6-K 1 tm2135244-2_6k.htm FORM 6-K abb2021q4fininfo
 
 
 
 
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 February 2022
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s
 
name into English)
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
 
reports under cover of Form 20-F or Form 40-F.
 
Form 20-F
 
Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper
 
as permitted by Regulation S-T Rule 101(b)(1):
Note:
 
Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form
 
6-K if submitted solely to provide an
attached annual report to security holders.
Indication by check mark if the registrant is submitting the Form 6-K
 
in paper as permitted by Regulation S-T Rule 101(b)(7):
Note:
 
Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form
 
6-K if submitted to furnish a report or
other document that the registrant foreign private issuer must furnish
 
and make public under the laws of the jurisdiction in
which the registrant is incorporated, domiciled or legally organized
 
(the registrant’s “home country”),
 
or under the rules of the
home country exchange on which the registrant’s
 
securities are traded, as long as the report or other document is not a press
release, is not required to be and has not been distributed to the registrant’s
 
security holders, and, if discussing a material event,
has already been the subject of a Form 6-K submission or other Commission filing
 
on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
 
contained in this Form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under
 
the Securities Exchange Act of 1934.
 
Yes
 
No
If “Yes”
 
is marked, indicate below the file number assigned to the registrant in
 
connection with Rule 12g3-2(b): 82-
 
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated February 3, 2022 titled “Q4 2021 results”.
2.
Q4 2021 Financial Information.
3.
Press release issued by ABB Ltd dated February 2, 2022 titled “ABB appoints Andrea
 
Antonelli as General
Counsel
 
and Company Secretary”.
4.
Announcements regarding transactions in ABB Ltd’s
 
Securities made by the directors or the members of the
Executive Committee.
 
The information provided
 
by Item 2 above is hereby incorporated by reference into the Registration
 
Statements on Form F-3 of
ABB Ltd and ABB Finance (USA) Inc. (File Nos. 333-223907
 
and 333-223907-01) and registration statements on Form S-8
(File Nos. 333-190180, 333-181583, 333-179472, 333-171971
 
and 333-129271) each of which was previously filed with the
Securities and Exchange Commission.
2
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ZURICH, SWITZERLAND, FEBRUARY 3, 2022
Q4 2021 results
Strong demand, increased earnings and margin
support a robust cash flow
Q4 2021
 
Orders $8.3 billion, +18%; comparable
1
 
+21%
 
 
Revenues $7.6 billion, +5%; comparable +8%
 
 
Income from operations $2,975 million; margin 39.3%
 
 
Operational EBITA
1
 
$988 million; margin
1
 
13.1%
 
Basic EPS $1.34; up from $-0.04 year on year
 
Cash flow from operating activities was $1,020 million and
from operating activities in continuing operations it was
$1,033 million
FY 2021
 
Orders $31.9 billion, +20%; comparable
1
 
+17%
 
 
Revenues $28.9 billion, +11%; comparable +8%
 
 
Income from operations $5,718 million; margin 19.8%
 
 
Operational EBITA
1
 
$4,122 million; margin
1
 
14.2%
 
Basic EPS $2.27; -7%
2
 
Cash flow from operating activities was $3,330 million and
from operating activities in continuing operations it was
$3,338 million
 
Dividend proposal of CHF 0.82 per share, up from CHF 0.80
last year
“2021 was a good year with strong demand, improved profitability, consolidation of our
portfolio and strong cash flow. We
 
look towards 2022 with confidence.”
Björn Rosengren
, CEO
Ad hoc Announcement pursuant to Art. 53 Listing
 
Rules of SIX Swiss Exchange
Q4 2021
Full year
Press Release
KEY FIGURES
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
1
FY 2021
FY 2020
US$
Comparable
1
Orders
8,257
7,003
18%
21%
31,868
26,512
20%
17%
Revenues
7,567
7,182
5%
8%
28,945
26,134
11%
8%
Gross Profit
2,397
2,147
12%
9,467
7,878
20%
as % of revenues
31.7%
29.9%
+1.8 pts
32.7%
30.1%
+2.6 pts
Income from operations
2,975
578
415%
5,718
1,593
259%
Operational EBITA
1
988
825
20%
22%
 
3
4,122
2,899
42%
37%
 
3
as % of operational revenues
1
13.1%
11.5%
+1.6 pts
14.2%
11.1%
+3.1 pts
Income (loss) from continuing operations, net of
tax
2,703
127
n.a.
4,730
345
n.a.
Net income attributable to ABB
2,640
(79)
n.a.
4,546
5,146
-12%
Basic earnings per share ($)
 
1.34
(0.04)
n.a.
2
2.27
2.44
-7%
2
Cash flow from operating activities
4
1,020
1,182
-14%
3,330
1,693
97%
Cash flow from operating activities in continuing
operations
1,033
1,225
-16%
3,338
1,875
78%
1
For a reconciliation of non-GAAP measures, see
 
“supplemental reconciliations and definitions”
 
in the attached Q4 2021 Financial Information.
2
EPS growth rates are computed using unrounded
 
amounts.
 
3
Constant currency (not adjusted for portfolio changes).
4
Amount represents total for both continuing and
 
discontinued operations.
abb2021q4fininfop4i0.jpg
ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
2
In the fourth quarter,
 
demand increased significantly and
orders grew by 18% year-on-year (21% comparable) with
underlying strength shown across all business areas,
regions and most customer segments. Revenue growth of
5% (8% comparable) was stronger than expected, due
primarily to higher project deliveries towards the end of the
period and despite supply chain disruptions in parts of our
business. We expect supply chain constraints to prevail
near-term. Importantly, we did not experience any unusual
order cancellations, which adds comfort to the high level of
order backlog of $16.6 billion, up 16% year-on-year (21%
comparable).
Operational EBITA increased by 20% year-on-year, and
despite adverse impacts from supply chain imbalances and
some cost inflation we achieved a 160bps improvement of
the Operational EBITA margin to 13.1%. This improvement
includes last year’s adverse margin impact of 80bps due to
the charges triggered by the Kusile project in South Africa
as well as non-core items.
At $1.0 billion we maintained a strong cash generation in
the fourth quarter, and I am pleased with us closing 2021
with a total cash flow from operating activities in continuing
operations of $3.3 billion, representing an annual
improvement of $1.5 billion.
We successfully closed the divestment of the Mechanical
Power Transmission (Dodge) division on November 1. This
triggered a book gain of $2.2 billion reported in income from
operations. This marks the completion of the announced first
step to focus the business portfolio on our leading position in
electrification and automation. As part of these actions, we
have appointed a new Head of the Turbocharging division
and while a spin-off looks more likely, we will make a final
decision towards the end of the first quarter. Meanwhile,
efforts to separately list the E-mobility business are moving
ahead and we aim to complete this during the second quarter
2022.
On the back of added confidence for our future growth and
profitability, we lifted our long-term targets at our Capital
Markets Day in December. Our leading position in resource
efficiency through electrification and automation, new ways
of working through the decentralized operating model,
improved performance management system and
acceleration of ESG drivers are expected to drive our
through-the-cycle revenue growth
to 4-7%, in constant currency. This is the total of 3-5%
organic growth and 1-2% acquired growth. We also
sharpened our Operational EBITA margin target to be at
least 15% as from 2023, in any given year.
We firmed up our ambition to drive industry leadership in
circularity. By 2030, the goal is to have 80% of ABB products
and solutions covered by our common approach for circular
customer solutions and circularity in our own operations.
To support our growth ambitions and leading offering, we
invested in start-up company BrainBox AI which pioneers
the use of artificial intelligence to reduce energy costs and
carbon emissions from Heating, Ventilation and Air
Conditioning (HVAC) systems in commercial buildings.
Additionally, we entered into a strategic partnership with
start-up Sevensense, to enhance our new autonomous
mobile robotics (AMR) offering with artificial intelligence and
3D vision mapping technology.
After the close of the quarter, the E-mobility division took
action to strengthen its position on the US market as it
increased its stake to a controlling 60% in InCharge Energy.
InCharge Energy tailors end-to-end EV charging
infrastructure solutions, including the procurement,
installation, operation, and maintenance of charging
systems, and provides cloud-based software services to
optimize energy management.
Considering improving performance, strong cash flow and
robust balance sheet, the Board of Directors proposes an
ordinary dividend of CHF 0.82 per share. Up from CHF 0.80
in the previous year and in line with the long-term ambition
of a rising sustainable dividend per share over time, while
still prioritizing a continued solid balance sheet to support
our growth ambitions. We plan to continue our share
buybacks for full year of 2022, also in excess of the PG
capital return program.
Björn Rosengren
CEO
In the
first quarter of 2022
, ABB anticipates the underlying
market activity to remain overall stable compared with the prior
quarter. Revenues in the first quarter tend to be sequentially
seasonally softer in absolute terms. ABB anticipates the
Operational EBITA margin to remain broadly stable or to be
slightly up, compared with the prior quarter.
In full year 2022
, we expect a steady margin improvement
towards the 2023 target of at least 15%, supported by
increased efficiency as we fully incorporate the decentralized
operating model and performance culture in all our divisions.
Furthermore, we expect support from an anticipated positive
market momentum and our strong order backlog.
CEO summary
Outlook
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ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
3
In the fourth quarter,
 
demand was strong across the board and
orders improved by 18% (21% comparable) year-on-year,
growing from an already relatively high level and despite a
lower contribution from large orders received in the current
quarter. Total
 
order intake amounted to the high level of
$8,257 million, supported by both the short-cycle as well as the
process-related businesses and a 14% (16% comparable)
improvement in the service business. All business areas
reported strong double-digit order growth, except for Process
Automation, which faced a high comparable in last year’s
quarter and reported a flat development.
 
All customer segments improved year-on-year. Orders grew
strongly in the machine building and food & beverage
segments, as well as in general industries overall. The
automotive segment increased due to broadly accelerating
investments in the EV segment.
In transport and infrastructure, there was a very strong order
development across the renewables and e-mobility business.
The buildings segment improved in both the residential and
non-residential segments. The marine segment recovered,
including a positive development in the cruise segment with
customers initiating service spend in anticipation of upcoming
cruising activities.
The process-related business improved across most of the
customer segments.
 
From a geographical perspective, demand was strong in all
three regions. In Europe and Americas orders increased by
26% (31% comparable) and 32% (38% comparable)
respectively. While order intake in China increased by 17%
(14% comparable), the region of Asia Middle East and Africa
declined by 1% (2% comparable) from last year, when certain
large project orders were received.
Revenues increased by 5% (8% comparable) with contribution
from positive volumes in a generally strong demand
environment and execution of the order backlog. Additionally,
there was support from a positive pricing development, but also
due to stronger than expected project deliveries late in the
period. The impact from imbalances in the supply chain
adversely affected the revenues as component shortages and
strained logistics triggered protracted lead times for some
customer deliveries. Sequentially,
 
these challenges remained
broadly stable. The strong order intake and certain limitations
on deliveries resulted in a book-to-bill ratio of 1.09 and an order
backlog of $16.6 billion, up by 16% year-on-year (21%
comparable).
Orders and revenues
 
Orders by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q4 2021
Q4 2020
US$
Comparable
Europe
3,138
2,497
26%
31%
The Americas
2,640
2,002
32%
38%
Asia, Middle East
and Africa
2,479
2,504
-1%
-2%
ABB Group
8,257
7,003
18%
21%
Growth
Q4
Q4
Change year-on-year
Orders
Revenues
Comparable
21%
8%
FX
-2%
-2%
Portfolio changes
-1%
-1%
Total
18%
5%
Revenues by region
($ in millions,
unless otherwise
indicated)
CHANGE
Q4 2021
Q4 2020
US$
Comparable
Europe
2,756
2,710
2%
6%
The Americas
2,198
2,045
7%
12%
Asia, Middle East
and Africa
2,613
2,427
8%
7%
ABB Group
7,567
7,182
5%
8%
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ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
4
Gross profit
Gross margin increased to 31.7%, up 180bps year-on-year, driven
by Process Automation and lower project charges.
 
Gross profit
improved by 12% to $2,397 million.
Income from operations
Income from operations amounted to $2,975 million, improving by
close to $2.4 billion, mainly due to the positive impact from the
$2.2 billion book gain related to the completion of the divestment of
the Mechanical Power Transmission division, in the Motion
business area. The improvement was also driven by strong
operational performance and approximately $140 million less
restructuring costs, partially offset by separation costs of
$36 million.
Operational EBITA
Operational EBITA of $988 million was 20% higher (22% constant
currency) year-on-year, with the increased profit in Process
Automation as the main driver. The Operational EBITA margin
improved by 160bps to 13.1%, including last year’s adverse margin
impact of 80bps due to the specific items impacting comparability
triggered by the Kusile project in South Africa as well as non-core
items. The operational improvement was due to the combined
positive impact from higher volumes, positive price development
and increased efficiency, which more than offset adverse effects
from primarily cost inflation related to raw materials and freight.
Both Process Automation as well as Robotics and Discrete
Automation improved profitability, while Electrification and Motion
declined,
with the latter primarily due to the divestment of
Mechanical Power Transmission.
 
Selling, general and administrative (SG&A) expenses increased by
7% (9% in constant currency), while the ratio in relation to revenues
remained relatively stable at 17.9%, compared with 17.7% last
year. Corporate and Other Operational EBITA improved by
$36 million, to -$108 million.
 
Net finance expenses
Net finance expenses
1
 
declined to $26 million from $199 million,
primarily reflecting the absence of losses on extinguishment of debt
and slightly lower underlying debt compared with last year.
 
Income tax
Income tax expense was $282 million with an effective tax rate of
9.4%. The low rate reflects the approximate $210 million of income
tax expense related to the $2.2 billion book gain due to the
divestment of the Mechanical Power Transmission business. In
addition, we benefited from favorable resolution of prior year tax
matters and together these reduced the reported tax rate by
approximately 9 percentage points. For the full year 2021, the tax
rate was 18.3%, reduced by approximately 8 percentage points by
the impact from the divestment and certain tax benefits in the third
and fourth quarter.
Net income and earnings per share
Net income attributable to ABB was $2,640 million and increased
significantly from last year due to the book gain related to the
divestment of Mechanical Power Transmission as well as increased
earnings in continuing operations.
 
Consequently,
 
basic earnings per
share was $1.34 and increased from last year’s loss of $0.04, when
early repayment of bonds and non-operational pension costs had an
adverse impact.
Earnings
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ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
5
Net working capital
Net working capital amounted to $2,303 million, declining
both year-on-year from $2,718 million and sequentially from
$2,920 million. The sequential decline was driven primarily
by payables as inventories and receivables remained
largely stable. Net working capital as a percentage of
revenues
1
 
was 8.1%.
 
Capital expenditures
Purchases of property, plant and equipment and intangible
assets amounted to $361 million, higher than anticipated due
mainly to the opportunity to acquire a formerly leased property
in China.
 
Net debt
A net cash
1
 
position of $98 million was achieved at the end of
the quarter, compared with last year’s net debt of
$112 million. Sequentially,
 
net debt was reduced from
$1,898 million,
 
including the contribution from completing the
divestment of Mechanical Power Transmission.
 
Cash flows
Cash flow from operating activities in continuing operations
was $1,033 million and declined year-on-year from
$1,225 million. The quarterly year-on-year decline was
related to a lower reduction of trade net working capital.
Cash flow was impacted by approximately $300 million cash
tax related to the Mechanical Power Transmission
divestment, compared with approximately $200 million in
the prior year quarter due to the Kusile settlement and
pension plan transfers.
Share buyback program
A 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. Since the launch of the follow-up
program on April 9 and through the end of 2021, a total of
58,627,600 shares were repurchased for the total of
approximately $2.0 billion,
 
including 32,785,000 shares in the
fourth quarter. Shares were repurchased on the second trading
line. The total number of ABB Ltd’s issued shares is
2,053,148,264.
($ millions,
 
unless otherwise indicated)
Dec. 31
2021
Dec. 31
2020
Short term debt and current
maturities of long-term debt
1,384
 
1,293
 
Long-term debt
4,177
 
4,828
 
Total debt
5,561
 
6,121
 
Cash & equivalents
4,159
 
3,278
 
Restricted cash - current
30
 
323
 
Marketable securities and
 
short-term investments
1,170
 
2,108
 
Restricted cash - non-current
300
 
300
 
Cash and marketable securities
5,659
 
6,009
 
Net debt (cash)*
(98)
112
 
Net debt (cash)* to EBITDA ratio
(0.01)
0.04
 
Net debt (cash)* to Equity ratio
(0.01)
0.01
 
*
net debt excludes net pension liabilities $871
 
million
Balance sheet & Cash flow
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ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
6
Orders and revenues
Order intake of $3,638 million increased by 18% year-on-year
(20% comparable) and represents one of the strongest
quarters on record, supported by an overall positive
development in all customer segments. Supply chain
constraints hampered revenues. Consequently, Electrification
enters 2022 with a record-high order backlog of $5.5 billion to
execute, while supply chain challenges are expected to
persist near term.
Strong comparable order growth was driven by a positive
development in all divisions. E-mobility and Power
Conversion were particularly strong, albeit relatively small in
absolute terms.
All segments improved. Momentum was stronger in
buildings, food & beverage, infrastructure, renewables and
e-mobility. The pace of improvement was more moderate in
oil & gas and utilities.
Order growth was very strong in both Americas at 41%
(40% comparable) and Europe at 15% (19% comparable).
Asia, Middle East and Africa remained stable, including a
decline of 3% (6% comparable) in China on high
comparables.
Revenues improved by 3% (4% comparable), mainly due to
strong pricing execution as volumes were hampered by
supply chain disruptions including component shortages
and a tight labor market. All regions noted stable to positive
growth, with the strongest comparable contribution from
Americas and Europe while Asia, Middle East and Africa
remained stable.
 
Profit
The impact from higher revenues was offset primarily by
higher raw material and freight costs, and while gross
margin remained stable, the Operational EBITA declined by
3% (1% constant currency) to $507 million, from a high
comparable.
 
Operational EBITA margin declined by 80bps
to 14.8% in the fourth quarter, which tends to be seasonally
soft.
The component shortages mostly impacted the largest
division, Distribution Solutions, due to its large systems
sales. This, and the impact from higher costs for primarily
raw materials,
 
freight and higher sales costs, weighed on
business area earnings and margins year-on-year and
more than offset impacts from increased efficiency,
positive pricing and higher profits in the smaller divisions.
Electrification
Growth
Q4
Q4
Change year-on-year
Orders
Revenues
Comparable
20%
4%
FX
-2%
-1%
Portfolio changes
0%
0%
Total
18%
3%
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
FY 2021
FY 2020
US$
Comparable
Orders
3,638
3,074
18%
20%
14,381
11,884
21%
18%
Order backlog
5,458
4,358
25%
29%
5,458
4,358
25%
29%
Revenues
3,445
3,356
3%
4%
13,187
11,924
11%
9%
Operational EBITA
507
522
-3%
2,121
1,681
26%
as % of operational revenues
14.8%
15.6%
-0.8 pts
16.1%
14.1%
+2 pts
Cash flow from operating activities
715
882
-19%
2,181
1,757
24%
No. of employees (FTE equiv.)
50,800
50,500
1%
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ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
7
Orders and revenues
Demand was strong across the board, which supported the
double-digit growth in both the short- and long-cycle
businesses as well as in the service business.
 
Despite the divestment of the Mechanical Power
Transmission division, order intake amounted to
$1,843 million, representing a reported growth of 19%,
with market strength further visible in the remaining
divisions (29% comparable).
All divisions reported strong double-digit order growth,
supported by a positive development in all customer
segments for electrical motors and drives. Orders were
supported by a higher level of project orders coming
through, year-on-year.
All regions improved, although the very strong order
growth in Europe and the Americas outpaced the high
single-digit improvement in Asia, Middle East and Africa,
which included a slight order growth in China.
 
The focused efforts to ease the impact from component
shortages by re-designing products and onboarding
additional sourcing options are increasingly paying off in
some areas, compared with the previous quarter.
Consequently, most divisions increased revenues which
amounted to $1,735 million, up 2% (9% comparable),
year-on-year.
Profit
Despite the divestment of the Mechanical Power
Transmission division early in the quarter, the Operational
EBITA remained largely stable year-on-year at $278 million.
The Operational EBITA margin declined by 70bps year-
on-year, out of which approximately 50bps was related to
the divestment of the Mechanical Power Transmission.
Additional slight margin pressure was primarily due to
increased raw material and freight costs as well as
divisional mix, which offset the positive impacts from
higher revenues and efficiency measures.
 
The divestment of the Mechanical Power Transmission
division for $2.9 billion in cash was completed,
 
triggering a
non-operational pre-tax book gain of $2.2 billion in income
from operations.
Growth
Q4
Q4
Change year-on-year
Orders
Revenues
Comparable
29%
9%
FX
-2%
-1%
Portfolio changes
-8%
-6%
Total
19%
2%
Motion
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
FY 2021
FY 2020
US$
Comparable
Orders
1,843
1,552
19%
29%
7,616
6,574
16%
14%
Order backlog
3,749
3,320
13%
20%
3,749
3,320
13%
20%
Revenues
1,735
1,705
2%
9%
6,925
6,409
8%
7%
Operational EBITA
278
285
-2%
1,183
1,075
10%
as % of operational revenues
16.1%
16.8%
-0.7 pts
17.1%
16.8%
+0.3 pts
Cash flow from operating activities
416
424
-2%
1,362
1,283
6%
No. of employees (FTE equiv.)
20,100
20,900
-4%
abb2021q4fininfop10i2.gif abb2021q4fininfop10i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2021q4fininfop10i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
8
Orders and revenues
Order intake for the quarter of $1,898 million remained
stable at last year’s record-high level, despite significantly
less contribution from large orders received. Consequently,
while growth was very strong in base orders, total order
growth remained largely flat at -1% (0% comparable). Order
backlog increased slightly sequentially to $6.1 billion.
Demand was strong across almost all customer segments
with power generation remaining stable. Orders in the
service business increased by 19% (21% comparable),
including a significant improvement related to the cruise
business.
Excluding the impact from large orders
5
, order intake
increased by at least 20% in all regions. Large orders
received in the year-earlier period resulted in declining
total orders in Asia, Middle East and Africa.
Revenues increased by 17% (19% comparable) with
support from all divisions on successful execution of the
order backlog and a generally strong demand environment
in the relatively more short-cycle business like
Measurement and Analytics.
Profit
All divisions improved both earnings and margin compared
with the corresponding quarter last year, which included the
already communicated items impacting comparability of
approximately $43 million. In total, the business area’s
Operational EBITA increased by 140%, to $247 million, and
the Operational EBITA margin improved to 13.7% from
6.8%.
The earnings and margin increase were driven by higher
volumes and efficiency measures.
 
Impacts from component shortages were limited in the
period, although may increase near-term.
 
As part of the process to exit the Turbocharging business, a
new divisional President has been appointed, as Daniel
Bischofberger rejoins ABB.
 
Growth
Q4
Q4
Change year-on-year
Orders
Revenues
Comparable
0%
19%
FX
-1%
-2%
Portfolio changes
0%
0%
Total
-1%
17%
Process Automation
5
Large orders, defined as orders >$15 million
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
FY 2021
FY 2020
US$
Comparable
Orders
1,898
1,918
-1%
0%
6,779
6,144
10%
7%
Order backlog
6,079
5,805
5%
10%
6,079
5,805
5%
10%
Revenues
1,805
1,545
17%
19%
6,259
5,792
8%
5%
Operational EBITA
247
103
140%
801
451
78%
as % of operational revenues
13.7%
6.8%
+6.9 pts
12.8%
7.8%
+5 pts
Cash flow from operating activities
370
196
89%
1,062
454
134%
No. of employees (FTE equiv.)
22,000
22,200
-1%
abb2021q4fininfop11i2.gif abb2021q4fininfop11i1.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2021q4fininfop11i0.jpg
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
9
Orders and revenues
Due to the broad-based strength in all customer segments
order intake amounted to $1,100 million, representing a
significant increase of 57% (59% comparable), albeit from a low
comparable in the year-earlier period. Order backlog increased
to the high level of $1.9 billion, as the pace of converting strong
orders into revenues was protracted due to component
shortages, which are expected to remain also in the coming
quarter.
Both divisions reported double-digit order growth, with
Machine Automation outpacing Robotics on a lower
comparable.
The automotive segment benefited from investments in EV
capacity, with the strongest increase noted in China. The
conscious effort to grow in the general industry segment is
paying off as steep order growth resulted in the strongest
contribution in absolute terms, supporting future profitability
as the backlog is executed. Demand from machine builders
was stellar, despite extended delivery times.
All regions increased orders at a high rate of at least 40%
year-on-year.
Despite the strong order intake, revenues remained broadly
stable year-on-year at $799 million, as component shortages
slowed the pace of customer deliveries in both divisions.
Supply constraints primarily relate to semiconductor
shortages and logistics.
Profit
Both profit and profitability increased year-on-year, despite
the lack of revenue growth. Operational EBITA improved by
8% with a margin increase of 80bps.
In total, the positive impacts from increased efficiency and
favorable mix due to a lower share of systems sales
compared with the year-earlier period, more than offset
the adverse impacts from increased freight and input
costs.
The positive earnings and profitability development in
Robotics more than offset the decline in Machine
Automation where the impacts from supply chain
disruptions were relatively higher.
 
Growth
Q4
Q4
Change year-on-year
Orders
Revenues
Comparable
59%
-1%
FX
-3%
-2%
Portfolio changes
1%
3%
Total
57%
0%
Robotics & Discrete Automation
CHANGE
CHANGE
($ millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
FY 2021
FY 2020
US$
Comparable
Orders
1,100
699
57%
59%
3,844
2,868
34%
29%
Order backlog
1,919
1,403
37%
43%
1,919
1,403
37%
43%
Revenues
799
801
0%
-1%
3,297
2,907
13%
9%
Operational EBITA
64
59
8%
355
237
50%
as % of operational revenues
8.1%
7.3%
+0.8 pts
10.8%
8.2%
+2.6 pts
Cash flow from operating activities
129
134
-4%
374
378
-1%
No. of employees (FTE equiv.)
10,600
10,300
3%
abb2021q4fininfop12i1.gif abb2021q4fininfop12i0.gif
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2021q4fininfop12i2.jpg
ABB
 
INTERIM
 
REPORT
I
Q4 2021
10
Quarterly highlights
At the Capital Markets Day in December, ABB unveiled
its circularity framework covering every stage of the
product lifecycle to preserve resources. It includes four
stages: circular design and sourcing, resource efficient
operations, optimized use phase and responsible end of
life. The goal is to have 80% of ABB products, solutions
and services covered by the circularity framework by
2030, with the company’s progress measured against a
set of KPIs.
Safety performance was good for the year with ABB
having zero fatalities in 2021, the first time since 2011,
and underlines the company’s efforts to continuously
advance its world-class safety practices, an integral part
of its sustainability ambitions.
ABB Robotics signed an agreement to collaborate with
California-based Zume, a global provider of innovative,
compostable packaging. ABB will supply robotic cells that
will enable Zume’s production of sustainable packaging
on a global scale, helping to reduce reliance on single-
use plastics.
As part of its Diversity and Inclusion Strategy 2030 and in
line with national legislation, ABB carried out an equal
pay analysis for its Swiss entities with at least 100
employees. More details will be available in the
Compensation Report to be published near the end of
February.
 
In October, ABB’s Electrification sites in Ede (The
Netherlands) and Porvoo (Finland) joined Beijing (China)
and Lüdenscheid (Germany) as official sites that have
achieved carbon neutral operations, a key element of the
company’s 2030 Mission to Zero journey.
 
Story of the quarter
As part of the 26th UN Climate Change Conference of the
Parties (COP26) in Glasgow, UK, ABB announced the ABB
Formula E Climate Initiatives focused around three pillars:
Innovating technologies; Social progress, diversity and
inclusion; and Championing Change. Under these pillars,
activities will be undertaken in connection with ABB Formula
E races in city centers around the world. ABB will build on
its existing partnership with FIA Girls on Track to empower
women and promote gender equality in an innovative,
engaging, and positive manner. It will also support energy
transition through education, awareness, training and
volunteering by organizing events in schools and
communities. Global & local engagement will also be driven
by targeted public affairs programs within race locations.
 
Q4 outcome
29% reduction of CO
 
emissions in own operations as
green electricity contracts increasingly implemented
12% year-on-year decline in LTIFR due to increased
safety measures in production and more employees
working from home
3%-points increase in number of women in senior
management supported by various initiatives across the
company
Sustainability
Q4 2021
Q4 2020
CHANGE
12M ROLLING
CO2e own operations emissions,
 
kt scope 1 and 2
1
64
90
-29%
80
Lost Time Injury Frequency Rate (LTIFR),
 
frequency / 200,000 working hours
0.142
0.162
-12%
0.143
Share of females in senior management
positions, %
16.3
13.5
+2.8 pts
14.9
1
From energy use, previous quarter
ABB
 
INTERIM
 
REPORT
I
Q4 2021
 
11
During Q4 2021
On December 7, ABB hosted its Capital Markets Day and
lifted the revenue growth target to 4-7% through the
economic cycle, in constant currency, which is the total of 3-
5% organic growth and 1-2% acquired growth. ABB also
sharpened the operational EBITA margin target to be at least
15% as from 2023, in any given year. These changes take
into account the immediate adverse margin impacts due to
the exit of the Mechanical Power Transmission division and
the planned exit of the Turbocharging division. The Group
had previously targeted 3-5% for revenue growth through the
cycle and an operational EBITA margin in the upper half of a
13-16% range as from 2023.
Additionally, in 2022, ABB will introduce a circularity
framework covering every stage of the product lifecycle in
order to preserve resources. These include: design and
sourcing; production and packaging; optimizing the use
phase (efficiency and lifetime); and the end-of-life phase
(take back and recycling). The goal is to have 80% of ABB
products, solutions and services covered by the circularity
framework by 2030, with the company’s progress measured
against a set of KPIs. Already today, several initiatives are in
place. For example, close to 40% of ABB’s 400 sites across
the world are sending zero waste to landfills.
On November 1, ABB completed the divestment of its
Mechanical Power Transmission division (Dodge) for
$2.9 billion in cash. The deal triggered a non-operational pre-
tax book gain of approximately $2.2 billion reported in income
from operations.
After Q4 2021
 
On January 27, ABB announced that it had increased its
shareholdings to approximately 60% in start-up company
InCharge Energy to strengthen its E-mobility division in
the North American market and expand its software and
digital services offering. InCharge Energy tailors end-to-
end EV charging infrastructure solutions, including the
procurement, installation, operation, and maintenance of
charging systems, and provides cloud-based software
services for the optimization of energy management.
 
On February 2, ABB announced that Andrea Antonelli
had been appointed General Counsel and Member of the
Executive Committee, as of March 1, 2022. He will
succeed Maria Varsellona, who will, as previously
announced, leave the company to become Chief Legal
Officer of Unilever. Furthermore, Andrea will become
ABB’s Company Secretary on March 24, 2022, following
the Annual General Meeting.
After Q4 2021
In 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 significant.
Orders amounted to $31,868 million and improved by 20%
(17% comparable) and revenues amounted to
$28,945 million, up by 11%
 
(8% comparable), with a book-to-
bill ratio of 1.10. The recovery was initially driven by the short-
cycle business, and the process-related business
predominantly picked up later 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 $5,718 million, up
significantly from last year driven by stronger Operational
EBITA as well as the book gain of $2.2 billion related to the
divestment of the Mechanical Power Transmission business.
Results include restructuring activities that are progressing
according to plan with restructuring and restructuring-related
expenses of $160 million. Operational EBITA improved by 42%
year-on-year to $4,122 million and the Operational EBITA
margin increased by 310bps to 14.2%. The improved
performance was driven by increased revenues in combination
with an improved gross margin and lower specific items which
impact comparability. While revenues increased by 11%, the
expenses related to selling, general and administrative (SG&A)
increased by a more limited 5%, driven by higher sales
expenses. The ratio in relation to revenues declined to 17.8%,
from 18.7% in the year-earlier period. R&D expenses increased
by 8%. Corporate and Other Operational EBITA improved by
$207 million to -$338 million.
 
Net finance expenses amounted to -$97 million. For the full year
2021, the tax rate was 18.3%, reduced by approximately
8 percentage points by the impact from the divestment and
certain tax benefits in the third and fourth quarter. Net income
attributable to ABB was $4,546 million and decreased from last
year’s level which includes the book gain related to the
divestment of Power Grids and was larger than the book gain
related to this year’s divestment of Mechanical Power
Transmission.
 
Basic earnings per share was $2.27. Cash flow
from operating activities in continuing operations amounted to
$3,338 million, up from $1,875 million in the year-earlier period.
Significant events
Full year 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABB
 
INTERIM
 
REPORT
I
Q4 2021
12
Note: comparable growth calculation includes
 
acquisitions and divestments with revenues of greater
 
than $50 million.
1
Represents the estimated annual revenues for the
 
period prior to the announcement of the
 
respective acquisition/divestment.
Divestments
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2021
Motion
Mechanical Power Transmission
1-Nov
645
1,500
Acquisitions
Company/unit
Closing date
Revenues, $ million
1
No. of employees
2021
Electrification
Enervalis (majority stake)
26-Apr
1
22
Robotics & Discrete Automation
ASTI Mobile Robotics Group
2-Aug
36
300
($ in millions, unless otherwise stated)
FY 2022
Q1 2022
Net finance expenses
~(100)
~(25)
Non-operational pension
(cost) / credit
~140
~35
Effective tax rate
~25%
~20%
Capital Expenditures
~(750)
~(140)
($ in millions, unless otherwise stated)
FY 2022
1
Q1 2022
Corporate and Other Operational costs
~(330)
~(80)
Non-operating items
Restructuring and restructuring related
~(150)
~(40)
Separation costs
2
~(180)
~(70)
ABB Way transformation
~(150)
~(30)
PPA-related amortization
~(230)
~(60)
Certain other income and expenses
related to PG divestment
3
~(20)
~(15)
Additional 2022 guidance
Additional figures
ABB Group
Q1 2020
Q2 2020
Q3 2020
Q4 2020
FY 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
FY 2021
EBITDA, $ in million
600
799
302
807
2,508
1,024
1,324
1,072
3,191
6,611
Return on Capital Employed, %
n.a.
n.a.
n.a.
n.a.
10.3%
n.a.
n.a.
n.a.
n.a.
14.90
Net debt/Equity
0.52
0.61
(0.05)
0.01
0.01
0.09
0.16
0.13
(0.01)
(0.01)
Net debt/ EBITDA 12M rolling
2.3
2.5
(0.4)
0.04
0.04
0.4
0.7
0.5
(0.01)
(0.01)
Net working capital, % of 12M rolling
revenues
12.3%
12.6%
12.5%
10.5%
10.5%
10.8%
11.6%
10.2%
8.1%
8.1%
Earnings per share, basic, $
0.18
0.15
2.14
(0.04)
2.44
0.25
0.37
0.33
1.34
2.27
Earnings per share, diluted, $
0.18
0.15
2.14
(0.04)
2.43
0.25
0.37
0.32
1.33
2.25
Dividend per share, CHF
n.a.
n.a.
n.a.
n.a.
0.80
n.a.
n.a.
n.a.
n.a.
0.82*
Share price at the end of period, CHF
17.01
21.33
23.45
24.71
24.71
28.56
31.39
31.39
34.90
34.90
Share price at the end of period, $
17.26
22.56
25.45
27.96
27.96
30.47
33.99
33.36
38.17
38.17
Number of employees (FTE
equivalents)
143,320
142,310
106,420
105,520
105,520
105,330
106,370
106,080
104,420
104,420
No. of shares outstanding at end of
period (in millions)
2,134
2,135
2,092
2,031
2,031
2,024
2,006
1,993
1,958
1,958
*
Dividend proposal subject to shareholder approval
 
at the 2022 AGM
1
Excludes 2 main exposures estimated to a total
 
of ~$300 million, that are ongoing in the
 
non-core business. Exact exit timing is difficult to
 
assess due to legal proceedings etc. however ABB
 
currently
expects $150-$200 million to come through in non-operating
 
items during 2022.
2
Costs relating to the announced exits and the potential
 
E-mobility listing.
3
Excluding share of net income from JV.
Acquisitions and divestments, last twelve months
 
 
ABB
 
INTERIM
 
REPORT
I
Q4 2021
13
For additional information please contact:
Media Relations
Phone: +41 43 317 71 11
Email:
media.relations@ch.abb.com
Investor Relations
Phone: +41 43 317 71 11
Email:
investor.relations@ch.abb.com
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Financial calendar
202
February 10
ABB E
-
mobility
CMD, virtual
March 24
 
Annual General Meeting
March 30
 
Propose date to receive dividend for shares on CHSIX
April 1
 
Proposed date to receive dividend for shares on SENasdaq
April 21
 
Q1 2022 results
Mid-May
 
Proposed timing to receive dividend for shares on USNYSE
May 17
 
BB Motion CMD in Helsinki
May 18
 
ABB Process Automation CMD in Helsinki
July 21
Q2 2022 results
October 20
Q3 2022 results
This press release includes forward-looking information and
statements as well as other statements concerning the
outlook for our business, including those in the sections of
this release titled “CEO summary”, “Outlook”, “Share
buyback program”, “Sustainability” and “Significant events”.
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 “goals”,
“anticipates,” “expects”, “estimates,” “plans,” “targets” or
similar expressions. However, there are many risks and
uncertainties, many of which are beyond our control, that
could cause our actual results to differ materially from the
forward-looking information and statements made in this
press release and which could affect our ability to achieve
any or all of our stated targets. Some important factors that
could cause such differences include, among others,
business risks associated with the volatile global economic
environment and political conditions, costs associated with
compliance activities, market acceptance of new products
and services, changes in governmental regulations and
currency exchange rates and such other factors as may be
discussed from time to time in ABB Ltd’s filings with the
U.S. Securities and Exchange Commission, including its
Annual Reports on Form 20-F. Although ABB Ltd believes
that its expectations reflected in any such forward-looking
statement are based upon reasonable assumptions, it can
give no assurance that those expectations will be achieved.
The Q4 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. CET.
To pre-register for the conference call or to join the
webcast, please refer to the ABB website:
www.abb.com/investorrelations.
 
The recorded session will be available after the event on
ABB’s website.
Q4 results presentation on February 3, 2022
Important notice about forward-looking information
ABB
 
(ABBN: SIX Swiss Ex) is a leading global technology company that energizes the
 
transformation of society and industry to
achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation
 
and motion
portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With
 
a history of excellence stretching back
more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.
abb2021q4fininfop16i1.jpg abb2021q4fininfop16i2.gif
1
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
February 3, 2022
Q4 2021
Financial information
abb2021q4fininfop17i0.jpg
2
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Financial
 
Information
Contents
03
─ 07
 
Key Figures
08 ─
37
 
Consolidated
 
Financial
 
Information
 
(unaudited)
38 ─
52
 
Supplemental
 
Reconciliations
 
and Definitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2021q4fininfop18i0.jpg
3
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Key Figures
CHANGE
($ in millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Comparable
(1)
Orders
8,257
7,003
18%
21%
Order backlog (end December)
16,607
14,303
16%
21%
Revenues
7,567
7,182
5%
8%
Gross Profit
2,397
2,147
12%
as % of revenues
31.7%
29.9%
+1.8 pts
Income from operations
2,975
578
415%
Operational EBITA
(1)
988
825
20%
22%
(2)
as % of operational revenues
(1)
13.1%
11.5%
+1.6 pts
Income from continuing operations, net of tax
2,703
127
n.a.
Net income (loss) attributable to ABB
2,640
(79)
n.a.
Basic earnings per share ($)
1.34
(0.04)
n.a.
(3)
Cash flow from operating activities
(4)
1,020
1,182
-14%
Cash flow from operating activities in continuing operations
1,033
1,225
-16%
CHANGE
($ in millions, unless otherwise indicated)
FY 2021
FY 2020
US$
Comparable
(1)
Orders
31,868
26,512
20%
17%
Revenues
28,945
26,134
11%
8%
Gross Profit
9,467
7,878
20%
as % of revenues
32.7%
30.1%
+2.6 pts
Income from operations
5,718
1,593
259%
Operational EBITA
(1)
4,122
2,899
42%
37%
(2)
as % of operational revenues
(1)
14.2%
11.1%
+3.1 pts
Income from continuing operations, net of tax
4,730
345
n.a.
Net income attributable to ABB
4,546
5,146
-12%
Basic earnings per share ($)
2.27
2.44
-7%
(3)
Cash flow from operating activities
(4)
3,330
1,693
97%
Cash flow from operating activities in continuing operations
3,338
1,875
78%
(1)
 
For a reconciliation of non-GAAP measures see “
” on page 38.
(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
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
Q4 2021
Q4 2020
US$
Local
Comparable
Orders
 
ABB Group
8,257
7,003
18%
20%
21%
Electrification
3,638
3,074
18%
20%
20%
Motion
1,843
1,552
19%
21%
29%
Process Automation
1,898
1,918
-1%
0%
0%
Robotics & Discrete Automation
1,100
699
57%
60%
59%
Corporate and Other
 
(incl. intersegment eliminations)
(222)
(240)
Order backlog (end December)
ABB Group
16,607
14,303
16%
21%
21%
Electrification
5,458
4,358
25%
29%
29%
Motion
3,749
3,320
13%
19%
20%
Process Automation
6,079
5,805
5%
10%
10%
Robotics & Discrete Automation
1,919
1,403
37%
43%
43%
Corporate and Other
 
(incl. intersegment eliminations)
(598)
(583)
Revenues
 
ABB Group
7,567
7,182
5%
7%
8%
Electrification
3,445
3,356
3%
4%
4%
Motion
1,735
1,705
2%
3%
9%
Process Automation
1,805
1,545
17%
19%
19%
Robotics & Discrete Automation
799
801
0%
2%
-1%
Corporate and Other
 
(incl. intersegment eliminations)
(217)
(225)
Income from operations
ABB Group
2,975
578
Electrification
418
444
Motion
2,464
258
Process Automation
193
28
Robotics & Discrete Automation
45
23
Corporate and Other
(incl. intersegment eliminations)
(145)
(175)
Income from operations %
ABB Group
39.3%
8.0%
Electrification
12.1%
13.2%
Motion
142.0%
15.1%
Process Automation
10.7%
1.8%
Robotics & Discrete Automation
5.6%
2.9%
Operational EBITA
ABB Group
988
825
20%
22%
Electrification
507
522
-3%
-1%
Motion
278
285
-2%
-1%
Process Automation
247
103
140%
146%
Robotics & Discrete Automation
64
59
8%
10%
Corporate and Other
(incl. intersegment eliminations)
(108)
(144)
Operational EBITA %
 
ABB Group
13.1%
11.5%
Electrification
14.8%
15.6%
Motion
16.1%
16.8%
Process Automation
13.7%
6.8%
Robotics & Discrete Automation
8.1%
7.3%
Cash flow from operating activities
(1)
ABB Group
1,020
1,182
Electrification
715
882
Motion
416
424
Process Automation
370
196
Robotics & Discrete Automation
129
134
Corporate and Other
 
(incl. intersegment eliminations)
(597)
(411)
Discontinued operations
(13)
(43)
(1)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
CHANGE
($ in millions, unless otherwise indicated)
FY 2021
FY 2020
US$
Local
Comparable
Orders
 
ABB Group
31,868
26,512
20%
17%
17%
Electrification
14,381
11,884
21%
18%
18%
Motion
7,616
6,574
16%
13%
14%
Process Automation
6,779
6,144
10%
7%
7%
Robotics & Discrete Automation
3,844
2,868
34%
29%
29%
Corporate and Other
(incl. intersegment eliminations)
(752)
(958)
Order backlog (end December)
ABB Group
16,607
14,303
16%
21%
21%
Electrification
5,458
4,358
25%
29%
29%
Motion
3,749
3,320
13%
19%
20%
Process Automation
6,079
5,805
5%
10%
10%
Robotics & Discrete Automation
1,919
1,403
37%
43%
43%
Corporate and Other
(incl. intersegment eliminations)
(598)
(583)
Revenues
 
ABB Group
28,945
26,134
11%
8%
8%
Electrification
13,187
11,924
11%
8%
9%
Motion
6,925
6,409
8%
5%
7%
Process Automation
6,259
5,792
8%
5%
5%
Robotics & Discrete Automation
3,297
2,907
13%
9%
9%
Corporate and Other
(incl. intersegment eliminations)
(723)
(898)
Income from operations
ABB Group
5,718
1,593
Electrification
1,841
1,335
Motion
3,276
989
Process Automation
713
344
Robotics & Discrete Automation
269
(163)
Corporate and Other
(incl. intersegment eliminations)
(381)
(912)
Income from operations %
ABB Group
19.8%
6.1%
Electrification
14.0%
11.2%
Motion
47.3%
15.4%
Process Automation
11.4%
5.9%
Robotics & Discrete Automation
8.2%
-5.6%
Operational EBITA
ABB Group
4,122
2,899
42%
37%
Electrification
2,121
1,681
26%
21%
Motion
1,183
1,075
10%
6%
Process Automation
801
451
78%
70%
Robotics & Discrete Automation
355
237
50%
43%
Corporate and Other
(1)
(incl. intersegment eliminations)
(338)
(545)
Operational EBITA %
 
ABB Group
14.2%
11.1%
Electrification
16.1%
14.1%
Motion
17.1%
16.8%
Process Automation
12.8%
7.8%
Robotics & Discrete Automation
10.8%
8.2%
Cash flow from operating activities
(2)
ABB Group
3,330
1,693
Electrification
2,181
1,757
Motion
1,362
1,283
Process Automation
1,062
454
Robotics & Discrete Automation
374
378
Corporate and Other
(incl. intersegment eliminations)
(1,641)
(1,997)
Discontinued operations
(8)
(182)
(1)
Corporate and Other includes Stranded corporate costs of $40 million for the year ended December 31, 2020.
(2)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Operational EBITA
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Revenues
7,567
7,182
3,445
3,356
1,735
1,705
1,805
1,545
799
801
Foreign exchange/commodity timing
differences in total revenues
(44)
(37)
(22)
(15)
(10)
(4)
(5)
(23)
(5)
3
Operational revenues
7,523
7,145
3,423
3,341
1,725
1,701
1,800
1,522
794
804
Income from operations
2,975
578
418
444
2,464
258
193
28
45
23
Acquisition-related amortization
59
66
29
29
7
13
2
1
21
20
Restructuring, related and
 
implementation costs
79
220
34
62
4
24
33
88
1
12
Changes in obligations related to
 
divested businesses
(7)
14
Gains and losses from sale of businesses
(2,184)
(2)
9
(2)
(2,195)
Acquisition- and divestment-related
 
expenses and integration costs
58
31
34
31
7
18
1
Other income/expense relating to the
 
Power Grids joint venture
5
Certain other non-operational items
40
(43)
8
(22)
4
(2)
2
Foreign exchange/commodity timing
differences in income from operations
(32)
(44)
(25)
(20)
(9)
(14)
3
(15)
(3)
2
Operational EBITA
988
825
507
522
278
285
247
103
64
59
Operational EBITA margin
 
(%)
13.1%
11.5%
14.8%
15.6%
16.1%
16.8%
13.7%
6.8%
8.1%
7.3%
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions, unless otherwise indicated)
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
Revenues
28,945
26,134
13,187
11,924
6,925
6,409
6,259
5,792
3,297
2,907
Foreign exchange/commodity timing
differences in total revenues
(1)
(41)
1
(13)
2
(7)
5
(30)
(7)
Operational revenues
28,944
26,093
13,188
11,911
6,927
6,402
6,264
5,762
3,290
2,907
Income (loss) from operations
5,718
1,593
1,841
1,335
3,276
989
713
344
269
(163)
Acquisition-related amortization
250
263
117
115
43
52
5
4
83
78
Restructuring, related and
implementation costs
160
410
66
145
22
44
48
125
7
26
Changes in obligations related to
 
divested businesses
9
218
15
Changes in pre-acquisition estimates
(6)
11
(6)
11
Gains and losses from sale of businesses
(2,193)
2
13
4
(2,196)
(13)
Fair value adjustment on assets and
 
liabilities held for sale
33
33
Acquisition- and divestment-related
 
expenses and integration costs
132
74
70
71
26
35
2
1
Other income/expense relating to the
 
Power Grids joint venture
34
20
Certain other non-operational items
(18)
335
(5)
(27)
1
17
1
1
295
Foreign exchange/commodity timing
differences in income from operations
36
(60)
25
(21)
11
(27)
12
(25)
(5)
1
Operational EBITA
4,122
2,899
2,121
1,681
1,183
1,075
801
451
355
237
Operational EBITA margin
 
(%)
14.2%
11.1%
16.1%
14.1%
17.1%
16.8%
12.8%
7.8%
10.8%
8.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Depreciation and Amortization
Process
Robotics & Discrete
ABB
Electrification
Motion
Automation
Automation
($ in millions)
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Q4 21
Q4 20
Depreciation
(1)
141
147
74
68
29
32
13
17
16
13
Amortization
75
82
36
33
9
14
2
3
21
21
including total acquisition-related amortization of:
59
66
29
29
7
13
2
1
21
20
Process
Robotics & Discrete
 
ABB
Electrification
Motion
Automation
Automation
($ in millions)
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
FY 21
FY 20
Depreciation
(1)
575
586
276
274
123
127
72
69
59
50
Amortization
318
329
149
138
49
55
11
11
85
81
including total acquisition-related amortization of:
250
263
117
115
43
52
5
4
83
78
(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-
Com-
Q4 21
Q4 20
US$
Local
parable
Q4 21
Q4 20
US$
Local
parable
Europe
3,138
2,497
26%
31%
31%
2,756
2,710
2%
6%
6%
The Americas
2,640
2,002
32%
32%
38%
2,198
2,045
7%
7%
12%
of which United States
1,995
1,450
38%
38%
46%
1,579
1,497
5%
6%
11%
Asia, Middle East and Africa
2,479
2,504
-1%
-2%
-2%
2,613
2,427
8%
8%
7%
of which China
1,255
1,071
17%
14%
14%
1,233
1,231
0%
-3%
-2%
ABB Group
8,257
7,003
18%
20%
21%
7,567
7,182
5%
7%
8%
($ in millions, unless otherwise indicated)
Orders received
CHANGE
Revenues
CHANGE
Com-
Com-
FY 21
FY 20
US$
Local
parable
FY 21
FY 20
US$
Local
parable
Europe
11,857
9,559
24%
20%
20%
10,529
9,708
8%
5%
5%
The Americas
9,940
7,938
25%
24%
25%
8,686
7,936
9%
9%
10%
of which United States
7,453
5,962
25%
25%
27%
6,397
6,019
6%
6%
8%
Asia, Middle East and Africa
10,071
8,893
13%
8%
8%
9,730
8,382
16%
12%
12%
of which China
5,036
4,107
23%
15%
15%
4,932
4,091
21%
13%
14%
Intersegment orders/revenues
(1)
122
108
ABB Group
31,868
26,512
20%
17%
17%
28,945
26,134
11%
8%
8%
(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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
abb2021q4fininfop23i0.gif
8
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Consolidated Financial Information
ABB Ltd Consolidated Income Statements (unaudited)
Year ended
Three months ended
($ in millions, except per share data in $)
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2020
Sales of products
23,745
21,214
6,101
5,823
Sales of services and other
5,200
4,920
1,466
1,359
Total revenues
28,945
26,134
7,567
7,182
Cost of sales of products
(16,364)
(15,229)
(4,275)
(4,182)
Cost of services and other
(3,114)
(3,027)
(895)
(853)
Total cost of sales
(19,478)
(18,256)
(5,170)
(5,035)
Gross profit
9,467
7,878
2,397
2,147
Selling, general and administrative expenses
(5,162)
(4,895)
(1,354)
(1,271)
Non-order related research and development expenses
(1,219)
(1,127)
(322)
(336)
Impairment of goodwill
(311)
Other income (expense), net
2,632
48
2,254
38
Income from operations
5,718
1,593
2,975
578
Interest and dividend income
51
51
14
12
Interest and other finance expense
(148)
(240)
(40)
(49)
Losses from extinguishment of debt
(162)
(162)
Non-operational pension (cost) credit
166
(401)
36
(129)
Income from continuing operations before taxes
5,787
841
2,985
250
Income tax expense
(1,057)
(496)
(282)
(123)
Income from continuing operations, net of tax
4,730
345
2,703
127
Income (loss) from discontinued operations, net of tax
(80)
4,860
(35)
(183)
Net income (loss)
4,650
5,205
2,668
(56)
Net income attributable to noncontrolling interests
(104)
(59)
(28)
(23)
Net income (loss) attributable to ABB
4,546
5,146
2,640
(79)
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax
4,625
294
2,674
104
Income (loss) from discontinued operations, net of tax
(79)
4,852
(34)
(183)
Net income (loss)
4,546
5,146
2,640
(79)
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
2.31
0.14
1.35
0.05
Income (loss) from discontinued operations, net of tax
(0.04)
2.30
(0.02)
(0.09)
Net income (loss)
2.27
2.44
1.34
(0.04)
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax
2.29
0.14
1.34
0.05
Income (loss) from discontinued operations, net of tax
(0.04)
2.29
(0.02)
(0.09)
Net income (loss)
2.25
2.43
1.33
(0.04)
Weighted-average number of shares outstanding
 
(in millions) used to compute:
Basic earnings per share attributable to ABB shareholders
2,001
2,111
1,974
2,059
Diluted earnings per share attributable to ABB shareholders
2,019
2,119
1,991
2,071
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
ABB Ltd Condensed Consolidated Statements of Comprehensive
Income (unaudited)
Year ended
Three months ended
($ in millions)
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2020
Total comprehensive income,
 
net of tax
4,567
6,820
2,845
576
Total comprehensive
 
income attributable to noncontrolling interests, net
 
of tax
(108)
(86)
(27)
(28)
Total comprehensive income
 
attributable to ABB shareholders, net of tax
4,459
6,734
2,818
548
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Balance Sheets (unaudited)
($ in millions)
Dec. 31, 2021
Dec. 31, 2020
Cash and equivalents
4,159
3,278
Restricted cash
30
323
Marketable securities and short-term investments
1,170
2,108
Receivables, net
6,551
6,820
Contract assets
990
985
Inventories, net
4,880
4,469
Prepaid expenses
206
201
Other current assets
573
760
Current assets held for sale and in discontinued operations
136
282
Total current assets
18,695
19,226
Restricted cash, non-current
300
300
Property, plant and equipment,
 
net
4,045
4,174
Operating lease right-of-use assets
895
969
Investments in equity-accounted companies
1,670
1,784
Prepaid pension and other employee benefits
892
360
Intangible assets, net
1,561
2,078
Goodwill
10,482
10,850
Deferred taxes
1,177
843
Other non-current assets
543
504
Total assets
40,260
41,088
Accounts payable, trade
4,921
4,571
Contract liabilities
1,894
1,903
Short-term debt and current maturities of long-term
 
debt
1,384
1,293
Current operating leases
230
270
Provisions for warranties
1,005
1,035
Other provisions
1,386
1,519
Other current liabilities
4,367
4,181
Current liabilities held for sale and in discontinued operations
381
644
Total current liabilities
15,568
15,416
Long-term debt
4,177
4,828
Non-current operating leases
689
731
Pension and other employee benefits
1,025
1,231
Deferred taxes
685
661
Other non-current liabilities
2,116
2,025
Non-current liabilities held for sale and in discontinued operations
43
197
Total liabilities
24,303
25,089
Commitments and contingencies
Stockholders’ equity:
Common stock, CHF 0.12 par value
(2,053 million and 2,168 million shares issued at December
 
31, 2021 and 2020, respectively)
178
188
Additional paid-in capital
22
83
Retained earnings
22,477
22,946
Accumulated other comprehensive loss
(4,088)
(4,002)
Treasury stock, at cost
(95 million and 137 million shares at December 31, 2021
 
and 2020, respectively)
(3,010)
(3,530)
Total ABB stockholders’ equity
15,579
15,685
Noncontrolling interests
378
314
Total stockholders’ equity
15,957
15,999
Total liabilities and stockholders’
 
equity
40,260
41,088
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Cash Flows (unaudited)
Year ended
Three months ended
($ in millions)
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2020
Operating activities:
Net income (loss)
 
4,650
5,205
2,668
(56)
Loss (income) from discontinued operations, net of tax
80
(4,860)
35
183
Adjustments to reconcile net income (loss) to
 
net cash provided by operating activities:
Depreciation and amortization
893
915
216
229
Impairment of goodwill
311
Changes in fair values of investments
(123)
(99)
(9)
(13)
Pension and other employee benefits
(216)
50
(57)
77
Deferred taxes
(289)
(280)
(371)
(121)
Losses from extinguishment of debt
162
162
Loss (income) from equity-accounted companies
100
66
17
25
Net loss (gain) from derivatives and foreign exchange
49
(2)
(50)
(31)
Net loss (gain) from sale of property,
 
plant and equipment
(38)
(37)
(16)
(13)
Net loss (gain) from sale of businesses
(2,193)
2
(2,184)
(2)
Fair value adjustment on assets and liabilities held for sale
33
Other
117
57
47
(12)
Changes in operating assets and liabilities:
Trade receivables, net
(142)
(100)
40
(63)
Contract assets and liabilities
29
186
102
145
Inventories, net
(771)
196
(79)
397
Accounts payable, trade
659
(13)
298
85
Accrued liabilities
454
(92)
118
(34)
Provisions, net
(48)
243
31
147
Income taxes payable and receivable
117
(76)
209
2
Other assets and liabilities, net
10
8
18
118
Net cash provided by operating activities – continuing
 
operations
3,338
1,875
1,033
1,225
Net cash used in operating activities – discontinued
 
operations
(8)
(182)
(13)
(43)
Net cash provided by operating activities
3,330
1,693
1,020
1,182
Investing activities:
Purchases of investments
(1,528)
(5,933)
(1,114)
49
Purchases of property, plant and
 
equipment and intangible assets
(820)
(694)
(361)
(262)
Acquisition of businesses (net of cash acquired)
and increases in cost- and equity-accounted companies
(241)
(121)
(14)
(22)
Proceeds from sales of investments
2,272
4,341
633
3,053
Proceeds from maturity of investments
81
11
1
10
Proceeds from sales of property,
 
plant and equipment
93
114
57
46
Proceeds from sales of businesses (net of transaction costs
and cash disposed) and cost- and equity-accounted companies
2,958
(136)
2,865
(3)
Net cash from settlement of foreign currency derivatives
(121)
138
(46)
44
Other investing activities
(23)
8
2
(3)
Net cash provided by (used in) investing activities –
 
continuing operations
2,671
(2,272)
2,023
2,912
Net cash provided by (used in) investing activities –
 
discontinued operations
(364)
9,032
(281)
(59)
Net cash provided by investing activities
2,307
6,760
1,742
2,853
Financing activities:
Net changes in debt with original maturities of 90 days or less
(83)
(587)
(296)
(62)
Increase in debt
1,400
343
22
(17)
Repayment of debt
(1,538)
(3,459)
(775)
(2,796)
Delivery of shares
826
412
40
29
Purchase of treasury stock
(3,708)
(3,048)
(1,267)
(1,778)
Dividends paid
(1,726)
(1,736)
Dividends paid to noncontrolling shareholders
(98)
(82)
(7)
Other financing activities
(41)
(49)
(24)
18
Net cash used in financing activities – continuing
 
operations
(4,968)
(8,206)
(2,307)
(4,606)
Net cash provided by financing activities – discontinued
 
operations
31
Net cash used in financing activities
(4,968)
(8,175)
(2,307)
(4,606)
Effects of exchange rate changes on cash and equivalents
 
and restricted cash
(81)
79
(6)
134
Net change in cash and equivalents and restricted cash
588
357
449
(437)
Cash and equivalents and restricted cash, beginning
 
of period
3,901
3,544
4,040
4,338
Cash and equivalents and restricted cash, end of period
4,489
3,901
4,489
3,901
Supplementary disclosure of cash flow information:
Interest paid
132
189
57
78
Income taxes paid
1,292
905
499
216
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
ABB Ltd Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
($ in millions)
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total ABB
 
stockholders’
equity
Non-
controlling
interests
Total
stockholders’
equity
Balance at January 1, 2020
188
73
19,640
(5,590)
(785)
13,526
454
13,980
Adoption of accounting
standard update
(82)
(82)
(9)
(91)
Comprehensive income:
Net income
5,146
5,146
59
5,205
Foreign currency translation
adjustments, net of tax of $2
990
990
27
1,017
Effect of change in fair value of
available-for-sale securities,
net of tax of $3
7
7
7
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $161
589
589
589
Change in derivative instruments
and hedges, net of tax of $(2)
2
2
2
Total comprehensive income
6,734
86
6,820
Changes in noncontrolling interests
(16)
(16)
19
3
Change in noncontrolling interests
 
in connection with divestments
(138)
(138)
Dividends to
noncontrolling shareholders
(98)
(98)
Dividends to shareholders
(1,758)
(1,758)
(1,758)
Share-based payment arrangements
54
54
54
Purchase of treasury stock
(3,181)
(3,181)
(3,181)
Delivery of shares
(24)
436
412
412
Other
(3)
(3)
(3)
Balance at December 31, 2020
188
83
22,946
(4,002)
(3,530)
15,685
314
15,999
Balance at January 1, 2021
188
83
22,946
(4,002)
(3,530)
15,685
314
15,999
Comprehensive income:
Net income
4,546
4,546
104
4,650
Foreign currency translation
adjustments, net of tax of $0
(534)
(534)
4
(530)
Effect of change in fair value of
available-for-sale securities,
net of tax of $(4)
(15)
(15)
(15)
Unrecognized income (expense)
related to pensions and other
postretirement plans,
net of tax of $22
467
467
467
Change in derivative instruments
and hedges, net of tax of $(1)
(5)
(5)
(5)
Total comprehensive income
4,459
108
4,567
Changes in noncontrolling interests
(37)
(20)
(57)
55
(2)
Dividends to
noncontrolling shareholders
(98)
(98)
Dividends to shareholders
(1,730)
(1,730)
(1,730)
Cancellation of treasury shares
(10)
(17)
(3,130)
3,157
Share-based payment arrangements
60
60
60
Purchase of treasury stock
(3,682)
(3,682)
(3,682)
Delivery of shares
(84)
(136)
1,046
826
826
Other
16
16
16
Balance at December 31, 2021
178
22
22,477
(4,088)
(3,010)
15,579
378
15,957
Due to rounding, numbers presented may not add to the totals provided.
See Notes to the Consolidated Financial Information
13
 
Q4
 
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
 
in connection with
divestments,
estimates and assumptions used in determining the fair
 
values of assets and liabilities assumed in business combinations,
assumptions used in the determination of corporate costs
 
directly attributable to discontinued operations,
estimates of loss contingencies associated with litigation
 
or threatened litigation and other claims and inquiries,
 
environmental damages, product
warranties, self-insurance reserves, regulatory and other proceedings,
estimates used to record expected costs for employee severance
 
in connection with restructuring programs,
estimates related to credit losses expected to occur over the
 
remaining life of financial assets such as trade and other
 
receivables, loans and other
instruments,
assumptions used in the calculation of pension and postretirement
 
benefits and the fair value of pension plan assets,
 
and
assumptions and projections, principally related to 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 December 31, 2020, the Company
 
corrected certain liabilities which were
 
extinguished as part of the finalization of the purchase
 
price of
GEIS. The price agreement was reached in 2019 but the
 
impact on these liabilities was not originally identified
 
at that time by the Company. As
 
a result, a gain of
$28 million was recorded in the Interim Consolidated
 
Income Statements for the three months ended December
 
31, 2020. As this gain results from the favorable
resolution of a purchase price uncertainty with respect
 
to the acquisition of GEIS, this amount has been excluded
 
from the measure of segment performance,
Operational EBITA (see Note
 
18) for the Electrification operating segment. 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
 
Q4
 
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
 
does not expect this update to have a significant
impact on its consolidated financial statements.
Business Combinations — Accounting for contract assets
 
and contract liabilities from contracts with customers
In October 2021, an accounting standard update was issued
 
which provides guidance on the accounting for revenue
 
contracts acquired in a business combination.
The update requires contract assets and liabilities acquired in
 
a business combination to be recognized and measured
 
at the date of acquisition in accordance with
the principles for recognizing revenues from contracts with
 
customers. This update is effective prospectively
 
for the Company for annual and interim
 
reporting
periods beginning January 1, 2023, with early adoption
 
permitted in any interim period. The Company will adopt
 
this update prospectively as of January 1, 2022.
The Company does not expect this update to have a significant
 
impact on its consolidated financial statements.
Disclosures about government assistance
In November 2021, an accounting standard update was issued
 
which requires entities to disclose certain types of government
 
assistance. Under the update, the
Company is required to annually disclose (i) the type of
 
the assistance received, including any significant terms
 
and conditions, (ii) its related accounting policy,
and (iii) the effect such transactions have on its
 
financial statements. The update is effective
 
either prospectively for all in-scope transactions at the
 
date of
adoption or retrospectively, for
 
annual periods beginning January 1, 2022, with early
 
adoption permitted. The Company will adopt this update
 
prospectively as of
January 1, 2022. This update does not have a significant
 
impact on the Company’s consolidated financial
 
statements.
 
Note 3
Discontinued operations and assets held for sale
Divestment of the Power Grids business
On July 1, 2020, the Company completed the sale of 80.1
 
percent of its Power Grids business to Hitachi Ltd (Hitachi)
 
.
 
The transaction was executed through the
sale of 80.1 percent of the shares of Hitachi Energy Ltd, formerly
 
Hitachi ABB Power Grids Ltd (“Hitachi Energy”). Cash
 
consideration received at the closing date
was $9,241 million net of cash disposed.
 
Further, for accounting purposes,
 
the 19.9 percent ownership interest retained by the Company
 
was deemed to have
been both divested and reacquired at its fair value
 
on July 1, 2020. The Company also obtained a put
 
option, exercisable with three-months’ notice commencing
 
in
April 2023 (to be effective from July 2023), allowing
 
the Company to require Hitachi to purchase the remaining
 
interest for 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 combined
 
fair value of the retained investment and the related
put option, which was initially estimated at $1,808 million
 
on July 1, 2020, and subsequently remeasured to $1,779
 
million in the three months ended
December 31, 2020, was recorded as an equity-method
 
investment and also accounted for as part of the proceeds
 
for the sale of the entire Power Grids business
(see Note 4).
In connection with the divestment, the Company recorded liabilities
 
in discontinued operations for estimated future costs
 
and other cash payments of $487 million
for various contractual items relating to the sale of the business,
 
including required future cost reimbursements
 
payable to Hitachi Energy,
 
costs to be incurred by
the Company for the direct benefit of Hitachi Energy and
 
an amount due to Hitachi Ltd in connection with
 
the expected purchase price finalization of the closing
debt and working capital balances. In October 2021,
 
the Company and Hitachi concluded an agreement
 
to settle the various amounts owing by the Company.
 
The
net difference between the agreed amounts and the
 
amounts initially estimated by the Company was recorded
 
in the three months ended December 31, 2021,
 
in
discontinued operations as an adjustment to “Net gain
 
recognized on sale of the Power Grids business” in the table
 
below. During the year and three
 
months
ended December 31, 2021, total cash payments (including
 
the amounts paid under the settlement agreement) of $364
 
million and $281 million, respectively,
 
were
made in connection with these liabilities. In both the year
 
and three months ended December 31, 2020, total
 
cash payments made in connection with these
liabilities amounted to $33 million. At December 31, 2021,
 
the remaining amount recorded was $150 million.
As a result of the Power Grids sale, the Company
 
recognized an initial net gain of $5,320 million, net
 
of transaction costs, for the sale of the entire Power
 
Grids
business, in Income from discontinued operations, net
 
of tax, in the year ended December 31, 2020. Certain
 
amounts included in the net gain were estimated or
otherwise subject to change and in the three months
 
ended December 31, 2020, adjustments to decrease
 
the net gain by $179 million were recorded. Included
 
in
the calculation of the net gain was a cumulative translation
 
loss relating to the Power Grids business of $420 million
 
which was reclassified from Accumulated other
comprehensive loss (see Note 16). In the year and
 
three months ended December 31, 2021, the Company
 
has recorded further adjustments to the net gain,
including the impacts of the agreed settlement amount
 
referred to above, reducing the gain by $65 million and
 
$33 million, respectively.
 
Certain remaining minor
obligations relating to the divestment continue to be subject
 
to uncertainty and will be adjusted in future periods but these
 
adjustments are not expected to have a
material impact on the consolidated financial statements.
In the year ended December 31, 2020,
 
the Company recorded $262 million,
 
in Income tax expense within discontinued operations
 
in connection with the
reorganization of the legal entity structure of the Power Grids
 
business required to facilitate the sale.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
Certain entities of the Power Grids business for which the
 
legal process or other regulatory delays resulted
 
in the Company not yet having transferred legal
 
titles to
Hitachi were accounted for as being sold since control
 
of the business as well as all risks and rewards of
 
the business were fully transferred to Hitachi Energy.
 
At
December 31, 2021, substantially all of these delayed entities
 
have been legally transferred to Hitachi. The proceeds
 
for these entities are included in the cash
proceeds described above and certain funds were placed in
 
escrow pending completion of the transfer process.
 
At December 31, 2021 and 2020, current
restricted cash includes $12 million and $302 million, respectively,
 
relating to these proceeds.
In connection with the divestment, the Company has recognized
 
liabilities in discontinued operations for certain indemnities
 
(see Note 11 for additional
 
information)
and has also recorded an initial liability of $258 million
 
representing the fair value of the right granted to Hitachi
 
Energy for the use of the ABB brand for up to
8 years.
Upon closing of the sale, the Company entered into various
 
transition services agreements (TSAs). Pursuant to
 
these TSAs, the Company and Hitachi Energy
provide to each other, on an interim, transitional
 
basis, various services. The services provided by the Company
 
primarily include finance, information technology,
human resources and certain other administrative services.
 
Under the current terms, the TSAs will continue
 
for up to 3 years, and can only be extended
 
on an
exceptional basis for business-critical services for an additional period
 
which is reasonably necessary to avoid a material adverse
 
impact on the business. In the
year and three months ended December 31, 2021, the Company
 
has recognized within its continuing operations, general
 
and administrative expenses incurred to
perform the TSA, offset by $173 million and $46 million,
 
respectively, in TSA-related income
 
for such services that is reported in Other income (expense).
 
In the
year and three months ended December 31, 2020, Other
 
income (expense) included $91 million and $49 million,
 
respectively, of TSA
 
-related income for such
services.
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 Energy. Assets
 
and liabilities
relating to, as well as the net financial results of, these
 
contracts will continue to be included in discontinued
 
operations until they have been completed or
otherwise transferred to Hitachi Energy.
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.
Operating results of the discontinued operations, are summarized
 
as follows:
Year ended
Three months ended
($ in millions)
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2020
Total revenues
4,008
Total cost of sales
(3,058)
Gross profit
950
Expenses
(18)
(808)
(5)
(6)
Change to net gain recognized on sale of the Power Grids
 
business
(65)
5,141
(33)
(179)
Income (loss) from operations
(83)
5,282
(38)
(185)
Net interest income (expense) and other finance expense
2
(5)
2
Non-operational pension (cost) credit
(94)
Income (loss) from discontinued operations before taxes
(81)
5,182
(36)
(185)
Income tax
1
(322)
1
2
Income (loss) from discontinued operations, net of tax
(80)
4,860
(35)
(183)
Of the total Income (loss) from discontinued operations
 
before taxes in the table above, $(80) million and
 
$5,170 million in the year ended December 31,
 
2021
 
and
2020, respectively, and $(35)
 
million and $(185) million in the three months ended
 
December 31, 2021 and 2020, respectively,
 
are attributable to the Company,
while the remainder is attributable to noncontrolling interests.
Until the date of the divestment, Income (loss) 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 year ended December 31,
 
2020, $40 million of allocated overhead and other management
 
costs, which
were previously included in the measure of segment profit
 
for the Power Grids operating segment are reported
 
as part of Corporate and Other.
 
In the table above,
Net interest income (expense) and other finance expense in
 
the year ended December 31, 2020, included
 
$20 million of interest expense which was recorded
 
on
an allocated basis in accordance with the Company’s
 
accounting policy election until the divestment date. In
 
addition, as required by U.S. GAAP,
 
subsequent to
December 17, 2018, (the date of the original agreement to
 
sell the Power Grids business) the Company has not record
 
ed depreciation or amortization on the
property, plant and equipment,
 
and intangible assets reported as discontinued operations.
Included in the reported Total
 
revenues of the Company for the year ended December
 
31, 2020, are revenues for sales from the Company’s
 
operating segments to
the Power Grids business of $108 million, 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 18). Subsequent to the divestment,
 
sales to Hitachi Energy 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
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)
Dec. 31, 2021
(1)
Dec. 31, 2020
(1)
Receivables, net
131
280
Inventories, net
1
Other current assets
5
1
Current assets held for sale and in discontinued operations
136
282
Accounts payable, trade
71
188
Other liabilities
310
456
Current liabilities held for sale and in discontinued
 
operations
381
644
Other non-current liabilities
43
197
Non-current liabilities held for sale and in discontinued
 
operations
43
197
(1)
 
At December 31, 2021 and 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
Acquisitions, divestments and equity-accounted companies
Acquisition of controlling interests
Acquisitions of controlling interests were as follows:
Year ended December 31,
Three months ended December 31,
($ in millions, except number of acquired businesses)
2021
2020
2021
2020
Purchase price for acquisitions (net of cash acquired)
(1)
212
79
(3)
19
Aggregate excess of purchase price
over fair value of net assets acquired
(2)
161
92
2
23
Number of acquired businesses
 
2
3
1
(1)
 
Excluding changes in cost- and equity-accounted companies
(2)
 
Recorded as goodwill (see Note 9). For all periods presented, amounts include adjustments arising during the measurement period of acquisitions.
In the table above, the “Purchase price for acquisitions”
 
and “Aggregate excess of purchase price over fair value
 
of net assets acquired” amounts for the year
ended December 31, 2021, relate primarily to the acquisition
 
of ASTI Mobile Robotics Group (ASTI).
Acquisitions of controlling interests have been accounted for
 
under the acquisition method and have been included
 
in the Company’s Consolidated Financial
Statements since the date of acquisition.
 
While the Company uses its best estimates and assumptions
 
as part of the purchase price allocation process to value
 
assets acquired and liabilities assumed at
the acquisition date, the purchase price allocation for acquisitions
 
is preliminary for up to 12 months after the acquisition
 
date and is subject to refinement as more
detailed analyses are completed and additional information
 
about the fair values of the assets and liabilities becomes
 
available.
 
On August 2, 2021, the Company acquired the shares
 
of ASTI.
 
ASTI is headquartered in Burgos, Spain,
 
and is a global autonomous mobile robot (AMR)
manufacturer.
 
The resulting cash outflows for the Company amounted
 
to $186 million (net of cash acquired of $7 million). The
 
acquisition expands the Company’s
robotics and automation offering in its Robotics
 
and Discrete Automation operating segment.
There were no significant business acquisitions for the year
 
and three months ended December 31, 2020.
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. For
accounting purposes, the 19.9 percent interest is deemed
 
to have been both divested and reacquired, with
 
a fair value at the transaction date of $1,661 million
 
.
The fair value was based on a discounted cash flow model
 
considering the expected results of the future business
 
operations of Hitachi Energy and using relevant
market inputs including a risk-adjusted weighted-average cost
 
of capital. The Company also obtained a right to require
 
Hitachi to purchase this investment (see
Note 3) with a floor price equivalent to a 10 percent
 
discount compared to the price paid by Hitachi for
 
the initial 80.1 percent. This option was valued at
$118 million using a standard
 
option pricing model with inputs considering the nature
 
of the investment and the expected period until option
 
exercise. As this option
is not separable from the investment the value has been
 
combined with the value of the underlying investment
 
and is accounted for together.
Hitachi also holds a call option which would require the Company
 
to sell the remaining 19.9 percent interest in Hitachi
 
Energy at a price consistent with what was
paid by Hitachi to acquire the initial 80.1 percent
 
or at fair value, if higher. The
 
option is exercisable with three-months’ notice from April 2023,
 
to be effective from
July 2023.
The Company has concluded that based on its continuing involvement
 
with the Power Grids business, including membership
 
in its governing board of directors, it
has significant influence over Hitachi Energy.
 
As a result, the investment (including the value of
 
the option) is accounted for using the equity method.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
The difference between the initial carrying value of
 
the Company's investment in Hitachi Energy at fair value
 
and its proportionate share of the underlying net
assets, created basis differences
 
of $8,570 million ($1,705 million for the Company’s
 
19.9 percent ownership),
 
which are allocated as follows:
Allocated
Weighted-average
($ in millions)
Amount
 
useful life
Inventories
169
5 months
Order backlog
727
2 years
Property, plant and equipment
(1)
1,016
Intangible assets
(2)
1,731
9 years
Other contractual rights
251
2 years
Other assets
43
Deferred tax liabilities
(942)
Goodwill
6,026
Less: Amount attributed to noncontrolling interest
(451)
Basis difference
8,570
(1)
 
Property, plant and equipment includes assets subject to amortization having an initial fair value difference of $686 million and a weighted-average useful life of 14 years.
(2)
 
Intangible assets include brand license agreement, technology and customer relationships.
For assets subject to depreciation or amortization, the Company
 
amortizes these basis differences
 
over the estimated remaining useful lives of the 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.
 
Certain
other assets are recorded as an expense as the benefits
 
from the assets are realized. As of December 31, 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, except ownership share in %)
December 31, 2021
December 31, 2021
December 31, 2020
Hitachi Energy Ltd
19.9%
1,609
1,710
Others
61
74
Total
1,670
1,784
In the year and three months ended December 31, 2021
 
and 2020, the Company recorded its share of the
 
earnings of investees accounted for under the equity
method of accounting in Other income (expense), net, as follows:
Year ended December 31,
Three months ended December 31,
($ in millions)
2021
2020
2021
2020
Income from equity-accounted companies, net of taxes
38
29
27
17
Basis difference amortization (net of deferred income
 
tax benefit)
(138)
(95)
(44)
(43)
Loss from equity-accounted companies
(100)
(66)
(17)
(26)
Business divestments
In the year and three months ended December 31, 2021,
 
the Company received proceeds (net of transactions costs
 
and cash disposed) of $2,958 million and
$2,865 million, respectively, relating
 
to divestments of consolidated businesses and recorded
 
gains of $2,193 million and $2,184 million, respectively
 
in “Other
income (expense), net” on the sales of such businesses. These
 
are primarily due to the divestment of the Company’s
 
Mechanical Power Transmission Division
(Dodge) to RBC Bearings Inc. Certain amounts included in
 
the net gain for the sale of the Dodge business
 
are estimated or otherwise subject to change in value
and, as a result, the Company may record additional
 
adjustments to the gain in future periods which are
 
not expected to have a material impact on the
consolidated financial statements. In the years ended December
 
31, 2021 and 2020, “Income from continuing operations
 
before taxes”, included net income of
$115 million and $96 million,
 
respectively, from the Dodge
 
business which, prior to its sale was part of the Company’s
 
Motion operating segment. In the three
months ended December 31, 2021 and 2020, “Income
 
from continuing operations before taxes”, included net income
 
of $9 million and $25 million, respectively,
related to this business.
In 2020, the Company completed the sale of its Power Grids
 
business (see Note 3 for details) and its solar inverters
 
business.
 
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 year ended December 31, 2020, a loss of
 
$33 million was included in “Other income (expense),
 
net” for changes in fair value of this business of which
$14 million was recorded in the three months. 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 $33 million,
 
in the year ended December 31, 2020, Income from
 
continuing operations before taxes includes net losses
 
of $63 million
from the solar inverters business prior to its sale.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
 
Q4
 
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:
December 31, 2021
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
 
recorded in net income
Cash
2,752
2,752
2,752
Time deposits
2,037
2,037
1,737
300
Equity securities
569
18
587
587
5,358
18
5,376
4,489
887
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
203
7
(1)
209
209
Corporate
74
1
(1)
74
74
277
8
(2)
283
283
Total
5,635
26
(2)
5,659
4,489
1,170
Of which:
 
Restricted cash, current
30
Restricted cash, non-current
300
December 31, 2020
Cash and
Marketable
Gross
Gross
equivalents
securities
unrealized
unrealized
and restricted
and short-term
($ in millions)
Cost basis
gains
losses
Fair value
cash
investments
Changes in fair value
recorded in net income
Cash
2,388
2,388
2,388
Time deposits
1,513
1,513
1,513
Equity securities
1,704
12
1,716
1,716
5,605
12
5,617
3,901
1,716
Changes in fair value recorded
in other comprehensive income
Debt securities available-for-sale:
U.S. government obligations
274
19
293
293
European government obligations
24
24
24
Corporate
69
6
75
75
367
25
392
392
Total
5,972
37
6,009
3,901
2,108
Of which:
Restricted cash, current
323
Restricted cash, non-current
300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
 
Q4
 
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 interest rate swaps
 
are used to manage the interest rate and foreign
currency risk associated with certain debt and generally
 
such swaps are designated as fair value hedges. In addition,
 
from time to time, the Company uses
instruments such as interest rate swaps, interest rate futures,
 
bond futures or forward rate agreements to manage interest
 
rate risk arising from the Company’s
balance sheet structure but does not designate such instruments
 
as hedges.
Equity risk
The Company is exposed to fluctuations in the fair
 
value of its warrant appreciation rights (WARs)
 
issued under its management
 
incentive plan. A WAR gives its
holder the right to receive cash equal to the market price
 
of an equivalent listed warrant on the date of exercise.
 
To eliminate
 
such risk, the Company has
purchased cash-settled call options, indexed to the shares
 
of the Company, which entitle
 
the Company to receive amounts equivalent to its obligations
 
under the
outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective
 
in its use of derivatives is to minimize exposures arising
 
from its business, certain derivatives are designated
and qualify for hedge accounting treatment while others either
 
are not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange
 
and interest rate derivatives (whether designated as hedges
 
or not) were as follows:
Type of derivative
Total notional amounts at
($ in millions)
December 31, 2021
December 31, 2020
Foreign exchange contracts
11,276
12,610
Embedded foreign exchange derivatives
815
1,134
Cross-currency interest rate swaps
906
Interest rate contracts
3,541
3,227
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
December 31, 2021
December 31, 2020
Copper swaps
metric tonnes
36,017
39,390
Silver swaps
ounces
2,842,533
1,966,677
Aluminum swaps
metric tonnes
7,125
8,112
Equity derivatives
At December 31, 2021 and 2020, the Company held 9 million
 
and 22 million cash-settled call options indexed to ABB
 
Ltd shares (conversion ratio 5:1) with a total
fair value of $29 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.
 
In
these cases, the effective portion of the changes in
 
their fair value is recorded in “Accumulated other comprehensive
 
loss” and subsequently reclassified into
earnings in the same line item and in the same period
 
as the underlying hedged transaction affects
 
earnings. For the year and three months
 
ended December 31,
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
 
interest rate
swaps. Where such instruments are designated as fair value
 
hedges, the changes in the fair value of these instruments,
 
as well as the changes in the fair value of
the risk component of the underlying debt being hedged,
 
are recorded as offsetting gains and losses in
 
“Interest and other finance expense”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
The effect of derivative instruments, designated and
 
qualifying as fair value hedges, on the Consolidated
 
Income Statements was as follows:
Year ended December 31,
Three months ended December 31,
($ in millions)
2021
2020
2021
2020
Gains (losses) recognized in Interest and other finance
 
expense:
 
Interest rate contracts
Designated as fair value hedges
(55)
11
(15)
(10)
Hedged item
56
(11)
15
9
Cross-currency interest rate swaps
Designated as fair value hedges
(37)
(10)
Hedged item
34
9
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
Year ended December 31,
Three months ended December 31,
($ in millions)
Location
2021
2020
2021
2020
Foreign exchange contracts
Total revenues
3
94
52
131
Total cost of sales
(53)
(29)
(53)
SG&A expenses
(1)
11
(11)
5
(9)
Non-order related research
 
and development
(2)
(2)
(1)
Interest and other finance expense
(173)
207
(52)
100
Embedded foreign exchange
Total revenues
(7)
(34)
7
(30)
contracts
Total cost of sales
(2)
(1)
1
1
Commodity contracts
Total cost of sales
78
56
31
44
Other
Interest and other finance expense
1
Total
(145)
310
15
183
(1)
 
SG&A expenses represent
 
“Selling, general and
 
administrative expenses”.
The fair values of derivatives included in the Consolidat
 
ed Balance Sheets were as follows:
December 31, 2021
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
3
5
Interest rate contracts
9
20
Cross-currency interest rate swaps
109
Cash-settled call options
29
Total
38
20
3
114
Derivatives not designated as hedging instruments:
Foreign exchange contracts
108
14
107
7
Commodity contracts
19
5
Interest rate contracts
1
2
Embedded foreign exchange derivatives
10
7
16
10
Total
138
21
130
17
Total fair value
176
41
133
131
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
 
Q4
 
2021
 
FINANCIAL
 
INFORMATION
December 31, 2020
Derivative assets
Derivative liabilities
Current in
Non-current in
Current in
Non-current in
“Other current
“Other non-current
“Other current
“Other non-current
($ in millions)
assets”
assets”
liabilities”
liabilities”
Derivatives designated as hedging instruments:
Foreign exchange contracts
1
2
4
Interest rate contracts
6
78
Cash-settled call options
10
11
Total
16
90
2
4
Derivatives not designated as hedging instruments:
Foreign exchange contracts
221
22
106
26
Commodity contracts
59
7
Interest rate contracts
2
2
Embedded foreign exchange derivatives
10
2
28
16
Total
292
24
143
42
Total fair value
308
114
145
46
Close-out netting agreements provide for the termination,
 
valuation and net settlement of some or all outstanding
 
transactions between two counterparties on the
occurrence of one or more pre-defined trigger events.
Although the Company is party to close-out netting agreements
 
with most derivative counterparties, the fair values in the
 
tables above and in the Consolidated
Balance Sheets at December 31, 2021 and 2020, have
 
been presented on a gross basis.
The Company’s netting agreements and other similar
 
arrangements allow net settlements under certain conditions.
 
At December 31, 2021 and 2020, information
related to these offsetting arrangements was as follows:
($ in millions)
December 31, 2021
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
assets
in case of default
received
received
exposure
Derivatives
200
(104)
96
Total
200
(104)
96
($ in millions)
December 31, 2021
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
 
of recognized
eligible for set-off
collateral
collateral
Net liability
similar arrangement
liabilities
in case of default
pledged
pledged
exposure
Derivatives
238
(104)
134
Total
238
(104)
134
($ in millions)
December 31, 2020
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
 
of recognized
eligible for set-off
collateral
collateral
Net asset
similar arrangement
 
assets
in case of default
received
received
exposure
Derivatives
410
(106)
304
Total
410
(106)
304
 
($ in millions)
December 31, 2020
Gross amount
Derivative liabilities
Cash
Non-cash
Type of agreement or
 
of recognized
eligible for set-off
collateral
 
collateral
Net liability
similar arrangement
liabilities
 
in case of default
pledged
pledged
exposure
Derivatives
147
(106)
41
Total
147
(106)
41
Note 7
Fair values
The Company uses fair value measurement principles
 
to record certain financial assets and liabilities on a
 
recurring basis and, when necessary,
 
to record certain
non-financial assets at fair value on a non-recurring
 
basis, as well as to determine fair value disclosures for
 
certain financial instruments carried at amortized
 
cost
in the financial statements. Financial assets and liabilities
 
recorded at fair value on a recurring basis include foreign
 
currency, commodity and interest
 
rate
derivatives, as well as cash-settled call options and available
 
-for-sale securities. Non-financial assets recorded at
 
fair value on a non-recurring basis include
long-lived assets that are reduced to their estimated fair
 
value due to impairments.