ABB Ltd

Ladies and gentlemen, welcome to the Q3 Results 2020 Analyst Conference Call. I am Alice, 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 1 on your telephone. For operator assistance, please press star and 0. 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.

Good morning and welcome to ABB's third quarter 2020 results call and webcast. The press release and financial information documents were published this morning at 7 o'clock and can be found on our website along with this results presentation. Following our presentation, we will open the lines for your questions. With me today to present the results and answer your questions are ABB's CEO Bjorn Rosengren and CFO Timo Iha-Matilla. Also on the call with us today is Anne-Sophie Noord, who succeeds me as head of IR at ABB going forward. A very warm welcome to Annecy and farewell and thank you from myself on my last set of results at ABB. 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. Let me now hand you over to Bjorn.

Thank you. Yes. And let me also offer a warm welcome to everyone on our call. I'd like to start with the key takeaways from the quarter. First, we saw a strong underlying performance in the third quarter. Of course, as expected, revenues in all regions suffered due to the ongoing impact of COVID-19. And there are still many uncertainties. It looks like the recovery for industrial automations and markets will still take some time. Robotics won a number of large orders in China, but the market remains tough. But all our business areas worked hard with their costs, and our focus on profitability is showing results. Electrification margins are a highlight. Strong progress was made with the GIS and the continuing turnaround of installation products. And Motion extended its good track record. Throughout the COVID-19 pandemic, our top priority has remained the health and safety of our people. We continue to monitor the development closely, and we are well prepared to adopt our operations to deal with these challenges. Lastly, as Timo will explain in details, the divestment of power grids has significantly strengthened our balance sheet, and we are carrying out our shareback program as planned. Let's move to slide four, showing ABB's regional and country order trends in comparable terms. Influenced by the pandemic, demand decreased year over year in all regions, despite a strong rebound in China. In the Americas, orders were 11% lower year on year, with the most countries reporting lower order levels. The United States declined 12% compared to last year. Motion's orders were robust in the US, but electrification and robotics and discrete automation was subdued. And we saw a step fall in the industrial automation. In Europe, orders were 10% lower year over year with mixed performance at the country level and lower levels in the larger orders. In Germany, orders were 14% lower with electrification remaining resilient. Broadly, Northern Europe countries did well while demand in the Southern Europe was subdued. Orders in Asia and the Middle East and Africa had an overall decline of 2% year-over-year. Weakness in IA and electrification was partially offset by robust orders in motioned and RA. India's market remains strongly impacted by COVID-19. China's growth was solid, with orders rising 8% year-over-year, driven by improved domestic demand. RA's orders were particularly strong in China, but electrification and motion also grew well there this quarter. So let's move over to slide five for a quick summary of the results. Compared to the same period last year, orders were 8% lower. Revenues declined by 4% on a comparable basis. Our operational EBITDA margin at 12% was up 30 basis points year on year. The margin includes roughly 80 basic points of negative impact relation to the KUSILE project in South Africa. And in addition, there was a negative impact of 130 basic points for non-core business activities. As you can see, without this impact, margin would have been in the 13 to 16% target margin corridor for the group. Basic EPS at $2.14 was including the impact of the over $5 billion gain for the sales of power grids recorded in discontinued operations. Cash flow from operating activities was 408 million, including a 273 million negative impact from cash flow outflow of the facilitate the transfer of certain pension plans to third-party insurers. This compared to the 670 million in cash generation for the same period last year. We continue to expect the resilient cash flow delivery for the full year. And with that, I will hand over to Timo to cover the quarter results for the business areas. Thank you, Timo.