ABB(US:ABBNY)2022-02-24 23:03Financial Performance - ABB generated $13.2 billion in revenues in 2021 from its Electrification Business Area, employing approximately 50,800 people[118]. - The Motion Business Area generated approximately $6.9 billion in revenues in 2021, with around 20,000 employees[131]. - The Process Automation Business Area generated revenues of $6.3 billion in 2021, employing approximately 22,000 people[147]. - The Robotics & Discrete Automation Business Area generated $3.3 billion in revenues in 2021, with approximately 10,600 employees[159]. - In 2021, orders increased by 20% year-on-year, while revenues grew by 11%, resulting in an order backlog of $16.6 billion, up 16% from the previous year[222]. - The company achieved cash flows from operating activities of $3.3 billion in 2021, marking a 78% increase compared to 2020[224]. Research and Development - ABB's annual non-order related research and development spending in 2021 was approximately 4.2% of revenues, totaling around $7 billion since 2016[96]. - Total non-order related research and development expenses were $1.2 billion in 2021, representing 4.2% of revenues[225]. - In 2021, ABB invested $1,219 million in research and development, representing approximately 4.2% of its consolidated revenues[263]. - The company filed over 2,250 patents in 2021, reflecting its commitment to innovation and intellectual property protection[192]. - ABB has approximately 25,000 patent applications and registrations, with about 5,500 pending applications, indicating a strong focus on protecting its technological advancements[192]. - ABB's research and development efforts include collaborations with universities and start-ups to foster new technologies and enhance innovation[266][267]. Capital Expenditures - The Electrification Business Area's capital expenditures for property, plant, and equipment totaled $345 million in 2021, up from $316 million in 2020, with 54% of expenditures in Europe[130]. - Capital expenditures in the Motion Business Area reached $230 million in 2021, compared to $118 million in 2020, with 49% of expenditures in Asia, Middle East, and Africa[144]. - Capital expenditures for the Process Automation Business Area totaled $85 million in 2021, an increase from $75 million in 2020, with 73% of expenditures in Europe[158]. - The Robotics Division's capital expenditures for property, plant, and equipment totaled $96 million in 2021, up from $65 million in 2020, with 75% of expenditures in Europe[166]. - Total capital expenditures for property, plant, and equipment and intangible assets amounted to $820 million in 2021, which was 8% lower than depreciation and amortization[181]. - In 2021, the share of emerging markets capital expenditures was 33%, compared to 22% in 2020, indicating a significant increase in investment focus[183]. Sustainability and Environmental Impact - The company aims to enable a low-carbon society and reduce carbon emissions through its technologies, targeting sectors that account for three-quarters of global energy consumption[195]. - The share of green electricity used by ABB increased from 32% in 2020 to 51% in 2021, while waste sent to landfill decreased from 15.1 thousand tons to 12.6 thousand tons[199]. - ABB aims to support customers in reducing annual CO2 emissions by at least 100 megatons, equivalent to the emissions of 30 million combustion cars[30]. - ABB's new circularity approach will cover at least 80% of its products and solutions, evaluated against a transparent scoring system[200]. - By 2030, ABB aims for at least 80% of supply spend in focus countries to be covered by its Sustainable Supply Base Management program[30]. - ABB's Board of Directors oversees the sustainability strategy and ensures remuneration policies are linked to sustainability targets[198]. Business Strategy and Growth - ABB has transitioned two-thirds of its Divisions, representing about 60% of Group revenues, to a growth mandate, focusing on organic and acquired growth[99]. - The company has increased its focus on discrete industries and transport and infrastructure, aligning its business portfolio to more attractive growth markets[102]. - The ongoing shift towards short-cycle businesses aims to reduce risk and volatility in ABB's earnings[102]. - The growth target has been raised to an annual average revenue growth of 4% to 7%, up from the previous target of 3% to 5%[228]. - The Operational EBITA margin target has been increased to at least 15% starting in 2023[228]. - The company plans to complete five or more bolt-on acquisitions each year as part of its growth strategy[220]. Challenges and Risks - The company reported that supply chain management faced challenges in 2021, including delays in supplier deliveries and product shortages, but implemented measures to mitigate disruptions[190]. - ABB's tax estimates are subject to change based on audits and litigation, which could materially affect tax accruals[251]. - Approximately 74 percent of the cost of sales and selling, general and administrative expenses were reported in currencies other than USD[281]. Employee Engagement and Diversity - ABB's employee engagement score decreased by 1 percentage point to 74%, with the response rate increasing from 73% to 78%[201]. - The number of women in senior management positions increased from 13.5% to 16.3%[201]. - ABB recorded no fatalities in 2021, and the lost time incident frequency rate dropped from 0.16 to 0.14 per 200,000 hours worked[201]. Acquisitions and Divestments - The company acquired ASTI Mobile Robotics Group in 2021, expanding its portfolio of autonomous mobile robot vehicles and solutions[161]. - ABB completed the divestment of its Mechanical Power Transmission Division for cash proceeds of $2,862 million, recognizing a net gain of $2,195 million[272]. - The principal acquisition in 2021 was ASTI Mobile Robotics Group SL, with ABB paying $212 million for this acquisition[270]. - The company is pursuing a dual track process for the exit of the Turbocharging Division and plans to carve out the E-mobility Division for an initial public offering[219]. Currency and Financial Reporting - Approximately 77% of ABB's consolidated revenues in 2021 were reported in currencies other than USD, with 23% in Euro and 17% in Chinese renminbi[280]. - The average exchange rate for EUR to USD in 2021 was 1.18, compared to 1.14 in 2020[279]. - Local currency financial information is translated into USD at applicable exchange rates for inclusion in the Consolidated Financial Statements[282]. - Period-to-period variations in local currency results are measured using a constant foreign exchange rate for all periods under comparison[283]. - Local currency information is considered a significant indicator of business performance but should not be relied upon exclusively over U.S. GAAP financial measures[284].