“We are confident that our unrelenting bold vision, customer focus and business momentum will make 2022 another outstanding year and position TTI with exciting opportunities in the months and years ahead.”
I am pleased to announce that 2021 was an extraordinary year for TTI with outstanding revenue and profit growth.
We delivered sales of US$13.2 billion, an increase of 34.6%. Over the two-year period, we significantly outperformed the market with +72.2% sales growth. Increased strategic investments in new product, manufacturing capacity, geographic expansion, logistics, and our in-field marketing initiatives propelled our industry leading performance.
Every one of our business units in all geographic regions delivered exceptional sales growth in 2021. North America grew 33.7%, Europe grew 41.1% and ROW grew 31.8%. Our Power Equipment business, representing 90.6% of total sales, grew 37.0% to US$12.0 billion. Our Milwaukee business, Ryobi DIY, and Ryobi Outdoor businesses all achieved double-digit growth, significantly outgrowing the market. Our Floorcare and Cleaning business also produced strong sales growth of 14.8% to US$1.2 billion.
Gross margin improved for the 13th consecutive year, from 38.3% in 2020 to 38.8% in 2021. This gross margin improvement is a direct result of the launching of high margin new products, disciplined mix management, exceptional productivity gains, and volume leverage.
Our team has done a masterful job managing through the evolving supply chain landscape. With the help of key long-term suppliers, we have navigated through increased in-transit times and limited transportation availability to keep serving customers at a high level. Additionally, our bold decision to invest in inventory has created a buffer of critical components to keep production lines running smoothly and insulating the business from commodity cost increases.
We are deeply committed to being a global leader in clean tech innovation, environmental sustainability, social responsibility, and ethical corporate governance. Throughout 2021, we continued to invest relentlessly in the development of environmentally responsible cordless products that reduce carbon and noise pollution and are safer for end users, while investing in decarbonizing our manufacturing operations. This year we are pleased to announce that we are committing to reducing our 2030 SCOPE 1 and SCOPE 2 absolute emissions by 60% from our 2021 baseline, not only reducing carbon intensity, but doing so while growing our business.
EBIT increased 37.2% to US$1.2 billion, with the EBIT margin improving by 17 basis points to 9.0%. Net Profit rose 37.2% to US$1.1 billion, with earnings per share increasing 37.1% over 2020 to US60.04 cents. With the investments in inventory to support sales growth and high service levels, the Group maintained a disciplined working capital ratio at 20.9% of sales.
The Board is recommending a final dividend of HK 1 dollar (approximately US12.87 cents) per share. Together, with the interim dividend of HK85.00 cents (approximately US10.94 cents) per share, this will result in a full-year dividend of HK185.00 cents (approximately US23.81 cents) per share, against HK135.00 cents (approximately US17.37 cents) per share in 2020, an increase of 37.0%.
TTI is now uniquely positioned to continue our leadership position in professional cordless, DIY cordless, outdoor cordless, and in floorcare. In 2021, we made bold investments to expand manufacturing capacity, new product development, marketing, end user conversion, geographic expansion, and inventory to support our 34.6% sales growth. In 2022, we are excited to continue making substantial investments in the business, to drive another year of above market results and gross margin expansion.
I would like to thank our customers, end users, suppliers, shareholders and entire TTI organization for another tremendous year. These outstanding results are a testament to the quality of our dedicated, skilled, and passionate world-class teams across the globe. We are confident that our unrelenting bold vision, customer focus and business momentum will make 2022 another outstanding year and position TTI with exciting opportunities in the months and years ahead.
Chief Executive Officer’s Message
“While we are pleased with our 2021 performance, we firmly believe the next five years will be a tremendous period for company’s sales and profit growth.”
2021 was an epic year for TTI, with organic sales growth of $3.4 billion. Not only did we grow the business by 34.6%, but we did so while improving gross margin and net profit at a faster rate than sales. Our unwavering strategic focus on cordless technology drove this extraordinary performance.
We are leading the once-in-a-generation shift from petrol, corded, manual, hydraulic, and pneumatic products to cordless in power tools, light equipment, outdoor products, and cleaning. Our technologically advanced cordless products command a premium in the market, which drives our continued gross margin improvement. 2021 was the 13th consecutive year of gross margin improvement, funding additional strategic SG&A investments in R&D, new product development, in-field marketing specialists, digital marketing, store coverage, and geographic expansion. This virtuous cycle of gross margin improvement and strategic SG&A reinvestment to drive sales and gross margin improvement is a core strategy that has allowed us to consistently deliver on our commitment of outgrowing the market while improving our financial performance.
In addition to delivering spectacular results in 2021, I have never been more optimistic about the future growth engines of the company. MILWAUKEE is the number one and fastest-growing global brand in the professional tool market, while RYOBI is the number one DIY tool and cordless outdoor power equipment brand worldwide. We have also expanded our best-in-class offering of MILWAUKEE professional cordless outdoor equipment, which is now the fastest-growing brand of cordless professional-grade outdoor products for landscapers and lawn and garden enthusiasts.
We are laser-focused on developing advanced, demonstrably better and technologically superior cordless products. Our development process is driven by the end user’s needs from start to finish. As an example, when developing our new flagship RYOBI 80V HP Zero-Turn Riding Mower, we started from a blank canvas rather than working to “electrify” an existing petrol-powered product. This allowed us to optimize each critical component of the mower to maximize power and performance while adding new innovative features.
In addition to developing one runaway successful product after another, the network effect of our interchangeable battery systems compounds our growth trajectory. Every additional product we add to the system increases the value of the entire platform to our end customer. For example, the flagship MILWAUKEE M18 platform now has 251 products that run off the same M18 battery and is rapidly growing. This is attractive to new customers who gain access to a wide range of tools that run off the same powerful battery. It also creates a loyal customer base with access to a continuous stream of new products available as bare tools powered by batteries they already own. This is a key tenant of our cordless strategy and is deployed across all our TTI battery platforms.
Supply Chain Investments
In 2021, we continued to make bold investments in additional manufacturing capacity to support our future growth. Construction is currently underway on greenfield manufacturing sites in the US and Vietnam while we continue to invest in our world-class existing facilities across Asia, North America, and Europe. Our expanding global manufacturing footprint allows us to produce high-quality products with the flexibility to quickly react to changing environmental and geopolitical factors. All TTI sites worldwide adhere to the TTI OPEX philosophy of delivering world-class quality, driving increased productivity, and maintaining best-in-class service levels for our customers.
We have also strategically partnered with key suppliers to develop the latest technology. These close partnerships allow us to deliver on our internal mandate of disrupting our core products with next-generation models that have more power, compactness, longer life, or a multitude of other features. Our strategic suppliers did a magnificent job delivering advanced technology and steady component supply throughout 2021.
We continued with our aggressive hiring plans in 2021, adding another 2,031 high-potential college graduates to our Leadership Development Program (LDP). Since its beginning over 14 years ago, this program has supported our growth by creating a pipeline of future leaders across the engineering, sales, marketing, purchasing, supply chain, manufacturing, and finance disciplines. Software and electronics engineering is an especially high focus, as we have augmented our R&D powerhouse with newly recruited engineers who drive technological advancements and accelerate the pace of our new product launches.
In addition to bolstering our workforce with high-potential college graduates, we’ve focused on further developing our high-performance culture across all levels and functions of the organization. The depth of our team has never been more impressive, with many of our LDP graduates leading functions across the organization with increasing levels of responsibility. The deep commitment and dedication of our highly talented team to users, customers, and distribution partners across the globe is a competitive advantage that powers our growth.
Geographic Expansion Success
Our breathtaking growth in the European theater exemplifies the power of our world-class management team. We have gone from a very small presence in Europe to a commanding cordless leadership and growth position. The European team’s success is a great example of the company’s ability to continue to grow outside the core US market. In addition to Europe, we have been able to achieve incredibly strong growth levels in Canada, Mexico, Australia/ New Zealand, and Asia. I am enormously impressed by the quality of our world-class team across the globe.
Our mission is to lead the industry in clean tech innovation, environmental sustainability, social responsibility, and ethical corporate governance. Sustainability best practices are embedded in all layers of the organization and across all functions. This year, we committed to reducing our absolute SCOPE 1 and SCOPE 2 Greenhouse Gas (GHG) emissions by 60% in 2030. Our team has rallied around this commitment and has started making excellent progress towards our goal. For example, we recently committed to a green energy initiative in the State of Wisconsin, powering our sites in the area with electricity generated from clean sources.
Another one of our leadership initiatives in sustainability is developing carbon and noise pollution-free battery-powered outdoor products. RYOBI has led the revolution away from noisy, petrol-powered outdoor equipment with a fleet of battery-powered lawn mowers, battery-powered snow blowers, and cordless handheld outdoor equipment. We have also launched a premium line of MILWAUKEE battery-powered professional-grade outdoor equipment, led by the flagship MILWAUKEE M18 FUEL 21” Self-Propelled Dual Battery Mower.
From raw material sourcing, manufacturing operations, supply chain, transportation, and new product development, I am incredibly proud of how our team has developed a core competency in sustainability. We firmly believe that our ability to grow as a company is closely linked to our ESG performance.
The Best is Yet to Come
In 2021, we dramatically outpaced the market and strengthened our global leadership position. Our bold investments in new product development, manufacturing, logistics, geographic expansion, and in-field marketing initiatives drove our growth and extended our position as industry leaders. While we are pleased with our 2021 performance, we firmly believe the next five years will be a tremendous period for the company’s sales and profit growth.
I want to thank our Chairman, Horst Pudwill, and Vice-Chairman, Stephan Pudwill for their bold leadership and unwavering support. We share a vision for sustainable global cordless dominance, and I am proud of being a part of a team that consistently outperforms the market. This is just the beginning of our journey, and I am confident that the best is yet to come.
Review of Operations
Review of Operations
Floorcare & Cleaning
All trademarks and trade names listed other than AEG and RYOBI are owned by the Group.
AEG is a registered trademark of AB Electrolux (publ.), and is used under license.
RYOBI is a registered trademark of Ryobi Limited, and is used under license.