ABB Ltd

Ladies and gentlemen, welcome to the ADBQ1 2020 Results Analyst Conference Call. I'm Andrea, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jessica Mitchell, Head of Investor Relations. Please go ahead, Madam.

Hello, and good morning to all. Welcome to ABB's first quarter 2020 results conference call and webcast. The press release and financial information documents were published this morning at 7 a.m. and can be found on our website along with this results presentation. Following our presentation, we will open the lines for your questions. I am pleased to introduce ABB's new CEO, Bjorn Rosengren. And also with me today is our Chief Financial Officer, Timo Iha-Motila, who is going to present our results in more detail. Before we begin, I would like to draw your attention to the important information regarding safe harbor notices and our use of non-GAAP measures on slide two of the ABB presentation. This conference call will include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. And with that, let me now hand you over to Bjorn.

Thank you, Jess. And let me also say hello and very warm welcome to everybody on the call. My start at ABB has not been exactly as I expected when I took on the challenge as being the CEO of ABB. Yes, it has been a challenging time for all of us. On the other hand, wrestling with the rapid spread of COVID-19 has given me the opportunity to understand the quality and the resilience of many of our businesses. Nevertheless, the COVID-19 has created a very tough set of trading conditions for the quarter and also for the coming months. First, some highlights from the quarter. Order growth surprised on the upside, helped by large order. which more than offset somewhat softer short cycle demand in the later part of the quarter. This doesn't help our revenues right now, but makes us more resilient over the medium to long term. The book-to-bill ratio for the quarter was 1.118, which means that the orders are 18% higher than the revenues. The challenges from the COVID-19 first affected China and then spread to Europe and the rest of the world. The pandemic created a huge challenge, both to keep our employees safe and to maintaining our commitment to our customers, but also to keep our around 200 factories and operations up and running. It helped that China managed to reopen so quickly. and that we could learn from the early experiences how to secure a safe working environment in all our plants. The way our teams have handled the crisis is quite an achievement. However, supply chain challenges and mobility restrictions impacted our ability to deliver products, complete project installations and carry out services. which affected our revenues and eventually our operating margins in all our businesses. On the positive note, we have made very good progress with the carve out of the power grids business and target to close the transaction at the end of Q2 2020 as planned. Although I took over as CEO on March 1st, I was fortunate enough to be able to meet most of our key leaders, as well as visit our operations in India, in the US and Europe, already in February, before the COVID-19 restricted our ability to travel. Since the start of the coronavirus outbreak, the health and safety of our people has remained our first priority. The teams have worked very hard to maintain business continuity and to support our customers and partners around the world. The speed, agility and accountability in which our organizations have acted during the crisis is a true proof of the commitment in our workforce and power of the operating model. The lockdown has enabled me to spend more time with our senior team. discussing how we want to operate going forward. And I do look forward to sharing more thoughts around this at June 10th. Needless to say, my first impression of ABB is very positive, thanks to our people and great technologies. I am confident that we will see our way through these times and emerge even stronger and continue our journey to meet our long-term financial and sustainability targets. That having been said, let's move to slide number five. The extraordinary macro environment can be described as very challenging. Purchasing managers index have plunged around the world. with weaker short cycle demand led by the automotive sector and other consumer-facing sectors. In ABB, we have seen strong large order in the transport and in part of the process industries, suggesting a bit more resilience in some later cycle and markets. Although economic conditions began to stabilize in China during March, They have declined materially in other regions, with many forward-looking indicators pointing towards a global recession of uncertain magnitude. On the supply side, although the majority of our production capacity remains intact, constraints have started to emerge in some of our supply chains. Restrictions on travel and site visits have limited our ability to provide services, which traditionally holds up better during recessions. They have also slowed down many project installations, making this economic downturn faster and more severe in character than prior recessions. We have yet to see the full effect in our results. As a leadership team, we have taken very proactive approach to address these major challenges as outlined on slide six. We have put health and safety at the center of our response to lead by a group steering committee and country task forces. The board, but also the executive committee have taken a 10% reduction in compensation during the crisis. And we are supporting the communities in which we work with both essential supplies and critical power equipment and services to the healthcare facilities. Operationally, we are focused on delivering critical goods and services to our customers. And we are making use of the digital channels and services we invested in over the years. We are cutting costs by reducing capacity limiting discretionary expenses like travel and professional services, and delaying non-essential capex investments. It is clear that our decentralized operating model, with our businesses being more accountable, are taking the message to adjust their operations quickly to meet the market demand. Let me now hand over to Timo to cover the quarterly result in more details. Please, Timo.