ABB will be hosting its Capital Markets Day today, November 19,
starting 11.30 am CET, at which CEO, Björn Rosengren, and CFO, Timo
Ihamuotila, as well as the four business area Presidents, will give
an update on the recent strategic and operational developments,
including:
-- Improving performance under ABB Way
-- Review of business portfolio
-- ABB's digital strategy
-- Updated financial framework and long-term sustainability targets
"ABB is a leading technology company, now and in the future. We
have the global R&D capabilities, digital solutions and
innovation focus to support our customers. The COVID-19 pandemic
still weighs on the near-term outlook, but the long-term market
trends of electrification, automation, digitalization and energy
efficiency remain intact. At the same time, we are taking
additional steps to improve performance in order to drive value
creation for all stakeholders going forward," said CEO Björn
Rosengren.
Improved performance in the making
Since the start of this year, ABB has further decentralized its
organization to bring operating decisions closer to the customer
and successfully rolled out its new operating model called ABB Way,
including the introduction of a scorecard-based performance
management system reinforced through incentivization. This creates
a clear focus on stability and profitability before growth in order
to strengthen underperforming divisions.
Furthermore, ABB has carried out a portfolio review of its
divisions to ascertain whether it is ultimately the best owner. As
a result, ABB has decided to explore all options to exit three
divisions:
-- Turbocharging (Industrial Automation)
-- Mechanical Power Transmission (Motion)
-- Power Conversion (Electrification)
These divisions represent roughly $1.75 billion of combined
annual revenues or approximately six percent of ABB's total
revenues.
"All three divisions are high-quality businesses, with
Operational EBITA margins above the group's target margin corridor.
In this process, we will seek the best value-accretive solution for
ABB and those businesses and not put ourselves under time
pressure," said Rosengren. "Furthermore, portfolio reviews will
continue to be a key element of the ABB Way."
ABB will increase the number of divisions to 20 as of January 1,
2021, due to a split in the Motion business area portfolio, while
Industrial Automation will be renamed Process Automation to better
reflect its customer base.
CFO Timo Ihamuotila will highlight in his presentation that ABB
has delivered on sustainable cost reductions: "Due to the
reorganization of the Group, the ABB-OS target of $500 million net
savings has been reached one year ahead of plan."
ABB's digital strategy
ABB has recently carried out a review of its digital strategy
under the ABB Ability(TM) brand, which is comprised of
software-enabled products and systems, as well as software and
digital services. The company intends to accelerate the expansion
of its digital offering that is tailored to specific sectors or
applications based on ABB's domain expertise. This will be done
through increasing R&D and investments to about 5 percent of
revenues per year and will be led by the business. This approach
creates superior value for customers and drives a higher quality of
revenues for the company. ABB will also continue to pursue select
strategic partnerships in the digital sphere, as well as synergetic
bolt-on acquisitions.
Updated financial framework
ABB is retaining its financial framework with modifications to
certain targets in order to align with the ABB Way.
Guidance Medium term ambitions
Revenue growth 3-5% annual average 2/3 comparable, 1/3
through economic inorganic
cycle(1)
Operational EBITA margin Group 13-16% Upper half of range as
corridor from 2023
Electrification 15-19%
Industrial Automation
12-16% Motion 15-19%
(previously 14-18%)
Robotics & Discrete
Automation 13-17%
ROCE 15-20% Steady improvement
FCF conversion to net 100% Maintain solid track
income record
Basic EPS growth EPS growth > revenue Effective tax rate 25%
growth as from 2023 EPS rising
strongly due to capital
structure optimization
program
ABB's capital allocation priorities remain unchanged, including
funding organic growth, a rising sustainable dividend per share and
value-creating acquisitions. As previously announced, ABB intends
to return to shareholders net cash proceeds from the Power Grids
divestment of $7.6-7.8 billion.
"ABB aims to deliver attractive returns to shareholders and
retain a 'single A' credit rating," said CFO Timo Ihamuotila. "We
also aim to complete most of our capital structure optimization
program by the end of the year in order to further de-risk our
balance sheet and further improve performance."
Long-term sustainability targets
ABB is announcing the launch of its new sustainability strategy
and targets for 2030, which is rooted in ABB's Purpose and centered
on an intensive stakeholder listening phase comprised of interviews
and analyzed feedback. Based on this, the company has created a
comprehensive sustainability strategy that combines ABB's higher
ambition, impact, measurability and accountability across its value
chain of operations, customers, suppliers and society at large.
We enable a low carbon We preserve resources We promote social
society progress
Carbon neutrality in 80% of ABB products and Zero harm to our people
own operations solutions covered by and contractors
circularity approach
Support our customers Zero waste to Comprehensive D&I
in reducing annual landfill(3) framework(4) ; 25% women
CO(2) emissions by >100 among ABB leaders
Mt(2)
Supply chain emissions Supplier sustainability Top-tier employee
reduction framework engagement score in our
industry
Impactful support for
community-building
initiatives
Integrity and transparency across our value chain
Further details available at go.abb/sustainability
"ABB is embedding sustainability in everything we do in order to
create long-term value. Foremost, we are enabling customers to
reduce their emissions and preserve resources because this is where
ABB's technology can have the greatest impact. Furthermore, our new
targets will be tied to employee incentive plans thus driving
performance and culture within our group, while we are proud to be
contributing to the United Nations' Sustainable Development Goals,"
said Rosengren.
Note to editors: The Capital Markets Day, CEO/CFO presentation,
as well as presentations from Business Areas and Divisions, can be
followed under:
https://global.abb/group/en/investors/strategy-events/capital-markets-day-2020
from 11.30 am to 5.15 pm CET.
ABB (ABBN: SIX Swiss Ex) is a leading global technology company
that energizes the transformation of society and industry to
achieve a more productive, sustainable future. By connecting
software to its electrification, robotics, automation and motion
portfolio, ABB pushes the boundaries of technology to drive
performance to new levels. With a history of excellence stretching
back more than 130 years, ABB's success is driven by about 110,000
talented employees in over 100 countries. www.abb.com
Important notice about forward-looking information
This press release includes forward-looking information and
statements which are based on current expectations, estimates and
projections about the factors that may affect our future
performance, including the economic conditions of the regions and
industries that are major markets for ABB. These expectations,
estimates and projections are generally identifiable by statements
containing words such as "anticipates", "expects," "believes,"
"estimates," "plans", "targets", "aims" or similar expressions.
However, there are many risks and uncertainties, many of which are
beyond our control, that could cause our actual results to differ
materially from the forward-looking information and statements made
in this press release and which could affect our ability to achieve
any or all of our stated targets. The important factors that could
cause such differences include, among others, business risks
associated with the COVID-19 pandemic, the volatile global economic
environment and political conditions, costs associated with
compliance activities, market acceptance of new products and
services, changes in governmental regulations and currency exchange
rates and such other factors as may be discussed from time to time
in ABB Ltd's filings with the U.S. Securities and Exchange
Commission, including its Annual Reports on Form 20-F. Although ABB
Ltd believes that its expectations reflected in any such
forward-looking statement are based upon reasonable assumptions, it
can give no assurance that those expectations will be achieved.
(_____________________ 1) Calculated to exclude FX impacts and
transformational acquisitions and divestments, includes bolt-on
acquisitions and divestments within divisions.
(2) Annual savings in the year 2030 from all solutions provided
to customers 2021-30
(3) Wherever local conditions allow
(4) Diversity & Inclusion framework
View source version on businesswire.com:
https://www.businesswire.com/news/home/20201118006185/en/
CONTACT: ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
Media Relations
+41 43 317 71 11
media.relations@ch.abb.com
Investor Relations
+41 43 317 71 11
investor.relations@ch.abb.com
SOURCE: ABB
Copyright Business Wire 2020
(END) Dow Jones Newswires
November 19, 2020 01:01 ET (06:01 GMT)
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