Summary of fourth quarter performance in 2021

• The order volume was US $8.3 billion, with a year-on-year increase of 18% and a comparable increase of 21%

• The sales revenue was US $7.6 billion, with a year-on-year increase of 5% and a comparable increase of 8%

• The operating profit was US $2.975 billion, with a profit margin of 39.3%

• The operating EBITDA was US $988 million, with a profit margin of 13.1%

• The basic earnings per share was $1.34, up from $0.04 in the same period last year

• The cash flow from operating activities was USD 1.02 billion and that from continuing operations was USD 1.033 billion

Summary of annual performance in 2021

• The total amount of orders was US $31.9 billion, with a year-on-year increase of 20% and a comparable increase of 17%

• The sales revenue was US $28.9 billion, with a year-on-year increase of 11% and a comparable increase of 8%

• The operating profit was $57.18 and the profit margin was 19.8%

• The operating EBITDA was US $4.122 billion, with a profit margin of 14.2%

• Basic earnings per share was $2.27, down 7%

• The cash flow from operating activities was US $3.33 billion and that from continuing operations was US $3.338 billion

• The proposed dividend of CHF 82.0 per share was higher than that of CHF 80.0 last year

The CEO of ABB said: “we are confident that the group’s cash flow will continue to be strong in 2021. At the same time, we are looking forward to further strengthening the group’s profitability in 2022.”

CEO overview

Luo Biang, CEO of ABB Group: “in the fourth quarter, the market demand increased significantly, and the order volume increased by 18% year-on-year (increased by 21% according to the comparable standard). This increase is reflected in all ABB business divisions, regions and most industry fields. The sales revenue increased by 5% (increased by 8% according to the comparable standard) , higher than expected, mainly due to the increase in project delivery at the end of the year. Some businesses still face the impact of supply chain problems. We expect that supply chain constraints will still prevail in the short term. Importantly, we did not encounter any unusual order cancellations, which pushed our order reserve to a high of $16.6 billion, a year-on-year increase of 16% (an increase of 21% according to comparable standards).
Operating EBITDA increased by 20% year-on-year. Despite the adverse impact of supply chain imbalance and cost growth, we still increased the operating EBITDA margin by 160 basis points to 13.1%. This increase also includes the adverse impact of the kusile project in South Africa last year and the 80 basis points of non core business expenditure.
We maintained a strong cash flow of $1 billion in the fourth quarter and are pleased that our cash flow from continuing operations reached $3.3 billion at the end of 2021, an annual increase of $1.5 billion.
On November 1, we successfully completed the divestiture of the mechanical power transmission business unit (Daoqi), resulting in a Book income of US $2.2 billion, which indicates that we have completed the first step of business portfolio adjustment and continue to strengthen our leading position in the field of electrical and automation. In addition, we have appointed a new head of the turbocharging business unit. Although the business is more likely to be spun off, we will make a final decision at the end of the first quarter. At the same time, we are promoting the independent listing of electric transportation business, with the goal of completing this work in the second quarter of 2022.
Based on confidence in future growth and profitability, we raised our long-term target on the capital market day in December. Our leading position in the field of resource efficiency with our electrical and automation business, combined with the new working mode of vertical operation, improved performance management system and accelerated environmental, social and corporate governance (ESG), is expected to drive the growth of our sales revenue by 4-7% (at fixed exchange rate) in this economic cycle, This includes 3-5% organic growth and 1-2% acquisition growth. We have also raised our operating EBITDA target to at least 15% annually from 2023.
We are more determined to become the industry leader in circular development. By 2030, 80% of ABB products and solutions will be recyclable through the circular solutions we provide to customers and our own operations.
To support our growth goals and leading businesses, we invested in start-up BrainBox AI, which innovatively uses artificial intelligence technology to reduce energy costs and carbon emissions of heating, ventilation and air conditioning (HVAC) systems in commercial buildings. In addition, we have also reached a strategic partnership with start-up sevensense to enhance ABB’s strength in the new field of autonomous mobile robots (AMR) by using artificial intelligence and 3D visual graphics technology.
After this quarter, the electric transport business unit took action to strengthen its position in the U.S. market, increasing the shareholding ratio of incharge energy to 60% and obtaining the controlling stake. Incharge energy tailor-made end-to-end electric vehicle charging infrastructure solutions, including the procurement, installation, operation and maintenance of charging systems, and provides cloud based software services to optimize energy management.
Based on the improvement of performance, strong cash flow and robust balance sheet, the board of Directors proposes to pay a dividend of CHF 0.82 per share, higher than CHF 0.80 in the previous year, which is in line with the long-term goal of continuous increase in dividend per share. At the same time, it still gives priority to a stable balance sheet to support our growth plan. ABB plans to continue share repurchases throughout 2022 and will exceed the capital return from the divestiture of the grid business (PG). “
Prospect
In the first quarter of 2022, abb expects the basic market demand to remain generally stable compared with the previous quarter. In absolute terms, the sales revenue in the first quarter tends to be seasonally weak. ABB expects the operating EBITDA margin to remain roughly stable or increase slightly compared with the previous quarter.
For the whole year of 2022, we expect the profit margin to increase steadily and reach the goal of at least 15% in 2023. We will achieve this goal by fully implementing the vertical operation mode and performance culture in all business units to improve efficiency. In addition, it is expected that good market momentum and strong order reserves will also support us to achieve our goals.