Q1 2024 ABB Ltd Earnings Call

Ansofi Nord: Greetings to you all as I welcome you to this presentation where we will talk through ABB's results for the first quarter. I'm Ansofi Nord, Head of Investor Relations, and next to me here is our CEO, Björn Rosengren, and CFO, Timo Ihamotila.

Greetings to all and I welcome you to today's presentation, we will talk through Abb's results for the first quarter.

Speaker Change: I'm also an old hattaway, Mr Relations and next to me here at ICU beyond roast and ground and CFO T Mo yeah not at all.

Ansofi Nord: They will take you through the presentation before we open up for questions. But before we begin, I should mention the information regarding safe harbor notices on our use of non-GAAP measures on slide two of the presentation. This call includes forward-looking statements based on the company's current expectations and assumptions, which are subject to risks and uncertainty. And with that said, I will kick off the presentation, and I hand over to you, Bjrn. Thank you.

Speaker Change: They will take you through the presentation before we open up for questions, but before we begin I should mention the information regarding safe Harbor notices on our use of non-GAAP measures on slide two of the presentation.

Speaker Change: This call includes forward looking statements based on the company's current expectations and assumptions, which are subject to risks and uncertainties and with that said I'll kick off the presentation and I hand over to you. Thank.

Bjrn Klas Otto Rosengren: Thank you, Anssi. And a warm welcome from me as well.

Speaker Change: Thank you Ron theme.

Speaker Change: And a warm welcome from me as Robyn, let's summarize the quarter on page three.

Bjrn Klas Otto Rosengren: Let's summarize the quarter on page three. The year got off to a good start with orders at $9 billion. This was one of the strongest quarters for ABB. Both electrification and motion were at new record heights, while orders in process automation declined. But remember that the comparables were at an all-time high level of 2.1 billion.

Robyn: The year got off to a good start with orders.

Speaker Change: $9 billion.

Robyn: This is one of the strongest quarters for ABB.

Robyn: Both electrification and motion, while a new record heights.

Robyn: Orders in process automation declined.

Robyn: But remember that the Comparables wassa on their all time high level of $2 1 billion.

Bjrn Klas Otto Rosengren: And importantly, the underlying markets remain consistent with recent quarters. In robotics and discrete automation, you recognize the patent of sharp order decline. In machine automation, you can still see the device effect, and the robotic market declined from last year.

Robyn: And importantly, the underlying markets remain consistent with recent quarters.

Robyn: In robotics and discrete automation you recognize the patent of sharp order decline.

Robyn: In machine automation, you can still see.

Robyn: Despite the effects and the robotic market declined from last year, but.

Bjrn Klas Otto Rosengren: We saw encouraging sequential signs. I will talk more about this on the next slide. To summarize, we see a continued high level of customer activity in their project and systems areas, and it is encouraging to see the positive order development in electrification's short cycle business. I feel even more confident about 2024 than I did coming into the year.

Robyn: We saw encouraging sequentially.

Speaker Change: <unk> I will talk more about this on the next slide.

Speaker Change: To summarize we see continued high level of customer activity in their project and systems areas and it is encouraging to see the positive order development in electrification short cycle business.

Speaker Change: Even more confident about 2024 than it did coming into the year. It was good to see the record level operational EBITA margin of 17, 9%.

Bjrn Klas Otto Rosengren: It was good to see a record-level operation EBITDA margin of 17.9%. This was supported by electrification and process automation, which both delivered new hires. This is a good sign that there is still upside potential in ABB. Also, cash flow was strong at $550 million. A great start to what should be another strong year for cash. We expect free cash flow to be at least similar to last year. Timo will talk more about that later on.

Speaker Change: This was supported by electrification and process automation, which board delivered new highs.

Speaker Change: This is a good sign that there is still upside potential in ABB.

Speaker Change: What's the cash flow was strong at $550 million.

Speaker Change: Great start to what should be another strong year for cash.

Speaker Change: We expect free cash flow to be at least similar to last year T. Mo will talk more about that later on.

Bjrn Klas Otto Rosengren: We published our sustainability report, which included the proof point of our core customer value proposition. We help our customers to avoid 74 megatons of greenhouse gas emissions from the products we sold in 2023. At the current total of 139 megatons, we are on a good path towards our ambition of 600 megatons of avoided emissions by 2030. However, it is short. We had a good start to the year, even stronger than expected for orders and margins.

Speaker Change: We published our sustainability report, which included the proof point of our core customer value proposition. We helped our customers to avoid 74 mega tons of greenhouse gas emissions from the products we sold in 2023.

Speaker Change: At the current total of 139 Meg up guns, we are on a good path towards our ambition of 600 Mega accounts avoided emissions by 2030.

Speaker Change: In short we had a good start to the year, even stronger than expected for orders and margins.

Bjrn Klas Otto Rosengren: We also announced my decision to retire as CEO in August. I will have been with ABB for close to five years. The transition towards the ABB way operating model went even faster than expected, and today ABB is in good shape. I think this is a good time for me to hand over to Morten.

We also announced my decision to retire as CEO.

Speaker Change: In August.

Speaker Change: I will have been with ABB for close to five years the transition towards the ABB way operating model went even faster than expected and today ABB is in a good shape.

Speaker Change: This is a good time for me to hand over to Martin.

Bjrn Klas Otto Rosengren: He has been with ABB for 25 years. He knows the company and his customers well, and importantly, he has a proven leadership track record and a strong belief in the ABB way operating model. I feel confident that ABB will be in good hands. Now, let's talk about the market development on page four. Comparable orders declined by 4%, down from last year's record high.

Martin: He has been with ABB for 25 years.

Martin: He knows the company and its customers well.

Martin: And importantly.

Martin: He has the proven leadership track record and a strong belief in the ABB way operating model I feel confident that ABB will be in good hands.

Martin: Now, let's talk about the market development on page four.

Martin: Comparable orders declined by 4%.

Martin: From last year's record high comparable.

Bjrn Klas Otto Rosengren: And as I mentioned earlier, orders actually came in a bit stronger than expected. I did not foresee both electrification and motion to improve to all-time highs, a very strong achievement.

Martin: And as I mentioned earlier orders actually came in a bit stronger than expected.

Martin: I did not foresee both electrification and motion to improve to all time highs.

Martin: Very strong achievement.

Bjrn Klas Otto Rosengren: In the project and system business, we continue to see high activity, but now also see encouraging signs in the short cycle area, which only declined by low single digits. And in electrification, it even contributed strongly to orders. We called out early that Q4 would be the low point for absolute orders in RA. And we now see a good sequential order increase. However, in machine automation, we still see pre-buy effects. And the order backlog supports deliveries until late summer.

Martin: In the project and system business, we continued to see high activity.

Martin: But now also see encouraging sign in the short cycle areas, which only declined by low single digits and in electrification even contributed strongly to order growth.

Martin: We called out earlier that Q4 would be the low point for the absolute orders in our E <unk>.

Martin: And we now saw a good sequential order increase.

Martin: In machine automation, we still see pre buy effect.

Martin: And the order backlog supports deliveries until late summer. This is when we will get a better believe for where the real market is.

Bjrn Klas Otto Rosengren: This is when we will get a better belief for where the real market is. The robotics market was down in all regions from last year, but the sequential pattern was encouraging. We see continued strong momentum in segments like utilities and data centers, but also in marine imports. Even the building segment supported orders driven by the US commercial segment in electrification. Comparable revenues increased by 2%. Equally supported by price and volume, we had support from the strong order backlog, which continued to grow to $222 billion. And this makes us feel confident for the year ahead.

Martin: Their bodies market was down in all regions from last year, but the sequential pattern was encouraging.

Martin: We see a continued strong momentum in segments like utilities and data centers, but also in marine imports.

Martin: Even the building segment supported orders driven by the U S commercial segment in electrification.

Martin: Comparable revenues increased by 2% equally supported by price and volumes.

Martin: We had support from the strong order backlog, which continued to grow to 22 billion.

Martin: And this makes us feel confident for the year.

Bjrn Klas Otto Rosengren: Book to build was positive at 1.14. Now let's turn to slide five and look at the geographical development. The US remains the most robust market, but the American region declined slightly due to the timing of large orders. Amir remains stable.

Martin: Book to Bill was positive at 1.2 thousand 14.

Martin: Now, let's turn to slide five and look at the geographical developments.

Martin: The U S remains the most robust market, but the American region declined slightly due to timing of large orders.

Martin: I remain stable and we see very strong development for example in India.

Bjrn Klas Otto Rosengren: And we see very strong development, for example, in India. China declined year over year with soft activity in several segments, but the message internally is that we see a stable sequential pattern in China and with a slight positive undertone for the future. Europe dropped by 9%, with the biggest decline recorded in the areas of robotics and discrete automation.

Martin: China declined year over year with soft activity in several segments.

Martin: But the message internally is that we see a stable sequential pattern in China and with a slight positive undertone for the future.

Martin: Europe dropped by 9%.

Martin: With the biggest decline recorded in the area of robotics and discrete automation.

Bjrn Klas Otto Rosengren: Now let's turn to slide C and our earnings outcome. In the charts, you see the strong improvement in both earnings and margins; operational EBITDA was up 11%, and the margin increased by 160 basic points to 17.9%, a new record level.

Speaker Change: Now, let's turn to slide six.

Speaker Change: And our earnings alcohol.

Speaker Change: In the chart you see the strong improvement in both earnings and margin operational EBITA was up 11% and the margin increased by 160 basis points to 17, 9% a new record level we.

Bjrn Klas Otto Rosengren: We had a positive impact from price, operation leverage, on Volumes and Continuous Efficiency Measures. These more than offset higher spend on, for example, R&D. In the quarter, we also had about 20 basic points of support from corporate costs being slightly lower than expected due to some timing impact. It was good to see the gross margin increase by 270 basic points to 37.3%. All in all, it was a good achievement by the team. With that, I hand over to Timo.

Speaker Change: We had positive impact from price operation leverage.

Speaker Change: On volumes and continues efficiency measures.

Speaker Change: This more than offset higher spend in for example, R&D.

Speaker Change: In the quarter. We also had about 20 basis points support from corporate costs being slightly lower than expected due to some timing impacts.

Speaker Change: It's good to see the gross margin increased by 270 basis points to 37, 3%.

Speaker Change: All in all it was a good achievement by the teams.

Chemo: With that I hand over to chemo.

Timo Ihamuotila: and greetings to everyone from my side as well. Let's now flip to slide 7 and electrification. I have to say that it was really good to see them deliver new record-level orders. The market environment in the project and system businesses remained good. And this was now coupled with a mid-single-digit growth in short-cycle orders. This combination resulted in strong comparable order growth of 8% year-on-year. We saw stability or improvements across most segments, with outstanding growth in the areas of data centers and utilities.

Chemo: Thank you Brian.

Chemo: And greetings to everyone from my side as well, let's now flip to slide seven and electrification I have to say that it was really good to see them deliver a new record level of orders the market environment in the project and system businesses remained good.

Speaker Change: And this was now coupled with a mid single digit growth in short cycle orders. This combo resulted in the strong comparable order growth of 8% year on year.

Speaker Change: We saw stability or improvements across most segments with outstanding growth in the areas of data centers and utilities as Bjorn mentioned the building segment improved after several quarters of decline. This was driven by a good demand in commercial buildings in the United States.

Timo Ihamuotila: As Bjrn mentioned, the building segment improved after several quarters of decline. This was driven by good demand for commercial buildings in the United States, which offset the general weakness in the building segment in China. Europe continues to show signs of stabilization at a lower level.

Speaker Change: Which offset the general weakness in the building segment in China.

Europe continues to solar shines of stabilization at a lower level.

Timo Ihamuotila: Turning now to revenues, the electrification team again executed well and delivered 6% comparable growth. Price was slightly positive, but the key driver was higher volumes supported by backlog deliveries. And this time, with the added support from the book and bill business, operational impact from higher volume and pricing, coupled with continuous improvement measures, offset some of the cost inflation and resulted in a new record high margin of 22.4 percent. All in all, a very strong quarter for electrification, adding to our confidence for the year.

Speaker Change: Turning now to revenues the electrification theme again executed well and delivered 6% comparable growth price was slightly positive, but the key driver was higher volumes supported by backlog deliveries and this time with the added support from the book and Bill business.

Speaker Change: Operational impact from higher volume and pricing coupled with continuous improvement measures offset some of the cost inflation and resulted in a new record high margin of 22.4%.

Speaker Change: All in all a very strong quarter for electrification, adding to our confidence for the year.

Timo Ihamuotila: Looking ahead into the second quarter, we currently expect the growth rate in comparable revenues to be higher than what we saw in Q1 and the operational EBITDA margin to be slightly up sequentially. Now, let's move to slide eight and the motion business area.

Speaker Change: Looking ahead into the second quarter. We currently expect the growth rate in the comparable revenues to be higher than what we saw in Q1 and the operational EBITA margin to be slightly up sequentially.

Speaker Change: Let's move to slide eight and the motion business area. They also delivered a new record level for orders at $2.3 billion up one percentage point on comparable basis.

Timo Ihamuotila: They also delivered a new record level for orders at $2.3 billion, up one percentage point on a comparable basis. This was supported by the project and systems businesses, and the traction division was the engine for order growth, including the 150 million ticket in Australia. But we also saw encouraging signs for the short cycle business through the quarter. Besides the good momentum in rail, there were favorable moves in oil and gas and power generation, including investments in grid stabilization equipment. Some slowness from last year's high level was noted in areas like pulp and paper, chemicals, and HVAC.

Speaker Change: These will support data by the project in Houston businesses, and the traction Division was the engine for order growth, including the 150 million ticketing Australia.

Speaker Change: But we also saw encouraging signs for the short cycled business through the quarter.

Speaker Change: Apart the good momentum in rail they were favorable moves also in oil and gas and power generation, including investments in grid stabilization equipment.

Speaker Change: Some slowness from last year's high level was noted in areas like pulp and paper chemicals and HVAC looked.

Timo Ihamuotila: Looking at revenues, we recorded a comparable decline of 6% as contribution from backlog in our traction and large motor businesses was impacted by some delivery timing changes and did not fully compensate for the weaker short cycle business. The price impact was slightly positive, while volumes declined overall. Motions' operational EBITDA margin came in at 18.5%, decreasing by 40 basis points hampered by operating leverage on lower volume.

Speaker Change: Looking at revenues, we recorded a comparable decline of 6% as contribution from backlog in our traction in large motor businesses was impacted by some delivery timing changes and did not fully compensate the weak or a short cycle business.

Speaker Change: The price impact was slightly positive while volumes declined overall.

Speaker Change: <unk> operational EBITA margin came in at 18, 5% decreasing by 40 basis points hampered by operating leverage on lower volumes.

Timo Ihamuotila: That said, the team did a good job of offsetting some higher expenses related to salaries, R&D, and SG&A with price increases. Looking ahead into the second quarter, we anticipate a low comparable growth in comparable revenues year-on-year and operational EBITDA margin to be slightly up sequentially. Then, turning to slide nine, and process automation.

Speaker Change: That said the team did a good job in offsetting some higher expenses related to salaries R&D and SG&A with price increases looking ahead into the second quarter, we anticipate a low comparable growth in comparable revenues year on year and operational EBITA margin to be slightly up sequentially.

Speaker Change: Then turning to slide nine and process automation.

Timo Ihamuotila: And looking at the chart on the left, we can see orders down 20% on a comparable basis. Note, though, that this is down from last year's record level of over $2 billion. The decrease is mainly due to the combination of last year's quarter being supported by a very high share of large orders, and this year, we instead had some timing pushouts. In my view, the order level of 1.7 billion is a good indication that the underlying market remains buoyant and that PEA continues to focus on quality of revenue.

Speaker Change: And looking at the chart on the left we can see orders down 20% on a comparable basis note, though that this is down from last year's record level of over $2 billion there.

Speaker Change: The decrease is mainly due to the combination of last years quarter being supported by very highest share of large orders and this year. We instead had some timing push outs in my view the order level of $1 7 billion is a good indication that the underlying walking market remains buoyant and at <unk>.

Speaker Change: <unk> continues to focus on quality of revenues.

Timo Ihamuotila: This is the right strategy for PEA, particularly when looking at the project pipeline, which continues to be strong. But total orders declined, down in the large process-related segments of oil and gas, pulp and paper, and mining. However, a positive development was recorded in ports, as well as in the less sizable low-carbon-related areas, such as nuclear, carbon capture, and hydrogen.

Speaker Change: This is the right strategy for P. Eight, particularly when looking at the project pipeline, which continues to be strong, but total orders declined down in the large process related segments of oil and gas pulp and paper and mining. However, a positive development was recorded imports alloys as well as in the letter.

Speaker Change: Sizable low carbon related areas, such as nuclear and carbon capture and hydrogen.

Timo Ihamuotila: Comparable revenues were up by 12%, which was even better than we anticipated, with all divisions contributing to growth. Deliveries from the order backlog were the key drivers, but we also had some positive pricing coming through. I took a quick look at history, and this was actually the 14th straight quarter that process automation had a positive book-to-bill job really well done. At 15.6%, process automation also delivered a new record high margin, up by 140 basis points from last year. All divisions contributed on the back of better project execution and delivery from the backlog with improved cross-margin. It's really nice to see that all divisions are now in the so-called teens' range.

Speaker Change: Comparable revenues were up by 12%, which was even better than we anticipated with all divisions contributing to growth.

Speaker Change: Deliveries from the order backlog, where the key drivers, but we also had some positive pricing coming through.

Speaker Change: I took a quick look at history and this was actually the 14th straight quarter that process automation has had a positive book to bill job really well done.

Speaker Change: At 15, 6% also process automation delivered a new record high margin up by 140 basis points from last year.

Speaker Change: All divisions contributed on the back of better brokerage execution and delivering from the backlog with improved gross margin. It's really nice to see that all divisions are now in the so called Dean's range.

Timo Ihamuotila: Looking at our expectations for the second quarter, we foresee at least a mid-single-digit growth rate for comparable revenues and the operational EBITDA margin to be ballpark similar to the first quarter. On slide 10, we then turn to robotics and discrete automation. As mentioned earlier, we delivered on our prediction of sequentially higher orders. But from last year's very high level, comparable orders declined sharply by 30%.

Speaker Change: Looking at our expectations for the second quarter, we foresee at least a mid single digit growth rate for comparable revenues and operational EBITA margin to be ballpark similar to the first quarter.

Speaker Change: On Slide 10, we then turn to robotics and discrete automation as mentioned earlier, we delivered on our prediction of sequentially higher orders, but from last year's very high level comparable orders declined sharply by 30%.

Timo Ihamuotila: In robotics, demand declined across the board, but the sequential pattern was encouraging, including in China. Inventory levels in the channels did seemingly normalize as expected towards the end of the quarter. In machine automation, the order backlog remains high and should support deliveries into the latter part of the summer. Meanwhile, customers hold on placing orders awaiting deliveries from Pirivai.

Speaker Change: In robotics demand declined across the board, but the sequential pattern was encouraging including China.

Speaker Change: Inventory levels in the channels did seemingly normalized as expected towards the end of the quarter.

Speaker Change: In machine automation, the order backlog remains high and should support deliveries into the latter part of the summer.

Speaker Change: Meanwhile, customers hold on placing orders awaiting deliveries from theory buys.

Timo Ihamuotila: Moving to revenues, which decreased by 7% on a comparable basis, this is the combined outcome of machine automation recording a strong positive development as it executes on the backlog and the adverse impacts from the short cycle business still under pressure in robotics. Leverage on the lower volumes put pressure on the margin year on year to 13.2%, which more than offset positive mix and stringent cost efforts. For the second quarter, we expect a mid-single negative growth in comparable revenues, with some sequential pressure on the operational EBITDA margin, mainly from MIG. Moving on to slide 11, showing the operational EBITDA bridge.

Speaker Change: Moving to revenues, which have decreased by 7% on a comparable basis. This is the combined outcome of machine automation recording a strong positive development as they execute on the backlog and the adverse impact from the short cycle business still under pressure in robotics.

Speaker Change: Leverage on the lower volumes put pressure on the margin year on year to 13, 2%, which more than offset positive mix and stringent cost airports.

Speaker Change: For the second quarter, we expect a mid single negative growth in comparable revenues with some sequential pressure on the operational EBITA margin mainly from mix.

Speaker Change: Moving onto slide 11, showing the operational EBITA bridge. The profile is very similar to recent quarters with earnings improvement driven by strong operational performance.

Timo Ihamuotila: The profile is very similar to recent quarters, with earnings improvement driven by strong operational performance. We benefit from positive price execution at about 1% and leverage on higher volume. Unlike recent quarters, it is good to see a positive impact from efficiency measures in operations which more than offset cost inflation linked to labor, SG&A, and R&D. All in all, an 11% improvement in operational EBITDA with a 160 basis points margin increase. A great outcome.

Speaker Change: We benefit from the positive price execution at about 1% and leverage on higher volumes.

Speaker Change: Unlike recent quarters. It is good to see a positive impact from efficiency measures in operations, which more than offset cost inflation linked to labor SG&A and R&D.

Speaker Change: All in all an 11% improvement in operational EBIT or with a 160 basis points margin increase.

Speaker Change: Great outcome.

Timo Ihamuotila: Now let's move to cash flow on slide 12. The 551 million of free cash flow was, in my view, an excellent cash generation for a first quarter, the best Q1 at least during my seven years at the company. All business areas had a positive operating cash flow, and three out of four BAs improved from last year. The increase was mainly driven by better operational performance as well as a less buildup of networking capital, mainly related to strong collection of receivables and less inventory buildup versus the prior year.

Speaker Change: Now, let's move to cash flow on slide 12.

Speaker Change: The 551 million of free cash flow was in my view and excellent cash generation for a third quarter best Q1 at least during my seven years at the company.

Speaker Change: All business areas had a positive operating cash flow and three out of four B has improved from last year the.

Speaker Change: The increase was mainly driven by better operational performance as well as less buildup of networking capital mainly related to strong collection of receivables and less inventory build up versus the prior year.

Timo Ihamuotila: This resulted in an increase in free cash flow of $389 million, despite higher CapEx investments. This puts us on a good path to deliver another year of strong cash, at least similar to last year's 3.7 billion. And with that, I will hand over to Bjrn to round off this presentation.

Speaker Change: This resulted in an increase in free cash flow of $389 million, despite higher capex investments.

Speaker Change: This puts us on a good path to deliver another year of strong cash at least similar to last year's $3 7 billion.

Speaker Change: And with that I will hand over to burn to round off this presentation. Thank you team up.

Bjrn Klas Otto Rosengren: Thank you, Timo. Let's finish off with some outlook comments on slide 13. We had a stronger than expected start to the year, so we raised our margin ambition for 2024. We now expect the operation EBITDA margin to be about 18%. For the second quarter, we anticipate a mid-single-digit comparable revenue growth year-over-year and the operation EBITDA margin to be slightly higher than in the first quarter of 2025. Now, let's open up for questions.

Burn: Let's finish off with outlook comments on slide 13.

Burn: We had a stronger than expected start of the year. So we raised our margin ambition for 2024, we now expect the operational EBITA margin to be about 18%.

Burn: For the second quarter, we anticipate a mid single digit comparable revenue growth year over year, and the operating EBITA margin to be slightly higher than in the first quarter 2024.

Speaker Change: Now, let's open up for questions I'd say, yes, let stacy and for those of you who have dialed in on the phone you Press Star 14 to register to ask a question.

Ansofi Nord: I say yes, let's do so. And for those of you who have dialed in on the phone, you press star 14 to register to ask a question. And to secure the sound quality, I just remind you to mute the webcast as your line is open for questions. You can also submit questions through the online tool in the webcast. And for the phone lines, again, I kindly ask you to limit yourself to one question and then get back in line for more.

Speaker Change: And to secure the sound quality I, just remind you to mute the webcast. That's your line is open for questions.

Speaker Change: Can also put questions through the online tool in the webcast and for the phone lines again, I kindly ask you to limit yourself to one question and then get back in line for additional <unk>.

Ansofi Nord: And with that, I say we open up for the first question. And we open the line for Andre at UBS. Are you with us? No. Let's see if we're more successful with Daniela, or if we have a technical issue.

Speaker Change: And with that I say, we open up for the first question and we open the line for Andre at UBS with Us.

Speaker Change: No.

Andre: Seems not.

Andre: Let's say, if we're more successful with Daniela.

Andre: Or if we have a technical issue.

Daniela Costa: Hi, can you hear me? It's Daniella from Goldman here.

Daniela: Hi can you hear me.

Bjrn Klas Otto Rosengren: Very good. Perfect. Thank you. So, yeah, I guess I'll keep it to one, as you asked. And my main question is regarding electrification products, which seems to be the largest part of the surprise versus the market and also of your margin commentary, I guess, from what you've said. Can you give us a little bit more of a mix of what's happening in low voltage versus medium voltage and how much of this very strong margin you've had and the guidance going forward comes from that mix? And this color would be very helpful. Thank you. Good

Goldman: From Goldman here very good.

Speaker Change: Perfect. Thank you.

Speaker Change: Yes, I guess I'll keep it to one as you ask my main question is regarding electrification products, which seems to be the largest part of the surprise versus the market. Then also off your margin commentary I guess from what you said can you give us a little bit more of a mix of what's happening in low voltage versus medium voltage and how much of these very strong.

Speaker Change: Margin you've had in the guidance going forward comes from some from that makes this color would be very helpful. Thank you.

Speaker Change: Thank you, let me talk a little bit about that yeah. I mean, we said that we see strong development in utilities, but also in data centers. We can see smart power also delivering near record margin, which is the coming from the low voltage and low voltage switchgear, but I also think that.

Bjrn Klas Otto Rosengren: but also in data centers. We can see smart power also delivering record margin, which is coming from low voltage and low voltage switchgear. But I also think that the US is a strong driver, even though the whole market is good and the improvements from the GIS integration are actually paying off. And we are starting to see really good margins also in the North American region, which supports us. So it's a good development, of course, in the medium voltage, you know, like the DS business, but also in the low voltage is developing well.

Speaker Change: The U S is the strong driver, even though the whole market is good and the improvement from the G. I S integration is actually paying off and we start seeing really good margins also.

Speaker Change: North American region, which supports US up so is good development of course in the medium voltage and I would like the D. S business, but also on the low voltage is developing well.

Bjrn Klas Otto Rosengren: And good margin also in Thomas and Betts' business, which is very much related also to that the US is moving from overlying infrastructure in California and in Florida to actually dig the whole infrastructure underground because of fires and tornadoes. And our medium voltage equipment underground, the switchgear there, is a very strong part of that.

Speaker Change: Good margin also in there.

Speaker Change: Tomas Embeds the business.

Speaker Change: Which is very much related also to that do you, whereas this.

Speaker Change: Is it moving from.

Speaker Change: Overlying.

Speaker Change: Infrastructure in California and in.

Speaker Change: Florida to actually dig the the whole infrastructure underground because of fires center in a dose and our medium voltage.

Speaker Change: Quipped meant underground switch gear. There is there is a very strong part of that business.

Bjrn Klas Otto Rosengren: Maybe just double checking here on the subdivisions, are there any areas that are still lagging your targets in our big self-help opportunities, or now it's just more about growth continuing to be good for the margin uptick from here?

Speaker Change: Maybe just double checking in here on the subdivisions are there any areas. There are still lagging your targets in our big self help opportunities or now it's just more about growth continues to be good for the.

The margin uptick from here.

Speaker Change: Of course stability profitability and figure out and we are very profitable today. So yes, we are pushing growth and I think you can also see that in in this report, but there is still potentially in the north American market on the margin side saw so yeah, I think that could be but but you know over 20.

Speaker Change: 2% I don't think that is what's going to drive the value for this business. It's the growth that is the focus going forward.

Bjrn Klas Otto Rosengren: You know, of course, stability and profitability, and we are very profitable today. So, yes, we are pushing growth. And I think you can also see that in this report. But there is still potential in the North American market on the margin side. So, yeah, I think that could be. But, you know, over 22 percent, I don't think that is what's going to drive the value of this business. It's growth that is the focus going forward. Okay, thank you. Thank you, Daniela, and we'll try Andre again. UBS, not to be confused with,

Speaker Change: Okay. Thank you.

Speaker Change: Daniela.

Speaker Change: And were try Andre again.

Speaker Change: UBS.

Speaker Change: Are you with us now.

Speaker Change: Hi, Yes, its Hamilton, John behalf, Andre and I just wanted to ask on the show side could you provide a bit more color on the short cycle revenue improvement in electrification in Q1 and also some short cycle orders at Pittsburgh proving in motion could you. Please comment on what is driving this geographically and by customer segment.

Tmall: I think I'll give this to Tmall sure sure. Thanks Andre Yeah. So.

Tmall: As we said in electrification, we had actually a high single digit improvement in short cycle, which is really good to see and it comes from the same sectors what.

Tmall: Beyond what's disgusting I E. L. S. B data centers. There is of course, some shorts out the cycle business going to utilities as well, but we also saw some encouraging signs in smart buildings, which was really really nice to see and actually even in China. We saw some encouraging signs on short cycle. So I think these are the segments.

Ansofi Nord: Okay, thank you. Thank you, Daniela. And we'll try Andre again. UBS, are you with us now?

Timo Ihamuotila: I think I'll give this to Timo. Sure, sure. Thanks, Andre.

Timo Ihamuotila: And actually, even in China, we saw some encouraging signs on the short cycle. So I think these are the segments and also a little bit of geographic color; the US was clearly strong. But, as I said, also a little bit of positive signs in China on the short cycle.

Tmall: And also a little bit of a geographic color U S was clearly strong but as I said also a little bit of positive signs in China on short cycle.

Timo Ihamuotila: Very good. Thank you. And now we'll try Will at Kepler.

Speaker Change: Very good thank you.

Speaker Change: And now we'll try we'll at Kepler.

William Mackie: Are you with us? Your line should be open. Yeah, good morning to everyone. Thanks.

Speaker Change: Your line should be open.

Kepler: Yes, good morning to everyone and thanks for the time My question will focus on China.

Unknown Speaker: Very good. Thank you.

Kepler: Can you please throw out some color across.

Ansofi Nord: And now we'll try Will at Kepler. Are you with us? Your line should be open.

Kepler: You see stabilization or improvement as we think across either the divisions or the business channels or the end market vertical.

Bjrn Klas Otto Rosengren: Yeah, let me start, and then maybe Timo can fill in afterwards. But yeah, it's quite clear that the momentum in China is starting to move more positively, and this is the first time in a year that we feel that in our operations. So maybe it's not seen in the minus 18, but I think the underlying. You saw the electrification where you have the short cycle business, it's just marginally down compared to the very, very strong last year.

Speaker Change: Specifically, how that might pan out across the robotics segment. Thank you Yeah, Let me start and then maybe Tim who can fill in afterwards, but.

Tim: Yeah, it's quite clear that the momentum in China, you start moving to more positive and this is the first time in a year that we feel that in our operations. So maybe it's not seen in the minus 18, but I think down the line you saw the electrification where you're out in the short cycle business is <unk>.

Tim: <unk> are down.

Tim: Down compared to very very strong.

Bjrn Klas Otto Rosengren: So I think the whole industry part is the positive and driving part, while the building sector is still soft. But also, robotics continues to be the biggest challenge, of course. What good is that on that? We've seen good growth outside China, which actually compensates for the slower. So India is actually sticking out quite a lot. And so if you look at Asia by it all, it's actually becoming flat.

Tim: Last year, so I think the whole industry part is the positive end driving part while the.

Tim: The building sector is still soft.

Tim: But also the robotics.

Tim: <unk> continues to be the biggest challenge of course in the in what good is that on that we've seen a good growth outside China, which actually compensate there.

Tim: The softer softest, so India is actually sticking out quite a quite a lot and so if you look at Asia by at all it's actually becomes flat.

Timo Ihamuotila: But you also heard from China that the GDP for the first quarter was 5.3 percent. I think that is very much in line with our view. And also, the PMI was about 50 percent, which is now somewhat positive in the industry. So we do expect to see more growth in China. Yeah, maybe.

Tim: And are you also heard from there from China that the GDP for the first quarter was five 3% I think that is very much in line with our with our view and also.

Tim: The PMI was about 50% of which is now.

Tim: Somewhat positive in there in the industry. So we do expect to see more growth in China going forward.

Timo Ihamuotila: Yeah, maybe if I just throw something on the robotics side. So we saw, at this time, I would say, sort of finally, the normalization of the channel. And in that sense, in robotics going into Q2, you know, it's early days to say this, but I think in robotics, we will see some order growth in China in Q2, and that's possible. I mean, we, of course, don't need that, but it's possible that we would even see a little bit of order growth overall in China in Q2. So we are seeing some sort of early, early signs. Also, actually, EL smart buildings are slightly positive in China. So there are snippets of information, as Bjrn was saying.

Speaker Change: Yeah, maybe if I just throw something on the on the robotic side. So we.

Speaker Change: We saw.

Speaker Change: At this time I would tell you so to finally, the normalization of the channel and in that sense in robotics going into Q2, you know it's early days to say this but I think in robotics, we will see some order growth in China, Q2, and it's possible I mean, it'll be of course don't need it but it is possible that we would even see.

Speaker Change: A little bit of order growth overall in China Q2. So we are seeing some sort of early early signs also actually.

Speaker Change: Ill.

Speaker Change: Buildings.

Speaker Change: Likely positive in China. So there are state bits of information that aspirin will say, but maybe it's also worth noting that if I remember correctly, China has been going down maybe seven quarters for us.

Timo Ihamuotila: But maybe it's also worth noting that, if I remember correctly, China has been going down, maybe seven quarters for us. And China out of our total revenue now is about 14%. It used to be higher, but in the US, it's actually now about 26%. So there's been a bit of a tilt in that direction as well. And we, of course, would like to see growth in China as it's quite a profitable business for us as well.

Speaker Change: <unk>.

Speaker Change: China out of our total revenue now is about 14% it used to be higher U S. It's actually now about 26%. So theres been a bit of a deal in that side as well and we of course would like to see a growth in China, It's a quite profitable business for us as well.

William Mackie: Thanks a lot. Thanks Will. And we'll open up the line for Alex at Bank of America Merlinch.

Speaker Change: Thanks, a lot thanks.

Speaker Change: Well.

Speaker Change: And we open up the line for Alex at Bank of America Merrill Lynch.

Alexander Virgo: If I take out that rail order, it looks like the orders were down about 7, 6, 7 percent, so kind of in line with where they were in Q4. So I'm just wondering what we're seeing in terms of the positives that you're talking about here, and how you think about the signs suggesting things are getting better, because that would seem to suggest the underlying business is perhaps still pretty soggy. And I wondered if you could sort of take that into just developing a little bit around the margin development in motion and how we think about that for the balance of the year. Thank you.

Alex: Yes. Thanks.

Alex: Morning Bill.

Alex: The question I.

Alex: I wondered if you could.

Alex: Just dig a little bit.

Alex: Motion for me.

Alex: If I take out that rail order it looks like the orders were down about 767% so kind of in line with where they were in Q4. So I'm just wondering.

Alex: What we're seeing in terms of the <unk>.

Alex: Positives that youre talking about here and how youre thinking about the signs, suggesting things are getting better because.

Alex: Which seem to suggest the underlying business perhaps.

Alex: Still pretty.

Alex: It's still pretty soggy.

Alex: Wondered if you could sort of take that into.

Alex: Just developing a little bit around the.

Alex: Margin.

Speaker Change: Development and motion and how we think about that for the balance of the yet. Thank you sure yes.

Bjrn Klas Otto Rosengren: Sure. As you know, we've seen over the years a softening in the short cycle business, and the project business has been the driving force in motion for quite some time. And in addition, there were some delivery issues from our order book during the quarter, which we believe will normalize things during the year. So revenues were a little bit lower than we anticipated. But we still see many of these orders that will be delivered during the year.

Speaker Change: Yes, you know we have seen during the years softening in the short cycle business and the project business is has been the driving force in motion for quite some time.

Speaker Change: And then in addition, there was some delivery issues from our order book during the quarter, which we believes will normalizing.

Speaker Change: During the year so.

Speaker Change: Even the revenues were a little bit lower than we anticipated, but we still see.

Many of these orders that will be delivered out during the.

Bjrn Klas Otto Rosengren: You know, our motion business actually consists of two areas. You know, we have the motor business, and you have the delivery business. And it's quite clear that during the last 12 months we've seen large motors and generators as well as medium voltage switchgear and an enormously strong development of the service business. So that is a little bit of a shift from what you've seen before, and you know that the most profitable division we have within motion is the Unknown Attendee, Alessandro Foletti, Guillermo Peigneux, Marco Kisic, Anke Hampel, Massimiliano, Moving towards this project business, but we feel confident that we will be delivering the right volumes for the full year but also protecting the margin.

Speaker Change: The year.

Speaker Change: Motion business actually consists of two areas you know we have the motor business and you have the drives business and it's quite clear that during the last 12 months, we've seen large motors and generators as well as the medium voltage switch gear and including it enormously strong development of the service.

Speaker Change: S business.

Speaker Change: So that is a little bit of shift what you've seen before in.

Speaker Change: And you know that the most profitable division we had within motion has the is the.

Speaker Change: Low voltage drives which have had a little bit softer development. During the year is still of course, very good, but but not in that enormous drive that we had there.

Speaker Change: During last year, So I think it's a little bit of a mix.

Speaker Change: Moving towards this.

Speaker Change: Business.

Speaker Change: But we feel comfortable we're comfortable confident that we will be delivering out to the right volumes for the full year, but also protect the margin.

Timo Ihamuotila: Is there anything you would like to add? Yeah, maybe just on the margin question. So, as we said, we expect going into Q2, sequentially, motion's margin to be slightly up, but not reach the levels because of the mixed reasons Bjrn discussed last year. So I think it was a little over 20% last year. So that's for the quarter. But, you know, let's see how it goes for the full year. If we look at the overall full year drivers for margin by business area, BL, we clearly expect to be positive, while BA may be slightly positive. Movement could be around last year's levels, just ballpark stuff. And then RA is probably a bit down, something like that.

Speaker Change: If you would like to add maybe just on the on the margin question. So as we said that we expect going into Q2 sequentially. Most of this margin to be slightly up but the <unk>.

Speaker Change: Not reach the levels because of the mixed reason beyond discussed off last year. So I think it was looked like a little over 20% margin last year. So that's for the quarter.

Speaker Change: But you know, let's see how it goes for a full year. If we look at the overall full year drivers for margin by business area. We clearly expect to be positive b, a maybe slightly positive motion could be around last year's levels, just ballpark stuff and then probably down something like that and I also like to men.

Bjrn Klas Otto Rosengren: But I also like to mention that because when it comes to large motors and generators, which was a crisis business in ABB, and I think they've done a remarkable job of improving the performance of that business. And today it is between 10 and 15%, which I think is a really strong margin level for that. So that is, of course, also helping and supporting our margins.

Speaker Change: To that because I think when it comes to large motors and generators, which was a crisis business in ABB and I think that on a.

Speaker Change: Remarkable job to improve the performance of that business and today. It is between 10, and 15%, which I think is.

Speaker Change: Is there really as strong a margin level for that so that is of course also helping is supporting our margins.

Speaker Change: Okay Super helpful. Thank you very much can I just clarify one final thing just on your last answer to the last question from well on China.

Alexander Virgo: just on your last question from Will on China: how much of your sort of positive comments on China are driven by the fact that the macro data has got a little bit better than we thought, the PMI GDP you mentioned there? And how much was actually the conversation you're having with people on the ground towards the back end of the quarter? Because obviously, the order decline you mentioned is 18%.

Speaker Change: How much of how much of your sort of positive comments on China is driven by.

Speaker Change: Great Day, you just got a little bit better than we thought PMI GDP, you mentioned and how much was actually the conversations youre, having with people on the ground towards the backend of the quarter because obviously the order decline you mentioned, obviously the 18% in the quarter. It was minus seven I think in Q4.

Speaker Change: So just just to push you a little bit on that no I think the macro data that that is just confirming our conversation with our businesses.

Bjrn Klas Otto Rosengren: No, I think the macro data is just confirming our conversation with our businesses, and I'm sure we wouldn't even mention anything positive if we didn't hear these positive signals from our local operations in China. Yeah, exactly. I mean, we run...

Speaker Change: I'm sure you, we wouldn't even mention anything of a positive if we didnt hear these positive signals from our local operations yeah in China. So yeah exactly I mean, we ran quite rigorous five quarter rolling estimation process. This is of course done by business and by division, but we get snippets of information on geographic level on that stuff.

Timo Ihamuotila: Yeah, exactly. I mean, we run quite a rigorous five-quarter rolling estimation process. This is, of course, done by business and by division, but we get little snippets of information at the geographic level on that stuff as well.

Speaker Change: That's one.

Speaker Change: And I would say it gives us as he is also fair to say that this is the first time in the last five.

Bjrn Klas Otto Rosengren: And I think it's also fair to say that this is the first time in the last five quarters that we are seeing any positive signs on the local market.

Speaker Change: Quarters that we are seeing any positive signs on.

Speaker Change: The local market.

Timo Ihamuotila: Yeah, great. Thank you very much, Grace. Thanks, Alex. And then we'll move on.

Speaker Change: Yeah great.

Speaker Change: Alright, Thank you very much guys.

Speaker Change: Thanks, Alex.

Speaker Change: And then when they have to show them that they just Betsy.

Sean McLoughlin: Colleagues. And then we move on to Sean at HSBC.

Speaker Change: Good morning, Thanks for taking my question, just coming back to short cycle trends you'd previously flights, whereas construction is an area of particular weakness maybe you could detail how youll see in the statements.

Timo Ihamuotila: Thank you for taking my question. Just coming back to the short cycle trend, you previously flagged Resi construction as an area of particular weakness. Maybe you could detail how you're seeing this segment on a sequential basis and maybe which other short cycle areas you think have room for further improvement.

Speaker Change:

Speaker Change: On a sequential basis, and maybe which other shorts likes areas, you're seeing have room for further improvement.

Speaker Change: Yeah, maybe I'll start.

Speaker Change: Stop here thanks for the question so.

Speaker Change: First of all rest of it is about 10% of electrification retro remember that it's of course, a super important market for us in places like Germany in particular, and there we actually have seen a little bit of a pickup in the business, but overall, it's not like a huge part of our overall activation and where we are.

Timo Ihamuotila: of electrification. Let's remember that it's, of course, a super important market for us in places like Germany, in particular, and there we actually have seen a little bit of a pick-up in the business. But overall, it's not a huge part of overall electrification. And where we are seeing the pickup on the short cycle, and a lot of that is coming from the smart power division, which Bjrn discussed earlier, is in the areas of data centers, as we discussed, some going to utilities, and also non-Resi construction, which is, if I remember correctly, about 20% of EL's business. So it really is, you know, quite broad based. And we have a very, very strong product portfolio, especially competitive in smart power. So it's really good to see the growth there.

Speaker Change: Seeing the pick up on the short cycle and lot of that is coming from the smart power Division, which bill discussed earlier east in the areas of data centers that we discussed some going to utilities and also non resi construction, which is if I remember correctly about 20% of E health business. So it really is you know cry.

Speaker Change: Quite broad based and.

Speaker Change: And we have a very very strong product portfolio, especially ultra competitive wise and smart power. So it's really good to see the growth there.

Sean McLoughlin: Are there areas that you think are still lagging behind?

Speaker Change: All the areas that you think are still lagging behind.

Unknown Speaker: Sorry, I didn't understand the question.

Speaker Change: Sorry, I didn't get the question.

Sean McLoughlin: and markets that you think, particularly on a short cycle, that are still lagging behind.

Speaker Change: Particular end markets that you think I think they'll all the short cycle that all still lagging behind.

Timo Ihamuotila: Outside Resi, I don't think there is a huge bunch of outside Resi construction, which is sort of lacking behind. I mean, as I said, we had high single-digit short cycle growth in electrification during Q1, which was actually slightly more positive than we expected going into the quarter. And now it would be, of course, great to see a similar trend start happening in motion as well.

Speaker Change: Outside the rest of it.

Speaker Change: I don't think there is a huge bunch of outside reticle inspection and construction, which is sort of lagging behind I mean, as I said we had.

Speaker Change: High single digit short cycle growth in electrification during Q1, which was actually slightly more positive than we expected going into the into the quarter and now it would be of course, great to see a similar trend stop happening motion as well.

Martin Wilkie: Okay, very good. Thank you, Sean. And then we move to Martin at Citi.

Speaker Change: Okay very good. Thank you Sean and then we moved to Boston at Citi. Your line should be open.

Bjrn Klas Otto Rosengren: Good morning, it's Martin from City. Can I drill down further into North America electrification, there's a lot of industry commentary on shortages for switchgears and transformers in particular, and just to understand what you're seeing there and what portion of your US business is impacted. [inaudible] Unknown Speaker, Unknown Attendee, Unknown Attendee, Unknown Speaker, Maybe I'll start and then Tim Yeah, it's correct that, you know, building out the infrastructure for the whole electrification that is taking place, the transformer plays an important role.

Speaker Change: Yes. Good morning. Thank you so much in that city and can only drill down further into north American electrification, there's a lot of industry commentary or shortages or excuse in transformers.

Boston: And just to understand what you're seeing there and what portion of your U S business is impacted.

Boston: Many of these shortly.

Boston: Understand what that means for our lead.

Boston: China, we're hearing some comment.

Boston: Okay.

Speaker Change: A couple of years to deliver a worsening of pricing if your plans for capacity additions just to give some color around that subset of the business. Thank you maybe I'll start and then Tim who can add on to that is correct that the bill.

Speaker Change: Building out the infrastructure in the whole electrification that is taking place at transformer plays an important role and there is shortages of transformers.

Bjrn Klas Otto Rosengren: And there are shortages of transformers in the market at the moment, and you have longer delivery times there than many other suppliers of equipment setting up some of the standards. So that that is correct. But it is not on a level, as you can see, we get quite good revenues still in both the utility sector as well as in the data centers, which are growing very sharply during this period. So it isn't becoming a huge issue.

Speaker Change: In the market at the moment and do you have longer delivery times, there than many out there of the equipment set in upset some of the standard.

Speaker Change: So that that is correct, but it is not on a level as you can see we get quite good revenues.

In the utility sector as well as in the data centers.

Speaker Change: Which is growing very sharply during this period. So it is not becoming a huge issue I think it's more or less for for the buyers and for that project are probably putting that time schedule and in line with the supplies of Av.

Bjrn Klas Otto Rosengren: I think it's more or less for the buyers and for the projects are probably putting that time schedule in line with the supplies of transformation. Would you like to add anything there? Yeah, maybe just the...

Speaker Change: Transformers.

Timo Ihamuotila: Yeah, maybe just that on the switchgear, which has been the other area where there's been a little bit of discussion of this. I mean, transformers are, I would presume, at a slightly different level, but nevertheless, we are investing a lot of capital expenditure in the US and also in Mexico for medium-voltage switchgear and also low-voltage products so that we are really serving the growth of that market. So I think, as Bjrn said, we should be in a pretty good place.

Speaker Change: You want to add anything that he may be adjusted on the switch gear, which has been the other area, where it's there's been a little bit discussion of this I mean transformers is I would presume it's like a different level, but nevertheless, we are investing a lot of capex in the U S and also in Mexico for medium voltage switch gear and also low voltage products. So that we are really serving the growth of that mark.

Speaker Change: So I think that's the bigger instead, we should be in a pretty good place there.

Speaker Change: Yeah.

Ansofi Nord: Then we can move... Thanks, Martin.

Speaker Change: And then we.

Speaker Change: Sure.

Unknown Speaker: I think he's trying to ask something else. Yeah, I think you're trying to ask something, but your line is very bad, and we unfortunately can't hear you.

Martin: Thanks Martin.

Martin: Alright, thanks, guys.

Martin: Sure.

Speaker Change: I think he has got trying to ask something else. Thank you.

Speaker Change: But your line is very bad we unfortunately can't hear you.

Unknown Speaker: [inaudible]

Speaker Change: Do you want to try again.

Speaker Change: Is that better.

Bjrn Klas Otto Rosengren: It was really just to clarify, so I think what you're saying is it's not really going to hugely change the backlog conversion rates. All in very strong order, but we shouldn't expect that this feature is going to significantly change the rate at which you convert the backlog into electricity. No, no, in our case.

Speaker Change: Slightly yes go ahead go ahead.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Just to clarify I think what you're saying.

Speaker Change: Do you have a hugely change the backlog conversion rates.

It's obviously been a very strong orders, but we shouldn't expect this feature is going to significantly change.

Speaker Change: Right, we should convert to backlog in electrification no no and I in our case I think we have where we have taken the delivery times expected in into consideration in the backlog conversion date that what we have to our best ability of course I mean this is not an exact science its fair to say this whole backlog conversion, but we're of course trying to.

Bjrn Klas Otto Rosengren: No, no, in our case, I think we have taken the delivery times expected into consideration in the backlog conversion data, what we have to our best ability, of course, I mean, this is not an exact science, it's fair to say this whole backlog conversion, but we are, of course, trying to understand both internally and externally on our report.

Speaker Change: Understand both generally are giving you a little bit of color on that as well externally on how report.

Speaker Change: Thank you.

Gael de: And then we open up the line for Gael at Deutsche Bank.

Speaker Change: And then we open up the line for Gale at Deutsche Bank.

Gael de: Oh, good morning, everybody. Thanks very much for the time. Bjorn, you mentioned that ABB was in very good shape. Thank you for joining us today. You also mentioned that the transition to ABB's Way operating model was implemented faster than expected. Is there anything left to do? Where do you think Morten can make a difference or push things up a bit more?

Gale: Oh, good morning, everybody.

Gale: Thanks, very much for the time.

Gale: John You mentioned that it was very good shape.

Gale: Obviously the case looking at the fulfillment today, you also mentioned that the transition to the <unk> way operating model was implemented faster than expected. So.

Gale: Is there anything left to do they are they using molten can make a difference all pushed things up a bit more.

Bjrn Klas Otto Rosengren: Yeah, sounds like a question for me. Yeah, I definitely think ABB is in great shape, and I think the transition has gone faster than I anticipated starting up here. But I think the whole company is very much aligned today with the ABB operating model and the way we drive performance management, which I think actually reflects in our numbers this quarter. But this is only the beginning of the journey.

Gale: Yeah.

Speaker Change: It sounds like your question for me.

Speaker Change: Yeah, I definitely think ABB is in great shape, and I think the transition has gone faster than I anticipated.

Speaker Change: Starting up here, but I think the whole company is very much aligned today with ABB operating model and the way, we drive performance management, which I think actually reflect in our numbers this quarter.

Speaker Change: But this is only the beginning of the journey here.

Bjrn Klas Otto Rosengren: You know, the model we have, it's driving our divisions' improvement in performance, and it starts with stabilization, it goes to profitability, and then growth. And today, the majority of our divisions are in the so-called growth mode. And even the divisions that were in stability mode are now in profit improvement mode. So if you look at ABB overall, it's really gone from improving profitability to driving growth. And I think that is where the biggest value creation is going to happen going forward, and this is both organic as well as inorganic.

Speaker Change: The model, we have it's driving our divisions improvement in performance and it starts with stabilization. It goes it to profitability and then growth and today majority of our divisions are in so called growth mode and even the division's February and stability mode is now in the.

Speaker Change: The profit improvement mode.

Speaker Change: And if you look at ABB overall, it's really gone from improving profitability to drive growth.

Speaker Change: And I think that is where the biggest value creation is going to happen going.

Speaker Change: And then this is both organic as well as inorganic and we have quite an exciting pipeline of acquisitions, which you will see in the coming months.

Bjrn Klas Otto Rosengren: And we have quite an exciting pipeline of acquisitions, which you will see in the coming months. And I think that is important. We said five to 10 M&A acquisitions per year is where these companies should be. And I think we are at these levels today.

Speaker Change: And I think that is important we said five to 10.

Speaker Change: M&A acquisitions per year as to where this company should be.

Speaker Change: I think we are on these levels today and I think there is even more potential and our financial situation actually supports.

Bjrn Klas Otto Rosengren: And I think there is even more potential. And our financial situation actually supports all of these acquisitions. And we'd be happy actually to spend a little bit of money to find the right technology and the right companies to support further growth of the group. But that's pretty clear. That's where the focus is supported by our long-term financial goals of organic five to seven percent over a business cycle.

Speaker Change: All of these acquisitions and we'd be happy actually to spend a little bit money to find the right technology and the right companies to support further growth.

Speaker Change: The group, but that's pretty clear that's where the focus is supported by our long term financial goals from organic 5% to 7% over a business cycle.

Bjrn Klas Otto Rosengren: And yeah, it is an exciting time at ABB when you look at the global trends. And I think Morten is the right person. You know, and I'm really saying this, he's been a proven leader in ABB for many years. You can see what he has done with electrification. So he's helped me to look good. So, Morten. And I think he will continue to drive ABB in the right way. Thank you.

Speaker Change: Yeah. It is an exciting time at ABB when you look at the global trends and I think Martin is the right person.

Speaker Change: And I am really saying this is that he is a proven leader in ABB for many years you can see what he has done with electrification. So so he's helped me to look good. So thank you Morten and ICP will continue to drive ABB in the right way so thank.

Speaker Change: Thank you.

Bjrn Klas Otto Rosengren: Thanks very much for this. Can I have a follow-up on the electrification business area? I mean, looking at the strong order in tech this quarter, at least where is this expectation? Do you think the business has gained share, in particular in the U.S., or is this just the oldest trend? Just a fair reflection of the underlying market starting to improve now in short cycle areas.

Speaker Change: Thanks very much for this can I have a follow up on the electrification.

Speaker Change: Business that way.

Speaker Change: Looking at the strong order intake this quarter acute investors' expectations.

Speaker Change: Do you think the business has gained share in particular in the U S or is the oldest friends.

Speaker Change: It's a reflection of the underlying markets.

Speaker Change: In between now and short cycle areas.

Bjrn Klas Otto Rosengren: You know, I think we should be careful talking about shares, but I think we're definitely getting our deserved share of the market. I think the acquisition of GIS has put ABB in a totally different situation than we were before. And the excellent job of electrification to integrate that business and get the profitability to the right level actually, of course, has helped us to perform in North America. And I think that is what's reflected in the 22.5% profit margin that they chose, which I think is absolutely top of the line.

Speaker Change: I think you should be careful talking about shares but I think we are definitely getting our deserve chair of the market I think the acquisition of Gis have put ABB in a totally different situation, where we were before and the excellent job of electrification to integrate that.

Speaker Change: And getting to profitability to the right level.

Speaker Change: Actually of course have helped us to to perform and in North America and I think that is what is reflecting in the 22.5% profit fortunate that they chose which I think is absolutely.

Speaker Change: Top top off the top.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Speaker Change: Say, we try Sebastian at RBC.

Sebastian: Your line should be open.

Sebastian: Yes, good morning, everyone.

Sebastian: My question is related to the process industries.

Sebastian: And NPA in motion you mentioned, the timing of large projects and pump pulp and paper food and beverage and oil and gas.

Sebastian: Being an issue for order intake.

Sebastian Kuenne: Very much. Thank you. So we will try Sebastian at RBC.

In your view how much of this.

Sebastian: Delays stemming from higher interest rates, Ohio.

Sebastian: No longer are higher for longer interest rates I should say and how much is really softer underlying demand.

Timo Ihamuotila: Yeah, good morning, everyone. Yeah, my question is related to the process industries.

Sebastian: That mean for the rest of the year and process industries.

Speaker Change: And maybe I can answer that question.

Bjrn Klas Otto Rosengren: Yeah, maybe I can answer that question. You know, when you see 20% down in orders, I think that is a misleading indicator of what's going on in the market. The book to bill, even though we had what was a 15% growth, what did we have in 12% revenue growth?

Speaker Change: You see 20% down in orders I think that is a miss showing of the real what's going on in the market. The book to Bill, even though we had to.

Speaker Change: What was the 15% growth what did we have in the well of a person and a 12% revenue growth, but we still had a positive book to bill of <unk>, 6% to higher orders, which shows that that market really continues to drive even though we deliver really good volumes at the moment.

Speaker Change: PAA is probably the business area.

Speaker Change: Sides electrification that is very much driven by.

Timo Ihamuotila: And let's remember this is the 14th quarter with Positive Book to Build in a row.

Speaker Change: The traditional industry that are transforming and new industries like batteries like yeah, hydrogen and and this exciting new market. So and we don't see any slowdown any of these we think this will continue until the world have transfer them towards more renewables.

Timo Ihamuotila: 14th quarter. Yeah, that's quite unique.

Unknown Speaker: But you mentioned the same for motion as well; it's not just process automation. You also mentioned timing of projects, problem paper, food, and beverages. So is there an underlying temporary softness in these?

Speaker Change: In a low carbon society.

Speaker Change: You know I'm, a strong supporter of the process automation and I'm, even more positive now and I see the margin development in that business, which is a magnificent from my perspective and.

Speaker Change: Let's remember the fourth quarter.

Quarter with positive book to Bill in a road 14th quarter.

Speaker Change: That's quite unique.

Speaker Change: Yes.

Speaker Change: But you mentioned the same for Molson as well, it's not just process automation and you also mentioned timing of.

Timo Ihamuotila: No, but these are different things. Sorry, can I? Yeah, you can answer. Yeah, because on motion, we spoke about revenue, i.e. we were not able to earn revenue as much as we expected in some of this project-type business, so timing issues, and we expect that to come through quite quickly. Whereas, at PEA, we actually had a couple of orders, and they're exactly in these new areas of business of, you know, renewables and hydrogen and that kind of stuff.

Speaker Change: Pulp and paper food and beverage. So is there an underlying temporary softness in Vietnam, but these are different things.

Speaker Change: Yeah, you can answer yes, because on on motion, we spoke about revenue I E. We were not able to revenue as much as we expected and some of these project type business, so timing issues and we expect that to come come through quite quickly, whereas in <unk>, we actually had a couple of orders in dairy exactly in these new areas.

Speaker Change: It's all the renewables and hydrogen and that kind of stuff and it's understandable. Because these are growing new businesses that timing of when you exactly get the order, it's not that easy to SaaS, but this is the difference between what we said emotion and NPA.

Timo Ihamuotila: And it's understandable, because these are growing new businesses, that the timing of when you exactly get the order is not that easy to assess. But this is the difference between what we said in motion and in PEA.

Sebastian Kuenne: Could I have a follow-up on e-mobility, maybe? I noticed another quite heavy loss of 54 million, more than twice the level of Q1 last year in terms of losses and also some kind of stagnation of order intake at around 120, 150 million per quarter. Do we see another reset here, another change of strategy, or tightening of products? What is happening currently with e-mobility and its market?

Speaker Change: Understood and could I have a follow up on the E mobility.

Speaker Change: And noticed another club heavy loss of 54 million, which was more than.

Speaker Change: Twice the level of Q1 last year in terms of loss and also some kind of technician of order intake at around 120, <unk> hundred 50 million per quarter.

Speaker Change: Do we see another reset here another change of strategy or tightening of products. What is happening currently in E mobility and its market.

Bjrn Klas Otto Rosengren: Yeah, it's correct. Yeah.

Bjrn Klas Otto Rosengren: Yeah, it's correct. Yeah. I mean, this is, I think, a combination of softening in the market. I think we've all seen that the EV vehicle market has plateaued, which is normal when you have a new industry that grows up. First, you see growth, then plateauing a little bit, and then it will take off again.

Speaker Change: It's correct Yeah. I mean this is I think a combination of a softening in the market I think we all seen that.

Speaker Change: The EBV car market has plateaued, which is normal when you have a new industry that grows at first you see growth than plateauing, a little bit and then it will take off again, but the sales of EV vehicles have gone down.

Bjrn Klas Otto Rosengren: But the sales of EV vehicles have gone down lately, so there are a lot of inventories of cars. You've seen it with Tesla, you've seen it with Chinese cars moving into Europe. But also, subsidies have been taken away in countries like Germany and Italy for EV charging, which means that some of these charging companies that have normally been investing heavily in their infrastructure are being a little bit careful because they need to make sure that the cash flow is good. I don't think there is any difference in the trends.

Speaker Change: Lately, which there are a lot of inventories or.

Speaker Change: Of course, you've seen it in tests now you're seeing about Chinese cars moving into Europe.

Speaker Change: But also subsidies have been taken away in countries like Germany, and Italy for EV.

Speaker Change: EV charging which have made that some of these are charging companies that are normally been investing heavily into their infrastructure are being a little bit careful because they need to make sure that the cash flow is good I don't think there is any difference in the trends we strongly believe that the world is growing.

Bjrn Klas Otto Rosengren: We strongly believe that the world is going electric in the automotive business, and the infrastructure needs to be rebuilt. When it comes to our company, you know, we are transforming the company from the previous management to the new one. And we have a strategy with a whole new product for you, which is being introduced into the market at the moment, which we are very optimistic about. We still have the leftovers from the previous one, which was a much broader portfolio with too many variances and too much inventory that needs to be cleaned up. So it is cleaning in that part.

Speaker Change: Trick in the automotive business.

Speaker Change: And the infrastructure needs to be rebuilt when it comes to our company. We are transforming the company from the previous management to the new one and we have a strategy with a whole new product polio, which being introduced into the market at the moment, which we are very optimistic about but we see.

Speaker Change: We'll have the left over from the previous one which was a much broader.

Speaker Change: Portfolio with the too many variances and too much inventory that needs to be cleaned up sorry. It is a cleaning in that part and we are of course happy that we can do it in the group without any severe impact for that performance.

Bjrn Klas Otto Rosengren: And we are, of course, happy that we can do it in the group without any severe impact on the performance of the group. So I think we can handle it. And we believe that the future for electrification, EV charging, is bright. Thank you very much. Thank you, Seb. And then we open up the line for Delphine at Odo. Yes, good morning. Yes, can you hear me?

Speaker Change: India Group, So I think we can handle it and we believe that the future for electrification.

Speaker Change: <unk> be charging is bright.

Speaker Change: Thank you very much. Thank you said and then we open up the line for <unk> and Delphine at auto.

Speaker Change: Yes, Yes, you can hear me.

Speaker Change: Yes, we can.

Delphine: Okay. Good morning, all thanks for taking my question.

Delphine: Thank you very much. Thank you, Seb. And then we open up the line for Delphine.

Delphine: I wanted to come back on your free cash flow in Q4, you said that it has to be.

Delphine: Let me say first, have you said 4 billion, Timo? I don't recall that exactly, but let's anyway; we can talk about the matter and a little bit about the puts and takes on the cash. So it's, of course, a good question, and we're super happy with how Q1 cash came in, as we discussed earlier. But if you look at our new guidance, about 5% growth, of course, is the same guidance, and then about 18% margin new guidance.

Delphine: For the year can be a new normal.

Delphine: Sure.

Delphine: Yes.

Delphine: And comments for the full year.

Speaker Change: Welcome everyone.

Speaker Change: I'll begin.

Speaker Change: All of them.

Speaker Change: So firstly have you said 4 billion.

Speaker Change: I don't recall that exactly but you know, but let's anyhow weekend that we can talk about the the matter in a little bit about the puts and takes on the cash. So it's of course, a good question and we're Super happy with how Q1 cash game in <unk> as we discussed earlier, but if you look at our new guidance are about.

About 5% growth of course is the same guidance and then about ethane margin new guidance, so that would bring compared to last year, maybe five to 600 million of more.

Delphine: So that would bring, compared to last year, maybe 5-600 million or more EBITDA, so D is important here now as well. And then if we look at the other cash items, sort of tax, finance, below the line, they could be a bit of a headwind, maybe 150. CapEx, we have said, we're going to invest more to support our growth agenda, maybe another 150. And then if we come at 10% networking capital to revenue, that would maybe tie another 100 with growth.

Speaker Change: EBITDA so the important here now as well and then if we look at the other cash items sort of tax finance below the line there could be a bit of a headwind maybe 150 capex that we have said, we're going to invest more to support our growth agenda, maybe another 150, and then if we come at 10%.

Speaker Change: Net working capital to revenue that would maybe tie another hundred with a growth and with those numbers you come a bit higher than the $3 7 billion. So then the rest of it you always really depending on if we get the network in networking capital further down we're of course doing our best to do so so looking at that 4 billion is not entirely impossible, but today we.

Delphine: And with those numbers, you can't be higher than 3.7 billion. So then the residual is really depending on if we get the networking capital further down. We're, of course, doing our best to do so. So knocking on that 4 billion is not entirely impossible. But today we said we should be at least at last year's level of 3.7.

He said you know we should be at least at last years level of $3 seven.

Speaker Change: Okay. Thank you.

Delphine: Oh, yes. Thanks for fitting me in. I guess since we last had a set of results, you've had the buyback announced.

Speaker Change: Jonathan at BMP are you with US your line should be open.

Jonathan: Hello, Yes.

Jonathan: Dan.

Jonathan: Since we last had a set of results you've had the buyback announced some debate about that going into it.

Unknown Speaker: There's a lot of debate about that going into it, but it's relatively small. [inaudible]

Jonathan: It would be small.

Bjrn Klas Otto Rosengren: Thank you for the question. Let me talk a little bit about our portfolio and our ambitions going forward. You know, coming in four years ago, we said that we needed to get profitability in place. So it's stability and profitability that we focus on. And we had, at that time, 30% of our divisions in growth mode, which is a small part. Today, the majority of the divisions are in growth phase, which means that, I mean, it's electrification, it is in motion, it is in process automation, where they have taken over the responsibility of M&A activity.

Speaker Change: At least in my view and I think maybe that goes to the point you made around M&A.

Speaker Change: You said there was yes. It was a good pipeline could you first maybe comment on the areas you're looking to acquire some of the auto.

Speaker Change: Also areas.

Speaker Change: Acquiring and maybe technologies, maybe software, but also Conversely, you're coming out towards the end of your churn yet.

Speaker Change: And you had a strategic review at the beginning.

Speaker Change: You've got the four divisions, we have we have some time, but when we look at it now after winning the business you can see is for a few years. What do you think about the pulse that is sustained and really specifically my question is focused on robotics and discrete automation could perhaps something like a spin out or out of the group's investment case to more focus around.

Speaker Change: Vacation themes, where things seem to be against.

Speaker Change: Thank you for the question let me.

Speaker Change: Let me talk a little bit about our portfolio and our ambition going forward.

Speaker Change: You know coming in.

Speaker Change: Four years ago.

Speaker Change: We said that we need to get the profitability in place so its stability and profitability focus and we had at that time, 30% of our division in growth mode, which is a small part today. The majority of the divisions are in growth phase, which means that I mean its in electrification. It is in motion. It is in process at <unk>.

Bjrn Klas Otto Rosengren: We have also said that there are certain criteria to be part of ABB. One is to be aligned with the purpose. The second one is to be number one or number two in the business where we operate. And the third one is that we need to be in a business where we can make money. You know, we don't want to throw good money at bad earnings. So these three criteria.

Speaker Change: Patients, where they have taken over the responsibility of M&A activities. We have also said that there are certain criteria to be part of ABB. One is to be aligned with the purpose. The second one is to be number one or number two in the business wherever we operate and the third one is that we need to be busy.

Bjrn Klas Otto Rosengren: And I think today we have a good portfolio with our 19 divisions, well positioned. And, of course, there are some divisions where we could see some upside, both when it comes to profitability, but, of course, also growth and in adding, you know, technology to the division. So what the divisions are focusing on now, and they look at their own portfolio, they look at their peers, where do we need to be to continue to maintain our leading position in the market?

Speaker Change: So where you can make money you know, we don't want to throw good money into to a bad earnings. So these three criterias and I think today, we have a good portfolio with our 19 divisions and well positioned in there and of course, there are some divisions, where we could see some upside both when it comes to profitability, but of course also.

Also growth and in adding technology to that to the division. So what the divisions are focusing now and they look at their own portfolio, they're looking at the peers, where do we need to be to continue to maintain our leading position in the market and that's why we see so this is software.

Bjrn Klas Otto Rosengren: And that's where we see. So this is software acquisitions. We had, you know, the first one we did this year was an AI software company from ETH here in Switzerland, which we have been a part owner and supporting in their growth. Now we picked up the whole part, and we think this is a good add-on to the robotic AI portfolio that we have. And the second one is service for electrification in North America, where we think that it's about helping our customers with their electrification and their transformation. And this is the service company that is doing that.

Speaker Change: Acquisitions, we had you know it.

The first one we did this year.

Speaker Change: Wassa AI software company from Eth in Switzerland, which we have been a part owner and supporting them in the growth now we picked up the whole part and we think this is a good add on to the robotic AI portfolio that we have and the second one is serviced in electrification in North America.

Speaker Change: We think that it's about helping our customers in their electrification and that transformation. This is the service company that is doing that we think is also perfectly position. When we look at these trends that are taking place and we really want to continue these were encouraging the divisions both too.

Bjrn Klas Otto Rosengren: We think it's also perfectly positioned when we look at these trends that are taking place. And we really want to continue them. So we're encouraging the divisions both to make full M&A acquisitions but also to do minority investments in startups with certain technologies that can be successful and can challenge our own technology. So I think the activity is good there. We need capital available for that, and I think we have it.

Speaker Change: Make full M&A acquisitions, but also due minority investments in startups with certain technology that can be successful and can be challenging our own technology in the future. So I think the activity is good that we need capital available for that and I think.

Bjrn Klas Otto Rosengren: Yeah, we do, but we still have over capacity on that part. And that's why we have announced the $1 billion US dollar buyback. So maybe you could talk a little bit about that. Yeah, I mean, of course, no drama.

Speaker Change: Yeah, we do but we still have over.

Speaker Change: Capacity on their part and that's why we have announced the 1 billion U S. Dollar buybacks. So maybe you could talk a little bit about that.

Unknown Speaker: But I mean, of course, no drama there. The only difference in the buyback is that it's now a little bit shorter because we would like to be able to announce all the stuff relating to sort of shareholder distribution and capital allocation at the same time. And that's now possible with this new capital band in Switzerland. So that's why we said that the buyback runs from now until the end of January, when we then come out with a full But, you know, exactly as Bjrn said, the share buyback for us is up to 1 billion precisely for the reason that we would rather deploy capital in value-adding acquisitions. So that's number three; share buyback is number four. But of course, if we have extra capital, we think it's, you know, a good investment to deploy it into ABB as well.

Speaker Change: Of course, no drama there I mean, the only difference in the buyback is that it's now a little bit shorter because we would like to be able to announce all the stuff relating to sort of shareholder distribution and the capital allocation at the same go and it's now possible with this new capital Bank in Switzerland. So that's why we said that the buyback runs from now until end of January.

Speaker Change: When we then come out with the with our full year results, but what exactly has been said the share buyback for US is up to 1 billion exactly for the reason that we would rather.

Speaker Change: <unk> deployed capital in value, adding acquisitions. So that's number three share buyback. This number four but of course, if we have extra capital. We think it's a good investment to deploy it into a baby as well.

Speaker Change: Okay.

Unknown Speaker: [inaudible]

Speaker Change: Yeah.

Speaker Change: Yes, Jonathan Robotics.

Unknown Speaker: Robotics and Dispute Automation. Any comment about that within the portfolio?

Speaker Change: Robotics and discrete automation any comment about that within the portfolio.

Bjrn Klas Otto Rosengren: These are two divisions, as we know, and in robotics, we are number two in the market. We have a very strong position in both Europe and China. We have more to do in North America, but we have invested, as you know, in a production facility there and a lot of activities, especially in the logistics markets, which are doing quite well. And machine automation is a small niche business where we support machine builders.

Speaker Change: I mean, it can be simple. These are two divisions as we know in the robotics. We are number two in the market we have very strong position in.

Speaker Change: Both Europe and in China, we have more to do in in North America, but we have invested as you know in that production facility, there and a lot of activities, especially in the logistic markets, which is doing quite quite good on the machine automation, it's a small niche business, where we support machine builders.

Bjrn Klas Otto Rosengren: So it's OEM customers. It's a very, very specialized business, but very profitable. And if you look over a cycle, it's almost 10% growth in revenues during the year. So it's a small, exciting business, but very niche.

Speaker Change: So its OEM customers, it's a very very specialized business, but very profitable and if you look over a cycle and it's almost growth of 10% in revenues during the year. So it's in small exciting business, but very niche.

Unknown Speaker: Okay, and then we move on to Bernstein and Alistair. Your line is open.

Speaker Change: Okay.

Speaker Change: And then we move on to Bernstein and Alistair Your line is open.

Unknown Speaker: We've already covered some of these, but there are a few follow-ups, please. First one: I think you said the backlog now on machine builders is going to hold you until the summer. So just wondering whether you sort of see a risk to sales in the second half and an air pocket there, or are you kind of comfortable that customers are going to start placing orders again, I guess, maybe in Q3 and your conversations with the machine builders kind of indicate that?

Alistair: Yes, hi, good morning. Thank you sorry, I was I was cut off earlier, so how are you.

Alistair: Fully apologize if you've already covered some of these but a few follow ups. Please first one you said the backlog now machine builders is going to hold you until the summer. So I'm just wondering whether you sort of see a risk to sales in the second half and in that pocket.

Alistair: You kind of comfortable that customers are going to start placing orders again, I guess, maybe in Q3 and.

Alistair: Conversations with the machine builders kind of indicator.

Unknown Speaker: I suppose linked to that, I suppose, a follow-up on the comments on China and the industry and just how broad based that is. Was that a sequential pickup you saw towards the end of the quarter, just trying to reconcile those comments with perhaps more cautious updates from alternative peers during the quarter? Was your view kind of more centering around robotics specifically? And then just a final question, if I could squeeze it on US commercial strength, just wondering how broad-based that was. Are you still seeing pockets of weakness in areas like offices? I don't know how much leverage you've got in those areas, but maybe some more color on the different verticals.

Alistair: Linked to that I, suppose and a follow up on the comments on China in industry and just how broad based studies.

Alistair: Sequential pick up you saw towards the end of the quarter Im just trying to reconcile those comments with that small crucial sub base from automation pitch during the quarter, which would be kind of more centered around robotics, specifically and then just a final question if I could squeeze it in on the U S. Commercial strengths I was just wondering how broad based that.

Alistair: Or are you still seeing pockets of weakness.

Areas like offices.

Alistair: And then how much leverage you've got to those areas, but maybe some more color on the different verticals.

Bjrn Klas Otto Rosengren: That was a lot of questions. But let me start talking a little bit about machine automation. And it is correct that we've seen low orders. On the other hand, during the supply chain issues we had with the semiconductors, we had a huge order backlog build up during that period. And as we are dealing with OEM customers, not distributors here, our equipment goes into So, depending on how many machines they are building, that is going to be the demand. And we've been delivering from that order book now for more than a year. And yes, it's correct.

Alistair: That was a lot of questions, but let me start talking lipid Bachman makes me not ashamed to mission and.

Alistair: It is correct that we seen low orders on the other hand during the supply chain issues, we had with the semiconductors we have.

Alistair: The huge order backlog build up during that period and as we are dealing with OEM customers not distributors here.

Alistair: Our equipment goes into machines.

Alistair: Depending on how many machines. They are building that is going to be the demand than we've been delivering from that order book now for for more than a year and yes. It's correct are we getting closer to the end of that big part and we said during summer when.

Bjrn Klas Otto Rosengren: We're getting closer to the end of that big part, and we said during summer when most of it is delivered out, what we have in orders today, then depending on what the orders are being placed from DCOM customers are doing. They had, of course, placed pre-orders, you know, and those are the ones that we've been living off of. Now, when it gets lower, we'll see how that business is developing. On the other hand, I would like to just mention today that robotic and discrete automation in general is about 11% of our total sales today.

Alistair: Most of it is said delivered out what we have in orders today and then depending on what the orders are being placed from D. C. O M customers. So I'll do it they had of course placed preorders.

Alistair: And those are the one that we we've been living from now and again, we'll see how that business is developing.

Alistair: On the other hand, I, just would like to just to mention today.

Alistair: That.

Alistair: Robotic and discrete automation in the hole is about 11% of our Doctor says today.

Timo Ihamuotila: Yeah, maybe just on the order dynamics a little bit. I mean, we said after the previous quarter that we would expect orders to have bottomed out and now to move up. So we had like 550 million orders in Q4. Now we had about 700.

Speaker Change #101: Yeah, maybe just on the on the order dynamics, a little bit I mean, we said after.

Speaker Change #101: After a previous quarter that we would expect orders to have bottomed and now to move up. So we had like 550 million orders Q4, now we had about 700, we would expect that to continue to notch higher and also in machine automation. This was the first quarter, where we actually saw a sequential growth in orders very low level, but sort of saw a sequence.

Timo Ihamuotila: We would expect that to continue to notch higher. And also, in machine automation, this was the first quarter where we actually saw sequential growth in orders. Very low level, but sort of saw sequential growth in order. So in that sense, sort of it's moving in the right direction. Very difficult to call in the end, you know, what happens after the end of the summer. But our base case is that we start to see short cycle improvement also there when machine automation, when the inventory is really depleted.

Speaker Change #101: Growth in order so in that sense sort of it's moving to the right direction very difficult to call in the end you know at what happens after end of the summer, but but our base case is that we start to see short cycle improve also their window when the machine automation window.

Unknown Speaker: There was sort of one robotic side, I think. Did we drill into that? I think we sort of already did.

Speaker Change #101: The portfolio inventory is related to be depleted, which shall we expect it to run through.

Speaker Change #101: There was still a question right there.

Speaker Change #101: Sort of on the robotic side I think did we drilling I think we are we sort of already covered it.

Unknown Speaker: [inaudible] Yeah, it was on the real estate, I think. Yeah, yeah, yeah, yeah. And you? Yeah, I mean, our commercial real estate. I don't have data on where it goes.

Speaker Change #102: I guess are you happy Alastair yes.

Alastair: A better way of putting it.

Alastair: There was.

Alastair: With real estate deals from them ourselves.

Alastair: State Yeah. It was.

Alastair: On the real estate.

Alastair: Yeah Yeah.

Alastair: The U S. I mean, our commercial real estate.

Alastair: I don't have data on wherever it goes but of course, there is other stuff done than what you mentioned, so stuff like cost per thousand airports in distribution centers and all kinds of things. So so it's sort of broad area.

Unknown Speaker: But of course, there is other stuff than what you mentioned. Stuff like hospitals and airports and distribution centers and all kinds of things. So it's sort of broader. Yeah. But I think it's fair to say our

Alastair: I think it's fair to say, our smart building part of U S is quite quite small yes.

Bjrn Klas Otto Rosengren: But I think it's fair to say our smart building part of the U.S. is quite small in the whole thing. I mean, it's in Germany where we see a big percentage point of the electrification business. Otherwise, it's really marginal.

Alastair: Under hold them, partly I mean, its in Germany, where we see b percentage points of the electrification that'd be sits other IC, it's really marginal.

Unknown Speaker: Fully covered, we hope. We'll take the last question for today from Andy at J.P. Morgan, please.

Speaker Change #104: Okay. Thank you.

Fully covered we help.

Speaker Change #104: I will take the last question for today from Andy at J P. Morgan Please.

Andy: Hi, good morning. Thanks for screening me in.

Andy: Hi, Good morning, Thanks for squeezing me in I'll make it quick.

Andy: I'll make it quick. I'm just interested if there's any kind of update on pricing dynamics across businesses. I'm just interested, given we're expecting, I guess, a normalization from obviously what's been a very, very good period of pricing. But in orders, given what feels like very good momentum in particular a couple of areas, just if there's any change in terms of optimism about maybe we could see a better kind of price outcome for the year. And I guess it was transcribed by https://otter.ai

Andy: Just interested if there's any kind of update on pricing dynamics across the businesses I'm just interested given we were expecting I guess, a normalization from a very very good.

Andy: Good period of pricing.

Andy: In the orders given what feels like very good momentum in particular, a couple of areas.

Andy: Any change in terms of optimism on maybe we could see a better kind of price down for the year and I guess.

Andy: It's glad that all Conversely, if there's any areas, which had a little bit more difficult. Let me start a little bit and then T. Mo can fill in.

Bjrn Klas Otto Rosengren: Let me start a little bit and then Timo can fill in. And I think we said that in this quarter we had 1% volume and 1% price in the product business. I think that is pretty clear.

T. Mo: I think we said that in this quarter, we had 1% volume and 1% price that is in the product business I think that is pretty clear.

Bjrn Klas Otto Rosengren: When we look at the project business, it is very difficult to measure actually what the price increase is because it's more project-oriented. But what you can see is that the gross margin in our order book continues to grow. So I think that is a sign that we are getting well paid for the value that we are offering and delivering. And that is a little bit of a hidden number in our numbers.

T. Mo: When we look at the project business it is very difficult to measure.

T. Mo: Actually what is the price increase because it's more project oriented but what you can see is that the gross margin in our order book continues to grow.

T. Mo: So I think that is a sign that we are getting good paid for the value that we are.

T. Mo: That we are offering and delivering out and that is a little bit of a hidden in our numbers and also the price increases in service is also not part of this 1%.

Bjrn Klas Otto Rosengren: And also the price increases in service are also not part of this 1%. And we've seen a 14% growth in service, which is a huge number, I would say. And we know that we are getting well paid for those products. And I think that is the underlying driving of the gross margin that we are seeing. So it's not only the numbers that we are mentioning.

T. Mo: We've seen a 14% growth in in service, which is a huge number I would say in and we know that we are getting good paid or so for those products, yes, and I'll keep that these down to ly and driving of the gross margin that we all see so it's not only the <unk>.

Timo Ihamuotila: Yeah, no, I was going to say a similar thing that I mean, if there is one really, really nice number in this result, it's the whole gross margin being over 37%. And all business areas went up in gross margin. So that's also super nice to see. And I totally agree with Bjrn that part of that gross margin improvement is also coming from better execution of pricing in some of these areas like project and service, which is more difficult to capture.

Speaker Change #107: Members that we are mentioning maybe you want to know I was going to say a similar thing that I mean, if there is one really really nice round number in this result, it's the whole gross margin being over 37% and all business areas went up in gross margin. So that's also a super nice to see.

I totally agree with beer and that part of that gross margin improvement is also coming from a better.

Speaker Change #107: Better execution of pricing in some of these areas like project and service, where it's more difficult to capture but of course super well done by business. It's also in driving the efficiency and and our supply.

Timo Ihamuotila: But of course, super well done by businesses also on driving efficiency and the supply chain and all those things. So really, really good. And I think it really reflects itself in the margin for the process automation business, which is at a record high level.

Speaker Change #107: Supply chain and all those things so really really good growth.

Speaker Change #107: T get really reflect itself in the margin for the process automation business, which is on a record high level.

Andy: Okay. Thanks, Andy.

Speaker Change #108: Okay. Thank you, thanks, Sandy and with that we close for today, thanks for joining us and we'll see you in a quarters, telling me if not before thank you.

Unknown Speaker: And with that, we close for today. Thanks for joining us. And we'll see you in a quarter's time, if not before.

Unknown Speaker: Thank you. Thank you. Thank you. Bye.

Speaker Change #109: Thank you. Thank you.

Speaker Change #109: Oh.

Speaker Change #109: Yeah.

Speaker Change #109: Yeah.

Speaker Change #109: Yes.

Speaker Change #109: Sure.

Speaker Change #109: Yes.

Speaker Change #109: Yeah.

Speaker Change #109: [music].

Speaker Change #109: Yeah.

Speaker Change #109: Yeah.

Speaker Change #109: Okay.

Speaker Change #109: Yeah.