ABB Ltd

Greetings to you all and welcome to this presentation of ABB's third quarter results. Next to me here is for the first time our new CEO, Moten Virud, and our CFO, Timo Jamotila. I'm Ann-Sofie Nord, Head of Investor Relations. This time, we're going to do things somewhat differently. We'll first do the usual results presentation, but with a slightly shorter Q&A. And after that, Morten here will talk through his initial perspectives following his first couple of months as CEO. After that, we open up for another round of Q&A. So you will get the chance to put your non-quarter related questions to both of them. We aim to be finished in about an hour and a half from now. And with that said, let's get this started.

And I hand over to you, Morten. Let's start with a summary and the very short version of the quarter is that we improved on the most headlines in the income statement. orders increased by 2%. Book-to-bill was positive and we repeated the record level margin with very strong cash flow. And I think these results show the benefits of having a broad industrial segment exposure.

We had good developments in the three business areas with close links to what I call the electrification of everything. With the exception being the e-mobility business where performance is still weak. On the automation side, we are challenged by low volumes in robotics and discrete automation. And especially in machine automation, customers remain focused on reducing their inventories. In total, our revenues improved 2% in the quarter. But if you look at it without RA and e-mobility, it was actually up 7% and 6% year-to-date. I mentioned the operational EBITDA margin, which again reached 19%. And it was great to see the strong contribution from electrification. Congratulations to the team for reaching the 24% margin level. Another step in the right direction. There is also reason to celebrate InMotion reaching a new all-time high margin, and Process Automation delivered another solid plus 15% margin quarter. This is all good, but at the same time profitability in robotics and discrete automation is low. While robotics remained in double-digit margin territory, it was a very tough quarter for the machine automation division. They are pushing to bring down the break-even level and restore profitability. Timo will talk more about that on the RA slide later on. We also had further losses in the e-mobility business, which continues to work on its turnaround. Looking at it from a group level, e-mobility diluted the margin by about 100 basis points in the quarter. So all in all, in my view, a quarter where the positives outweigh the negatives. Cash was good. And you know that we have an ambition of being at least on par with the free cash flow of 3.7 billion dollars we delivered last year. At 2.6 billion year to date, I would say the target is clearly doable. I know that the M&A team in the measurement and analytics division in process automation has worked very hard this summer. It was great to see that the acquisition of Furtish Group came through, adding about 55 million dollars of revenues. The deal makes strategic sense and it expands our position in advanced industrial emission measurement and analytic solutions, giving really good opportunities for revenue synergies. We also closed the SIEM deal in the electrification service division. SIEM is a US-based company which through its software platform provide asset management and advisory services mostly industrial building markets. It complements over already existing service offering and adds approximately 19 million of revenues. As the last point, I want to welcome John Piero and Brandon as new Business Area Presidents of Electrification and Motion. Both have long careers with ABB, so I know them well and have seen their ability to bring a team together towards common goals. I also know that they are both strategic and result driven, so I do look forward to see the impact of their leadership. We had strong momentum in our short cycle orders, which increased by the highest single digits. Electrification was the main contributor, with a double-digit growth, but we also had a slight positive in motion. In the project and system businesses, there is still robust activity, although we were up against some challenging comparables, including the large order of $285 million booked in process automation last year. Excluding that booking, our total orders were up by 6%, and in my view, reflecting a solid market environment. Looking at the different customer segments, the areas of data centers, utilities and infrastructure stood out. As the strongest positive, while the most challenging area was the machine builders linked to discrete automation. of a revenue of $8.2 billion improved by 2%, driven equally by price and volumes. This was a bit lower than we anticipated going into the quarter. We find the main deviations in discrete automation where the backlog is diminishing and customers push new orders further out in time, but also in motion where we had some deliveries being held as some customers changed their schedule. From a segment perspective, we again highlight the strong demand in data centers. So I thought we would spend some extra time on it. Looking at the data center market, the map changes fast. Some years ago, a co-location site of 5 to 10 megawatts would have been considered fairly sizable. Three years ago, 20 to 50 was big. And now, some co-location can almost be as big as hyperscalers, some hundred or even a thousand megawatts. Traditionally, we have a strong position with the technically advanced hyperscalers, and we are the strongest in the mission-critical power access area, also known as the grey space, which is the infrastructure equipment is located. This includes medium and low voltage switchgear, protection relays and critical power protection. But we also play in the wide space with, for example, power distribution units. When it comes to transformers and cooling solutions, we work with partners. So what we talked about today is linked to our business area electrification, where the offering is broad and compromises both low and medium voltage equipment. Even we are not the market leader in the low voltage UPS, we see a very strong momentum from an already meaningful level. and momentum is even higher for our medium voltage UPS HyperGuard, which is the first medium voltage UPS product on the market. Note that data center loads and power consumption are increasing. Demands on electricity quality is rising. So our medium voltage GPS is well positioned as it covers the entire power system closer to the grid connection point. Overall, in data centers, we have seen a strong order cager of 24% during 2019 to 23, with an even stronger momentum so far this year. Our ability to meet customers' delivery expectations seems to have been above market average, and it appears as we have gained some ground. With higher data processing requirements, we expect the data-centered market to grow in the double digits in the mid-term. And we aim to outgrow the market where we decide to play. Now let's look at the regional developments. Orders in America declined by 6%, but the numbers is impacting by the timing of large bookings. Looking through this, orders actually increased as a double-digit rate. So in general, the US market remains the most robust market for us. AMEA was up by 8%, helped by a very strong quarter in Australia, but also good development in India. China declined year on year, but it's only about 2%. So sequentially, China remained broadly stable. Europe was up by 6, with a very strong improvement in Germany, however from a low level. In the charts you see the strong improvement in both earnings and margin. The operational EBITDA was up 12% and we improved the margin by 160 basis points to 19%. It is encouraging to see that this is driven by a strong gross margin which reached 38.2% and we had a positive development in 3 out of 4 business areas. But I hand over to you, Timo, to talk more about that.