ABB Q4 2025 ABB Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 ABB Ltd Earnings Call
Speaker #1: Greetings, and welcome to this presentation of ABB's full year and fourth quarter results. As usual, we have our CEO, Morten Wierod, here. And now also for the last time in this forum, our CFO, Timo Ihamuotila.
Ann-Sofie Nordh: Greetings and welcome to this presentation of ABB's full year and fourth quarter results. As usual, we have our CEO, Morten Wierod, here, and now also for the last time in this forum, our CFO, Timo Ihamuotila. I am Ann-Sofie Nordh, Head of Investor Relations, and as per tradition, Morten and Timo will talk through the results, after which we open up for Q&A. So now I'll leave it up to you, Morten, to kick off the presentation with some comments on 2025 as a whole.
Ann-Sofie Nordh: Greetings and welcome to this presentation of ABB's full year and fourth quarter results. As usual, we have our CEO, Morten Wierod, here, and now also for the last time in this forum, our CFO, Timo Ihamuotila. I am Ann-Sofie Nordh, Head of Investor Relations, and as per tradition, Morten and Timo will talk through the results, after which we open up for Q&A. So now I'll leave it up to you, Morten, to kick off the presentation with some comments on 2025 as a whole.
Speaker #1: I am Ann-Sofie Nordh, Head of Investor Relations. And as per tradition, Morten and Timo will talk through the results, after which we will open up for Q&A.
Speaker #1: So now I'll leave it up to you, Morten, to kick off the presentation with some comments on '25 as a whole.
Speaker #2: Thanks, Antti. Yeah, 2025 was our best year yet. We delivered an all-time high financial performance and we also continue to be recognized with good sustainability ratings.
Morten Wierod: Thanks, Antti. Yeah, 2025 was our best year yet. We delivered an all-time high financial performance, and we also continue to be recognized with good sustainability ratings. I want to thank and give credit to the team who worked hard to achieve this. Through the year, we saw demand for electrification and automation solutions continue its overall strong trend. From a top-line perspective, I would say that we have performed well in a strong market. Add to that our internal focus on continuous improvements. And putting it all together, we reached new record levels in orders and across most P&L metrics, including an operational EBITA margin of 19%. The margin of 18.2% on income from operations, or EBIT, was only 80 basis points lower, in line with our ambition to keep the gap at about 100 basis points. The strong order intake resulted in a book-to-bill of 1.11.
Morten Wierod: Thanks, Ann-Sofie. Yeah, 2025 was our best year yet. We delivered an all-time high financial performance, and we also continue to be recognized with good sustainability ratings. I want to thank and give credit to the team who worked hard to achieve this. Through the year, we saw demand for electrification and automation solutions continue its overall strong trend. From a top-line perspective, I would say that we have performed well in a strong market. Add to that our internal focus on continuous improvements. And putting it all together, we reached new record levels in orders and across most P&L metrics, including an operational EBITA margin of 19%. The margin of 18.2% on income from operations, or EBIT, was only 80 basis points lower, in line with our ambition to keep the gap at about 100 basis points. The strong order intake resulted in a book-to-bill of 1.11.
Speaker #2: I want to thank and give credit to the team who worked hard to achieve this. Through the year, we saw demand for electrification and automation solutions continue its overall strong trend.
Speaker #2: From a top-line perspective, I would say that we have performed well in a strong market. Add to that our internal focus on continuous improvements.
Speaker #2: And putting it all together, we reached new record levels in orders and across most P&L metrics, including an operational EBITA margin of 19%. The margin of 18.2% on income from operations or EBIT was only 80 basis points lower.
Speaker #2: In line with our ambition to keep the gap at about 100 basis points. The strong order intake resulted in a book-to-bill of 1.11. This leaves us with a record backlog of $25.3 billion to support future revenues.
Morten Wierod: This leaves us with a record backlog of $25.3 billion to support future revenues. Another highlight is the strong free cash flow of $4.6 billion, as well as the outstanding return on capital employed of 25.3%. We ended the year with a strong balance sheet with net debt to EBITDA of 0.3. The teams are active on their M&A pipelines, but admittedly, valuations have been demanding in some cases, and we have chosen to step away. I want to make good deals that create long-term value for our shareholders. So while we want to be active on the portfolio and we have financial headroom, we will continue to keep a firm grip on the calculator when screening deals. So balance sheets allow for M&A, dividend, as well as buybacks. We steadily reward shareholders with an annual increase in dividend.
This leaves us with a record backlog of $25.3 billion to support future revenues. Another highlight is the strong free cash flow of $4.6 billion, as well as the outstanding return on capital employed of 25.3%. We ended the year with a strong balance sheet with net debt to EBITDA of 0.3. The teams are active on their M&A pipelines, but admittedly, valuations have been demanding in some cases, and we have chosen to step away. I want to make good deals that create long-term value for our shareholders. So while we want to be active on the portfolio and we have financial headroom, we will continue to keep a firm grip on the calculator when screening deals. So balance sheets allow for M&A, dividend, as well as buybacks. We steadily reward shareholders with an annual increase in dividend.
Speaker #2: Another highlight is the strong free cash flow of $4.6 billion, as well as the outstanding return on capital employed of 25.3%. We ended the year with a strong balance sheet, with net debt to EBITDA of 0.3.
Speaker #2: The teams are active on their M&A pipelines, but admittedly, valuations have been demanding in some cases and we have chosen to step away. I want to make a good deal that creates long-term value for our shareholders.
Speaker #2: So while we want to be active on the portfolio and we have financial headroom, we will continue to keep a firm grip on the calculator when screening deals.
Speaker #2: So, balance sheets allow for M&A, dividends as well as buybacks. We steadily reward shareholders with an annual increase in dividend. And for 2025, we propose a dividend per share of CHF 0.94.
Morten Wierod: For 2025, we propose a dividend per share of CHF 0.94. If approved, this would be an annual raise of CHF 0.04, which is higher than the 2 to 3 in past years. We will also run a new and larger annual buyback program of up to $2 billion. This is an increase from the 2025 program of up to $1.5 billion, under which we spent about $1.3 billion. A good utilization, in my view, and the equivalent of about 1% of market cap, which adds to the yield of about 1.6% from the proposed dividend. Let's now turn to Q4, where one highlight was the very strong increase of 32% in comparable orders. With growth this strong, it is reassuring that it wasn't a one-dimensional driver.
For 2025, we propose a dividend per share of CHF 0.94. If approved, this would be an annual raise of CHF 0.04, which is higher than the 2 to 3 in past years. We will also run a new and larger annual buyback program of up to $2 billion. This is an increase from the 2025 program of up to $1.5 billion, under which we spent about $1.3 billion. A good utilization, in my view, and the equivalent of about 1% of market cap, which adds to the yield of about 1.6% from the proposed dividend. Let's now turn to Q4, where one highlight was the very strong increase of 32% in comparable orders. With growth this strong, it is reassuring that it wasn't a one-dimensional driver.
Speaker #2: If approved, this would be an annual raise of 4 rappen, which is higher than the 2 to 3 in past years. We will also run a new and larger annual buyback program of up to 2 billion dollars.
Speaker #2: This is an increase from the 2025 program of up to 1.5 billion under which we spent about 1.3. So a good utilization in my view, and the equivalent of about 1% of market cap, which adds to the yield of about 1.6% from the proposed dividend.
Speaker #2: Let's now turn to the fourth quarter, where I want to highlight was the very strong increase of 32% in comparable orders. With growth this strong, it is reassuring that it wasn't a one-dimensional driver.
Speaker #2: Instead, we were up in most segments and had double-digit growth across all business areas. Led by electrification and automation at the standout levels of 33 and 41%.
Morten Wierod: Instead, we were up in most segments and had double-digit growth across all business areas, led by electrification and automation at the standout levels of 33% and 41%. We continue to improve our operational performance. To make a long story short, we expanded on most lines in the P&L, generated high cash flow and capital returns. This is the strongest fourth quarter we have delivered so far. In the long run, we wouldn't be anything without our leading technology, the foundations for helping our customers. Our medium-voltage power technology is at the forefront of the industry. It puts us in the front row for future data center architecture. Building on this, the electrification team has extended its partnerships with Applied Digital, and we introduced new power designs for large-scale, AI-ready data centers. Another future potential demand driver is our cutting-edge direct current and solid-state electronics technology.
Instead, we were up in most segments and had double-digit growth across all business areas, led by electrification and automation at the standout levels of 33% and 41%. We continue to improve our operational performance. To make a long story short, we expanded on most lines in the P&L, generated high cash flow and capital returns. This is the strongest fourth quarter we have delivered so far. In the long run, we wouldn't be anything without our leading technology, the foundations for helping our customers. Our medium-voltage power technology is at the forefront of the industry. It puts us in the front row for future data center architecture. Building on this, the electrification team has extended its partnerships with Applied Digital, and we introduced new power designs for large-scale, AI-ready data centers. Another future potential demand driver is our cutting-edge direct current and solid-state electronics technology.
Speaker #2: operational performance. And to We continue to improve our make a long story short, we expanded on most lines in the P&L: generated high cash flow and capital returns.
Speaker #2: This is the strongest fourth quarter we have delivered so far. But in the long run, we wouldn't be anything without our leading technology—the foundations for helping our customers.
Speaker #2: Our medium-voltage power technology is at the forefront of the industry. It puts us in the front row for future data center architecture. Building on this, the Electrification team has extended its partnerships with Applied Digital, and we introduced new power designs for large-scale, AI-ready data centers.
Speaker #2: Another future potential demand driver is our cutting-edge direct current and solid-state electronics technology. We were the first in the market introducing a solid-state circuit breaker.
Morten Wierod: We were the first in the market introducing a solid-state circuit breaker, the SACE Infinitus. In the DC field, we run a collaboration with NVIDIA and hyperscalers supporting their 800-volt DC architecture. This is focused on power solutions needed to create high-efficiency, scalable power delivery for future AI workloads. Why DC technology? Well, it comes with the customer benefits of higher power density and lower conversion losses. It also requires less raw materials, for example, copper, as the cable can be thinner and fewer compared with alternating current. In our minds, the electrical distribution in future data centers will have much more DC technology combined with traditional AC technology. Let's call it beyond 2028-2030. In my view, we are very well positioned to lead this evolution.
We were the first in the market introducing a solid-state circuit breaker, the SACE Infinitus. In the DC field, we run a collaboration with NVIDIA and hyperscalers supporting their 800-volt DC architecture. This is focused on power solutions needed to create high-efficiency, scalable power delivery for future AI workloads. Why DC technology? Well, it comes with the customer benefits of higher power density and lower conversion losses. It also requires less raw materials, for example, copper, as the cable can be thinner and fewer compared with alternating current. In our minds, the electrical distribution in future data centers will have much more DC technology combined with traditional AC technology. Let's call it beyond 2028-2030. In my view, we are very well positioned to lead this evolution.
Speaker #2: The Sachse Infinitus. And in the DC field, we run a collaboration with NVIDIA and Hyperscalers supporting their 800-volt DC architecture. This is focused on power solutions needed to create high-efficiency scalable power delivery for future AI workloads.
Speaker #2: But why DC technology? Well, it comes with a customer benefit of higher power density and lower conversion losses. It also requires less raw materials—for example, copper—as the cable can be thinner and fewer compared with alternating current.
Speaker #2: In our minds, the electrical distribution in future data centers will have much more DC technology combined with traditional AC technology. Let's call it beyond 2028-2030.
Speaker #2: And in my view, we are very well positioned to lead this evolution. The transition from AC to DC could mean that about 40% to 50% of the installed data center capacity in 2030 is in DC electrical distribution.
Morten Wierod: The transition from AC to DC could be that about 40% to 50% of the installed data center's capacity in 2030 is in DC electrical distribution. I earlier talked about M&A, and the Motion team has now closed the acquisition of Gamesa Electric's power electronic business. This fills a gap in our product portfolio. We add power conversion products such as certain wind converters targeting industrial battery energy storage systems, as well as utility-scale solar inverters. I keep saying that the best is still to come for ABB. And to back it up, we have updated our long-term financial targets. So far, we have a good track record for delivering on our commitments. I expect this to continue also for these new targets, which I see as both ambitious and realistic. Starting with comparable growth, the 5% to 7% range is unchanged.
The transition from AC to DC could be that about 40% to 50% of the installed data center's capacity in 2030 is in DC electrical distribution. I earlier talked about M&A, and the Motion team has now closed the acquisition of Gamesa Electric's power electronic business. This fills a gap in our product portfolio. We add power conversion products such as certain wind converters targeting industrial battery energy storage systems, as well as utility-scale solar inverters. I keep saying that the best is still to come for ABB. And to back it up, we have updated our long-term financial targets. So far, we have a good track record for delivering on our commitments. I expect this to continue also for these new targets, which I see as both ambitious and realistic. Starting with comparable growth, the 5% to 7% range is unchanged.
Speaker #2: I earlier talked about M&A. And the Motion team has now closed the acquisition of Gamesa Electric's power electronics business. This fills a gap in our product portfolio.
Speaker #2: We add power conversion products such as certain wind converters, targeting industrial battery energy storage systems, as well as utility-scale solar inverters. I keep saying that the best is still to come for ABB.
Speaker #2: And to back it up, we have updated our long-term financial targets. So far, we have a good track record for delivering on our commitments.
Speaker #2: I expect this to continue also for these new targets, which I see as both ambitious and realistic. Starting with comparable growth, the 5% to 7% range is unchanged.
Speaker #2: This is a long-term, through-cycle target with a corridor, as an average of what we will deliver over—or be above or below—in the next—let's call it—8 to 10 years.
Morten Wierod: This is a long-term through-cycle target with a corridor as an average of what we will deliver over the next, let's call it, 8 to 10 years. This means that we can be above or below in individual years, but over the time, the average corridor is what you should expect from us. On top of this, we look to add an average 1% to 2% of acquired growth. Turning to the raised margin target, we now aim to run Operational EBITA margin in the range of 18% to 22%. So from the 2025 level, which is the best ABB has delivered so far, we see further upside of 300 basis points. The new higher margin range also means that worst case should we face a softer cycle, we will protect margin to only 100 basis points below the record 2025 level. Ambitious, in my view.
This is a long-term through-cycle target with a corridor as an average of what we will deliver over the next, let's call it, 8 to 10 years. This means that we can be above or below in individual years, but over the time, the average corridor is what you should expect from us. On top of this, we look to add an average 1% to 2% of acquired growth. Turning to the raised margin target, we now aim to run Operational EBITA margin in the range of 18% to 22%. So from the 2025 level, which is the best ABB has delivered so far, we see further upside of 300 basis points. The new higher margin range also means that worst case should we face a softer cycle, we will protect margin to only 100 basis points below the record 2025 level. Ambitious, in my view.
Speaker #2: This means that we can have individual years, but over time, the average corridor is what you should expect from us. On top of this, we look to add an average 1 to 2% of acquired growth.
Speaker #2: Turning to the raised margin target, we now aim to run operational EBITA margin in the range of 18 to 22%. So from the 2025 level, which is the best ABB has delivered so far, we see further upside of 300 basis points.
Speaker #2: The new higher margin range also means that worst case, should we face a softer cycle, we will protect margin to only 100 basis points below the record 2025 level.
Speaker #2: Ambitious, in my view. We have also set external target ranges for each business area. The high end of these ranges varies, but all represent best-in-class performances and fit within the ABB group.
Morten Wierod: We have also set external target ranges for each business area. The high end of these ranges varies, but all represent best-in-class performances, and fit within the ABB group. Backed by our growth and higher margins ambitions, we increased the ROSI target to about 20%. We aim to stay at this high level even as we pursue higher M&A activity. To support growth, we have slightly turned the Free Cash Flow conversion target to above 95%. Finally, we continue to expect average EPS growth to be at least high single digits. Setting new targets is one thing, but delivery is what matters. I see both internal, and external building blocks that position us well to accelerate operational performance. First, we aim to drive additional accountability and speed in the business as we embed the ABB Way operating model deeper into the organization across our 70 business lines.
We have also set external target ranges for each business area. The high end of these ranges varies, but all represent best-in-class performances, and fit within the ABB group. Backed by our growth and higher margins ambitions, we increased the ROSI target to about 20%. We aim to stay at this high level even as we pursue higher M&A activity. To support growth, we have slightly turned the Free Cash Flow conversion target to above 95%. Finally, we continue to expect average EPS growth to be at least high single digits. Setting new targets is one thing, but delivery is what matters. I see both internal, and external building blocks that position us well to accelerate operational performance. First, we aim to drive additional accountability and speed in the business as we embed the ABB Way operating model deeper into the organization across our 70 business lines.
Speaker #2: Backed by our growth and higher margins ambitions, we increased the ROSI target to about 20%. And we aim to stay at this high level even as we pursue higher M&A activity.
Speaker #2: To support growth, we have slightly adjusted the free cash flow conversion target to above 95%. And finally, we continue to expect average EPS growth to be at least high single digits.
Speaker #2: Setting new targets is one thing, but delivery is what matters. I see both internal and external building blocks that position us well to accelerate operational performance.
Speaker #2: First, we aim to drive additional accountability and speed in the business, as we embed the ABB way operating model deeper into the organization in our across 70 business lines.
Speaker #2: Secondly, we can do better in what I refer to as the beauty of mix. What we have done is to deploy a more rigorous and transparent internal KPI framework.
Morten Wierod: Secondly, we can do better in what I refer to as the beauty of mix. What we have done is to deploy a more rigorous and transparent internal KPI framework. This framework more clearly defines expected performance by mandate. It also links remuneration closer to mandates. Another important point is that we will continue to stay laser-focused on our annual 5% gross profit productivity target. And I already mentioned more M&A. I want this to become part of our culture, ingrained in everyday business. We're not quite there yet. But lastly, we play in strong secular markets. Cycles come and go, but I'm convinced about the long-term electrification and automation trends. Electricity demand is forecast to double by 2050, and we are positioned at the core of this energy expansion. ABB, we're set to capitalize on this.
Secondly, we can do better in what I refer to as the beauty of mix. What we have done is to deploy a more rigorous and transparent internal KPI framework. This framework more clearly defines expected performance by mandate. It also links remuneration closer to mandates. Another important point is that we will continue to stay laser-focused on our annual 5% gross profit productivity target. And I already mentioned more M&A. I want this to become part of our culture, ingrained in everyday business. We're not quite there yet. But lastly, we play in strong secular markets. Cycles come and go, but I'm convinced about the long-term electrification and automation trends. Electricity demand is forecast to double by 2050, and we are positioned at the core of this energy expansion. ABB, we're set to capitalize on this.
Speaker #2: This framework more clearly defines expected performance by mandate. It also links remuneration closer to mandates. Another important point is that we will continue to stay laser-focused on our annual 5% gross profit productivity target.
Speaker #2: And I already mentioned more M&A. I want this to become part of our culture. Ingrained in everyday business. We're not quite there yet. But lastly, we play in strong secular markets.
Speaker #2: Cycles come and go, but I'm convinced about the long-term electrification and automation trends. Electricity demand is forecast to double by 2050, and we are positioned at the core of this energy expansion.
Speaker #2: ABB, we're set to capitalize on this. Now let's turn back to the fourth quarter, and I don't think I'd be overstating it by saying that we had fantastic orders.
Morten Wierod: Now let's turn back to Q4, and I don't think I'd be overstating it by saying that we had fantastic orders. In the chart on the left, you see the comparable growth of 32% and total orders of $10.3 billion. We see persistently high customer activity across most of the key segments. Yes, there are some soft spots, and I would say that the process industry-related markets remain generally cautious. Orders in pulp and paper were down from last year. Mining was actually okay in the quarter, but in the big picture, we don't see yet the big CapEx coming online. I can also mention residential buildings, where particularly China is weak, and the discrete market remains a challenge. So what was it that helped drive our orders? Some of the segments to mention would be the continued strong utilities market.
Now let's turn back to Q4, and I don't think I'd be overstating it by saying that we had fantastic orders. In the chart on the left, you see the comparable growth of 32% and total orders of $10.3 billion. We see persistently high customer activity across most of the key segments. Yes, there are some soft spots, and I would say that the process industry-related markets remain generally cautious. Orders in pulp and paper were down from last year. Mining was actually okay in the quarter, but in the big picture, we don't see yet the big CapEx coming online. I can also mention residential buildings, where particularly China is weak, and the discrete market remains a challenge. So what was it that helped drive our orders? Some of the segments to mention would be the continued strong utilities market.
Speaker #2: In the chart on the left, you see the comparable growth of 32% and total orders of 10.3 billion. We see persistently high customer activity across most of the key segments.
Speaker #2: Yes, there are some soft spots, and I would say that at the process industry-related markets, we remain generally cautious. Orders in pulp and paper were down from last year.
Speaker #2: Mining was actually okay in the quarter, but in the big picture, we don't see yet the big CAPEX coming online. I can also mention residential buildings, where particularly China is weak.
Speaker #2: And the discrete market remains a challenge. So, what was it that helped drive our orders? Some of the segments to mention would be the continued strong utilities market.
Speaker #2: The same goes for land-based infrastructure and transport, where we see upgrades of electrical infrastructure in, for example, airports and tunnels. Commercial building is positive, supporting demand for HVAC solutions.
Morten Wierod: The same goes for land-based infrastructure and transport, where we see upgrades of electrical infrastructure in, for example, airports and tunnels. Commercial building is positive, supporting demand for HVAC solutions. And marine, as well as rail, continues to be very strong segments for us. In total, orders were supported across the project, service, and short-cycle businesses, and by all three business areas. Order intake from good underlying demand was further fueled by timing of some project orders. Both electrification and automation had several large bookings above the $100 million mark linked to the data center, marine, and ports segments. The data center segment was particularly strong, also when looking beyond the large orders just mentioned. We expect this to persist, and it looks like the market could grow into the teens near term.
The same goes for land-based infrastructure and transport, where we see upgrades of electrical infrastructure in, for example, airports and tunnels. Commercial building is positive, supporting demand for HVAC solutions. And marine, as well as rail, continues to be very strong segments for us. In total, orders were supported across the project, service, and short-cycle businesses, and by all three business areas. Order intake from good underlying demand was further fueled by timing of some project orders. Both electrification and automation had several large bookings above the $100 million mark linked to the data center, marine, and ports segments. The data center segment was particularly strong, also when looking beyond the large orders just mentioned. We expect this to persist, and it looks like the market could grow into the teens near term.
Speaker #2: And marine, as well as rail, continues to be very strong segments for us. In total, orders were supported across the project, service, and short cycle businesses, and by all three business areas.
Speaker #2: Order intake from good underlying demand was further fueled by timing of some project orders. Both electrification and automation had several large bookings above the 100 million mark, linked to the data center, marine, and ports segments.
Speaker #2: The data center segment was particularly strong, also when looking beyond the large orders just mentioned. We expect this to persist and it looks like the market could grow into the teams near term.
Speaker #2: In the revenue chart, you see the high level of $9.1 billion, up 9% on a comparable basis. This was stronger than we originally expected, and it was particularly electrification that outperformed with a strong finish to the year.
Morten Wierod: In the revenue chart, you see the high level of $9.1 billion, up 9% on a comparable basis. This was stronger than we originally expected, and it was particularly electrification that outperformed with a strong finish to the year. Similar to the order profile, revenue growth was supported by a positive development across service, long, and short-cycle businesses. While revenues were record high, orders were even stronger. On a book-to-bill of 1.14, the backlog was up by 18% to $25.3 billion. I usually don't talk about FX, which is largely a translation impact for us. But this time, it had a meaningful top-line contribution of 4%, mainly linked to the recent swings in dollar-euro rates. In total, revenues were up by 13%. I mentioned that orders progressed across the business areas. The same goes for the different geographies.
In the revenue chart, you see the high level of $9.1 billion, up 9% on a comparable basis. This was stronger than we originally expected, and it was particularly electrification that outperformed with a strong finish to the year. Similar to the order profile, revenue growth was supported by a positive development across service, long, and short-cycle businesses. While revenues were record high, orders were even stronger. On a book-to-bill of 1.14, the backlog was up by 18% to $25.3 billion. I usually don't talk about FX, which is largely a translation impact for us. But this time, it had a meaningful top-line contribution of 4%, mainly linked to the recent swings in dollar-euro rates. In total, revenues were up by 13%. I mentioned that orders progressed across the business areas. The same goes for the different geographies.
Speaker #2: Similar to the order profile, revenue growth was supported by a positive development across service, long and short cycle businesses. While revenues were record high, orders were even stronger; on a book-to-bill of 1.14, the backlog was up by 18% to $25.3 billion.
Speaker #2: I usually don't talk about FX, which is a large layer translation impact for us. But this time, it had a meaningful top-line contribution of 4%, mainly linked to the recent swings in dollar-euro rates.
Speaker #2: In total, revenues were up by 13%. I mentioned that orders progress across the business areas. The same goes for the different geographies. All three regions were up by more than 20%, led by Americas at 43, like for like.
Morten Wierod: All three regions were up by more than 20%, led by Americas at 43% like-for-like. Looking specifically at the US, orders increased by 57%. This high number includes some large booking, but also base orders were very strong and improved by 20%. Europe was up by 25% with a mixed picture between countries. If we look at Germany, our largest market in Europe, it was broadly stable at +1%. And as of yet, we don't really see a material impact from stimulus packages. AMEA improved by 23%, supported by the three largest countries in the region. Let's now look at Operational EBITA, which we improved by 19% to $1.6 billion. And we expanded the margin by 100 basis points to 17.6%. Operational leverage on higher volumes was the main factor in earnings growth. Add to that a positive price component, and efficiency gains through improved operational excellence.
All three regions were up by more than 20%, led by Americas at 43% like-for-like. Looking specifically at the US, orders increased by 57%. This high number includes some large booking, but also base orders were very strong and improved by 20%. Europe was up by 25% with a mixed picture between countries. If we look at Germany, our largest market in Europe, it was broadly stable at +1%. And as of yet, we don't really see a material impact from stimulus packages. AMEA improved by 23%, supported by the three largest countries in the region. Let's now look at Operational EBITA, which we improved by 19% to $1.6 billion. And we expanded the margin by 100 basis points to 17.6%. Operational leverage on higher volumes was the main factor in earnings growth. Add to that a positive price component, and efficiency gains through improved operational excellence.
Speaker #2: Looking specifically at the US, orders increased by 57%. This high number includes some large bookings, but also base orders were very strong and improved by 20%.
Speaker #2: Europe was up by 25%, with a mixed picture between countries. If we look at Germany, our largest market in Europe, it was broadly stable at plus 1%. As of yet, we don't really see a material impact from stimulus packages.
Speaker #2: AMEA improved by 23%, supported by the three largest countries in the region. Let's now look at operational EBITDA, which we improved by 19% to $1.6 billion.
Speaker #2: And we expanded the margin by 100 basis points to 17.6. Operational leverage on higher volumes was the main factor in earnings growth. Add to that a positive price component and efficiency gains through improved operational excellence.
Speaker #2: We more than offset tariff impacts and higher expenses linked to commodities. We also offset a higher spend on SG&A, which, however, reduced slightly in relation to revenues.
Morten Wierod: We more than offset tariff impacts and higher expenses linked to commodities. We also offset the higher spend on SG&A, which, however, reduced slightly in relation to revenues. The team did a good job, but we have to remain focused and manage, for example, rising input costs. We are primarily an assembly business, so our biggest raw material exposure is in the components we buy, predominantly in electrification and motion. We estimate the total exposure to commodities to be about 7% of revenues. And out of this, about 2/3 sits in copper and silver, as well as in E-Steel for our motors. We have been successful in managing these swings in the past and continue to balance market position with defending our long-term profitability. Overall, the strong performance in our businesses more than offset the $37 million higher expenses on the corporate and other line.
We more than offset tariff impacts and higher expenses linked to commodities. We also offset the higher spend on SG&A, which, however, reduced slightly in relation to revenues. The team did a good job, but we have to remain focused and manage, for example, rising input costs. We are primarily an assembly business, so our biggest raw material exposure is in the components we buy, predominantly in electrification and motion. We estimate the total exposure to commodities to be about 7% of revenues. And out of this, about 2/3 sits in copper and silver, as well as in E-Steel for our motors. We have been successful in managing these swings in the past and continue to balance market position with defending our long-term profitability. Overall, the strong performance in our businesses more than offset the $37 million higher expenses on the corporate and other line.
Speaker #2: The team did a good job, but we have to remain focused and manage, for example, rising input costs. We are primarily an assembly business, so our biggest raw material exposure is in the components we buy, predominantly in electrification and motion.
Speaker #2: We estimate the total exposure to commodities to be about 7% of revenues. And out of this, about two-thirds sits in copper and silver, as well as in esteel for our motors.
Speaker #2: We have been successful in managing these swings in the past and continue to balance market position with defending our long-term profitability. Overall, the strong performance in our businesses more than offset the $37 million higher expenses on the Corporate and Other line.
Speaker #2: And as a net total, we increased earnings per share by 30% to 70 cents. I'm pleased with our results. And with that, I hand over to you, Timo.
Morten Wierod: As a net total, we increased earnings per share by 30% to $0.70. I'm pleased with our result. With that, I hand over to you, Timo. Thanks, Morten. Let's take a look at what happened in the different business areas, starting with electrification. I have to say that the order level of $5.3 billion is a job well done. The market trend for electrification of things is buoyant, and the team performs well in this very strong market. The data center segment stood out with the timing of some large project orders adding to an already strong trend. These larger bookings at the +$100 million level totaled about $600 million. Looking ahead, the project pipeline remains good, and as Morten mentioned, we remain confident about the market.
As a net total, we increased earnings per share by 30% to $0.70. I'm pleased with our result. With that, I hand over to you, Timo.
Timo Ihamuotila: Thanks, Morten. Let's take a look at what happened in the different business areas, starting with electrification. I have to say that the order level of $5.3 billion is a job well done. The market trend for electrification of things is buoyant, and the team performs well in this very strong market. The data center segment stood out with the timing of some large project orders adding to an already strong trend. These larger bookings at the +$100 million level totaled about $600 million. Looking ahead, the project pipeline remains good, and as Morten mentioned, we remain confident about the market.
Speaker #2: Thanks, Morten. And let's take a look at what happened in the different business areas, starting with electrification. I have to say that the order level of 5.3 billion is a job well done.
Speaker #2: The market trend for electrification of things is buoyant, and the team performs well in this very strong market. The data center segment stood out, with the timing of some large project orders adding to an already strong trend.
Speaker #2: These larger bookings at the plus $100 million level totaled about $600 million. Looking ahead, the project pipeline remains good and, as Morten mentioned, we remain confident about the market.
Speaker #2: In such a strong environment, it is important that we remain honest with our customers, careful, not to overpromise, on our ability to deliver. This is key in our customer conversations.
Morten Wierod: In such a strong environment, it is important that we remain honest with our customers, careful not to overpromise on our ability to deliver. This is key in our customer conversations. But electrification is not all about data centers. Orders increased at a low double-digit rate, also excluding data centers. I would mention a continued strong customer activity in utilities, as well as for land-based infrastructure. Buildings is the biggest single segment and was overall positive. This is net of support from the commercial business, while residential remains challenging. Turning to revenues, the chart in the middle shows the record high level of $4.7 billion. The 12% comparable growth was primarily due to higher volumes, with a positive development in all divisions. We were up in all regions.
In such a strong environment, it is important that we remain honest with our customers, careful not to overpromise on our ability to deliver. This is key in our customer conversations. But electrification is not all about data centers. Orders increased at a low double-digit rate, also excluding data centers. I would mention a continued strong customer activity in utilities, as well as for land-based infrastructure. Buildings is the biggest single segment and was overall positive. This is net of support from the commercial business, while residential remains challenging. Turning to revenues, the chart in the middle shows the record high level of $4.7 billion. The 12% comparable growth was primarily due to higher volumes, with a positive development in all divisions. We were up in all regions.
Speaker #2: But electrification is not all about data centers. Orders increased at a low double-digit rate also excluding data centers. I would mention a continued strong customer activity in utilities as well as for land-based infrastructure.
Speaker #2: Buildings is the biggest single segment and was overall positive. This is net of support from the commercial business, while residential remains challenging. Turning to revenues, the chart in the middle shows the record high level of $4.7 billion.
Speaker #2: The 12% comparable growth was primarily due to higher volumes with a positive development in all divisions. And we were up in all regions. So while revenues were all-time high, electrification still reached a positive book-to-bill of 1.13, increasing the backlog by 21% to 9.4 billion dollars.
Morten Wierod: So while revenues were all-time high, electrification still reached a positive book-to-bill of 1.13, increasing the backlog by 21% to $9.4 billion. Operational EBITA was up by 23% to $1.1 billion, supported mainly by operational leverage on higher volumes, as well as by efficiency gains. These positives more than offset growth-related higher spend on R&D and SG&A, but also inflation linked to tariffs, as well as rising input costs from raw materials. The team is taking mitigating actions to offset higher commodity prices. And considering timing between price action and full realization, the sequential margin improvement into the first quarter may be a bit lower than what we have seen in the last few years. But with the expected Q1 comparable revenue growth at a high single to low double-digit rate, we should still see operational EBITA margin increase year-on-year.
So while revenues were all-time high, electrification still reached a positive book-to-bill of 1.13, increasing the backlog by 21% to $9.4 billion. Operational EBITA was up by 23% to $1.1 billion, supported mainly by operational leverage on higher volumes, as well as by efficiency gains. These positives more than offset growth-related higher spend on R&D and SG&A, but also inflation linked to tariffs, as well as rising input costs from raw materials. The team is taking mitigating actions to offset higher commodity prices. And considering timing between price action and full realization, the sequential margin improvement into the first quarter may be a bit lower than what we have seen in the last few years. But with the expected Q1 comparable revenue growth at a high single to low double-digit rate, we should still see operational EBITA margin increase year-on-year.
Speaker #2: Operational EBITA was up by 23% to $1.1 billion, supported mainly by operational leverage on higher volumes, as well as by efficiency gains. These positives more than offset growth-related higher spend on R&D and SG&A.
Speaker #2: But also, inflation is linked to tariffs, as well as rising input costs from raw materials. The team is taking mitigating actions to offset higher commodity prices.
Speaker #2: And considering timing between price action and full realization, the sequential margin improvement into the first quarter may be a bit lower than what we have seen in the last few years.
Speaker #2: But with the expected Q1 comparable revenue growth at a high single to low double-digit rate, we should still see operational EBITA margin increase year on year.
Speaker #2: Now, let's turn to Motion, where comparable orders were up by 13% and total orders reached $2.2 billion, in line with recent quarters. Just like in Electrification, there was contribution across the project, service, and short-cycle businesses.
Morten Wierod: Now let's turn to Motion, where comparable orders were up by 13% and total orders reached $2.2 billion, in line with recent quarters. Just like in Electrification, there was contribution across the project, service, and short-cycle businesses. And looking at the different customer segments, I would highlight on the positive side areas like HVAC linked to commercial buildings. I would also mention power generation, which benefits from grid modernization and distributed energy systems. On the more muted side of things, there are process industry segments of pulp and paper, and also chemicals, where, however, orders were up in this specific quarter. In the revenues chart, you see that Motion delivered a new all-time high. The 6% comparable growth was mainly due to higher volumes with some further contribution from price. We also added about 1% from M&A, which includes the closing of the Gamesa Electric deal in early December.
Now let's turn to Motion, where comparable orders were up by 13% and total orders reached $2.2 billion, in line with recent quarters. Just like in Electrification, there was contribution across the project, service, and short-cycle businesses. And looking at the different customer segments, I would highlight on the positive side areas like HVAC linked to commercial buildings. I would also mention power generation, which benefits from grid modernization and distributed energy systems. On the more muted side of things, there are process industry segments of pulp and paper, and also chemicals, where, however, orders were up in this specific quarter. In the revenues chart, you see that Motion delivered a new all-time high. The 6% comparable growth was mainly due to higher volumes with some further contribution from price. We also added about 1% from M&A, which includes the closing of the Gamesa Electric deal in early December.
Speaker #2: And looking at the different customer segments, I would highlight on the positive side areas like HVAC linked to commercial buildings. I would also mention power generation, which benefits from grid modernization and distributed energy systems.
Speaker #2: On the more muted side of things, there are process industry segments of pulp and paper and also chemicals, where, however, orders were up in this specific quarter.
Speaker #2: In the revenues chart, you see that motion delivered a new all-time high. The 6% comparable growth was mainly due to higher volumes with some further contribution from price.
Speaker #2: We also added about 1% from M&A, which includes the closing of the Gamesa Electric deal in early December. On an annual basis, this adds about $170 million to Motion.
Morten Wierod: On an annual basis, this adds about $170 million to motion. All included, revenues reached $2.3 billion, leaving book-to-bill at slightly negative 0.97. As most of you are familiar with, we have a pattern of a negative book-to-bill in the fourth quarter. Operational EBITA improved by 8% to $412 million. The margin, however, was down by 40 basis points to 18.3%. This was mainly down to two factors with broadly similar dilutive impacts. One being that we have some operational inefficiencies in the recently formed high-power division. It is taking some time to get the new setup fully oiled and up to speed. The team is on it, but it will most likely take a few quarters to get fully resolved. The second point to mention is the margin dilution from the acquired Gamesa business I just mentioned.
On an annual basis, this adds about $170 million to motion. All included, revenues reached $2.3 billion, leaving book-to-bill at slightly negative 0.97. As most of you are familiar with, we have a pattern of a negative book-to-bill in the fourth quarter. Operational EBITA improved by 8% to $412 million. The margin, however, was down by 40 basis points to 18.3%. This was mainly down to two factors with broadly similar dilutive impacts. One being that we have some operational inefficiencies in the recently formed high-power division. It is taking some time to get the new setup fully oiled and up to speed. The team is on it, but it will most likely take a few quarters to get fully resolved. The second point to mention is the margin dilution from the acquired Gamesa business I just mentioned.
Speaker #2: And all-included revenues reached $2.3 billion, leaving book-to-bill at a slightly negative 0.97. As most of you are familiar with, we have a pattern of a negative book-to-bill in the fourth quarter.
Speaker #2: Operational EBITA improved by 8% to $412 million. The margin, however, was down by 40 basis points to 18.3%. This was mainly down to two factors, with broadly similar dilutive impacts.
Speaker #2: One being that we have some operational inefficiencies in the recently formed high power division. It is taking some time to get the new setup fully oiled and up to speed.
Speaker #2: The team is on it, but it will most likely take a few quarters to get fully resolved. The second point to mention is the margin dilution from the acquired Gamesa business.
Speaker #2: I just mentioned, in this quarter, with only one month inclusion, it weighed on margin by about 20 basis points. The business is currently making a small loss, and we expect it to be dilutive for 2026 as a whole.
Morten Wierod: In this quarter, with only one month inclusion, it weighed on margin by about 20 basis points. The business is currently making a small loss, and we expect it to be dilutive for 2026 as a whole. Our plans allow for a couple of years to bring profitability to double digit as we embed the offering into our broad leading market reach. It should also add cross-divisional benefits with potential for the services business. For the first quarter, we anticipate comparable revenue growth towards the high single-digit level and Operational EBITA margin to improve slightly from the fourth quarter. Let's then turn to Automation, where this was the first quarter in the new structural setup with machine automation division now part of the business area. Automation also delivered a fantastic order inflow.
In this quarter, with only one month inclusion, it weighed on margin by about 20 basis points. The business is currently making a small loss, and we expect it to be dilutive for 2026 as a whole. Our plans allow for a couple of years to bring profitability to double digit as we embed the offering into our broad leading market reach. It should also add cross-divisional benefits with potential for the services business. For the first quarter, we anticipate comparable revenue growth towards the high single-digit level and Operational EBITA margin to improve slightly from the fourth quarter. Let's then turn to Automation, where this was the first quarter in the new structural setup with machine automation division now part of the business area. Automation also delivered a fantastic order inflow.
Speaker #2: Our plans allow for a couple of years to bring profitability to double digits, as we embed the offering into our broad, leading market reach. It should also add cross-divisional benefits, with potential for the services business.
Speaker #2: For the first quarter, we anticipate comparable revenue growth toward the high single-digit level and operational EBITA margin to improve slightly from the fourth quarter.
Speaker #2: Let's then turn to Automation, where this was the first quarter in the new structural setup, with the Machine Automation division now part of the business area.
Speaker #2: Automation also delivered a fantastic order inflow. You see in the chart on the left that the 2.8 billion dollars up by a comparable 41% is on par with the similarly high Q2.
Morten Wierod: You see in the chart on the left that the $2.8 billion, up by a comparable 41%, is on par with the similarly high Q2. This has clearly been a strong year for automation orders. Like for electrification in Q4, we had some large bookings above the $100 million mark. These were linked to the marine and port segments and contributed to a total of close to $600 million. In addition to strong marine and ports, I would mention oil and gas as a generally solid market, although orders declined in this specific quarter. There was also an increased activity among nuclear customers, albeit a small part of the total. Machine builders remains a challenging area, but due to the low comparable from last year, orders increased sharply.
You see in the chart on the left that the $2.8 billion, up by a comparable 41%, is on par with the similarly high Q2. This has clearly been a strong year for automation orders. Like for electrification in Q4, we had some large bookings above the $100 million mark. These were linked to the marine and port segments and contributed to a total of close to $600 million. In addition to strong marine and ports, I would mention oil and gas as a generally solid market, although orders declined in this specific quarter. There was also an increased activity among nuclear customers, albeit a small part of the total. Machine builders remains a challenging area, but due to the low comparable from last year, orders increased sharply.
Speaker #2: This has clearly been a strong year for automation orders. And, like for electrification in Q4, we had some large bookings at the above-the-$100-million mark.
Speaker #2: These were linked to the marine and port segments, and contributed to a total of close to 600 million dollars. In addition to strong marine and ports, I would mention oil and gas as a generally solid market, although orders declined in this specific quarter.
Speaker #2: There was also an increased activity among nuclear customers, albeit a small part of the total. Machine builders remains a challenging area, but due to the low comparable from last year, orders increased sharply.
Speaker #2: And lastly, mining orders were up in what we otherwise continue to see as a bit of a muted segment. Turning to revenues, comparable growth was stronger than expected at 9%.
Morten Wierod: Lastly, mining orders were up in what we otherwise continue to see as a bit of a muted segment. Turning to revenues, comparable growth was stronger than expected at 9%. Execution of the backlog, as well as good deliveries in service and short-cycle businesses, all supported revenues to the record $2.2 billion. Operational EBITA was up by 27% to $311 million. Key level to the higher profitability was the gross margin increase of 140 basis points. This was due to leverage on higher volumes, some positive pricing, and the team delivering productivity enhancements. Add to that a stringent management of SG&A, and we arrive at the 150 basis points increase in operational EBITA margin to 13.9%. Looking at Q1, we expect automation's comparable revenues to improve at broadly a mid-single-digit range, and operational EBITA margin should improve slightly year-on-year.
Lastly, mining orders were up in what we otherwise continue to see as a bit of a muted segment. Turning to revenues, comparable growth was stronger than expected at 9%. Execution of the backlog, as well as good deliveries in service and short-cycle businesses, all supported revenues to the record $2.2 billion. Operational EBITA was up by 27% to $311 million. Key level to the higher profitability was the gross margin increase of 140 basis points. This was due to leverage on higher volumes, some positive pricing, and the team delivering productivity enhancements. Add to that a stringent management of SG&A, and we arrive at the 150 basis points increase in operational EBITA margin to 13.9%. Looking at Q1, we expect automation's comparable revenues to improve at broadly a mid-single-digit range, and operational EBITA margin should improve slightly year-on-year.
Speaker #2: Execution of the backlog, as well as good deliveries in service and short-cycle businesses, all supported revenues to the record 2.2 billion dollars. Operational EBITA was up by 27% to 311 million.
Speaker #2: And key level to the higher profitability was the gross margin increase of 140 basis points. This was due to leverage on higher volumes, some positive pricing, and the team delivering productivity enhancements.
Speaker #2: Add to that a stringent management of SG&A and we arrive at the 150 basis points increase in the 13.9% operational EBITA margin. Looking at the first quarter, we expect Automation's comparable revenues to improve at broadly a mid-single-digit range, and operational EBITA margin should improve slightly year on year.
Speaker #2: Now, let's move on to cash flow, which was another highlight of the quarter. The strong outcome was the result of improved operational cash flow, in combination with a larger release of trade networking capital, compared with last year.
Morten Wierod: Now let's move on to cash flow, which was another highlight of the quarter. The strong outcome was the result of improved operational cash flow in combination with a larger release of trade net working capital compared with last year. So despite a higher paid tax and CapEx expenses, we improved free cash flow by 17% to $1.5 billion. A good outcome in my view, given the strong cash performance already in the prior quarters. In total for 2025, we generated free cash flow of $4.6 billion, and I really want to give credit to the team for achieving this. We have now consistently run at a free cash flow margin between 12% to 14% over the last 3 years. I'm really pleased about both the level, but also the margin stability.
Now let's move on to cash flow, which was another highlight of the quarter. The strong outcome was the result of improved operational cash flow in combination with a larger release of trade net working capital compared with last year. So despite a higher paid tax and CapEx expenses, we improved free cash flow by 17% to $1.5 billion. A good outcome in my view, given the strong cash performance already in the prior quarters. In total for 2025, we generated free cash flow of $4.6 billion, and I really want to give credit to the team for achieving this. We have now consistently run at a free cash flow margin between 12% to 14% over the last 3 years. I'm really pleased about both the level, but also the margin stability.
Speaker #2: So despite a higher paid tax and CapEx expenses, we improved free cash flow by 17% to 1.5 billion. A good outcome, in my view.
Speaker #2: Given the strong cash performance already in the prior quarters, in total for 2025, we generated free cash flow of $4.6 billion, and I really want to give credit to the team for achieving this.
Speaker #2: We have now consistently run at a free cash flow margin between 12% to 14% over the last three years. And I'm really pleased about both the level, but also the margin stability.
Speaker #2: Looking forward into 2026, we expect free cash flow to remain broadly unchanged at the $4.6 billion level. This would be the net outcome from higher cash flow in the businesses and real estate gain, with an offset mainly from the expected cash impact from the closing of the robotics divestment.
Morten Wierod: Looking forward into 2026, we expect free cash flow to remain broadly unchanged at the $4.6 billion level. This would be the net outcome from a higher cash flow in the businesses, and real estate gain, with an offset mainly from the expected cash impact from the closing of the robotics divestment. It looks like this tax impact will be about $400 million, with approximately $300 million in 2026 and the remainder in 2027. And with that, I hand it back to you, Morten. Thanks, Timo. Now let's finish off with the outlook. We expect to continue to perform well in a strong market and foresee another year with a positive book-to-bill. Comparable revenue growth should be in the range of 6% to 9%. We aim for a slight increase in operational EBITA margin, even when excluding the real estate gain in Q1 2026.
Looking forward into 2026, we expect free cash flow to remain broadly unchanged at the $4.6 billion level. This would be the net outcome from a higher cash flow in the businesses, and real estate gain, with an offset mainly from the expected cash impact from the closing of the robotics divestment. It looks like this tax impact will be about $400 million, with approximately $300 million in 2026 and the remainder in 2027. And with that, I hand it back to you, Morten.
Speaker #2: It looks like this tax impact will be about $400 million, with approximately $300 million in '26 and the remainder in '27. And with that, I hand it back to you, Morten.
Morten Wierod: Thanks, Timo. Now let's finish off with the outlook. We expect to continue to perform well in a strong market and foresee another year with a positive book-to-bill. Comparable revenue growth should be in the range of 6% to 9%. We aim for a slight increase in operational EBITA margin, even when excluding the real estate gain in Q1 2026.
Speaker #2: Thanks, Timo. Now, let's finish off with the outlook. We expect to continue to perform well in a strong market, and foresee another year with a positive book-to-bill.
Speaker #2: Comparable revenue growth should be in the range of 6% to 9%. And we aim for a slight increase in operational EBITA margin, even when excluding the real estate gain in the first quarter of 2026.
Speaker #2: For the first quarter, we expect comparable revenue growth in the range of 7 to 10%. And the operational EBITA margin should increase year on year, excluding the real estate gains.
Morten Wierod: For the first quarter, we expect comparable revenue growth in the range of 7% to 10%. The operational EBITA margin should increase year-on-year, excluding the real estate gains. Last year, the Q1 margin was supported by about 190 basis points to 20.3%. So excluding the gain, the margin was 18.4%. So now, Ann-Sofie, let's open up for questions. Yes, let's do so. As a quick reminder, for those of you who have dialed in on the phone, please press star 1 4 to register to ask a question. Please remember to mute the webcast as your line is opened and limit it to one question. That way, we allow for as many as possible to be heard. You can also put questions through the online tool in the webcast, and I will then voice them over from here.
For the first quarter, we expect comparable revenue growth in the range of 7% to 10%. The operational EBITA margin should increase year-on-year, excluding the real estate gains. Last year, the Q1 margin was supported by about 190 basis points to 20.3%. So excluding the gain, the margin was 18.4%. So now, Ann-Sofie, let's open up for questions.
Speaker #2: Last year, the Q1 margin was supported by about 190 basis points to 20.3%. So, excluding the gain, the margin was 18.4%. So now, Ann-Sofie, let's open up for
Speaker #2: questions. Yes, let's do
Ann-Sofie Nordh: Yes, let's do so. As a quick reminder, for those of you who have dialed in on the phone, please press star 1 4 to register to ask a question. Please remember to mute the webcast as your line is opened and limit it to one question. That way, we allow for as many as possible to be heard. You can also put questions through the online tool in the webcast, and I will then voice them over from here. With that, I suggest we open up for the first question, and it should come from Max at Morgan Stanley. Max, are you with us?
Speaker #3: So, and as a quick reminder for those of you who have dialed in on the phone, please press star 14 to register to ask a question.
Speaker #3: And please remember to mute the webcast as your line is opened. And limit it to one question. That way, we allow for as many as possible to be heard.
Speaker #3: But you can also put questions through the online tool in the webcast, and I will then voice them over from here. And with that, I suggest we open up for the first question, and it should come from Max at Morgan Stanley.
Morten Wierod: With that, I suggest we open up for the first question, and it should come from Max at Morgan Stanley. Max, are you with us? Thank you, and good morning, everyone. I just wanted to ask around pricing and the raw materials comments you made, because I think if you look at the moves in copper and silver, kind of it looks to me that most of the electrical equipment companies from this alone will have to put up prices by about 2% in 2026. So I guess I wanted to understand how much of those price rises are already captured in your Q4 numbers. Roughly how much price are you embedding in the guidance? And maybe just talk us through actually the mechanism here in terms of how it works. Do you hedge? Will we see those prices come through gradually? Have you put them through already?
Speaker #3: Max, are you with us?
Max Yates: Thank you, and good morning, everyone. I just wanted to ask around pricing and the raw materials comments you made, because I think if you look at the moves in copper and silver, kind of it looks to me that most of the electrical equipment companies from this alone will have to put up prices by about 2% in 2026. So I guess I wanted to understand how much of those price rises are already captured in your Q4 numbers. Roughly how much price are you embedding in the guidance? And maybe just talk us through actually the mechanism here in terms of how it works. Do you hedge? Will we see those prices come through gradually? Have you put them through already?
Speaker #4: Thank you. And good morning, everyone. I just wanted to ask around pricing. And the raw materials comments you made, because I think if you look at the moves in copper and silver, kind of it looks to me that most of the electrical equipment companies from this alone will have to put up prices by about 2% in 2026.
Speaker #4: So I guess I wanted to understand how much of those price rises are already captured in your Q4 numbers? Roughly how much price are you embedding in the guidance?
Speaker #4: And maybe just talk us through actually the mechanism here in terms of how it works. Do you hedge? Will we see those prices come through gradually?
Speaker #4: Have you put them through already? And should we be worried at all about sort of any pricing exhaustion in the industry, given how much pricing has already risen in the past kind of three to five years?
Morten Wierod: Should we be worried at all about sort of any pricing exhaustion in the industry, given how much pricing has already risen in the past kind of three to five years? Thank you. Thanks, Max. First of all, we will, of course, reflect the, I would say, quite rapid changes in raw materials. Some of that we even saw late December and starting of this year when you're talking about silver at an all-time high, I think, $120 per ounce this morning. So we are, of course, always passing on some of those raw material changes out to the market. That's very common in the industry, and that will happen again. In general, we are also, and I think Timo can give more color to that when it comes to hedging.
Should we be worried at all about sort of any pricing exhaustion in the industry, given how much pricing has already risen in the past kind of three to five years? Thank you.
Speaker #4: Thank
Speaker #4: you. Thanks,
Morten Wierod: Thanks, Max. First of all, we will, of course, reflect the, I would say, quite rapid changes in raw materials. Some of that we even saw late December and starting of this year when you're talking about silver at an all-time high, I think, $120 per ounce this morning. So we are, of course, always passing on some of those raw material changes out to the market. That's very common in the industry, and that will happen again. In general, we are also, and I think Timo can give more color to that when it comes to hedging.
Speaker #2: Max. First of all, we will, of course, reflect the, I would say, quite rapid changes in raw materials, some of that we even saw late December and starting of this year when you're talking about silver at one all-time high, I think 120 dollars per ounce this morning.
Speaker #2: So, we are, of course, always passing on some of those raw material changes out to the market. That's very common in the industry, and that will happen again.
Speaker #2: The, in general, we are also and I think Timo can give more color to that when it comes to hedging. We are hedging for both on overall materials, but of course, hedging doesn't prices as well.
Morten Wierod: We are hedging for both on over raw materials, but of course, hedging doesn't fix the long-term issues. You have to do work on prices as well. Rapid changes, like what we've seen now, this fluctuation will take, will go into current pricing. All of that is not covered, and therefore you may see some delay getting that out. On an annual basis, this will be fully covered. That's always our commitment. So therefore, and I'm not worried about the industry being able to deal with it. This is another point that will be transferred out in the market. Yeah, yeah. Maybe just on the hedging and guidance. So yes, we hedge commodities, but it's exactly as Morten said, we do that really to buy time to react in the business side.
We are hedging for both on over raw materials, but of course, hedging doesn't fix the long-term issues. You have to do work on prices as well. Rapid changes, like what we've seen now, this fluctuation will take, will go into current pricing. All of that is not covered, and therefore you may see some delay getting that out. On an annual basis, this will be fully covered. That's always our commitment. So therefore, and I'm not worried about the industry being able to deal with it. This is another point that will be transferred out in the market. Yeah, yeah.
Speaker #2: To fix a long-term issue, you have to do work on it. Rapid changes will, like what we've seen now—these fluctuations will go into current pricing.
Speaker #2: All of that is not covered, and therefore you may see some delay getting that out on an annual basis; this will be fully covered.
Speaker #2: That's always our commitment. So, therefore, I'm not worried about the industry being able to deal with it. This is another point that will be transferred.
Speaker #2: out in the market. Yeah.
Speaker #5: Yeah. Maybe just on the hedging and guidance. So yes, we hedge commodities, but it's actually as Morten said, we do that really to buy time to react in the business side.
Timo Ihamuotila: Maybe just on the hedging and guidance. So yes, we hedge commodities, but it's exactly as Morten said, we do that really to buy time to react in the business side. In that way, when you look at our electrification guidance, where we are saying that we expect it to go up year-over-year, but then sequentially maybe up a little bit less than we have had in the previous year. So that is actually taking into account this small time lag which we would have there. But yes, we would expect electrification pricing to be up a bit more than it was last year. Last year, it was maybe full year about 1%, so it could be a bit more than that this year.
Speaker #5: And in that way, when you look at our electrification guidance, where we are saying that we expect it to go up year on year, but then sequentially maybe had in the previous year.
Morten Wierod: In that way, when you look at our electrification guidance, where we are saying that we expect it to go up year-over-year, but then sequentially maybe up a little bit less than we have had in the previous year. So that is actually taking into account this small time lag which we would have there. But yes, we would expect electrification pricing to be up a bit more than it was last year. Last year, it was maybe full year about 1%, so it could be a bit more than that this year. Okay. Thanks. And sorry, just maybe embedded in the guidance, what have you put in for price within the 6 to 9? Yeah, for the year, as Timo said, we had last year, we had about 1%. We have put in a bit more north of 1% for this year.
Speaker #5: So that is actually taking into account this small time lag, which we would have there. But yes, we would expect Electrification pricing to be up a bit more than it was last year.
Speaker #5: Last year, it was maybe a full year, about a point. So it could be a bit more than that this year.
Ann-Sofie Nordh: Okay. Thanks.
Speaker #3: Thanks.
Max Yates: And sorry, just maybe embedded in the guidance, what have you put in for price within the 6 to 9?
Speaker #4: And sorry, just maybe embedded in the 'okay.'
Speaker #4: guy, maybe embedded in the guidance, what have you put in for price within the six to
Speaker #4: nine? Yeah.
Morten Wierod: Yeah, for the year, as Timo said, we had last year, we had about 1%. We have put in a bit more north of 1% for this year. That's, but then of course, this is something we also would need to look at throughout the year, depending on if this very high level now on copper and silver will remain. Then it may be a bit, even a bit more with kind of numbers that you referred to earlier in your question.
Speaker #5: For the year, as Timo said, last year we had about 1%. We have put in a bit more—north of one—for this year.
Speaker #5: And that's, but then of course, this is something we also would need to look at throughout the year, depending on if this very high level now on copper and silver will remain.
Morten Wierod: That's, but then of course, this is something we also would need to look at throughout the year, depending on if this very high level now on copper and silver will remain. Then it may be a bit, even a bit more with kind of numbers that you referred to earlier in your question. Okay, really helpful. Thank you very much. Thanks, Max. And we open up the line for Magnus at Nordea. Hi, Morten, Timo, Ann-Sofie, thank you for taking my question. Along the same lines, you're talking about a slight increase on EBITA margins year over year this year. So in the context of 69% like-for-like growth, it looks too light. Could you talk through the sort of the various components which goes into that assessment, please? Yeah, you want to, I mean, we can. I will try first, and then Timo can correct me.
Speaker #5: Then it may be a bit even a bit more with kind of numbers that you refer to earlier in your
Max Yates: Okay, really helpful. Thank you very much.
Speaker #4: Okay. Really helpful. much.
Ann-Sofie Nordh: Thanks, Max. And we open up the line for Magnus at Nordea.
Speaker #3: Thanks, Max. And we open the question up the line for Magnus at Nordea.
Magnus Kruber: Hi, Morten, Timo, Ann-Sofie, thank you for taking my question. Along the same lines, you're talking about a slight increase on EBITA margins year over year this year. So in the context of 69% like-for-like growth, it looks too light. Could you talk through the sort of the various components which goes into that assessment, please?
Speaker #6: Hi, Morten, Timo, Ann-Sofie, thank you for taking my question. Along the same lines, you're talking about a slight increase in EBITA margins year over year this year.
Speaker #6: So in the context of 6% to 9% lag for lag growth, it looks a tad light. Could you talk through the sort of the various components which go into that assessment?
Speaker #6: please? Yeah.
Timo Ihamuotila: Yeah, you want to, I mean, we can.
Speaker #5: You want to—I mean, we can—I will try first, and then Timo can correct. Because what we said is that last year we had a significant real estate gain, and that is— and that meant that we ended up at 19.0 for the year.
Morten Wierod: I will try first, and then Timo can correct me. Because what we said is that last year we had a significant real estate gain, and that meant that we ended up at 19.0 for the year. When we're looking at the outlook for 2026, we said that that will be a slight improvement on that number. And then you can put, announce the real estate gain, what we announced last night, on top. So that's kind of, we are going to do operational improvement to cover the real estate gains from 2025, and then we have it to do a bit more. That's in layman's terms, the best way to explain it, but I'm sure the CFO have a better, maybe have a better explanation.
Morten Wierod: Because what we said is that last year we had a significant real estate gain, and that meant that we ended up at 19.0 for the year. When we're looking at the outlook for 2026, we said that that will be a slight improvement on that number. And then you can put, announce the real estate gain, what we announced last night, on top. So that's kind of, we are going to do operational improvement to cover the real estate gains from 2025, and then we have it to do a bit more. That's in layman's terms, the best way to explain it, but I'm sure the CFO have a better, maybe have a better explanation. Yeah, maybe throw in a couple of numbers in there.
Speaker #5: When we're looking at the outlook for 2026, we said that will be a slight improvement on that number. And then you can put the announced real estate gain—what we announced last night—on top.
Speaker #5: So that’s kind of what we are going to do—operational improvement to cover the real estate gains from 2025. And then we have to do a bit more.
Speaker #5: That's in Lehman's terms, the best way to explain it, but I'm sure the CFO has a better maybe have a better explanation. Yeah. Maybe throw in a couple of numbers in there.
Timo Ihamuotila: Yeah, maybe throw in a couple of numbers in there. So the real estate gain last year, which we first have to cover in the margin, is, if I remember correctly, $140 million, and that's about 40 basis points lower starting point. So you first cover that, and then you move slightly up is the way of thinking. And then if we look at sort of the components here, so first, if you look at the business areas, we would expect electrification to improve. We would expect automation to improve. Motion is a little bit trickier with all the dynamics going on there. And then also when you look at corporate and e-mobility combined, we would expect that to be also a slight positive because in e-mobility profitability, we expect quite significant improvement to this year.
Speaker #5: So, the real estate gain last year, which we first have to cover in the margin, is, if I remember correctly, $140 million. And that's about 40 basis points lower starting point.
Morten Wierod: So the real estate gain last year, which we first have to cover in the margin, is, if I remember correctly, $140 million, and that's about 40 basis points lower starting point. So you first cover that, and then you move slightly up is the way of thinking. And then if we look at sort of the components here, so first, if you look at the business areas, we would expect electrification to improve. We would expect automation to improve. Motion is a little bit trickier with all the dynamics going on there. And then also when you look at corporate and e-mobility combined, we would expect that to be also a slight positive because in e-mobility profitability, we expect quite significant improvement to this year.
Speaker #5: So, you first cover that, and then you move slightly up is the way of thinking. And then, if we look at sort of the components here—so first, if you look at the business areas—we would expect automation to electrification to improve.
Speaker #5: We improve. Motion is a little bit trickier with all the dynamics going on there. And then also when you look at corporate and e-mobility combined, we would expect that to be also a slight positive because in e-mobility, profitability we expect quite significant improvement to this year.
Speaker #5: So the, let's call it, full year loss is clearly less than $50 million. And then corporate is up $50 million, from $300 million to $350 million, driven mainly by just an FX move.
Morten Wierod: So the, let's call it full year loss, clearly less than $50 million, and then corporate up $50 million from $300 million to $350 million, driven mainly by just an FX move. So those are sort of the puts and takes in the margin guidance. Excellent. Thank you so much. Thank you. I will throw in a question here from those that came in online. This, I think, is aimed to you, Morten. Could you give some qualitative feel on the large $100 million DC contracts in electrification orders? Are these long-term framework agreements over a few years? Question is from Ben. Yeah, no, thank you. The data center, kind of, first of all, data center developed very strongly overall for 2025. Q4 was extremely strong due to we got some significant large kind of call-offs on long-term frame agreements. So these are in the $100 million dollar tickets.
So the, let's call it full year loss, clearly less than $50 million, and then corporate up $50 million from $300 million to $350 million, driven mainly by just an FX move. So those are sort of the puts and takes in the margin guidance.
Speaker #5: So, those are sort of the puts and takes in the margin guidance.
Magnus Kruber: Excellent. Thank you so much.
Speaker #4: Excellent. Thank you so much. Thank you.
Ann-Sofie Nordh: Thank you. I will throw in a question here from those that came in online. This, I think, is aimed to you, Morten. Could you give some qualitative feel on the large $100 million DC contracts in electrification orders? Are these long-term framework agreements over a few years? Question is from Ben.
Speaker #3: you. And I will throw in a question here from the from those that came in online. And this, I think, is aimed to you, Morten.
Speaker #3: Could you give some qualitative feel on the large $100 million DC contracts in electrification orders? Are these long-term framework agreements over a few years?
Speaker #3: Question is from
Speaker #3: Question is from Ben. Yeah.
Morten Wierod: Yeah, no, thank you. The data center, kind of, first of all, data center developed very strongly overall for 2025. Q4 was extremely strong due to we got some significant large kind of call-offs on long-term frame agreements. So these are in the $100 million dollar tickets. That is quite common. We had that discussion during 2025. Some quarters have been lower. Q4 was very, very high. This is more when you get that call-off. The lead time of this is really dependent on the project, where when the customer wants, you know, the site is ready for installation. So that is what is driving the lead time. Most of this project that we got now has, it's kind of needed on site from 12 to 24 months from now.
Speaker #5: No, thank you. The data center kind of, first of all, data center developed very strongly overall for Q4 2025, was extremely strong due to significant large kind of call-offs. Also, we got some long-term frame agreements.
Speaker #5: So these are in the $100 million dollar tickets. That is quite common. We had that discussion during '25. Some quarters have been lower.
Morten Wierod: That is quite common. We had that discussion during 2025. Some quarters have been lower. Q4 was very, very high. This is more when you get that call-off. The lead time of this is really dependent on the project, where when the customer wants, you know, the site is ready for installation. So that is what is driving the lead time. Most of this project that we got now has, it's kind of needed on site from 12 to 24 months from now. That's kind of the lead time when we're talking about the, for the deliveries. Also, you talked about the kind of, what is this, the new normal? I say, yes, when you're looking at this volatility, you will still see that there are quarters where it comes in high bookings when it really depends when the sites are ready.
Speaker #5: Q4 was very, very high. This is more when you when you get that call-off. The lead time of this is really dependent on the project.
Speaker #5: When the customer wants, you know, the site is ready. For installation. So that is what is driving the lead time. Most of these projects that we got now has would is kind of needed on site from 12 to 24 months from now.
Speaker #5: That's kind of the lead time when we're talking about the—for the deliveries. I also—you talked about the kind of, what is this, the new normal?
That's kind of the lead time when we're talking about the, for the deliveries. Also, you talked about the kind of, what is this, the new normal? I say, yes, when you're looking at this volatility, you will still see that there are quarters where it comes in high bookings when it really depends when the sites are ready. That's where we kind of, when we get the deliveries going in this space.
Speaker #5: I say yes, when you're looking at this volatility, you will still see that there are quarters where you're coming with high bookings, when it really depends when the sites are ready.
Speaker #5: And that's where we kind of when we get the deliveries going in this
Morten Wierod: That's where we kind of, when we get the deliveries going in this space. Okay, then we take a question from the conference call, and we open up the line for Martin at Citi. Martin? Yeah, thank you. Good morning, Martin from Citi. I just wanted to ask about the automation business. It seems like the discrete business is still at a relatively low level, even though it's improved in Q4. Just give us some sense as to what you're hearing from the market there in terms of regionally. Is that something that there are some green shoots that we can see progressing through the early part of 2026? I'd say, you know, speaking to other companies, it does seem there are some signs of recovery there, but maybe still a little bit mixed.
Speaker #5: space. Okay.
Ann-Sofie Nordh: Okay, then we take a question from the conference call, and we open up the line for Martin at Citi. Martin?
Speaker #3: And then we take a question from the conference call, and we open up the line for Martin at Citi.
Speaker #3: Martin? Yeah.
Martin Wilkie: Yeah, thank you. Good morning, Martin from Citi. I just wanted to ask about the automation business. It seems like the discrete business is still at a relatively low level, even though it's improved in Q4. Just give us some sense as to what you're hearing from the market there in terms of regionally. Is that something that there are some green shoots that we can see progressing through the early part of 2026? I'd say, you know, speaking to other companies, it does seem there are some signs of recovery there, but maybe still a little bit mixed. So we're keen to hear what you're seeing in that business in terms of an uptake over the course of the year. Thank you.
Speaker #6: Thank you. Good morning, Martin from City. I just want to ask about the automation business. And it seems like the discrete business is still at a relatively low level, even though it's improved in the fourth quarter.
Speaker #6: Do you think it's in line with what you're hearing from the market there, both overall and regionally? Is that something where there are some green shoots that we can see progressing through the early part of 2026?
Speaker #6: Let's say, you know, speaking to other companies, we've seen there are some signs of recovery there, but maybe still a little bit mixed. So, you know, keen to hear what you're seeing in that business in terms of an uptick over the course of the year.
Morten Wierod: So we're keen to hear what you're seeing in that business in terms of an uptake over the course of the year. Thank you. Yeah, no, thanks, Martin. We do see a recovery, but what we talked about here is a step-by-step recovery. There is not kind of a very steep curve. We are looking at improvement, but from a very low comparable level. But we do see an improvement, especially first, of course, in the order intake and then the rebuilding. This is not where you don't have a large backlog. Normally, this is a book-to-bill within weeks, not in quarters. So we do see an improvement. If you look at geographies, I would say also there that we have seen a bit more recovery or stronger markets in Asia. Europe has been still relatively slow, to say, based on an improvement, but from a very low level.
Speaker #6: Thank you.
Morten Wierod: Yeah, no, thanks, Martin. We do see a recovery, but what we talked about here is a step-by-step recovery. There is not kind of a very steep curve. We are looking at improvement, but from a very low comparable level. But we do see an improvement, especially first, of course, in the order intake and then the rebuilding. This is not where you don't have a large backlog. Normally, this is a book-to-bill within weeks, not in quarters. So we do see an improvement. If you look at geographies, I would say also there that we have seen a bit more recovery or stronger markets in Asia. Europe has been still relatively slow, to say, based on an improvement, but from a very low level.
Speaker #5: Yeah. No. Thanks, Martin. We do see a recovery, but we talked about here is that step by step recovery there is not kind of a very steep curve.
Speaker #5: We are looking at improvement, but from a very low comparable level. But we do see an improvement, especially first, of course, in the order intake and then the overbuilding.
Speaker #5: This is not where you don’t have a large backlog. Normally, this is a book-to-bill within weeks, not in quarters. So we do see an improvement. If you look at geographies, I would say also there that we have seen a bit more recovery or stronger markets in Asia. Europe has been still relatively slow.
Speaker #5: So, say based on an improvement, but from a very low level. America is also there—kind of not a rapid or not a big change; it is kind of improving, but sideways to improving.
Morten Wierod: Americas also there, not kind of a rapid or not a big change. It's kind of improving, but sideways to improving. That is kind of how I would describe it. We do expect to see this trend continuing via stepwise improvement. That's why we're also taking corrective actions, as we have talked about before in that business, reducing the cost base, not waiting for kind of the market to quickly come back. It's really that, but being ready and do the self-help that is needed in the business. And that's what the new management is now executing within that machine builder division. Can I just throw in something here? So when you look at automation and you look at their annual margin, 14 versus 14, 24 versus 25, so this is all driven by this.
Americas also there, not kind of a rapid or not a big change. It's kind of improving, but sideways to improving. That is kind of how I would describe it. We do expect to see this trend continuing via stepwise improvement. That's why we're also taking corrective actions, as we have talked about before in that business, reducing the cost base, not waiting for kind of the market to quickly come back. It's really that, but being ready and do the self-help that is needed in the business. And that's what the new management is now executing within that machine builder division.
Speaker #5: That is kind of how I would describe it. We do expect to see this trend continuing via stepwise taking corrective improvement. That's why we also are actions as we have talked about before in that business, reducing the cost base not waiting for kind of the market to quickly come back.
Speaker #5: It's really that but being ready and do the self-help that is needed in the business. And that's what the new management is now executing within that machine builder division.
Timo Ihamuotila: Can I just throw in something here? So when you look at automation and you look at their annual margin, 14 versus 14, 24 versus 25, so this is all driven by this. So if you look at the process automation without machine automation, that thing actually went up like the old process automation, some 50, 70 basis points. So that gives you a feel. And now, as Morten said, this year, we would expect a positive impact, a little bit of positive impact also from machine automation.
Speaker #5: Can I just throw in something here? So, when you look at Automation and you look at their annual margin—14 versus 14, 24 versus 25—so this is all driven by this.
Speaker #5: So if you look at the process automation, without machine automation, that thing actually went up like the old process automation some 50, 70 basis points.
Morten Wierod: So if you look at the process automation without machine automation, that thing actually went up like the old process automation, some 50, 70 basis points. So that gives you a feel. And now, as Morten said, this year, we would expect a positive impact, a little bit of positive impact also from machine automation. Okay. Thank you very much. Thanks, Martin. And we open up the line for our next caller, which is Mattias from DNB. Great, thank you. I would like to ask if you could help us frame the recent strength in the data center-related orders a bit.
Speaker #5: So that gives you a feel. And now as Martin said, this year we would expect a positive impact a little bit a positive impact also from machine automation.
Speaker #5: So that gives you a feel. And now, as Martin said, this year we would expect a little bit of a positive impact also from machine automation.
Ann-Sofie Nordh: Okay.
Martin Wilkie: Thank you very much.
Speaker #6: Great. Okay. Thank you very much.
Ann-Sofie Nordh: Thanks, Martin. And we open up the line for our next caller, which is Mattias from DNB.
Speaker #3: Thanks, Martin. And we open up the line for our next caller, which is Matthias from DNB
Speaker #3: Carnegie. Great.
Mattias Holmberg: Great, thank you. I would like to ask if you could help us frame the recent strength in the data center-related orders a bit. In particular, if you could clarify whether the current order momentum already includes any of the next-generation power architecture that you've, I think you press-released, some collaboration with NVIDIA's 800-volt direct current, or if we should view this rather as a more medium-term opportunity that could come on top of the current sort of strength and run rate. And if it's the latter, when would you expect this opportunity to start to translate into orders?
Speaker #7: Thank you. I would like to ask if you could help us frame the recent strength in the data center-related orders a bit, in particular if you could clarify whether the current order momentum already includes any of the next generation power architecture that you've I think you press released some collaboration with NVIDIA's 800 voltage direct current.
Morten Wierod: In particular, if you could clarify whether the current order momentum already includes any of the next-generation power architecture that you've, I think you press-released, some collaboration with NVIDIA's 800-volt direct current, or if we should view this rather as a more medium-term opportunity that could come on top of the current sort of strength and run rate. And if it's the latter, when would you expect this opportunity to start to translate into orders? Yeah, thanks. I can confirm, Mattias, that the current offering, what we have, is fully based on, let's say, the legacy or the current architecture. That's why we, so there is no 800-volt DC architecture in the numbers that you see now, and it will not be either in 2026.
Speaker #7: Or if we should view this rather as a more medium-term opportunity that could come on top of the current sort of strength and run rate.
Speaker #7: And if it's the latter, when would you expect this opportunity to start to translate into orders?
Morten Wierod: Yeah, thanks. I can confirm, Mattias, that the current offering, what we have, is fully based on, let's say, the legacy or the current architecture. That's why we, so there is no 800-volt DC architecture in the numbers that you see now, and it will not be either in 2026. This is why we're working on a technology development with companies like NVIDIA, who is the leader in this field, looking at that new architecture, moving it up to 800-volt DC. It will change the architecture from not that much on the medium voltage side, let's say on the outside, is more what you're looking at the inside on power distribution units, busways, UPS. This is where we see the changes. We believe this is a great opportunity for us at ABB. We are one of the leaders in DC technology, for instance, with DC grid in the marine business with our drives business, and also the medium voltage UPS, which has technology which can be used and will be used in this kind of new architecture. So this is future business.
Speaker #5: Yeah, thanks. I can confirm, Matthias, that the current offering we have is fully based on—let's say—the legacy or the current architecture.
Speaker #5: That's why we so there is no 800 volt DC architecture in the numbers what you see now. And it will not be either in 2026.
Speaker #5: This is why we're working on a technology development with companies like NVIDIA, who is the leader in this field, looking at that new architecture, moving it up to 800-volt DC.
Morten Wierod: This is why we're working on a technology development with companies like NVIDIA, who is the leader in this field, looking at that new architecture, moving it up to 800-volt DC. It will change the architecture from not that much on the medium voltage side, let's say on the outside, is more what you're looking at the inside on power distribution units, busways, UPS. This is where we see the changes. We believe this is a great opportunity for us at ABB. We are one of the leaders in DC technology, for instance, with DC grid in the marine business with our drives business, and also the medium voltage UPS, which has technology which can be used and will be used in this kind of new architecture. So this is future business.
Speaker #5: It will change the architecture from not that much on the medium voltage side on, let's say, on the outside is more what you're looking at the inside on power distribution units, busways, UPS, this is where we see the changes.
Speaker #5: We believe this is a great opportunity for us at ABB. We are one of the leaders in DC technology, for instance, with DC grid in the marine business, with our drives business, and also the medium voltage UPS, which has technology that can be used and will be used in this kind of new architecture.
Speaker #5: So, this is a future business. If you ask about when—I mean, just to, you know—NVIDIA, we start kind of releasing the 800-volt DC chips and the components in 2027, and more, be able to deliver that to the market in '28.
Morten Wierod: If you ask about when, I mean, just to, you know, NVIDIA will start kind of releasing the 800 volt DC chips and the components in 2027, and more will be able to deliver that to the market in 2028. That is onwards. And that's where we, of course, need to be ready on our side so we can build those new data centers with those new racks doing that at 800 volt DC. So that's 2028 onwards is when we will start to see a pickup in that part of the business. Okay, thanks. Thank you. Thanks. And we'll throw in another question here. It's about China, and in this specific case, linked to electrification. It's from Kilwinder, who asked, could you please talk about the double-digit decline in electrification in China?
If you ask about when, I mean, just to, you know, NVIDIA will start kind of releasing the 800 volt DC chips and the components in 2027, and more will be able to deliver that to the market in 2028. That is onwards. And that's where we, of course, need to be ready on our side so we can build those new data centers with those new racks doing that at 800 volt DC. So that's 2028 onwards is when we will start to see a pickup in that part of the business.
Speaker #5: That is onwards. And that's where we of course need to be ready on our side so we can build those new data center with those new racks doing that at 800 volt DC.
Speaker #5: So, that's 2028 onwards, is when we will start to see a pickup in that part of the business.
Ann-Sofie Nordh: Okay, thanks.
Speaker #7: Great. Thank you. Okay.
Mattias Holmberg: Thank you.
Ann-Sofie Nordh: Thanks. And we'll throw in another question here. It's about China, and in this specific case, linked to electrification. It's from Kilwinder, who asked, could you please talk about the double-digit decline in electrification in China?
Speaker #3: Thanks. And we'll throw in another question here. It's about China. And in this specific case linked to electrification, it's from Calwinder who asks, could you please talk about the double-digit decline in electrification in
Speaker #3: China? Yeah.
Morten Wierod: Yeah, there was, in Q4, we had overall in China, we had for the group, we had +25%, but for electrification, it was down in the quarter. It was due to some also very high comparable from last year in the data center space in China. That's why you need to look at some of these quarters. I think the, so always at the residential is the building market, it's still slow in China, and I will predict that it will remain slow also for this year. We don't see any kind of rapid recovery there, but there are other opportunities in China. I mentioned already data centers, the whole integration of renewables and large projects, both in what we saw now in motion automation in this quarter. So therefore, if you look at 2025, the full year, it was 8% growth in order growth in China.
Morten Wierod: Yeah, there was, in Q4, we had overall in China, we had for the group, we had +25%, but for electrification, it was down in the quarter. It was due to some also very high comparable from last year in the data center space in China. That's why you need to look at some of these quarters. I think the, so always at the residential is the building market, it's still slow in China, and I will predict that it will remain slow also for this year. We don't see any kind of rapid recovery there, but there are other opportunities in China. I mentioned already data centers, the whole integration of renewables and large projects, both in what we saw now in motion automation in this quarter. So therefore, if you look at 2025, the full year, it was 8% growth in order growth in China.
Speaker #5: There was—in Q4, we had overall in China, we had for the group, we had plus 25%. But for electrification, it was down in the quarter.
Speaker #5: It was due to some also very high comparables from last year in the data center space in China. That's why you need to look at some of these quarters.
Speaker #5: As I already said, the residential is the building market. It's still slow in China, and I will predict that it will remain slow also for this year.
Speaker #5: We don't see any kind of rapid recovery there. But there are other opportunities in China. I mentioned already data centers, the whole integration of renewables, and large project both in what we saw now in motion automation in this quarter.
Speaker #5: So therefore, if you look at 2025, the full year, it was 8% growth in order growth in China. So that's kind of the what we leave 2025 with.
Morten Wierod: So that's kind of what we leave 2025 with. And I think that when you're looking at 2026, we are going to see, as I say, building being still slow, and that's not, but there are other opportunities, and that's kind of the team is focusing on to take over China business forward. So therefore, we are still investing in China because we believe in the long-term growth and the opportunities in the Chinese market. Very good. And then we move to Phil at J.P. Morgan on the conference call. Hi, good morning. Thanks for the question, and also congrats on the strong Q4. The question's on M&A. It's obviously great to hear that you're disciplined on price and prepared to walk away. My sense is that some of those assets are not too far above your own valuations.
So that's kind of what we leave 2025 with. And I think that when you're looking at 2026, we are going to see, as I say, building being still slow, and that's not, but there are other opportunities, and that's kind of the team is focusing on to take over China business forward. So therefore, we are still investing in China because we believe in the long-term growth and the opportunities in the Chinese market.
Speaker #5: And I think that when you're looking at '26, we are going to see, as I say, building being still slow. And that's not—but there are other opportunities.
Speaker #5: And that's kind of what the team is focusing on to take our China business forward. So therefore, we are still investing in China because we believe in the long-term growth and the opportunities in the Chinese market.
Speaker #5: market. Very
Ann-Sofie Nordh: Very good. And then we move to Phil at JPMorgan on the conference call.
Speaker #3: good. And then we move to Phil at JP Morgan on the conference
Speaker #3: call. Hi.
Phil Buller: Hi, good morning. Thanks for the question, and also congrats on the strong Q4. The question's on M&A. It's obviously great to hear that you're disciplined on price and prepared to walk away. My sense is that some of those assets are not too far above your own valuations. The observation just being that great assets with attractive outlooks do deserve a premium. So the question is, how is the pipeline looking now? Are there still plenty of targets in data center for you to go for? Are you becoming more open to paying slightly higher prices now? And also, given what appears to be this broader-based pickup in demand outside of electrical, are you inclined to broaden out the net a bit and look for other end markets or geographies where there might be some slightly lower-priced assets? Thanks.
Speaker #7: Good morning. Thanks for the question. And also, congrats on the strong Q4. The question's on M&A. It's obviously great to hear that you're disciplined on price and prepared to walk away.
Speaker #7: My sense is that some of those assets are not too far above your own valuations. The observation just being that great assets with attractive outlooks do deserve a premium.
Morten Wierod: The observation just being that great assets with attractive outlooks do deserve a premium. So the question is, how is the pipeline looking now? Are there still plenty of targets in data center for you to go for? Are you becoming more open to paying slightly higher prices now? And also, given what appears to be this broader-based pickup in demand outside of electrical, are you inclined to broaden out the net a bit and look for other end markets or geographies where there might be some slightly lower-priced assets? Thanks. Yeah, no, thanks. Thanks, Phil. We are not kind of limiting ourselves on the M&A pipeline only to data centers. Yes, that's one area of interest. I mentioned earlier also we're looking at the utility business, grid automation.
Speaker #7: So the question is, how is the pipeline looking now? Are there still plenty of targets in data center for you to go for? Are you becoming more open to paying slightly higher prices now?
Speaker #7: And also given what appears to be this broader based pickup in demand outside of electrical, are you inclined to broaden out the net a bit and look for other end markets or geographies where there might be some slightly lower priced assets?
Speaker #7: Thanks. Yeah.
Morten Wierod: Yeah, no, thanks. Thanks, Phil. We are not kind of limiting ourselves on the M&A pipeline only to data centers. Yes, that's one area of interest. I mentioned earlier also we're looking at the utility business, grid automation. We did make an acquisition now in Q4 of NetControl, which is a Finnish company working as a specialist in the grid automation. It's a technology we believe can help utilities to be more reliable and more effective in managing their grids. So that is one example of bolt-on acquisitions that we are doing, I would say, more of a constant basis. So we are open absolutely to do it. I do agree also that there are premium to that we also have to accept to pay premium for premium assets. But there are limits also to that.
Speaker #5: No. Thanks. Thanks, Phil. We are not kind of limiting ourselves on the M&A pipeline only to data centers. Yes, that's one area of interest.
Speaker #5: I mentioned earlier also, we're looking at the utility business, grid automation. We did make an acquisition now in the fourth quarter of Netcontrol, which is a Finnish company working as a specialist in grid automation.
Morten Wierod: We did make an acquisition now in Q4 of NetControl, which is a Finnish company working as a specialist in the grid automation. It's a technology we believe can help utilities to be more reliable and more effective in managing their grids. So that is one example of bolt-on acquisitions that we are doing, I would say, more of a constant basis. So we are open absolutely to do it. I do agree also that there are premium to that we also have to accept to pay premium for premium assets. But there are limits also to that. And that's what I also want to be kind of clear to in our, that overthinking is that we need to be convinced and confident in the long-term value creation. That is what's the decisive factor. So we are looking very wide.
Speaker #5: It's a technology we believe can help utilities to be more reliable and more effective in managing their grids. So that is one example of bolt-on acquisitions that we are doing I would say more of a constant basis.
Speaker #5: When we're looking at so we are open absolutely to do it. I do agree also that there are premium to that we also have to accept to pay premium for premium assets.
Speaker #5: But there are limits also to that. And that's what I also want to be kind of clear to in our—that overthinking is that we need to be convinced and confident in the long-term value creation; that is what's the decisive factor.
And that's what I also want to be kind of clear to in our, that overthinking is that we need to be convinced and confident in the long-term value creation. That is what's the decisive factor. So we are looking very wide. We are not limiting ourselves to any technology or any single segment market. We are looking on a wide scale and see how we can do. We do have a strong pipeline in all our three business areas in the divisions we have there. We have a strong pipeline. So therefore, we are confident that we will see more deals coming through also in this year.
Speaker #5: So we are looking very wide. We're not limiting ourselves to any technology or any single segment market. We are looking on a wide scale and see how we can do.
Morten Wierod: We are not limiting ourselves to any technology or any single segment market. We are looking on a wide scale and see how we can do. We do have a strong pipeline in all our three business areas in the divisions we have there. We have a strong pipeline. So therefore, we are confident that we will see more deals coming through also in this year. I will, yeah, I will; you mentioned data centers. There's one question here. We mentioned the importance of being honest with customers and making sure that we can deliver on our promises. Are we turning some business away? Question from Sean. Yeah, we have done that in the past, and we will do it again if we cannot, we can, as I said, not be confident that we will reach the milestone that are required.
Speaker #5: And we do have a strong pipeline in all our three business areas in the divisions we have there. We have a strong pipeline. So therefore we are confident that we will see more deals coming through also in this year.
Ann-Sofie Nordh: I will, yeah, I will; you mentioned data centers. There's one question here. We mentioned the importance of being honest with customers and making sure that we can deliver on our promises. Are we turning some business away? Question from Sean.
Speaker #3: And I will yeah. I will you mentioned data centers. And there's one question here. We mentioned the importance of being honest with customers and making sure that we can deliver on our promises.
Speaker #3: Are we turning some business away? Question from Sean.
Morten Wierod: Yeah, we have done that in the past, and we will do it again if we cannot, we can, as I said, not be confident that we will reach the milestone that are required. There are projects we say with very short lead times, and if we don't have the capacity, we would rather say no than to say grab the order and then disappoint the customer and maybe pay a lot of liquidated damages on delays later on. So I think this is just the, for us, have been especially in our medium voltage business, and I'm talking there especially in the United States where there has been this dynamic has been there in the market. We have said that we want to be the most credible partner in this business. We want to always deliver on time. And that's the feedback we also got from some of our major customers telling us that's why they give you more orders, because we are confident that you can deliver on site when we need it, because if you don't, the whole project is delayed.
Speaker #7: Yeah. We have done that in the past. And we will do it again if we cannot we can say not be confident that we will reach the milestone that they are required.
Speaker #7: There are projects we say with very short lead times, and if we don't have the capacity, we would rather say no. Than to say grab the order and then disappoint the customer and maybe pay a lot of liquidated damages on delays later on.
Morten Wierod: There are projects we say with very short lead times, and if we don't have the capacity, we would rather say no than to say grab the order and then disappoint the customer and maybe pay a lot of liquidated damages on delays later on. So I think this is just the, for us, have been especially in our medium voltage business, and I'm talking there especially in the United States where there has been this dynamic has been there in the market. We have said that we want to be the most credible partner in this business. We want to always deliver on time. And that's the feedback we also got from some of our major customers telling us that's why they give you more orders, because we are confident that you can deliver on site when we need it, because if you don't, the whole project is delayed.
Speaker #7: So I think this is just the for us have been especially in our medium voltage business. And I'm talking here especially in the United States, where there has been this dynamic has been there in the market.
Speaker #7: We have
Speaker #1: That we said we want to be the most credible partner in this business. We want to always deliver on time, and that's the feedback.
Speaker #1: We also got from some of our major customer feedback we also got from some of our major customers , telling us , that's why we give you more orders , because we are confident that you can deliver on site when we need it .
Speaker #1: Because if you don't , the whole project is delayed . And as we all know , that has massive consequences . So there are times where we could have grown even more than what we show in our numbers .
Morten Wierod: And as we all know, that has massive consequences. So there are times where we could have grown even more than what we show in our numbers, but I believe turning these, taking these orders, but turning them into solid revenue with the right margin and avoid disappointing customers has been for us one of the key priorities of the last years. And I think that is really what we see now also. It pays dividends. And then we take the next call from the, a question from the conference call, and that would be from Alex at Evercore. Alex, please. Yeah, thanks very much, Nancy. Morning, morning, Timo. I wondered if you could talk a little bit about the electrical demand picture outside of data centers.
And as we all know, that has massive consequences. So there are times where we could have grown even more than what we show in our numbers, but I believe turning these, taking these orders, but turning them into solid revenue with the right margin and avoid disappointing customers has been for us one of the key priorities of the last years. And I think that is really what we see now also. It pays dividends.
Speaker #1: But I believe turning these , taking these orders , but turning them into revenue solid with the right margin and avoid disappointing customers has been for us , one of the key priorities of the last years .
Speaker #1: I think that is And really what we see now . Also , it pays dividends .
Ann-Sofie Nordh: And then we take the next call from the, a question from the conference call, and that would be from Alex at Evercore. Alex, please.
Speaker #2: we take the next call And then from the question from the conference call . And that would be from Alex at Evercore . Alex , please .
Alex Virgo: Yeah, thanks very much, Nancy. Morning, morning, Timo. I wondered if you could talk a little bit about the electrical demand picture outside of data centers. I'm thinking in particular about utility demand and the development in terms of broader grid expectations, I guess in the US in particular, given the very obvious focus of the administration and the impact of storms, etc. But it's something that I think has been, it seems like, feels like it's accelerating again. And I wondered if you could just expand on that for us. And if I could throw in a cheeky little follow-up on commercial, it sounds like you're a little bit more optimistic around commercial construction than perhaps we've been over the last 12 to 18 months. I wondered if you could just touch on that as well. Thanks very much.
Speaker #3: Yeah , thanks very much . Ancy . Morning . Morning , Timo . I wondered if you could talk a little bit about the electrical demand picture outside of data centers .
Morten Wierod: I'm thinking in particular about utility demand and the development in terms of broader grid expectations, I guess in the US in particular, given the very obvious focus of the administration and the impact of storms, etc. But it's something that I think has been, it seems like, feels like it's accelerating again. And I wondered if you could just expand on that for us. And if I could throw in a cheeky little follow-up on commercial, it sounds like you're a little bit more optimistic around commercial construction than perhaps we've been over the last 12 to 18 months. I wondered if you could just touch on that as well. Thanks very much. Yeah, thanks, Alex. On the energy expansion, as you know, there is declared a kind of an energy crisis in the United States. So that is putting more energy online.
Speaker #3: I'm And thinking in particular about utility demand and the development in , in terms of broader grid expectations . I guess in the US , in particular , given the very obvious focus of the administration and the impact of storms , etc.
Speaker #3: , but it's something that I think has been it seems like feels like it's accelerating again . And I wondered if you could just expand on that for us , and if I little follow up on , it could throw like you're a little bit sounds cheeky commercial more in a optimistic around commercial construction than than perhaps we've been over the last 12 to 18 months .
Morten Wierod: Yeah, thanks, Alex. On the energy expansion, as you know, there is declared a kind of an energy crisis in the United States. So that is putting more energy online. So we see a very strong build-out, especially on the LNG side. So that's kind of power generation getting more energy online in the grid. So, and that's where we are involved in drilling pipelines, terminals, you know, all to make that happen. And then you have the new, then you have the new power plants there where you're turning gas into electricity because in the end, that's the outcome you want. So this is from power generation, but then you have the whole transmission distribution where we are involved as well, which is where utilities need to have greater grid reliability. And just what we see now with the storms of the last week is where, of course, American grid companies or utility companies are struggling with a lot of their overhead lines which are filled with ice and pulled to the ground.
Speaker #3: I wondered if you could just touch on that as well . Thanks very much .
Speaker #1: Thanks , Alex . On the energy expansion . As you know , there is declared a kind of an energy crisis in the United States .
Morten Wierod: So we see a very strong build-out, especially on the LNG side. So that's kind of power generation getting more energy online in the grid. So, and that's where we are involved in drilling pipelines, terminals, you know, all to make that happen. And then you have the new, then you have the new power plants there where you're turning gas into electricity because in the end, that's the outcome you want. So this is from power generation, but then you have the whole transmission distribution where we are involved as well, which is where utilities need to have greater grid reliability. And just what we see now with the storms of the last week is where, of course, American grid companies or utility companies are struggling with a lot of their overhead lines which are filled with ice and pulled to the ground.
Speaker #1: So that is putting more energy online . So we see a very strong build out on , especially on the LNG side . So that's kind of power generation getting more energy online in the grid .
Speaker #1: So and that's where we are involved in drilling pipelines , terminals , you know all to make that happen . And then you have the new then you have the new power plants where where you're turning gas into electricity , because in the end , that's the outcome you want .
Speaker #1: So this from is the power generation . But then you have the whole transmission . The distribution where we are involved as well , which is where have need to utilities greater grid reliability .
Speaker #1: just what And we see now with the storms over the last week is where , of course , you American grid companies or utility companies are struggling with a lot of their overhead lines with our filled with ice and fall to the ground .
Morten Wierod: And then you're out of power for days and worst case for weeks. So with all the consequences that have. So this is where we help with our underground switchgear, underground cabling, all that equipment that is needed for power utilities to keep electricity flowing in cold weather, but also in all the industries that need it. So this is the trend of what we see everywhere that kind of as we turn to electricity as the main source of energy, just you also need to build on the power side and do that energy expansion. It's the same what we see, and I was happy to see in also talking about Europe, that Germany approved also the building of new gas-fired power plants next to their nuclear plants that was closed a few years ago.
And then you're out of power for days and worst case for weeks. So with all the consequences that have. So this is where we help with our underground switchgear, underground cabling, all that equipment that is needed for power utilities to keep electricity flowing in cold weather, but also in all the industries that need it. So this is the trend of what we see everywhere that kind of as we turn to electricity as the main source of energy, just you also need to build on the power side and do that energy expansion. It's the same what we see, and I was happy to see in also talking about Europe, that Germany approved also the building of new gas-fired power plants next to their nuclear plants that was closed a few years ago.
Speaker #1: And then you're out of power for days . And worst case , for weeks . So with all the consequences that have . So this is where we help with our underground switchgear , underground cabling , all that equipment that is needed for power utilities to keep electricity flowing in cold weather , but also , you know , in all the industries that need it .
Speaker #1: So this is the trend of what we see everywhere , that kind of as we turn to electricity , the as main source of energy , just you also need to fill on the on the , on the power side and do that energy expansion .
Speaker #1: It's the same as what we see. And I was happy to see that. Also, talking about Europe, that Germany also approved the building of new gas-fired power plants next to their nuclear plants that were closed a few years ago.
Morten Wierod: And now we are building new gas-fired power plants next because there is already grid infrastructure to connect it. And of course, these are projects that we would be involved very often. There is plans for a data center next door to that power plant. And again, that is where we would help to make all that happen. So this is the whole energy expansion that is going on one side, more power generation, but then more of the consumption and data center, of course, being one, but not the only one. I think it's important to look at the whole demand for electrification outside data center. We still have double-digit growth when at the electrification business, even without data center. So it's a very strong trend that is there. The data center, really the icing of the cake, but these underlying fundamentals happen everywhere.
And now we are building new gas-fired power plants next because there is already grid infrastructure to connect it. And of course, these are projects that we would be involved very often. There is plans for a data center next door to that power plant. And again, that is where we would help to make all that happen. So this is the whole energy expansion that is going on one side, more power generation, but then more of the consumption and data center, of course, being one, but not the only one. I think it's important to look at the whole demand for electrification outside data center. We still have double-digit growth when at the electrification business, even without data center. So it's a very strong trend that is there. The data center, really the icing of the cake, but these underlying fundamentals happen everywhere.
Speaker #1: And now we're building new gas-fired power plants next, because there is already grid infrastructure to connect in. And of course, these are projects that we would be involved in. Very often, there are plans for a data center next door to that power plant.
Speaker #1: And again, that is where we would help to make all that happen. So, this is the whole energy expansion that is going on one side.
Speaker #1: More power generation, but then more of the consumption and data center. Of course, being one, but not the only one.
Speaker #1: I think it's important to look at the whole demand for electrification outside data center . We still have double digit growth when at the electrification business , even without data center .
Speaker #1: So it's a very strong trend that is there . The data center is really the icing on the cake , but these underlying fundamentals happen , happens everywhere .
Morten Wierod: Your second question was around the commercial buildings. I think what we see here, that is a better market in general than residential. So that is what's reflected both through our motion and our electrification business. Our commercial business exposure is also stronger than the residential business as a company. Therefore, on that side, that we see really especially both in Europe, Middle East, but also in Americas is where we see the strongest commercial build-out. A lot of focus here is around energy efficiency of those buildings, not just the new build, but upgrade of existing facility, commercial buildings, reducing energy cost and footprint. That is where we come in and help on the commercial building side. So it's not just new build, it's also about making those buildings more efficient and more comfortable to work and to live in. Very helpful. Thanks very much.
Your second question was around the commercial buildings. I think what we see here, that is a better market in general than residential. So that is what's reflected both through our motion and our electrification business. Our commercial business exposure is also stronger than the residential business as a company. Therefore, on that side, that we see really especially both in Europe, Middle East, but also in Americas is where we see the strongest commercial build-out. A lot of focus here is around energy efficiency of those buildings, not just the new build, but upgrade of existing facility, commercial buildings, reducing energy cost and footprint. That is where we come in and help on the commercial building side. So it's not just new build, it's also about making those buildings more efficient and more comfortable to work and to live in.
Speaker #1: You asked your second question was around the commercial buildings . think what And I here , we see that is a better market in general than residential .
Speaker #1: that is So what's reflected both through our motion and our electrification business over business commercial exposure is also stronger than the residential business .
Speaker #1: As a company and therefore on that side that we see really , especially both in Europe , Middle East , but also in in Americas is where we see the strongest commercial building build out a lot of focus here is around energy efficiency .
Speaker #1: All those buildings—not just the new builds, but also the upgrades of existing facilities and commercial buildings—are focused on reducing energy costs and footprint.
Speaker #1: That is where we come in and help on the commercial building side . So it's not just new build , it's also about making those buildings more efficient and more comfortable to work and to live in .
Alex Virgo: Very helpful. Thanks very much. And thanks, Timo, for all of the help over the years.
Morten Wierod: And thanks, Timo, for all of the help over the years. Thanks, Alex. And then we open up for the next question from James at Redburn Atlantic. Thanks, Nancy. Hello, everyone. I wondered if I could just follow up. My line went dead for touch. So sorry if this is a repeat question, but fantastic data center orders for the year. You must be close to $4 billion and over 20% of EL. But just in terms of mix, is it all low voltage, medium voltage in UPS, or are there any other categories? Any chance you could pie chart it? I'm really trying to get to the UPS piece and how big it is now. And within that, is it all medium voltage or is it still the bulk of it low voltage? Just trying to understand that because I see you having a significant potential there.
Speaker #3: Very helpful . much . Thanks very And and thanks , Timo , for all of the help over the years .
Morten Wierod: Thanks, Alex.
Ann-Sofie Nordh: And then we open up for the next question from James at Redburn Atlantic.
Speaker #4: Thanks , Alex .
Speaker #2: And then we open up for the next question from James at Redburn .
James Moore: Thanks, Nancy. Hello, everyone. I wondered if I could just follow up. My line went dead for touch. So sorry if this is a repeat question, but fantastic data center orders for the year. You must be close to $4 billion and over 20% of EL. But just in terms of mix, is it all low voltage, medium voltage in UPS, or are there any other categories? Any chance you could pie chart it? I'm really trying to get to the UPS piece and how big it is now. And within that, is it all medium voltage or is it still the bulk of it low voltage? Just trying to understand that because I see you having a significant potential there.
Speaker #5: Thanks , Nancy . Hello , everyone . I wondered if I could just follow up . My line went dead for touch . So sorry if this is a repeat question , but fantastic data center orders for the year .
Speaker #5: You must be close to over 20% of L , 4 billion and but just in terms of mix , like is it all low voltage , medium voltage and ups , or are there any other categories , any chance you could pie chart it ?
Speaker #5: I'm really trying to get to the UPS piece and how big it is now, and within that, is it all medium voltage, or is there still the bulk of it?
Speaker #5: Low voltage ? Just trying to understand that , because I see you having a significant potential there .
Morten Wierod: Well, we don't classify all the breakdown of the data center revenue or the orders that we take. But what I can say is that when you need, when you normally do these packages, you do medium voltage and low voltage. That's part of switchgear, is part of the package because you don't do one without the other. So that goes normally for us also hand in hand. When we're looking at the best success we have had as a company is on the UPS side, is on the medium voltage UPS because that's a technology that is really a game changer in the market.
Morten Wierod: Well, we don't classify all the breakdown of the data center revenue or the orders that we take. But what I can say is that when you need, when you normally do these packages, you do medium voltage and low voltage. That's part of switchgear, is part of the package because you don't do one without the other. So that goes normally for us also hand in hand. When we're looking at the best success we have had as a company is on the UPS side, is on the medium voltage UPS because that's a technology that is really a game changer in the market.
Speaker #1: Well over we don't classify the whole the breakdown of the the data center revenue or the orders that that we take . But what I can say is that it's when you need , when you normally do these packages , you medium do voltage and voltage .
Speaker #1: Well over we don't classify the whole the breakdown of the the data center revenue or the orders that that we take . But what I can say is that it's when you need , when you normally do these packages , you medium do voltage and voltage . low That's part of switchgear is part of the package because you don't do one without the other .
Speaker #1: So that goes normally . And for us also hand in hand when we're looking at the best success we have had as a company is on the on the UPS side is on the medium voltage ups because that's a technology that is really a game changer in the market .
Morten Wierod: So we also used here on this call. I talked about the Applied Digital, which is one customer that we didn't have three years back, which now a large customer and are really standardized on medium-voltage UPS as a way of giving backup power to those facilities. So this is where we have seen a significant growth, more also growing on the low-voltage side, but the majority of the growth comes on medium-voltage UPS. And that is also a part when we're talking about this future architecture, we believe that more of that protection and that support will be done, a lot will be done on medium voltage and more and more use of power electronics. And that's what gives us confidence in the starting point for those future data centers.
So we also used here on this call. I talked about the Applied Digital, which is one customer that we didn't have three years back, which now a large customer and are really standardized on medium-voltage UPS as a way of giving backup power to those facilities. So this is where we have seen a significant growth, more also growing on the low-voltage side, but the majority of the growth comes on medium-voltage UPS. And that is also a part when we're talking about this future architecture, we believe that more of that protection and that support will be done, a lot will be done on medium voltage and more and more use of power electronics. And that's what gives us confidence in the starting point for those future data centers.
Speaker #1: So we used also here on this call , I talked about the Applied Digital , which is one customers , that customer , we didn't have three years back , which now a large customer and are really standardized on medium voltage ups as they were their way of giving backup power to that .
Speaker #1: Those facilities . So this is where we have seen a significant growth more also growing on the low voltage side . But the majority of the growth comes on , on on medium voltage ups .
Speaker #1: And that is also a part when we're talking about these future architectures. We believe that more of that protection and that support will be, a lot, done.
Speaker #1: on will be done medium and more and more voltage and more of power electronics . And use that's what gives us confidence in this starting point for those future data centers .
Morten Wierod: So that's kind of what the team is working on, both from a research side, from a development side, but of course also then on engineering on the ground level. And that's how we work close with customers, both on the NVIDIA being one, but of course also with the hyperscalers, who is the one that will operate these new large AI data centers in the coming years. Just to clarify more, Liz, of your UPS orders in the year, is medium voltage now more than half of it or is it still the minority? That would be, yeah, that I will not give a kind of a rough answer. I think I'll need to come back if you have any statement there. We can talk later. Yeah, yeah. Thanks. Thanks a lot. And here's one, I know you mentioned the e-mobility earlier, but here's one question.
So that's kind of what the team is working on, both from a research side, from a development side, but of course also then on engineering on the ground level. And that's how we work close with customers, both on the NVIDIA being one, but of course also with the hyperscalers, who is the one that will operate these new large AI data centers in the coming years.
Speaker #1: So that's kind of what the team is working on , both from a research a side , from development side . But of course , also then on engineering on on the ground .
Speaker #1: And that's how we work close with with customers both on the Nvidia being one . But of course also with a hyperscalers , who is the one that will operate these new AI data large centers in the coming years .
James Moore: Just to clarify more, Liz, of your UPS orders in the year, is medium voltage now more than half of it or is it still the minority?
Speaker #1: .
Speaker #5: Just to clarify, Morten,
Speaker #5: Of your UPS orders in the year, is medium voltage now more than half of it, or is it still the minority?
Morten Wierod: That would be, yeah, that I will not give a kind of a rough answer. I think I'll need to come back if you have any statement there.
Speaker #1: That would be , yeah , that I will I will not give a kind of a rough answer . I think you need to come back if you have any statement there .
Ann-Sofie Nordh: We can talk later. Yeah, yeah.
James Moore: Thanks. Thanks a lot.
Speaker #2: You can .
Speaker #1: Talk later. Yeah, yeah.
Ann-Sofie Nordh: And here's one, I know you mentioned the e-mobility earlier, but here's one question. Can you talk about what to expect from the e-mobility business during 2026?
Speaker #5: Thanks a lot Thanks . .
Speaker #2: And here's one I know you mentioned immobility earlier , but here's one question . Can you talk about what to from the expect immobility business during 2026 ?
Morten Wierod: Can you talk about what to expect from the e-mobility business during 2026? Sure, happy to. So if we look at the e-mobility, we are looking at a significant reversal on the profitability performance, still, as I said, being negative. So we say under $50 million on EBITDA level, impacting the group. But then when you look at the important items, why are we having this about $100 million improvement there, it really is driven by expected gross-margin improvement from the better product portfolio. So we are expecting double-digit growth on orders and revenue, but the main item is the gross margin, which last year was hovering around 20%. So there should be really a significant improvement there, combined of course with tight cost management. So that's sort of the equation for e-mobility. And then we take the next question from Will at Kepler Cheuvreux, please. Hi, good morning.
Timo Ihamuotila: Sure, happy to. So if we look at the e-mobility, we are looking at a significant reversal on the profitability performance, still, as I said, being negative. So we say under $50 million on EBITDA level, impacting the group. But then when you look at the important items, why are we having this about $100 million improvement there, it really is driven by expected gross-margin improvement from the better product portfolio. So we are expecting double-digit growth on orders and revenue, but the main item is the gross margin, which last year was hovering around 20%. So there should be really a significant improvement there, combined of course with tight cost management. So that's sort of the equation for e-mobility.
Speaker #4: Sure . Happy to . So if we look at immobility , we are looking at a significant reversal on the profitability performance . Still , as I said , being negative .
Speaker #4: So we say under $50 million on EBITDA level impacting the group. But then, when you look at the important items, why are we having this?
Speaker #4: About 100 million improvement there ? It really is driven by expected gross margin improvement from the better product portfolio . So we are expecting double digit growth on orders and revenue .
Speaker #4: But the main item is the gross margin , which last year was hovering around 20% . So there should be really a significant improvement there combined of course , with tight cost management .
Timo Ihamuotila: And then we take the next question from Will at Kepler Cheuvreux, please. Hi, good morning.
Speaker #4: So the that's sort of equation for immobility .
Speaker #2: And will, from then, we take questions, please.
Morten Wierod: Congratulations on the results and thanks for everything over the last nine years. Timo, I'd like just a question on housekeeping. I mean, if you can be specific on the e-mobility, just to clarify, is it a $100 million improvement from the base or do you think that you'll actually reach break-even this year? But more importantly, when we come to the corporate line, can you just talk us through how you expect the corporate line to develop into 2027? When will the stranded costs drop out and when should the corporate level normalize? Thanks a lot. Yeah. So on e-mobility, as I said, we expect sort of less than $50 million impact negative on ABB's overall profitability. Last year we had about $150 million negative. So that's where the $100 million comes from. And we are expecting that towards the end of the year, it should turn positive.
Will Mackie: Congratulations on the results and thanks for everything over the last nine years. Timo, I'd like just a question on housekeeping. I mean, if you can be specific on the e-mobility, just to clarify, is it a $100 million improvement from the base or do you think that you'll actually reach break-even this year? But more importantly, when we come to the corporate line, can you just talk us through how you expect the corporate line to develop into 2027? When will the stranded costs drop out and when should the corporate level normalize? Thanks a lot.
Speaker #6: Good Hi . morning . Congratulations on the results . And thanks for everything over the last nine years . Timo , I'd like just a question on housekeeping .
Speaker #6: I mean , if you can be specific on the e-mobility , just to is it clarify , 100 million improvement from the base , or do you think that you'll actually reach base break even this year ?
Speaker #6: But more importantly, when we come to the corporate line, can you just talk us through how you expect the corporate line to develop into '27?
Speaker #6: When will the stranded drop-out costs end, and when should the corporate level normalize? Thanks a lot.
Timo Ihamuotila: Yeah. So on e-mobility, as I said, we expect sort of less than $50 million impact negative on ABB's overall profitability. Last year we had about $150 million negative. So that's where the $100 million comes from. And we are expecting that towards the end of the year, it should turn positive. That's kind of like where we are on that. And then on the corporate line, so there are like two items here now excluding the $350 million real estate gain. So our corporate line, we are saying we are expecting it to go up from $300 to $350 million because we have so much corporate cost in Swiss francs. So it's almost all driven by the FX conversion situation. So if that reverses, I would let my successor decide what to do there on the corporate line. And then on stranded cost, this $125 million, that's a full year estimate. Now we would expect the robotics transaction to close, as we have said, sometime during second half. So we would expect that to start to decrease rapidly after the closing. And hopefully for 2027, we wouldn't see any of that stranded cost there.
Speaker #4: Yeah . So on e-mobility , as I said , we we expect sort of less than 50 million impact negative on overall profitability .
Speaker #4: Last year we had about 150 negative . So that's where the hundred comes from . And we are expecting that towards the end of the It should turn year .
Morten Wierod: That's kind of like where we are on that. And then on the corporate line, so there are like two items here now excluding the $350 million real estate gain. So our corporate line, we are saying we are expecting it to go up from $300 to $350 million because we have so much corporate cost in Swiss francs. So it's almost all driven by the FX conversion situation. So if that reverses, I would let my successor decide what to do there on the corporate line. And then on stranded cost, this $125 million, that's a full year estimate. Now we would expect the robotics transaction to close, as we have said, sometime during second half. So we would expect that to start to decrease rapidly after the closing. And hopefully for 2027, we wouldn't see any of that stranded cost there. Super. Thanks. Thanks, Will.
Speaker #4: could positive . That's kind of like where we are on that . And then on the on the corporate line . So there are there two are like items here .
Speaker #4: Now, excluding the $350 million real estate gain. So, on our corporate line, we are saying we are expecting it to go up from $300 million to $350 million because we have so much corporate costs in Swiss francs.
Speaker #4: So it's almost all driven by the effects conversion situation . So if that reverses , I would , you know , let my successor decide what to do there on the corporate corporate line and then on stranded cost this 125 million .
Speaker #4: That's a full-year estimate. Now, we would expect the robotics transaction to close, as we have said, sometime during the second half.
Speaker #4: So, we would expect that to start to decrease rapidly after the closing. And hopefully for 2027, we wouldn’t see any of that stranded cost.
Will Mackie: Super. Thanks.
Speaker #4: There .
Ann-Sofie Nordh: Thanks, Will. And then we open up the line for Andre at UBS. Andre?
Speaker #6: Super . Thanks .
Morten Wierod: And then we open up the line for Andre at UBS. Andre? Yes, good morning. Thank you very much for taking, yeah, can you hear me? Yes. Oh, great. Yeah, morning. Thanks for taking the question. I just wanted to circle back to the bigger picture and think about the 6 to 9% growth guidance that you gave. You've given some indications on end markets and pricing, but can we just kind of think specifically about maybe data centers and grids and process industrial automation as three chunks? What kind of growth rate ranges do you expect for those three within the 6 to 9? And maybe just to anticipate a little bit the answer on data centers, it's double digit, but is it starting with one, two, or three? We're not going to go there. Yeah, exactly. Tricky question.
Speaker #2: Will Thanks . . And then we open up the line from Andre at UBS .
Andre Kukhnin: Yes, good morning. Thank you very much for taking, yeah, can you hear me? Yes. Oh, great. Yeah, morning. Thanks for taking the question. I just wanted to circle back to the bigger picture and think about the 6 to 9% growth guidance that you gave. You've given some indications on end markets and pricing, but can we just kind of think specifically about maybe data centers and grids and process industrial automation as three chunks? What kind of growth rate ranges do you expect for those three within the 6 to 9? And maybe just to anticipate a little bit the answer on data centers, it's double digit, but is it starting with one, two, or three? We're not going to go there.
Speaker #2: Andre .
Speaker #7: Yes. Good morning. Thank you.
Speaker #7: very much for taking . Yeah . Can you hear me .
Speaker #8: Yes .
Speaker #7: Oh , great . Yeah . Morning . the Thanks for taking question . I just wanted to circle back to the bigger picture and think about the 6 to 9% growth guidance that you gave .
Speaker #7: You've given some indications on that . Markets and pricing , but can we just kind of think specifically about maybe data centers and grids and process industrial automation are three chunks ?
Speaker #7: What kind of growth rate ranges do you expect for those three within the 6 to 9 ? And maybe just to anticipate a little bit , the answer on data centers , it's it's double digit .
Speaker #7: But is it starting with one , 2 or 3 .
Morten Wierod: Yeah, exactly. Tricky question. No, on the data center side, what we have said before is also last year on the capital market day was that we have a CAGR of 25% since 2019. And therefore, and that was the same also yet another year for that in 2025, 2026; we are, say, we are in the teens, which, and we are, as you heard me say already, we are very confident about the outlook of the data center market. So of course, that will be one of the growth drivers. That's why we also upped the guidance today for the quarter for our utility, our grid business. That's another example of, I think, also what will be again growth above average. Also, it's a very solid and a good market.
Speaker #2: We're not going to go.
Speaker #1: There . Yeah . Exactly . Three key question . No on on the data center side , what we on the have said before last year is also capital market day was that we have a kegger of 25% , you know , since 2019 and , and therefore and that was the same also yet another year for that in 25 is 26 .
Morten Wierod: No, on the data center side, what we have said before is also last year on the capital market day was that we have a CAGR of 25% since 2019. And therefore, and that was the same also yet another year for that in 2025, 2026; we are, say, we are in the teens, which, and we are, as you heard me say already, we are very confident about the outlook of the data center market. So of course, that will be one of the growth drivers. That's why we also upped the guidance today for the quarter for our utility, our grid business. That's another example of, I think, also what will be again growth above average. Also, it's a very solid and a good market.
Speaker #1: We are say we are in in the teens which and we are as you heard me say already , we are very confident about the outlook of the data center market .
Speaker #1: So of course that will be one of the growth drivers . That's why we also up the the , the guidance today for for the quarter for our utility , our grid business .
Speaker #1: As another example , I think also what will be again growth above average . We will also it's it's a very solid and a good market .
Morten Wierod: And then we have some other pockets we talked already about, on the discrete sides we had in some of the process industries, where we don't see yet that market is coming fully back. And we think that will residential, I may mention as well; that's kind of this balance that brings us to the guidance of the 6 to 9 for the full year. We are also; we have 7 to 10 for Q1 because we have very high comparable now in the Q3 and Q4. And that's why we are also, let's say, even more optimistic for the first coming quarters, which we also, of course, have more visibility to. And I think time flies when you're having fun, and I see we're sort of coming up to the hour.
And then we have some other pockets we talked already about, on the discrete sides we had in some of the process industries, where we don't see yet that market is coming fully back. And we think that will residential, I may mention as well; that's kind of this balance that brings us to the guidance of the 6 to 9 for the full year. We are also; we have 7 to 10 for Q1 because we have very high comparable now in the Q3 and Q4. And that's why we are also, let's say, even more optimistic for the first coming quarters, which we also, of course, have more visibility to.
Speaker #1: And then we have some other pockets. We talked already about, on the discrete sides, we had in some of the process industries where we don't yet see the market fully coming back. That is, and we think that will be the residential.
Speaker #1: May I mention as well, that's kind of this balance that brings us to the guidance of the 6 to 9 for the full year.
Speaker #1: We also , when we're looking at the we have 7 to 10 for Q1 because we have some kind of we have very high comparable now in the Q3 .
Speaker #1: And four and that's why we are also a let's say even more optimistic for the first , first coming quarters and which we also , of course , have more visibility to .
Ann-Sofie Nordh: And I think time flies when you're having fun, and I see we're sort of coming up to the hour. So Morten, do you want to finish up with some words?
Speaker #1: .
Speaker #2: And I think time flies when you're having fun . And I see we sort of coming up to to the hour . So Morton , do you want to finish off with some work ?
Morten Wierod: So Morten, do you want to finish up with some words? Yeah. No, thank you. I'll see. It has been; this is, we're closing out 2025. Already feels a long time ago, but it probably will be a good year as you all hear. We have a high confidence level for 2026. It was a record year, and we're predicting also for 2026 to be a new record year. But it's also a bit special. It's special for me, but I know it's even more special for Timo today because Timo, as of tomorrow, will be his final kind of active working day as the CFO and be my right hand at ABB. It's been a pleasure working with Timo for nine years. I had that pleasure. Of course, it's been very close now since I started last summer.
Morten Wierod: Yeah. No, thank you. I'll see. It has been; this is, we're closing out 2025. Already feels a long time ago, but it probably will be a good year as you all hear. We have a high confidence level for 2026. It was a record year, and we're predicting also for 2026 to be a new record year. But it's also a bit special. It's special for me, but I know it's even more special for Timo today because Timo, as of tomorrow, will be his final kind of active working day as the CFO and be my right hand at ABB. It's been a pleasure working with Timo for nine years. I had that pleasure. Of course, it's been very close now since I started last summer.
Speaker #1: Yeah . No thank you . I'll see . It has been this is we're closing out 2025 already . Feels a long time ago , but a good for it to year , as you all .
Speaker #1: Here we have confidence level for 2026. It was a record year, and we are predicting also for '26 to be a new record year.
Speaker #1: But it's also a bit special . Special for me . But I know it's even more special for Timo today because Timo has of tomorrow will be his final kind of active working day as a CFO and be my right hand at ABB .
Speaker #1: It's been a pleasure working with Timo for nine years . I had that pleasure . Of course , it's been very close now , the last since I started last summer , but Timo has .
Morten Wierod: But Timo is leaving a big footprint at ABB with a strong finance organization behind him, but he's been part of this journey now for nine years. So I really want to say a big thank you also from my side in front of everybody. I know also the banking community and everyone has been enjoying working with Timo, but we know at ABB we have really enjoyed it and you will be missed. We're looking forward to welcoming Christian in Q1, but today it is the final time we do this. So I just wish you all the best in your new non-executive roles. And again, thank you for everybody from everyone at ABB for your fantastic work here. Yeah, yeah. And I want to say to everybody, to the whole community here, that I just want to thank you for the good cooperation.
But Timo is leaving a big footprint at ABB with a strong finance organization behind him, but he's been part of this journey now for nine years. So I really want to say a big thank you also from my side in front of everybody. I know also the banking community and everyone has been enjoying working with Timo, but we know at ABB we have really enjoyed it and you will be missed. We're looking forward to welcoming Christian in Q1, but today it is the final time we do this. So I just wish you all the best in your new non-executive roles. And again, thank you for everybody from everyone at ABB for your fantastic work here.
Speaker #1: He's leaving a big footprint at ABB with a strong finance organization behind him, but he's been part of this journey now for nine years.
Speaker #1: So I really want to say a big thank you also from my side in front of everybody. I know also the banking community and everyone has been enjoying Timo working, know that, but we with ABB, we enjoyed really having it and you will be missed. And we're looking forward to welcoming Christian on in Q1.
Speaker #1: But today, it finally is the time we do this, so I just wish you all the best in your new non-executive roles.
Speaker #1: Again, thank you to everybody from everyone at ABB for your fantastic work here.
Timo Ihamuotila: Yeah, yeah. And I want to say to everybody, to the whole community here, that I just want to thank you for the good cooperation. It's been a really, really nice ride, good learnings as it is. I think there is a lot more opportunity still for ABB, and it's a good time for me to hand over to my very capable successor, Christian Nielsen. So thanks again for great cooperation over the years.
Speaker #4: Yeah, yeah. And I want to say to everybody, to the whole community here, that I just want to thank you for the good cooperation.
Morten Wierod: It's been a really, really nice ride, good learnings as it is. I think there is a lot more opportunity still for ABB, and it's a good time for me to hand over to my very capable successor, Christian Nielsen. So thanks again for great cooperation over the years. With that, we close the session. We'll see you in about a quarter's time. Thanks, Timo. Thanks. Thank you.
Speaker #4: It's been a really , really nice ride . Good learnings as it is . And and I think there is a lot more opportunity still for AB .
Speaker #4: And it's a good time for me to hand over to my very capable successor, Christian Nielsen. So, thanks again for great cooperation over the years.
Ann-Sofie Nordh: With that, we close the session. We'll see you in about a quarter's time. Thanks, Timo. Thanks. Thank you.
Speaker #4: .
Speaker #2: And with that , we close the session . We'll see you in about a quarter's time .
