ABB Posts Profit In Q4 On Strong Demand; Sees Margin Growth; Stock Down

(RTTNews) - Swiss engineering company ABB Ltd. Thursday reported a hefty profit in its fourth quarter, compared to last year's loss, driven by strong demand. The company further lifted its dividend and said it plans share buybacks.

Looking ahead, ABB said it expects steady improvement in margin, but supply chain constraints would prevail near-term. ABB shares were losing around 2 percent in the morning trading in Switzerland as well as in pre-market activity on NYSE.

In the first quarter of 2022, ABB anticipates the underlying market activity to remain overall stable sequentially. Revenues tend to be seasonally softer in absolute terms, and Operational EBITA margin to remain broadly stable or to be slightly up, sequentially.

For full year 2022, the company expects a steady margin improvement towards the 2023 Operational EBITA margin target of at least 15 percent, supported by increased efficiency. ABB also projects support from an anticipated positive market momentum and strong order backlog.

In fiscal 2021, operational EBITA margin was 14.2 percent.

At its Capital Markets Day in December, the company had lifted long-term targets.

Bjrn Rosengren, CEO, said, the company looks towards 2022 with confidence.

Rosengren said, "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 percent, in constant currency. This is the total of 3-5 percent organic growth and 1-2 percent acquired growth. We also sharpened our Operational EBITA margin target to be at least 15 percent as from 2023, in any given year."

Further, the Board of Directors proposed an ordinary dividend of 0.82 Swiss francs per share, up from 0.80 francs in the previous year. The company also plans to continue share buybacks for full year of 2022, in excess of the PG capital return program.

For the fourth quarter, net income attributable to the company was $2.64 billion, compared to loss of $79 million last year.

Basic earnings per share were $1.34, compared to loss of $0.04 a year ago. Income from continuing operations was $2.70 billion, up from $127 million last year.

Operational EBITA increased 20 percent year-on-year. Despite adverse impacts from supply chain imbalances and some cost inflation, it achieved a 160 basis points improvement of the Operational EBITA margin to 13.1 percent.

Revenues grew 5 percent to $7.57 billion from last year's $7.18 billion. Revenues increased 8 percent on comparable basis.

Revenue growth was stronger than expected, due primarily to higher project deliveries towards the end of the period, despite supply chain disruptions in parts of business.

Orders were $8.26 billion, a growth of 18 percent on a reported basis and 21 percent on a comparable basis, with underlying strength shown across all business areas, regions and most customer segments.

The company said it did not experience any unusual order cancellations, order backlog was $16.6 billion, up 16 percent year-on-year.

In Switzerland, ABB shares were trading at 32.08 francs, down 1.53 percent.

In pre-market activity on the NYSE, the shares were losing around 2.1 percent to trade at $34.83.