ABB Capital Markets Day 2021: Cementing Performance Culture
ABB has updated its financial targets during the Capital Markets Day, lifting revenue growth expectations to 4-7% through the economic cycle, with an operational EBITA margin target set at at least 15% beginning in 2023. CEO Björn Rosengren noted robust demand despite supply chain challenges. The company aims to enhance its sustainable transport offerings, which currently account for approximately 10% of group order intake. ABB plans continued acquisitions, leveraging strong cash flow generation while implementing an ABB Circularity Framework as part of its 2030 Sustainability Strategy.
- Revenue growth target raised to 4-7% through the economic cycle.
- Operational EBITA margin target sharpened to at least 15% from 2023.
- Plans for continued strong cash flow generation to support organic growth and M&A.
- Supply chain disruptions expected to affect customer deliveries in the fourth quarter and early next year.
- Anticipated adverse margin impacts due to exiting the Dodge and Turbocharging divisions.
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Revenue growth target lifted to 4
-7% through economic cycle -
Group Operational EBITA margin target sharpened to at least
15% as from 2023 - Sustainable transport supporting mid-term growth story
- CEO: “Demand has remained robust this far and we anticipate positive market momentum in 2022 but still have to manage supply chain disruptions”
- Swiss IPO for E-mobility planned for H1 2022
- CFO: “Continued strong cash flow generation to support organic growth and M&A”
- Introduction of ABB Circularity Framework as part of 2030 Sustainability Strategy
“Over the last 24 months, ABB has made solid progress in implementing its decentralized organization and improving quality of revenues. But we are still not where we want to be,” said CEO Rosengren. “Our technology leadership in electrification and automation, aligned with sustainability and the global megatrends, is at the core of ABB’s Purpose and gives us a competitive edge. Nevertheless, we need to cement a high performance and integrity culture in everything we do. Therefore, a sharpened focus on accountability, transparency and speed in 2022 will help drive growth, lift profitability and create further value for shareholders.”
Improving performance
Since the start of 2020, ABB has decentralized its organization to bring business decisions closer to the customer and successfully rolled out its new operating model called
ABB has lifted its revenue growth target to 4
CEO Rosengren added: “Order activity has remained robust this far and we anticipate a positive market momentum in the business year 2022. That said, we still have to manage the disruptions in the supply chain, which most likely will impact customer deliveries in the fourth quarter and at least the early part of next year.”
ABB is more optimistic about its revenue growth prospects not only because of its global leading businesses and its decentralized operating model but also because it will benefit from important secular trends. For example, energy efficiency is a key driver for decarbonizing the economy, including the industrial sector, while declining working age populations and rising labor costs are driving demand for automation in industrial and other sectors.
Approximately
ABB is expecting to make five or more small to mid-sized acquisitions per year. This will be funded through the Group’s “continued strong cash flow generation,” said CFO
Portfolio management progress
Last year, ABB announced the exit of three divisions of which the Dodge (MPT) business has already been successfully sold in November. At today’s event, CEO Rosengren will give an update on the Group’s ongoing portfolio management efforts. This includes exiting the Turbocharging division (PA) through a spin-off to existing shareholders or a divestment and is targeted for summer 2022. The final decision will be based purely on which route creates the most value. ABB also plans to divest its
In addition, ABB is continuing to work towards an initial public offering of its E-mobility division (EL). The legal separation is expected to be completed during Q1 2022 and if market conditions remain favorable, a listing in
Sustainable transport
At today’s event, the four business area Presidents will present their product portfolios that enable sustainable transport, representing in total ~
One particular highlight is the growing demand for electric vehicles (EVs), whose sales are expected to exceed non-EV sales by 2035*, driven by the global electrification, decarbonization and digitalization trends. For example, the Robotics division is the second largest provider of technology for the assembling of the powertrain and battery, the car body, as well as the painting and sealing of EVs. Furthermore, ABB is the leading company for charging solutions (AC & DC) to passenger e-cars, e-buses and e-trucks, as well as rail infrastructure.
Sustainability strategy: Circularity framework rollout
At last year’s CMD, ABB unveiled its ambitious Group 2030 sustainability strategy based on three pillars of enabling a low-carbon society, preserving resources and promoting social progress. Significant steps have already been made, above all through ABB technology supporting customers in reducing their annual CO2 emissions by more than 100 megatons, which is the equivalent of 30 million combustion cars.
In 2022, ABB will introduce a circularity framework covering every stage of the product lifecycle in order to preserve resources. It will include stages: design and sourcing; production and packaging; optimizing the use phase (efficiency and lifetime); and the end-of-life phase (take back and recycling). The goal is to have
*Source: Long-term Electric Vehicle Outlook 2021, BloombergNEF
Note to editors: The Capital Markets Day can be followed on the ABB Investor Relations website from midday to
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 105,000 talented employees in over 100 countries. www.abb.com
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