Q2 2024 ABB Ltd Earnings Call

Greetings to all and welcome to this presentation, where we will talk to Abb's results for the second quarter I'm honest of an old head of Investor Relations and next to me here today is our CFO CMO and whatnot.

Seb Ill: And for the last time also I see ill be on roast and ground.

Seb Ill: They will take you through the presentation after which we as usual open up for the Q&A session.

Seb Ill: Before we begin though I should mention the information regarding safe Harbor notices and our use of non-GAAP measures on slide two and this call includes forward looking statements, which are subject to risks uncertainties and.

Seb Ill: And with that said, we kick off and I hand over to you John Thank you Ron theme and a warm welcome from me as well.

John: Let's start on slide three with a summary of the quarter developed pretty much as planned except for a couple of areas first the record high operational EBITA margin of 19% is better than we originally expected. This was driven by strong performance in three out of four business there.

Speaker Change: Yes, while robotics and discrete automation came in on the low side.

Speaker Change: We also had some margin support from one offs and the slightly lower corporate line.

Bjrn Klas Otto Rosengren: Secondly, the market for machine automation is now weaker than anticipated. And lastly, performance in the mobility business is weak. But for most of our businesses, market activity was solid, and I was very pleased to see growth in short cycle orders. This compensated for the lower bookings in large orders compared with last year. Sustainability is core to ABB and part of its purpose. Our Scope 1, 2 and 3 targets have now been approved by the Science Based Target Initiative.

John: Secondly, the market for machine automation is now weaker than anticipated.

John: And lastly performance in the mobility business is weak.

John: But for the most of our businesses the market activity was solid.

John: I was very good to see growth in the short cycle orders. These are compensated for the lower bookings in large orders compared with last year.

John: And sustainability is core to ABB and part of the purpose our scope one two and three targets have now been approved by the science based target initiative.

Bjrn Klas Otto Rosengren: We are committed to reducing our own emissions and support our customers in their journey to transform towards low carbon and energy efficiency. A good example of this is the launch of the Robotics new Omnicore controller. Compared with the previous version, this controller can make the robot operate 25% faster and consume 20% less energy. It is really great to see our R&D efforts turn to customer value.

John: We are committed to reduce our own emissions and support our customers in their journey to transform towards low carbon and energy efficiency.

Speaker Change: Good example of this is the launch of the robotics, new omni core controller compared with the previous.

John: Previous version this controller can make the robot operate 25% faster and consumed 20% less energy.

Speaker Change: It's really great to see our R&D efforts turn to customer value.

Bjrn Klas Otto Rosengren: As an extension of our R&D, we continue to invest in technology startups. This quarter, we took minority positions in two AI-based cleantech companies. But we also announced an acquisition in the smart building division. We complement our offering in wiring accessories and broaden our market reach in China by taking over Siemens wiring and accessories. When the deal closes, it will add revenues of more than $150 million. As both Morten and Tarak will leave their positions, we are happy to announce their replacements. Jean-Pierre and Brandon are new presidents for the business areas electrification and motion. Some of you have already met them at our earlier CMDs.

John: As an extension to.

John: Two our R&D, we continue to invest in technology startups.

John: This quarter, we took a minority position in two AI based clean tech companies.

John: We also announced an acquisition in the Smart building Division.

John: We complement our offering in wiring accessories.

John: And broaden our market reach in China, but taking all of his Siemens wiring and accessories.

John: When the deal closes it will add revenues of more than $150 million.

Speaker Change: As a board Morten attack, we leave their positions we are happy to announce their replacements, Sean Pietro and Brandon on new precedence for the business areas electrification and motion.

Some of you have already met them at our earliest cmt's. They both have a long history with IBP and they have proven themselves as great business leaders in the ABB way operating model.

Bjrn Klas Otto Rosengren: They both have a long history with ABB, and they have proven themselves as great business leaders in the ABB way operating model. Now, let's talk about the market development on page four. In the second quarter, comparable orders remained stable year over year.

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

Speaker Change: In the second quarter comparable orders remained stable year over year.

Bjrn Klas Otto Rosengren: Book to bill was positive at 1.02, and orders backlog remained high and above 22 billion dollars. I earlier mentioned the short cycle orders. After several quarters of weakness, we now have positive growth driven by electrification and motion. In the long cycle business, the underlying customer activity remains solid and projects the pipeline intact. But the comparable was high for large order bookings. For example, last year, the big Rio Grande order.

Speaker Change: Book to Bill was positive at one point or two.

Speaker Change: And orders backlog remained high and about $22 billion.

Speaker Change: I already mentioned the short cycle orders after several quarters of weakness, we now have a positive growth driven by electrification and motion.

Speaker Change: In the long cycle business, the underlying customer activity remains solid and project pipeline intact.

Speaker Change: But the comparable was high for large orders bookings.

Speaker Change: For example last year.

Speaker Change: The Big Rio Grande the order.

Bjrn Klas Otto Rosengren: Let's take a look at the different segments. Demand continues to be very strong for data centers, and we had very high growth. There are also good developments in areas of infrastructure, marine, but also ports and electrical traction solutions for rail. The building segments improved, driven by the commercial area, and general industry was stable to slightly improve. It was good to see order growth in the robotics business. I have already mentioned the weakness in machine automation and the mobility business. Orders were slow in e-mobility, where customers held off on investment, particularly in Europe.

Speaker Change: Let's take a look at the different segments.

Speaker Change: Demand continues to be very strong in data centers, and we had a very high growth.

Speaker Change: There are also good development in areas of infrastructure Marine, but also ports and electrical traction solutions for rail.

Speaker Change: The building segment's improved driven by the commercial area.

Speaker Change: And generally industry was stable to slightly improved.

Speaker Change: It was good to see order growth in the robotic business I already mentioned the weakness in machine automation and the mobility business orders were slow in E mobility, where customers to hold off on investment, particularly in Europe. In this business, we just launched.

Bjrn Klas Otto Rosengren: In this business, we just launched a new DC charger, which upgrades technology. It has been well received by customers, and it should support orders intake toward the end of the year. Timo will talk about the machine building segment later.

Speaker Change: A new DC charger, which upgrade technology.

Speaker Change: It has been well received by the customers and it should support orders intake towards the end of the year.

Speaker Change: People would talk about the machine building segment later now.

Bjrn Klas Otto Rosengren: Now let's turn to slide five and look at the development by region. Overall, the US remains the most robust market with good demand in the short cycle business. While the total of the American region declined, impacted by the timing of large orders, AMEA increased comparable orders by 9%, with a particularly strong quarter in Australia and in part of the Middle East. China declined year over year, with weak activity, particularly in process automation, and continued weakness in residential buildings.

Speaker Change: Now, let's turn to slide five and look at the development by region.

Speaker Change: Overall, the U S remains the most robust market with good demand in the short cycle business.

Speaker Change: While the total of the American region declined impacted by the timing of large orders.

Speaker Change: EMEA increased comparable orders by 9% with a particularly strong quarter in Australia and in part of the Middle East.

Speaker Change: China declined year over year with weak activity, particularly in the process automation and continued weakness in residential buildings.

Bjrn Klas Otto Rosengren: Sequentially, China remained pretty stable, and our view of the Chinese market has not changed during the quarter. Europe dropped by 4%, mainly due to weakness in machine automation, which has most of its business in Europe. Now let's turn to slide six and our earnings outcome. In the charge, you see a strong improvement in both earnings and margins. Operational EBITDA was up 10%, and margin increased by 150 basic points to 19%, a new all-time high.

Speaker Change: Sequentially, China remained pretty stable and our view of the China market has not changed during the quarter.

Speaker Change: Europe dropped by 4%, mainly due to weakness in the machine automation, which has the most of its business in Europe now, let's turn to slide six and our earnings outcome.

Speaker Change: And the charge you see the strong improvement in both earnings and margins.

Bjrn Klas Otto Rosengren: And it was good to see the gross margin improvement. We had good performance in three out of four business areas. However, robotic and discrete automation was impacted, mainly due to a decline in the machine automation division.

Speaker Change: EBITDA was up 10% and margin increased by 150 basis points to 19% a new all time high and it was good to see the gross margin improvement.

Speaker Change: We had good performance in three out of four business areas.

Speaker Change: Robotics and discrete automation was impacted mainly due to decline in the machine automation division.

Bjrn Klas Otto Rosengren: Here the market is challenging, but remember that this business represents only three to four percent of total ABB. This strong performance for the group was supported by leverage on higher volumes and positive pricing, which more than offset slightly higher spend on, for example, R&D and SG&A. Corporate and others netted out at minus 67 million. Timo will now talk through the details as there are some puts and takes.

Speaker Change: He is a market is challenging but remember that this business represent only 3% to 4% of total ABB.

This strong performance for the group was supported by leverage on higher volumes and positive pricing.

Speaker Change: This more than offset slightly higher spend in example, R&D and SG&A.

T. Mo: Corporate and others netted out at minus $6 million to $7 million and the team will now talk through the details as there are some puts and takes T. Mo. Thanks peony.

Timo Ihamuotila: Thanks Bjrn. Yeah, let's look at the different components. But first, of course, welcome to you all from my side as well.

Mo: Let's look at the different components, but first of course welcome to you all from my side as well.

Timo Ihamuotila: So, in the details of the corporate and other lines, we had some positives and negatives, which may not repeat. On the positive side, we had a total of about $75 million related to a reduction in a self-insurance provision and a provision reversal link to the non-core business. These positives were partially offset by impairments of $48 million in immobility, which elevated the total quarterly loss in this business to $87 million.

Speaker Change: So in the details of the corporate and other line, we had some positives and negatives, which may not repeat on.

Speaker Change: On the positive we had a total of about $75 million related to a reduction of our self insurance provision and a provision reversal linked to the noncore business.

Speaker Change: These positives were partially offset by impairments of 48 million in E mobility, which elevated the total quarterly loss in this business to $87 million.

Timo Ihamuotila: The net effect of the two positive non-repeating items and the e-mobility impairment supported the 19% margin by about 30 basis points. In addition, the underlying corporate operational costs were slightly lower than anticipated. While there is volatility between quarters, I expect the annual run rate for corporate costs in the coming years to be at the 300 million level, as we have mentioned before. To round off the crew performance, it was good to see the 22% increase in EPS to 59 cents. And I just want to add to Bjrn's earlier comments on e-mobility.

Speaker Change: The net effect of the two positive non repeating items and E mobility impairment support bid benign dean percent margin by about 30 basis points.

Speaker Change: In addition, the underlying corporate operational costs were slightly lower than anticipated.

Speaker Change: While there is volatility between quarters I expect the annual run rate for corporate costs in the coming years to be at the 300 million level as we have mentioned before.

Speaker Change: To round off the crude performance. It was good to see the 22% increase in EPS to <unk> 59 cents.

Speaker Change: And I just want to add to berens earlier comments on E mobility.

Timo Ihamuotila: Clearly, this is a transformation year for this business, which means technology investments in a new best-in-class focused product portfolio for DC chargers. These investments and a weak market impacting sales of the old portfolio have burdened results so far this year more than expected.

Speaker Change: Clearly this is a transformation year for this business. This means technology investments to a new best in class focused product portfolio for DC Chargers These investments and a weak market impacting sales of the old portfolio have burdened results. So far this year more than expected and.

Timo Ihamuotila: And unfortunately, will continue to do so during the second half of the year. Next year's performance should be significantly helped by both better operations as well as by orders of the new upgraded products driving better cross-margin. Now, let's flip to slide 7 and electrification.

Fortunately, we'll continue to do so also during the second half of the year.

Speaker Change: Next year's performance should be significantly helped by both better operations as well as by orders of the new upgraded products driving better gross margin.

Speaker Change: Now, let's flip to slide slide seven and electrification.

Timo Ihamuotila: Here the market environment remains very strong, and it was good to see that orders again hit the 4 billion mark, growing 7% on a comparable basis. It is encouraging that the pattern of short cycle order growth continued from the previous quarter, this time at a double-digit pace.

Speaker Change: Here the market environment remains very strong and it was good to see that orders again hit the 4 billion Mark growing 7% on a comparable basis.

Speaker Change: It is encouraging that the pattern of short cycle order growth continued from the previous quarter.

Speaker Change: This time at a double digit pace.

Timo Ihamuotila: Customer activity remains persistently high in the project and systems-related businesses, although orders declined from last year when we had a very high share of large orders. The data center segment continues to stand out as clearly the highest growth segment for EL in orders, but the infrastructure segment improved strongly from last year. Encouragingly, we had a positive development in the important building segment. Commercial building was up in all regions, and the strongest momentum was noted in the US. On the flip side, residential buildings were still muted, with broadly stable developments in both the US and Europe and continued declines in China.

Customer activity remains persistently high in the project and systems related businesses, although orders declined from last year. When we had a very high share of large orders.

Speaker Change: The data center segment continues to standout as clearly the highest growth segment for El in orders, but also the infrastructure segment improved strongly from last year Encouragingly, we had a positive development in the important building segment.

Speaker Change: Commercial building was up in all regions and the strongest momentum was no data in the U S. On.

Speaker Change: On the flip side residential buildings was still muted with a broadly stable development in both U S and Europe and continued declines in China looking.

Timo Ihamuotila: Looking at the chart in the middle, you see that we had record high revenues in electrification; even without the power conversion division, which was divested in July last year, revenues reached $3.8 billion and grew 7% on a comparable basis. Virtually all divisions contributed to the strong revenue growth, which was primarily driven by higher volumes, but also by positive pricing. Impressively, electrification delivered another record quarter for both earnings and margin. Operational EBITDA was up by 13% from last year, with a margin of 23.2%. Really well done by the team.

Speaker Change: Looking at the chart in the Middle you see that we had to record high revenues in electrification, even without the power conversion division, which was divested in July last year.

Speaker Change: Revenues reached $3 $8 billion and grew 7% on a comparable basis virtually all divisions contributed to the strong revenue growth, which was primarily driven by higher volumes, but also by positive pricing impressively electrification delivered another record quarter for both earnings.

Speaker Change: And margin operational EBIT was up by 13% from last year with a margin of 23, 2% really well done by the team.

Timo Ihamuotila: Looking ahead into the third quarter, we currently expect double-digit growth rates in comparable revenues and the operational EBITDA margin to be similar to the second quarter. Let's then move to slide eight and the motion business area, which delivered yet another quarter with orders of more than two billion dollars. Even so, the orders declined by 4% year on year from the fairly high comparable. Just like in electrification, the short cycle orders improved, but this was more than offset by declines in the project and system-related divisions, where orders can be lumpy. Book-to-bill was 1.03, adding further to the already considerable backlog.

Looking ahead into the third quarter. We currently expect double digit growth rate in comparable revenues and operational EBITA margin to be similar to the second quarter.

Speaker Change: Let's then move to slide eight and the motion business area, which delivered yet another quarter with orders of more than $2 billion.

Speaker Change: Even so the orders declined by 4% year on year from the fairly high comparable.

Speaker Change: Just like in electrification the short cycle orders improved but this was more than offset by declines in the project and system related divisions, where orders can be lumpy book to Bill was one point all three adding further to the already considerable backlog.

Timo Ihamuotila: We continue to see strength in the areas of rail and power generation. HVAC was positive, driven by commercial buildings, mainly in the US. However, oil and gas declined from last year's high levels, and slum slowness was noted in metals and chemicals.

Speaker Change: We continued to see strength in the areas of rail and power generation.

Speaker Change: H back was positive driven by commercial buildings, mainly in the U S oil.

Speaker Change: Oil and gas declined from last year's high level and slung slowness was no data in metals and chemicals.

Timo Ihamuotila: Moving now to revenues, which was supported by backlog execution and a positive price impact. This was, however, more than offset by lower volumes in the short cycle areas, as the order improvement did not yet convert to revenue. This summed up to a year-on-year decline of 1% in comparable revenues to $2 billion.

Speaker Change: Shifting now to revenues, which was supported by backlog execution and a positive price impact this.

Speaker Change: This was however, more than offset by lower volumes in the short cycle areas as the order improvement did not yet convert the revenues.

Speaker Change: These summed up to a year on year decline of 1% and comparable revenues to $2 billion.

Timo Ihamuotila: While earnings decreased slightly by 3%, the margin reached a healthy 19.9%, this despite the adverse mix from lower volumes in the higher margin short cycle divisions. This is a good indication of the impressive profitability improvements in the projects and system businesses. Looking ahead into the third quarter, we anticipate single-digit comparable revenue growth year-on-year and operational EBITDA margin to be similar to the second quarter. Turning on to slide nine and process automation, which delivered another strong quarter.

Speaker Change: While earnings decreased slightly by 3% the margin reached a healthy 19, 9%.

This despite the adverse mix from lower volumes in the higher margin short cycle divisions visit.

Speaker Change: This is a good indication of the impressive profitability improvements in the project and system businesses.

Speaker Change: Looking ahead into the third quarter, we anticipate a single digit comparable revenue growth year on year and operational EBITA margin to be similar to the second quarter.

Speaker Change: Turning on to slide nine and protest automation, which delivered another strong quarter orders reached one $8 billion and grew strongly by a comparable 10% from last year.

Timo Ihamuotila: Orders reached 1.8 billion dollars and grew strongly by a comparable 10 percent from last year. I'll bite on a relatively easy base. From a customer segment perspective, there was a strong trend in marine, ports, and chemicals, whereas oil and gas remained broadly stable at a high level. A more muted environment was noted in the areas of pulp and paper, as well as metals and mining.

Speaker Change: White Vornado relatively easy base.

Speaker Change: From a customer segment perspective, there was a strong trend in marine bought in chemicals, whereas oil and gas remained broadly stable at the high level a more muted environment was noted in the areas of pulp and paper as well as metals and mining.

Timo Ihamuotila: However, the overall market is healthy, and the project pipeline remains robust and intact. Now turning to revenues, Process Automation surpassed our original expectations as they executed well on their strong order backlog. They delivered a 12% increase in comparable revenues, reaching $1.7 billion.

Speaker Change: However, the overall market is healthy and the project pipeline remains robust and intact.

Speaker Change: Now turning to revenues protest automation surpassed our original expect expectations as they executed well on their strong order backlog they delivered a 12% increase in comparable revenues, reaching $1 $7 billion.

Timo Ihamuotila: The growth was supported by three out of four divisions and was driven by both volume and a slight positive price impact. Strong development in the service business was also helpful. It was nice to see process automation deliver yet another quarter with a margin of about 15%, more precisely 15.5%, with operational EBITDA improving 10% year-on-year. This good outcome was triggered by execution of the order backlog with a higher gross margin offsetting somewhat higher SG&A and R&D expenses.

Speaker Change: The growth was supported by three out of four divisions and was driven by both volume and slight positive price impact.

Speaker Change: Strong development in the service business was also helpful.

Speaker Change: It was nice to see protests automation deliver yet another quarter with a margin above 15% more precisely 15.5 with operational EBITA, improving 10% year on year.

Speaker Change: This good outcome was triggered by execution of the order backlog with a higher gross margin offset things somewhat higher SG&A and R&D expenses.

Timo Ihamuotila: Looking at our expectations for the third quarter, we foresee at least a mid-single-digit growth rate for comparable revenues and the operational EBITDA margin to be sequentially similar or slightly down. On slide 10, we turn to robotics and discrete automation.

Speaker Change: Looking at our expectations for the third quarter, we foresee at least mid single digit growth rate for comparable revenues and operational EBITDA margin to be sequentially similar or slightly down.

Speaker Change: On slide 10, we turn to robotics and discrete automation as in previous quarters, we need to look at the divisional levels to understand the diverging market environments.

Timo Ihamuotila: As in previous quarters, we need to look at the divisional levels to understand the diverging market environments. Starting with robotics, it was encouraging to see a slight growth in orders, both year-on-year and sequentially. This was mainly driven by the segments of general industry and warehouse automation for consumer industries, as well as service. This growth was, however, partially offset by the negative developments in automotive and electronics.

Speaker Change: Starting with robotics, it was encouraging to see a slight growth in orders both year on year and sequentially. These.

Speaker Change: This was mainly driven by the segments of general industry and warehouse automation for consumer industries as well as service.

Speaker Change: This growth was however, partially offset by the negative developments outmoded in electronics.

Timo Ihamuotila: Importantly, the impression from the local teams is that inventory levels in the channels are aligned with the current market situation. This adds comfort, and we expect orders to increase sequentially. Now turning to machine automation, as Bjrn already mentioned, this division is facing a challenging market environment. Customers continue to hold back on new orders following a period of pre-buys.

Speaker Change: Importantly, the impression from the local teams is that inventory levels in the channels are aligned with the current market situation. These ads comfort and we expect orders to increase sequentially.

Speaker Change: Now turning to machine automation as Bjorn already mentioned this division is facing a challenging market environment customers continue to hold back on new orders following a period of pre buys.

Timo Ihamuotila: As our backlog is now normalizing, and we are getting a feel for where the real market is, we clearly sense a lower level than expected. Our customers have high stock levels, and we expect a continued challenging order situation for the remainder of the year. Both divisions reported a decline in revenues. The positive order development in robotics did not yet translate, and the market slowdown in machine automation weighed on revenues as the backlog is normalized.

Bjorn: As our backlog is now normalizing and we're getting a feel for where the real market. This we clearly sends a lower level than foreseen.

Bjorn: Our customers have high stock levels, and we expect a continued challenging order situation for the remainder of the year.

Bjorn: Both divisions reported a decline in revenues the positive order development in robotics did not yet convert and the market slowdown in machine automation weight on revenues as the backlog is normalized.

Timo Ihamuotila: For the business area as a whole, this resulted in quarterly revenues of $833 million, down 8% on a comparable basis. The lower production volumes in both divisions resulted in underabsorption, which weighed on earnings and margins, particularly in machine automation.

Bjorn: For the business area as a whole these resulted in quarterly revenues of $833 million down 8% on a comparable basis.

Bjorn: The lower production volumes in both divisions that resulted in under absorption, which weighed on earnings and margins, particularly in machine automation.

Timo Ihamuotila: Operational EBITDA margin dropped by 420 basis points from last year to 11.1%. On the back of the weaker market, machine automation has initiated further cost measures to defend future profitability. However, benefits from these actions will not start coming through until towards the end of this year, meaning we expect the margin to be under pressure in the third quarter, which, however, should be the trough period for both revenues and margin in machine automation.

Bjorn: Operational EBITA margin dropped by 420 basis points from last year to 11, 1%.

Bjorn: On the back of the weaker market machine automation has initiated further cost measures to defend future profitability. However.

Bjorn: However benefits from these actions will not start coming through until towards the end of this year, meaning we expect the margin to be under pressure in the third quarter, which however should be the trough period for both revenues and margin in machine automation.

Timo Ihamuotila: In total, for the quarter, we expect negative growth in the mid-teens range in comparable revenues and sequential pressure on the operational EBITDA margin. Moving on to slide 11, showing the group's operational EBITDA bridge, the impacts from our positive price execution at about 1% and leverage on higher volumes more than offset the adverse effects from an increased spend in R&D and SG&A. The provision reversals booked in corporate this quarter helped to offset the higher-than-anticipated loss in the e-mobility business, as we mentioned earlier.

In total for the quarter, we expect negative growth in the mid teens range and comparable revenues and sequential pressure on the operational EBITA margin move.

Bjorn: Moving on to slide 11, showing the group operational EBITA bridge the.

Bjorn: The impacts from our positive price execution at about 1% and leverage on higher volumes more than offset the adverse effect from an increased spend in R&D and SG&A.

Bjorn: The provision reversals booked in corporate this quarter helped to offset the higher than anticipated loss in the E mobility business as we mentioned earlier.

Timo Ihamuotila: All in all, a 10% improvement in operational EBITDA with a 150 basis points margin increase. Now, from me, let's move on to cash flow on slide 12. The 918 million of free cash flow is, in my view, another solid cash delivery. Our free cash flow of almost 1.5 billion for the first half of 24 adds to our confidence of at least reaching last year's good level. All business areas improved their cash generation from last year.

Bjorn: All in all a 10% improvement in operational EBITA with 150 basis points margin increase.

Speaker Change: Finally from me, let's move onto cash flow on slide 12.

Speaker Change: The $918 million of free cash flow is in my view another solid cash delivery, our free cash flow of almost 1.5 billion for first half 'twenty four adds to our confidence of at least reaching last year's good level.

Timo Ihamuotila: The increase was mainly driven by a lower buildup of networking capital with improvements in all key components, but also a slight increase in operational performance. However, networking capital in relation to revenues remains sequentially stable at just above 11%.

Speaker Change: All business areas improved cash generation from last year.

Speaker Change: The increase was mainly driven by a lower buildup of networking capital with improvement in all key components.

Speaker Change: But also a slight increase in operational performance.

Net working capital in relation to revenues remained sequentially stable at just above 11%.

Timo Ihamuotila: Now, at this point, I would normally just hand over to Bjrn to finalize. But as this is our last quarterly call together, I would like to thank you, Bjrn, for your great cooperation during the years. We have worked together and wish you all the best in your future endeavors. It's also been fun. So, and with that, I would hand over to you to finish this presentation. Thank you, Timo. And likewise, it has been a pleasure working with you too. So let's finish off with no new comments on slide 13.

Beer: Now at this point I would normally just handover to beer and to finalize but as this is our last quarterly call together I would like to thank you burak for great cooperation during the years, we have worked together and wish you all the best in your future endeavors. It's been also.

Speaker Change: None.

Beer: So and with that I would hand over to you too.

Burak: Finalized this presentation. Thank you team and likewise it has been a pleasure working with you too.

Burak: So let's finish off without blue comments on slide 13.

Bjrn Klas Otto Rosengren: For the third quarter, we anticipate a sequentially higher growth rate in comparable revenues and operating EBITDA margin of around 18.5% or slightly below. Now, Anssi, let's open up for questions. Yes, let's do so. And just as a quick reminder, for those of you who have dialed in on the phone, please press star 14 to register to ask a question. And also, just remember to mute the webcast as your line is open and limit it to one question.

For the third quarter, we anticipate sequentially higher growth rate in comparable revenues and operational EBITA margin to be around 18, 5% or slightly below.

Anssi: That way, we allow for as many as possible of you to get through. But you can also put questions through the online tool in the webcast, and then I will voice them over from here. And just before I let the questions flow, I just want to say that if all goes to plan, we will have our incoming CEO, Morten, popping in right at the end. So stay tuned. And with that said, we'll open up for the first question, and the line should be open for you, Daniela Goldman Sachs. Hi, good morning. Am I on now?

Now onto <unk>.

Speaker Change: Let's open up for questions, Yes, let's queso and just as a quick reminder, for those of you who have dialed in on the phone. Please press Star 14 to register to ask a question and answer yes remember to mute the webcast as your line is health and limit it to one question.

Speaker Change: Way, we allow for as many as possible of you to get through.

Speaker Change: But you can also put questions through the online tool in the webcast and then I will invoice them over from here.

Speaker Change: And just before I.

Speaker Change: Let the questions fly I just want to say that if all goes to plan, we will have our incoming CEO Morten popping in right at the end so stay tuned and with that said.

Speaker Change: Open up for the first question and the line should be open for you Daniela <unk> Goldman Sachs.

Speaker Change: Okay.

Daniela Costa: You are. Perfect. Thank you very much. So I have two questions. One more on the shorter term. And then one for Bjrn when he has his last call.

Daniela: Hi, Good morning, I know you are.

Speaker Change: Perfect. Thank you very much.

So I have two questions one more on the shorter term and then one for per Bjarne has his left.

Speaker Change: Paul.

Bjrn Klas Otto Rosengren: But on the shorter term, just I see quite strong commentary regarding construction, especially on the non-RESI side, but in contrast to the high rates and a lot of data, like the architectural billings index and the Dodge Momentum and other metrics that have been a bit more on the weaker side lately. Can you comment on exactly what sort of market share gains that you think you have had in this segment? Is it specific to electrification? How do we see the sustainability of these measures going forward, given some of the leading indicators? Would you like to take it?

Speaker Change: But on the shorter term just.

Speaker Change: Quite strong commentary regarding construction, especially on the non resi side, but a big contrast, with the high rates in a lot of data like the architectural billings index and the Dodge momentum another metrics that has been a bit more on the weaker side lately can you comment on exactly as it sort of market share gains that you think you would have had on this.

Speaker Change: Segment is it specific to electrification how do we see the sustainability of these going forward given some of the leading indicators.

Unknown Executive: Yeah, sure. Thanks, Daniela, for the question. I mean, as we said, commercial construction showed strong performance for us, and I would say that some of our divisions have also diverted their activity to this area, given that it's been a little bit weaker in the RESI. So if I just give one example, in our electrification smart buildings, we actually had almost 10 percent growth in orders this quarter, and that's really testament to these guys also going after new markets.

Speaker Change: Yeah sure. Thanks, Daniela for the question I mean, as we said the commercial construction showed strong performance for us and I would say that some of our divisions have also divert their activity to this area given that its been a little bit weaker than the rest of it. So if I just gave one example in our electrification smart building.

We actually had almost 10% growth in orders this quarter and that's really a testament to these guys also going after new market. So I can't give sort of any market share gains that these sticks, but commercial construction was strong for us, particularly U S driven by electrification, but also some other markets.

Unknown Executive: So I can't give sort of any market share gains statistics, but commercial construction was strong for us, particularly in the U.S. driven by electrification, but also some other markets like, for example, the Middle East. So that's what's driving it. Thank you.

Speaker Change: Like for example, middle East So that's what's driving it.

Bjrn Klas Otto Rosengren: And then I guess sort of for Bjrn, given it's sort of the soon departing, when you look at the structure of the portfolio today, what are the areas that you would say sort of you wish you had seen further progress? Are there still any areas of particular self-help that you think, either organic or inorganic, provide an opportunity going forward, or pretty much are more about growth going forward? Yeah, first, first, I think one of the important journeys that we did was moving the company from what some perceived as a conglomerate towards a more purpose-driven structure.

Speaker Change: Hmm.

Speaker Change: Thank you.

Speaker Change: And then I guess sort of the.

Speaker Change: Fabio and given sort of the departing when when you look at the structure of the portfolio today.

Speaker Change: What are the areas that you would say.

Speaker Change: You wish you had seen further progress are there still any areas of particular or self help that you think either organic or inorganic provide them an opportunity going forward or pretty much is more about growth going forward.

Fabio: Yeah first first I'd say one of the important journey that we did was moving the company from from.

Bjrn Klas Otto Rosengren: And of course, that's driven by electrification and automation. And I think we can look at our divisions today; they are very much aligned with the purpose. And I think also most of our businesses are number one or number two in the areas where they operate. So I think we have a good structure today and good product lines all over. And I think this also shows, you know, the comparison with some of those global trends that we are positioned for, you know, in the whole electrification part, but also the strength in medium voltage that this part of the ABB offering is very good.

Fabio: From some perceived as a conglomerate torres to a more purpose driven structure and of course that driven by electrification and in automation I think we if we look at our divisions today. They are very much aligned with a purpose and I think also in most of our businesses are number one or number two in the area.

Fabio: Where they operate so I think we will see.

Fabio: A good structure today and good product lines all over.

And I T.

Fabio: This also shows.

Fabio: The comparison with some of those global trends that we are positioned in the late the whole electrification, but also the strength in the medium voltage that that's it's part of that of the ABB offering is very good I mean, if you look at our process automation. This is all we said traditionally industries and also new indices.

Bjrn Klas Otto Rosengren: And if you look at process automation, this is all these traditional industries and also new industries that are converting, you know, to become more sustainable. And this whole efficiency drives their parties, of course, benefiting the people.

Speaker Change: There are converting.

Speaker Change: To become more sustainable and these all efficiency drive their parties are of course benefiting the ABP growth and when you look at the automation, we are a robot and as you heard in the presentation is actually moving in the right direction with more orders both sequentially and year.

Bjrn Klas Otto Rosengren: And when you look at automation, we are robots, as you heard in the presentation, is actually moving in the right direction with more orders, more sequentially and year over year. And I think that business is well positioned for the future. But I think what we've seen, especially in machine automation in Europe, but also internationally, that it is a little bit weaker and probably driven by some higher interest rates during this part. There may be companies holding back some of the automation investments.

Speaker Change: Year over year.

Speaker Change: And I think.

Speaker Change: That business is well positioned for the future but.

Speaker Change: I think what we've seen.

Speaker Change: Specially on machine automation in Europe, but also our international that it is a little bit weaker than probably driven by some higher interest rates. During these part there may be companies holding back some of the automation investments, but we are very confident that this is part of the market will will also come back so when I look at the portfolio.

Bjrn Klas Otto Rosengren: But we are very confident that this part of the market will also come back. So when I look at the portfolio, I think we are in good shape. What I do believe in the future is that we will continue the acquisition. ABB is a small to medium-sized add-on to strengthen the business.

Speaker Change: We are in a good shape, what I do believe in the future is that we continue the acquisition.

Tom: Tom as we had started and I said five to 10 per year with this small to medium size add on to strengthen that business and we have a pretty good pipeline I can say on that partner you've seen of course some of them coming through so I think this is a good way to strength in both technology as well as.

Tom: As.

Tom: The offering that we have but overall I think ABB.

Tom: In a good place.

Speaker Change: Thank you very much and good luck for what's next thank you.

Bjrn Klas Otto Rosengren: We have a good pipeline on that part, and you have seen some of them coming through. This is a good way to strengthen both the technology and the offering that we have. Overall, I think ABB is in a good place. Thank you very much and good luck with what's next. Thank you, Daniela. Now we move on to Andy at JP Morgan. Your line should be open. Hi, good morning. Thanks for taking my question. I've got two.

Speaker Change: Thank you Daniela, we'll need to Andy at J P. Morgan your line should be open.

Andy: On the short cycle commentary, I just wanted to make sure that I understood that it was progress both year-on-year and also sequentially in terms of Q2. I guess I'm interested if you saw a pick-up in Q2 versus Q1, and obviously, if that's different by business area, that would be useful color as well. Maybe I can comment first and you can add on, Timo.

Andy: Hi, good morning, Thanks for that.

Andy: My question.

Speaker Change: And on the short cycle commentary just wanted to make sure that I understood that it was.

Speaker Change: Progress both year on year and also sequentially in terms of the Q2 I guess I'm interested if you saw a pick up in Q2 versus Q1, and obviously, it's different by business area that would be useful color as well.

Bjrn Klas Otto Rosengren: I think the short cycle business is up, as we said. The two big product areas or business areas, electrification, we saw during the first quarter approximately mid-teens short cycle growth, and in the second quarter, and when you look at the motion, it was pretty flat during the first quarter, and now it's up mid-teens. So both of these businesses are developing on the short cycle business. If you want to add something, Timo,

Speaker Change: Maybe I just can't comment first and you can add on more I think the short cycle business is up as we said they are the two big product area.

Speaker Change: Our business area outset electrification, we saw during the first quarter brought to the mid teens.

Speaker Change: Short cycle growth and in the second quarter of 10% and when you look at the motion It was pretty flat during the first quarter and now it's up mid teens. So both of these business is developing on the short.

Speaker Change: The cycle of business, if you want to add something Timur well, maybe the only thing to add is that is that also in whole ABB level. It has turned to a positive after six quarters of negative year on year quote quote I would think just in my head that it would be a slight positive also sequentially, but that number I haven't done I do not have now sort of cargo.

Timo Ihamuotila: Well, maybe the only thing to add is that, at the whole ABB level, it has turned positive after six quarters of negative year-on-year growth. I would think just in my head that it would be a slight positive also sequentially, but that number I do not have now sort of calculated. In the contracting environment, there's sort of a number of mentions in the release and in your commentary around projects and systems being obviously slower year on year. I appreciate a tough comp. Just to check, there's nothing there in terms of any kind of a pullback in customer decision-making or a slowdown in customer decision-making. This literally is just timing and the size of the Q2 comps.

Speaker Change: It did.

Speaker Change: Thank you and just I guess the other.

A side of that equation, just as a follow up on the contracting environment.

Sort of a number of mentions in the release and in your commentary around projects and systems being obviously slow year on your I. Appreciate it tough comp just to check there's nothing there in terms of kind of a pull back in customer decision, making or slowdown in customer decision, making this literally is just timing and the size of the Q2 comps.

Bjrn Klas Otto Rosengren: I mean, we've seen, of course, the long cycle business, the project business being the really driving force during the last year, and it has been extremely strong. So we have booked some fantastic orders over the years, which will, of course, be transforming into revenues during the coming year. So we see the pipeline for this project to continue to be very strong. So we are not worried at all.

Speaker Change: We've seen of course, the long cycle business. The project business being is there really a driving force during the last year and it has been extremely strong. So we booked some fantastic orders during the years, which will of course be.

Speaker Change: Transforming into revenues during the coming year. So we see the pipeline for these projects to continue to be very strong. So we are not worried at all I mean for us what's more important to see that the short cycle business, which is the everyday business is continued to picking up I think that is showing the trend in the market.

Bjrn Klas Otto Rosengren: I mean, for us, it's more important to see that the short cycle business, which is the everyday business, is continuing to pick up. I think that is showing the trend in the market. Thank you and good luck with everything, Bjorn. Thank you, Andy.

Speaker Change: Thank you and good luck with that and beyond Thank you Andy.

Anssi: Thank you. And can I remind you of the discipline of sticking to one question? Otherwise, we're not going to get through this list.

Speaker Change: And can I remind you of the discipline of sticking to one question otherwise, we're not going to get through this list.

Anssi: And that said, I will take a question from the web tool. And it comes from Kulwinder saying, Could you please elaborate on the profitability protection actions in machine automation? I can talk about that.

Speaker Change: And that said I will take a question from the Wetzel and it comes from Coke when Theyre, saying could you. Please elaborate on the profitability protection actions in our machine automation.

Bjrn Klas Otto Rosengren: I mean, the operating model we have is really made for this, that the divisions that have strong demand in the market accelerate, they invest, they continue to drive their business. And when the divisions that are seeing more headwinds, they, of course, adjust their operations in line with that demand. And that is what's taking place today in machine automation. But when you look at machine automation, this is mainly OEM customers, which means that when our customers, the machine builders, are building a machine, our equipment goes inside. The majority of business is in Europe, and Germany is a very important market there.

Speaker Change: I can talk about that I mean, the operating model. We have this is really made for this that the divisions that have strong demand in the market. They accelerate they invest they continue to drive that.

Speaker Change: And when the divisions that are seeing more headwind there of course adopt their their operations in line with that demand and that is what's taking place today in machine automation.

Speaker Change: When you look at machine automation. This is mainly OEM customers, which means that when our customers do the machines build there are building a machine our equipment goes inside and majority of the business is in Europe.

Bjrn Klas Otto Rosengren: And we've seen a slowdown in industrial automation investments, and that is affecting that. But we are adapting to make sure that we protect our margins. And when the market comes back, of course, this business will continue to deliver good performance. Yeah, maybe if I just comment from a numbers perspective.

Speaker Change: Germany is a very important market and we've seen slowdown in industrial automation investments and that is affecting that but we are adopting to make sure that we protect our margins and when the market comes back of course this business will continue to deliver.

Speaker Change: Good performance.

Speaker Change: Yeah, maybe if I just comment from numbers perspective, so I don't know if you noticed but we had a little bit higher restructuring line Q2, and we also upped our estimate the beat for Q3 and this is really coming from this area. So the change is really the restructuring happening in machine automation, which as bjorn said needs to happen now.

Timo Ihamuotila: So I don't know if you noticed, but we had a little bit higher restructuring line in Q2, and we also upped our estimate a bit for Q3, and this is really coming from this area. So the change is really the restructuring happening in machine automation, which as Bjrn said, needs to happen now. We need to adjust the cost best. OK, and then we have Martin Wilkie at City waiting on the line. I hope.

Bjorn: We need to adjust the cost base.

Bjorn: Okay, and then we have Martin Wilkie Citi waiting on the line I hope.

Martin Wilkie: Good morning, thank you. It's Martin from Citi. I'll just stick to the one question then. The question I had was on trade tariffs. Obviously, we don't know if tariffs will be changing potentially next year in the US, but could you remind us, obviously, back in 2018, 2019, we saw some tariffs.

Bjorn: Good morning, Thank you, it's Martin from Citi.

Speaker Change: The one question and then the question I had was on.

Martin Wilkie: Treat Paris I don't obviously, we don't know if tariffs changing potentially next year into the U S could you remind us.

Speaker Change: I'll be back in 2018, 2019, we sold some tariffs.

Bjorn: Great.

Speaker Change: Two large at that time, we keep them will have some structural changes can say can you remind us if there are large vessel.

Bjrn Klas Otto Rosengren: I don't think the impact for ABB was so large. Given we've had some structural changes since then, can you remind us if there are large, massive products that are moved between the regions, how you're thinking about the risk of increasing tariffs and how you might... Tarak is not a big issue for ABB. As you know, we have a local for local strategy where we are building up a sourcing structure locally. And that has been going on for many, many years.

Speaker Change: And the regions how are you thinking about the risk of increasing tariffs.

Speaker Change: You bet.

Bjrn Klas Otto Rosengren: So China, we are 95% self-sufficient, the same in Europe and the US; we are going maybe from 80 to 85% with the investments we are doing in our operations. So that has actually never been a big issue for us in our businesses. I have just one recollection from 2018 on this topic: then we still had power grids, and the biggest topic for us was not a big impact on the ABB level, as you said, or huge, but the biggest was in e-steel.

Speaker Change: Terex is not a big issue for ABB as you know we have local for local strategy, where we are building out both.

Bjorn: Sourcing.

Speaker Change: Structure locally and that has been going on for many many years, so China, where 95% self sufficient to same in Europe and U S. We are going maybe from 80% to 85% with the investments we are doing it in our operations. So that has actually never been a big issue for them for us.

Speaker Change: And the businesses you have.

Speaker Change: I have just one recollection from 2018 on this topic that then we still had power grids and the biggest topic for us it was not a big impact on ABB level. As you said are huge but the biggest was in east deal and at the moment, we actually have less of that as well. So I think we have moved to an even better position in this regard.

Speaker Change: What we have been.

Bjrn Klas Otto Rosengren: And at the moment, we actually have less of that as well. So I think we have moved to an even better position in this regard than we had then. Okay, thank you. Thanks, Martin. And we open up the line for Andre at UBS. Good morning.

Speaker Change: Okay. Thank you very much.

Thanks, Martin and we open up the line for Andre at UBS.

Andre Kukhnin: Thank you very much for taking my question. I will also stick to one, and we'll start with a very warm thank you to Bjorn for all the insights over the years. It really has been a pleasure and a learning experience for all of us and certainly for me. Thank you for taking us around data centers. You have to highlight the strong performance. Maybe you could give us some numbers around that kind of where you are in the second quarter or first half in terms of growth rates, or maybe an indication of book to bill. And maybe just a broader question as well.

Andre: Good morning. Thank you very much for taking my question I'll also 61, and we'll start with a very warm. Thank you to be on slowly insights over the years. It really has been.

Andre: Pleasure.

Speaker Change: Learning experience for all of US who said to me. Thank you.

Speaker Change: I wanted to ask around.

Bjrn Klas Otto Rosengren: Clearly, you're benefiting in this space by being a very strong player in medium voltage, more broadly, and you have got some elements of data center-specific offering that are doing well as well. Is there a consideration to try to bolster the latter and maybe to expand across the value chain in data centers, maybe in areas like cooling or anywhere else? Yeah, of course, data centers are important and are becoming even more important as our order book continues to grow, which is almost double the size of our revenue level.

Speaker Change: Thank you.

Speaker Change: Our own data centers you have to highlight the strong performance, maybe you could give us some numbers around that kind of where you are.

Speaker Change: In second quarter of last half.

Speaker Change: Of growth rates or maybe an indication of book to Bill.

Speaker Change: And maybe just a broader question as well clearly you're benefiting in this space by being a very strong player in medium voltage more broadly.

Speaker Change: You have got.

Some elements of data center specific offering that are doing well as well.

Speaker Change: Isn't there a.

Speaker Change: Incineration to try to bolster the luxor and maybe to expand across the value chain in.

Speaker Change: In data centers, maybe it's areas like cooling or anywhere else.

Speaker Change: Yeah of course data centers is an important and becoming even more important as our order book continues to grow which is almost double our.

Speaker Change: Revenue levels. So maybe you want to give some med some numbers.

Speaker Change: Exactly to show what a normalized growth we have there yeah happy to so as we said in the C. M. D. At the last five years or so the growth rate I think we mentioned what like 24, 25% and when we look at Q2, we grew clearly faster than this in orders and yes.

Speaker Change: Book to Bill continues to be positive and.

Speaker Change: It is thought to be actually close to 15% now of orders when you look at E. L. So we're clearly on that run rate above 2 billion Mark on and you also you know some hundreds of millions of Bob So it's continuing to be a very strong strong trend I don't know if you want to comment on the product portfolio are the the cooling.

Speaker Change: <unk> side of the question.

Timo Ihamuotila: So maybe you want to give us some, some numbers on the data center, to show what enormous growth we have there. Yeah, I mean, we can talk about data centers, of course, on the gray side, or the medium voltage, the whole infrastructure for that we have, of course, a strong position, but also on the white side, meaning inside with the UPS, and that we have a good offering there, which is actually growing strongly in the market.

Speaker Change: We can't forget to talk about the data centers of course on the.

Speaker Change: The gray side or the medium voltage the whole infrastructure to that that we have of course, a strong position, but also on the wide side mean insight with you passed and that we have a good offering there which is actually growing.

Speaker Change: Strongly in the market. So I think from from our products to be used inside the data centers is also increasing quite good today, but maybe on the portfolio I don't I mean, we have no plans to change now offering onto it due to kind of like go into fuel, calling or something like that we have good partnerships in different parts of the world actually read.

Timo Ihamuotila: So I think the demand for products to be used inside the data centers is also increasing quite well today. Yeah, but maybe on the portfolio. I don't, I mean, we have no plans to change the offering to do to kind of like go into fuel cooling or something like that. We have good partnerships in different parts of the world, actually regional partnerships with whom we work in the cooling area. So we don't think that we are, in any way, in a deferior position with our offering to data centers, even if we do not offer, for example, cooling ourselves.

Speaker Change: And our partnerships with whom we work on the calling area. So we don't think that we are in any way as you know diphtheria position with our offering to data centers, even though if we do not offer for example, calling ourselves and actually you mentioned the data center is getting bigger. So this is really good for us because you know the bigger the data center the more of course.

Bjrn Klas Otto Rosengren: And actually, you mentioned the data centers getting bigger. So this is really good for us because, you know, the bigger the data center, the more, of course, medium-voltage pipe it needs to come in. And here, one of the key growth areas looking forward for us when we look at the order book in this area are these medium voltage UPS products, where we expect really strong growth now going into the second half as well.

Speaker Change: Medium voltage vibe it needs to come in in here one of the key growth areas looking for but for us when we look at the order book in this area are these medium voltage <unk> products, where we expect really strong growth now going into second half as well.

Speaker Change: We also believe that we are taking market share or sorry in.

Speaker Change: In the data center business.

Speaker Change: You're happy with that Andre.

Andre: Then we move on thank you. Thanks.

Bjrn Klas Otto Rosengren: We also believe that we are taking market share also in the data center business. You happy with that, Andre? Then we move on. Thanks. Joe at Cowan, your line should be open now. Hey guys, thanks for taking my question and Bjrn, thanks for everything over the years here. I've never dealt with another CEO at ABB in my coverage.

Andre: Jill at Cowen Your line should be open now.

Andre: Okay.

Joe: So it's been has been great. Thank you. If you could talk through maybe the mix at PA, it seems like margins there have somewhat flattened out a bit here, and what's kind of needed there to move up to take another leg higher in margins? Yeah, you know, I'm extremely pleased with the process automation margins and the journey that they have made. You know, they were delivering just over 10%, including the turbo business, which I had a certain name for at that time; I'm not going to say it now.

Jill: Hey, guys. Thanks for taking my question and thanks for everything over the years you're.

Jill: Never dealt with another CEO at ABB in my coverage.

Speaker Change: It's been it's been great. Thank you.

Speaker Change: If you could talk through maybe the mix.

Speaker Change: It seems like margins there.

Speaker Change: It flattened out a bit here and what's kind of needed there you can move up.

Speaker Change: Another leg higher.

Speaker Change: In margins there.

Speaker Change: Yeah.

Speaker Change: I'm extremely pleased with our process automation the margins and the journey that they have you know Dave are delivering just over 10%, including the turbo business, which I had that certain naming four at that time I'm not going to say it now.

Joe: Now, that business is by itself, and you've probably followed that development, which is an amazing performance on the Swiss Stock Exchange. They are managed by proving that the value of what we are doing actually adds a lot of value to our customers.

Speaker Change: Now with that business is by itself and you probably followed that development, which is an amazing performance on the Swiss stock exchange and they are managed by proving that the value in what we are doing actually adds a lot of value to our customers and all of these have development has actually come.

Bjrn Klas Otto Rosengren: And all of these developments have actually come from gross margin improvement. This means that the solutions that we are putting in there, the customers are really prepared to pay for. So they are, of course, also dragging a lot of ABB equipment. They're both from the motion electrification side.

Speaker Change: From the gross margin improvement this means that the solutions that we're putting in that the customers are really prepared.

Speaker Change: To pay for.

They are of course also dragging a lot of ABB equipment there both from the motion electrification side. So besides these over 15% margin that we have electrification is getting their food margin in their own business as well as motion. So if you look at the total.

Bjrn Klas Otto Rosengren: So besides the over 15 percent margin that we have, electrification is getting their full margin in their own business as well as motion. So if you look at the total, and I would also like to mention the working capital, which is negative, which means that if you look at all the businesses we have, it actually has the highest return on capital employed of all our businesses. So I think being over 15 percent is amazing.

Speaker Change: I would also want like dementia, the working capital, which is negative which means that if you look at all businesses. We have it actually has the highest return on capital employed of of all our businesses, So I think being over 15%.

Speaker Change: It's amazing well down from from these businesses I think the important thing now is growth they have gone the deviation from that.

Bjrn Klas Otto Rosengren: Well done from this business. I think the important thing now is growth. You know, they have gone through the division from stability, profitability, and now moving over to growth in these businesses. That means growing with high margins. And the whole transformation in the process industries that is taking place is where we're going to see good growth. So we are very optimistic about that and also about remaining with a good margin. I'm really happy with the PAP. Okay, thank you.

The ability profitability and now moving over to <unk> to growth in these businesses that means growing with high margin and the whole transformation in the process industries that is taking place. That's why we're going to see good growth. So so we are very optimistic about that.

Speaker Change: And also to be remaining with good margin I'm really happy with the P. A performance.

Anssi: And I'll cut in between here with a question from the web tool, which is from Oscar. He says you should guide for around 5% revenue growth this year. So far, in the first half, it's 3%.

Speaker Change: Okay. Thank you and I'll cut in between here with a question from the web tool, which is from Oscar. He says you go you guide for around 5% revenue growth. This year. So far in first half, it's 5% do you still feel comfortable with the full year guidance.

Timo Ihamuotila: Do you still feel comfortable with the full year guidance? Yes, we feel comfortable with the full year guidance and maybe if you look at this, because we have a situation where the sort of backlog got longer than in a way in a normal situation and now when the delivery times are normalizing, people are ordering more book and bill type of business and when we look at our numbers, so for 5% growth, you would sort of need to come on sort of let's say similar FX rate to about 34 billion, maybe a bit less than 34 billion and if you look at how much we have now revenue plus what we expect from backlog conversion with this I think 49% number which we gave out today, that's like 27.3, 27.4 and you need to add about 6.5 to that to get to that growth and that means that we should have book and bill about 5% higher than last year but we already Q2 were kind of 5% higher and we actually checked these numbers because this is of course important question for us to understand as well what was the situation before COVID and actually we were more in these kind of levels, actually we had even higher book and bill, so that gives us confidence on the revenue growth.

Speaker Change: Yeah, Yeah sure, yes, we feel comfortable with the full year guidance, then and maybe if you look at this because we have a situation where the sort of backlog got longer than in a way in a normal situation and now when the when the delivery times are normalizing people are ordering more book and Bill type.

Speaker Change: Business and when we look at our numbers. So four 5% growth you would sort of need to come on sort of let's say similar FX rate to about 40 34 billion, maybe a bit less than 34 billion and if you look at how much we have now revenue plus what we expect from backlog conversion with this.

49% number, which we gave out today, that's like 27.3, 27, four and you need to add about $6 five to that to get to that growth and that means that we should have more kind of bill about 5% higher than last year, but we already Q2, we're kind of 5% tire and wheel.

Speaker Change: Actually check these numbers because these are of course important question for us to understand as well what was the situation before COVID-19 and actually we were more in these kind of levels actually we had even higher book and bill So that gives us confidence on the revenue growth now of course, we have a situation where ara is less than we expected going into the year and we had.

Timo Ihamuotila: Now, of course, we have a situation where RA is less than we expected going into the year, and we then expect to cover that more from electrification and process automation, as Björn was also discussing. Very good. Thanks for that.

Speaker Change: We expect to cover that more from electrification and process automation that's beyond what's also discussion.

Max: And then we will open up the line for Max at Morgan Stanley. Thank you. Good morning.

Speaker Change: Very good thanks for that and then we'll open up the line for Max at Morgan Stanley.

Max.

Bjrn Klas Otto Rosengren: Bjorn, I just wanted to ask about the margins, because I guess we look at the margins this quarter, they're 19%, which is the upper end of that 16 to 19% guidance that you've given for the group. But I guess the mix of margins is a bit different to what you would maybe expect with electrification at 23 and robotics that sort of more like robotics and automation at 11. So I guess my question is, given what we're seeing in the electrification margins and given kind of how much higher they've moved, are there any areas where you worry about the sustainability of these margins on a kind of two to three-year view?

Max: Thank you good morning.

Max: I just wanted to ask on also on the margins because I guess, if we look at the margin this quarter that the 90% that kind of.

Max: The upper end is about 16% to 19% guidance that you've given for the group.

Max: But I guess the mix of margins is a bit different than what you would maybe expect which electrification of 'twenty three in under both ticks up.

Speaker Change: Like the robotics and automation of lessons so.

Speaker Change: I guess my question is given what we're seeing in the electrification margins given kind of how much higher they moved are there any areas, where you worry about the sustainability of these margins on a kind of two to three years you are there any pockets, where you think the pricing environment.

Bjrn Klas Otto Rosengren: Are there any pockets where you think the pricing environment is particularly abnormal or favorable? Or really, do you see this as a sustainable level? But the reason I ask is if you can sustain 23 and then you get a robotics recovery, then you should be at least at the top end of that 16 to 19%.

Speaker Change: The abnormal are favorable.

Speaker Change: Do you see this as a.

Speaker Change: As a sustainable level and I guess the reason I ask is that you've seen sustained 23, and then you get a robotics recovery and you should be at least at the top end about 16% to 19% margin.

Bjrn Klas Otto Rosengren: Yeah, number one for electrification, and that's also the question that you can ask Morten about in the future because he's been part of creating that. I mean, this was created from our portfolio, the value we are putting in, but also the good growth numbers that we are seeing. And the good stuff here, I mean, you've been with us for not that long, but if you go back two years, the DS business, which was mostly medium voltage, was somewhat challenging on the margin side.

Speaker Change: Yeah that number one from electrification and <unk>.

Speaker Change: Thats also the question that you can in the future as Boston about because he has been part of creating that I mean, it is itself was creating from our portfolio of the value. We are putting in but also the good growth numbers that we are seeing and the good stuff here I mean, you've been with us for four four and not not that long but.

Speaker Change: If you go back two years the D. S business, which was majority medium voltage was somewhat challenging on the margin side. This business is today performing excellent with good margins. So even the sportswear. We you know after the acquisition of G. I.

Bjrn Klas Otto Rosengren: This business is today performing excellently with good margins. So even the spots where we, you know, after the acquisition, GIS has now come up, and US, which was a little bit lower on the margin side, have now improved so much. So it actually contributes to the profit margin of the group. So I think I feel very confident about the electrification business and the margins going forward. So that is.

Speaker Change: Have not come up in U S, which was a little bit lower on the margin side have now improved so much so it actually contributes to the profit margin.

Speaker Change: The group, so I think I feel very confident about the electrification business and margins going forward.

Speaker Change: So that so that is and I think when you look at the.

Bjrn Klas Otto Rosengren: And I think when you look at process automation and motion, which are both doing very well, and we believe that there will be good demand for these products in the future, which will also protect the margin. And of course, robotics, where we'll see recovery, but it will, of course, be a little bit more challenging during the rest of the year with machine automation, but that will come back.

Speaker Change: The process automation and motion, which are both doing very well and we believe that there will be good demand for these products in the future, which also will protect.

Speaker Change: The margin.

Speaker Change: Of course on the robotics, where we'll see a recovery, but it will of course be a little bit more challenging.

Gary with the machine automation, you addressed here, but that will come back. So yeah. You know the potential of this group is enormous which I have said from the first day I came in and I think yeah. They deliver in line with that and I think well positioned itself. So it should be paying off but I think still we stick with the guidance that we think this.

Speaker Change: It's quiet good challenging end.

Speaker Change: A lot of focus here on loan growth going forward with good margin.

Bjrn Klas Otto Rosengren: So yeah, you know, the potential of this group is enormous, which I have said from the first day I came in, and I think they will deliver in line with that. And I think they are well positioned, so it should be paying off. But I think we still stick with the guidance. And we think this is quite good, challenging, and a lot of focus on growth going forward with a good margin. Okay, thank you very much and good luck in the future, Gil. Thank you, Max. And then we open up for Will Mackie at Kepler.

Speaker Change: Okay. Thank you very much and good luck in the future. Thank you Max.

Speaker Change: And then we have been up four wheel Mackie Kepler cheuvreux.

William Mackie: Are you with us, Will? I am with you. Good morning, everybody. Bjorn, chapeau, indeed.

Speaker Change #100: With as well.

Bjrn Klas Otto Rosengren: Thanks. So two half questions, please, because they're follow-ups. To follow up on the margin question first and to kind of square this off. You achieved 18.4% in the first half, you're guiding for 18.5% in the third quarter, and yet you guide for 18% in the full year, but with implied revenue growth and strong performance in your largest divisions. Why are you implying a drop in margin in the fourth quarter? that maybe you can walk through some of the moving parts and this is, I mean, this is something that's been with ABB if you go back and you can follow the fourth quarter as long as you look backwards, we normally close down for Christmas and December, and the ending of that part is significantly lower, so we've always been a couple percentage points lower during the last quarter, but that doesn't change the whole thing if you're looking But I think the most important thing is to look year over year for the full year.

Mackie: I am with you good morning, everybody.

Speaker Change #102: <unk> shuffle indeed.

Speaker Change #102: Thanks.

Speaker Change #103: Two half questions. Please because their follow ups.

Speaker Change #103: To follow up on the margin question first and to kind of square this off.

Speaker Change #104: You achieved 18, 4% in the first half.

Speaker Change #104: <unk> four <unk> five in the third quarter.

Speaker Change #105: Yet you guide for <unk> 18 in the full year, but with implied revenue growth and strong performance in your largest divisions.

Speaker Change #106: Why are you, implying a drop in margin in the fourth quarter.

Speaker Change #107: That maybe you can walk through some of the moving parts.

This is I mean this is this is something that's been with ABB if.

Speaker Change #108: If you go back and you can follow the fourth quarter.

Speaker Change #109: As long as you look backwards.

Speaker Change #110: We normally closed down for for Christmas and December and the ending of that part is significantly lower so we have always been a couple of pieces.

Speaker Change #110: Sensitive points.

Speaker Change #110: Lower during the last quarter, but that doesn't change the hold if you're looking for about 150 basis points to be exact 150 basically play on.

Speaker Change #110: That has it been if theyre not going to be that we'll see of that but that is what expectations has been with the December that is normally but I think the most important is to look the year over year for the full year and the.

Bjrn Klas Otto Rosengren: And to reaching 18%, which is actually on the upper end of our financial targets, the one that we have for the group, I think these are good numbers. And then you're looking at some of the really growth businesses, which are showing even higher numbers, which I think is ensuring for the future. So I think ABB should continue with a good margin in line with the best peers in the market and then drive growth. And that is what good value creation is going to come from going forward. Thank you very much for your patience. The second follow-up is about distribution solutions.

Speaker Change #110: Reaching 18%, which is actually on the upper end of our financial targets.

Speaker Change #110: Targets are the.

Speaker Change #110: The one that we have for the group.

Speaker Change #111: These are good numbers and then you're looking at some of the really growth businesses are showing even higher number which I think is ensuring for for the future. So I think everybody should continue with good margin in line with the best peers in the market and then drive growth and that is what the bid the good value creation is going to come from going forward.

Speaker Change #110: Good.

Speaker Change #112: Thank you very much for your patience. The second follow up is about the distribution solutions.

Bjrn Klas Otto Rosengren: Just to follow on your comments on medium voltage, can you give a sense of how much additional growth you could achieve there and the type of volume and price dynamics you're seeing? Ideas have, of course, gone, and the medium voltage business has gone from something that the market considered something that you just had in your portfolio to being super focused and with strong demand for. And the good thing here is that when we made the changes, or actually Morten made the changes two years ago with the management, and we put in new management, and we separated the low voltage switchgear with the medium voltage and got the focus, the DS performance is one of the really successful stories, I would say.

Speaker Change #113: Just to follow regarding your comments on medium voltage can you give a sense of how much additional growth you could achieve there and the type of volume and price dynamics Youre seeing.

Speaker Change #114: D. S is of course, the garden and the medium voltage business from from.

Speaker Change #115: Something that the market considered.

Speaker Change #115: Something that you just had in your portfolio to be.

Speaker Change #115: Super focused and strong demand for and the good thing here is when we made the changes or or actually more than made the changes two years ago with the management and we've put in new management and we separated the low voltage switch gear with the medium voltage and got the focus the D. S.

Speaker Change #115: Performance is.

Speaker Change #115: One of the really success stories I would say so today, they're delivering really good margin in there.

Bjrn Klas Otto Rosengren: So today they're delivering really good margin in the medium voltage part, and that is, of course, a strong driver in the whole transformation. So we think that will continue. I would think ABB will be a strong and major player in this region. Okay, two half questions. That's an interesting definition.

Speaker Change #115: In the medium voltage part and that is of course, a strong driver in the whole transformation. So we think that will continue.

Speaker Change #115: And we think ABB will be strong in major player in this region.

Speaker Change #115: This segment.

Speaker Change #116: Okay two hulls.

Speaker Change #117: Thanks, Brandon interesting definition, well, we'll come back to that I think.

Alex: We'll come back to that, I think. Meanwhile, we open up the line for Alex at Bank of America Merrill Lynch. Morning, Bjorn, Timo, and Nancy, and best of luck in your future endeavors. Bjorn, it's been great working with you over the last few years, and well done on getting ABB into the position it's in. I wondered if you could talk a little bit about pricing dynamics generally. I guess I'm most interested in EL and MO given the operating leverage, and you're implying at least very strong growth in EL in Q3 as well.

Speaker Change #118: And we open up the line.

For Alex at Bank of America Merrill Lynch.

Speaker Change #118: Yes.

Alex: Yes morning.

Alex: Your own team.

Speaker Change #120: And best of luck.

Speaker Change #121: Future endeavors fuel and it's been great working with you.

Speaker Change #120: Cvs.

Speaker Change #122: Well done on getting <unk> into the position it's in I.

Speaker Change #123: I wondered if you could talk a little bit about <unk>.

Speaker Change #124: <unk> dynamics generally I guess I'm most interested in.

Speaker Change #124: Given the operating leverage.

Speaker Change #124: Youre, implying at least very strong price.

Speaker Change #124: In Q3 as well.

Alex: So I just wondered if you could give us an update on pricing. Yeah, I think we are very pleased to see that pricing continues to be one of the factors in the improvement of the margin and the gross margin that we are seeing in the part. If you're looking for the group, it's approximately 1% during the quarter. And if you want the details...

Speaker Change #125: So I was just wondering if you could give us an update on pricing. Yeah. I think we are very pleased to see that pricing continues to be one of the factors in the improvement of the margin and the gross margin that we are seeing in the partner.

Speaker Change #126: If you're looking for the group, it's approximately 1% during the.

Timo Ihamuotila: It's similar in EL and in MO as well, so that's where the pricing is coming from. So exactly in the areas you mentioned in your question. So quite pleased with the pricing development. And at the same time, I think it's worth noting that our variable cost performance has been very good. So we had really good supply chain operations work at the same time with pricing, and that's why we have a record gross margin. So our gross margin is... 38.5, and even if you take out the so-called, let's call them one-offs for this purpose the quarter, we are clearly above 38% gross margin in the company.

Speaker Change #127: Water and if you want to add the detail. It's the malaria in an E mail and in motion as well. So okay. So that's where the pricing is coming from so exactly in the areas. What you mentioned in your question. So so quite pleased with the with the pricing development and at the same time I think it's worth noting that our.

Speaker Change #127: Variable cost performance has been very good so we had really good supply chain.

Speaker Change #127: Operations work at the same time with the pricing and that's why we have the record gross margin. So our gross margin is 38, five and even if you take out the so-called let's let's call them one offs for this purpose in the quarter were clearly above 38% gross margin in the company and that's really important because under the hood, even if we are doing.

Timo Ihamuotila: And that's really important because under the hood, even if we are doing these kind of operating markets, we are, as Bjrn was saying, investing a lot in growth. So our R&D is up about 90 million first half, 24 compared to first half, 23. As you know, we are investing a lot more in capital expenditure than depreciation. We are targeting 900 million. Our depreciation is estimated to be maybe 580 million.

Speaker Change #127: These kind of operating markets. We are as we are and we're saying investing a lot in growth. So our R&D is up about 90 million first path 24 compared to first half 'twenty three and we are also as you know we're investing a lot more in capex than our depreciation were targeting 900 million or depreciate.

Speaker Change #127: And as like estimate data might be $580 million and we're also doing clearly more revenue expected from the signed M&A deals than earlier, maybe you say $250 million. We have signed up revenue this year compared to about 60 last year and we're also investing more than last year on this minority investment so.

Timo Ihamuotila: And we are also doing clearly more revenue expected from the signed M&A deals than earlier, maybe say 250 million we have signed of revenue this year compared to about 60 last year. And we are also investing more than last year in these minority investments. So we are really putting a lot of investment behind growth. And at the same time, as you can see from the gross margin, it is really good quality growth. One thing, one important measurement for us is productivity, and we measure our productivity in gross margin productivity, or gross margin per employee.

Speaker Change #127: We are really putting a lot of investment behind growth and at the same time as you can see it from the gross margin. It is really good quality growth.

Speaker Change #127: One thing one important measurement for us is the productivity and we measure our productivity and gross margin productivity gross margin per.

Speaker Change #128: Per employee.

Bjrn Klas Otto Rosengren: And this is, of course, developing very, very strongly with the growth that we are seeing and managing to keep our personnel costs on a good level. So that is important to drive profitability going forward. Thank you very much.

Speaker Change #127: And this is of course developing very very strong with the growth that we are seeing in managed to keep.

Speaker Change #127: Our personnel costs on a good level.

Speaker Change #127: That is important to.

Speaker Change #127: <unk> profitability going forward.

Speaker Change #129: I think it's just worth mezzanine debt, we have no. Thank you very much to take pricing in all business areas this quarter.

James: And then we'll open up the line for James at Redburn. Hey, everyone. Can you hear me?

Speaker Change #130: Good should've been remember that as well thanks.

Speaker Change #131: And then what I felt the line full James that Bad Bank.

James Moore: Yes, we can. And Morten, well, as it's your last quarter, can I also congratulate you, Bjrn, and, of course, Timo? You both presided over a massive margin expansion. I just checked. In the first 20 years I covered ABB before you joined, margin averaged 10, it was 11 when you joined, and it's now 18, 19.

Speaker Change #132: Everyone can you hear me.

Speaker Change #131: Yes.

Speaker Change #131: Last quarter I can I will congratulate bill.

Speaker Change #131: <unk> seen that.

Alrighty diver massive margin expansion I'll just check in the first three years of Calvert Adv before you joined margin averaged 10. It was 11 when he joined and is now 18 90 image for such a large company is truly remarkable.

Bjrn Klas Otto Rosengren: For such a large company, it's truly remarkable. And that kind of brings me to my question, which is similar to Max's, but more about the operating model than me. Some investors worry that what goes up will come back down and that your playbook is so, As it was at Sandvik, Barcelona, Atlas, I've seen it all, and you have over-squeezed the lemon, and that profitability won't be sustained. What can you give investors today to allay that fear before you leave? And maybe...

Speaker Change #133: That brings me to my question, which is similar to matches, but more about the operating model been mix, but some investors worry that won't goes out will come back down and that your playbook is.

Speaker Change #134: As it was it sounds like Atlas has seen it all.

Speaker Change #136: You have over squeeze the lemon and the profitability won't be sustained what can you give.

Speaker Change #137: These investments today to lay that fare.

Speaker Change #135: Before you leave and maybe.

Timo Ihamuotila: I'll talk a bit about next year if that's a way of answering your question. I think I went through a lot of stuff in the previous answer, which really shows that we have not squeezed the lemon and that we're really investing in all of these areas. And we are investing in good quality growth, which comes with a good gross margin. So, but please, I think it's important, squeezing the lemon is not what we want to do.

Speaker Change #138: Our next year, that's the way a bank right now.

Dave: I'll, let others, Dave I'll start I think.

Dave: I think I went through a lot of stock in the previous answer which really shows that we have not squeeze the lemon that were really investing on all of these areas and we are investing behind good quality growth with guns with good gross margin so but.

Bjrn Klas Otto Rosengren: And we want to create an ABB that delivers a good gross margin because that reflects the value that we can create for customers. And we want to grow these businesses in line with our purpose. And I think the ABB way of operating is working very well. And it's well established in the group today. I don't think anyone would question that.

Dave: I think it's important a squeeze in the laminate is not what we want to do and we want to create an ABB, which delivers good gross margin because that reflects actually at the value that we can create to their customers and we want to grow these businesses in line with our purpose and I think there are.

Martin Wilkie: <unk> way of operating model is working very well and is well established in the group today I don't think anyone would question that and Martin who is replacing me as being of course, one of the most active.

Bjrn Klas Otto Rosengren: And Morten, who is replacing me, has been, of course, one of the most active participants in this whole transformation and has driven that enormous change. So I feel that the margins that you're talking about are very sustainable. And I think going backward to other companies that we have done the similar, like Atlas Copco and Sandvik, and so we can see that the margin continues to be very strong and stays on that part.

Martin Wilkie: Participant in this whole transformation and driven that enormous change so I feel that the margins that you are talking about are very sustainable and I think.

Speaker Change #140: Going backward to other companies that we have done the similar like Atlas copco in sandvik in so we can see that the margin continues to be on their on their strong.

Speaker Change #140: Strong and state on that part so and that was one of the reason also why we set the financial.

Bjrn Klas Otto Rosengren: So, and that was one of the reasons also why we set the financial targets, you know, the margin between 16% and 19% shows that even in a really tough market, the company will deliver good performance. So I think you can sit back there and participate in the growth. Thank you so much. And then we'll see if we can squeeze in a few more questions here before we run out of time. Alistair Bernstein?

Speaker Change #140: The margin between 16, and 19% to shows that even in a really tough market. The company will deliver good performance I think you can.

Speaker Change #140: Feedback there and participate in the growth.

Speaker Change #140: Excellent job placement 12 months, Thank you James.

Speaker Change #140: And then we'll see if we can squeeze in a few more questions today before they run out of time Ollestad Bernstein.

Alistair: Are you with us? Yeah, hi, good morning, everyone. Thank you. So I had a question about data centers. I guess an interesting comment you gave there on the data center order strand. So it's kind of very positive. I was wondering whether you're sort of seeing any changes in the duration of those orders?

Speaker Change #141: And with this.

Bjrn Klas Otto Rosengren: You know, are they extending further into 2025? And in terms of the kind of capacity to meet that demand, how are lead times developing across some of your sort of key products? I guess what I'd like to better understand is just how quickly data center sales can accelerate from there. Yeah, I mean, the order book is probably until the end of 26 somewhere, if I recall what Morten said.

Ollestad Bernstein: Yes, hi, good morning, everyone. Thank you Ann.

Speaker Change #143: I had a question on data centers.

Speaker Change #144: Interesting comments you gave there on the data center <unk>. So it's a kind of very positive I was wondering whether you're seeing any changes in the duration on those orders extending further into 2025 and in terms of kind of capacity to meet that demand our lead times developing across some of your.

So key products, so I guess, what I'd like to better understand is just how quickly data center sales can can accelerate from here.

Speaker Change #145: The order book is probably until the end of 2006 somewhere.

Speaker Change #145: If I recall, what Martin said, so the demand continues on that part and we do believe that this will continue in the end.

Bjrn Klas Otto Rosengren: So the demand continues on that part, and we do believe that this will continue in the near future. That's pretty clear. And also, it will hang on for quite some time.

Speaker Change #145: The near future.

Speaker Change #146: That's pretty clear and or so hang on for quite some time I don't know if you want to yeah. Just if we look at some of the data from the medium voltage business. So I think before this data center boom started to really take off we had more like deliveries on about six months now we are maybe more sort of people.

Timo Ihamuotila: I don't know if you want to... Yeah, just if we look at some of the data from the medium voltage business. So I think before this data center boom started to really take off, we had more like deliveries for about six months. Now we are maybe more sort of people placing orders for about one year out. But it's not like we would be having a tricky time delivering.

Speaker Change #146: Placing orders to about one year out, but it's not like we would be having it tricky time delivering so most important here is of course that when you agree that order is delivered for example, one year from now then you also deliver one a year from now and then we're there we're doing really good job on on time delivery. Yeah, I think we managed to keep the capacity.

Timo Ihamuotila: So most important here is, of course, that when you agree that an order is delivered, for example, one year from now, then you also deliver one year from now. And then we are doing a really good job on on-time delivery. I think we managed to keep the capacity on a good level, and I think we have benefited a lot from that during the last... Okay, I see now that Morten has made it here.

Speaker Change #147: You are now on a good level and we I think we have benefit a lot from that during the last year.

Anssi: And I know it's a busy day for a lot of people in the financial industry today. We're doing lots of reporting. So we'll end it here. And for those of you who haven't got through, please reach out, and we'll try and help you separately. And with that, Bjrn. Since it's your last call, do you want to say a few words? Yeah, I would really like to do

Speaker Change #148: Okay I see.

Speaker Change #149: Thanks, I see now that Matson has made it here and I know, it's a busy day for a lot of people in the financial industry today within industrial coating. So we'll end it here and for those of you Havent got through please reach out and we'll try and help you.

Speaker Change #149: Separately and with that.

Speaker Change #151: So this is your last go.

Speaker Change #150: Let's say a few words.

Bjrn Klas Otto Rosengren: And it is four years since we, in June 2020, met for the first time on Capital Market Day and when we drew up the direction for the group with ABB Way, but also a purpose-driven, focused organization. It's been a fantastic journey for me and for the company. It's been a challenging external environment with COVID, with wars, with supply chain issues, with inflation, things that I haven't experienced in my career before.

Speaker Change #152: We'd like to do that and it is four years ago. Since we in June 2020, and met for the first time in the captive market and when we draw off the direction for the group with ABB way and but also purpose driven focused organization, it's been a fantastic journey.

Speaker Change #152: For me and.

Speaker Change #152: For the company, it's been a challenging external environment with the coal with with wars with the supply chain issues with inflation things that I havent experienced in my career before but at the same time, it's been an amazing journey for ABB and it's been a great pressure.

Bjrn Klas Otto Rosengren: But at the same time, it's been an amazing journey for ABB, and it's been a great pleasure to work with ABB and, together with the whole team, all the divisions, and all the executive committee members, make ABB perform in line with the best peers in the market but also position it well for future growth and some of those great secular trends.

Speaker Change #152: To work with ABB and together with the whole team to all of the divisions and all of them Executive Committee.

Speaker Change #152: Make ABB.

Speaker Change #152: Perform in line with the best peers have their market, but also position it well for for future growth.

Speaker Change #152: And some of those great.

Morten: Secular trends and one important person who has been participating in this has been Morten and I'm really pleased that you are going to replace me.

Bjrn Klas Otto Rosengren: And one important person who has been participating in this has been Morten, and I'm really pleased that you are going to replace me. I'm very happy with the performance that you have generated during these years. And you've been a strong driver in the ABB way. Sometimes I think you are more decentralized than I am. But I welcome you, and I wish you also the best.

Morten: I'm very happy with the performance that you have generated during these years and you'd be in a strong driver in the ABB ways. Sometimes I think you are more decentralized than I am.

Morten: Yes.

Pierre: I welcome you and I wish you all saw the best think Qbr's. Thanks, Pierre and then it's been a pleasure working with you earn over the last five years see us with haste empowerment and is open style I think it fits very well with me, but if it's just very well with ABB I've been here for 25 years and I think in the Spirit River and has also been.

Morten Wierod: With his empowerment and his open style, I think it fits very well with me, but it fits just very well with ABB. I've been working here for 25 years. And I think in the spirit, Bjrn has also been there in his mindset. So I'm really looking forward now also to the new challenge, starting 1st August, starting to lead ABB, the company, after more than 25 years of being on the commercial front line and knowing operations around the world, both in motion electrification and not so much in process automation and robotics and discrete automation, areas that I will have the opportunity to also now get deeper into the details.

Speaker Change #155: They're in our mind and his mindset. So I'm really looking forward now also to the new talents are starting first of August starting to lead ABB. The company after more than 25 years of being in the commercial frontline and knowing over operations around the world both emotional electrification and not so much in process automation.

Speaker Change #155: And the robotics and discrete automation lower areas that I will have the opportunity to also know get deeper into the details. So what has been driving the engagement and the performance of ABB. The last years has been also the decentralized model of full accountability to the divisions, what we call the ABB.

Morten Wierod: So what has been driving the engagement and the performance of ABB in recent years has also been the decentralized model of full accountability to the divisions, what we call the ABB way. And that I can confirm also, I truly believe in. I've been working closely with Bjrn on this together with the whole executive committee, and we also say, this is how we want to run the company. And that's also how we want to run the company in the future because I believe it's the right way for ABB. That's who we are as a company. Last year, we had many of you in Rossinone in Italy; you showed some operations there.

Speaker Change #155: Anyway, and that I can confirm also I truly believe and I've been working.

Speaker Change #155: Closely with with journalists together with the whole Executive Committee that we able to say this is how we want to run the company and that's also how we want to run the company in the future because I believe it's the right way for ABB, that's who we are as a company.

Speaker Change #155: Last year, we had many of you in person all in Italy, you saw some over all of our operations there.

Morten Wierod: And we presented financial and sustainability ambitions and targets for the next years. And also, coming on board, I can confirm that they, of course, stay in line because that was, again, a team commitment we made there as an executive committee. And it is anchored also within our operating divisions in the long-term performance planning. Of course, now the change, as you are hearing already, is the capital allocation more towards growth, both in the field of investment in sales and market coverage but, of course, also in technology with R&D, with the ambition to get up to 5% now in the coming years.

Speaker Change #156: We presented over financial our sustainability ambitions and targets for the next years and also coming on board I can confirm that they are of course stays in line because that was again a team commitment we did there as an accepted too.

Speaker Change #156: Committee any of those anchored also within our operating divisions in the long term performance planning of course now that changed as you are hearing already is the capital allocation more towards growth.

<unk> in the field all our investment in sales and market coverage, but of course also in technology with R&D with the ambition to get up to 5% now in the coming years and we also have the freedom and the expectation that most of our divisions are in growth mode means that the expectations of M&A and bolt on acquisitions is absolutely.

Morten Wierod: And we also have the freedom, and the expectations of most of our divisions are in growth mode means that the expectations of M&A and bolt-on acquisitions are absolutely there, and we're already showing it. I'm happy to see the pipeline that is there in place. So now I'm looking forward to starting work, and continuing to work with our customers, our partners, our great ABB team members. When the technology of ABB, our products, our systems, our digital offerings, our services, when that comes together, helping customers to decarbonize, to become more resource-deficient, that's when ABB is best.

There has to be already filling it and I'm happy to see the pipeline that is that is there in place.

Speaker Change #157: So now I'm looking forward to start.

Speaker Change #158: Working continue to work with our customers our partners our great team members of ABB when the technology, all ABB, there's over products or systems over digital offerings or services when that comes together, helping customers to decarbonize to become more resource efficient that's why in AVB assets as best so.

Morten Wierod: So now I'm looking forward to soon getting back to the job, but before that, I think everybody or many of us will take a well-deserved break and a vacation. So I want to first, again, thank you, Bjrn, for your fantastic leadership, how you have worked with us. And I want to, looking forward, then, to connect with everybody after the Q3 announcement.

Speaker Change #159: Now I am looking forward to soon get into the job, but before that I think to everybody or many of us will take some take a well deserved break in vacation. So I wanted to first again. Thank you burned for your fantastic leadership, how you have worked with us and I want to looking for them to connect with everybody.

Speaker Change #160: After Q3 announcements so we're happy summer.

Bjrn Klas Otto Rosengren: So, happy summer. Thank you, Morten. Thank you. Good, good speech. Thank you for watching!

Martin Wilkie: Thank you, Martin. Thank you.

Martin Wilkie: Thank you Martin.

Speaker Change #158: Yes.

Martin Wilkie: That's good.

Speaker Change #158: [music].

Speaker Change #158: Yes.

Speaker Change #158: Okay.

Speaker Change #158: Bruce.

Speaker Change #158: Sure.

Speaker Change #158: Yes.

Speaker Change #158: Okay.

Speaker Change #158: Yeah.

Speaker Change #158: Okay.

Speaker Change #158: Okay.

Speaker Change #158: Okay.

Speaker Change #158: Sure.

Speaker Change #158: Okay.

Speaker Change #158: Sure.

Speaker Change #158: [music].

Speaker Change #158: Okay.

Speaker Change #158: Yes.

Speaker Change #158: Yes.

Speaker Change #158: Yes.

Right.

Speaker Change #158: Okay.

Speaker Change #158: Right.

Speaker Change #158: Okay.

Speaker Change #158: Okay.

Speaker Change #158: [music].