The electrical engineering group ABB closed the past fiscal year well. The margin targets announced for 2023 are within reach.
Orders received at ABB in the final quarter of 2021 were around a fifth higher than the previous year at $8.3 billion.
The electrical engineering group ABB closed the final quarter of 2021 solidly despite bottlenecks in the supply chains. At $8.3 billion, incoming orders were around a fifth up on the previous year, and sales rose by 5 percent to just under $7.6 billion. Reported quarterly earnings per share of $1.34 exceeded analysts’ expectations.
Profits increased significantly, not least thanks to a book gain of $2.2 billion from the sale of the Mechanical Power Transmission Division to $5.7 billion. The transaction, which is described as the first step in focusing on the areas of electrification and automation, is to be followed by others. By the end of March, a decision should be made as to how the Turbocharging division should be separated. For the division, which is led by a new division head, a spin-off to ABB shareholders is the “likely one”, according to the statement.
More attention for the charging station business
The separation of the E-Mobility division, which is to be brought to the SIX Swiss Exchange, is also going according to the script. The fast-growing charging station business is set to receive more attention as an independent entity. ABB wants to continue to control a majority of this division.
Operating cash flow developed particularly well in the reporting period. For the year as a whole, it doubled to $3.33 billion. Sales increased by 11 percent to $28.9 billion, and incoming orders even increased by 20 percent to $31.9 billion. According to the announcement, there have been no unusual order cancellations, which is why ABB is confident that the high order backlog of $16.6 billion by the end of 2021 can be realized. The first quarter of 2022 will be somewhat weaker for seasonal reasons.
Significant margin improvement
However, the operating margin at Ebita level would be stable or slightly higher. For the entire 2022 fiscal year, ABB management expects a steady improvement in the margin. From 2023, the company wants to generate a margin of at least 15 percent. In 2021 it improved from 11.1 to 14.2 percent.
The better profitability makes it possible to propose again a slight dividend increase to the general meeting of March 24th after three years of unchanged distributions. 82 centimes are to be paid out per share. ABB intends to continue buying back its own shares on the market in the future. Proceeds from the sale of the power grid division are $7.8 billion available for share buybacks. By the end of 2021, $3.5 billion worth of shares had been repurchased. Another $4.3 billion buyback program has been running since April 2021, of which $2 billion has already been implemented.