ABB Ltd (0A6W) Risk Analysis
Risk Overview Q4, 2021
Source: the company's latest filing for the period ended Dec 31, 2021, filed Feb 24, 2022
Risk Change Over Time
No filing history is available.
- Corporate Activity and Growth - Risk 1Our business strategy includes making strategic divestitures. There can be no assurance that any divestitures will provide business benefit.
Our strategy includes divesting certain businesses. The divestiture of an existing business could reduce ourfuture profits and operating cash flows and make our financial results more volatile. We may also retaincertain obligations or grant indemnities in connection with a divestment. We may not find suitable purchasersfor our non-core businesses and may continue to pay operating costs associated with these businesses.Failed attempts to divest non-core businesses may distract management’s attention from other businessactivities, erode employee morale and customers’ confidence, and harm our business. A divestiture couldalso cause a decline in the price of our shares and increased reliance on other elements of our core businessoperations. Whether we realize the anticipated benefits of a divestment, including our divestment in 2020 of80.1 percent of the Power Grids business and the divestment in 2021 of our Mechanical Power Transmissionbusiness, depends on whether we successfully manage the related risks. If we do not successfully managethe risks associated with a divestiture, our business, financial condition, and results of operations could be adversely affected.
Risk Highlights Q4, 2021
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 27
- Economy & Political Environment - Risk 1The uncertainties relating to the United Kingdom’s new relationship with the European Union and itspotential impact on the relationship between Switzerland and the European Union, may have a negative effect on cross-border trade and our business.
The United Kingdom has withdrawn from the European Union and has negotiated the terms of suchdeparture (the UK-EU Trade and Cooperation Agreement or TCA). The TCA is subject to formal approval bythe European Parliament and the Council of the European Union before it comes into effect and has beenapplied provisionally since January 1, 2021. Because the agreement merely sets forth a framework in manyrespects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political andeconomic uncertainty remains and this has had and may continue to have a material effect on cross-bordertrade with the United Kingdom and with the European Union. Lack of clarity about future United Kingdomlaws and regulations, potentially divergent national laws, the possibility of increased regulatory complexities,or future developments in the European Union could depress economic activity, reduce demand for ourproducts and services, restrict our access to capital, and diminish or eliminate barrier-free access betweenthe United Kingdom and other European Union member states or among the European economic areaoverall. Furthermore, the TCA may influence discussions on open trade and political matters betweenSwitzerland and the European Union. Any of these factors could have an adverse effect on our business,financial condition and results of operations.
- Economy & Political Environment - Risk 2Our business is exposed to risks associated with the volatile global economic environment andpolitical conditions.
Adverse changes in economic or political conditions, particularly in locations where our customers oroperations are located, as well as concerns about global trade, global health crises, developments in energyprices, and terrorist activities, could have a material adverse effect on our business, financial condition,results of operations and liquidity and may adversely impact the demand for our products and services.These and other factors may prevent our customers and suppliers from obtaining the financing required topursue their business activities as planned, which may force them to modify, delay or cancel plans topurchase or supply our products or services. In addition, if our customers do not generate sufficient revenue,or fail to timely obtain access to the capital markets, they may not be able to pay, or may delay payment of,the amounts they owe us. Customers with liquidity issues have delayed payments of amounts they owe usand this had lead and may lead to additional bad debt expense for us, which may adversely affect our resultsof operations and cash flows. We are also subject to the risk that the counterparties to our credit agreementsand hedging transactions may go bankrupt if they suffer catastrophic demand on their liquidity that preventsthem from fulfilling their contractual obligations to us.Our business environment is influenced also by numerous other economic or political uncertainties whichmay affect the global economy and the international capital markets. In periods of slow economic growth ordecline, our customers are more likely to buy less of our products and services, and as a result we are morelikely to experience decreased revenues. Our businesses are affected by the level of investments anddemand in the markets that we serve, principally utilities, industry and transport & infrastructure. At varioustimes during the last several years, we also have experienced, and may experience in the future, grossmargin declines in certain businesses, reflecting the effect of factors such as competitive pricing pressures,inventory write-downs, charges associated with the cancellation of planned expansion and increases incomponent and manufacturing costs resulting from higher labor and material costs borne by ourmanufacturers and suppliers that, as a result of competitive pricing pressures or other factors, we are unableto pass on to our customers. Economic downturns also may lead to restructuring actions and associatedexpenses. Uncertainty about future economic conditions makes it difficult for us to forecast operating resultsand to make decisions about future investments.In addition, we are subject to the risks that our business operations in or with certain countries may beadversely affected by trade tariffs, trade or economic sanctions or other restrictions imposed on thesecountries, including the trade tensions between the United States and China in recent years. These couldlead to increased costs for us or for our customers or limit our ability to do business in or with certaincountries. In addition, actual or potential investors that object to certain of these business operations mayadversely affect the price of our shares by disposing or deciding not to purchase our shares. These countriesmay from time to time include countries that are identified by the United States as state sponsors of terrorism.If any countries where or with whom we do business are subject to such sanctions or restrictions, ourbusiness, consolidated operating results, financial condition and the trading price of our shares may beadversely affected. In 2021, our total revenues from business with countries identified by the U.S.government as state sponsors of terrorism represented significantly less than 1 percent of our total revenues.Based on the amount of revenues and other relevant quantitative and qualitative factors, we have determined 6that our business in 2021 with countries identified by the U.S. government as state sponsors of terrorism wasnot material.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.