ABB Ltd

Greetings and welcome to this presentation of ABB's full year and fourth quarter results. As usual, we have our CEO, Morten Wirod, here. And now also for the last time in this forum, our CFO, Timo Hyamotla. I'm Ansa Fynod, Head of Investor Relations. And as per tradition, Morten and Timo will talk through the results, after which we open up for Q&A. So now I'll leave it up to you, Morten, to kick off the presentation with some comments on 25 as a whole.

Thanks, Ansi. Yeah, 2025 was our best year yet. We delivered an all-time high financial performance and we also continue to be recognized with good sustainability ratings. I want to thank and give credit to the team who worked hard to achieve this. Through the year, we saw demand for electrification and automation solutions continue its overall strong trend. From a top-line perspective, I would say that we have performed well in a strong market. Add to that our internal focus on continuous improvements. And putting it all together, we reached new record levels in orders and across most P&L metrics, including an operational EBITDA margin of 19%. The margin of 18.2% on income from operations or EBIT was only 80 basis points lower, in line with our ambition to keep the gap at about 100 basis points. The strong order intake resulted in a book-to-bill of 1.11. This leaves us with a record backlog of 25.3 billion to support future revenues. Another highlight is the strong free cash flow of 4.6 billion, as well as the outstanding return on capital employed of 25.3%. We ended the year with a strong balance sheet with net debt to EBITDA of 0.3. The teams are active on their M&A pipelines, but admittedly, valuations have been demanding in some cases and we have chosen to step away. I want to make good deals that create long-term value for our shareholders. So while we want to be active on the portfolio and we have financial headroom, we will continue to keep a firm grip on the calculator when screening deals. So, balance sheets allow for M&A, dividend as well as buybacks. We steadily reward shareholders with an annual increase in dividend. And for 2025, we propose a dividend per share of 0.94 Swiss franc. If approved, this would be an annual raise of 4 rappen, which is higher than the 2-3 in past years. We will also run a new and larger annual buyback program of up to $2 billion. This is an increase from the 2025 program of up to $1.5 billion, under which we spent about $1.3 billion. So a good utilization in my view and the equivalent of about 1% of market cap, which adds to the yield of about 1.6% from the proposed dividend. Let's now turn to the fourth quarter, where one highlight was the very strong increase of 32% in comparable orders. With growth this strong, it is reassuring that it wasn't a one-dimensional driver. Instead, we were up in most segments and had double-digit growth across all business areas, led by electrification and automation at the standout levels of 33% and 41%. We continue to improve our operational performance. And to make a long story short, we expanded on most lines in the P&L, generated high cash flow and capital returns. This is the strongest fourth quarter we have delivered so far. But in the long run, we wouldn't be anything without our leading technology, the foundations for helping our customers. Our medium-voltage power technology is at the forefront of the industry. It puts us in the front row for future data center architecture. Building on this, the electrification team has extended its partnerships with Applied Digital, and we introduce new power designs for large-scale AI-ready data centers. Another future potential demand driver is our cutting-edge direct current and solid-state electronics technology. We were the first in the market introducing a solid-state circuit breaker, the Satya Infinitus. And in the DC field, we ran a collaboration with NVIDIA and Hyperscalers, supporting their 800V DC architecture. This is focused on power solutions needed to create high-efficiency, scalable power delivery for future AI workloads. But why DC technology? Well, it comes with the customer benefits of higher power density and lower conversion losses. It also requires less raw materials, for example copper, as the cable can be thinner and fewer compared with alternate current. In our minds, the electrical distribution in future data centers will have much more DC technology combined with traditional AC technology. Let's call it beyond 2028, 2030. And in my view, we are very well positioned to lead this evolution. The transition from AC to DC could be that about 40 to 50% of the installed data centers capacity in 2030 is in DC electrical distribution. I earlier talked about M&A, and the Motion team has now closed the acquisition of Gamesa Electric's power electronic business. This fills a gap in our product portfolio. We add power conversion products such as certain wind converters, targeting industrial battery energy storage system, as well as utility scale solar inverters. I keep saying that the best is still to come for ABB. And to back it up, we have updated our long-term financial targets. So far, we have a good track record for delivering on our commitments. I expect this to continue also for these new targets, which I see as both ambitious and realistic. Starting with comparable growth, the 5-7% range is unchanged. This is a long-term through-cycle target, with a corridor as an average of what we will deliver over the next 8-10 years. This means that we can be above or below in individual years, but over the time the average corridor is what you should expect from us. On top of this, we look to add an average 1-2% of acquired growth. Turning to the raised margin target, we now aim to run operational EBITDA margin in the range of 18-22%. So, from the 2025 level, which is the best ABB has delivered so far, we see further upside of 300 basis points. The new higher margin range also means that worst case, should we face a softer cycle, we will protect margin to only 100 basis points below the record 2025 level. Ambitious in my view. We have also set external target ranges for each business area. The high end of these ranges varies, but all represent best-in-class performances and fit within the ABV group. Backed by our growth and higher margins ambitions, we increased the ROSI target to about 20%. And we aim to stay at this high level even as we pursue higher M&A activity. To support growth, we have slightly turned the free cash flow conversion target to above 95%. And finally, we continue to expect average EPS growth to be at least high single digit. Setting new targets is one thing, but delivery is what matters. I see both internal and external building blocks that position us well to accelerate operational performance. First, we aim to drive additional accountability and speed in the business, as we embed the ABB Way operating model deeper into the organization in our across 70 business lines. Secondly, we can do better in what I refer to as the beauty of mix. What we have done is to deploy a more rigorous and transparent internal KPI framework. This framework more clearly defines expected performance by mandate. It also links remuneration closer to mandates. Another important point is that we will continue to stay laser focused on our annual 5% gross profit productivity target. And I already mentioned more M&A. I want this to become part of our culture, ingrained in everyday business. We're not quite there yet. But lastly, we play in strong secular markets. Cycles come and go, but I'm convinced about the long-term electrification and automation trends. Electricity demand is forecast to double by 2050, and we are positioned at the core of this energy expansion. ABB, we're set to capitalize on this. Now let's turn back to the fourth quarter, and I don't think I'd be overstating it by saying that we had fantastic orders. In the chart on the left, you see the comparable growth of 32% and total orders of 10.3 billion. We see persistently high custom activity across most of the key segments. Yes, there are some soft spots, and I would say that the process industry-related markets remain generally cautious. Orders in pulp and paper were down from last year. Mining was actually okay in the quarter, but in the big picture we don't see yet the big capex coming online. I can also mention residential buildings where particularly China is weak. And the discrete market remains a challenge. So, what was it that helped drive our orders? Some of the segments to mention would be the continued strong utilities market. The same goes for land-based infrastructure and transport, where we see upgrades of electrical infrastructure in for example airports and tunnels. Commercial building is positive, supporting demand for HVAC solutions, and marine as well as rail continues to be very strong segments for us. In total, orders were supported across the project, service and short cycle businesses, and by all three business areas. Order intake from good underlying demand was further fueled by timing of some project orders. Both electrification and automation had several large bookings above the 100 million mark, linked to the data center, marine and ports segments. The data center segment was particularly strong, also when looking beyond the large orders just mentioned. We expect this to persist, and it looks like the market could grow into the teens near term. In the revenue chart, you see the high level of 9.1 billion, up 9% on a comparable basis. This was stronger than we originally expected, and it was particularly electrification that outperformed with a strong finish to the year. Similar to the order profile, revenue growth was supported by a positive development across service, long and short cycle businesses. While revenues were record high, orders were even stronger. On a book-to-bill of 1.14, the backlog was up by 18% to 25.3 billion. I usually don't talk about FX, which is largely a translation impact for us. But this time, it had a meaningful top-line contribution of 4%, mainly linked to the recent swings in dollar-euro rates. In total, revenues were up by 13%. I mentioned that orders progressed across the business areas. The same goes for the different geographies. All three regions were up by more than 20%, led by Americas at 43% like for like. Looking specifically at the US, orders increased by 57%. This high number includes some large booking, but also base orders were very strong and improved by 20%. Europe was up by 25% with a mixed picture between countries. If we look at Germany, our largest market in Europe, it was broadly stable at plus 1%. And as of yet, we don't really see a material impact from stimulus packages. AMEA improved by 23%, supported by the three largest countries in the region. Let's now look at operational EBITDA, which we improved by 19% to 1.6 billion. And we expanded the margin by 100 basis points to 17.6. Operational leverage on higher volumes was the main factor in earnings growth. Add to that a positive price component and efficiency gains through improved operational excellence. We more than offset tariff impacts and higher expenses linked to commodities. We also offset a higher spend on SG&A, which however reduced slightly in relation to revenues. The team did a good job, but we have to remain focused and manage for example rising input costs. We are primarily an assembly business, so our biggest raw material exposure is in the components we buy, predominantly in electrification and motion. We estimate the total exposure to commodities to be about 7% of revenues. And out of this, about two-thirds sits in copper and silver, as well as in e-steel for our motors. We have been successful in managing these swings in the past and continue to balance market position with defending our long-term profitability. Overall, the strong performance in our businesses more than offset the 37 million higher expenses on the corporate and other line. And as a net total, we increased earnings per share by 30% to 70 cents. I'm pleased with our result. And with that, I hand over to you, Timo.

Thanks, Morten. And let's take a look at what happened in the different business areas, starting with electrification. I have to say that the order level of $5.3 billion is a job well done. The market trend for electrification of things is buoyant, and the team performs well in this very strong market. The data center segment stood out, with the timing of some large project orders adding to an already strong trend. These larger bookings at the plus 100 million level totaled about $600 million. Looking ahead, the project pipeline remains good and, as Morten mentioned, we remain confident about the market. In such a strong environment, it is important that we remain honest with our customers, careful not to overpromise on our ability to deliver. This is key in our customer conversations. But electrification is not all about data centers. Orders increased at a low double digit rate, also excluding data centers. I would mention a continued strong customer activity in utilities, as well as for land-based infrastructure. Buildings is the biggest single segment and was overall positive. This is net of support from the commercial business while residential remains challenging. Turning to revenues, the chart in the middle shows the record high level of $4.7 billion. The 12% comparable growth was primarily due to higher volumes with a positive development in all divisions. And we were up in all regions. So while revenues were all-time high, electrification still reached a positive book-to-bill of 1.13, increasing the backlog by 21% to $9.4 billion. Operational EBITDA was up by 23% to $1.1 billion, supported mainly by operational leverage on higher volumes, as well as by efficiency gains. These positives more than offset growth related higher spend on R&D and SG&A, but also inflation linked to tariffs as well as rising input costs from raw materials. The team is taking mitigating actions to offset higher commodity prices. And considering timing between price action and full realization, the sequential margin improvement into the first quarter may be a bit lower than what we have seen in the last few years. But with the expected Q1 comparable revenue growth at a high single to low double digit rate, we should still see operational EBITDA margin increase year on year. Now let's turn to Motion, where comparable orders were up by 13% and total orders reached $2.2 billion, in line with recent quarters. Just like in electrification, there was contribution across the project, service and short cycle businesses. Looking at the different customer segments, I would highlight on the positive side areas like HVAC linked to commercial buildings. I would also mention power generation, which benefits from grid modernization and distributed energy systems. On the more muted side of things, there are process industry segments of pulp and paper and also chemicals, where however orders were up in this specific quarter. In the revenues chart, you see that Motion delivered a new all-time high. The 6% comparable growth was mainly due to higher volumes with some further contribution from price. We also added about 1% from M&A, which includes the closing of the Gamesa Electric deal in early December. On an annual basis, this adds about $170 million to Motion. And all included, revenues reached 2.3 billion, leaving book to bill at slightly negative 0.97. As most of you are familiar with, we have a pattern of a negative book to bill in the fourth quarter. Operational EBITDA improved by 8% to 412 million. The margin, however, was down by 40 basis points to 18.3%. This was mainly down to two factors with broadly similar dilutive impacts. One being that we have some operational inefficiencies in the recently formed high power division. It is taking some time to get the new setup fully oiled and up to speed. The team is on it, but it will most likely take a few quarters to get fully resolved. The second point to mention is the margin dilution from the acquired Gamesa business I just mentioned. In this quarter, with only one month inclusion, it weighed on margin by about 20 basis points. The business is currently making a small loss and we expect it to be dilutive for 2026 as a whole. Our plans allow for a couple of years to bring profitability to double digit as we embed the offering into our broad leading market reach. it should also add cross-divisional benefits with potential for the services business. For the first quarter, we anticipate comparable revenue growth towards the high single digit level and operational EBITDA margin to improve slightly from the fourth quarter. Let's then turn to automation, where this was the first quarter in the new structural setup with machine automation division now part of the business area. Automation also delivered a fantastic order inflow. You see in the chart on the left that the $2.8 billion, up by a comparable 41%, is on par with the similarly high Q2. This has clearly been a strong year for automation orders. And like for electrification in Q4, we had some large bookings at the above the 100 million mark. These were linked to the marine and port segments and contributed to a total of close to $600 million. In addition to strong marine and ports, I would mention oil and gas as a generally solid market, although orders declined in this specific quarter. There was also an increased activity among nuclear customers, albeit a small part of the total. Machine builders remains a challenging area, but due to the low comparable from last year, orders increased sharply. And lastly, mining orders were up in what we otherwise continue to see as a bit of a muted segment. Turning to revenues, comparable growth was stronger than expected at 9%. Execution of the backlog as well as good deliveries in service and short cycle businesses all supported revenues to the record $2.2 billion. Operational EBITDA was up by 27% to 311 million. And key level to the higher profitability was the gross margin increase of 140 basis points. This was due to leverage on higher volumes, some positive pricing and the team delivering productivity enhancements. Add to that a stringent management of SG&A and we arrive at the 150 basis points increase in operational EBITDA margin to 13.9%. Looking at the first quarter, we expect automation's comparable revenues to improve at broadly a mid-single-digit range, and operational EBITDA margin should improve slightly year on year. Now let's move on to cash flow, which was another highlight of the quarter. The strong outcome was result of improved operational cash flow in combination with a larger release of trade networking capital compared with last year. So despite a higher paid tax and capex expenses, we improved free cash flow by 17% to 1.5 billion. A good outcome in my view, given the strong cash performance already in the prior quarters. In total for 2025, we generated free cash flow of $4.6 billion, and I really want to give credit to the team for achieving this. We have now consistently run at a free cash flow margin between 12 to 14% over the last three years. And I'm really pleased about both the level, but also the margin stability. Looking forward into 2026, we expect free cash flow to remain broadly unchanged at the 4.6 billion level. This would be the net outcome from a higher cash flow in the businesses and real estate gain with an offset mainly from the expected cash impact from the closing of the robotics divestment. It looks like this tax impact will be about 400 million with approximately 300 million in 26 and the remainder in 27. And with that, I hand it back to you, Morten. Thanks, Timo.

Now, let's finish off with the outlook. We expect to continue to perform well in its strong market and foresee another year with a positive book-to-bill. Comparable revenue growth should be in the range of 6-9% and we aim for a slight increase in operational EBITDA margin even when excluding the real estate gain in the first quarter of 2026. For the first quarter, we expect comparable revenue growth in the range of 7 to 10%. And the operational EBITDA margin should increase year on year, excluding the real estate gains. Last year, the Q1 margin was supported by about 190 basis points to 20.3%. So excluding the gain, the margin was 18.4%. So now Ansi, let's open up for questions.

Yes, let's do so. And as a quick reminder, for those of you who have dialed in on the phone, please press star 14 to register to ask a question. And please remember to mute the webcast as your line is opened and limit it to one question. That way we allow for as many as possible to be heard. But you can also put questions through the online tool in the webcast and I will then voice them over from here. And with that, I suggest we open up for the first question, and it should come from Max at Morgan Stanley. Max, are you with us?

Thank you, and good morning, everyone. I just wanted to ask around pricing and the raw materials comments you made, because I think if you look at the moves in copper and silver, it looks to me that most of the electrical equipment companies from this alone we'll have to put up prices by about 2% in 2026. So I guess I wanted to understand how much of those price rises are already captured in your four numbers. Roughly, how much price are you embedding in the guidance? And maybe just talk us through actually the mechanism here in terms of how it works. Do you hedge? Will we see those prices come through gradually? Have you put them through already? And should we be worried at all about sort of any pricing exhaustion in the industry, given how much pricing has already risen in the past kind of three to five years? Thank you.

Thanks, Max. First of all, we will, of course, reflect the, I would say, quite rapid changes in raw materials. Some of that we even saw late December and starting of this year when you're talking about silver at one all-time high of, I think, $120 per ounce this morning. We are of course always passing on some of those raw material changes out to the market. That's very common in the industry and that will happen again. In general we are also and I think Timo can give more color to that when it comes to hedging. We are hedging for both on overall materials but of course hedging doesn't fix the long-term issues you have to do work on prices as well. Rapid changes, like what we've seen now, this fluctuation will go into current pricing. All of that is not covered and therefore you may see some delay getting that out. On an annual basis this will be fully covered. That's always our commitment. And I'm not worried about the industry being able to deal with it. This is another point that will be transferred out in the market.

Yeah, maybe just on the hedging and guidance. So yes, we hedge commodities, but as Morten said, we do that really to buy time to react in the business side. And in that way, when you look at our electrification guidance, where we are saying that we expect it to go up year on year, but then sequentially maybe up a little bit less than we have had in the previous year. So that is actually taking into account this small time lag, which we would have there. But yes, we would expect electrification pricing to be up a bit more than it was last year. Last year it was maybe a full year about the point, so it could be a bit more than that this year. Okay.

I'm sorry, just maybe embedded in the guidance, what have you put in for price within the six to nine?

For the year, as Timo said, last year we had about 1%. We're putting a bit more north of one for this year. But then, of course, this is something we also would need to look at throughout the year, depending on if this very high level now on copper and silver will remain, then that may be even a bit more with kind of numbers that you referred to earlier in your question.

Okay, really helpful. Thank you very much.

Thanks, Max. And we open up the line for Magnus at Nordea.

Hi, Morten Thiemansi. Thank you for taking my question. Along the same lines, you're talking about a slight increase on EBITDA margins year-over-year this year. So in the context of 69% like-for-like growth, it looks a tad light. Could you talk through the various components which goes into that assessment, please?

I will try first and then Timo can correct me. Because what we said is that last year we had a significant real estate gain. And that made that we ended up at 19.0 for the year. When we're looking at the outlook for 2026, we said that that will be a slight improvement on that number. And then you can announce the real estate gain, what we announced last night, on top. So we are going to do operational improvement to cover the real estate gains from 2025. And then we have to do a bit more. That's, in Lehmann's terms, the best way to explain it.

But I'm sure the CFO maybe has a better explanation. Yeah, maybe throw a couple of numbers in there. So the real estate gain last year, which we first have to cover in the margin, is, if I remember correctly, 140 million, and that's about 40 basis points lower starting point. So you first cover that and then you move slightly up is the way of thinking. And then if we look at sort of the components here. So first, if you look at the business areas, we would expect electrification to improve. We would expect automation to improve. Motion is a little bit trickier with all the dynamics going on there. and then also when you look at corporate and e-mobility combined we would expect that to be also a slight positive because in e-mobility profitability we expect quite significant improvement to this year so the let's call it full year loss clearly less than 50 million and then corporate up 50 million from 300 to 350 driven mainly by just an FX move. So those are sort of the puts and takes in the margin guidance.

Excellent. Thank you so much.

Thank you. And I will throw in a question here from those that came in online. And this, I think, is aimed to you, Morten. Could you give some qualitative feel on the large 100 million DC contracts in electrification orders? Are these long-term framework agreements over a few years? Question is from Ben.

Yeah, no, thank you. The data center kind of, first of all, data center developed very strongly overall for 2025. Q4 was extremely strong due to we got some significant large kind of call-offs on long-term frame agreements. So these are in the hundred million of dollar tickets. That is quite common. We had that discussion during 2025. Some quarters have been lower, QE4 was very high. This is more when you get that call off. The lead time of this is really dependent on the project. where when the customer wants, you know, the site is ready for installation. So that is what is driving the lead time. Most of this project that we got now is kind of needed on site from 12 to 24 months from now. That's kind of the lead time when we're talking about for the deliveries. Also, you talked about the kind of, is this the new normal? I say, yes. When you're looking at this volatility, you will still see that there are quarters where you come in high bookings. It really depends when the sites are ready. And that's kind of when we get the deliveries going in this space.

Okay, and then we take a question from the conference call and we open up the line for Martin at City. Martin?

Thank you. Good morning, Martin from Citi. I just want to ask about the automation business. It seems like the discrete business is still at a relatively low level, even though it's improved in the fourth quarter. Do you think it's incentive to what you're hearing from the market there? And regionally, is that something where there are some green shoots that we can see progressing? through the early part of 2026. I'd say, speaking to other companies, I've seen there are some signs of recovery there, but maybe still a little bit mixed. So I'm keen to hear what you see in that business in terms of an uptake over the course of the year. Thank you.

Yeah, no, thanks, Martin. We do see a recovery, but we talked about here, it's a step-by-step recovery. There is not kind of a very steep curve. We are looking at improvement, but from a very low comparable level. But we do see an improvement, especially first, of course, in the order intake and then the overbuilding. This is not where you don't have a large backlog. Normally, this is a book to build within weeks, not in quarters. So we do see an improvement here. If you look at geographies, I would say also there that we have seen a bit more recovery or stronger markets in Asia. Europe has been still relatively slow, to say based on an improvement, but from a very low level. America's also there, not a rapid or not a big change. It's kind of improving, but sideways to improving. That is kind of how I would describe it. We do expect to see this trend continue by a stepwise improvement. That's why we're also taking corrective actions, as we have talked about before in that business, reducing the cost base, not waiting for kind of the market to quickly come back. It's really that being ready and do the self-help that is needed in the business. And that's what the new management is now executing within that machine builder division.

Can I just throw in something here? So when you look at automation and you look at their annual margin, 14 versus 14, 24 versus 25. So this is all driven by this. So if you look at the process automation without machine automation, that thing actually went up like the old process automation, some 50, 70 basis points. So that gives you a feel. And now, as Morten said, this year we would expect a positive impact, a little bit of positive impact also from machine automation.

Okay.

Thank you very much.

Thanks, Martin. And we open up the line for our next caller, which is Matthias from DNB Carnegie.

Great, thank you. I would like to ask if you could help us frame the recent strength in the data center related orders a bit, in particular, if you could clarify whether the current order momentum already includes any of the next generation power architecture that you've I think you press released some collaboration with NVIDIA's 800 voltage direct current, or if we should view this rather as a more medium term opportunity that come on top of the current sort of strength and run rate. And if it's the latter, when would you expect this opportunity to start to translate into orders?

Yeah, thanks. I can confirm, Mattias, that the current offering, what we have, is fully based on, let's say, the legacy or the current architecture. So there is no 800-volt DC architecture in the numbers what you see now, and it will not be either in 2026. This is why we're working on a technology development. White companies like NVIDIA, who is the leader in this field, looking at that new architecture, moving it up to 800 volt DC. It will change the architecture from not that much on the medium voltage side. Let's say on the outside is more what you're looking at the inside on power distribution units, busways, UPS. This is where we see the changes. We believe this is a great opportunity for us at ABB. We are one of the leaders in DC technology, for instance, with DC Grid in the marine business, with our drives business, and also the medium voltage UPS, which has technology which can be used and will be used in this kind of new architecture. So this is a future business. If you ask about when, I mean, just to, you know, NVIDIA will start kind of releasing the 800-volt technology DC chips and the components in 2027 and more be able to deliver that to the market in 2028. That is onwards and that's where we of course need to be ready on our side so we can build those new data center with those new racks doing that at 800 volt DC. So that's 2028 onwards is when you will start to see a pickup in that part of the business.

Okay. Thank you. Thanks. And we'll throw in another question here. It's about China, and in this specific case, linked to electrification. It's from Colwinder who asks, could you please talk about the double-digit decline in electrification in China?

Yeah, there was in Q4, we had overall in China, we had for the group, we had plus 25%. But for electrification, it was down in the quarter. It was due to some also very high comparable from last year in the data center space in China. That's why you need to look at some of this quarter. I think the residential and the building market, it's still growing. slow in China, and I will predict that it will remain slow also for this year. We don't see any kind of rapid recovery there, but there are other opportunities in China. I mentioned already data centers, the whole integration of renewables and larger projects, both in what we saw now in motion automation in this quarter. So therefore, If you look at 2025, the full year, it was 8% growth in order growth in China. So that's kind of what we leave 2025 with. And I think that when we're looking at 26, we are going to see, as I say, building being still slow. But there are other opportunities. And that's kind of the team is focusing on to take over China business forward. So therefore, we are still investing. in China because we believe in the long-term growth and opportunities in the Chinese market.

Very good. And then we move to Phil at JP Morgan on the conference call.

Hi, good morning. Thanks for the question and also congrats on the strong Q4. The question is on M&A. It's obviously great to hear that you're disciplined on price and prepared to walk away, my sense is that some of those assets are not too far above your own valuations. The observation just being that great assets with attractive outlooks do deserve a premium. So the question is, how is the pipeline looking now? Are there still plenty of targets in data center for you to go for? Are you becoming more open to paying slightly higher prices now? And also given what appears to be this broader based pickup in demand outside of electrical, are you inclined to broaden out the net a bit and look for other end markets or geographies where there might be some slightly lower priced assets? Thanks.

Yeah, thanks, Phil. We are not kind of limiting ourselves on the M&A pipeline only to data centers. Yes, that's one area of interest. I mentioned earlier also we're looking at the utility business, grid automation. We did make an acquisition now in the fourth quarter of NetControl, which is a Finnish company working as a specialist in the grid automation. It's a technology we believe can help utilities to be more reliable and more effective in managing their grids. So that is one example of Bolton acquisitions that we are doing, I would say more of a constant basis. When we're looking at, so we are, open absolutely to do it. I do agree also that there are premium to that we also have to accept to pay premium for premium assets but there is limits also to that and that's what I also want to be kind of clear to in our you know that overthinking is that we need to be convinced and confident in the long-term value creation that is what's the decisive factor so we are looking very wide We're not limiting ourselves to any technology or any single segment market. We are looking on a wide scale and see how we can do. And we do have a strong pipeline in all our three business areas in the divisions we have there. We have a strong pipeline, so therefore we are confident that we will see more deals coming through also in this year.

And I will, you mentioned data centers, and there's one question here. We mentioned the importance of being honest with customers and making sure that we can deliver on our promises. Are we turning some business away? Question from Sean.

Yeah, we have done that in the past and we will do it again if we cannot be confident that we will reach the milestone that are required. There are projects we say with very short lead times and if you don't have the capacity we would rather say no than to say grab the order and then disappoint the customer and maybe pay a lot of liquidated damages on delays later on. So I think this is just the For us, especially in our medium voltage business, and I'm talking here especially in the United States, where this dynamic has been there in the market, we have said that we want to be the most credible partner in this business. We want to always deliver on time. And that's the feedback we also got from some of our major customers telling us, that's why we give you more orders, because we are confident that you can deliver on site when we need it. Because if you don't, the whole project is delayed. And as we all know, that has massive consequences. So there are times where we could have grown even more than what we show in our numbers. But I believe taking these orders, but turning them into solid revenue with the right margin and avoid disappointing customers has been for us one of the key priorities of the last years. And I think that really what we see now also, it pays dividends.

And then we take the next question from the conference call. And that will be from Alex at Evercall. Alex, please.

Yeah, thanks very much, Nancy. Morning, Timo. I wondered if you could talk a little bit about the electrical demand picture outside of data centres. And I'm thinking in particular about utility demand and the development in terms of broader grid expectations. I guess in the US in particular, given the very obvious focus of the administration and the impact of storms, et cetera. But it's something that I think has been, it seems like, feels like it's accelerating again. And I wondered if you could just expand on that for us. And if I could throw in a cheeky little follow-up on commercial, it sounds like you're a little bit more optimistic around commercial construction than perhaps we've been over the last 12 to 18 months. I wondered if you could just touch on that as well. Thanks very much.

Thanks, Alex. On the energy expansion, as you know, there is declared kind of an energy crisis in the United States. So that is putting more energy online. So we see a very strong build-out, especially on the LNG side. So that's kind of power generation, getting more energy online in the grid. And that's where we are involved in drilling pipelines, terminals, all to make that happen. And then you have the new... Then you have the new power plants where you're turning gas into electricity because in the end that's the outcome you want. So this is from power generation, but then you have the whole transmission distribution where we are involved as well, which is where utilities need to have greater grid reliability. And just what we see now with the storms of the last week is where, of course, American utilities grid companies or utility companies are struggling with a lot of their overhead lines are filled with ice and fall to the ground. And then you're out of power for days and worst case for weeks. So with all the consequences that have. So this is where we help with our underground switchgear, underground cabling, all that equipment that is needed for power utilities to keep electricity flowing in cold weather, but also in all the industries that need it. So this is the trend of what we see everywhere, that as we turn to electricity as the main source of energy, you also need to feel on the power side and do that energy expansion. It's the same What we see, I was happy to see, also talking about Europe, that Germany approved also the building of new gas fired power plants next to their nuclear plants that was closed a few years ago. And now we are building new gas fired power plants next because there is already grid infrastructure to connect it. And of course, these are projects that we would be involved. Very often there is plans for a data center next door to that power plant. Again, that is where we would help to make all that happen. So this is the whole energy expansion that is going on one side, more power generation, but then more of the consumption and data center, of course, being one, but not the only one. I think it's important to look at the whole demand for electrification outside data center, we still have double digit growth at the electrification business even without data center. So it's a very strong trend that is there. The data center really the icing of the cake, but these underlying fundamentals happen everywhere. You asked your second question was around the commercial buildings and I think what we see here that is a better market in general than residential. So that is what's reflected both through our motion and our electrification business. Our commercial business exposure is also stronger than the residential business as a company. And therefore, on that side, that we see really, especially both in Europe, Middle East, but also in America, is where we see the strongest commercial build-out. A lot of focus here is around energy efficiency of those building, not just the new build, but upgrade of existing facility, commercial buildings, reducing energy cost and footprint. That is where we come in and help on the commercial building side. So it's not just new build, it's also about making those buildings more efficient and more comfortable to work and to live in.

Very helpful. Thanks very much. And thanks, Timo, for all of the help over the years.

Thanks, Alex. And then we open up for the next question from James at Redburn.

Thanks, Ansi. Hello, everyone. I wondered if I could just follow up. My line went dead for a touch, so sorry if this is a repeat question. But fantastic data center orders for the year. You must be close to 4 billion and over 20% of EL. But just in terms of mix, is it all low voltage, medium voltage in UPS, or are there any other categories? Any chance you could pie chart it? I'm really trying to get to the UPS piece and how big it is now and within that. Is it all medium voltage or is there still the bulk of it low voltage? Just trying to understand that because I see you having a significant potential there.

Well, we don't classify the breakdown of the data center revenue or the orders that we take. But what I can say is that when you normally do these packages, you do medium voltage and low voltage. Switchgear is part of the package because you don't do one without the other. So that goes normally for us also hand in hand. When we're looking at the best success we have had as a company is on the UPS side, it's on the medium voltage. UPS, because that's a technology that is really a game changer in the market. So we used also here on this call, I talked about the applied digital, which is one customer we didn't have three years back, which is now a large customer and are really standardized on medium voltage UPS as their way of giving backup power to those facilities. So this is where we have seen a significant growth more also growing on the low voltage side, but the majority of the growth comes on medium voltage UPS. And that is also a part, when we're talking about this future architecture, we believe that more of that protection and that support will be done a lot will be done on medium voltage and more and more and more use of power electronics and that's what gives us confidence in the starting point for those future data centers so that's kind of what the team is working on both from a research side from a development side but of course also then on engineering on on the ground level and that's how we work close with with customers both on the NVIDIA being one, but of course also with the hyperscalers who is one that will operate these new large AI data centers in the coming years.

Just to clarify Morten, of your UPS orders in the year, is medium voltage now more than half of it or is it still the minority?

That would be Yeah, that I will not give a kind of a rough answer. I think Anssi need to come back if you have any statement there. We can talk later. Thanks. Thanks a lot.

And here's one, I know you mentioned e-mobility earlier, but here's one question. Can you talk about what to expect from the e-mobility business during 2026?

Sure, happy to. So if we look at immobility, we are looking at a significant reversal on the profitability performance still, as I said, being negative. So we say under 50 million on EBITDA level impacting the group. But then when you look at the important items, why are we having this about 100 million improvement there? It really is driven by expected cross-margin improvement from the better product portfolio. So we are expecting double digit growth on orders and revenue. But the main item is the gross margin, which last year was hovering around 20%. So there should be really a significant improvement there, combined, of course, with tight cost management. So that's sort of the equation for immobility.

And then we take the next question from Will from Kepler Chevroër, please.

Hi, good morning. Congratulations on the results and thanks for everything over the last nine years. Timo, I'd like just a question on housekeeping. I mean, if you can be specific on the e-mobility, just to clarify, is it 100 million improvement from the base or do you think that you'll actually reach break-even this year? But more importantly, When we come to the corporate line, can you just talk us through how you expect the corporate line to develop into 27? When will the stranded costs drop out and when should the corporate level normalize? Thanks a lot.

Yeah, so on immobility, as I said, we expect sort of less than 50 million impact negative on ABB's overall profitability. Last year we had about 150 negative, so that's where the 100 comes from. And we are expecting that towards the end of the year, it should, could turn positive. That's kind of like where we are on that. And then on the corporate line, so there are like two items here now excluding the 350 million real estate gain. So our corporate line, we are saying we are expecting it to go up from 300 to 350 million dollars because we have so much corporate cost in Swiss francs. So it's almost all driven by the FX conversion situation. So if that reverses, I would So let my successor decide what to do there on the corporate line. And then on stranded cost, this 125 million, that's a full year estimate. Now we would expect the robotics transaction to close, as we have said, sometime during second half. So we would expect that to start to decrease rapidly after the closing. And hopefully for 2027, we wouldn't see any of that stranded cost there. Super. Thanks.

Thanks, Will. And then we open up the line from Andre at UBS.

Andre? Yes, good morning. Thank you very much for taking... Can you hear me?

Yes.

Oh, great. Yeah, morning. Thanks for taking the question. I just wanted to circle back to the bigger picture and think about the 69% growth guidance that you gave. You've given some indications on end markets and pricing, but can we just kind of think specifically about maybe data centers and grids and process industrial automation as three chunks. What kind of growth rate ranges do you expect for those three within the 69? And maybe just to anticipate a little bit, the answer on data centers, it's double digit, but is it starting with one, two or three?

We're not going to go there, you know.

Yeah, exactly. Tricky question. On the data center side, what we have said before is also last year on the Capital Market Day was that we have a CAGR of... 25%, you know, since 2019. And therefore, and that was the same, also yet another year for that in 25. 26, we are, say, we are in the teens, which, and we are, as you heard me say already, we are very confident about the outlook of the data center market. So of course, that will be one of the growth drivers. That's why we also upped the the guidance today for the quarter. For our utility, our grid business, that's another example of, I think, also what will be, again, growth above average. It's a very solid and a good market. And then we have some other pockets we talked already about on the discrete sides we had in some of the process industries, where we don't see yet the market is coming fully back and we think that will, the residential, I may mention as well, that's kind of this balance that brings us to the guidance of the six to nine for the full year. We also, when you're looking at the, we have seven to 10 for Q1 because we have some kind of, we have very high comparable now in the Q3 and four. And that's why we are also, let's say, even more optimistic for the first coming quarters, which we also, of course, have more visibility to.

And I think time flies when you're having fun. And I see we're sort of coming up to the hour. So, Morten, do you want to finish off with some words?

Yeah. No, thank you, Anssi. We're closing out 2025. Already feels a long time ago, but it will probably be a good year As you all hear, we have high confidence level for 2026. It was a record year, and we are predicting also for 2026 to be a new record year. But it's also a bit special. It's special for me, but I know it's even more special for Timo today, because Timo, as of Tomorrow will be his final kind of active working day as a CFO and be my right hand at ABB. It's been a pleasure working with Timo for nine years. I had that pleasure. Of course, it's been very close now since I started last summer. But Timo is leaving a big footprint at ABB. with a strong finance organisation behind him, but he's been part of this journey now for nine years. So I really want to say a big thank you also from my side and in front of everybody. I know also the banking community and everyone has been enjoying working with Timo, but we know at ABB we have really enjoyed it and you will be missed. We're looking forward to welcoming Christian in Q1, but Today, it is the final time we do this. So I just wish you all the best in your new non-executive roles. And again, thank you for everybody from everyone at ABB for your fantastic work here.

Yeah, yeah. And I want to say to everybody, to the whole community here, that I just want to thank you for the good cooperation. It's been a really, really nice ride, good learnings as it is. And I think there is a lot more opportunity still for ABB, and it's a good time for me to hand over to my very capable successor, Christian Nilsson. So thanks again for great cooperation over the years.

And with that, we close the session. We'll see you in about a quarter's time.

Thanks, Timo.