UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN
PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July
2018
Commission File Number
001-16429
ABB Ltd
(Translation of registrant’s
name into English)
P.O. Box
1831, Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal
executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
⬜
Note:
Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual
report to security holders.
Indication by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
⬜
Note:
Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or
other document that the registrant foreign private issuer must furnish and make
public under the laws of the jurisdiction in which the registrant is
incorporated, domiciled or legally organized (the registrant’s “home country”),
or under the rules of the home country exchange on which the registrant’s
securities are traded, as long as the report or other document is not a press
release, is not required to be and has not been distributed to the registrant’s
security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934.
If “Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
This Form 6-K consists of the following:
1.
Press release issued by ABB Ltd dated July 19, 2018 titled “Continued
profitable growth”.
2.
Q2 2018 Financial Information.
3.
Announcements regarding transactions in ABB Ltd’s Securities made
by the directors or the members of the Executive Committee.
The information provided by Item 2 above is hereby incorporated by
reference into the Registration Statements on Form F-3 of ABB Ltd and ABB
Finance (USA) Inc. (File Nos. 333-223907 and 333-223907-01) and registration
statements on Form S-8 (File Nos. 333-190180, 333-181583, 333-179472,
333-171971 and 333-129271) each of which was previously filed with the
Securities and Exchange Commission.
2
—
ZURICH,
SWITZERLAND, JULY 19, 2018: SECOND QUARTER HIGHLIGHTS
Continued
profitable growth
─
Total orders +8%
1
, up in all divisions and
regions
─
Base orders +9%, up in all divisions and regions
─
Revenues +1%
─
Book-to-bill ratio
2
at 1.07x, >1 in all
divisions
─
Operational EBITA margin
2
up 60bps to 13.0%
─
Operational EPS
2
+27%
4
─
Net income $681 million, +30%
─
Cash flow from operating activities $1,010 million; solid
cash delivery for the full year expected
“In
the second quarter, we drove order growth in all divisions and across all
regions. Through our continued productivity efforts, we delivered margin
improvement and double-digit operational EPS growth,” said ABB CEO Ulrich
Spiesshofer. “We completed the acquisition of GE Industrial Solutions within
the committed time-frame and have started the integration at full speed
together with our new colleagues.”
“With
disciplined focus on relentless execution, our four divisions are continuing
their drive towards world-class efficiency and effectiveness,” he added. “These
results show that our transformation over the past years is delivering.”
Key
figures
|
|
|
ChangE
|
|
|
ChangE
|
($ in millions, unless otherwise indicated)
|
Q2
2018
|
Q2 2017
|
US$
|
Comparable
1
|
H1
2018
|
H1 2017
|
US$
|
Comparable
1
|
Orders
|
9,483
|
8,349
|
+14%
|
+8%
|
19,255
|
16,752
|
+15%
|
+7%
|
Revenues
|
8,889
|
8,454
|
+5%
|
+1%
|
17,516
|
16,308
|
+7%
|
+1%
|
Operational EBITA
2
|
1,167
|
1,042
|
+12%
|
+8%
3
|
2,227
|
1,985
|
+12%
|
+6%
3
|
as % of operational
revenues
|
13.0%
|
12.4%
|
+0.6pts
|
|
12.7%
|
12.3%
|
+0.4pts
|
|
Net income
|
681
|
525
|
+30%
|
|
1,253
|
1,249
|
0%
|
|
Basic EPS ($)
|
0.32
|
0.25
|
+30%
4
|
|
0.59
|
0.58
|
+1%
4
|
|
Operational EPS
2
($)
|
0.38
|
0.30
|
+28%
4
|
+27%
4
|
0.69
|
0.58
|
+19%
4
|
+16%
4
|
Cash flow from
operating activities
|
1,010
|
467
|
+116%
|
|
492
|
976
|
-50%
|
|
Short-term outlook
Macroeconomic
signs are trending positively in Europe and the United States, with growth
expected to continue in China. The overall global market is growing, with
rising geopolitical uncertainties in various parts of the world. Oil prices and
foreign exchange translation effects are expected to continue to influence the
company’s results.
______
1
Growth rates for
orders, third-party base orders and revenues are on a comparable basis (local
currency adjusted for acquisitions and divestitures). US$ growth rates are
presented in Key Figures table.
2
For non-GAAP
measures, see the “Supplemental Financial Information” attachment to the press
release.
3
Constant
currency (not adjusted for portfolio changes).
4
EPS growth rates
are computed using unrounded amounts. Comparable operational earnings per share
is in constant currency (2014 exchange rates not adjusted for changes in the
business portfolio).
Q2 2018 Group results
Orders
Total
orders rose 8 percent (14 percent in US dollars), up in all divisions and
regions compared to a year ago. Base orders (classified as orders below $15
million) increased 9 percent (14 percent in US dollars), up in all divisions
and regions. Large orders represented 7 percent of total orders, compared to 8
percent in the same quarter of 2017. ABB’s comprehensive digital offering, ABB
Ability™, was a significant contributor to the quarter’s order growth.
The
book-to-bill ratio increased to 1.07x at the end of the quarter compared with
0.99x in the previous year.
Service
orders were up 2 percent (5 percent in US dollars) on a tough comparable
period. Service orders represent 19 percent of total orders, compared to 20
percent in the prior year period.
Changes
in the business portfolio related to the acquisition of B&R resulted in a
net positive impact of 3 percent on total reported orders. A stronger US dollar
versus the prior year period provided a 3 percent positive translation impact
on reported orders.
Market
overview
ABB saw
strong demand from all regions in the quarter:
─
Total orders from Europe rose 10
percent (22 percent in US dollars), with positive contribution from Germany,
Italy, the UK, Norway, Spain and France more than offsetting declines in
Sweden, Finland and Switzerland. Base orders rose 12 percent (24 percent in US
dollars) with Italy and the UK as the main contributors.
─
The Americas delivered a 7 percent rise
in total orders (7 percent in US dollars). Higher orders were recorded in the
United States, Canada and Mexico. Base orders increased 7 percent (7 percent in
US dollars). The United States grew, on a comparable basis, 6 percent (7
percent in US dollars) in total order terms and 7 percent (8 percent in US
dollars) in base orders.
─
In Asia, Middle East and Africa (AMEA),
total orders grew 7 percent (11 percent in US dollars) with good order demand
from China, India and the UAE. Base orders rose 7 percent (12 percent in US
dollars) with positive contributions from China, India and Australia more than
offsetting lower intake from South Korea and South Africa. In China, total and
base orders increased 20 percent and 23 percent (29 percent and 32 percent in US
dollars) respectively.
Demand
grew in the majority of ABB’s key customer segments:
─
Utility demand was mixed in the second
quarter. Activity related to grid integration for renewables and investments in
improving grid reliability, particularly through digitalization, continued to
grow. Larger grid investments, for example in long distance transmission, remained
subdued.
─
Industrial demand grew well across a
broad customer base in the quarter. Process industries, including oil and gas
and mining, continued to increase investments, with capex concentrated on
upgrading and automating brown-field assets. An ongoing focus on select
industries such as food and beverage and automotive, proved beneficial for order
momentum, particularly ABB’s automation and robotics solutions.
─
Transport and infrastructure demand was
solid, with good orders received for rail electrification, from the construction
sector and in specialty vessels. Highlights for the quarter include continued
strong growth in data centers and for electric vehicle fast-charging solutions.
CONTINUED PROFITABLE GROWTH
|
2/7
|
Revenues
Revenues
were up 1 percent (5 percent higher in US dollars), well-supported by continued
solid growth in Robotics and Motion and Electrification Products. This was tempered
by steady revenues in Industrial Automation and lower revenues in Power Grids
due to the lower opening order backlog in both divisions.
Service
revenues were up 13 percent (16 percent in US dollars), and represented 19
percent of total revenues, up from 17 percent in the prior year period.
Services growth was bolstered by ABB’s leading digital portfolio, ABB Ability™
solutions.
Change in
exchange rates resulted in a positive translation impact on reported revenues
of 2 percent. Business portfolio changes had a net positive effect of 2 percent
on reported revenues.
Operational
EBITA
Operational
EBITA of $1,167 million increased 8 percent in local currencies (12 percent in
US dollars) in the second quarter. The operational EBITA margin increased 60
basis points to 13 percent, supported by continued productivity efforts. ABB
continued to invest in its sales, brand and ABB Ability™ over the quarter.
Net income,
basic and operational
earnings per
share
Net
income was $681 million, up 30 percent compared to the prior year’s $525
million. ABB’s operational net income
2
rose 27 percent to $810
million. Basic earnings per share of $0.32 was 30 percent higher year-on-year.
Operational earnings per share of $0.38 was up 28 percent, and 27 percent
better in constant currency terms
4
.
Cash
flow from operating
activities
The cash
flow from operating activities result of $1,010 million compares to $467
million in the second quarter of 2017. Relative to a year ago, cash flow
primarily reflects a change in the timing of employee incentive payments paid
in the first quarter this year which in 2017 were paid in the second quarter.
ABB expects solid cash delivery for the full year.
CONTINUED PROFITABLE GROWTH
|
3/7
|
Q2 divisional performance
($
in millions, unless otherwise indicated)
|
Orders
|
Change
|
3
rd
party base orders
|
Change
|
Revenues
|
Change
|
Op
EBITA %
|
CHANGE
|
US$
|
Comparable
1
|
US$
|
Comparable
1
|
US$
|
Comparable
1
|
Power Grids
|
2,577
|
+6%
|
+5%
|
2,128
|
+9%
|
+7%
|
2,354
|
-6%
|
-8%
|
9.7%
|
-0.4pts
|
Electrification
Products
|
2,727
|
+9%
|
+6%
|
2,553
|
+7%
|
+4%
|
2,673
|
+7%
|
+4%
|
16.0%
|
+1.0pts
|
Industrial
Automation
|
2,005
|
+34%
|
+15%
|
1,715
|
+30%
|
+9%
|
1,839
|
+17%
|
0%
|
14.1%
|
+0.7pts
|
Robotics and
Motion
|
2,540
|
+15%
|
+11%
|
2,363
|
+20%
|
+16%
|
2,316
|
+11%
|
+8%
|
16.1%
|
+1.0pts
|
Corporate
& other
|
(366)
|
|
|
35
|
|
|
(293)
|
|
|
|
|
ABB Group
|
9,483
|
+14%
|
+8%
|
8,794
|
+14%
|
+9%
|
8,889
|
+5%
|
+1%
|
13.0%
|
+0.6pts
|
Effective
January 1, 2018, management responsibility and oversight of certain remaining
engineering, procurement and construction (EPC) business, previously included
in the Power Grids, Industrial Automation, Robotics and Motion operating segments,
were transferred to a new non-core operating business within Corporate and
Other. Previously reported amounts have been reclassified consistent with this
new structure.
Power Grids
Momentum
in third-party base order growth continued, rising 7 percent (9 percent in US
dollars). Total orders were up 5 percent (6 percent in US dollars). Power Up
initiatives and ABB Ability™ solutions gained traction. Renewables, grid
digitalization and pick up in industrial and transportation sectors contributed
to the growth. At the end of the second quarter, the order backlog was 4
percent lower (6 percent in US dollars) versus the prior year period. Revenues
were 8 percent lower (6 percent in US dollars), dampened by the lower opening
order backlog. Operational EBITA margin was 9.7 percent, mainly due to lower
revenues and investment in the ongoing Power Up program. Cost management
initiatives are in place.
Electrification
Products
Total
orders increased 6 percent (9 percent in US dollars) and third-party
base orders improved 4 percent (7 percent in US dollars). Order growth was
broad based, with all business units, particularly products, performing well
across all regions. Revenues increased 4 percent (7 percent in US dollars).
Operational EBITA margins expanded 100 basis points year-on-year, benefiting
from pricing actions and sustained productivity efforts.
Industrial
Automation
Total
orders (including B&R and currency effects) were up 34 percent and
third-party base orders were up 30 percent compared to the prior year period.
On a comparable basis, total orders rose 15 percent and third-party base orders
increased 9 percent. Investments continued for specialty vessels as well as
selective investments in process industries, particularly oil and gas. Base orders
grew across all industries, with double digit growth in service. At the end of
the second quarter, the order backlog was 4 percent lower (1 percent lower
in US dollars) versus the prior year period. Revenues were stable in the
quarter, reflecting revenues from strong product orders offsetting the lower
opening order backlog. The operational EBITA margin improved by 70 basis
points, supported by a positive mix and strong project execution.
Robotics and
Motion
Third-party
base orders increased 16 percent (20 percent in US dollars) and total orders
increased 11 percent (15 percent in US dollars) in the quarter. Order growth
was achieved across all business units and regions, with demand from process
industries continuing the recovery trend. Revenues increased 8 percent (11
percent in US dollars). Operational EBITA margin expanded 100 basis points
year-on-year to 16.1 percent, due to positive volumes and mix as well as
continued productivity efforts.
CONTINUED PROFITABLE GROWTH
|
4/7
|
Next Level strategy
Since
2014, ABB has been executing its Next Level strategy, focusing on profitable
growth, relentless execution and business-led collaboration. In the past years,
ABB has shaped its divisions into four market-leading, entrepreneurial units;
has driven a quantum leap in digital through ABB Ability™; has accelerated
momentum in operational excellence; and has strengthened ABB’s brand.
All of
ABB’s divisions are driving profitable growth within key markets, with new and
existing end-to-end digital ABB Ability™ solutions, able to close the loop with
connected devices and build on the intelligent cloud. The divisions continue to
focus on relentless execution, building on existing momentum and continuing to
invest in growth, with stronger links between compensation and delivery of
operational performance.
Today,
ABB is better positioned in better markets, with a streamlined and strengthened
portfolio that offers two clear value propositions: bringing electricity from
any power plant to any plug, and automating industries from natural resources
to finished products.
Profitable
growth
ABB’s
digital solutions offering, ABB Ability™, is integral to the company’s efforts
to drive profitable growth. The offering includes more than 210 ABB Ability™
solutions, meeting the needs of customers in utilities, industry and transport
& infrastructure. During the quarter ABB received an order from Danish
green energy company Ørsted, to integrate offshore wind power with the UK power
grid. As part of the order, ABB will supply its market-leading ABB Ability™
digital grid solutions to ensure power reliability and efficiency. As well, for
example, ABB is working with China’s Yitai Group, a chemicals company. ABB will
supply end-to-end ABB Ability™ solutions that will enable top-tier productivity
levels in their new plants. This is the first order in a series of digital
projects for Yitai Group.
During
the second quarter ABB announced an investment of €100 million in an R&D
facility and training campus in Eggelsberg, Austria, which will drive
innovation in machine and factory automation including artificial intelligence
and machine learning. ABB also announced an investment of around $30 million in
a new state-of-the-art manufacturing unit for Power Grids’ transformer offering
in Sweden.
Update on the acquisition of GE Industrial Solutions (GEIS)
Through
ongoing portfolio management, ABB is shifting its center of gravity. The Group
completed its acquisition of GE Industrial Solutions (GEIS) on June 30, 2018.
By acquiring GEIS, ABB is strengthening the group’s number two position in
electrification globally, and increasing the group’s exposure to the attractive
North American market – already ABB’s biggest market – and early cycle
business. GEIS is being integrated into ABB’s Electrification Products (EP)
division as a new business unit called Electrification Products Industrial
Solutions (EPIS). Headquartered in Atlanta, Georgia, EPIS has about 14,000
employees around the world.
Approximately
$200 million of annual cost synergies are expected by year five. ABB will
realize value through product and technology portfolio harmonization,
particularly from coupling ABB Ability™ offerings with the extensive installed
base. Synergies will also be extracted from footprint optimization, supply
chain savings and SG&A cost reduction. It is expected that the integration
of GEIS will have an approximately 60 basis points negative impact on ABB Group
operating EBITA margins in the second half of 2018 and approximately 260 basis
points on the EP operating EBITA margin. ABB aims to bring the margin for the
EP division, after an initial dampening effect, back into its operational EBITA
margin target range of fifteen to nineteen percent during 2020. The transaction
includes a long-term strategic supply relationship with GE and allows ABB
long-term use of the GE brand.
CONTINUED PROFITABLE GROWTH
|
5/7
|
Relentless execution
ABB
continues to benefit from its ongoing cost management and productivity efforts.
During the quarter, pricing action and savings outpaced raw materials inflation
supporting ABB’s ongoing aim of offsetting three to five percent of the group’s
cost of sales each year.
The group
focus on Quality and Operations is building on ABB’s 1,000-day programs
completed in 2017. Gaps in performance, informed by customer feedback, are
rigorously identified and addressed using Lean Six Sigma methods. ABB currently
has 1,500 continuous improvement projects underway, led from within each
division.
Business-led
collaboration
Strategic
partnership developments in the second quarter include the formation of a
global strategic alliance to provide industrial grade edge data center
solutions between ABB and Rittal, building on the success of prior co-operation
and a software alliance for collaborative robotics with Kawasaki Heavy
Industries.
ABB
continues to build strategic brand positioning through its partnership with the
ABB Formula E electric car racing championship series, which provides a unique
platform to demonstrate e-mobility leadership.
Short- and long-term outlook
Macroeconomic
signs are trending positively in Europe and the United States, with growth
expected to continue in China. The overall global market is growing, with
rising geopolitical uncertainties in various parts of the world. Oil prices and
foreign exchange translation effects are expected to continue to influence the
company’s results.
The
attractive long-term demand outlook in ABB’s three major customer sectors –
utilities, industry and transport & infrastructure – is driven by the
Energy and Fourth Industrial Revolutions. ABB is well-positioned to tap into
these opportunities for long-term profitable growth with its strong market
presence, broad geographic and business scope, technology leadership and
financial strength.
CONTINUED PROFITABLE GROWTH
|
6/7
|
More
information
The Q2 2018
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
.
ABB will host a
media call today starting at 10:00 a.m. Central European Time (CET) (9:00 a.m.
BST, 4:00 a.m. EDT). The event will be accessible by conference call. Lines
will be open 10-15 minutes before the start of the call. The media conference
call dial-in numbers are:
UK +44 207 107
0613
Sweden +46 8
5051 0031
Rest of Europe,
+41 58 310 5000
US and Canada
+1 866 291 4166 (toll-free) or +1 631 570 5613 (long-distance charges)
A conference
call and webcast for analysts and investors is scheduled to begin today at 2:00
p.m. CET (1:00 p.m. BST, 8:00 a.m. EST). Callers are requested to phone in 10
minutes before the start of the call. The analyst and investor conference call
dial-in numbers are:
UK +44 207 107
0613
Sweden +46 8
5051 0031
Rest of Europe,
+41 58 310 5000
US and Canada
+1 866 291 4166 (toll-free) or +1 631 570 5613 (long-distance charges)
The call will
also be accessible on the ABB website at:
https://new.abb.com/investorrelations/second-quarter-2018-results-webcast. A
recorded session will be available as a podcast one hour after the end of the
conference call and can be downloaded from our website.
ABB
(ABBN: SIX Swiss Ex) is a pioneering technology leader in power
grids, electrification products, industrial automation and robotics and motion,
serving customers in utilities, industry and transport & infrastructure
globally. Continuing a history of innovation spanning more than 130 years, ABB
today is writing the future of industrial digitalization with two clear value
propositions: bringing electricity from any power plant to any plug and
automating industries from natural resources to finished products. As title
partner in ABB Formula E, the fully electric international FIA motorsport
class, ABB is pushing the boundaries of e-mobility to contribute to a
sustainable future. ABB operates in more than 100 countries with about 147,000
employees.
www.abb.com
|
Investor calendar 2018/2019
|
Third quarter
2018 results
|
October 25,
2018
|
Fourth
quarter and full year 2018 results
|
February 2019
|
Important
notice about
forward-looking
information
This
press release includes forward-looking information and statements as well as
other statements concerning the outlook for our business, including those in
the sections of this release titled “Short-term outlook”, “Cash flow from
operating activities”, “Next Level strategy” and “Short- and long-term
outlook”. These statements are based on current expectations, estimates and
projections about the factors that may affect our future performance, including
global economic conditions, the economic conditions of the regions and
industries that are major markets for ABB Ltd. These expectations, estimates
and projections are generally identifiable by statements containing words such
as “expects,” “believes,” “estimates,” “targets,” “plans,” “is likely”,
“intends” or similar expressions. However, there are many risks and
uncertainties, many of which are beyond our control, that could cause our
actual results to differ materially from the forward-looking information and
statements made in this press release and which could affect our ability to
achieve any or all of our stated targets. The important factors that could
cause such differences include, among others, business risks associated with
the volatile global economic environment and political conditions, costs
associated with compliance activities, market acceptance of new products and
services, changes in governmental regulations and currency exchange rates and
such other factors as may be discussed from time to time in ABB Ltd’s filings
with the U.S. Securities and Exchange Commission, including its Annual Reports
on Form 20-F. Although ABB Ltd believes that its expectations reflected in any
such forward-looking statement are based upon reasonable assumptions, it can
give no assurance that those expectations will be achieved.
Zurich,
July 19, 2018
Ulrich
Spiesshofer, CEO
—
For more information, please contact:
|
Media Relations
Phone: +41 43 317 71 11
E-mail: media.relations@ch.abb.com
|
Investor Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
|
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
|
CONTINUED PROFITABLE GROWTH
|
7/7
|
1
Q2
2018 Financial Information
2
Q2
2018 Financial Information
—
Key Figures
|
|
|
|
|
CHANGE
|
|
($ in millions, unless
otherwise indicated)
|
Q2 2018
|
Q2 2017
|
US$
|
Comparable
(1)
|
|
Orders
|
9,483
|
8,349
|
14%
|
8%
|
|
Order backlog (end June)
|
24,214
|
23,553
|
3%
|
-1%
|
|
Revenues
|
8,889
|
8,454
|
5%
|
1%
|
|
Operational EBITA
(1)
|
1,167
|
1,042
|
12%
|
8%
(2)
|
|
|
as % of operational revenues
(1)
|
13.0%
|
12.4%
|
+0.6
pts
|
|
|
Net income attributable to ABB
|
681
|
525
|
30%
|
|
|
Basic earnings per share ($)
|
0.32
|
0.25
|
30%
(3)
|
|
|
Operational earnings per share
(1)
($)
|
0.38
|
0.30
|
28%
(3)
|
27%
(3)
|
|
Cash flow from operating
activities
|
1,010
|
467
|
116%
|
|
|
|
|
|
|
CHANGE
|
|
($ in millions, unless
otherwise indicated)
|
H1 2018
|
H1 2017
|
US$
|
Comparable
(1)
|
|
Orders
|
19,255
|
16,752
|
15%
|
7%
|
|
Revenues
|
17,516
|
16,308
|
7%
|
1%
|
|
Operational EBITA
(1)
|
2,227
|
1,985
|
12%
|
6%
(2)
|
|
|
as % of operational revenues
(1)
|
12.7%
|
12.3%
|
+0.4
pts
|
|
|
Net income attributable to ABB
|
1,253
|
1,249
|
0%
|
|
|
Basic earnings per share ($)
|
0.59
|
0.58
|
1%
(3)
|
|
|
Operational earnings per share
(1)
($)
|
0.69
|
0.58
|
19%
(3)
|
16%
(3)
|
|
Cash flow from operating
activities
|
492
|
976
|
-50%
|
|
(1) For
a reconciliation of non-GAAP measures see “
Supplemental Reconciliations and
Definitions
” on
page 36.
(2) Constant
currency (not adjusted for portfolio changes).
(3) Earnings
per share growth rates are computed using unrounded amounts. Comparable Operational
earnings per share growth is in constant currency (2014 foreign exchange rates
and not adjusted for changes in the business portfolio).
3
Q2
2018 Financial Information
|
|
|
|
CHANGE
|
|
($ in millions, unless
otherwise indicated)
|
Q2 2018
|
Q2 2017
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB Group
|
9,483
|
8,349
|
14%
|
11%
|
8%
|
|
|
Power Grids
|
2,577
|
2,427
|
6%
|
5%
|
5%
|
|
|
Electrification Products
|
2,727
|
2,512
|
9%
|
6%
|
6%
|
|
|
Industrial Automation
|
2,005
|
1,492
|
34%
|
30%
|
15%
|
|
|
Robotics and Motion
|
2,540
|
2,218
|
15%
|
11%
|
11%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(366)
|
(300)
|
|
Third-party base orders
|
ABB Group
|
8,794
|
7,681
|
14%
|
12%
|
9%
|
|
|
Power Grids
|
2,128
|
1,961
|
9%
|
7%
|
7%
|
|
|
Electrification Products
|
2,553
|
2,393
|
7%
|
4%
|
4%
|
|
|
Industrial Automation
|
1,715
|
1,321
|
30%
|
26%
|
9%
|
|
|
Robotics and Motion
|
2,363
|
1,966
|
20%
|
16%
|
16%
|
|
|
Corporate and Other
|
35
|
40
|
|
|
|
|
Order backlog (end June)
|
ABB Group
|
24,214
|
23,553
|
3%
|
4%
|
-1%
|
|
|
Power Grids
|
10,471
|
11,085
|
-6%
|
-4%
|
-4%
|
|
|
Electrification Products
|
4,449
|
3,220
|
38%
|
39%
|
5%
|
|
|
Industrial Automation
|
5,496
|
5,578
|
-1%
|
-1%
|
-4%
|
|
|
Robotics and Motion
|
4,262
|
4,056
|
5%
|
6%
|
6%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(464)
|
(386)
|
|
Revenues
|
ABB Group
|
8,889
|
8,454
|
5%
|
3%
|
1%
|
|
|
Power Grids
|
2,354
|
2,507
|
-6%
|
-8%
|
-8%
|
|
|
Electrification Products
|
2,673
|
2,509
|
7%
|
4%
|
4%
|
|
|
Industrial Automation
|
1,839
|
1,575
|
17%
|
13%
|
0%
|
|
|
Robotics and Motion
|
2,316
|
2,082
|
11%
|
8%
|
8%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(293)
|
(219)
|
|
Operational EBITA
|
ABB Group
|
1,167
|
1,042
|
12%
|
8%
|
|
|
|
Power Grids
|
232
|
253
|
-8%
|
-9%
|
|
|
|
Electrification Products
|
430
|
373
|
15%
|
10%
|
|
|
|
Industrial Automation
|
260
|
211
|
23%
|
21%
|
|
|
|
Robotics and Motion
|
374
|
314
|
19%
|
15%
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(129)
|
(109)
|
|
Operational EBITA %
|
ABB Group
|
13.0%
|
12.4%
|
|
|
|
|
|
Power Grids
|
9.7%
|
10.1%
|
|
|
|
|
|
Electrification Products
|
16.0%
|
15.0%
|
|
|
|
|
|
Industrial Automation
|
14.1%
|
13.4%
|
|
|
|
|
|
Robotics and Motion
|
16.1%
|
15.1%
|
|
|
|
|
Income from operations
|
ABB Group
|
962
|
877
|
|
|
|
|
|
Power Grids
|
176
|
226
|
|
|
|
|
|
Electrification Products
|
343
|
334
|
|
|
|
|
|
Industrial Automation
|
223
|
209
|
|
|
|
|
|
Robotics and Motion
|
353
|
282
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(133)
|
(174)
|
|
Income from operations %
|
ABB Group
|
10.8%
|
10.4%
|
|
|
|
|
|
Power Grids
|
7.5%
|
9.0%
|
|
|
|
|
|
Electrification Products
|
12.8%
|
13.3%
|
|
|
|
|
|
Industrial Automation
|
12.1%
|
13.3%
|
|
|
|
|
|
Robotics and Motion
|
15.2%
|
13.5%
|
|
|
|
|
Cash flow from operating
activities
|
ABB Group
|
1,010
|
467
|
|
|
|
|
|
Power Grids
|
228
|
77
|
|
|
|
|
|
Electrification Products
|
297
|
259
|
|
|
|
|
|
Industrial Automation
|
208
|
153
|
|
|
|
|
|
Robotics and Motion
|
351
|
221
|
|
|
|
|
|
Corporate and Other
|
(74)
|
(243)
|
|
|
|
4
Q2
2018 Financial Information
|
|
|
|
CHANGE
|
|
($ in millions, unless
otherwise indicated)
|
H1 2018
|
H1 2017
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB Group
|
19,255
|
16,752
|
15%
|
10%
|
7%
|
|
|
Power Grids
|
5,057
|
4,751
|
6%
|
3%
|
3%
|
|
|
Electrification Products
|
5,513
|
5,040
|
9%
|
4%
|
4%
|
|
|
Industrial Automation
|
4,122
|
3,166
|
30%
|
23%
|
9%
|
|
|
Robotics and Motion
|
5,119
|
4,395
|
16%
|
11%
|
11%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(556)
|
(600)
|
|
|
|
|
Third-party base orders
|
ABB Group
|
17,545
|
15,279
|
15%
|
10%
|
7%
|
|
|
Power Grids
|
4,120
|
3,724
|
11%
|
7%
|
7%
|
|
|
Electrification Products
|
5,200
|
4,758
|
9%
|
4%
|
4%
|
|
|
Industrial Automation
|
3,502
|
2,762
|
27%
|
20%
|
4%
|
|
|
Robotics and Motion
|
4,676
|
3,957
|
18%
|
13%
|
13%
|
|
|
Corporate and Other
|
47
|
78
|
|
|
|
|
Order backlog (end June)
|
ABB Group
|
24,214
|
23,553
|
3%
|
4%
|
-1%
|
|
|
Power Grids
|
10,471
|
11,085
|
-6%
|
-4%
|
-4%
|
|
|
Electrification Products
|
4,449
|
3,220
|
38%
|
39%
|
5%
|
|
|
Industrial Automation
|
5,496
|
5,578
|
-1%
|
-1%
|
-4%
|
|
|
Robotics and Motion
|
4,262
|
4,056
|
5%
|
6%
|
6%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(464)
|
(386)
|
|
Revenues
|
ABB Group
|
17,516
|
16,308
|
7%
|
3%
|
1%
|
|
|
Power Grids
|
4,739
|
4,858
|
-2%
|
-6%
|
-6%
|
|
|
Electrification Products
|
5,167
|
4,802
|
8%
|
3%
|
3%
|
|
|
Industrial Automation
|
3,698
|
3,088
|
20%
|
14%
|
0%
|
|
|
Robotics and Motion
|
4,525
|
4,002
|
13%
|
8%
|
8%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(613)
|
(442)
|
|
Operational EBITA
|
ABB Group
|
2,227
|
1,985
|
12%
|
6%
|
|
|
|
Power Grids
|
464
|
484
|
-4%
|
-7%
|
|
|
|
Electrification Products
|
807
|
695
|
16%
|
8%
|
|
|
|
Industrial Automation
|
522
|
417
|
25%
|
19%
|
|
|
|
Robotics and Motion
|
712
|
596
|
19%
|
13%
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(278)
|
(207)
|
|
Operational EBITA %
|
ABB Group
|
12.7%
|
12.3%
|
|
|
|
|
|
Power Grids
|
9.7%
|
10.0%
|
|
|
|
|
|
Electrification Products
|
15.6%
|
14.6%
|
|
|
|
|
|
Industrial Automation
|
14.1%
|
13.6%
|
|
|
|
|
|
Robotics and Motion
|
15.7%
|
14.9%
|
|
|
|
|
Income from operations
|
ABB Group
|
1,857
|
1,900
|
|
|
|
|
|
Power Grids
|
369
|
437
|
|
|
|
|
|
Electrification Products
|
661
|
641
|
|
|
|
|
|
Industrial Automation
|
460
|
420
|
|
|
|
|
|
Robotics and Motion
|
666
|
543
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
(incl. inter-division
eliminations)
|
(299)
|
(141)
|
|
|
|
|
Income from operations %
|
ABB Group
|
10.6%
|
11.7%
|
|
|
|
|
|
Power Grids
|
7.8%
|
9.0%
|
|
|
|
|
|
Electrification Products
|
12.8%
|
13.3%
|
|
|
|
|
|
Industrial Automation
|
12.4%
|
13.6%
|
|
|
|
|
|
Robotics and Motion
|
14.7%
|
13.6%
|
|
|
|
|
Cash flow from operating
activities
|
ABB Group
|
492
|
976
|
|
|
|
|
|
Power Grids
|
(22)
|
267
|
|
|
|
|
|
Electrification Products
|
378
|
464
|
|
|
|
|
|
Industrial Automation
|
287
|
273
|
|
|
|
|
|
Robotics and Motion
|
424
|
484
|
|
|
|
|
|
Corporate and Other
|
(575)
|
(512)
|
|
|
|
5
Q2
2018 Financial Information
Operational EBITA
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
|
($ in millions, unless
otherwise indicated)
|
ABB
|
Grids
|
Products
|
Automation
|
and
Motion
|
|
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
|
Revenues
|
8,889
|
8,454
|
2,354
|
2,507
|
2,673
|
2,509
|
1,839
|
1,575
|
2,316
|
2,082
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in total revenues
|
75
|
(26)
|
42
|
(13)
|
20
|
(16)
|
7
|
(2)
|
10
|
2
|
|
Operational revenues
|
8,964
|
8,428
|
2,396
|
2,494
|
2,693
|
2,493
|
1,846
|
1,573
|
2,326
|
2,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
962
|
877
|
176
|
226
|
343
|
334
|
223
|
209
|
353
|
282
|
|
Acquisition-related
amortization
|
72
|
56
|
10
|
9
|
19
|
26
|
21
|
2
|
16
|
16
|
|
Restructuring and
|
|
|
|
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
6
|
84
|
7
|
18
|
(1)
|
13
|
–
|
5
|
(2)
|
17
|
|
Changes in retained
obligations of
|
|
|
|
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
1
|
2
|
–
|
–
|
1
|
2
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of
businesses
|
(1)
|
7
|
–
|
–
|
2
|
–
|
–
|
(2)
|
–
|
–
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
|
|
|
|
integration costs
|
51
|
8
|
3
|
1
|
44
|
3
|
1
|
4
|
–
|
–
|
|
Certain other non-operational
items
|
30
|
48
|
12
|
24
|
10
|
9
|
–
|
–
|
4
|
–
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in income from
operations
|
46
|
(40)
|
24
|
(25)
|
12
|
(14)
|
15
|
(7)
|
3
|
(1)
|
|
Operational EBITA
|
1,167
|
1,042
|
232
|
253
|
430
|
373
|
260
|
211
|
374
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
13.0%
|
12.4%
|
9.7%
|
10.1%
|
16.0%
|
15.0%
|
14.1%
|
13.4%
|
16.1%
|
15.1%
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
|
($ in millions, unless
otherwise indicated)
|
ABB
|
Grids
|
Products
|
Automation
|
and
Motion
|
|
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
|
Revenues
|
17,516
|
16,308
|
4,739
|
4,858
|
5,167
|
4,802
|
3,698
|
3,088
|
4,525
|
4,002
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in total revenues
|
87
|
(105)
|
56
|
(41)
|
14
|
(27)
|
6
|
(15)
|
11
|
(10)
|
|
Operational revenues
|
17,603
|
16,203
|
4,795
|
4,817
|
5,181
|
4,775
|
3,704
|
3,073
|
4,536
|
3,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
1,857
|
1,900
|
369
|
437
|
661
|
641
|
460
|
420
|
666
|
543
|
|
Acquisition-related
amortization
|
145
|
115
|
20
|
17
|
39
|
52
|
44
|
4
|
32
|
34
|
|
Restructuring and
|
|
|
|
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
17
|
132
|
11
|
21
|
3
|
13
|
2
|
9
|
2
|
27
|
|
Changes in retained
obligations of
|
|
|
|
|
|
|
|
|
|
|
|
divested businesses
|
–
|
94
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
1
|
2
|
–
|
–
|
1
|
2
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of
businesses
|
5
|
(331)
|
–
|
–
|
2
|
–
|
3
|
(2)
|
–
|
–
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
|
|
|
|
integration costs
|
77
|
14
|
4
|
–
|
68
|
3
|
2
|
7
|
–
|
–
|
|
Certain other non-operational
items
|
59
|
150
|
27
|
52
|
15
|
13
|
–
|
–
|
5
|
–
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in income from
operations
|
66
|
(91)
|
33
|
(43)
|
18
|
(29)
|
11
|
(21)
|
7
|
(8)
|
|
Operational EBITA
|
2,227
|
1,985
|
464
|
484
|
807
|
695
|
522
|
417
|
712
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
12.7%
|
12.3%
|
9.7%
|
10.0%
|
15.6%
|
14.6%
|
14.1%
|
13.6%
|
15.7%
|
14.9%
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
6
Q2
2018 Financial Information
Depreciation and Amortization
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
|
($ in millions)
|
ABB
|
Grids
|
Products
|
Automation
|
and
Motion
|
|
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
Q2 18
|
Q2 17
|
|
Depreciation
|
188
|
180
|
42
|
43
|
50
|
50
|
17
|
12
|
35
|
34
|
|
Amortization
|
92
|
78
|
16
|
15
|
21
|
29
|
23
|
3
|
18
|
19
|
|
including total
acquisition-related amortization of:
|
72
|
56
|
10
|
9
|
19
|
26
|
21
|
2
|
16
|
16
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
|
($ in millions)
|
ABB
|
Grids
|
Products
|
Automation
|
and
Motion
|
|
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
H1 18
|
H1 17
|
|
Depreciation
|
381
|
364
|
87
|
86
|
102
|
100
|
34
|
24
|
70
|
68
|
|
Amortization
|
184
|
157
|
33
|
30
|
44
|
58
|
47
|
6
|
35
|
40
|
|
including total
acquisition-related amortization of:
|
145
|
115
|
20
|
17
|
39
|
52
|
44
|
4
|
32
|
34
|
Orders received and revenues by
region
|
($ in millions, unless
otherwise indicated)
|
Orders
received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
Q2 18
|
Q2 17
|
US$
|
Local
|
parable
|
Q2 18
|
Q2 17
|
US$
|
Local
|
parable
|
|
Europe
|
3,469
|
2,843
|
22%
|
16%
|
10%
|
3,071
|
2,813
|
9%
|
4%
|
0%
|
|
The Americas
|
2,601
|
2,441
|
7%
|
8%
|
7%
|
2,545
|
2,472
|
3%
|
4%
|
3%
|
|
Asia, Middle East and Africa
|
3,413
|
3,065
|
11%
|
8%
|
7%
|
3,273
|
3,169
|
3%
|
0%
|
-1%
|
|
ABB Group
|
9,483
|
8,349
|
14%
|
11%
|
8%
|
8,889
|
8,454
|
5%
|
3%
|
1%
|
|
($ in millions, unless
otherwise indicated)
|
Orders
received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
H1 18
|
H1 17
|
US$
|
Local
|
parable
|
H1 18
|
H1 17
|
US$
|
Local
|
parable
|
|
Europe
|
7,051
|
5,970
|
18%
|
8%
|
3%
|
6,220
|
5,507
|
13%
|
4%
|
-1%
|
|
The Americas
|
4,992
|
4,803
|
4%
|
4%
|
3%
|
4,935
|
4,804
|
3%
|
3%
|
2%
|
|
Asia, Middle East and Africa
|
7,212
|
5,979
|
21%
|
15%
|
13%
|
6,361
|
5,997
|
6%
|
1%
|
1%
|
|
ABB Group
|
19,255
|
16,752
|
15%
|
10%
|
7%
|
17,516
|
16,308
|
7%
|
3%
|
1%
|
7
Q2
2018 Financial Information
—
Interim Consolidated Financial Information
|
ABB Ltd Interim Consolidated Income
Statements (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in millions, except per
share data in $)
|
Jun.
30, 2018
|
Jun.
30, 2017
|
Jun.
30, 2018
|
Jun.
30, 2017
|
|
Sales of products
|
14,212
|
13,451
|
7,176
|
6,982
|
|
Sales of services and other
|
3,304
|
2,857
|
1,713
|
1,472
|
|
Total revenues
|
17,516
|
16,308
|
8,889
|
8,454
|
|
Cost of sales of products
|
(10,109)
|
(9,652)
|
(5,137)
|
(4,985)
|
|
Cost of services and other
|
(1,970)
|
(1,693)
|
(1,023)
|
(874)
|
|
Total cost of sales
|
(12,079)
|
(11,345)
|
(6,160)
|
(5,859)
|
|
Gross profit
|
5,437
|
4,963
|
2,729
|
2,595
|
|
Selling, general and
administrative expenses
|
(2,902)
|
(2,683)
|
(1,432)
|
(1,370)
|
|
Non-order related research and
development expenses
|
(699)
|
(610)
|
(346)
|
(319)
|
|
Other income (expense), net
|
21
|
230
|
11
|
(29)
|
|
Income from operations
|
1,857
|
1,900
|
962
|
877
|
|
Interest and dividend income
|
51
|
35
|
28
|
18
|
|
Interest and other finance
expense
|
(153)
|
(153)
|
(45)
|
(74)
|
|
Non-operational pension (cost)
credit
|
58
|
14
|
28
|
7
|
|
Income from continuing
operations before taxes
|
1,813
|
1,796
|
973
|
828
|
|
Provision for taxes
|
(499)
|
(456)
|
(264)
|
(248)
|
|
Income from continuing
operations, net of tax
|
1,314
|
1,340
|
709
|
580
|
|
Income (loss) from
discontinued operations, net of tax
|
3
|
(1)
|
8
|
1
|
|
Net income
|
1,317
|
1,339
|
717
|
581
|
|
Net income attributable to
noncontrolling interests
|
(64)
|
(90)
|
(36)
|
(56)
|
|
Net income attributable
to ABB
|
1,253
|
1,249
|
681
|
525
|
|
|
|
|
|
|
|
Amounts attributable to
ABB shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
1,250
|
1,250
|
673
|
524
|
|
Net income
|
1,253
|
1,249
|
681
|
525
|
|
|
|
|
|
|
|
Basic earnings per share
attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
0.59
|
0.58
|
0.32
|
0.24
|
|
Net income
|
0.59
|
0.58
|
0.32
|
0.25
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
0.58
|
0.58
|
0.31
|
0.24
|
|
Net income
|
0.58
|
0.58
|
0.32
|
0.24
|
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding (in millions) used to compute:
|
|
|
|
|
|
Basic earnings per share
attributable to ABB shareholders
|
2,132
|
2,140
|
2,130
|
2,140
|
|
Diluted earnings per share
attributable to ABB shareholders
|
2,142
|
2,149
|
2,138
|
2,151
|
|
Due to rounding, numbers presented
may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim
Consolidated Financial Information
|
|
|
|
|
8
Q2
2018 Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
ABB Ltd Interim Condensed Consolidated
Statements of Comprehensive
|
|
Income (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in millions)
|
Jun.
30, 2018
|
Jun.
30, 2017
|
Jun.
30, 2018
|
Jun.
30, 2017
|
|
Total comprehensive
income, net of tax
|
984
|
1,872
|
192
|
916
|
|
Total comprehensive income
attributable to noncontrolling interests, net of tax
|
(60)
|
(103)
|
(16)
|
(60)
|
|
Total comprehensive
income attributable to ABB shareholders, net of tax
|
924
|
1,769
|
176
|
856
|
|
Due to rounding, numbers
presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim
Consolidated Financial Information
|
|
|
|
|
9
Q2
2018 Financial Information
|
—
|
|
|
|
ABB Ltd Interim Consolidated Balance
Sheets (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except share
data)
|
Jun.
30, 2018
|
Dec.
31, 2017
|
|
Cash and equivalents
|
3,283
|
4,526
|
|
Marketable securities and short-term
investments
|
794
|
1,102
|
|
Receivables, net
|
9,001
|
8,267
|
|
Contract assets
|
2,281
|
2,149
|
|
Inventories, net
|
5,934
|
5,255
|
|
Prepaid expenses
|
315
|
189
|
|
Other current assets
|
735
|
647
|
|
Total current assets
|
22,343
|
22,135
|
|
|
|
|
|
Property, plant and equipment,
net
|
5,621
|
5,363
|
|
Goodwill
|
12,402
|
11,199
|
|
Other intangible assets, net
|
2,959
|
2,622
|
|
Prepaid pension and other
employee benefits
|
154
|
144
|
|
Investments in
equity-accounted companies
|
166
|
158
|
|
Deferred taxes
|
1,033
|
1,250
|
|
Other non-current assets
|
513
|
587
|
|
Total assets
|
45,191
|
43,458
|
|
|
|
|
|
Accounts payable, trade
|
5,933
|
5,419
|
|
Contract liabilities
|
2,757
|
2,908
|
|
Short-term debt and current
maturities of long-term debt
|
3,786
|
738
|
|
Provisions for warranties
|
1,136
|
1,231
|
|
Other provisions
|
1,697
|
1,882
|
|
Other current liabilities
|
4,076
|
4,291
|
|
Total current
liabilities
|
19,385
|
16,469
|
|
|
|
|
|
Long-term debt
|
6,661
|
6,709
|
|
Pension and other employee
benefits
|
1,795
|
1,882
|
|
Deferred taxes
|
1,269
|
1,099
|
|
Other non-current liabilities
|
1,902
|
1,950
|
|
Total liabilities
|
31,012
|
28,109
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Capital stock
|
|
|
|
(2,168,148,264 issued shares
at June 30, 2018, and December 31, 2017)
|
188
|
188
|
|
Additional paid-in capital
|
26
|
29
|
|
Retained earnings
|
18,919
|
19,594
|
|
Accumulated other
comprehensive loss
|
(4,683)
|
(4,345)
|
|
Treasury stock, at cost
|
|
|
|
(36,372,358 and 29,541,775
shares at June 30, 2018, and December 31, 2017, respectively)
|
(824)
|
(647)
|
|
Total ABB stockholders’
equity
|
13,626
|
14,819
|
|
Noncontrolling interests
|
553
|
530
|
|
Total stockholders’
equity
|
14,179
|
15,349
|
|
Total liabilities and
stockholders’ equity
|
45,191
|
43,458
|
|
Due to rounding, numbers
presented may not add to the totals provided.
|
|
|
|
|
|
|
|
See Notes to the Interim
Consolidated Financial Information
|
|
|
10
Q2
2018 Financial Information
|
—
|
|
|
|
|
|
ABB Ltd Interim Consolidated Statements of
Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
Six months ended
|
Three months ended
|
|
($ in millions)
|
Jun.
30, 2018
|
Jun.
30, 2017
|
Jun.
30, 2018
|
Jun.
30, 2017
|
|
Operating activities:
|
|
|
|
|
|
Net income
|
1,317
|
1,339
|
717
|
581
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
565
|
521
|
280
|
258
|
|
Deferred taxes
|
50
|
43
|
54
|
51
|
|
Net loss (gain) from
derivatives and foreign exchange
|
93
|
(29)
|
20
|
(14)
|
|
Net loss (gain) from sale of
property, plant and equipment
|
(39)
|
(10)
|
(12)
|
(4)
|
|
Net loss (gain) from sale of
businesses
|
5
|
(331)
|
(1)
|
7
|
|
Share-based payment
arrangements
|
28
|
27
|
16
|
15
|
|
Other
|
(34)
|
37
|
(34)
|
29
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
Trade receivables, net
|
(142)
|
(143)
|
(145)
|
(237)
|
|
Contract assets and
liabilities
|
(306)
|
(109)
|
1
|
40
|
|
Inventories, net
|
(447)
|
(234)
|
(198)
|
10
|
|
Trade payables
|
218
|
229
|
432
|
240
|
|
Accrued liabilities
|
(159)
|
(133)
|
113
|
(335)
|
|
Provisions, net
|
(218)
|
(21)
|
(87)
|
(75)
|
|
Income taxes payable and
receivable
|
(87)
|
(7)
|
(49)
|
(33)
|
|
Other assets and liabilities,
net
|
(352)
|
(203)
|
(97)
|
(66)
|
|
Net cash provided by
operating activities
|
492
|
976
|
1,010
|
467
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
Purchases of marketable
securities (available-for-sale)
|
(34)
|
(274)
|
(17)
|
(153)
|
|
Purchases of short-term
investments
|
(24)
|
(74)
|
(24)
|
(21)
|
|
Purchases of property, plant
and equipment and intangible assets
|
(435)
|
(417)
|
(197)
|
(225)
|
|
Acquisition of businesses (net
of cash acquired)
|
|
|
|
|
|
and increases in cost- and
equity-accounted companies
|
(2,518)
|
(18)
|
(2,514)
|
(3)
|
|
Proceeds from sales of
marketable securities (available-for-sale)
|
31
|
490
|
16
|
477
|
|
Proceeds from maturity of
marketable securities (available-for-sale)
|
124
|
100
|
–
|
–
|
|
Proceeds from short-term
investments
|
285
|
874
|
23
|
53
|
|
Proceeds from sales of
property, plant and equipment
|
45
|
30
|
19
|
10
|
|
Proceeds from sales of
businesses (net of transaction costs
|
|
|
|
|
|
and cash disposed) and cost-
and equity-accounted companies
|
(9)
|
673
|
1
|
15
|
|
Net cash from settlement of
foreign currency derivatives
|
(29)
|
33
|
(34)
|
16
|
|
Other investing activities
|
(123)
|
22
|
(115)
|
8
|
|
Net cash provided by
(used in) investing activities
|
(2,687)
|
1,439
|
(2,842)
|
177
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
Net changes in debt with original
maturities of 90 days or less
|
1,243
|
410
|
1,030
|
400
|
|
Increase in debt
|
1,901
|
890
|
1,894
|
843
|
|
Repayment of debt
|
(97)
|
(590)
|
(53)
|
(571)
|
|
Delivery of shares
|
42
|
86
|
40
|
3
|
|
Purchase of treasury stock
|
(250)
|
(251)
|
–
|
(251)
|
|
Dividends paid
|
(1,717)
|
(1,635)
|
(1,717)
|
(1,635)
|
|
Dividends paid to
noncontrolling shareholders
|
(126)
|
(116)
|
(119)
|
(107)
|
|
Other financing activities
|
11
|
(15)
|
(4)
|
(9)
|
|
Net cash provided by
(used in) financing activities
|
1,007
|
(1,221)
|
1,071
|
(1,327)
|
|
|
|
|
|
|
|
Effects of exchange rate
changes on cash and equivalents
|
(55)
|
180
|
(118)
|
139
|
|
Net change in cash and
equivalents – continuing operations
|
(1,243)
|
1,374
|
(879)
|
(544)
|
|
|
|
|
|
|
|
Cash and equivalents,
beginning of period
|
4,526
|
3,644
|
4,162
|
5,562
|
|
Cash and equivalents,
end of period
|
3,283
|
5,018
|
3,283
|
5,018
|
|
|
|
|
|
|
|
Supplementary disclosure
of cash flow information:
|
|
|
|
|
|
Interest paid
|
118
|
115
|
56
|
63
|
|
Taxes paid
|
531
|
443
|
237
|
242
|
|
Due to rounding, numbers
presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated
Financial Information
|
|
|
|
|
11
Q2
2018 Financial Information
|
—
|
|
|
|
|
|
|
|
|
|
ABB Ltd Interim Consolidated Statements of
Changes in Stockholders’ Equity (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
Capital stock
|
Additional paid-in capital
|
Retained earnings
|
Total accumu-
lated other comprehensive loss
|
Treasury stock
|
Total ABB
stockholders’ equity
|
Non-
controlling interests
|
Total stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1,
2017
|
192
|
24
|
19,925
|
(5,187)
|
(1,559)
|
13,395
|
502
|
13,897
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,249
|
|
|
1,249
|
90
|
1,339
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
adjustments, net of tax of
$(1)
|
|
|
|
564
|
|
564
|
13
|
577
|
|
Effect of change in fair value
of
|
|
|
|
|
|
|
|
|
|
available-for-sale securities,
|
|
|
|
|
|
|
|
|
|
net of tax of $0
|
|
|
|
2
|
|
2
|
|
2
|
|
Unrecognized income (expense)
|
|
|
|
|
|
|
|
|
|
related to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement plans,
|
|
|
|
|
|
|
|
|
|
net of tax of $(13)
|
|
|
|
(51)
|
|
(51)
|
|
(51)
|
|
Change in derivatives
qualifying as
|
|
|
|
|
|
|
|
|
|
cash flow hedges, net of tax
of $2
|
|
|
|
5
|
|
5
|
|
5
|
|
Total comprehensive
income
|
|
|
|
|
|
1,769
|
103
|
1,872
|
|
Changes in noncontrolling
interests
|
|
|
|
|
|
–
|
3
|
3
|
|
Dividends to
|
|
|
|
|
|
|
|
|
|
noncontrolling shareholders
|
|
|
|
|
|
–
|
(127)
|
(127)
|
|
Dividends paid to shareholders
|
|
|
(1,622)
|
|
|
(1,622)
|
|
(1,622)
|
|
Share-based payment
arrangements
|
|
27
|
|
|
|
27
|
|
27
|
|
Purchase of treasury stock
|
|
|
|
|
(251)
|
(251)
|
|
(251)
|
|
Delivery of shares
|
|
(23)
|
|
|
109
|
86
|
|
86
|
|
Balance at June 30, 2017
|
192
|
27
|
19,552
|
(4,667)
|
(1,701)
|
13,403
|
481
|
13,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1,
2018
|
188
|
29
|
19,594
|
(4,345)
|
(647)
|
14,819
|
530
|
15,349
|
|
Cumulative effect of changes
in
|
|
|
|
|
|
|
|
|
|
accounting principles
|
|
|
(192)
|
(9)
|
|
(201)
|
|
(201)
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,253
|
|
|
1,253
|
64
|
1,317
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
adjustments, net of tax of $1
|
|
|
|
(389)
|
|
(389)
|
(4)
|
(393)
|
|
Effect of change in fair value
of
|
|
|
|
|
|
|
|
|
|
available-for-sale securities,
|
|
|
|
|
|
|
|
|
|
net of tax of $(1)
|
|
|
|
(5)
|
|
(5)
|
|
(5)
|
|
Unrecognized income (expense)
|
|
|
|
|
|
|
|
|
|
related to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement plans,
|
|
|
|
|
|
|
|
|
|
net of tax of $25
|
|
|
|
84
|
|
84
|
|
84
|
|
Change in derivatives
qualifying as
|
|
|
|
|
|
|
|
|
|
cash flow hedges, net of tax
of $(3)
|
|
|
|
(19)
|
|
(19)
|
|
(19)
|
|
Total comprehensive
income
|
|
|
|
|
|
924
|
60
|
984
|
|
Changes in noncontrolling
interests
|
|
|
|
|
|
–
|
89
|
89
|
|
Dividends to
|
|
|
|
|
|
|
|
|
|
noncontrolling shareholders
|
|
|
|
|
|
–
|
(126)
|
(126)
|
|
Dividends paid to shareholders
|
|
|
(1,736)
|
|
|
(1,736)
|
|
(1,736)
|
|
Share-based payment
arrangements
|
|
28
|
|
|
|
28
|
|
28
|
|
Purchase of treasury stock
|
|
|
|
|
(249)
|
(249)
|
|
(249)
|
|
Delivery of shares
|
|
(30)
|
|
|
72
|
42
|
|
42
|
|
Balance at June 30, 2018
|
188
|
26
|
18,919
|
(4,683)
|
(824)
|
13,626
|
553
|
14,179
|
|
Due to rounding, numbers
presented may not add to the totals provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim
Consolidated Financial Information
|
12
Q2
2018 Financial Information
—
Notes to
the Interim Consolidated Financial Information (unaudited)
─
Note 1
The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively, the Company) together
form a pioneering technology leader in power grids, electrification products, industrial
automation and robotics and motion, serving customers in utilities, industry
and transport & infrastructure globally.
The
Company’s Interim 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 Interim 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, 2017.
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 Interim Consolidated Financial Information. The
most significant, difficult and subjective of such accounting assumptions and
estimates include:
·
estimates and assumptions used in determining the fair values of
assets and liabilities assumed in business combinations,
·
assumptions used in determining inventory obsolescence and net
realizable value,
·
estimates used to record expected costs for employee severance in
connection with restructuring programs,
·
assumptions and projections, principally related to future
material, labor and project related overhead costs, used in determining the
percentage of completion on projects,
·
estimates of loss contingencies associated with litigation or
threatened litigation and other claims and inquiries, environmental damages,
product warranties, self-insurance reserves, regulatory and other proceedings,
·
assumptions used in the calculation of pension and postretirement
benefits and the fair value of pension plan assets,
·
estimates to determine valuation allowances for deferred tax
assets and amounts recorded for uncertain tax positions,
·
growth rates, discount rates and other assumptions used to
determine impairment of long lived assets and in testing goodwill for
impairment,
·
assessment of the allowance for doubtful accounts, and
·
the estimated effective annual tax rate applicable to the interim
financial information.
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 Interim Consolidated Financial Information
contains all necessary adjustments to present fairly the financial position,
results of operations and cash flows for the reported interim periods.
Management considers all such adjustments to be of a normal recurring nature.
The Company
has retained obligations (primarily for environmental and taxes) related to
businesses disposed or otherwise exited that qualified as discontinued
operations. Changes to these retained obligations are recorded in income/loss
from discontinued operations, net of tax.
The
Interim Consolidated Financial Information is presented in United States
dollars ($) unless otherwise stated. Due to rounding, numbers presented in the
Interim Consolidated Financial Information may not add to the totals provided.
Reclassifications
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 reorganization of the Company’s operating segments (see Note
15), and
·
as a result of the adoption of a number of accounting
pronouncements (see Note 2):
(i) the
reclassification of Unbilled receivables from Receivables to Contract assets,
(ii) the
reclassification of Billings in excess of sales, Advances from customers,
certain advances to customers previously reported as a reduction in
Inventories, and deferred revenues previously reported in Other current
liabilities, to Contract liabilities, and
(iii)
the reclassification of certain net periodic pension and postretirement
benefits costs/credits from Total cost of sales, Selling, general and
administrative expenses and Non-order related research and development expenses
to Non-operational pension (cost) credit.
13
Q2
2018 Financial Information
─
Note 2
Recent accounting pronouncements
Applicable for current periods
Revenue from
contracts with customers
As of January 1, 2018, the Company adopted a new accounting
standard for recognizing revenues from contracts with customers. The new
standard, which supersedes substantially all previously existing revenue
recognition guidance, provides a single comprehensive model for recognizing
revenues on the transfer of promised goods or services to customers for an
amount that reflects the consideration that is expected to be received for
those goods or services. The adoption of this standard resulted in only
immaterial differences between the identification of performance obligations
and the current unit of accounting determination. Therefore, the cumulative
effect on retained earnings of retrospectively applying this standard was not
significant. However, total assets and total liabilities increased by $196 million
due to the reclassification of certain advances from customers, previously
reported as a reduction in Inventories, to liabilities.
While comparative information has not been
restated and continues to be measured and reported under the accounting standards
in effect for those periods presented, the following prior period amounts have
been reclassified in the Consolidated Balance Sheets to conform to the
presentation requirements of the new standard:
|
December 31, 2017
|
|
|
|
Previously
|
As
|
|
|
|
Previously
|
As
|
|
($ in millions)
|
|
reported
|
adjusted
|
|
|
|
reported
|
adjusted
|
|
Consolidated Balance
Sheet
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Current liabilities
|
|
|
|
|
Receivables, net
(1)
|
|
10,416
|
8,267
|
|
Contract liabilities
(2),
(3), (4)
|
|
–
|
2,908
|
|
Contract assets
(1)
|
|
–
|
2,149
|
|
Billings in excess of sales
(2)
|
|
1,251
|
–
|
|
Inventories, net
(3)
|
|
5,059
|
5,255
|
|
Advances from customers
(2),
(3)
|
|
1,367
|
–
|
|
|
|
|
|
|
Other current liabilities
(4)
|
|
4,385
|
4,291
|
|
Total assets
|
|
43,262
|
43,458
|
|
Total liabilities
|
|
27,913
|
28,109
|
(1)
$2,149 million of unbilled receivables previously included in Receivables, have
been reclassified to Contract assets.
(2)
Amounts previously presented as billings in excess of sales and advances from
customers, have been reclassified to Contract liabilities.
(3)
$196 million of advances from customers, previously recorded net within
Inventories, have been reclassified to advances from customers and recorded
within Contract liabilities.
(4)
Certain amounts recorded as deferred revenues totaling $94 million, have been
reclassified from Other current liabilities to Contract liabilities.
Other than the reclassifications of 2017 balances in
the table above and the additional disclosure requirements, the impact of the
adoption on the Company’s Interim Consolidated Financial Information for the
six and three months ended June 30, 2018, was not significant.
Income taxes –
Intra-entity transfers of assets other than inventory
In January 2018, the Company adopted an accounting standard update
requiring it to recognize the income tax consequences of an intra-entity
transfer of an asset other than inventory when the transfer occurs instead of
when the asset has been sold to an outside party. This update was applied on a
modified retrospective basis and resulted in a net reduction in deferred tax
assets of $201 million with a corresponding reduction in retained
earnings.
Improving the
presentation of net periodic pension cost and net periodic postretirement benefit
cost
In January 2018, the Company adopted an accounting standard update
which changes how employers that sponsor defined benefit pension plans and
other postretirement plans present the net periodic benefit cost in the income
statement. Under this standard, the Company is required to report the service
cost component in the same line item or items as other compensation costs
arising from services rendered by the pertinent employees during the period.
Other components of net periodic benefit cost are required to be presented in
the income statement separately from the service cost component and outside the
subtotal of income from operations. Under the amendment only the current service
cost component is allowed to be capitalized as a cost of internally
manufactured inventory or a self-constructed asset. This update was applied
retrospectively for the presentation requirements, and prospectively for the
capitalization of the current service cost component requirements. The Company
has used the practical expedient, as the amount of other components of net
periodic benefit cost capitalized in inventory for prior periods is not
significant.
For the six and three months ended June 30, 2017, the Company reclassified
$14 million and $7 million, respectively, of income and presented it
outside of income from operations relating to net periodic pension costs.
Recognition
and measurement of financial assets and financial liabilities
In January 2018, the Company adopted two accounting standard
updates enhancing the reporting model for financial instruments, which include
amendments to address aspects of recognition, measurement, presentation and
disclosure. The Company is required to measure equity investments (except those
accounted for under the equity method) at fair value with changes in fair value
recognized in net income. The adoption of these updates resulted in the
reclassification of the net cumulative unrealized gains on available-for-sale
equity securities of $9 million (net of tax) at December 31, 2017
from Total accumulated comprehensive loss to Retained earnings on January 1,
2018.
Classification
of certain cash receipts and cash payments in the statement of cash flows
In January 2018, the company adopted an accounting standard update
which clarifies how certain cash receipts and cash payments, including debt
prepayment or extinguishment costs, the settlement of zero coupon debt
instruments, contingent consideration paid after a business combination,
proceeds from insurance settlements, distributions from certain equity method
investees and beneficial interests obtained in a financial asset
securitization, should be presented and classified in the statement of cash
flows. This update was applied retrospectively and did
14
Q2
2018 Financial Information
not
have a significant impact on the consolidated financial statements.
Statement of
cash flows - Restricted cash
In January
2018, the Company adopted an accounting standard update which clarifies the
classification and presentation of changes in restricted cash on the statement
of cash flows. It requires the inclusion of cash and cash equivalents that have
restrictions on withdrawal or use in total cash and cash equivalents on the
statement of cash flows. This update did not have a significant impact on the
consolidated financial statements.
Clarifying the
definition of a business
In January 2018, the Company adopted an accounting standard update
which narrows the definition of a business. It also provides a framework for
determining whether a set of transferred assets and activities involves a
business. This update was applied prospectively and did not have a significant
impact on the consolidated financial statements.
Clarifying the
scope of asset derecognition guidance and accounting for partial sales of
nonfinancial assets
In January 2018, the Company adopted an accounting standard update
which clarifies the scope of asset derecognition guidance, adds guidance for
partial sales of nonfinancial assets and clarifies recognizing gains and losses
from the transfer of nonfinancial assets in contracts with noncustomers. This
update was applied retrospectively and did not have a significant impact on the
consolidated financial statements.
Compensation—Stock
Compensation
In January 2018, the Company adopted an
accounting standard update which clarifies when to account for a change to the
terms or conditions of a share‑based payment award as a modification.
Under this update, modification accounting is required only if the fair value,
the vesting conditions, or the classification of the award (as equity or
liability) changes as a result of the change in terms or conditions. This
update was applied prospectively and did not have a significant impact on the
consolidated financial statements.
Applicable
for future periods
Leases
In February 2016, an accounting standard update was issued that
requires lessees to recognize lease assets and corresponding lease liabilities
on the balance sheet for all leases with terms of more than 12 months. The
update, which supersedes existing lease guidance, will continue to classify
leases as either finance or operating, with the classification determining the
pattern of expense recognition in the income statement. This update is
effective for the Company for annual and interim periods beginning
January 1, 2019, and is applicable on a modified retrospective basis with
various optional practical expedients.
The Company currently expects the update will increase total
assets and total liabilities by approximately $1.5 billion. The Company
continues to evaluate the impacts of the adoption of this update and therefore
the expected impacts are subject to change.
Measurement of
credit losses on financial instruments
In June 2016, an accounting standard update was issued which
replaces the existing incurred loss impairment methodology for most financial
assets with a new “current expected credit loss” model. The new model will
result in the immediate recognition of the estimated credit losses expected to
occur over the remaining life of financial assets such as trade and other
receivables, held-to-maturity debt securities, loans and other instruments.
Credit losses relating to available-for-sale debt securities will be measured
in a manner similar to current GAAP, except that the losses will be recorded
through an allowance for credit losses rather than as a direct write-down of
the security.
This
update is effective for the Company for annual and interim periods beginning
January 1, 2020, with early adoption permitted for annual and interim
periods beginning January 1, 2019. The Company is currently evaluating the
impact of this update on its consolidated financial statements.
Derivatives
and Hedging—Targeted Improvements to Accounting for Hedging Activities
In August 2017, an accounting standard update was
issued which expands and refines hedge accounting for both financial and
non-financial risk components, aligns the recognition and presentation of the
effects of hedging instruments and hedge items in the financial statements, and
includes certain targeted improvements to ease the application of current
guidance related to the assessment of hedge effectiveness. This update is
effective for the Company for annual and interim periods beginning January 1,
2019. For cash flow and net investment hedges as of the adoption date, the
guidance requires a modified retrospective approach. The amended presentation
and disclosure guidance is required only prospectively. The Company will adopt
this update as of January 1, 2019, and is currently evaluating the impact of
this update on its consolidated financial statements.
Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018, an accounting standard update
was issued which allows a reclassification of the stranded tax effects in
accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act
of 2017 to retained earnings. This update is effective for the Company for
annual and interim periods beginning January 1, 2019, with early adoption in
any interim period permitted. The updated guidance is to be applied in the period
of adoption or retrospectively to each period in which the effect of the Tax
Cuts and Jobs Act related to items remaining in accumulated other comprehensive
income are recognized. The Company is currently evaluating the impact of this
update on its consolidated financial statements.
15
Q2
2018 Financial Information
─
Note 3
Acquisitions and Divestments
Acquisitions
Acquisitions were as follows:
|
|
Six
months ended
|
|
Three
months ended
|
|
($ in millions, except number
of acquired businesses)
|
June
30, 2018
|
|
June
30, 2018
|
|
Acquisitions (net of cash
acquired)
(1)
|
2,498
|
|
2,498
|
|
Aggregate excess of purchase
price over fair value of net assets acquired
(2)
|
1,367
|
|
1,371
|
|
Number of acquired businesses
|
1
|
|
1
|
(1)
Excluding changes
in cost and equity accounted companies
(2) Recorded as
goodwill.
In
the table
above, the “Acquisitions” and “Aggregate excess of purchase price over fair
value of net assets acquired” amounts for the six months ended June 30, 2018,
relate primarily to the acquisition of GE Industrial Solutions (GEIS).
Acquisitions for the six months ended June 30, 2017, were not significant
.
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
June 30, 2018, the Company acquired through numerous share and asset
transactions substantially all the revenues, assets and liabilities of GEIS,
GE’s global electrification solutions business. GEIS, headquartered in Atlanta,
United States, provides technologies that distribute and control electricity
and support the commercial, data center, health care, mining, renewable energy,
oil and gas, water and telecommunications sectors. The resulting cash outflows
for the Company amounted to $2,498 million (net of cash acquired of
$178 million). The acquisition strengthens the Company’s global position
in electrification and expands its access to the North American market through
strong customer relationships, large installed base and extensive distribution
networks and consequently the goodwill acquired represents expected operating
synergies and cost savings as well as intangible assets that are not separable
such as employee know-how and expertise. Given the timing and complexity of the
acquisition, the presentation of GEIS in the Company’s Financial Statements, including
the allocation of the purchase price, is preliminary and likely to change in
future periods.
The aggregate preliminary allocation of the purchase consideration
for business acquisitions (including measurement period adjustments) in the six
months ended June 30, 2018, was as follows:
|
($ in millions)
|
|
Allocated amounts
|
Weighted-average
|
|
|
|
|
useful
life
|
|
Technology
|
|
87
|
7 years
|
|
Customer relationships
|
|
214
|
14
years
|
|
Trade names
|
|
122
|
13
years
|
|
Supply agreement
|
|
34
|
13
years
|
|
Intangible assets
|
|
457
|
|
|
Fixed assets
|
|
427
|
|
|
Deferred tax liabilities
|
|
(177)
|
|
|
Inventory
|
|
454
|
|
|
Other assets and liabilities,
net
|
|
(30)
|
|
|
Goodwill
(1)
|
|
1,367
|
|
|
Total consideration (net
of cash acquired)
(2)
|
|
2,498
|
|
(1) The Company
does not expect the majority of the goodwill recognized to be deductible for
income tax purposes.
(2) Primarily
relates to the acquisition of GEIS.
Business divestments
There
were no significant gains or losses recognized relating to divestments in the
six and three months ended June 30, 2018. For the six and three months ended
June 30, 2017, the Company recorded net gains (including transaction costs) of $331 million
and net losses (including transaction costs) of $7 million in “Other income
(expense), net”.
For the
six months ended June 30, 2017, an associated tax expense of $28 million relating
to the divestment of consolidated businesses was recorded in “Provision for
taxes”. These are primarily due to the divestment in March 2017, of the
Company’s high-voltage cable system and cable accessories businesses (the
Cables business).
16
Q2
2018 Financial Information
The Company has retained certain obligations of
the Cables business and thus the Company remains directly or indirectly liable
for these liabilities which existed at the date of the divestment. Subsequent
to the divestment, in six months ended June 30, 2017, the Company recorded a
loss of $94 million for changes in the amounts recorded for these
obligations. In addition, the Company has provided certain performance guarantees
to third parties which guarantee the performance of the buyer under existing
contracts with customers as well as for certain capital expenditures of the
divested business (see Note 7).
Changes in total goodwill were as follows:
|
($ in millions)
|
|
|
|
Total
Goodwill
|
|
Balance at
January 1, 2017
|
|
|
|
9,501
|
|
Goodwill acquired during the
year
(1)
|
|
|
|
1,337
|
|
Goodwill allocated to
disposals
(2)
|
|
|
|
(2)
|
|
Exchange rate differences and
other
|
|
|
|
363
|
|
Balance at December 31,
2017
|
|
|
|
11,199
|
|
Goodwill acquired during the
year
(3)
|
|
|
|
1,367
|
|
Goodwill allocated to
disposals
|
|
|
|
(1)
|
|
Exchange rate differences and
other
|
|
|
|
(163)
|
|
Balance at June 30, 2018
|
|
|
|
12,402
|
(1) Includes
primarily goodwill in respect of B&R, acquired in July 2017, which has been
allocated to the Industrial Automation operating segment.
(2) Goodwill
allocated to the high-voltage cable system business sold in March 2017, within
Corporate and Other (formerly reported in the Power Grids operating segment)
was reported as held-for-sale at December 31, 2016.
(3) Includes
primarily goodwill in respect of GEIS, acquired in June 2018, which has been
allocated to the Electrification Products operating segment.
─
Note 4
Cash and equivalents, marketable securities and
short-term investments
Cash and equivalents, marketable securities and short-term
investments consisted of the following:
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash
and
|
and
short-term
|
|
($ in millions)
|
Cost
basis
|
gains
|
losses
|
Fair
value
|
equivalents
|
investments
|
|
Cash
|
1,776
|
|
|
1,776
|
1,776
|
–
|
|
Time deposits
|
1,546
|
|
|
1,546
|
1,507
|
39
|
|
Other short-term investments
|
297
|
|
|
297
|
–
|
297
|
|
Debt securities
available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
212
|
–
|
(5)
|
207
|
–
|
207
|
|
|
Corporate
|
92
|
–
|
(2)
|
90
|
–
|
90
|
|
Equity securities
available-for-sale
|
147
|
14
|
–
|
161
|
–
|
161
|
|
Total
|
4,070
|
14
|
(7)
|
4,077
|
3,283
|
794
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash
and
|
and
short-term
|
|
($ in millions)
|
Cost
basis
|
gains
|
losses
|
Fair
value
|
equivalents
|
investments
|
|
Cash
|
1,963
|
|
|
1,963
|
1,963
|
–
|
|
Time deposits
|
2,853
|
|
|
2,853
|
2,563
|
290
|
|
Other short-term investments
|
305
|
|
|
305
|
–
|
305
|
|
Debt securities
available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
127
|
–
|
(2)
|
125
|
–
|
125
|
|
|
Other government obligations
|
2
|
–
|
–
|
2
|
–
|
2
|
|
|
Corporate
|
215
|
1
|
(1)
|
215
|
–
|
215
|
|
Equity securities
available-for-sale
|
152
|
13
|
–
|
165
|
–
|
165
|
|
Total
|
5,617
|
14
|
(3)
|
5,628
|
4,526
|
1,102
|
17
Q2
2018 Financial Information
Other short-term investments at June 30, 2018,
and December 31, 2017, are receivables of $297 million and $305 million,
respectively, representing reverse repurchase agreements. These collateralized
lendings, made to a financial institution, have maturity dates of less than one
year.
─
Note 5
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 the 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 the subsidiaries hedge the commodity
price risk exposures from binding contracts, as well as at least 50 percent (up
to a maximum of 100 percent) of the forecasted commodity exposure over the next
12 months or longer (up to a maximum of 18 months). Primarily swap contracts
are used to manage the associated price risks of commodities.
Interest rate risk
The Company has issued bonds at fixed rates. Interest rate swaps
are used to manage the interest rate risk associated with certain debt and
generally such swaps are designated as fair value hedges. In addition, from
time to time, the Company uses instruments such as interest rate swaps, interest
rate futures, bond futures or forward rate agreements to manage interest rate
risk arising from the Company’s balance sheet structure but does not designate
such instruments as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of its
warrant appreciation rights (WARs) issued under its management incentive plan.
A WAR gives its holder the right to receive cash equal to the market price
of an equivalent listed warrant on the date of exercise. To eliminate such
risk, the Company has purchased cash-settled call options, indexed to the
shares of the Company, which entitle the Company to receive amounts equivalent
to its obligations under the outstanding WARs.
Volume of derivative activity
In general, while the Company’s primary objective in its use of
derivatives is to minimize exposures arising from its business, certain
derivatives are designated and qualify for hedge accounting treatment while
others either are not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives
The gross notional amounts of outstanding foreign exchange and
interest rate derivatives (whether designated as hedges or not) were as
follows:
|
Type of derivative
|
Total notional amounts at
|
|
($ in millions)
|
June
30, 2018
|
December
31, 2017
|
June
30, 2017
|
|
Foreign exchange contracts
|
16,390
|
17,280
|
16,387
|
|
Embedded foreign exchange
derivatives
|
1,676
|
1,641
|
2,089
|
|
Interest rate contracts
|
3,934
|
5,706
|
5,197
|
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, aluminum and oil. The following table shows the notional
amounts of outstanding derivatives (whether designated as hedges or not), on a
net basis, to reflect the Company’s requirements for these commodities:
|
Type of derivative
|
Unit
|
Total notional amounts at
|
|
|
|
June
30, 2018
|
December
31, 2017
|
June
30, 2017
|
|
Copper swaps
|
metric tonnes
|
49,886
|
44,145
|
39,292
|
|
Silver swaps
|
ounces
|
2,213,132
|
1,966,729
|
1,604,444
|
|
Aluminum swaps
|
metric tonnes
|
9,850
|
7,700
|
5,550
|
|
Crude oil swaps
|
barrels
|
120,139
|
170,331
|
153,067
|
18
Q2
2018 Financial Information
Equity derivatives
At June 30, 2018, December 31, 2017, and June 30, 2017, the
Company held 33 million, 37 million and 37 million cash-settled
call options indexed to ABB Ltd shares (conversion ratio 5:1) with a total fair
value of $15 million, $42 million and $33 million, respectively.
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange
contracts to manage the foreign exchange risk of its operations, commodity
swaps to manage its commodity risks and cash-settled call options to hedge its
WAR liabilities. Where such instruments are designated and qualify as cash flow
hedges, the effective portion of the changes in their fair value is recorded in
“Accumulated other comprehensive loss” and subsequently reclassified into
earnings in the same line item and in the same period as the underlying hedged
transaction affects earnings. Any ineffectiveness in the hedge relationship, or
hedge component excluded from the assessment of effectiveness, is recognized in
earnings during the current period.
At June 30, 2018, and December 31, 2017, “Accumulated other
comprehensive loss” included net unrealized losses of $7 million and net unrealized
gains of $12 million, respectively, net of tax, on derivatives designated
as cash flow hedges. Of the amount at June 30, 2018, net losses of $2 million
are expected to be reclassified to earnings in the following 12 months. At June
30, 2018, the longest maturity of a derivative classified as a cash flow hedge
was 67
months.
The amount of gains or losses, net of tax, reclassified into
earnings due to the discontinuance of cash flow hedge accounting was not
significant in the six and three months ended June 30, 2018 and 2017.
The pre-tax effects of derivative instruments, designated and
qualifying as cash flow hedges, on “Accumulated other comprehensive loss” (OCI)
and the Consolidated Income Statements were as follows:
|
|
Gains (losses) recognized in OCI
|
|
|
Gains (losses) reclassified from OCI
|
|
($ in millions)
|
on derivatives (effective portion)
|
|
|
into income (effective portion)
|
|
Six months ended June
30,
|
2018
|
2017
|
|
|
2018
|
2017
|
|
Type of derivative
|
|
|
|
Location
|
|
|
|
Foreign exchange contracts
|
(3)
|
10
|
|
Total revenues
|
3
|
(3)
|
|
|
|
|
|
Total cost of sales
|
–
|
3
|
|
Commodity contracts
|
(5)
|
2
|
|
Total cost of sales
|
3
|
4
|
|
Cash-settled call options
|
(25)
|
12
|
|
SG&A expenses
(1)
|
(17)
|
9
|
|
Total
|
(33)
|
24
|
|
|
(11)
|
13
|
|
|
Gains (losses) recognized in OCI
|
|
|
Gains (losses) reclassified from OCI
|
|
($ in millions)
|
on derivatives (effective portion)
|
|
|
into income (effective portion)
|
|
Three months ended June
30,
|
2018
|
2017
|
|
|
2018
|
2017
|
|
Type of derivative
|
|
|
|
Location
|
|
|
|
Foreign exchange contracts
|
(5)
|
8
|
|
Total revenues
|
1
|
(1)
|
|
|
|
|
|
Total cost of sales
|
–
|
–
|
|
Commodity contracts
|
(1)
|
–
|
|
Total cost of sales
|
1
|
2
|
|
Cash-settled call options
|
(4)
|
4
|
|
SG&A expenses
(1)
|
(3)
|
3
|
|
Total
|
(10)
|
12
|
|
|
(1)
|
4
|
(1) SG&A
expenses
represent
“Selling,
general
and
administrative
expenses”.
The
amounts in respect of gains (losses) recognized in income for hedge
ineffectiveness and amounts excluded from effectiveness testing were not
significant for the six and three months ended June 30, 2018 and 2017.
Net
derivative losses of $13 million and net derivative gains of $10 million, both net
of tax, were reclassified from “Accumulated other comprehensive loss” to
earnings during the six months ended June 30, 2018 and 2017, respectively. During
the three months ended June 30, 2018 and 2017, net derivative losses of $2 million
and net derivative gains of $3
million, both net of tax, respectively, were
reclassified from “Accumulated other comprehensive loss” to earnings.
Fair value hedges
To reduce its interest rate exposure arising primarily from its
debt issuance activities, the Company uses interest rate swaps. Where such
instruments are designated as fair value hedges, the changes in the fair value
of these instruments, as well as the changes in the fair value of the risk component
of the underlying debt being hedged, are recorded as offsetting gains and
losses in “Interest and other finance expense”. Hedge ineffectiveness of
instruments designated as fair value hedges for the six and three months ended
June 30, 2018 and 2017, was not significant.
The effect of interest rate contracts, designated and qualifying
as fair value hedges, on the Consolidated Income Statements was as follows:
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions)
|
2018
|
2017
|
2018
|
2017
|
|
Gains (losses) recognized in
Interest and other finance expense:
|
|
|
|
|
|
- on derivatives designated
as fair value hedges
|
(20)
|
–
|
5
|
(1)
|
|
- on hedged item
|
20
|
3
|
(6)
|
3
|
19
Q2
2018 Financial Information
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not
qualify as either cash flow or fair value hedges are economic hedges used for
risk management purposes. Gains and losses from changes in the fair values of
such derivatives are recognized in the same line in the income statement as the
economically hedged transaction.
Furthermore,
under certain circumstances, the Company is required to split and account
separately for foreign currency derivatives that are embedded within certain
binding sales or purchase contracts denominated in a currency other than the
functional currency of the subsidiary and the counterparty.
The gains (losses) recognized in the Consolidated Income
Statements on derivatives not designated in hedging relationships were as
follows:
|
Type of derivative not
|
Gains (losses) recognized in income
|
|
designated as a hedge
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions)
|
Location
|
2018
|
2017
|
2018
|
2017
|
|
Foreign exchange contracts
|
Total revenues
|
(231)
|
167
|
(210)
|
60
|
|
|
Total cost of sales
|
86
|
(26)
|
60
|
34
|
|
|
SG&A expenses
(1)
|
4
|
(10)
|
11
|
(7)
|
|
|
Non-order related research
|
|
|
|
|
|
|
and development
|
–
|
–
|
1
|
2
|
|
|
Other income (expense), net
|
–
|
(1)
|
–
|
–
|
|
|
Interest and other finance
expense
|
37
|
13
|
12
|
19
|
|
Embedded foreign exchange
|
Total revenues
|
67
|
(23)
|
51
|
(2)
|
|
contracts
|
Total cost of sales
|
(3)
|
–
|
(2)
|
(1)
|
|
|
SG&A expenses
(1)
|
2
|
5
|
1
|
3
|
|
Commodity contracts
|
Total cost of sales
|
(15)
|
18
|
7
|
(8)
|
|
Other
|
Interest and other finance
expense
|
8
|
(3)
|
5
|
2
|
|
Total
|
|
(45)
|
140
|
(64)
|
102
|
(1)
SG&A
expenses
represent
“Selling,
general
and
administrative
expenses”.
The fair values of derivatives included in the Consolidated
Balance Sheets were as follows:
|
|
June 30, 2018
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
|
Current
in
|
Non-current
in
|
|
Current
in
|
Non-current
in
|
|
|
“Other
current
|
“Other
non-current
|
|
“Other
current
|
“Other
non-current
|
|
($ in millions)
|
assets”
|
assets”
|
|
liabilities”
|
liabilities”
|
|
Derivatives designated
as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
1
|
–
|
|
3
|
2
|
|
Commodity contracts
|
–
|
–
|
|
2
|
–
|
|
Interest rate contracts
|
–
|
25
|
|
–
|
7
|
|
Cash-settled call options
|
8
|
7
|
|
–
|
–
|
|
Total
|
9
|
32
|
|
5
|
9
|
|
|
|
|
|
|
|
|
Derivatives not
designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
152
|
22
|
|
222
|
54
|
|
Commodity contracts
|
14
|
2
|
|
12
|
–
|
|
Cross-currency interest rate
swaps
|
5
|
–
|
|
–
|
–
|
|
Embedded foreign exchange
derivatives
|
48
|
31
|
|
11
|
3
|
|
Total
|
219
|
55
|
|
245
|
57
|
|
Total fair value
|
228
|
87
|
|
250
|
66
|
20
Q2
2018 Financial Information
|
|
December 31, 2017
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
|
Current
in
|
Non-current
in
|
|
Current
in
|
Non-current
in
|
|
|
“Other
current
|
“Other
non-current
|
|
“Other
current
|
“Other
non-current
|
|
($ in millions)
|
assets”
|
assets”
|
|
liabilities”
|
liabilities”
|
|
Derivatives designated
as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
4
|
–
|
|
3
|
1
|
|
Commodity contracts
|
6
|
–
|
|
–
|
–
|
|
Interest rate contracts
|
–
|
42
|
|
–
|
4
|
|
Cash-settled call options
|
25
|
16
|
|
–
|
–
|
|
Total
|
35
|
58
|
|
3
|
5
|
|
|
|
|
|
|
|
|
Derivatives not
designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
142
|
25
|
|
190
|
63
|
|
Commodity contracts
|
35
|
1
|
|
6
|
–
|
|
Cross-currency interest rate
swaps
|
–
|
–
|
|
2
|
–
|
|
Cash-settled call options
|
–
|
1
|
|
–
|
–
|
|
Embedded foreign exchange
derivatives
|
32
|
16
|
|
22
|
7
|
|
Total
|
209
|
43
|
|
220
|
70
|
|
Total fair value
|
244
|
101
|
|
223
|
75
|
Close-out
netting agreements provide for the termination, valuation and net settlement of
some or all outstanding transactions between two counterparties on the
occurrence of one or more pre-defined trigger events.
Although
the Company is party to close-out netting agreements with most derivative
counterparties, the fair values in the tables above and in the Consolidated
Balance Sheets at June 30, 2018, and December 31, 2017, have been presented on
a gross basis.
The Company’s netting agreements and other similar arrangements
allow net settlements under certain conditions. At June 30, 2018, and December
31, 2017, information related to these offsetting arrangements was as follows:
|
($ in millions)
|
June 30, 2018
|
|
|
Gross
amount
|
Derivative
liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of
recognized
|
eligible
for set-off
|
collateral
|
collateral
|
Net
asset
|
|
similar arrangement
|
assets
|
in case
of default
|
received
|
received
|
exposure
|
|
Derivatives
|
236
|
(160)
|
–
|
–
|
76
|
|
Reverse repurchase agreements
|
297
|
–
|
–
|
(297)
|
–
|
|
Total
|
533
|
(160)
|
–
|
(297)
|
76
|
|
|
|
|
|
|
|
|
($ in millions)
|
June 30, 2018
|
|
|
Gross amount
|
Derivative
liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of
recognized
|
eligible
for set-off
|
collateral
|
collateral
|
Net
liability
|
|
similar arrangement
|
liabilities
|
in case
of default
|
pledged
|
pledged
|
exposure
|
|
Derivatives
|
302
|
(160)
|
–
|
–
|
142
|
|
Total
|
302
|
(160)
|
–
|
–
|
142
|
|
($ in millions)
|
December 31, 2017
|
|
|
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
|
297
|
(172)
|
–
|
–
|
125
|
|
Reverse repurchase agreements
|
305
|
–
|
–
|
(305)
|
–
|
|
Total
|
602
|
(172)
|
–
|
(305)
|
125
|
|
|
|
|
|
|
|
|
($ in millions)
|
December 31, 2017
|
|
|
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
|
269
|
(172)
|
–
|
–
|
97
|
|
Total
|
269
|
(172)
|
–
|
–
|
97
|
21
Q2
2018 Financial Information
─
Note 6
Fair values
The Company uses fair value measurement principles to record
certain financial assets and liabilities on a recurring basis and, when
necessary, to record certain non‑financial assets at fair value on a non‑recurring
basis, as well as to determine fair value disclosures for certain financial
instruments carried at amortized cost in the financial statements. Financial
assets and liabilities recorded at fair value on a recurring basis include
foreign currency, commodity and interest rate derivatives, as well as cash‑settled
call options and available‑for‑sale securities. Non‑financial
assets recorded at fair value on a non‑recurring basis include long‑lived
assets that are reduced to their estimated fair value due to impairments.
Fair value is
the price that would be received when selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. In determining fair value, the Company uses various valuation
techniques including the market approach (using observable market data for
identical or similar assets and liabilities), the income approach (discounted
cash flow models) and the cost approach (using costs a market participant would
incur to develop a comparable asset). Inputs used to determine the fair value
of assets and liabilities are defined by a three‑level hierarchy,
depending on the reliability of those inputs. The Company has categorized its
financial assets and liabilities and non‑financial assets measured at
fair value within this hierarchy based on whether the inputs to the valuation
technique are observable or unobservable. An observable input is based on
market data obtained from independent sources, while an unobservable input
reflects the Company’s assumptions about market data.
The levels of
the fair value hierarchy are as follows:
Level 1:
Valuation
inputs consist of quoted prices in an active market for identical assets or
liabilities (observable quoted prices). Assets and liabilities valued using
Level 1 inputs include certain actively traded debt securities.
Level 2:
Valuation
inputs consist of observable inputs (other than Level 1 inputs) such as
actively quoted prices for similar assets, quoted prices in inactive markets
and inputs other than quoted prices such as interest rate yield curves, credit
spreads, or inputs derived from other observable data by interpolation,
correlation, regression or other means. The adjustments applied to quoted
prices or the inputs used in valuation models may be both observable and
unobservable. In these cases, the fair value measurement is classified as Level
2 unless the unobservable portion of the adjustment or the unobservable input to
the valuation model is significant, in which case the fair value measurement
would be classified as Level 3. Assets and liabilities valued or disclosed
using Level 2 inputs include investments in certain funds, reverse repurchase
agreements, certain debt securities that are not actively traded, interest rate
swaps, commodity swaps, cash‑settled call options, forward foreign
exchange contracts, foreign exchange swaps and forward rate agreements, time
deposits, as well as financing receivables and debt.
Level 3:
Valuation
inputs are based on the Company’s assumptions of relevant market data
(unobservable input).
Whenever
quoted prices involve bid‑ask spreads, the Company ordinarily determines
fair values based on mid‑market quotes. However, for the purpose of
determining the fair value of cash‑settled call options serving as hedges
of the Company’s management incentive plan, bid prices are used.
When
determining fair values based on quoted prices in an active market, the Company
considers if the level of transaction activity for the financial instrument has
significantly decreased, or would not be considered orderly. In such cases, the
resulting changes in valuation techniques would be disclosed. If the market is
considered disorderly or if quoted prices are not available, the Company is
required to use another valuation technique, such as an income approach.
Recurring fair value measures
The fair values of financial assets and liabilities measured at
fair value on a recurring basis were as follows:
|
|
June 30, 2018
|
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
fair value
|
|
Assets
|
|
|
|
|
|
Available-for-sale securities
in “Marketable securities and short-term investments”:
|
|
|
|
|
|
Equity securities
|
–
|
161
|
–
|
161
|
|
Debt securities—U.S.
government obligations
|
207
|
–
|
–
|
207
|
|
Debt securities—Corporate
|
–
|
90
|
–
|
90
|
|
Derivative assets—current in
“Other current assets”
|
–
|
228
|
–
|
228
|
|
Derivative assets—non-current
in “Other non-current assets”
|
–
|
87
|
–
|
87
|
|
Total
|
207
|
566
|
–
|
773
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative liabilities—current
in “Other current liabilities”
|
–
|
250
|
–
|
250
|
|
Derivative
liabilities—non-current in “Other non-current liabilities”
|
–
|
66
|
–
|
66
|
|
Total
|
–
|
316
|
–
|
316
|
22
Q2
2018 Financial Information
|
|
December 31, 2017
|
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
fair value
|
|
Assets
|
|
|
|
|
|
Available-for-sale securities
in “Marketable securities and short-term investments”:
|
|
|
|
|
|
Equity securities
|
–
|
165
|
–
|
165
|
|
Debt securities—U.S.
government obligations
|
125
|
–
|
–
|
125
|
|
Debt securities—Other
government obligations
|
–
|
2
|
–
|
2
|
|
Debt securities—Corporate
|
–
|
215
|
–
|
215
|
|
Receivable in “Other
non-current assets”:
|
|
|
|
|
|
Receivable under securities
lending arrangement
|
79
|
–
|
–
|
79
|
|
Derivative assets—current in
“Other current assets”
|
–
|
244
|
–
|
244
|
|
Derivative assets—non-current
in “Other non-current assets”
|
–
|
101
|
–
|
101
|
|
Total
|
204
|
727
|
–
|
931
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative liabilities—current
in “Other current liabilities”
|
–
|
223
|
–
|
223
|
|
Derivative
liabilities—non-current in “Other non-current liabilities”
|
–
|
75
|
–
|
75
|
|
Total
|
–
|
298
|
–
|
298
|
The Company uses the following methods and assumptions in
estimating fair values of financial assets and liabilities measured at fair
value on a recurring basis:
·
Available-for-sale securities in “Marketable securities and
short-term investments” and “Other non-current assets”:
If
quoted market prices in active markets for identical assets are available,
these are considered Level 1 inputs; however, when markets are not active,
these inputs are considered Level 2. If such quoted market prices are not
available, fair value is determined using market prices for similar assets or
present value techniques, applying an appropriate risk-free interest rate
adjusted for nonperformance risk. The inputs used in present value techniques
are observable and fall into the Level 2 category. The fair value of the
receivable under the securities lending arrangement has been determined based
on the fair value of the security lent.
·
Derivatives
: The fair values of derivative instruments are
determined using quoted prices of identical instruments from an active market,
if available (Level 1). If quoted prices are not available, price quotes for
similar instruments, appropriately adjusted, or present value techniques, based
on available market data, or option pricing models are used. Cash-settled call
options hedging the Company’s WAR liability are valued based on bid prices of
the equivalent listed warrant. The fair values obtained using price quotes for
similar instruments or valuation techniques represent a Level 2 input unless
significant unobservable inputs are used.
Non-recurring fair value measures
There were no significant non-recurring fair
value measurements during the six and three months ended June 30, 2018 and
2017.
Disclosure about financial instruments
carried on a cost basis
The fair values of financial instruments
carried on a cost basis were as follows:
|
|
June 30, 2018
|
|
($ in millions)
|
Carrying
value
|
|
Level 1
|
Level 2
|
Level 3
|
Total
fair value
|
|
Assets
|
|
|
|
|
|
|
|
Cash and equivalents
(excluding available-for-sale securities
|
|
|
|
|
|
|
|
with original maturities up to
3 months):
|
|
|
|
|
|
|
|
Cash
|
1,776
|
|
1,776
|
–
|
–
|
1,776
|
|
Time deposits
|
1,507
|
|
–
|
1,507
|
–
|
1,507
|
|
Marketable securities and
short-term investments
|
|
|
|
|
|
|
|
(excluding available-for-sale
securities):
|
|
|
|
|
|
|
|
Time deposits
|
39
|
|
–
|
39
|
–
|
39
|
|
Receivables under reverse
repurchase agreements
|
297
|
|
–
|
297
|
–
|
297
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
Loans granted
|
34
|
|
–
|
36
|
–
|
36
|
|
Restricted time deposits
|
37
|
|
37
|
–
|
–
|
37
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term debt and current
maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding capital lease
obligations)
|
3,756
|
|
1,870
|
1,886
|
–
|
3,756
|
|
Long-term debt (excluding
capital lease obligations)
|
6,482
|
|
5,851
|
728
|
–
|
6,579
|
23
Q2
2018 Financial Information
|
|
December 31, 2017
|
|
($ in millions)
|
Carrying
value
|
|
Level 1
|
Level 2
|
Level 3
|
Total
fair value
|
|
Assets
|
|
|
|
|
|
|
|
Cash and equivalents
(excluding available-for-sale securities
|
|
|
|
|
|
|
|
with original maturities up to
3 months):
|
|
|
|
|
|
|
|
Cash
|
1,963
|
|
1,963
|
–
|
–
|
1,963
|
|
Time deposits
|
2,563
|
|
–
|
2,563
|
–
|
2,563
|
|
Marketable securities and
short-term investments
|
|
|
|
|
|
|
|
(excluding available-for-sale
securities):
|
|
|
|
|
|
|
|
Time deposits
|
290
|
|
–
|
290
|
–
|
290
|
|
Receivables under reverse
repurchase agreements
|
305
|
|
–
|
305
|
–
|
305
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
Loans granted
|
32
|
|
–
|
33
|
–
|
33
|
|
Restricted time deposits
|
38
|
|
38
|
–
|
–
|
38
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term debt and current
maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding capital lease
obligations)
|
704
|
|
400
|
304
|
–
|
704
|
|
Long-term debt (excluding
capital lease obligations)
|
6,569
|
|
6,046
|
775
|
–
|
6,821
|
The Company uses the following methods and assumptions in
estimating fair values of financial instruments carried on a cost basis:
·
Cash and equivalents (excluding available-for-sale securities with
original maturities up to 3 months), and Marketable securities and short-term
investments (excluding available-for-sale securities)
: The
carrying amounts approximate the fair values as the items are short-term in
nature.
·
Other non-current assets
: Includes (i) loans granted whose fair values
are based on the carrying amount adjusted using a present value technique to
reflect a premium or discount based on current market interest rates (Level 2
inputs), and (ii) restricted time deposits whose fair values approximate the
carrying amounts (Level 1 inputs).
·
Short-term debt and current maturities of long-term debt
(excluding capital lease obligations)
: Short-term debt includes commercial paper, bank
borrowings and overdrafts. The carrying amounts of short-term debt and current
maturities of long-term debt, excluding capital lease obligations, approximate
their fair values.
·
Long-term debt (excluding capital lease obligations)
: Fair
values of bonds are determined using quoted market prices (Level 1 inputs), if
available. For bonds without available quoted market prices and other long-term
debt, the fair values are determined using a discounted cash flow methodology
based upon borrowing rates of similar debt instruments and reflecting
appropriate adjustments for non-performance risk (Level 2 inputs).
─
Note 7
Commitments and contingencies
Contingencies—Regulatory, Compliance and Legal
Antitrust
In April 2014, the European Commission announced its decision
regarding its investigation of anticompetitive practices in the cables industry
and granted the Company full immunity from fines under the European
Commission’s leniency program.
In
Brazil, the Company’s Gas Insulated Switchgear business is under investigation
by the
Brazilian
Antitrust Authority (
CADE) for alleged anticompetitive practices. In
addition, the CADE has opened an investigation into certain other power
businesses of the Company, including flexible alternating current transmission
systems (FACTS) and power transformers. With respect to these matters,
management is cooperating fully with the authorities. An informed judgment
about the outcome of these investigations or the amount of potential loss or
range of loss for the Company, if any, relating to these investigations cannot
be made at this stage.
Suspect
payments
As a result of an internal investigation, the Company
self-reported to the Securities and Exchange Commission (SEC) and the Department
of Justice (DoJ) in the United States as well as to the Serious Fraud
Office (SFO) in the United Kingdom concerning certain of its past dealings with
Unaoil and its subsidiaries, including alleged improper payments made by these
entities to third parties. The SFO has commenced an investigation into this
matter. The Company is cooperating fully with the authorities. At this time, it
is not possible for the Company to make an informed judgment about the outcome
of these matters.
General
In addition, the Company is aware of proceedings, or the threat of
proceedings, against it and others in respect of private claims by customers
and other third parties with regard to certain actual or alleged
anticompetitive practices. Also, the Company is subject to other various legal
proceedings, investigations, and claims that have not yet been resolved. With
respect to the above mentioned regulatory matters and commercial litigation
contingencies, the Company will bear the costs of the continuing investigations
and any related legal proceedings.
24
Q2
2018 Financial Information
Liabilities recognized
At June 30, 2018, and December 31, 2017, the Company had aggregate
liabilities of $236 million and $233 million, respectively, included
in “Other provisions” and “Other non-current liabilities”, for the above
regulatory, compliance and legal contingencies, and none of the individual
liabilities recognized was significant. As it is not possible to make an
informed judgment on the outcome of certain matters and as it is not possible,
based on information currently available to management, to estimate the maximum
potential liability on other matters, there could be material adverse outcomes
beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the
Company’s third-party guarantees. The maximum potential payments represent a
“worst‑case scenario”, and do not reflect management’s expected outcomes.
|
Maximum potential payments
($ in
millions)
|
June
30, 2018
|
December
31, 2017
|
|
Performance guarantees
|
1,607
|
1,775
|
|
Financial guarantees
|
12
|
17
|
|
Indemnification guarantees
|
63
|
72
|
|
Total
|
1,682
|
1,864
|
The carrying amount of liabilities recorded in the Consolidated
Balance Sheets reflects the Company’s best estimate of future payments, which
it may incur as part of fulfilling its guarantee obligations. In respect of the
above guarantees, the carrying amounts of liabilities at June 30, 2018, and
December 31, 2017, were not significant.
The Company is party to various guarantees providing financial or
performance assurances to certain third parties. These guarantees, which have
various maturities up to 2027, mainly consist of performance guarantees whereby
(i) the Company guarantees the performance of a third party’s product or
service according to the terms of a contract and (ii) as member of a
consortium/joint-venture that includes third parties, the Company guarantees
not only its own performance but also the work of third parties. Such
guarantees may include guarantees that a project will be completed within a
specified time. If the third party does not fulfill the obligation, the Company
will compensate the guaranteed party in cash or in kind. The original maturity
dates for the majority of these performance guarantees range from one to eight
years.
In conjunction with the divestment of the high-voltage cable and
cables accessories businesses, the Company has entered into various performance
guarantees with other parties with respect to certain liabilities of the
divested business. At June 30, 2018 and December 31, 2017, the maximum
potential payable under these guarantees amounts to $792 million and
$929 million, respectively, and these guarantees have various maturities
ranging from one to ten years.
Commercial
commitments
In addition, in the normal course of bidding for and executing
certain projects, the Company has entered into standby letters of credit,
bid/performance bonds and surety bonds (collectively “performance bonds”) with
various financial institutions. Customers can draw on such performance bonds in
the event that the Company does not fulfill its contractual obligations. The
Company would then have an obligation to reimburse the financial institution
for amounts paid under the performance bonds. At June 30, 2018, and December
31, 2017, the total outstanding performance bonds aggregated to $7.5 billion
and $7.7 billion, respectively. There have been no significant amounts
reimbursed to financial institutions under these types of arrangements in the
six and three months ended June 30, 2018 and 2017.
Product and order-related contingencies
The Company calculates its provision for product warranties based
on historical claims experience and specific review of certain contracts.
The reconciliation of the “Provisions for warranties”, including
guarantees of product performance, was as follows:
|
($ in millions)
|
2018
|
2017
|
|
Balance at January 1,
|
1,231
|
1,142
|
|
Net change in warranties due
to acquisitions and divestments
|
11
|
–
|
|
Claims paid in cash or in kind
|
(179)
|
(165)
|
|
Net increase in provision for
changes in estimates, warranties issued and warranties expired
|
110
|
148
|
|
Exchange rate differences
|
(37)
|
68
|
|
Balance at June 30,
|
1,136
|
1,193
|
─
Note 8
Contract assets and liabilities
The following table provides information about Contracts assets
and Contract liabilities with customers:
|
($ in millions)
|
June
30, 2018
|
December
31, 2017
|
June
30, 2017
|
|
Contract assets
|
2,281
|
2,149
|
2,310
|
|
Contract liabilities
|
2,757
|
2,908
|
3,033
|
Contract
assets primarily relate to the Company’s right to receive consideration for work
completed but for which no invoice has been issued at the reporting date. Contract
assets are transferred to receivables when rights to receive payment become
unconditional.
25
Q2
2018 Financial Information
Contract liabilities primarily relate to up-front
advances received on orders from customers as well as amounts invoiced to
customers in excess of revenues recognized predominantly on long-term projects.
Contract liabilities are reduced as work is performed and as revenues are
recognized.
The significant changes in the Contract assets and Contract
liabilities balances were as follows:
|
|
Six months ended June 30,
|
|
|
2018
|
|
2017
|
|
|
Contract
|
|
Contract
|
|
Contract
|
|
Contract
|
|
($ in millions)
|
assets
|
|
liabilities
|
|
assets
|
|
liabilities
|
|
Revenue recognized, which was
included in the Contract liabilities balance at Jan 1, 2018/2017
|
|
|
1,233
|
|
|
|
1,630
|
|
Additions to Contract
liabilities - excluding amounts recognized as revenue during the period
|
|
|
(1,167)
|
|
|
|
(1,228)
|
|
Receivables recognized that
were included in the Contract asset balance at Jan 1, 2018/2017
|
(965)
|
|
|
|
(1,250)
|
|
|
The Company considers unfulfilled orders (order backlog) from
customers to be unsatisfied performance obligations. At June 30, 2018,
unfulfilled orders were $24,214 million and, of this amount, the Company
expects to recognize approximately 53 percent in 2018, approximately
29 percent in 2019 and the balance thereafter.
─
Note 9
Debt
The Company’s total debt at June 30, 2018, and December 31, 2017,
amounted to $10,447 million and $7,447 million, respectively.
Short-term debt and current maturities of long-term debt
The Company’s “Short-term debt and current maturities of long-term
debt” consisted of the following:
|
($ in millions)
|
June
30, 2018
|
December
31, 2017
|
|
Short-term debt
|
1,937
|
327
|
|
Current maturities of
long-term debt
|
1,849
|
411
|
|
Total
|
3,786
|
738
|
Short-term
debt primarily represented issued commercial paper and short-term loans from
various banks. At June 30, 2018, and December 31, 2017, $905 million and
$259 million, respectively, was outstanding under the $2 billion
commercial paper program in the United States. In addition, at June 30, 2018,
$886 million was outstanding under the $2 billion Euro-commercial
paper program.
Long-term debt
The Company’s long-term debt at June 30, 2018, and December 31,
2017, amounted to $6,661 million and $6,709 million, respectively.
Outstanding bonds (including maturities within the next 12 months)
were as follows:
|
|
June 30, 2018
|
December 31, 2017
|
|
(in millions)
|
Nominal outstanding
|
Carrying
value
(1)
|
Nominal outstanding
|
Carrying
value
(1)
|
|
Bonds:
|
|
|
|
|
|
|
|
|
|
1.50% CHF Bonds, due 2018
|
CHF
|
350
|
$
|
352
|
CHF
|
350
|
$
|
358
|
|
2.625% EUR Instruments, due
2019
|
EUR
|
1,250
|
$
|
1,455
|
EUR
|
1,250
|
$
|
1,493
|
|
2.8% USD Notes, due 2020
|
USD
|
300
|
$
|
299
|
|
|
|
–
|
|
4.0% USD Notes, due 2021
|
USD
|
650
|
$
|
645
|
USD
|
650
|
$
|
644
|
|
2.25% CHF Bonds, due 2021
|
CHF
|
350
|
$
|
371
|
CHF
|
350
|
$
|
378
|
|
5.625% USD Notes, due 2021
|
USD
|
250
|
$
|
267
|
USD
|
250
|
$
|
270
|
|
2.875% USD Notes, due 2022
|
USD
|
1,250
|
$
|
1,231
|
USD
|
1,250
|
$
|
1,256
|
|
3.375% USD Notes, due 2023
|
USD
|
450
|
$
|
448
|
|
|
|
–
|
|
0.625% EUR Notes, due 2023
|
EUR
|
700
|
$
|
817
|
EUR
|
700
|
$
|
834
|
|
0.75% EUR Notes, due 2024
|
EUR
|
750
|
$
|
871
|
EUR
|
750
|
$
|
889
|
|
3.8% USD Notes, due 2028
|
USD
|
750
|
$
|
747
|
|
|
|
–
|
|
4.375% USD Notes, due 2042
|
USD
|
750
|
$
|
723
|
USD
|
750
|
$
|
723
|
|
Total
|
|
|
$
|
8,226
|
|
|
$
|
6,845
|
(1)
USD
carrying values include unamortized debt issuance costs, bond discounts or
premiums, as well as adjustments for fair value hedge accounting, where
appropriate.
In April 2018, the Company issued the following
notes with a principal of:
·
$300 million, due 2020, paying interest
semi-annually in arrears at a fixed rate of 2.8 percent per annum,
·
$450 million, due 2023, paying interest
semi-annually in arrears at a fixed rate of 3.375 percent per annum, and
26
Q2
2018 Financial Information
·
$750 million, due 2028, paying interest
semi-annually in arrears at a fixed rate of 3.8 percent per annum.
The aggregate net proceeds of these bond
issues, after underwriting discount and other fees, amounted to $1,494 million.
─
Note 10
Employee benefits
The Company operates defined benefit pension plans, defined
contribution pension plans, and termination indemnity plans, in accordance with
local regulations and practices. These plans cover a large portion of the
Company’s employees and provide benefits to employees in the event of death,
disability, retirement, or termination of employment. Certain of these plans
are multi-employer plans. The Company also operates other postretirement
benefit plans including postretirement health care benefits, and other
employee-related benefits for active employees including long-service award
plans. The measurement date used for the Company’s employee benefit plans is
December 31. The funding policies of the Company’s plans are consistent with
the local government and tax requirements.
Net periodic benefit cost of the Company’s defined benefit pension
and other postretirement benefit plans consisted of the following:
|
($ in millions)
|
Defined pension benefits
|
Other postretirement benefits
|
|
Six months ended June
30,
|
2018
|
2017
|
2018
|
2017
|
|
Operational pension
cost:
|
|
|
|
|
|
Service cost
|
108
|
122
|
–
|
–
|
|
Operational pension cost
|
108
|
122
|
–
|
–
|
|
Non-operational
pension cost (credit):
|
|
|
|
|
|
Interest cost
|
113
|
125
|
2
|
2
|
|
Expected return on plan assets
|
(212)
|
(202)
|
–
|
–
|
|
Amortization of prior service
cost (credit)
|
(7)
|
18
|
(2)
|
(2)
|
|
Amortization of net actuarial
loss
|
48
|
44
|
–
|
–
|
|
Curtailments, settlements and
special termination benefits
|
–
|
1
|
–
|
–
|
|
Non-operational pension
cost (credit)
|
(58)
|
(14)
|
–
|
–
|
|
Net periodic benefit
cost
|
50
|
108
|
–
|
–
|
|
($ in millions)
|
Defined pension benefits
|
Other postretirement benefits
|
|
Three months ended June
30,
|
2018
|
2017
|
2018
|
2017
|
|
Operational pension
cost:
|
|
|
|
|
|
Service cost
|
51
|
63
|
–
|
–
|
|
Operational pension cost
|
51
|
63
|
–
|
–
|
|
Non-operational
pension cost (credit):
|
|
|
|
|
|
Interest cost
|
54
|
64
|
1
|
1
|
|
Expected return on plan assets
|
(103)
|
(103)
|
–
|
–
|
|
Amortization of prior service
cost (credit)
|
(3)
|
9
|
(1)
|
(1)
|
|
Amortization of net actuarial
loss
|
24
|
22
|
–
|
–
|
|
Curtailments, settlements and
special termination benefits
|
–
|
1
|
–
|
–
|
|
Non-operational pension
cost (credit)
|
(28)
|
(7)
|
–
|
–
|
|
Net periodic benefit
cost
|
23
|
56
|
–
|
–
|
The components of net periodic benefit cost
other than the service cost component are included in the line “Non-operational
pension (cost) credit” in the income statement.
Employer contributions were as follows:
|
($ in millions)
|
Defined pension benefits
|
Other postretirement benefits
|
|
Six months ended June
30,
|
2018
|
2017
|
2018
|
2017
|
|
Total contributions to defined
benefit pension and
|
|
|
|
|
|
other postretirement benefit plans
|
95
|
95
|
4
|
4
|
|
($ in millions)
|
Defined pension benefits
|
Other postretirement benefits
|
|
Three months ended June
30,
|
2018
|
2017
|
2018
|
2017
|
|
Total contributions to defined
benefit pension and
|
|
|
|
|
|
other postretirement benefit
plans
|
49
|
48
|
2
|
2
|
The Company
expects to make contributions totaling approximately $218 million and $11 million
to its defined benefit pension plans and other postretirement benefit plans,
respectively, for the full year 2018.
27
Q2
2018 Financial Information
─
Note 11
Stockholders’ equity
In the six months ended June 30, 2018, the Company purchased on
the open market an aggregate of 10 million of its own shares resulting in
an increase in Treasury stock of $249 million. Also in the first half of
2018, the Company delivered, out of treasury stock, 2.4 million shares for
options exercised in connection with its Management Incentive Plan.
At the Annual
General Meeting of Shareholders on March 29, 2018, shareholders approved
the proposal of the Board of Directors to distribute 0.78 Swiss francs per
share to shareholders. The declared dividend amounted to $1,736 million
and was paid in April 2018.
─
Note 12
Earnings per share
Basic earnings per share is calculated by dividing income by the
weighted-average number of shares outstanding during the period. Diluted
earnings per share is calculated by dividing income by the weighted-average
number of shares outstanding during the period, assuming that all potentially
dilutive securities were exercised, if dilutive. Potentially dilutive
securities comprise outstanding written call options, and outstanding options
and shares granted subject to certain conditions under the Company’s
share-based payment arrangements.
|
Basic earnings per share
|
|
|
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions, except per
share data in $)
|
2018
|
2017
|
2018
|
2017
|
|
Amounts attributable to ABB
shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
1,250
|
1,250
|
673
|
524
|
|
Income (loss) from
discontinued operations, net of tax
|
3
|
(1)
|
8
|
1
|
|
Net income
|
1,253
|
1,249
|
681
|
525
|
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding (in millions)
|
2,132
|
2,140
|
2,130
|
2,140
|
|
|
|
|
|
|
|
Basic earnings per share
attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
0.59
|
0.58
|
0.32
|
0.24
|
|
Income (loss) from
discontinued operations, net of tax
|
–
|
–
|
–
|
0.01
|
|
Net income
|
0.59
|
0.58
|
0.32
|
0.25
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions, except per
share data in $)
|
2018
|
2017
|
2018
|
2017
|
|
Amounts attributable to ABB
shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
1,250
|
1,250
|
673
|
524
|
|
Income (loss) from
discontinued operations, net of tax
|
3
|
(1)
|
8
|
1
|
|
Net income
|
1,253
|
1,249
|
681
|
525
|
|
|
|
|
|
|
|
Weighted-average number of
shares outstanding (in millions)
|
2,132
|
2,140
|
2,130
|
2,140
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
Call options and shares
|
10
|
9
|
8
|
11
|
|
Adjusted
weighted-average number of shares outstanding (in millions)
|
2,142
|
2,149
|
2,138
|
2,151
|
|
|
|
|
|
|
|
Diluted earnings per share
attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
0.58
|
0.58
|
0.31
|
0.24
|
|
Income (loss) from
discontinued operations, net of tax
|
–
|
–
|
0.01
|
–
|
|
Net income
|
0.58
|
0.58
|
0.32
|
0.24
|
28
Q2
2018 Financial Information
─
Note 13
Reclassifications out of accumulated other
comprehensive loss
The following table shows changes in “Accumulated other
comprehensive loss” (OCI) attributable to ABB, by component, net of tax:
|
|
|
Unrealized
gains
|
Pension
and
|
Unrealized
gains
|
|
|
|
Foreign
currency
|
(losses)
on
|
other
|
(losses)
of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow
hedge
|
|
|
($ in millions)
|
adjustments
|
securities
|
plan
adjustments
|
derivatives
|
Total
OCI
|
|
Balance at January 1,
2017
|
(3,592)
|
7
|
(1,601)
|
(1)
|
(5,187)
|
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
|
Other comprehensive (loss)
income
|
|
|
|
|
|
|
before reclassifications
|
572
|
2
|
(103)
|
18
|
489
|
|
Amounts reclassified from OCI
|
–
|
–
|
46
|
(10)
|
36
|
|
Changes attributable to
divestments
|
5
|
–
|
6
|
(3)
|
8
|
|
Total other
comprehensive (loss) income
|
577
|
2
|
(51)
|
5
|
533
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts attributable to
|
|
|
|
|
|
|
noncontrolling interests
|
13
|
–
|
–
|
–
|
13
|
|
Balance at June 30, 2017
|
(3,028)
|
9
|
(1,652)
|
4
|
(4,667)
|
|
|
|
Unrealized
gains
|
Pension
and
|
Unrealized
gains
|
|
|
|
Foreign
currency
|
(losses)
on
|
other
|
(losses)
of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow
hedge
|
|
|
($ in millions)
|
adjustments
|
securities
|
plan
adjustments
|
derivatives
|
Total
OCI
|
|
Balance at January 1,
2018
|
(2,693)
|
8
|
(1,672)
|
12
|
(4,345)
|
|
Cumulative effect of changes
in
|
|
|
|
|
|
|
accounting principles
|
–
|
(9)
|
–
|
–
|
(9)
|
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
|
Other comprehensive (loss)
income
|
|
|
|
|
|
|
before reclassifications
|
(404)
|
(5)
|
55
|
(32)
|
(386)
|
|
Amounts reclassified from OCI
|
–
|
–
|
29
|
13
|
42
|
|
Changes attributable to divestments
|
11
|
–
|
–
|
–
|
11
|
|
Total other
comprehensive (loss) income
|
(393)
|
(5)
|
84
|
(19)
|
(333)
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts attributable to
|
|
|
|
|
|
|
noncontrolling interests
|
(4)
|
–
|
–
|
–
|
(4)
|
|
Balance at June 30, 2018
|
(3,082)
|
(6)
|
(1,588)
|
(7)
|
(4,683)
|
The following table reflects
amounts reclassified out of OCI in respect of pension and other postretirement
plan adjustments:
|
|
|
Six months ended
|
Three months ended
|
|
($ in millions)
|
Location of (gains) losses
|
June 30,
|
June 30,
|
|
Details about OCI
components
|
reclassified from OCI
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
|
|
|
Pension and other
postretirement plan adjustments:
|
|
|
|
|
|
|
Amortization of prior service
cost (credit)
|
Non-operational pension (cost)
credit
(1)
|
(9)
|
16
|
(4)
|
8
|
|
Amortization of net actuarial
loss
|
Non-operational pension (cost)
credit
(1)
|
48
|
44
|
24
|
22
|
|
Total before tax
|
|
39
|
60
|
20
|
30
|
|
Tax
|
Provision for taxes
|
(10)
|
(14)
|
(5)
|
(7)
|
|
Amounts reclassified
from OCI
|
|
29
|
46
|
15
|
23
|
(1)
These
components
are
included
in
the
computation
of
net
periodic
benefit
cost
(see
Note
10).
The
amounts in respect of Unrealized gains (losses) on available-for-sale
securities and Unrealized gains (losses) of cash flow hedge derivatives were
not significant for the six and three months ended June 30, 2018 and 2017.
29
Q2
2018 Financial Information
─
Note 14
Restructuring and related expenses
White Collar Productivity program
In September 2015, the Company announced a two-year program aimed
at making the Company leaner, faster and more customer-focused. Productivity
improvements include the rapid expansion and use of regional shared service
centers as well as the streamlining of global operations and head office
functions, with business units moving closer to their respective key markets.
In the course of this program, the Company has implemented and executed various
restructuring initiatives across all operating segments and regions.
As of
December 31, 2017, the Company had incurred substantially all costs related to
the White Collar Productivity program.
Liabilities associated with the White Collar
Productivity program are primarily included in “Other provisions”. The
following table shows the activity from the beginning of the program to June
30, 2018, by expense type.
|
|
Employee
|
Contract
settlement,
|
|
|
($ in millions)
|
severance
costs
|
loss
order and other costs
|
Total
|
|
Liability at
January 1, 2015
|
–
|
–
|
–
|
|
Expenses
|
364
|
5
|
369
|
|
Cash payments
|
(34)
|
(1)
|
(35)
|
|
Liability at December 31,
2015
|
330
|
4
|
334
|
|
Expenses
|
232
|
3
|
235
|
|
Cash payments
|
(106)
|
(3)
|
(109)
|
|
Change in estimates
|
(102)
|
(1)
|
(103)
|
|
Exchange rate differences
|
(23)
|
–
|
(23)
|
|
Liability at
December 31, 2016
|
331
|
3
|
334
|
|
Expenses
|
35
|
3
|
38
|
|
Cash payments
|
(110)
|
(5)
|
(115)
|
|
Change in estimates
|
(164)
|
–
|
(164)
|
|
Exchange rate differences
|
28
|
–
|
28
|
|
Liability at
December 31, 2017
|
120
|
1
|
121
|
|
Cash payments
|
(47)
|
–
|
(47)
|
|
Change in estimates and
exchange rate differences
|
(12)
|
–
|
(12)
|
|
Liability at June 30,
2018
|
61
|
1
|
62
|
The change in estimates during 2016 of $103 million is due to
significantly higher than expected rates of attrition and internal
re-deployment and a lower than expected severance cost per employee for the
employee groups affected by the first phase of restructuring initiated in 2015.
The change in estimates during 2017 of $164 million is mainly
due to higher than expected rates of attrition and internal re‑deployment.
During the six months ended June 30, 2017, $60 million of the 2017 change
in estimates, was recorded primarily as reductions in Cost of sales of $29 million
and in Selling, general and administrative expenses of $24 million and related
to restructurings initiated in both 2015 and 2016. During the three months
ended June 30, 2017, $29 million of the 2017 change in estimates, was recorded
primarily as reductions in Cost of sales of $13 million and in Selling,
general and administrative expenses of $14 million and related to
restructurings initiated in both 2015 and 2016.
The change in estimates for the six months and three months ended
June 30, 2017, of $60 million and $29 million, respectively, resulted in an increase
in earnings per share (basic and diluted) of $0.02 and $0.01, in the respective
periods.
The following table outlines the net costs incurred in the six and
three months ended June 30, 2017, and the cumulative net costs incurred to December
31, 2017:
|
|
Net
cost incurred
|
Net
cost incurred
|
Cumulative
net
|
|
|
Six
months ended
|
Three
months ended
|
cost
incurred up to
|
|
($ in millions)
|
June
30, 2017
(1)
|
June
30, 2017
(1)
|
December
31, 2017
(1)
|
|
Power Grids
|
(11)
|
(4)
|
60
|
|
Electrification Products
|
(6)
|
(2)
|
72
|
|
Industrial Automation
|
(8)
|
(4)
|
106
|
|
Robotics and Motion
|
(3)
|
(3)
|
56
|
|
Corporate and Other
|
(17)
|
(10)
|
91
|
|
Total
|
(45)
|
(23)
|
385
|
(1)
Net costs incurred in 2017 and Cumulative net costs incurred up to December 31,
2017 have been recast to reflect the reorganization of the Company’s operating
segments as outlined in Note 15.
30
Q2
2018 Financial Information
The Company recorded the following expenses, net
of changes in estimates, under this program:
|
|
|
|
Cumulative
costs
|
|
|
Six
months ended
|
Three
months ended
|
incurred
up to
|
|
($ in millions)
|
June
30,2017
(1)
|
June
30, 2017
(2)
|
December
31, 2017
|
|
Employee severance costs
|
(46)
|
(24)
|
365
|
|
Estimated contract settlement,
loss order and other costs
|
1
|
1
|
10
|
|
Inventory and long-lived asset
impairments
|
–
|
–
|
10
|
|
Total
|
(45)
|
(23)
|
385
|
(1) Of
which $23 million was recorded in Total cost of sales and $17 million
in Selling, general and administrative expenses.
(2) Of
which $9 million was recorded in Total cost of sales and $13 million
in Selling, general and administrative expenses.
Other restructuring-related
activities
In the six months ended June 30,
2018 and 2017, the Company executed various other restructuring‑related
activities and incurred expenses of $26 million and $58 million,
respectively. In the three months ended June 30, 2018 and 2017, expenses relating
to these various other restructuring‑related activities amounted to $9 million
and $45 million, respectively. These expenses mainly relate to employee
severance costs, contract settlement and other costs, primarily recorded in
“Other income (expense), net” in the three and six months ended June 30, 2018.
These expenses mainly relate to employee severance costs, primary recorded in
“Total cost of sales”, and long-lived asset impairments, recorded in “Other
income (expense), net” in the three and six months ended June 30, 2017.
─
Note 15
Operating segment data
The Chief Operating Decision Maker (CODM) is the Chief Executive
Officer. The CODM allocates resources to and assesses the performance of each
operating segment using the information outlined below. The Company’s operating
segments consist of Power Grids, Electrification Products, Industrial
Automation, and Robotics and Motion. The remaining operations of the Company
are included in Corporate and Other.
Effective January 1, 2018, management responsibility and oversight
of certain remaining engineering, procurement and construction (EPC)
businesses, previously included in the Power Grids, Industrial Automation and
Robotics and Motion operating segments, were transferred to a new non-core
operating business within Corporate and Other. In addition, the results of
certain businesses divested which, prior to their divestment in March 2018,
were included within the Industrial Automation segment have been reclassified
to Corporate and Other for all periods presented.
The segment information for the six and three months ended June
30, 2017 and at December 31, 2017, has been recast to reflect these
organizational changes.
A description of the types of products and services provided by
each reportable segment is as follows:
·
Power Grids:
offers a range of products, systems, service and
software solutions across the power value chain of generation, transmission and
distribution, to utility, industry, transport & infrastructure customers.
These offerings address existing and evolving grid needs such as the
integration of renewables, digital substations, network control solutions,
microgrids and asset management. The division portfolio includes AC and DC
transmission systems, substations, as well as a wide range of power,
distribution and traction transformers and an array of high-voltage products,
such as circuit breakers, switchgear and capacitors.
·
Electrification Products:
manufactures and sells products and services
including electric vehicle charging, solar inverters, modular substation
packages, switchgear, UPS solutions, circuit breakers, control products, wiring
accessories, enclosures and cabling systems, and intelligent home and building
solutions designed to integrate and automate the lighting, heating and
ventilation, and security and data communication networks. The Electrification
Products segment will also include the operations of GEIS which was acquired on
June 30, 2018.
·
Industrial Automation:
develops and sells integrated automation and
electrification systems and solutions, such as process and discrete control
solutions, advanced process control software and manufacturing execution
systems, sensing, measurement and analytical instrumentation and solutions,
electric ship propulsion systems, as well as solutions for modern machine and
factory automation and large turbochargers. In addition, the division offers a
comprehensive range of services ranging from repair to advanced services such
as remote monitoring, preventive maintenance and cybersecurity services.
·
Robotics and Motion:
manufactures and sells robotics, motors,
generators, drives, wind converters, components and systems for railways and
related services and digital solutions for a wide range of applications in industry,
transportation and infrastructure, and utilities.
·
Corporate and Other:
includes headquarters, central research and
development, the Company’s real estate activities, Group Treasury Operations, non-core
operating activities, historical operating activities of certain divested
businesses and other minor business activities.
The Company evaluates the profitability of its segments based on
Operational EBITA, which represents income from operations excluding:
·
amortization expense on intangibles arising upon acquisitions
(acquisition-related amortization),
·
restructuring and restructuring-related expenses,
31
Q2
2018 Financial Information
·
changes in the amount recorded for retained obligations of
divested businesses occurring after the divestment date (changes in retained
obligations of divested businesses),
·
changes in estimates relating to opening balance sheets of
acquired businesses (changes in pre-acquisition estimates),
·
gains and losses from sale of businesses,
·
acquisition-related expenses and integration costs,
·
certain other non-operational items, as well as
·
foreign exchange/commodity timing differences in income from
operations consisting of: (a) unrealized gains and losses on derivatives
(foreign exchange, commodities, embedded derivatives), (b) realized gains
and losses on derivatives where the underlying hedged transaction has not yet
been realized, and (c) unrealized foreign exchange movements on
receivables/payables (and related assets/liabilities).
The CODM
primarily reviews the results of each segment on a basis that is before the
elimination of profits made on inventory sales between segments. Segment
results below are presented before these eliminations, with a total deduction
for intersegment profits to arrive at the Company’s consolidated Operational
EBITA. Intersegment sales and transfers are accounted for as if the sales and
transfers were to third parties, at current market prices.
The following tables present disaggregated segment revenues from
contracts with customers, Operational EBITA, and the reconciliations of
consolidated Operational EBITA to Income from continuing operations before
taxes for the six and three months ended June 30, 2018 and 2017, as well as
total assets at June 30, 2018, and December 31, 2017.
|
|
Six months ended June 30, 2018
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
and
|
Corporate
|
|
|
($ in millions)
|
Grids
|
Products
|
Automation
|
Motion
|
and
Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
1,291
|
1,862
|
1,580
|
1,442
|
45
|
6,220
|
|
The Americas
|
1,385
|
1,347
|
783
|
1,399
|
21
|
4,935
|
|
Asia, Middle East and Africa
|
1,798
|
1,716
|
1,268
|
1,438
|
141
|
6,361
|
|
|
4,474
|
4,925
|
3,631
|
4,279
|
207
|
17,516
|
|
End Customer
Markets
|
|
|
|
|
|
|
|
Utilities
|
3,081
|
1,182
|
582
|
355
|
126
|
5,326
|
|
Industry
|
1,036
|
2,208
|
2,182
|
3,249
|
51
|
8,726
|
|
Transport & infrastructure
|
357
|
1,535
|
867
|
675
|
30
|
3,464
|
|
|
4,474
|
4,925
|
3,631
|
4,279
|
207
|
17,516
|
|
Product type
|
|
|
|
|
|
|
|
Products
|
2,574
|
4,281
|
1,229
|
3,086
|
36
|
11,206
|
|
Systems
|
1,093
|
298
|
922
|
522
|
171
|
3,006
|
|
Services and other
|
807
|
346
|
1,480
|
671
|
–
|
3,304
|
|
|
4,474
|
4,925
|
3,631
|
4,279
|
207
|
17,516
|
|
|
|
|
|
|
|
|
|
Third-party revenues
|
4,474
|
4,925
|
3,631
|
4,279
|
207
|
17,516
|
|
Intersegment revenues
|
265
|
242
|
67
|
246
|
(820)
|
–
|
|
Total Revenues
|
4,739
|
5,167
|
3,698
|
4,525
|
(613)
|
17,516
|
|
|
Three months ended June 30, 2018
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
and
|
Corporate
|
|
|
($ in millions)
|
Grids
|
Products
|
Automation
|
Motion
|
and
Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
618
|
925
|
772
|
733
|
23
|
3,071
|
|
The Americas
|
714
|
699
|
406
|
715
|
11
|
2,545
|
|
Asia, Middle East and Africa
|
897
|
916
|
629
|
746
|
85
|
3,273
|
|
|
2,229
|
2,540
|
1,807
|
2,194
|
119
|
8,889
|
|
End Customer
Markets
|
|
|
|
|
|
|
|
Utilities
|
1,500
|
642
|
286
|
188
|
64
|
2,680
|
|
Industry
|
540
|
1,120
|
1,105
|
1,627
|
38
|
4,430
|
|
Transport & infrastructure
|
189
|
778
|
416
|
379
|
17
|
1,779
|
|
|
2,229
|
2,540
|
1,807
|
2,194
|
119
|
8,889
|
|
Product type
|
|
|
|
|
|
|
|
Products
|
1,257
|
2,196
|
590
|
1,575
|
20
|
5,638
|
|
Systems
|
542
|
161
|
458
|
278
|
99
|
1,538
|
|
Services and other
|
430
|
183
|
759
|
341
|
–
|
1,713
|
|
|
2,229
|
2,540
|
1,807
|
2,194
|
119
|
8,889
|
|
|
|
|
|
|
|
|
|
Third-party revenues
|
2,229
|
2,540
|
1,807
|
2,194
|
119
|
8,889
|
|
Intersegment revenues
|
125
|
133
|
32
|
122
|
(412)
|
–
|
|
Total Revenues
|
2,354
|
2,673
|
1,839
|
2,316
|
(293)
|
8,889
|
32
Q2
2018 Financial Information
|
|
Six months ended June 30, 2017
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
and
|
Corporate
|
|
|
($ in millions)
|
Grids
|
Products
|
Automation
|
Motion
|
and
Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
1,342
|
1,657
|
1,174
|
1,231
|
103
|
5,507
|
|
The Americas
|
1,441
|
1,293
|
633
|
1,364
|
73
|
4,804
|
|
Asia, Middle East and Africa
|
1,742
|
1,617
|
1,208
|
1,162
|
268
|
5,997
|
|
|
4,525
|
4,567
|
3,015
|
3,757
|
444
|
16,308
|
|
End Customer
Markets
|
|
|
|
|
|
|
|
Utilities
|
3,338
|
1,288
|
622
|
285
|
335
|
5,868
|
|
Industry
|
882
|
1,792
|
1,632
|
2,771
|
93
|
7,170
|
|
Transport & infrastructure
|
305
|
1,487
|
761
|
701
|
16
|
3,270
|
|
|
4,525
|
4,567
|
3,015
|
3,757
|
444
|
16,308
|
|
Product type
|
|
|
|
|
|
|
|
Products
|
2,620
|
3,997
|
627
|
2,729
|
49
|
10,022
|
|
Systems
|
1,257
|
270
|
1,067
|
447
|
388
|
3,429
|
|
Services and other
|
648
|
300
|
1,321
|
581
|
7
|
2,857
|
|
|
4,525
|
4,567
|
3,015
|
3,757
|
444
|
16,308
|
|
|
|
|
|
|
|
|
|
Third-party revenues
|
4,525
|
4,567
|
3,015
|
3,757
|
444
|
16,308
|
|
Intersegment revenues
|
333
|
235
|
73
|
245
|
(886)
|
–
|
|
Total Revenues
|
4,858
|
4,802
|
3,088
|
4,002
|
(442)
|
16,308
|
|
|
Three months ended June 30, 2017
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
and
|
Corporate
|
|
|
($ in millions)
|
Grids
|
Products
|
Automation
|
Motion
|
and
Other
|
Total
|
|
Geographical
markets
|
|
|
|
|
|
|
|
Europe
|
694
|
853
|
584
|
624
|
59
|
2,814
|
|
The Americas
|
753
|
666
|
315
|
705
|
33
|
2,472
|
|
Asia, Middle East and Africa
|
891
|
866
|
636
|
625
|
150
|
3,168
|
|
|
2,338
|
2,385
|
1,535
|
1,954
|
242
|
8,454
|
|
End Customer
Markets
|
|
|
|
|
|
|
|
Utilities
|
1,719
|
712
|
320
|
108
|
189
|
3,048
|
|
Industry
|
440
|
886
|
832
|
1,445
|
42
|
3,645
|
|
Transport & infrastructure
|
179
|
787
|
383
|
401
|
11
|
1,761
|
|
|
2,338
|
2,385
|
1,535
|
1,954
|
242
|
8,454
|
|
Product type
|
|
|
|
|
|
|
|
Products
|
1,420
|
2,074
|
329
|
1,417
|
49
|
5,289
|
|
Systems
|
579
|
149
|
533
|
239
|
193
|
1,693
|
|
Services and other
|
339
|
162
|
673
|
298
|
–
|
1,472
|
|
|
2,338
|
2,385
|
1,535
|
1,954
|
242
|
8,454
|
|
|
|
|
|
|
|
|
|
Third-party revenues
|
2,338
|
2,385
|
1,535
|
1,954
|
242
|
8,454
|
|
Intersegment revenues
|
169
|
124
|
40
|
128
|
(461)
|
–
|
|
Total Revenues
|
2,507
|
2,509
|
1,575
|
2,082
|
(219)
|
8,454
|
33
Q2
2018 Financial Information
|
|
Six months ended
|
Three months ended
|
|
|
June 30,
|
June 30,
|
|
($ in millions)
|
2018
|
2017
|
2018
|
2017
|
|
Operational EBITA:
|
|
|
|
|
|
Power Grids
|
464
|
484
|
232
|
253
|
|
Electrification Products
|
807
|
695
|
430
|
373
|
|
Industrial Automation
|
522
|
417
|
260
|
211
|
|
Robotics and Motion
|
712
|
596
|
374
|
314
|
|
Corporate and Other and
Intersegment elimination
|
(278)
|
(207)
|
(129)
|
(109)
|
|
Consolidated Operational
EBITA
|
2,227
|
1,985
|
1,167
|
1,042
|
|
Acquisition-related
amortization
|
(145)
|
(115)
|
(72)
|
(56)
|
|
Restructuring and
restructuring-related expenses
(1)
|
(17)
|
(132)
|
(6)
|
(84)
|
|
Changes in retained
obligations of divested businesses
|
–
|
(94)
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
(1)
|
(2)
|
(1)
|
(2)
|
|
Gains and losses from sale of
businesses
|
(5)
|
331
|
1
|
(7)
|
|
Acquisition-related expenses
and integration costs
|
(77)
|
(14)
|
(51)
|
(8)
|
|
Certain other non-operational
items
|
(59)
|
(150)
|
(30)
|
(48)
|
|
Foreign exchange/commodity
timing differences in income from operations:
|
|
|
|
|
|
Unrealized gains and losses on
derivatives (foreign exchange,
|
|
|
|
|
|
commodities, embedded
derivatives)
|
(66)
|
169
|
(46)
|
93
|
|
Realized gains and losses on
derivatives where the underlying hedged
|
|
|
|
|
|
transaction has not yet been
realized
|
(12)
|
18
|
(19)
|
8
|
|
Unrealized foreign exchange
movements on receivables/payables (and
|
|
|
|
|
|
related assets/liabilities)
|
12
|
(96)
|
19
|
(61)
|
|
Income from operations
|
1,857
|
1,900
|
962
|
877
|
|
Interest and dividend income
|
51
|
35
|
28
|
18
|
|
Interest and other finance
expense
|
(153)
|
(153)
|
(45)
|
(74)
|
|
Non-operational pension (cost)
credit
|
58
|
14
|
28
|
7
|
|
Income from continuing
operations before taxes
|
1,813
|
1,796
|
973
|
828
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
|
|
Total assets
(1)
|
|
($ in millions)
|
June
30, 2018
|
December
31, 2017
|
|
Power Grids
|
8,250
|
8,387
|
|
Electrification Products
|
13,836
|
10,314
|
|
Industrial Automation
|
6,802
|
7,258
|
|
Robotics and Motion
|
8,490
|
8,134
|
|
Corporate and Other
|
7,813
|
9,365
|
|
Consolidated
|
45,191
|
43,458
|
(1)
Total assets are after intersegment eliminations and therefore reflect
third-party assets only.
34
Q2
2018 Financial Information
35
Q2
2018 Financial Information
—
Supplemental Reconciliations and Definitions
The following reconciliations and definitions include measures
which ABB uses to supplement its Interim Consolidated Financial Information
(unaudited) which is prepared in accordance with United States generally
accepted accounting principles (U.S. GAAP). Certain of these financial measures
are, or may be, considered non-GAAP financial measures as defined in the rules
of the U.S. Securities and Exchange Commission (SEC).
While ABB’s management believes that the non-GAAP financial
measures herein are useful in evaluating ABB’s operating results, this
information should be considered as supplemental in nature and not as a
substitute for the related financial information prepared in accordance with U.S.
GAAP. Therefore these measures should not be viewed in isolation but considered
together with the Interim Consolidated Financial Information (unaudited)
prepared in accordance with U.S. GAAP as of and for the six and three months
ended June 30, 2018.
On January 1, 2018, the Company adopted a new accounting standard,
Revenue from contracts with customers, and consistent with the method of
adoption elected, comparative information has not been restated and continues
to be reported under the accounting standards previously in effect for those
periods (see Note 2 to the Interim Consolidated Financial Information).
Comparable growth rates
Growth rates for certain key figures may be presented and
discussed on a “comparable” basis. The comparable growth rate measures growth
on a constant currency basis. Since we are a global company, the comparability
of our operating results reported in U.S. dollars is affected by foreign
currency exchange rate fluctuations. We calculate the impacts from foreign
currency fluctuations by translating the current-year periods’ reported key
figures into U.S. dollar amounts using the exchange rates in effect for the
comparable periods in the previous year.
Comparable growth rates are also adjusted for changes in our
business portfolio. Adjustments to our business portfolio occur due to acquisitions,
divestments, or by exiting specific business activities or customer markets.
The adjustment for portfolio changes is calculated as follows: where the
results of any business acquired or divested have not been consolidated and
reported for the entire duration of both the current and comparable periods,
the reported key figures of such business are adjusted to exclude the relevant
key figures of any corresponding quarters which are not comparable when
computing the comparable growth rate. Certain portfolio changes which do not
qualify as divestments under U.S. GAAP have been treated in a similar manner to
divestments. Changes in our portfolio where we have exited certain business
activities or customer markets are adjusted as if the relevant business was
divested in the period when the decision to cease business activities was
taken. We do not adjust for portfolio changes where the relevant business has
annualized revenues of less than $50 million.
The following tables provide reconciliations of reported growth
rates of certain key figures to their respective comparable growth rate.
Divisional comparable growth rate reconciliation
|
|
Q2 2018 compared to Q2 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Power Grids
|
6%
|
-1%
|
0%
|
5%
|
|
-6%
|
-2%
|
0%
|
-8%
|
|
Electrification Products
|
9%
|
-3%
|
0%
|
6%
|
|
7%
|
-3%
|
0%
|
4%
|
|
Industrial Automation
|
34%
|
-4%
|
-15%
|
15%
|
|
17%
|
-4%
|
-13%
|
0%
|
|
Robotics and Motion
|
15%
|
-4%
|
0%
|
11%
|
|
11%
|
-3%
|
0%
|
8%
|
|
ABB Group
|
14%
|
-3%
|
-3%
|
8%
|
|
5%
|
-2%
|
-2%
|
1%
|
|
|
H1 2018 compared to H1 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Power Grids
|
6%
|
-3%
|
0%
|
3%
|
|
-2%
|
-4%
|
0%
|
-6%
|
|
Electrification Products
|
9%
|
-5%
|
0%
|
4%
|
|
8%
|
-5%
|
0%
|
3%
|
|
Industrial Automation
|
30%
|
-7%
|
-14%
|
9%
|
|
20%
|
-6%
|
-14%
|
0%
|
|
Robotics and Motion
|
16%
|
-5%
|
0%
|
11%
|
|
13%
|
-5%
|
0%
|
8%
|
|
ABB Group
|
15%
|
-5%
|
-3%
|
7%
|
|
7%
|
-4%
|
-2%
|
1%
|
36
Q2
2018 Financial Information
Regional comparable growth rate reconciliation
|
|
Q2 2018 compared to Q2 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Region
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Europe
|
22%
|
-6%
|
-6%
|
10%
|
|
9%
|
-5%
|
-4%
|
0%
|
|
The Americas
|
7%
|
1%
|
-1%
|
7%
|
|
3%
|
1%
|
-1%
|
3%
|
|
Asia, Middle East and Africa
|
11%
|
-3%
|
-1%
|
7%
|
|
3%
|
-3%
|
-1%
|
-1%
|
|
ABB Group
|
14%
|
-3%
|
-3%
|
8%
|
|
5%
|
-2%
|
-2%
|
1%
|
|
|
H1 2018 compared to H1 2017
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Region
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Europe
|
18%
|
-10%
|
-5%
|
3%
|
|
13%
|
-9%
|
-5%
|
-1%
|
|
The Americas
|
4%
|
0%
|
-1%
|
3%
|
|
3%
|
0%
|
-1%
|
2%
|
|
Asia, Middle East and Africa
|
21%
|
-6%
|
-2%
|
13%
|
|
6%
|
-5%
|
0%
|
1%
|
|
ABB Group
|
15%
|
-5%
|
-3%
|
7%
|
|
7%
|
-4%
|
-2%
|
1%
|
Order backlog growth rate reconciliation
|
|
June 30, 2018 compared to June 30, 2017
|
|
|
|
US$
|
Foreign
|
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
|
Power Grids
|
-6%
|
2%
|
0%
|
-4%
|
|
|
Electrification Products
|
38%
|
-33%
|
0%
|
5%
|
|
|
Industrial Automation
|
-1%
|
0%
|
-3%
|
-4%
|
|
|
Robotics and Motion
|
5%
|
1%
|
0%
|
6%
|
|
|
ABB Group
|
3%
|
1%
|
-5%
|
-1%
|
|
Other growth rate reconciliations
|
|
Q2 2018 compared to Q2 2017
|
|
H1 2018 compared to H1 2017
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Large orders
|
3%
|
-1%
|
0%
|
2%
|
|
16%
|
-6%
|
-3%
|
7%
|
|
Base orders
|
14%
|
-2%
|
-3%
|
9%
|
|
15%
|
-5%
|
-3%
|
7%
|
|
Service orders
|
5%
|
-3%
|
0%
|
2%
|
|
10%
|
-5%
|
0%
|
5%
|
|
Service revenues
|
16%
|
-3%
|
0%
|
13%
|
|
16%
|
-6%
|
1%
|
11%
|
37
Q2
2018 Financial Information
Division realignment
Effective January 1, 2018, management responsibility and oversight
of certain remaining engineering, procurement and construction (EPC)
businesses, previously included in the Power Grids, Industrial Automation and
Robotics and Motion operating segments, were transferred to a new non-core
operating business within Corporate and Other. See Note 15 to the Interim
Consolidated Financial Information (unaudited) for further details on the
realignment.
The following information presents a reconciliation
of growth rates of orders and revenues for 2017 compared with 2016 to reflect
these organizational changes:
Divisional comparable growth rate reconciliation
|
|
Q2 2017 compared to Q2 2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Power Grids
|
-6%
|
2%
|
0%
|
-4%
|
|
-1%
|
2%
|
0%
|
1%
|
|
Electrification Products
|
-4%
|
3%
|
0%
|
-1%
|
|
-1%
|
3%
|
0%
|
2%
|
|
Industrial Automation
|
6%
|
2%
|
0%
|
8%
|
|
-9%
|
2%
|
0%
|
-7%
|
|
Robotics and Motion
|
12%
|
3%
|
0%
|
15%
|
|
3%
|
2%
|
0%
|
5%
|
|
ABB Group
|
0%
|
3%
|
0%
|
3%
|
|
-3%
|
3%
|
1%
|
1%
|
|
|
H1 2017 compared to H1 2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Power Grids
|
-13%
|
2%
|
0%
|
-11%
|
|
1%
|
2%
|
0%
|
3%
|
|
Electrification Products
|
-2%
|
3%
|
0%
|
1%
|
|
0%
|
2%
|
0%
|
2%
|
|
Industrial Automation
|
-2%
|
2%
|
0%
|
0%
|
|
-8%
|
2%
|
0%
|
-6%
|
|
Robotics and Motion
|
8%
|
3%
|
0%
|
11%
|
|
3%
|
2%
|
0%
|
5%
|
|
ABB Group
|
-5%
|
3%
|
2%
|
0%
|
|
-2%
|
3%
|
1%
|
2%
|
38
Q2
2018 Financial Information
Operational EBITA margin
Definition
Operational
EBITA margin
Operational EBITA margin is Operational EBITA as a percentage of
Operational revenues.
Operational EBITA
Operational
earnings before interest, taxes and acquisition-related amortization
(Operational EBITA) represents Income from operations excluding:
·
acquisition-related amortization (as defined below),
·
restructuring and restructuring-related expenses,
·
changes in the amount recorded for retained obligations of
divested businesses occurring after the divestment date (changes in retained
obligations of divested businesses),
·
changes in estimates relating to opening balance sheets of
acquired businesses (changes in pre-acquisition estimates)
,
·
gains and losses from sale of businesses,
·
acquisition-related expenses and integration costs,
·
certain other non-operational items, as well as
·
foreign exchange/commodity timing differences in income from
operations consisting of: (a) unrealized gains and losses on derivatives
(foreign exchange, commodities, embedded derivatives), (b) realized gains
and losses on derivatives where the underlying hedged transaction has not yet
been realized, and (c) unrealized foreign exchange movements on
receivables/payables (and related assets/liabilities).
Operational EBITA is our measure of segment profit but is also
used by management to evaluate the profitability of the Company as a whole.
Acquisition-related
amortization
Amortization expense on intangibles arising upon acquisitions.
Operational
revenues
The Company presents Operational revenues solely for the purpose
of allowing the computation of Operational EBITA margin. Operational revenues
are total revenues adjusted for foreign exchange/commodity timing differences
in total revenues of: (i) unrealized gains and losses on derivatives,
(ii) realized gains and losses on derivatives where the underlying hedged
transaction has not yet been realized, and (iii) unrealized foreign exchange
movements on receivables (and related assets). Operational revenues are not
intended to be an alternative measure to Total Revenues, which represent our
revenues measured in accordance with U.S. GAAP.
Reconciliation
The following tables provide reconciliations of consolidated
Operational EBITA to Net Income and Operational EBITA Margin by division.
Reconciliation of consolidated Operational EBITA to Net Income
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions)
|
2018
|
2017
|
2018
|
2017
|
|
Operational EBITA
|
2,227
|
1,985
|
1,167
|
1,042
|
|
Acquisition-related
amortization
|
(145)
|
(115)
|
(72)
|
(56)
|
|
Restructuring and
restructuring-related expenses
(1)
|
(17)
|
(132)
|
(6)
|
(84)
|
|
Changes in retained
obligations of divested businesses
|
–
|
(94)
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
(1)
|
(2)
|
(1)
|
(2)
|
|
Gains and losses from sale of
businesses
|
(5)
|
331
|
1
|
(7)
|
|
Acquisition-related expenses
and integration costs
|
(77)
|
(14)
|
(51)
|
(8)
|
|
Certain other non-operational
items
|
(59)
|
(150)
|
(30)
|
(48)
|
|
Foreign exchange/commodity
timing differences in income from operations:
|
|
|
|
|
|
Unrealized gains and losses on
derivatives (foreign exchange,
|
|
|
|
|
|
commodities, embedded
derivatives)
|
(66)
|
169
|
(46)
|
93
|
|
Realized gains and losses on
derivatives where the underlying hedged
|
|
|
|
|
|
transaction has not yet been
realized
|
(12)
|
18
|
(19)
|
8
|
|
Unrealized foreign exchange
movements on receivables/payables (and
|
|
|
|
|
|
related assets/liabilities)
|
12
|
(96)
|
19
|
(61)
|
|
Income from operations
|
1,857
|
1,900
|
962
|
877
|
|
Interest and dividend income
|
51
|
35
|
28
|
18
|
|
Interest and other finance
expense
|
(153)
|
(153)
|
(45)
|
(74)
|
|
Non-operational pension (cost)
credit
|
58
|
14
|
28
|
7
|
|
Income from continuing
operations before taxes
|
1,813
|
1,796
|
973
|
828
|
|
Provision for taxes
|
(499)
|
(456)
|
(264)
|
(248)
|
|
Income from continuing
operations, net of tax
|
1,314
|
1,340
|
709
|
580
|
|
Income (loss) from
discontinued operations, net of tax
|
3
|
(1)
|
8
|
1
|
|
Net income
|
1,317
|
1,339
|
717
|
581
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
39
Q2
2018 Financial Information
Reconciliation
of Operational EBITA margin by division
|
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
Corporate
and
|
|
|
|
|
|
|
|
Other
and
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
Intersegment
|
|
|
($ in millions, unless
otherwise indicated)
|
Grids
|
Products
|
Automation
|
and
Motion
|
elimination
|
Consolidated
|
|
Total revenues
|
4,739
|
5,167
|
3,698
|
4,525
|
(613)
|
17,516
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in total
revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
64
|
27
|
7
|
23
|
6
|
127
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
16
|
–
|
6
|
(1)
|
(5)
|
16
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables (and related
assets)
|
(24)
|
(13)
|
(7)
|
(11)
|
(1)
|
(56)
|
|
Operational revenues
|
4,795
|
5,181
|
3,704
|
4,536
|
(613)
|
17,603
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
369
|
661
|
460
|
666
|
(299)
|
1,857
|
|
Acquisition-related
amortization
|
20
|
39
|
44
|
32
|
10
|
145
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
|
11
|
3
|
2
|
2
|
(1)
|
17
|
|
Changes in retained
obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
–
|
1
|
–
|
–
|
–
|
1
|
|
Gains and losses from sale of
businesses
|
–
|
2
|
3
|
–
|
–
|
5
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
integration costs
|
4
|
68
|
2
|
–
|
3
|
77
|
|
Certain other non-operational
items
|
27
|
15
|
–
|
5
|
12
|
59
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in income from
operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on
derivatives
|
|
|
|
|
|
|
|
(foreign exchange,
commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
39
|
22
|
1
|
4
|
–
|
66
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
10
|
1
|
7
|
–
|
(6)
|
12
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related
assets/liabilities)
|
(16)
|
(5)
|
3
|
3
|
3
|
(12)
|
|
Operational EBITA
|
464
|
807
|
522
|
712
|
(278)
|
2,227
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
9.7%
|
15.6%
|
14.1%
|
15.7%
|
n.a.
|
12.7%
|
40
Q2
2018 Financial Information
|
|
Six months ended June 30, 2017
|
|
|
|
|
|
|
Corporate
and
|
|
|
|
|
|
|
|
Other
and
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
Intersegment
|
|
|
($ in millions, unless
otherwise indicated)
|
Grids
|
Products
|
Automation
|
and
Motion
|
elimination
|
Consolidated
|
|
Total revenues
|
4,858
|
4,802
|
3,088
|
4,002
|
(442)
|
16,308
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in total
revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
(79)
|
(42)
|
(27)
|
(19)
|
(12)
|
(179)
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
(13)
|
–
|
(2)
|
1
|
1
|
(13)
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables (and related
assets)
|
51
|
15
|
14
|
8
|
(1)
|
87
|
|
Operational revenues
|
4,817
|
4,775
|
3,073
|
3,992
|
(454)
|
16,203
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
437
|
641
|
420
|
543
|
(141)
|
1,900
|
|
Acquisition-related
amortization
|
17
|
52
|
4
|
34
|
8
|
115
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
21
|
13
|
9
|
27
|
62
|
132
|
|
Changes in retained
obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
94
|
94
|
|
Changes in pre-acquisition
estimates
|
–
|
2
|
–
|
–
|
–
|
2
|
|
Gains and losses from sale of
businesses
|
–
|
–
|
(2)
|
–
|
(329)
|
(331)
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
integration costs
|
–
|
3
|
7
|
–
|
4
|
14
|
|
Certain other non-operational
items
|
52
|
13
|
–
|
–
|
85
|
150
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in income from
operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on
derivatives
|
|
|
|
|
|
|
|
(foreign exchange,
commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
(92)
|
(39)
|
(36)
|
(17)
|
15
|
(169)
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
(13)
|
–
|
(2)
|
–
|
(3)
|
(18)
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related
assets/liabilities)
|
62
|
10
|
17
|
9
|
(2)
|
96
|
|
Operational EBITA
|
484
|
695
|
417
|
596
|
-207
|
1,985
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
10.0%
|
14.6%
|
13.6%
|
14.9%
|
n.a.
|
12.3%
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
41
Q2
2018 Financial Information
|
|
Three months ended June 30, 2018
|
|
|
|
|
|
|
Corporate
and
|
|
|
|
|
|
|
|
Other
and
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
Intersegment
|
|
|
($ in millions, unless
otherwise indicated)
|
Grids
|
Products
|
Automation
|
and
Motion
|
elimination
|
Consolidated
|
|
Total revenues
|
2,354
|
2,673
|
1,839
|
2,316
|
(293)
|
8,889
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in total
revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
47
|
31
|
11
|
19
|
–
|
108
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
12
|
–
|
3
|
(1)
|
6
|
20
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables (and related
assets)
|
(17)
|
(11)
|
(7)
|
(8)
|
(10)
|
(53)
|
|
Operational revenues
|
2,396
|
2,693
|
1,846
|
2,326
|
(297)
|
8,964
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
176
|
343
|
223
|
353
|
(133)
|
962
|
|
Acquisition-related
amortization
|
10
|
19
|
21
|
16
|
6
|
72
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
|
7
|
(1)
|
–
|
(2)
|
2
|
6
|
|
Changes in retained
obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition
estimates
|
–
|
1
|
–
|
–
|
–
|
1
|
|
Gains and losses from sale of
businesses
|
–
|
2
|
–
|
–
|
(3)
|
(1)
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
integration costs
|
3
|
44
|
1
|
–
|
3
|
51
|
|
Certain other non-operational
items
|
12
|
10
|
–
|
4
|
4
|
30
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in income from
operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on
derivatives
|
|
|
|
|
|
|
|
(foreign exchange,
commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
30
|
16
|
9
|
2
|
(11)
|
46
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
8
|
1
|
5
|
–
|
5
|
19
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related
assets/liabilities)
|
(14)
|
(5)
|
1
|
1
|
(2)
|
(19)
|
|
Operational EBITA
|
232
|
430
|
260
|
374
|
(129)
|
1,167
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
9.7%
|
16.0%
|
14.1%
|
16.1%
|
n.a.
|
13.0%
|
42
Q2
2018 Financial Information
|
|
Three months ended June 30, 2017
|
|
|
|
|
|
|
Corporate
and
|
|
|
|
|
|
|
|
Other
and
|
|
|
|
Power
|
Electrification
|
Industrial
|
Robotics
|
Intersegment
|
|
|
($ in millions, unless
otherwise indicated)
|
Grids
|
Products
|
Automation
|
and
Motion
|
elimination
|
Consolidated
|
|
Total revenues
|
2,507
|
2,509
|
1,575
|
2,082
|
(219)
|
8,454
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in total
revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
(29)
|
(19)
|
(9)
|
(1)
|
6
|
(52)
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
(8)
|
–
|
(2)
|
1
|
(1)
|
(10)
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables (and related
assets)
|
24
|
3
|
9
|
2
|
(2)
|
36
|
|
Operational revenues
|
2,494
|
2,493
|
1,573
|
2,084
|
(216)
|
8,428
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
226
|
334
|
209
|
282
|
(174)
|
877
|
|
Acquisition-related
amortization
|
9
|
26
|
2
|
16
|
3
|
56
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
18
|
13
|
5
|
17
|
31
|
84
|
|
Changes in pre-acquisition
estimates
|
–
|
2
|
–
|
–
|
–
|
2
|
|
Gains and losses from sale of
businesses
|
–
|
–
|
(2)
|
–
|
9
|
7
|
|
Acquisition-related expenses
and
|
|
|
|
|
|
|
|
integration costs
|
1
|
3
|
4
|
–
|
–
|
8
|
|
Certain other non-operational
items
|
24
|
9
|
–
|
–
|
15
|
48
|
|
Foreign exchange/commodity
timing
|
|
|
|
|
|
|
|
differences in income from
operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on
derivatives
|
|
|
|
|
|
|
|
(foreign exchange,
commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
(51)
|
(23)
|
(19)
|
(7)
|
7
|
(93)
|
|
Realized gains and losses on
derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been
realized
|
(10)
|
–
|
–
|
–
|
2
|
(8)
|
|
Unrealized foreign exchange
movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related
assets/liabilities)
|
36
|
9
|
12
|
6
|
(2)
|
61
|
|
Operational EBITA
|
253
|
373
|
211
|
314
|
(109)
|
1,042
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin
(%)
|
10.1%
|
15.0%
|
13.4%
|
15.1%
|
n.a.
|
12.4%
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
43
Q2
2018 Financial Information
Operational EPS
Definition
Operational
EPS
Operational EPS is calculated as Operational net income divided by
the weighted-average number of shares outstanding used in determining basic
earnings per share.
Operational
net income
Operational net income is calculated as Net income attributable to
ABB adjusted for the following:
(i)
acquisition-related amortization,
(ii)
restructuring
and restructuring-related expenses,
(iii)
non-operational
pension cost (credit),
(iv)
changes
in retained obligations of divested businesses,
(v)
changes
in pre-acquisition estimates,
(vi)
gains
and losses from sale of businesses,
(vii)
acquisition-related
expenses and integration costs,
(viii)
certain other
non-operational items,
(ix)
foreign
exchange/commodity timing differences in income from operations consisting of:
(a) unrealized gains and losses on derivatives (foreign exchange,
commodities, embedded derivatives), (b) realized gains and losses on
derivatives where the underlying hedged transaction has not yet been realized,
and (c) unrealized foreign exchange movements on receivables/payables (and
related assets/liabilities), and
(x)
The
amount of income tax on operational adjustments either estimated using the Adjusted
Group effective tax rate or in certain specific cases, computed using the
actual income tax effects of the relevant item in (i) to (viii) above.
Acquisition-related
amortization
Amortization expense on intangibles arising upon acquisitions.
Adjusted Group
effective tax rate
The Adjusted Group effective tax rate is computed by dividing an
adjusted provision for taxes by an adjusted income from continuing operations
before taxes. Certain amounts recorded in income from continuing operations
before taxes and the related provision for taxes (primarily gains and losses
from sale of businesses) are excluded from the computation.
Constant
currency Operational EPS adjustment and Operational EPS growth rate (constant
currency)
In connection with ABB’s 2015-2020 targets, Operational EPS growth
is measured assuming 2014 as the base year and uses constant exchange rates. We
compute the constant currency operational net income for all periods using the
relevant monthly exchange rates which were in effect during 2014 and any
difference in computed Operational net income is divided by the relevant
weighted-average number of shares outstanding to identify the constant currency
Operational EPS adjustment.
Reconciliation
|
|
Six months ended June 30,
|
|
|
($ in millions, except per
share data in $)
|
2018
|
2017
|
Growth
(3)
|
|
Net income (attributable
to ABB)
|
1,253
|
1,249
|
|
|
Operational adjustments:
|
|
|
|
|
Acquisition-related
amortization
|
145
|
115
|
|
|
Restructuring and
restructuring-related expenses
(1)
|
17
|
132
|
|
|
Non-operational pension cost
(credit)
|
(58)
|
(14)
|
|
|
Changes in retained
obligations of divested businesses
|
–
|
94
|
|
|
Changes in pre-acquisition
estimates
|
1
|
2
|
|
|
Gains and losses from sale of
businesses
|
5
|
(331)
|
|
|
Acquisition-related expenses
and integration costs
|
77
|
14
|
|
|
Certain other non-operational
items
|
59
|
150
|
|
|
FX/commodity timing
differences in income from operations
|
66
|
(91)
|
|
|
Tax on operational adjustments
(2)
|
(86)
|
(76)
|
|
|
Operational net income
|
1,479
|
1,244
|
19%
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding (in millions)
|
2,132
|
2,140
|
|
|
|
|
|
|
|
Operational EPS
|
0.69
|
0.58
|
19%
|
|
Constant currency Operational
EPS adjustment
|
0.09
|
0.09
|
|
|
Operational EPS
(constant currency basis - 2014 exchange rates)
|
0.78
|
0.67
|
16%
|
44
Q2
2018 Financial Information
|
|
Three months ended June 30,
|
|
|
($ in millions, except per
share data in $)
|
2018
|
2017
|
Growth
(3)
|
|
Net income (attributable
to ABB)
|
681
|
525
|
|
|
Operational adjustments:
|
|
|
|
|
Acquisition-related
amortization
|
72
|
56
|
|
|
Restructuring and
restructuring-related expenses
(1)
|
6
|
84
|
|
|
Non-operational pension cost
(credit)
|
(29)
|
(7)
|
|
|
Changes in retained
obligations of divested businesses
|
–
|
–
|
|
|
Changes in pre-acquisition
estimates
|
1
|
2
|
|
|
Gains and losses from sale of
businesses
|
(1)
|
7
|
|
|
Acquisition-related expenses
and integration costs
|
51
|
8
|
|
|
Certain other non-operational
items
|
30
|
48
|
|
|
FX/commodity timing
differences in income from operations
|
46
|
(40)
|
|
|
Tax on operational adjustments
(2)
|
(47)
|
(46)
|
|
|
Operational net income
|
810
|
637
|
27%
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding (in millions)
|
2,130
|
2,140
|
|
|
|
|
|
|
|
Operational EPS
|
0.38
|
0.30
|
28%
|
|
Constant currency Operational
EPS adjustment
|
0.05
|
0.04
|
|
|
Operational EPS
(constant currency basis - 2014 exchange rates)
|
0.43
|
0.34
|
27%
|
(1)
Amounts in 2017 also include the incremental implementation costs in relation
to the White Collar Productivity program.
(2)
Tax amount is computed by applying the Adjusted Group effective tax rate to the
operational adjustments, except for gains and losses from sale of businesses
for which the actual provision for taxes resulting from the gain or loss has
been computed.
(3)
Growth is computed using unrounded EPS amounts.
Net debt
Definition
Net debt
Net debt is defined as Total debt less Cash and marketable
securities.
Total debt
Total debt is the sum of Short-term debt and current maturities of
long-term debt, and Long-term debt.
Cash and
marketable securities
Cash and marketable securities is the sum of Cash and equivalents,
and Marketable securities and short-term investments.
Reconciliation
|
($ in millions)
|
June
30, 2018
|
December
31, 2017
|
|
Short-term debt and current
maturities of long-term debt
|
3,786
|
738
|
|
Long-term debt
|
6,661
|
6,709
|
|
Total debt
|
10,447
|
7,447
|
|
Cash and equivalents
|
3,283
|
4,526
|
|
Marketable securities and
short-term investments
|
794
|
1,102
|
|
Cash and marketable
securities
|
4,077
|
5,628
|
|
Net debt
|
6,370
|
1,819
|
45
Q2
2018 Financial Information
Net working capital as a percentage of revenues
Definition
Net working
capital as a percentage of revenues
Net working capital as a percentage of revenues is calculated as
Net working capital divided by Adjusted revenues for the trailing twelve
months.
Net working
capital
Net working capital is the sum of (i) receivables, net, (ii)
contract assets, (iii) inventories, net, and (iv) prepaid expenses; less (v)
accounts payable, trade, (v) contract liabilities, and (vi) other current
liabilities (excluding primarily: (a) income taxes payable, (b) current
derivative liabilities, (c) pension and other employee benefits, and (d)
payables under the share buyback program); and including the amounts related to
these accounts which have been presented as either assets or liabilities held
for sale.
Adjusted
revenues for the trailing twelve months
Adjusted revenues for the trailing twelve months includes total
revenues recorded by ABB in the twelve months preceding the relevant balance
sheet date adjusted to eliminate revenues of divested businesses and the
estimated impact of annualizing revenues of certain acquisitions which were
completed in the same trailing twelve-month period.
Reconciliation
|
($ in millions, unless
otherwise indicated)
|
June
30, 2018
|
June
30, 2017
|
|
Net working capital:
|
|
|
|
Receivables, net
|
9,001
|
7,995
|
|
Contract assets
|
2,281
|
2,310
|
|
Inventories, net
|
5,934
|
5,135
|
|
Prepaid expenses
|
315
|
268
|
|
Accounts payable, trade
|
(5,933)
|
(4,888)
|
|
Contract liabilities
|
(2,757)
|
(3,033)
|
|
Other current liabilities
(1)
|
(3,501)
|
(3,088)
|
|
Net working capital
|
5,340
|
4,699
|
|
Total revenues for the three
months ended:
|
|
|
|
June 30, 2018 / 2017
|
8,889
|
8,454
|
|
March 31, 2018 / 2017
|
8,627
|
7,854
|
|
December 31, 2017 / 2016
|
9,280
|
8,993
|
|
September 30, 2017 / 2016
|
8,724
|
8,255
|
|
Adjustment to
annualize/eliminate revenues of certain acquisitions/divestments
|
2,586
|
(228)
|
|
Adjusted revenues for
the trailing twelve months
|
38,106
|
33,328
|
|
Net working capital as a
percentage of revenues (%)
|
14.0%
|
14.1%
|
(1) Amounts
exclude $575 million and $514 million at June 30, 2018 and 2017,
respectively, related primarily to (a) income taxes payable, (b) current
derivative liabilities, and (c) pension and other employee benefits.
46
Q2
2018 Financial Information
Free cash flow conversion to net income
Definition
Free cash flow
conversion to net income
Free cash flow conversion to net income is calculated as Free cash
flow divided by Net income attributable to ABB.
Free cash flow
(FCF)
Free cash flow is calculated as net cash provided by operating
activities adjusted for: (i) purchases of property, plant and equipment and
intangible assets, (ii) proceeds from sales of property, plant and equipment,
and (iii) changes in financing and other non-current receivables, net (included
in other investing activities).
Free cash flow
for the trailing twelve months
Free cash flow for the trailing twelve months includes free cash
flow recorded by ABB in the twelve months preceding the relevant balance sheet
date.
Net income for
the trailing twelve months
Net income for the trailing twelve months includes net income
recorded by ABB in the twelve months preceding the relevant balance sheet date.
Free cash flow conversion to net income
|
|
Twelve months to
|
|
($ in millions, unless
otherwise indicated)
|
June
30, 2018
|
December
31, 2017
|
|
Net cash provided by
operating activities
|
3,315
|
3,799
|
|
Adjusted for the effects of:
|
|
|
|
Purchases of property, plant
and equipment and intangible assets
|
(967)
|
(949)
|
|
Proceeds from sale of
property, plant and equipment
|
81
|
66
|
|
Changes in financing
receivables and other non-current receivables
|
3
|
10
|
|
Free cash flow
|
2,432
|
2,926
|
|
Net income attributable
to ABB
|
2,217
|
2,213
|
|
Free cash flow
conversion to net income
|
110%
|
132%
|
Reconciliation of the trailing
twelve months to June 30, 2018
|
|
|
Purchases
of
|
|
Changes
in
|
|
|
|
Net
cash
|
property,
plant
|
Proceeds
|
financing
|
|
|
|
provided
by
|
and
equipment
|
from
sale of
|
receivables
and
|
Net
income
|
|
|
operating
|
and
intangible
|
property,
plant
|
other
non-current
|
attributable
|
|
($ in millions)
|
activities
|
assets
|
and
equipment
|
receivables
|
to ABB
|
|
Q3 2017
|
954
|
(203)
|
20
|
–
|
571
|
|
Q4 2017
|
1,869
|
(329)
|
16
|
3
|
393
|
|
Q1 2018
|
(518)
|
(238)
|
26
|
(1)
|
572
|
|
Q2 2018
|
1,010
|
(197)
|
19
|
1
|
681
|
|
Total for the trailing
twelve months
to June 30, 2018
|
3,315
|
(967)
|
81
|
3
|
2,217
|
47
Q2
2018 Financial Information
Finance net
Definition
Finance net is calculated as Interest and dividend income less
Interest and other finance expense.
Reconciliation
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions)
|
2018
|
2017
|
2018
|
2017
|
|
Interest and dividend income
|
51
|
35
|
28
|
18
|
|
Interest and other finance
expense
|
(153)
|
(153)
|
(45)
|
(74)
|
|
Finance net
|
(102)
|
(118)
|
(17)
|
(56)
|
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by
Total revenues.
Reconciliation
|
|
Six months ended June 30,
|
Three months ended June 30,
|
|
($ in millions, unless
otherwise indicated)
|
2018
|
2017
|
2018
|
2017
|
|
Orders received
|
19,255
|
16,752
|
9,483
|
8,349
|
|
Total revenues
|
17,516
|
16,308
|
8,889
|
8,454
|
|
Book-to-bill ratio
|
1.10
|
1.03
|
1.07
|
0.99
|
48
Q2
2018 Financial Information
—
ABB
Ltd
Corporate Communications
P.O.
Box
8131
805
0
Zurich
Switzerland
Tel:
+41
(0)43
317
71
11
Fax:
+41
(0)43
317
79
58
www.abb.com
49
Q2
2018 Financial Information
April —
June 2018 — Q2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABB Ltd announces that the following members of the Executive Committee
or Board of Directors of ABB have purchased, sold or been granted ABB’s
registered shares, call options and warrant appreciation rights (“WARs”), in
the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date
|
|
Description
|
|
Received *
|
|
Purchased
|
|
Sold
|
|
Price
|
Peter Voser
|
|
May 15, 2018
|
|
Shares
|
|
25,133
|
|
|
|
|
|
CHF
|
22.72
|
Matti Alahuhta
|
|
May 15, 2018
|
|
Shares
|
|
2,694
|
|
|
|
|
|
CHF
|
22.72
|
David Constable
|
|
May 15, 2018
|
|
Shares
|
|
2,947
|
|
|
|
|
|
CHF
|
22.72
|
Frederico Curado
|
|
May 15, 2018
|
|
Shares
|
|
2,495
|
|
|
|
|
|
CHF
|
22.72
|
Lars Förberg
|
|
May 15, 2018
|
|
Shares
|
|
6,690
|
|
|
|
|
|
CHF
|
22.72
|
David Meline
|
|
May 15, 2018
|
|
Shares
|
|
2,779
|
|
|
|
|
|
CHF
|
22.72
|
Satish Pai
|
|
May 15, 2018
|
|
Shares
|
|
2,574
|
|
|
|
|
|
CHF
|
22.72
|
Jacob Wallenberg
|
|
May 15, 2018
|
|
Shares
|
|
3,789
|
|
|
|
|
|
CHF
|
22.72
|
Ulrich Spiesshofer
|
|
June 05, 2018
|
|
Shares
|
|
99,324
|
|
|
|
|
|
CHF
|
22.73
|
Jean-Christophe Deslarzes
|
|
June 05, 2018
|
|
Shares
|
|
29,763
|
|
|
|
|
|
CHF
|
22.73
|
Diane de Saint Victor
|
|
June 05, 2018
|
|
Shares
|
|
35,650
|
|
|
|
|
|
CHF
|
22.73
|
Frank Duggan
|
|
June 05, 2018
|
|
Shares
|
|
38,365
|
|
|
|
|
|
CHF
|
22.73
|
Greg Scheu
|
|
June 05, 2018
|
|
Shares
|
|
26,569
|
|
|
|
|
|
USD
|
23.11
|
Tarak Mehta
|
|
June 05, 2018
|
|
Shares
|
|
24,106
|
|
|
|
|
|
CHF
|
22.73
|
Claudio Facchin
|
|
June 05, 2018
|
|
Shares
|
|
35,434
|
|
|
|
|
|
CHF
|
22.73
|
Peter Terwiesch
|
|
June 05, 2018
|
|
Shares
|
|
29,542
|
|
|
|
|
|
CHF
|
22.73
|
Chunyuan Gu
|
|
June 05, 2018
|
|
Shares
|
|
15,152
|
|
|
|
|
|
CHF
|
22.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Received instruments were delivered as part of the ABB Ltd
Director’s or Executive Committee Member’s compensation
|
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
ABB LTD
|
|
|
|
|
|
|
Date: July 19, 2018.
|
By:
|
|
|
|
Name:
|
Jessica Mitchell
|
|
|
Title:
|
Group Senior Vice President
and
Head of Investor Relations
|
|
|
|
|
|
|
Date: July 19, 2018.
|
By:
|
|
|
|
Name:
|
Richard A. Brown
|
|
|
Title:
|
Group Senior Vice President
and
Chief Counsel Corporate & Finance
|
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