I
Q4 2021
In the fourth quarter,
demand increased significantly and
orders grew by 18% year-on-year (21% comparable) with
underlying strength shown across all business areas,
regions and most customer segments. Revenue growth of
5% (8% comparable) was stronger than expected, due
primarily to higher project deliveries towards the end of the
period and despite supply chain disruptions in parts of our
business. We expect supply chain constraints to prevail
near-term. Importantly, we did not experience any unusual
order cancellations, which adds comfort to the high level of
order backlog of $16.6 billion, up 16% year-on-year (21%
comparable).
Operational EBITA increased by 20% year-on-year, and
despite adverse impacts from supply chain imbalances and
some cost inflation we achieved a 160bps improvement of
the Operational EBITA margin to 13.1%. This improvement
includes last year’s adverse margin impact of 80bps due to
the charges triggered by the Kusile project in South Africa
as well as non-core items.
At $1.0 billion we maintained a strong cash generation in
the fourth quarter, and I am pleased with us closing 2021
with a total cash flow from operating activities in continuing
operations of $3.3 billion, representing an annual
improvement of $1.5 billion.
We successfully closed the divestment of the Mechanical
Power Transmission (Dodge) division on November 1. This
triggered a book gain of $2.2 billion reported in income from
operations. This marks the completion of the announced first
step to focus the business portfolio on our leading position in
electrification and automation. As part of these actions, we
have appointed a new Head of the Turbocharging division
and while a spin-off looks more likely, we will make a final
decision towards the end of the first quarter. Meanwhile,
efforts to separately list the E-mobility business are moving
ahead and we aim to complete this during the second quarter
2022.
On the back of added confidence for our future growth and
profitability, we lifted our long-term targets at our Capital
Markets Day in December. Our leading position in resource
efficiency through electrification and automation, new ways
of working through the decentralized operating model,
improved performance management system and
acceleration of ESG drivers are expected to drive our
through-the-cycle revenue growth
to 4-7%, in constant currency. This is the total of 3-5%
organic growth and 1-2% acquired growth. We also
sharpened our Operational EBITA margin target to be at
least 15% as from 2023, in any given year.
We firmed up our ambition to drive industry leadership in
circularity. By 2030, the goal is to have 80% of ABB products
and solutions covered by our common approach for circular
customer solutions and circularity in our own operations.
To support our growth ambitions and leading offering, we
invested in start-up company BrainBox AI which pioneers
the use of artificial intelligence to reduce energy costs and
carbon emissions from Heating, Ventilation and Air
Conditioning (HVAC) systems in commercial buildings.
Additionally, we entered into a strategic partnership with
start-up Sevensense, to enhance our new autonomous
mobile robotics (AMR) offering with artificial intelligence and
3D vision mapping technology.
After the close of the quarter, the E-mobility division took
action to strengthen its position on the US market as it
increased its stake to a controlling 60% in InCharge Energy.
InCharge Energy tailors end-to-end EV charging
infrastructure solutions, including the procurement,
installation, operation, and maintenance of charging
systems, and provides cloud-based software services to
optimize energy management.
Considering improving performance, strong cash flow and
robust balance sheet, the Board of Directors proposes an
ordinary dividend of CHF 0.82 per share. Up from CHF 0.80
in the previous year and in line with the long-term ambition
of a rising sustainable dividend per share over time, while
still prioritizing a continued solid balance sheet to support
our growth ambitions. We plan to continue our share
buybacks for full year of 2022, also in excess of the PG
capital return program.
Björn Rosengren
CEO
In the
first quarter of 2022
, ABB anticipates the underlying
market activity to remain overall stable compared with the prior
quarter. Revenues in the first quarter tend to be sequentially
seasonally softer in absolute terms. ABB anticipates the
Operational EBITA margin to remain broadly stable or to be
slightly up, compared with the prior quarter.
In full year 2022
, we expect a steady margin improvement
towards the 2023 target of at least 15%, supported by
increased efficiency as we fully incorporate the decentralized
operating model and performance culture in all our divisions.
Furthermore, we expect support from an anticipated positive
market momentum and our strong order backlog.
CEO summary
Outlook