

(8)

‒ Stranded corporate costs

–

(40)

–

(19)

‒ Corporate costs and Other Intersegment elimination

(164)

(190)

(85)

(107)

Total

2,072

1,287

1,113

651

Acquisition-related amortization

(129)

(130)

(64)

(65)

Restructuring, related and implementation costs

(1)

(53)

(107)

(18)

(67)

Changes in obligations related to divested businesses

(6)

(1)

(4)

(1)

Changes in pre-acquisition estimates

(8)

–

(2)

–

Gains and losses from sale of businesses

(5)

(4)

Fair value adjustment on assets and liabilities held for sale

–

(19)

–

Acquisition-

and divestment-related expenses and integration costs

(30)

(27)

(20)

(16)

Other income/expense relating to the Power Grids joint venture

(19)

–

(2)

–

Foreign exchange/commodity timing differences in

income from operations:

Unrealized gains and losses on derivatives (foreign exchange,

commodities, embedded derivatives)

(56)

(8)

Realized gains and losses on derivatives where the underlying

hedged

transaction has not yet been realized

(3)

Unrealized foreign exchange movements on receivables/payables

(and

related assets/liabilities)

(11)

(6)

(9)

Certain other non-operational items:

Costs for divestment of Power Grids

–

(99)

–

(55)

Regulatory, compliance and legal

costs

(2)

–

Business transformation costs

(2)

(39)

(12)

(19)

(5)

Favorable resolution of an uncertain purchase price adjustment

–

Certain other fair value changes, including asset impairments

114

Other non-operational items

(2)

(6)

Income from operations

1,891

944

1,094

571

Interest and dividend income

Interest and other finance expense

(91)

(112)

(36)

(90)

Non-operational pension (cost) credit

Income from continuing operations before taxes

1,914

930

1,111

525

(1) Amount

includes implementation costs in relation to the OS program of $30 million and $14 million for the six and three months ended June 30, 2020, respectively.

(2) Amount

includes ABB Way process transformation costs of $33 million and $18 million for the six and three months ended June 30, 2021, respectively.

Total assets

(1), (2)

($ in millions)

June 30, 2021

December 31, 2020

Electrification

13,098

12,800

Motion

6,771

6,495

Process Automation

4,968

5,008

Robotics & Discrete Automation

4,751

4,794

Corporate and Other

9,833

11,991

Consolidated

39,421

41,088

(1) Total

assets are after intersegment eliminations and therefore reflect third-party assets only.

(2) At

June 30, 2021, and December 31, 2020, respectively, Corporate and Other includes $192 million and $282 million of assets in the Power Grids business which is reported as

discontinued operations (see Note 3). In addition, at June 30, 2021, and December 31, 2020,

Corporate and Other includes $1,660 million and $1,710 million, respectively, related to

the equity investment in Hitachi ABB Power Grids Ltd (see Note 4).

35 Q2

2021

FINANCIAL

INFORMATION

36 Q2

2021

FINANCIAL

INFORMATION

—

Supplemental Reconciliations and Definitions

The following

reconciliations

and definitions

include

measures

which ABB

uses to

supplement

its Consolidated

Financial

Information

(unaudited)

which is

prepared

in accordance

with United

States

generally

accepted

accounting

principles

(U.S. GAAP).

Certain

of these

financial

measures

are, or

may be,

considered

non-GAAP

financial

measures

as defined

in the

rules of

the U.S.

Securities

and Exchange

Commission

(SEC).

While ABB’s

management

believe

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

financial

information

prepared

in accordance

with U.S.

GAAP.

Therefore

these measures

should

not be viewed

in isolation

but considered

together

with the

Consolid

ated Financial

Information

(unaudited)

prepared

in accordance

with U.S.

GAAP as

of and for

the six

and three

months

ended June

30, 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

Q2 2021 compared to Q2 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

35%

-7%

28%

23%

-6%

17%

Motion

23%

-7%

16%

17%

-6%

11%

Process Automation

19%

-8%

11%

-7%

Robotics & Discrete Automation

52%

-11%

41%

32%

-10%

22%

ABB Group

32%

-8%

24%

21%

-7%

14%

H1 2021 compared to H1 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

23%

-6%

18%

-6%

14%

Motion

11%

-6%

14%

-6%

Process Automation

-7%

-2%

-7%

-3%

Robotics & Discrete Automation

25%

-9%

16%

30%

-10%

20%

ABB Group

18%

-7%

11%

16%

-6%

11%

37 Q2

2021

FINANCIAL

INFORMATION

Regional comparable growth rate reconciliation

Regional comparable growth rate reconciliation for ABB

Group - Quarter

Q2 2021 compared to Q2 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

33%

-10%

23%

22%

-10%

12%

The Americas

44%

-3%

41%

22%

-3%

19%

of which: United States

39%

14%

Asia, Middle East and Africa

25%

-9%

-1%

15%

23%

-9%

15%

of which: China

26%

-11%

15%

30%

-12%

19%

ABB Group

32%

-8%

24%

21%

-7%

14%

Regional comparable growth rate reconciliation by Business

Area - Quarter

Q2 2021 compared to Q2 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

44%

-11%

33%

29%

-10%

19%

The Americas

41%

-2%

39%

23%

-3%

20%

of which: United States

35%

-1%

34%

14%

Asia, Middle East and Africa

20%

-9%

11%

18%

-9%

10%

of which: China

17%

-10%

15%

-10%

Electrification

35%

-7%

28%

23%

-6%

17%

Q2 2021 compared to Q2 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

11%

-8%

11%

-7%

The Americas

41%

-3%

38%

15%

-1%

14%

of which: United States

37%

15%

Asia, Middle East and Africa

19%

-9%

10%

25%

-10%

15%

of which: China

23%

-11%

12%

41%

-13%

28%

Motion

23%

-7%

16%

17%

-6%

11%

Q2 2021 compared to Q2 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

-9%

-2%

-9%

-6%

The Americas

39%

-5%

34%

22%

-5%

17%

of which: United States

44%

-1%

43%

-1%

Asia, Middle East and Africa

22%

-8%

14%

-7%

of which: China

37%

-11%

26%

27%

-11%

16%

Process Automation

19%

-8%

11%

-7%

Q2 2021 compared to Q2 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

60%

-13%

47%

27%

-11%

16%

The Americas

80%

-2%

78%

40%

-6%

34%

of which: United States

91%

45%

Asia, Middle East and Africa

32%

-11%

21%

37%

-11%

26%

of which: China

28%

-11%

17%

45%

-13%

32%

Robotics & Discrete Automation

52%

-11%

41%

32%

-10%

22%

38 Q2

2021

FINANCIAL

INFORMATION

Regional comparable growth rate reconciliation for ABB

Group – Year to date

H1 2021 compared to H1 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

21%

-8%

13%

14%

-8%

The Americas

16%

of which: United States

16%

Asia, Middle East and Africa

29%

-10%

19%

48%

-12%

38%

of which: China

29%

-10%

19%

48%

-12%

38%

ABB Group

18%

-7%

11%

16%

-6%

11%

Regional comparable growth rate reconciliation by Business

Area – Year to date

H1 2021 compared to H1 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

26%

-10%

17%

19%

-9%

11%

The Americas

23%

-1%

22%

12%

-1%

12%

of which: United States

19%

Asia, Middle East and Africa

21%

-8%

14%

25%

-8%

20%

of which: China

35%

-11%

24%

36%

-11%

25%

Electrification

23%

-6%

18%

-6%

14%

H1 2021 compared to H1 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

-8%

-1%

-7%

-2%

The Americas

21%

-2%

19%

-1%

of which: United States

19%

Asia, Middle East and Africa

-7%

-2%

30%

-9%

21%

of which: China

22%

-11%

11%

54%

-13%

41%

Motion

11%

-6%

14%

-6%

H1 2021 compared to H1 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

12%

-10%

-1%

-9%

-10%

The Americas

-5%

-2%

-7%

-5%

-2%

-7%

of which: United States

-7%

-1%

-8%

-19%

Asia, Middle East and Africa

-6%

-2%

15%

-6%

of which: China

15%

-9%

40%

-11%

29%

Process Automation

-7%

-2%

-7%

-3%

H1 2021 compared to H1 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

26%

-10%

16%

20%

-9%

11%

The Americas

27%

-1%

26%

19%

-2%

17%

of which: United States

29%

25%

Asia, Middle East and Africa

22%

-9%

13%

49%

-11%

38%

of which: China

22%

-10%

12%

72%

-14%

58%

Robotics & Discrete Automation

25%

-9%

16%

30%

-10%

20%

39 Q2

2021

FINANCIAL

INFORMATION

Order backlog growth rate reconciliation

June 30, 2021 compared to June 30, 2020

US$

Foreign

(as

exchange

Portfolio

Business Area

reported)

impact

changes

Comparable

Electrification

13%

-4%

Motion

-4%

Process Automation

15%

-6%

Robotics & Discrete Automation

-6%

-4%

ABB Group

11%

-5%

Other growth rate reconciliations

Q2 2021 compared to Q2 2020

Service orders growth rate

Services revenues growth rate

US$

Foreign

US$

Foreign

(as

exchange

Portfolio

(as

exchange

Portfolio

Business Area

reported)

impact

changes

Comparable

reported)

impact

changes

Comparable

Electrification

28%

-7%

21%

15%

-6%

Motion

25%

-8%

17%

-6%

Process Automation

25%

-9%

16%

14%

-8%

Robotics & Discrete Automation

66%

-10%

56%

36%

-10%

26%

ABB Group

28%

-8%

20%

15%

-8%

H1 2021 compared to H1 2020

Service orders growth rate

Services revenues growth rate

US$

Foreign

US$

Foreign

(as

exchange

Portfolio

(as

exchange

Portfolio

Business Area

reported)

impact

changes

Comparable

reported)

impact

changes

Comparable

Electrification

-5%

-4%

Motion

11%

-6%

10%

-6%

Process Automation

10%

-7%

-6%

-4%

Robotics & Discrete Automation

33%

-8%

25%

20%

-6%

14%

ABB Group

11%

-6%

40 Q2

2021

FINANCIAL

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 movements on receivables/payables

(and related assets/liabilities).

Certain other non-operational items generally includes certain

regulatory, compliance and

legal costs, certain other fair value changes and certain

asset

impairments (including impairment of goodwill), 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) unrealized gains and losses on derivatives,

(ii) realized gains and

losses on derivatives where the underlying hedged transaction

has not yet been realized, and (iii) unrealized foreign exchange

movements on receivables (and

related assets). Operational revenues are not intended to be an alternative

measure to Total

revenues, which represent our revenues measured in accordance

with U.S. GAAP.

Reconciliation

The following tables provide reconciliations of consolidated

Operational EBITA to

Net Income and Operational EBITA

Margin by business.

Reconciliation of consolidated Operational EBITA

to Net Income

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Operational EBITA

2,072

1,287

1,113

651

Acquisition-related amortization

(129)

(130)

(64)

(65)

Restructuring, related and implementation costs

(1)

(53)

(107)

(18)

(67)

Changes in obligations related to divested businesses

(6)

(1)

(4)

(1)

Changes in pre-acquisition estimates

(8)

–

(2)

–

Gains and losses from sale of businesses

(5)

(4)

Fair value adjustment on assets and liabilities held for sale

–

(19)

–

Acquisition-

and divestment-related expenses and integration costs

(30)

(27)

(20)

(16)

Other income/expense relating to the Power Grids joint venture

(19)

–

(2)

–

Certain other non-operational items

(47)

–

Foreign exchange/commodity timing differences in

income from operations

(19)

(7)

Income from operations

1,891

944

1,094

571

Interest and dividend income

Interest and other finance expense

(91)

(112)

(36)

(90)

Non-operational pension (cost) credit

Income from continuing operations before taxes

1,914

930

1,111

525

Income tax expense

(574)

(209)

(322)

(130)

Income from continuing operations, net of tax

1,340

721

789

395

Income (loss) from discontinued operations, net of tax

(36)

(8)

(49)

Net income

1,304

726

781

346

(1) Amounts

include implementation costs in relation to the OS program of $30 million and $14 million for the six and three months ended June 30, 2020, respectively.

41 Q2

2021

FINANCIAL

INFORMATION

Reconciliation of Operational EBITA

margin by business

Three months ended June 30, 2021

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

elimination

Consolidated

Total revenues

3,406

1,850

1,540

832

(179)

7,449

Foreign exchange/commodity timing

differences in total revenues:

Unrealized gains and losses

on derivatives

(7)

(14)

–

(19)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

–

(5)

–

(1)

(7)

Unrealized foreign exchange movements

on receivables (and related assets)

(1)

Operational revenues

3,408

1,839

1,536

834

(181)

7,436

Income (loss) from operations

549

303

190

(22)

1,094

Acquisition-related amortization

–

Restructuring, related and

implementation costs

–

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

(1)

(13)

–

(12)

Acquisition-

and divestment-related expenses

and integration costs

–

Other income/expense relating to the

Power Grids joint venture

–

Certain other non-operational items

(9)

–

(80)

(86)

Foreign exchange/commodity timing

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities,

embedded derivatives)

(2)

–

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

(2)

(1)

(4)

(7)

Unrealized foreign exchange movements

on receivables/payables

(and related assets/liabilities)

(1)

Operational EBITA

592

325

192

(92)

1,113

Operational EBITA margin (%)

17.4%

17.7%

12.5%

11.5%

n.a.

15.0%

In the three months ended June 30, 2021, Certain other non

-operational items in the table above includes the following:

Three months ended June 30, 2021

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

and Other

Consolidated

Certain other non-operational items:

Certain other fair values changes,

including asset impairments

(10)

–

(86)

(96)

Business transformation costs

(1)

–

Other non-operational items

–

(12)

(9)

Total

(9)

–

(80)

(86)

(1) Amounts

include ABB Way process transformation costs of $18 million for the three months ended June 30, 2021.

42 Q2

2021

FINANCIAL

INFORMATION

Three months ended June 30, 2020

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

elimination

Consolidated

Total revenues

2,764

1,583

1,382

629

(204)

6,154

Foreign exchange/commodity timing

differences in total revenues:

Unrealized gains and losses

on derivatives

(23)

(13)

(30)

(3)

(1)

(70)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

–

(1)

–

Unrealized foreign exchange movements

on receivables (and related assets)

Operational revenues

2,764

1,579

1,364

633

(202)

6,138

Income (loss) from operations

305

284

117

(153)

571

Acquisition-related amortization

Restructuring, related and

implementation costs

Changes in obligations related to

divested businesses

–

Gains and losses from sale of businesses

–

Acquisition-

and divestment-related expenses

and integration costs

–

Certain other non-operational items

(7)

–

Foreign exchange/commodity timing

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities,

embedded derivatives)

(30)

(23)

(2)

(81)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

–

(1)

Unrealized foreign exchange movements

on receivables/payables

(and related assets/liabilities)

(1)

Operational EBITA

348

279

115

(134)

651

Operational EBITA margin (%)

12.6%

17.7%

8.4%

6.8%

n.a.

10.6%

In the three months ended June 30, 2020, Certain other non

-operational items in the table above includes the following:

Three months ended June 30, 2020

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

and Other

Consolidated

Certain other non-operational items:

Costs for planned divestment of Power Grids

–

Certain other fair values changes,

including asset impairments

–

(58)

Business transformation costs

–

(1)

Favorable resolution of an uncertain

purchase price adjustment

(8)

–

(8)

Other non-operational items

–

Total

(7)

–

43 Q2

2021

FINANCIAL

INFORMATION

Six months ended June 30, 2021

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

elimination

Consolidated

Total revenues

6,546

3,517

2,947

1,685

(345)

14,350

Foreign exchange/commodity timing

differences in total revenues:

Unrealized gains and losses

on derivatives

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

–

(7)

(1)

(10)

Unrealized foreign exchange movements

on receivables (and related assets)

(9)

(5)

(6)

(5)

(3)

(28)

Operational revenues

6,558

3,525

2,948

1,684

(345)

14,370

Income (loss) from operations

989

568

337

156

(159)

1,891

Acquisition-related amortization

129

Restructuring, related and

implementation costs

Changes in obligations related to

divested businesses

–

Changes in pre-acquisition estimates

–

Gains and losses from sale of businesses

(1)

(13)

–

(9)

Acquisition-

and divestment-related expenses

and integration costs

–

Other income/expense relating to the

Power Grids joint venture

–

Certain other non-operational items

(15)

–

(62)

(74)

Foreign exchange/commodity timing

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities,

embedded derivatives)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

(3)

(1)

(5)

(9)

Unrealized foreign exchange movements

on receivables/payables

(and related assets/liabilities)

(8)

(5)

(7)

(1)

(7)

(28)

Operational EBITA

1,103

614

347

201

(193)

2,072

Operational EBITA margin (%)

16.8%

17.4%

11.8%

11.9%

n.a.

14.4%

In the six months ended June 30, 2021, Certain other non-operational

items in the table above includes the following:

Six months ended June 30, 2021

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

and Other

Consolidated

Certain other non-operational items:

Regulatory, compliance and legal

costs

–

Certain other fair values changes,

including asset impairments

(19)

–

(95)

(114)

Business transformation costs

(1)

–

Other non-operational items

–

(4)

(1)

Total

(15)

–

(62)

(74)

(1) Amounts

include ABB Way process transformation costs of $33 million for the six months ended June 30, 2021.

44 Q2

2021

FINANCIAL

INFORMATION

Six months ended June 30, 2020

Corporate and

Robotics &

Other and

Process

Discrete

Intersegment

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

elimination

Consolidated

Total revenues

5,537

3,093

2,844

1,300

(404)

12,370

Foreign exchange/commodity timing

differences in total revenues:

Unrealized gains and losses

on derivatives

(3)

(1)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

–

(2)

Unrealized foreign exchange movements

on receivables (and related assets)

(6)

(4)

(7)

(2)

(14)

Operational revenues

5,547

3,086

2,843

1,302

(399)

12,379

Income (loss) from operations

504

475

241

(326)

944

Acquisition-related amortization

130

Restructuring, related and

implementation costs

107

Changes in obligations related to

divested businesses

–

Gains and losses from sale of businesses

–

Fair value adjustment on assets and liabilities

held for sale

–

Acquisition-

and divestment-related expenses

and integration costs

–

Certain other non-operational items

(7)

Foreign exchange/commodity timing

differences in income from operations:

Unrealized gains and losses on derivatives

(foreign exchange, commodities,

embedded derivatives)

(11)

(5)

–

(3)

(7)

Realized gains and losses on derivatives

where the underlying hedged

transaction has not yet been realized

(1)

–

(3)

Unrealized foreign exchange movements

on receivables/payables

(and related assets/liabilities)

(1)

(2)

–

Operational EBITA

666

509

259

102

(249)

1,287

Operational EBITA margin (%)

12.0%

16.5%

9.1%

7.8%

n.a.

10.4%

In the six months ended June 30, 2020, Certain other non-operational

items in the table above includes the following:

Six months ended June 30, 2020

Robotics &

Process

Discrete

Corporate

($ in millions, unless otherwise indicated)

Electrification

Motion

Automation

and Other

Consolidated

Certain other non-operational items:

Costs for planned divestment of Power Grids

–

Certain other fair values changes,

including asset impairments

–

(58)

Business transformation costs

–

Favorable resolution of an uncertain

purchase price adjustment

(8)

–

(8)

Other non-operational items

–

Total

(7)

45 Q2

2021

FINANCIAL

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)

June 30, 2021

December 31, 2020

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

2,117

1,293

Long-term debt

4,375

4,828

Total debt (gross debt)

6,492

6,121

Cash and equivalents

2,860

3,278

Restricted cash - current

323

Marketable securities and short-term investments

1,002

2,108

Restricted cash - non-current

300

Cash and marketable securities

4,233

6,009

Net debt

2,259

112

Net debt/Equity ratio

Definition

Net debt/Equity ratio

Net debt/Equity ratio is defined as Net debt divided by

Equity.

Equity

Equity is defined as Total

stockholders’ equity.

Reconciliation

($ in millions, unless otherwise indicated)

June 30, 2021

December 31, 2020

Total stockholders

equity

14,266

15,999

Net debt (as defined above)

2,259

112

Net debt / Equity ratio

0.16

0.01

Net debt/EBITDA ratio

Definition

Net debt/EBITDA ratio

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

EBITDA

EBITDA is defined as Income from operations for the trailing twelve

months preceding the balance sheet date before depreciation

and amortization for the same

trailing twelve-month period.

Reconciliation

($ in millions, unless otherwise indicated)

June 30, 2021

June 30, 2020

Income from operations for the three months ended:

June 30, 2021/2020

1,094

571

March 31, 2021/2020

797

373

December 31, 2020/2019

578

648

September 30, 2020/2019

577

Depreciation and Amortization for the three months ended:

June 30, 2021/2020

230

228

March 31, 2021/2020

227

December 31, 2020/2019

229

246

September 30, 2020/2019

231

235

EBITDA

3,457

3,105

Net debt (as defined above)

2,259

7,615

Net debt / EBITDA ratio

0.7

2.5

46 Q2

2021

FINANCIAL

INFORMATION

Net working capital as a percentage of revenues

Definition

Net working capital as a percentage of revenues

Net working capital as a percentage of revenues is calculated

as Net working capital divided by Adjusted revenues for

the trailing twelve months.

Net working capital

Net working capital is the sum of (i) receivables, net, (ii) contract

assets, (iii) inventories, net, and (iv) prepaid expenses; less

(v) accounts payable, trade, (vi)

contract liabilities, and (vii) other current liabilities (excluding

primarily: (a) income taxes payable, (b) current derivative

liabilities, (c) pension and other employee

benefits, (d) payables under the share buyback program and

(e) liabilities related to the divestment of the Power

Grids business); and including the amounts

related to these accounts which have been presented as

either

assets or liabilities held for sale but excluding any amounts

included in discontinued operations.

Adjusted revenues for the trailing twelve months

Adjusted revenues for the trailing twelve months includes total

revenues recorded by ABB in the twelve months preceding

the relevant balance sheet date adjusted

to eliminate revenues of divested businesses and the estimated

impact of annualizing revenues of certain acquisitions

which were completed in the same trailing

twelve-month period.

Reconciliation

($ in millions, unless otherwise indicated)

June 30, 2021

June 30, 2020

Net working capital:

Receivables, net

(1)

7,113

6,150

Contract assets

1,087

1,110

Inventories, net

4,700

4,395

Prepaid expenses

229

256

Accounts payable, trade

(4,708)

(4,062)

Contract liabilities

(1,846)

(1,703)

Other current liabilities

(2)

(3,324)

(2,869)

Net working capital

3,251

3,277

Total revenues for the three

months ended:

June 30, 2021 / 2020

7,449

6,154

March 31, 2021 / 2020

6,901

6,216

December 31, 2020 / 2019

7,182

7,068

September 30, 2020 / 2019

6,582

6,892

Adjustment to annualize/eliminate revenues of certain acquisitions/divestments

–

(269)

Adjusted revenues for the trailing twelve months

28,114

26,061

Net working capital as a percentage of revenues (%)

11.6%

12.6%

(1) Amount

excludes receivables related to sales of investments outstanding at June 30, 2021.

(2) Amounts

exclude $705 million and $578 million at June 30, 2021 and 2020, respectively, related primarily to (a) income taxes payable, (b) current derivative liabilities, (c) pension and

other employee benefits and (d) payables under the share buyback program and (e) liabilities related to the divestment of the Power Grids business.

47 Q2

2021

FINANCIAL

INFORMATION

Free cash flow conversion to net income

Definition

Free cash flow conversion to net income

Free cash flow conversion to net income is calculated as

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 property,

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)

June 30, 2021

December 31, 2020

Net cash provided by operating activities – continuing operations

2,809

1,875

Adjusted for the effects of continuing operations:

Purchases of property, plant and equipment

and intangible assets

(684)

(694)

Proceeds from sale of property, plant

and equipment

110

114

Free cash flow from continuing operations

2,235

1,295

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

operations

(13)

(182)

Adjusted for the effects of discontinued operations:

Purchases of property, plant and equipment

and intangible assets

(15)

(108)

Proceeds from sale of property, plant

and equipment

–

Free cash flow

2,207

1,006

Adjusted net income attributable to ABB

(1)

1,064

478

Free cash flow conversion to net income

207%

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 June 30,

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

(used in)

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)

Q3 2020

398

(129)

–

(479)

Q4 2020

1,225

(262)

(43)

(15)

–

262

Q1 2021

523

(142)

–

526

Q2 2021

663

(151)

–

755

Total for the trailing

twelve months to

June 30, 2021

2,809

(684)

110

(13)

(15)

–

1,064

(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. Q2 2021 is adjusted to exclude the adjustment to the

gain on the sale of Power Grids of $3 million.

48 Q2

2021

FINANCIAL

INFORMATION

Net finance 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

Six months ended June 30,

Three months ended June 30,

($ in millions)

2021

2020

2021

2020

Interest and dividend income

Interest and other finance expense

(91)

(112)

(36)

(90)

Net finance expenses

(65)

(85)

(21)

(81)

Book-to-bill ratio

Definition

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

Total revenues.

Reconciliation

Six months ended June 30,

2021

2020

($ in millions, except Book-to-bill presented as a ratio)

Orders

Revenues

Book-to-bill

Orders

Revenues

Book-to-bill

Electrification

7,224

6,546

1.10

5,858

5,537

1.06

Motion

3,864

3,517

1.10

3,487

3,093

1.13

Process Automation

3,211

2,947

1.09

3,062

2,844

1.08

Robotics & Discrete Automation

1,809

1,685

1.07

1,449

1,300

1.11

Corporate and Other

(incl. intersegment eliminations)

(363)

(345)

n.a.

(456)

(404)

n.a.

ABB Group

15,745

14,350

1.10

13,400

12,370

1.08

Three months ended June 30,

2021

2020

($ in millions, except Book-to-bill presented as a ratio)

Orders

Revenues

Book-to-bill

Orders

Revenues

Book-to-bill

Electrification

3,693

3,406

1.08

2,737

2,764

0.99

Motion

1,947

1,850

1.05

1,586

1,583

1.00

Process Automation

1,555

1,540

1.01

1,305

1,382

0.94

Robotics & Discrete Automation

968

832

1.16

638

629

1.01

Corporate and Other

(incl. intersegment eliminations)

(174)

(179)

n.a.

(212)

(204)

n.a.

ABB Group

7,989

7,449

1.07

6,054

6,154

0.98

49 Q2

2021

FINANCIAL

INFORMATION

—

ABB Ltd

Corporate Communications

P.O. Box

8131

8050

Zurich

Switzerland

Tel: +41

(0)43 317

71 11

www.abb.com

April 7 — June 30, 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

Peter Voser

May 12, 2021

20,089

CHF

28.38

Gunnar Brock

May 12, 2021

4,542

CHF

28.38

David Constable

May 12, 2021

2,359

CHF

28.38

Frederico Curado

May 12, 2021

4,090

CHF

28.38

Lars Förberg

May 12, 2021

5,347

CHF

28.38

Jennifer Xin-Zhe Li

May 12, 2021

1,993

CHF

28.38

Geraldine Matchett

May 12, 2021

2,906

CHF

28.38

David Meline

May 12, 2021

2,696

CHF

28.38

Satish Pai

May 12, 2021

2,055

CHF

28.38

Jacob Wallenberg

May 12, 2021

3,033

CHF

28.38

Peter Terwiesch

May 05, 2021

CHF

29.74

Peter Terwiesch

May 05, 2021

19,999

CHF

29.79

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: July 22, 2021.

By:

/s/ Ann-Sofie Nordh

Name:

Ann-Sofie Nordh

Title:

Group Senior Vice President

and

Head of Investor Relations

Date: July 22, 2021.

By:

/s/ Richard A. Brown

Name:

Richard A. Brown

Title:

Group Senior Vice President

and

Chief Counsel Corporate & Finance