ABB Ltd (ABBN) Earnings Call Transcript & Summary

Greetings to you all, and a warm welcome to this ABB Capital Markets Day. I have to say it's really nice to see that we could gather so many of you actually here in the room in Zurich. And I know we have a big crowd joining us virtually. Thanks to all of you for taking the time to spend this afternoon with us. In the past -- in the first part of this program, we will focus on the recent development of the ABB Group. You will hear from our CEO, Björn Rosengren; our CFO, Timo Ihamuotila and our Head of Sustainability and Communications, Theo Swedjemark. I'm Ann-Sofie Nordh, and I'm heading the Investor Relations team here at ABB. Before we start, just a few practicalities I would like to share with you. After each set of presentations, there will be an opportunity for you to ask questions. And there are 3 ways you can do that today for you that are with us here in the room. Please raise your hand, and there will be someone coming -- running with the microphone. There is also, for all of you, a chat tool available in the CMD webcast window. And you can also, as a third option, dial in and put through your questions through the audio. And in order to do so, you just register via the link available on the CMD site, and you will have all the details how to proceed from there. I also, unfortunately, have to mention that we still have some COVID restrictions. And for those of you here today, I kindly ask you to wear your mask unless you're obviously eating or drinking. You have today's agenda available on the site at all times. We aim to finish today at about 5:00. I should mention that for you here in Zurich, just so you are -- have noticed anywhere that we had canceled the mingle session after the official program just as a precautious measurement in these COVID times. I should also say that there are no fire drills expected today. So if you hear an alarm, please make your way out the building, and we will assemble in the path just opposite the entry. I also just want to quickly draw your attention to our safe harbor notices and our use of non-GAAP measures. These are available on Page 2. This covers any forward-looking information that you may hear today, which could contain some uncertainties. And with that said, I will let Björn loose, after we kick this session off with a short video. [Presentation]

So thank you, Ann-Sofie, and a warm welcome from me as well. Of course, we would have loved to have all of you here in this ABB historical building. But we are happy that we had the opportunity to run this Capital Market Day in a hybrid, and maybe this is the future. I have now been with ABB for 2 years. On one hand, it's been a very cumbersome time with all the restriction related to COVID. On the other hand, it's been a very enlightening and charged and exciting energizing part for me to drive the transformation of ABB. Today, we will talk about how ABB contributes to and the opportunities we see in sustainable transports. Sustainable transports is also crucial for enabling a low-carbon society. Some people say that ABB is a conglomerate. I don't agree. I believe that ABB is a purpose-driven company with the ambition to drive customer value by helping our customers to become more productive as well as sustainable. And we do that through electrification and automation. And in both these 2 areas, ABB is #1 or #2. We want to drive impact by being a leader when it comes to resource efficiency. It's actually using various limited resources in a sustainable way and, in that way, minimize the impact on the environment. ABB's product offer is both relevant, strong and well positioned to drive strong growth and returns. I very often talk about value creation, and it always starts with the customer. For us to be able to be a leader when it comes to resource efficiency or to deliver in line with our purpose, ABB is well positioned. And we say that we have 3 core competencies that drives the success of ABB. The first one is innovation and also cutting-edge technologies. The second one is domain expertise. And the third one is the ability to scale. So if we start with the first one, innovation and cutting-edge technology, I don't think anyone today questions the competencies of ABB within this way. We are investing almost 5% of our turnover into innovation and R&D. We have more than 7,000 R&D engineers. 60% of them are today focusing on software development. The second competencies is the domain expertise. And now when some of the COVID restrictions have eased up a little bit after summer, I've been actually spending quite a lot of time traveling to our operations but also to meet our customers. And I'm quite astonished what a strong position ABB has. And I do believe that it actually comes that ABB have in the history driving a lot of system, projects, service sales but also products and, in decades, build up this strong knowledge about our customer segments. Many times, we even know these customer segments better than our customers. And the third competence is related to scaling. What do I mean with that? Yes, ABB has a global footprint. We are a global company, but at the same time, we look upon ourselves as local, meaning that we are in the different parts of the world with local people. We have more than -- we are available in more than 100 countries, and we have the ability to take our development, our innovation and to scale them up in the world. So these together is actually creating the strength of ABB. Our product offer is both relevant but it's also broad, and it actually consists of software and digital service products, which is today around USD 500 million and growing double digits. We have software-enabled products, which is the majority of our portfolio. And these products are, of course, loaded with semiconductors. And then we have the traditional products. And I do believe that if you want to be a global leader, you need to be strong in all these 3 areas. So let's move in a little bit into my favorite competence, innovation and technology. And it's quite exciting. ABB has products that are mature, that are already a success in the market but we also have a broad portfolio of products that are in the emerging phase. Just to give you a couple of examples. The EC titanium, it is the world's most efficient electric motor with built-in drive, variable speed drive. Another one, the Terra 360, which we recently launched, which is the fastest EV charger, electric mobile charger, in the world, where you actually have the capability to load or charge a car in only 15 minutes. Then, of course, I love to talk about the Azipods, as I always dreamt about having this in my portfolio when I was previously in [indiscernible]. Azipod is a unique product. It's actually electrifying its propulsion in many cruising ships and other special vessels, and here, ABB has a unique position. And I'll come back to that a little bit later. When we talk about energy efficiency, it's no longer an option. It is a must. When it comes to electric motors, they have been in the market for 100 years but it's only lately that a lot of efforts have been put in to make them more efficient. Did you know that 45% of all electricity is actually used to drive electric motors. Did you know that there are 300 million motors operating out there, and the majority of them do not have a variable speed drive, which means that they are very unefficient. By making sure that the motors have the latest technology but also connected to variable speed drive, we can actually save 10% of the world's electricity consumption, which is equivalent to around 300 megatons of CO2 emissions. It's quite dramatic. So I come back to the Azipod. Did you know that there are approximately 2.1 billion people traveling with ferries as well as cruising ships every year? And the cruising ships and the most advanced ferries are all equipped with electric propulsion from ABB. When you look at these propulsion systems, including drives, generators motors but also switchgear on electrification part, it's up to 20% of the value of the ferry. And today, we also offer a power-generating system, including battery solution as well as charging, and it's astonishing how this is actually being accelerated into the market. I'll give you an example. The P&O Ferries are going between U.K. and France, crossing the English Channel. By using ABB equipment they actually reduce the CO2 emission with 40% on each of this cruise. This is what I call energy efficiency. Another environmental problem is plastic. You know plastic does not break down. It stays the same. And every year, about 10 million tons of plastic ends up in the ocean. This is a huge problem we all know. This means that we need to move away to plastic. But plastic is a very good material to be used, especially in the food industry but also in the cosmetic industry. Now a company called Zume, which ABB has partnered with, have actually developed a new compossible material that has both the capabilities as plastic as well as the price efficiency. By doing this, the plastic can be replaced. Together with Zume, we are planning to install 1,000 robot cells where these materials is being produced. And the first installation is done in an Indian company called Satia Limited, which is the world's largest wood and paper manufacturer where the first line is being built. So I'm going to show you a video so you can see how it looks like. [Presentation]

It's quite fantastic. This has enormous potential in the future to support the sustainable development of the world. In line with our purpose, we are committed to energize the transformation of society and industry by helping our customers to become more productive and sustainable. And by this, we do it by electrification as well as through automation. And we are put in a sweet spot when it comes to growth opportunities. Let me give you some examples. When it comes to the -- any transformation, the demand for electricity is actually double than from any other energy resource. When it comes to energy efficiency, 40% of the reduction of the energy efficiency is actually generating a decrease in the greenhouse gases with 40% in the coming 20 years. So it's a transformation towards electricity but also the drive of energy efficiency. On the other side of our purpose, it's related to the automation. And as we see, industries are today looking for more flexible production. And we see that actually the working population in relation to the total relation is decreasing. And we see also labor cost increasing, which all is supporting automation, industrial automation as well as the use of robotics. So when we look at our business, and the businesses where we are into, we see that we are in a sweet spot. And we see that our business has potential to grow going forward is substantially higher than what the history has shown. So what is actually driving the growth abilities of our business? The first one is the well positioning in these global trends like electrification and automation. The second part is the way we operate, the new operating model where decision-making is done by the division closer to the customer, which makes us faster in reaction to drive growth. And the third one is more related to legislation and stimulation in relation to ESG, where ABB today is well positioned. That makes us lift our growth targets from 3% to 5% to 4.7%. We'll come back to that a little bit later. So I talked -- said we have gone through a transition, and it is now 1.5 year ago that we introduced our new operating model, where we have full accountability by the divisions. We have, during this period, reduced the central and the country resources from 18,000 to 900 and move them out to the businesses. Now when we've been traveling around visiting our operating entities around the world, we can see that we have more work to do within the divisions because the divisions also need to move the accountability down in their operating entities. So during the coming years, we will continue the transformation of ABB towards a more accountable structure and eliminating this matrix organizational structures. We are moving towards our target of over 15% EBITDA margin. And I think the progress is going well but we are not there yet. We have more to do. So if we look where we are on the last rolling 12 months, we are at 13.9%. And if you also then take away the margins from the Dodge business as well as from the turbo business, we are actually at 13.4%. But we are committed to be above 15% by 2023, and I feel that we are moving in the right direction. When we have our divisions, 21 divisions today operating with full accountability, it is, of course, important to keep the group together. We call it the glue, the ABB Way. So together with our purpose, which actually answer why we keep the group together, the ABB Way is actually answering how do we keep the group together. And here, the ABB Way is the glue that keeps it and also driving the performance management, keeping our values at the right place as well as making sure that our brand is taking good in a good way as well as making sure that we are fulfilling the governance structure, including the code of conduct. The ABB Way should help the businesses to become more successful. So if our businesses are benefiting of being part of ABB, then the group fits well together. If any of our business did not benefit by being part of the group, then we have the question, should it be part of the ABB structure. And as you know, we have decided to divest 3 of our businesses. When we introduced the ABB Way and our new operating model, we said that the -- each division is responsible for its strategy. And each division has a strategic mandate depending on where it is today. So if the division takes the right journey, it's first from stabilizing the business, improving the profitability and then focus on growth. So when we started, the majority of our businesses were actually in the profitability mode. And when we say the profitability mode, it means that it's not delivering in line with our peers in the market, in line or better. When the businesses are delivering in line with them, the focus should be on the growth. And what we can now see here is that, today, about 60% of our divisions are in the so-called growth mode. And I think we can see that many of the other businesses are moving the right way. In 2023, we do expect that 100% of our businesses have a strong focus on growth. So by that, I hand over to Theo, who will talk about our sustainability targets.

Thank you so much, Björn. And it's great to be able to be with you all here today also from my side to share a brief update about ABB and our leading sustainability efforts as well as some exciting news about our ambition to drive progress within the area of circularity going forward. But first, I will give a quick recap about our sustainability strategy, our ambitious sustainability framework, which was announced at last year's Capital Markets Day here in Zurich. Covering all aspects or material aspects of ESG. Our strategic approach is structured around 3 main impact pillars, enabling a low-carbon society, preserving resources and promoting social progress, which, together with our unwavering commitment to responsible business practices really target to embed sustainability and everything that we all do within ABB every day to drive maximum impact across our entire value chain. That means leading from within our own operations by driving maximum impact also upstream and downstream of ABB. So what have we been up to since last year when we presented this strategy? I can tell you, we have been very, very busy kicking off the implementation of our strategy. We have started to operationalize our goals and targets updating our ESG governance to align it with both our purpose, but also our operating model that Björn just described again, the ABB Way. And what does that mean? It means that we are successively integrating the delivery of the sustainability targets into our performance management process. So same level accountability and transparency and approach to the way we drive the delivery of these targets by division and business area internally. You already had Björn talk about performance process, and you will hear Timo talk a bit more about performance culture. So I just want to underline and make it crystal clear that the same level of transparency, accountability and speed is expected and will be delivered internally when it comes to delivering ESG just as any other financial or strategic targets. That also means that we are somewhat by now famous scorecards will be expanded to also include ESG parameters, which will be reviewed together in business review and already are actually, to a large extent, by our business teams. And whatever action will be supported by the appropriate management incentives. Also I want to share a few quick highlights that we are very proud of. During the course of the year, our plans to become carbon neutral in our own operations latest by 2030 were approved by the science-based target initiative, which also confirmed that they are in line with the 1.5-degree scenario of the Paris Agreement. We also chose to align our plans together with the Climate Group's 3 corporate 100 initiatives, which is EV100, RE100 and EP100 and we did this because they basically represent the 3 main levers through which we will become carbon neutral in our own operations latest by 2030. That means converting our roughly 10,000 strong fleet of cars towards electric ones we will purchase 100% of our electricity based on renewables, and we will continue to drive energy efficiency in all our factories and buildings and operations throughout the world. It's also great to see that we see continuous progress in actually delivering reduction of our own emissions. You should see the number here, minus 25%, which is a very strong performance, but also in safety. This is an area where we are very proud in ABB, and we have a strong culture and history. And by now, we are really operating at world-class levels. So very strong. We are very proud of that. I also want to take the opportunity to thank the teams for driving our ambitious diversity and inclusion strategy, where we're also starting to show some progress including in the area of gender diversity, where maybe on stage today, you will see we still have a little bit of work to do, even if things are going in the right direction. Now to the most exciting part of my presentation, the ABB circularity framework. I'm really proud to be able to show this to you today because it is the representation of our ambition to drive industry leadership in circularity. It's an area where we have a long history, but maybe we never spoke about it in this way or particularly loudly, but we will focus increasingly on across the company, including commercially going forward. So more to come also in terms of marketing aspects related to this. But under our -- we preserve resources pillar under our sustainability strategy, we have a very ambitious target of targeting at least having 80% of our products and solutions by 2030, that means our turnover covered by this circularity approach. And what does that mean? It means we have a unique, systematic, company-wide framework where all our product solutions and services are included and will be evaluated against clear KPIs following the life cycle stage and key circularity levers to enable us to score, measure and drive continuous improvement in terms of circularity, both for our customers as well as within our own functions and operations. But importantly, this will also enable us to develop new, more circular business models. The list of examples where this applies within ABB already today is practically endless. So I will not spend more time on that. Besides mentioning a couple of examples, for example, you see on the slide here, a picture of our beautiful EL factory in Frosinone where we produce millions of circuit breakers every year, and we have already -- or the Tarak's team have already today been able to prove that it's possible to run such a sizable operation without sending any waste to landfill. Or Sami and his team who have quite a long history by now already, to taking back robots, which have already been in operations for many years at hard work in industry, refurbishing them, repurposing them for a second life back in industry to serve new customers and help deliver efficiency and sustainability. So I just want to underline that, supported by digital technologies. This framework really help us drive sustainability, preserve resources but also enable new, more circular value propositions. With that, I hand back to you, Björn.

Thank you, Theo. And now moving over to the product portfolio management. As part of aligning our operations with our purpose. We already 1 year ago, informed that we are exiting a number of businesses. So I'll give you a little bit update on that. We -- during the third quarter this year, we announced that we sold our Dodge business, mechanicals transformation, and that business was closed during Q4. We are, of course, very happy for the Dodge business to end up in a home where they are really focused on for the future. And the price for this business was $2.9 billion, which is actually 22x EBITDA or the profit of the business, which is actually the highest price that anyone paid for mechanical business. So we're happy for that. We are now in the process of exiting Turbo. And here, we are running a dual track. We are looking at potential buyers, but also looking at the opportunity to list the company or spin it off to our shareholders. We will soon come out with a final decision, which is the right one. And we will, of course, take in consideration to make sure that the business ends up in the right hands to be able to develop and to grow into the future. The third business, which we announced was actually an IPO of the E-mobility. This is not because E-mobility is not part of our purpose. E-mobility is core of what ABB is doing. This is more a technical solution to give E-mobility the right circumstances to growth in line with the market or faster. And today, our E-mobility business is the largest in the world. We have now decided to list it on the Swiss Stock Exchange. We believe it's a good home where there is a lot of capital and a lot of investors who are excited about this business. We will keep the majority of this business and it will also be consolidated into ABB in the future. The money that we get from the listing will be used in the businesses to grow with the acquisition as well as investing in organic growth. We have big hopes of growth and of this business in the future. And you will hear more when Frank will represent the business a little bit later. The last business that we decided to exit is the power conversion. It's also the business that had been mostly affected during the COVID period. We now expect to start the process during the second half of this year. So by that, Timo, a little bit about the cemented culture.

There we go. Thank you, Björn. And good morning, good afternoon from my side as well, and thank you for your interest for ABB. It's a great company, which we, as a team, are looking to make even better. In this short presentation, I'll cover a couple of things. So I'll talk a little bit about driving better quality of revenue. I'll talk about progress in our profitability improvement. I'll talk about how we invest in future growth, and then about cash generation, cash flow, capital allocation and finally, a couple of words about our revised target framework. But before that, let me talk a little bit about ABB Way from a CFO perspective. So our decentralized model, as Björn described, is fully implemented, both the organization as well as way of operating. So at the moment, we have 0 overlap between corporate and business activities and the corporate activities are clearly defined. And if they are not defined to be part of corporate, like treasury tax brand, then they are automatically part of business. And that helps us drive to the lean corporate. I'll come to some numbers a bit later, but I'll actually give you 800 people instead of 900 people, what Björn said, outside the noncore business, and I'll talk about that ramp down later as well. We also have a systematic and granular way to look at our portfolio management. And everything we do in ABB needs to fit this model. So this is not a corporate thing. Everything needs to be supporting the core, i.e., purpose. We want to be in the markets which have good market dynamics, good growth and profitability dynamics. We want to be #1 or #2, i.e., the right assets to win in the market, and we also want to perform to full potential. And as I said, not only group looking at our group and business areas, looking at divisions, also divisions looking at their product groups, our sales units, looking at the customers, which are the really, really good customers for ABB and also our product managers looking at the different SKUs and looking where are we really making the bang of the buck. So it really is a cultural way of thinking through a portfolio lens. And this naturally then leads to capital allocation. I mean, in our system, cash is a corporate asset, and we're all the time moving forward to a situation where our divisions actually compete on capital to invest, which is great to see. And this doesn't mean that we would be doing micro management, but we, of course, have clear approval hurdles on how we move forward on different investments. And I'll come back to this topic as well when I talk about investing in growth. But first, a bit about quality of revenues. So we have now been driving this concept of quality of revenues for some 4 years. That means no EPC business, more customers with secular growth trends, more software and digital in our offering and more distribution partner business because the distribution partner business tends to be both higher margin and you can also expand faster because you don't yourself have to invest into the full channel. And so let's take a look at this in this picture with sort of on a 5-year interval from '16 to '20 how we have made progress here. So after the Power Grids exit and some other actions, we simply have no EPC business. You can be assured all ABB project business is high, more than 50% ABB content. And if you look at the utility share of ABB revenue, it's down from 32% to about 15% and at the same time, the industry revenue is up 9% or up 9% and also transport and infrastructure is up 8%. Our short-cycle business is up 20%, moving ABB towards these more secular growth customers like EV charging, water and wastewater, data centers. And then when you look at our operational gross margin development during this time, it is up actually about 300 basis points, so 3%. This is a testament to more software in our business driving value with the embedded software strategy on top of our digital offering. And then finally, our revenues from distributors is up 10%. So to about 1/3. So I would say a lot of really, really, really good effort done by the teams on the better quality of revenue. And I think as a team, we can be proud of that achievement. Then let's talk about the margin. I mean, Björn touched upon this as well. But the systematic operating model is really starting to come through here. So you can see that despite a quite a big drop in volume, to the COVID year of 2020. We were able to hold margin. And now the last 12 months is at 13.9%. And it's great to see that the improvement is really coming from all the business areas and also from lower corporate costs. And we are firmly on track to reach our 15% of EBITDA margin target 2023. I mean, the growth divisions will drive improvement in mix. The profitability divisions are improving from profitability. In our system, every division drives for at least 3% productivity per year and we also expect to have lower corporate. And this is actually a good segue to my next slide regarding driving this positive mix. And this is a bit of a busy slide, but it's very, very important. So just bear with me, I'll go through the structure a little bit here. So first, this is about how different divisions performed versus their 2020 strategic mandates. So green means you had a growth mandate 2020. Yellow, you had profitability mandate 2020. Second, we are comparing the last 12-month growth to 2019 to exclude the COVID impact as much as possible. And third, we are actually in this lens separating Robotics division into 2. We are looking at automotive separate from nonautomotive because, as you well know, automotive has really been more of a profitability drive with the exit from the systems business, which Sami and team have been driving. And what does this then tell us? It tells that, first of all, the growth has actually mainly happened in the growth divisions. So when you look at on the right, 7 out of 9 divisions are growth divisions, which have been sort of growing more, and they have combined margin of about 17%. Then when you look at on the left, you can see that out of the 10, 7 have had profitability mandates and there, the average is about 11%. And there are some outliers like the Marine and Ports division and so forth, which have been hit by the COVID. But overall, you can see that the model is working. So if you look at the stuff on the right on the slide, you can see that our low voltage has grown 12% faster than medium voltage, for example. Our drives divisions have grown 6% faster than the motors divisions and non-auto robotics have grown 26% faster than automotive robotics. So this is working, and it is also driving our investment divisions. So let's then first look at organic growth and then I'll go to inorganic. So here, on the left-hand side, you can really see that our divisions have different R&D and CapEx intensity. So R&D can run anywhere from 1% to 2% to 15% of revenue. And as we discussed earlier, over 60% of our R&D folks of the 7,000 are working in software to really drive digital offering, this embedded software higher gross margin, as I discussed, which also then has greater pull-through of our traditional products. But let's talk about a couple of practical examples here. So for example, electrification installation products. This is about 2% R&D type of division, but the value is really on the channel and distribution. So you need to have the right product in the right place at the right time for the installer, that's where the value is. And this is then a key driver of margin and also key barrier of entry of that kind of business. Whereas then you can see on the right-hand side, some businesses where we have significantly increased R&D. I mean you see E-mobility 100% up. Frank will talk about that later today, drive products where we have really invested in a plug-and-play connectivity in IoT and also the software platform on the drives to change the use case of a drive with software up 15% and robotics up 50% on investing in new areas like food and beverage, hygiene motors -- hygiene products or then in RobotStudio on design of totally new areas of business like this medical back-end or logistics. And from sort of historical times in technology, I have learned this statement that in R&D, you should invest where it matters. And I think with this model, we are really investing in R&D where it matters. Then if you look at inorganic growth, i.e., acquisitions. I mean, Björn spoke about the divestments. Now we use, of course, a similar tight lens on acquisitions. And I think during the last years, there's really been a big change how we look at M&A at ABB. First, we started to increase the analytical discipline. And now with ABB Way, I think we both have the right model as well as the right discipline. And for ABB, M&A is really a strategic execution tool. It is not the strategy itself, very important. So first, the divisions create a long list, then subset of that moves into the pipeline. And then we follow our clear criteria. Of course, it has to be close to the core and purpose as discussed. But from financial side, we want to see EPS accretion after year 1, and we want to see a return higher than weighted average cost of capital after year 3. And if I just -- you look at this ASTI acquisition through this lens, this was about $200 million ticket with about $50 million of revenue. So that would break the return over weighted average cost of capital hurdle in about 3.5 years. But we also drive minority investment through this divisional lens, where our ABB Technology Ventures organization helps on implementing. You can see here on the left, 4 investments, which have been done by this model. And these are also all investments, which can then later also become acquisition targets. So as I said, we have the right model, the right discipline to drive value-adding acquisitions. Then I would cover a couple of, I would call them, housekeeping items here. So first on the corporate side. So we are committing to our $300 million or under corporate costs, excluding noncore, just to remind that this is down from $1.1 billion, 2018. On the noncore, we continue the ramp down, and we expect to finalize this 2022. So at the end of '21, we still had 10 projects in operation. At the end of this year, we will have 4, at the end of next year 2022, we will have 0. And we have made progress on these 2 large projects, which I spoke about in our last Capital Markets Day. So we are not expecting more than this $300 million of operational charges in noncore. So the same situation as a year ago. And as I said, we should be out of this by end of next year with maybe some legal tail-ends only left. And then finally, we are doing these separations of these 4 assets. And this year, we expect about $130 million of separation cost next year, about $150 million, including, of course, all the preparation for the E-mobility IPO. Then the other one, and Björn touched upon it, so I'll just go through this in a little bit more detail, what does the Dodge and Turbo exit impact ABB? So first of all, Dodge is having about 60 basis point impact on motion level and Turbo about 180 basis points impact on process industries level. So this is combined about 50 basis points for the group. The great assets and as demonstrated, we expect full value. But however, getting to the 15% after that is a bit steeper hill to climb. And we spoke about the last 12 months now being at 13.4%. So still work to do, but we as a team, and I'm personally also confident that we will get to our more than 15%, 2023. Then a couple of words about cash. So 2021 has really been a year when we have improved our cash generation. This is coming from profitability improvement, also less of these transformational items. And already during the first 9 months, we are about $400 million ahead of years 2019, 2020 and the long-term cash dynamics for ABB continue to be favorable. So the strategic mandates of the divisions also drive strong cash generation. On the net working capital, we, of course, now at the end of this year and maybe a bit going into the next year, given the tight situation on the market a little bit more difficult to read. But longer term, I think net working capital dynamics are also positive. We can release cash both from inventory as well as from receivables. Then we continue to expect to have less of these transformational burdens, and we continue to expect to have a fairly flat CapEx around the sort of $750 million area. And very importantly, the ABB Way really defines clear responsibilities also regarding cash. So business areas and divisions are measured on this operating free cash flow, which is all cash components in it, also restructuring, also CapEx, and then the tax and finance-related cash items are corporate responsibility. Let's then talk a little bit about uses of cash. So we reiterate our capital allocation principles, funding organic growth been foremost, then rising sustainable dividend per share, value-creating acquisitions and then returning additional capital to shareholders, which we have mainly done through buybacks. And as you can see from the chart, our operating cash is expected to be higher than CapEx and dividend. So that will leave room for acquisition investment and also possible further share buybacks. And importantly, we are also adjusting our rating targets slightly here. So we are saying rather than single A with a strong investment grade. And we are doing this because we have improved profitability, and we are also expecting less cash flow volatility going forward, driven by the improved business mix of ABB. So this will give us additional financial flexibility when we look at the longer-term optimal capital structure for ABB. Then let me close with the revised financial target framework. So starting with growth. Björn spoke about this as well. So we are increasing from 3% to 5% to 4% to 7%. This is mainly coming from the organic growth side where we are increasing the comparable growth from 2% to 3.3% to 3% to 5%. And today's theme of sustainable transport really shows that we have levers, which have made this a better growth positioned company. So first of all, quality of revenue. We have really profiled ABB towards more attractive markets. Second, these long-term trends on energy efficiency, increased electricity demand, higher carbon price as well as labor shortages and this possible onshoring, which are happening are all strong secular growth drivers for ABB's businesses. And finally, the ABB Way operating model with profitability and growth mandates is driving both organic as well as inorganic growth in the right way. Then on operational EBITDA margin. So we adjust this from upper end of 13% to 16% to at or above 15% from 2023 onwards. And this, of course, also means that we are not intending to drop below 15% after 2023. Then we maintain our ROCE free cash flow conversion and EPS growth targets. And maybe on a return on capital employed, I'd just say that if you take out from our balance sheet, the 20% power grid stake because we kind of already got paid for that, our return on capital employed on a last 12 months basis is already closing into 14%. So we're making good progress on getting into the 15% to 20% return on capital employed target as well. So I think this is an ambitious set of targets. But with the ABB Way operating model and also with the high performance, high-integrity culture, we are implementing at ABB. We are in a good path to get there. And with that, I would hand it back to Björn.

Thank you, Timo. It's good to see that the financials are under control. We are coming closer to the end of '21 and coming closer to year 2022. We have seen that the ending of this year continued to show strong demand in the market. But we also see continuous challenges as we reported in Q3 on the supply chain. We believe it will affect Q4 and moving into 2022. On the other hand, no cancellation, which means that we are all in the same boat. We expect next year to continue to grow. But of course, we have a huge orders on hand, which will also be delivered during next year. The focus going forward will be for each of our business to continue to drive continuous improvement and to move towards our financial targets. We are also going to execute the exit of the businesses which we have promised to make sure that the offer and the business, the ABB will be in line with our purpose. By that, I think we end the first session, and we move over to the Q&A. So I hand over to you, Ann-Sofie.

Thank you. Let's do so. And as I said, different options to put questions through. [Operator Instructions] And with that said, let's see if we can start if we have any questions here in the room in Zurich. And I see no hands waving. So we'll go to the conference call, please. And I believe we have Alex Virgo on the line. Your line should be open, Alex.

Thanks very much, Ann-Sofie, I hope you can hear me [indiscernible]. Good afternoon to everybody. Thanks for the presentation so far. I wondered if you could make a comment, Björn, in the first instance, encouraging to see you raise your growth targets to 3% to 5% organically. I'm wondering if you can just comment a little bit on the differences that you see between your portfolio and some of your nearest peers, given they're expecting much stronger organic growth in the near term and the implications, I suppose, of some of those structural themes that you have talked about? And then second question to Timo. The shift in your long-term credit rating target is an interesting 1 given the cash generation you're going to be making over the next few years is the combination of those free cash improvement and disposals. And I wondered how we should interpret that with respect to the amount of money you feel or your war chest or what you feel you can look to spend?

Maybe I start up with the first question regarding the growth of ABB compared to the peers. Yes, I think every company are different, and we have different product lines and offerings in the market. I think ABB is well positioned when it comes to this ESG trends. And I think when you look at our offering today and the potential of growth I think it's quite good, and I think it's significantly better than we have seen historically. I don't really know which 1 you are referring to. But of course, some of our competitors have bought big software companies which software growth has been higher, it could have some effect. But I think we do not see any of our product line that we would grow less than our competitors. I think that's it. Then I hand over to you, Timo.

Thanks, Alex, for the question. So if you look at this, we really want to kind of like signal with this that ABB has come a better company from its cash flow volatility and stability perspective. And we think that we can have a situation where if you look at some of these targets, and this is now just drought, what I'm talking about. But if we would go to something like 2x, 2.5x net debt-to-EBITDA, we could have like a $10 billion capacity on the balance sheet, and we would still be in line with this. This does not mean that we would, of course, go to such a place right away, but it means that we can think through different growth scenarios and, of course, different capital return scenarios with this new lens of saying strong investment trend rather than single A.

And let's take another question from the telephone line, please. James Moore, your line should be open.

Can you hear me?

Yes, we hear you. Thank you.

I have 1 on growth and one on margin if I may. [indiscernible] on organic sales growth and the increase from 2% to 3% up to 3% to 5%, can I ask what kind of organic sales growth have come from [indiscernible] made on oil and gas chemicals [indiscernible] over the cycle? I'm trying to understand why you see a strong late cycle process pickup, hoping you make the numbers in the medium term. Maybe I'll come back to on margin.

Yes. It's clear that some of our businesses, we expect to grow somewhat slower than others. Some of our other businesses are in, let's say, more growth-oriented segments. And if you are now referring to the oil and gas part of the business, we do not expect that, that part will be growing very much. Maybe you can add Timo.

Maybe just to comment on the process industries in general. So we have, of course, built a strong backlog during the year in process industries. And when you look at the coming sort of frontiers that should also contribute to the revenue growth picture. But of course, the growth target is really through cycle. But if you look at sort of 2, 3 years forward yes, it is going to contribute.

I think it's clear what you're saying the recovery. I mean we saw, especially within the short service business, we saw a softening up during the COVID year, which has actually coming back. And as we've also seen the orders which you have also seen that we -- in many of the division there in process automation, we will be seeing good growth. So I mean, when we say 3% to 5%, it's over business cycle. Of course, the recovery demand that we are seeing after COVID is, as you have seen, on the orders much, much higher than that. And we do, of course, to believe that this will be delivered out and we will see good growth -- recovery growth, which is higher than these numbers short term. That's pretty clear.

And if I could follow up on the margin target. When you look 2023 to 2025, '25 or 2030, do you see the further potential beyond the 15% or do you think that remains a good guide [indiscernible] can you say which are the 5 remaining low profitability businesses, which 3 lifted up into [indiscernible] on Slide 16.

It's a little bit difficult to hear some of what you're saying. But the 15%, it's a target we have said to be on '23. But Timo also in his presentation mentioned that we are not planning to go back under 15%. Of course, we do expect that many of our business will continue to improve, which is normally as we are focusing continuous improvement. So see it as an in-between target. We'll come back when we have reached our target, which I clearly said that we are not there yet, even if we are moving in that direction, we'll come back with new targets, of course, in the future.

And we have lots of questions coming through, through the chat tool, and I will put 1 through here. It comes from Ben Uglow. And it says it refers to you, Timo, and 1 of your slides, where the majority of growth divisions had 17% margin. But the profitability were at an 11% margin on the other -- on the left-hand side. Could you say what signals when the division is moving into growth? What are the criteria and what are the signs of growth?

Yes. So yes, thanks, Ben. So I think Björn spoke about this. This is not like a set threshold. It's not like automatically when you are above 15% boom, you become a growth division. That's not how it works. It is about this topic about are you performing to full potential. And Björn mentioned that, that means we look at the competitive landscape. And if we are performing in line or better than competition, that should be a strong signal that you can move to growth. And of course, these then combined with a revenue-weighted average give the margin for the group. And that way, we think we drive the best possible mix for profitable growth. That's how we think about it.

I mean I can give you an example. For instance, E-mobility, as we will hear more about later on today, it's, of course, not on a profitability above 50%, but it is definitely in a growth mode.

Thank you. And I believe I have a question here in the conference room. There is someone, if you just hold on a bit, you will have a microphone coming through?

Yes. It's [indiscernible] from EFG. Living in [indiscernible], I get a lot of anecdotal evidence from ABB engineers. And it seems that taking out complexity of the structure, it's somehow drops down to the units. So what I hear is that you work a lot with hubs and some claims they have now even more work with administration another issue seems to be work -- using KPIs, cash flow and net working capital that somehow they're reluctant to order enough components and material. Is that just anecdotal evidence? Or do you see some issues there? And how would you tackle them?

I think we have many of the business area heads and a couple of divisions, we will be able to talk about this a little bit more. I think that I'm not saying that what you're saying is wrong. I'm sure that there are places where it can be seen when you have been used to how ABB in -- working in the historical way, I would say that when you're looking at our divisions, how they operate in the market, there is a lot of collaboration between the different businesses, as we say, smart leaders collaborate. We have certain hubs when it comes to technology, especially when it comes to software. These software hubs is to create environment for specialized, competent employees. China is an example, Poland and other ones where we have a lot of software development at the moment. And these are being, of course, governanced by the different divisions and they decide what kind of resources they want to have. So it's very much up to each division, how they drive, but there is also a lot of collaboration between the divisions. But please, you will have a good opportunity when we see the businesses to talk about this. They are all here today. And the whole afternoon will be related to them and their development. So yeah...

I just want to say that we are definitely not limiting in any way, ordering of components in the situation or anything like that. And if we look at the inventory numbers of the group, they also kind of show it. We have been very clear that in this kind of business situation, it makes sense to have the right inventory in place. And then when you work on your net working capital, this is also a great time to drive customer collections when the market is in this kind of situation. So we are not giving any kind of central instructions on how you should run the operating free cash flow. It is fully up to the divisions to decide.

Okay. So we do another question from the conference call, please. Andre from Credit Suisse. Your line should be open now.

Can I start with 1 on what you talked about pushing responsibility further down into divisions and going further into decentralized mode? Could you talk a bit more about that? And can you tell us whether this will change the remuneration structures of your managers below the divisional management level?

Yes. Number 1 is that, yes, the accountability in the divisions, we have moved that for 1.5 year ago. But many of the divisions, I mean, which we have seen continue to have complex structures. But many of the divisions are moving into much more straightforward, clearer way of operating. And I think that will drive performance going forward. This is, of course, a long journey. We've been only operating 1.5 year. And I've done this with many companies before. And of course, this is a journey that will continue to drive performance in the different businesses. But I must say, I'm really encouraging how many divisions actually have simplified their structure. I think Marine, which you will hear later on, is 1 of the 1 where we also now have clear P&L responsibility further down in the organization, which I think is going to help them to improve the business. But yes, it's a journey. This will take time, and that's why we are not on the top of where this company can perform. It's -- we will continue to become a little bit better every year, but it is hard work. I can assure you that. Timo?

Yes, if I can just comment quickly on the remuneration KPI. So it is the possibility to the business area leaders and the division leaders to further put specific number of KPIs to the teams in line with what Björn just said as long as they are auditable. So that's how we think about that. Of course, we don't want to have a huge fragmentation. But if there is a specific business inside Marine, and you want to drive the performance in that area, we can also give specific KPIs in that dimension as long as they are auditable.

I think it's important here that you're now -- from centrally, we follow the divisions and the business area that is -- and the business area, they follow the divisions, but also product lines within that business, of course and transparency is a key to be able to fix things. You need to know where you make money and where you don't make money. It's pretty clear.

And if I may follow up on that. Does that leave scope then for ABB to become significantly more than 20 divisions, maybe further down the line?

I don't think we have any targets when it comes to number of divisions. We make sure that the business here, they decide what is the right you saw last year motors in motion, he actually divided motors and generators up into 3 divisions, which is operating today, which has given a much better transparency and a better focus in the businesses. And now this year, of course, also electrification has taken that direction when it comes to service. So yes, it can change, but it's up to the business area where they think it's the right structure.

And my second question, if I may, is on acquired growth and the system that you laid out. Is that something that you expect to deliver already in 2022? Or we're still in the early stages of building the pipeline and doing due diligence, et cetera.

No. I think it's a huge work that is taking place today in the divisions and in the business area to identifying potential acquisition candidates. And you need to know the different businesses and you have to understand the business if they can add value to the businesses. So we will continue to build this backlog of potential M&A candidates, when and exactly this will be done, it's, of course, always related to who wants to sell, what is the valuation at the moment and what are we prepared to pay for it. But this can change a little bit suddenly that is a little bit tougher in the market, and there will be many companies available or suddenly someone decide that now it's time to step out because it's -- you need to maybe utilize ABB scalability that I talked about before to drive the business even further. So that can be many things. But definitely, if you don't focus on it, it will not happen. And now it's a big focus in the different division. I can assure you that.

And I will take another question that come through, through the chat tool here, and that's aimed for you, Theo. And it says how important is ABB's offering for resource efficient solutions to achieve your sustainability targets? And does this give your ESG strategy and an advantage over peers?

Okay. Very interesting question. Short answer is yes, in my humble opinion or in my real opinion. As I mentioned, our strategy is really going across our entire value chain. So whereas in the past, many companies really focused on doing the right thing in their own operations. Today, we say we want to lead from within our own operation, but we want to drive maximum impact across the entire value chain. And Björn, you mentioned energy efficient motors and drives. It's an example we would like to talk about because it's very clear in terms of what energy efficiency, for example, means or resource efficiency. But the target that we have set ourselves to help say for our customers, which is a Scope 4 target more than 100 megatons of CO2 in 1 year in 2030 is 150x more CO2 reduction than ABB becoming carbon neutral in our own operations. So it's 1 example, the circularity approach that I introduced before is another one. Again, where we will apply kind of a really hard-core KPI-based approach where we can then drive circularity both within ABB, but also for our customers in many different dimensions. So short answer is yes. The long answer is also yes.

And I'll squeeze in another 1 from the chat tool here, which I think the answer may be quite short. And perhaps Timo well, or Björn, it's come from Henry Golson, and he says, the way you spoke about the 15% margin target made it sound like a new trough through the cycle target from 2023. Is that the correct understanding?

Yes. I mean, I think since I started here in the company, I said ABB with the core competencies we had, this is definitely a 15% or above company. This is, of course, nothing you can do overnight. It's a lot of hard work with the different businesses. But it's correct that we believe when we go over 50%, we should not go back under 50%. That is correct.

Very good. And we'll take another question from the telephone line, please. And Daniela, I think your line should be open now.

I just wanted to follow up on some of the organic growth questions earlier on. But in the last 12 months, your order growth has obviously been double digit, I guess, probably lead time is extended given the supply chain issues that you've mentioned. If we think through the cycle on your guidance of the 3% to 5%, given next year is probably going to be a lot more than that, looking at your order book. It means the outer year seemed quite low. But can you talk through this? Sort of what is wrong on this? Is it that actually you can't deliver this for 2 or 3 years, what you currently have on your other book or how should we think about that?

Maybe I can answer this. I mean, we are not really guiding for next year. That is number one. The 3% -- or the 4% to 7%, it's actually over business cycle. We are in the recovery phase from the COVID, which required an exceptional -- I mean, we -- many of us have been in the business for many years, but we haven't seen anything else. We're seeing huge growth numbers. It's a huge demand in the market, and we have a big order book that we will deliver on. But we haven't given any guidance on that part. So of course, from short-to-medium perspective, of course, there is an upside to that. That's quite clear.

And we'll continue with another question from the conference call, Martin at Citi. Are you with us?

This is Martin with Citi. Just to talk about your acquisitions. You've talked about 5 or more acquisitions per year, which I guess means that these will be relatively smaller. But you've also mentioned about this growth difference to some of the peer targets could be because they have software businesses. You've also said that on a like-for-like basis, you're not undergrowing peer or you shouldn't be. So just to get your sense, do you believe that not having a larger vertical software business that doesn't impede your customer offering or impede growth in any way, but you feel that this, I guess, slightly different business model that you've taken against the Emerson on Schneider, Siemens is certainly the best way to grow ABB? That's the first question.

I mean, we have nothing against software businesses, and we are developing our software business as the day goes on, and we are making that a bigger part of operations what we decided not to do is to go in and to buy a big software company, platform company and pay the multiples that you need to do and to get the synergies out of that. But of course, if you have a big software business in your portfolio, it's, of course, never negative from that perspective. We -- but what we are doing with our portfolio, we are actually building it on our 21 divisions and our #1 or #2 position in each of these businesses. And our offer consists of what I said from the beginning, 3 things: pure software offerings and digital services. That is growing faster than any other part of our business. We have the software embedded business. That's why we have 60% of our -- all our R&D engineers actually focusing on software development. And the third 1 is the traditional. So to stay a leader in the segment, in the business we operate, we believe it's not enough to be a software supplier we need to deliver on all these 3 offerings and to be a leader within that. That's what we're trying to do. We will not buy a software company because we want to have a software company. It actually has to be synergic with the business we operate. So we could think about buying a medium-sized software company if we really saw that, that would add a lot of value to our businesses, that is pretty good. And we will make a business case from that. So it's not that we don't want this part of it. We don't say that it's negative, but we think we are well positioned in the businesses where we operate today with the offerings that we have.

I would say that looking at the return on capital employed for a very long term is 1 good financial metric to then see if these strategies are really sort of working in a comparable way. I'm not talking really long term.

That's really helpful. And a second question, just on buybacks and cash return, you've given an updated framework there. Should we infer from that, that the proceeds of the announced disposals will largely come in a buyback? You do seem to suggest that divisions will fund our acquisitions from cash flow. Just to clarify, if that's the best way to think about it is it too early to tell given that some of these disposals have yet to complete?

Well, we think that cash is cash, basically, and cash comes from certain things, and it goes to the balance sheet and then we look at our capital allocation principles to deploy the cash. And oftentimes, the best way to deploy and the best return comes from organic R&D. So we recognize that as well. And then when you need technologies and speed you do acquisitions and sometimes when you have an opportunity to consolidate, you also do acquisitions. And then we work that model continuously. We understand that for ABB to be, let's say, net cash positive or neutral is too strong of a balance sheet for long term. And that's why we are saying today that we can also work with the balance sheet where we have quite a bit more debt than currently. But these are, of course, long-term things for us to think through. I think what is really, really important is that we are really making this company performing better, higher margin, also lower cash flow volatility, and that will give us further financial flexibility.

And with that, thank you, Mark. And with that, we'll have to make that the final question for this session. And with that, we will sort of start the next phase of this agenda, which takes us into the topic of sustainable transport. In this session, you will hear from all the business area leaders as well as a couple of the divisional heads, and they will each talk about how their offering fits and ties into the special topic of the day, sustainable transport. Björn will make a bit of a short intro to sustainable transport topic, and we will start this off by looking at the video, and Björn will take it from there. [Presentation]

Thank you, Ann-Sofie, and I have the privilege to kick off the more interesting part of the day. We will talk about what can ABB offer, but we will also talk about what is the potential within the area of sustainable transport. It's also quite clear that in the part of the ESG transformation of the way of moving to carbon neutrality, this sustainable transport will play an important role. When you look at the portfolio that we offer within this area, it's quite exciting. It had some products and services that are already in the mature part. That is already setting good deliveries and good performance and growing strongly. And then we have the other side is more on the emerging side, new technology, new products, which are in the beginning of the growth period. And all of these businesses are actually contributing to our sustainable drive. So when we talk about sustainable transportation, we can see that approximately $3.2 billion of sales from ABB is within this area. It represents approximately 10% of our business. The 1 that currently are the biggest. It's the marine side and the rail side, but we have many other exciting that you will see from the different business that are growing quickly and becoming a bigger part of our business. The other interesting part is that this part of the market is actually growing at a pace of approximately 9%. But ABB is outgrowing the market here. We actually have a growth rate of about 17%. And what is driving this? Of course, it's regulations, it's technology. And as we talked about before, a new buying patent or buying behavior of our customers. So after a short break, we will go into details from the different businesses. And I really encourage you to follow us all to the end because we're going to show some of the interesting that makes ABB tick for the future. So thank you very much.

And I just want to say, with that little teaser, it's now time for a leg stretcher, both for us here in Zurich and you're in front of the screens. For you here in Zurich, there is coffee, et cetera, available towards the back of the room. And there is also seating available just as a COVID precaution. Please use those. And I'll see you back here at quarter 2. Thank you. [Break]

And welcome back. I hope you had a bit of a coffee booster, got the energy up. At least we did. That's good. Not that our next presenters need it. We will hear from Electrification, Tarak Mehta, Head of the business area; and also Frank Mühlon, Head of one of the divisions. And with that, Tarak, please.

Thank you. So on behalf of the 52,000 colleagues of Electrification, I welcome you to what we believe is a very exciting future for us in Electrification. We're going to focus today on sustainability and sustainable transport. So when you look at what is driving the business when it comes to sustainability, it's very clearly decisions made by government. But very clearly, the focus on sustainability. The more the world focuses on sustainability, the better the business is for ABB's Electrification business and our colleagues. Why do I say that? As the world shifts its energy from fossil fuels towards emission-reducing technologies at energy forms like electricity, the IEA just came out with a very definitive forecast, and that says electricity as a source of energy will grow twice as fast as any other source of energy. So as we add more people, as we improve the quality of life, as we focus on emissions reductions, just keep in mind, it just means even better business for us. We over the last years as a team have developed some market-leading technology and some strong positions, one of which Frank Mühlon has had the opportunity to lead, where we've invested a lot, and he will tell you his story and his business story in terms of where we are headed. When we look at sustainability, you heard from Theo about how we focus on our own assets, our own manufacturing, our customers' assets and their own operating organizations. We see plenty of opportunity. Sustainability is also driving the need for data. The digital world means more data centers, more volume of information that goes between the device either to the edge or out into the cloud, which also drives the need for electrification. When we talk about e-mobility, I will not steal Frank's thunder. He'll give you his perspective on what the future of the business looks like. But today, as I stand here, almost feel proud as a parent that we have the opportunity to graduate one of our star pupils away from Electrification into a world of his own, on his own and with his own team. And Frank will give you his perspective on what that looks like, what the future looks like. I will, on behalf of all of us, give you a perspective of what did it take us to get Frank and his team to where they are today. So when we talk about powering sustainable transports, we talk about how does it fit within the context of ABB. So as you heard earlier today, the ABB Way is the glue that brings the entire company together. And within Electrification, we all, for now many years, have stood behind safe, smart and sustainable electrification, both for our customers, but let's not forget our partners. As you heard from Timo, in the case of electrification, more than 50% of our business goes through and via our electrical distribution partners. All of this is made possible by the 50,000-plus colleagues who make up the Electrification business. A very challenging period over the last couple of years. But nevertheless, you've seen the kind of improvement in the business performance since 2019 that this team has delivered. So what is it that we're going to do? How are we going to get to a safe, smart and sustainable future? Very simply, focus on the customers. When a customer thinks about solving their problem, they should think about ABB's Electrification business. Our colleagues. Repeatedly in the customer surveys in our NPS score, the highest score we get is our colleagues. It's the people that interact with the customers on a daily basis. So how are we going to make an impact in the customers' processes. Very simply, the 20-plus external design awards that our colleagues have won recognized both by industry, by associations and by customers of developing very innovative solutions, executed through an embedded software, through a fully functioning software solution, taking advantage of digital processes, you can imagine one that is in deployment today. This exact way of working with the customers is what we use in our service business, remotely helping customers in far-off locations where we cannot send our colleagues, which we would normally do in 2019 and earlier. We're able to through visual means, virtual reality lenses support our customers to make sure their operations stay on track. So it's really digital, combined with innovations, making a difference for our customers. So let's take a look at one example. Today, it's all about sustainable transport. Within sustainable transport, there are segments which are mature like rail. You'll hear from Morten later on, on the success that we've had in motion in the traction side. We also got a significant portfolio of rail solutions when we procured or when we added GEIS to our portfolio, all of which means we have a mature business in rail, but where we have a leading position. So if you look at the 4 segments that make up about $8 billion of market opportunity for electrification, our team is #1 in 3 out of the 4 key segments. Frank will talk about what revolution that we are experiencing both in terms of orders, but also in terms of technology development when it comes to the automobile, whether it is the bus or whether it is the car. So we believe this is a hot market. And to give you a perspective, over the last 4 years, this team, led by Frank, but nevertheless, 1,000 colleagues in his organization plus many more in other parts of electrification, whether it's marine, whether it is shore-to-ship electrification, we have seen growth rates which are twice the market, 22% growth rate on average over the years. And you've heard about the key drivers. It's really the ease of use today that we're looking for that is driving the growth for us in electrification. What do I mean by ease of use? If you own electric car, the ease of use is trying to find a charging point where you can connect your car. Ease of use is the customer interface you face when you have to qualify as somebody allowed to use a charging station. These are the opportunity areas that we see from the regulation side. We believe the days of incentivizing electrical vehicles are probably coming to an end, whereas the scale adoption of electrical vehicles are giving us a fantastic opportunity because for every station in the highway that has 4 or 5 cars that can be charged at the same time, there's a medium voltage substation you need to feed power to that. I will give you an example through a couple of actual deployments we've had. So the technology is moving at a very fast pace. The cost of battery, the cost of electrical vehicles, the cost of sustainable transport, even the cost of technologies like hydrogen fuel cells, et cetera, is dropping at a pace which makes them very viable candidates for sustainable transport. Every one of these presents an opportunity for us in electrification, all of which means you need an infrastructure. To power mobility through electricity can only mean good things for electrification because you need an infrastructure to deliver the energy to the transport that is supposed to be sustainable. So we see a good opportunity going forward. I will go through 3 examples, and Frank will go through a very interesting example. We'll go from Los Angeles to Qatar to China and then over to a very interesting example of how the energy revolution will be upon us when the car can exchange power both directions. And Frank will give you a perspective of what that means and what are we doing with one of our key customers. So let's move on to Los Angeles. Imagine a few years from now, this solution will be in place. And the solution is an automated self-guided people mover, moving 230,000 citizens to the Los Angeles airport terminals and back. The combination of our technology, the addition of GEIS's Enviline solutions, acquisitions that we have made in the rail sector over the years gives us an opportunity to provide the Los Angeles airport with a very unique solution which enables the reliability to move 230,000 people, but also provides in the rare event that the grid goes down -- we can't have the airports not having people go back and forth. So we have 40 minutes of storage capacity while we are moving 230,000 people on a daily basis. Technology in deployment, an example of how sustainable transport creates demand opportunities and business for electrification. Second example. If you happen to visit Qatar in 2022 for the World Cup, you will see ABB's infrastructure in play. We're helping the country take 25% of its bus traffic off fossil fuels into electric already in 2022, a commitment to do 100% of all the buses, which is about 1,000 in the country of Qatar, to electric. In order for Qatar to meet its ambitious targets for emissions reductions, they have to move 125 megawatts of power from fossil fuel-based, diesel-based buses to electric. 125 megawatts of power, let's give a perspective what does that look like. That looks like 40, 40 30-story buildings. That's a huge amount of power. It's equal to as much power as 45,000 homes need. This power infrastructure cannot be done overnight. It has to be planned. It has to be managed. It has to be protected. And we have to make sure all of the grid that is supplying power to different parts of the country of Qatar are well balanced, well protected with reliable power. So not only do we have an opportunity on the charging side, which Frank was very happy to get as an order, a fantastic opportunity to help the country move towards this emissions target, but it also created a need for infrastructure, where we're happy to supply the medium voltage solutions you need for every 4 or 5 of these buses that need power overnight or during the course of the day when they are moving people around. So going from Qatar to further East to China. A very interesting pilot is being run with Jibei province, which is right around the Beijing area. We're creating a virtual power plant for the utility. It's a 25-megawatt block. If you think about it as a LEGO block, but that is the first piece of a 10-block virtual power plant network that will have 225 megawatts of power. And what does the virtual power plant do? As all power plants, it manages demand and supply. It makes sure there is enough power generation to match consumption. It ensures that the protection schemes make sure the critical infrastructures are up and about, but allowing the most optimal use of renewable energies. And this virtual power plant is actually a reality. We who have been in the utility business for many years have talked about a virtual utility. Here is the first building block, which is of significant size and scope and scale. And thanks to the technology of our colleagues developed in China, supported from a global dimension, we're deploying this in this particular province with the hope and the goal of making a 225-megawatt virtual power plant concept spread across a couple of hundred kilometers with 12 million people supported, protected and with high level of power reliability supplied by ABB's team in China. So that's a good example. Now to perhaps the highlight of the presentation today for Electrification, which is a proud moment for all of us. We have invested. It has been painful for the rest of us to support. But nevertheless, up to $230 million of investment in the business. It's really great to see how this team, which is now almost 1,000 people adding quite a few people per day, is growing at a pace which is market leading. It's a technology where almost half of the $230 million is in R&D. It's a growth which puts this business in a #1 position in the market. That's how we believe. It's an R&D portfolio which, I would challenge, is among the strongest in the market, and we're ready to invest more. This is our E-mobility business, which when Frank started in 2017 and earlier was a very small part of the portfolio. But it's a big driver of the growth as you see in Electrification, even in the third quarter and moving into the fourth quarter. So what do we see with this business? And why is this business and the team being asked to be part of an IPO? This is a business which we believe will grow from a charger-based to more one that's taking care of the bus people that I mentioned to you of Qatar and many others, to take a look at the maintenance of the site, to support the customer, make sure the reliability is there. It's a business where you can imagine an apartment complex with 50, 60 automobiles. Provides not only the infrastructure, but also helps maintain that infrastructure to keep the reliability. It's a business in which the information that we collect from the customers, including the power consumption, the demand pattern predictions, can be converted into valuable digital services. It's a business where we can define the future of mobility. By we, I mean Frank and the team. So why the IPO? Very simply 3 reasons. It's a business growing far more and at a faster pace than anything else in electrification. We're seeing growth rates above 50%. R&D investment percentages which are a multiple of anything else we have in electrification. So we must manage the business differently than the rest of the divisions of electrification. That's what we have done. We manage this business for growth, but not only for growth. We also need to take a look and see what are the different business model opportunities. We're primarily a CapEx company, but there might be and there will be opportunities for at least the E-mobility business to be CapEx plus CapEx and operational. So can we be there every day for our customers? Certainly, we are there through the connected charges we have, but can we do more? Can we add more value-enhancing services for our customers? Frank will give you a perspective of what he thinks we can do today, but also what the future brings. And then last, but not least, we have an opportunity to create a currency for both mergers and acquisitions, but also a very attractive profile to recruit absolutely the best people in the world. If you want to maintain our leadership position, we believe that graduating electromobility business from the ABB high school gymnasium to a university environment where they're more in control of their destiny, we're not watching them every single minute, but allowing them the freedom while still funding and participating in the bright future of the business is the right solution for us and also the right solution for this business, as well we believe also the right solution for the ABB shareholders. So we've had good support. So we're looking forward to it. I won't take any more of your time, but hand it over to Frank to walk you through what the bright future this business holds and also a little bit about his own personal journey and this business' personal journey over the course of the many years that he's been leading the business. So over to you, Frank.

Thanks. Yes. Thank you, Tarak. So it's really an exciting business. I mean I can say this, and I can say this from the bottom of my heart. When Tarak asked me 2017, "Frank, would you like to join this business," I was -- before this, I was running $1 billion businesses globally. Okay, this tiny business. I mean, okay. But very exciting, very nice fit and I was in, right? So I was -- at that time, the business was at a run rate of $40 million in orders to give you a number. Now you saw the number earlier, we are at a run rate already beyond $400 million. So that is a business growth you do not see anywhere else in ABB. And if you think about the drivers, why that growth and what is happening, we see in a lot of countries a regulatory push towards greenhouse gas emission reduction, electrification of transportation, exactly what we discussed here today. And so to give you a couple of examples, you see United States. You see the infrastructure bill, the Biden bill. You see in Germany a strong push now. You see in the U.K. just last week or 10 days ago, there was an announcement. Every new home to be built needs to have an AC charger in there. So it's these type of regulations, plus obviously the factor, if you drive an EV, you'll love it, right? So it's really becoming the new norm. And so this is a great business to be in. And now let's have a look at what type of business it is. So let's look at the size and the shape of this business. So as Tarak mentioned, $230 million invested over the last 5 years, half of that in R&D, which brought us to where we are today. So we had last 12 months a run rate of $263 million in pure revenues. And that reflects the growth of the last 5 years, a 57% compound annual growth rate. We sold more than 500,000 AC chargers so far, more than 25,000 DC fast chargers. We're in more than 85 countries with our charging equipment. Have about 1,000 employees and adding every day. And out of that, more than 300 are R&D. And they generated more than 300 patents already, and we have about the same amount in the pipeline. So -- and these numbers are for real. So it's not a projection or whatever. It's the current status. It's the real numbers, and that clearly puts us as the #1 in this market. Also, it's a well-diversified position we have. So if you look a bit at the allocation, this $263 million, about half of that is happening in Europe, about 1/4 in the Americas and about 1/4 in Asia, Middle East, Africa. Now looking at this fantastic number of $479 million order intake in the last 12 months. Again here, nicely diversified in the customer base. So we supply to CPOs, which is charge point operators, the guys running the equipment into -- then into public transportation, which is projects like the Qatar one. Then home and destination charging, car manufacturers and fleet. Now that business is also special, right? It's special because it's at the crossroad of 2 industries. So we hear ABB traditional electrical industry. So we know the rules. We know the game. But there's also the automotive industry, completely different set of tools, different parameters. And now when you go with your car and charge, actually, you bring the 2 together. That's exactly the point where it comes together. And so you need to be able to speak those languages to be successful and ultimately to offer a good user experience to the customer, to the driver, which is what we want to do. The business we have is kind of clustered -- vertically integrated and clustered in 3 categories. The majority of what we do, what we're very well known for, is the charging equipment, the AC and the DC chargers. Then the second pillar is all sorts of digital services to that business. So it's B2B and B2C digital services. And the third pillar is really independent of that, even agnostic to the hardware, pure digital offering Software-as-a-Service for advanced energy management and fleet management. Looking at the portfolio from the hardware perspective. So we're very proud of having the widest portfolio in the industry. So our portfolio ranges from a low-power AC. So that's the charger you typically have in your home or at a workplace, where you have a trailing time of a few hours and can easily charge up your battery. So this is a normal grid connection through your home. And that's where the conversion from the AC grid into the DC battery happens inside the car. So that's then an -- this is why we call it an AC charger. And then we come in the world of DC, so direct current charging. So that's where the conversion happens outside in the infrastructure. And there, we start with a low-power DC, so like this 20-kilowatt unidirectional and now also an 11-kilowatt bidirectional, talk more about that later. And then we go in the world of DC fast charging and DC high-power charging. So when we talk high power, currently, we talk about 350, 360 for cars, and we talk about 600 kilowatt for bus and truck. Here, we're very proud actually of having 2 product lines. So we have one product line where we have the charging in one piece of equipment. So our typical 50-kilowatt charger which you see at retail stores, for example. But then also the 360 charger, which we just launched a few weeks ago, and a few words on this product. We're also very happy. We call it the world's fastest EV charger. And so how fast is that? Just to give you an idea, if you want to charge 100 kilometers of range, and assuming the battery would be capable of taking the power the charger provides, then you charge this 100 kilometers of range in 3 minutes. So that's almost close to a petrol station experience, but fully on clean energy. And now of course, we know not every car can take that yet, so -- which is why we make that charger very flexible and modular. So you can charge not only 1 but 2 vehicles at the same time simultaneously or up to 3 or even up to 4. And then we have a lot of nice user experience features in there. So -- but that will go too far probably now. But we launched that charger recently. We now have the first installations up in Norway in Bergen and running very well, and we ramp up the production next year for that. The other portfolio line in the fast chargers is the so-called centralized power. So that is a different approach. So think about you have more than 4 stores, 6 stores, 8 stores, 20 stores or you have a fleet of 100 or whatever. Then it makes sense to have the power conversion centrally and different dispensers. So that can also be quite industrial looking like the one you see here. But that's what you need when you run a commercial fleet or for a bus when you have like the overhead connection. So that's the portfolio roughly from a hardware perspective. But that portfolio from a hardware perspective would be nothing if it would not be properly connected. So that's then the digital services you need to give to it to make it a product with a great user experience. So here's an example. A typical example of one of our customers, ChargePoint operator. So imagine you operate hundreds of sites somewhere and these sites are unmanned. They are somewhere out in the wild. Consumers are going there and want to have a service. So you want to know, is your site operational? Are all chargers operational? Are they occupied? What is the utilization rate? Do you need more prospectively going forward? When there is an error, obviously, you want to solve the problem. So we offer a service to make that -- to get remote accessibility to the chargers and can detect problems by about 90% and solve the problems remotely by about 70%. So you don't even need to send a service technician. Then when a car pulls up -- so you come and want to charge. So you need to have the handshake between the charger and the car. So there's a lot of software play there, especially with the new car models coming. Then when this handshake is done, you need to have a handshake with the back-end system of the operator to make sure that you're actually authorized to charge and that the billing process later on can be started. Of course, all the metering, et cetera, and all of that under cybersecurity regulations. So it's quite a complex environment you have here. And to master that is also -- is not easy and -- but if you do, it gives a great user experience. Now back to that example, which was already mentioned on the bidirectional flow of energy. Now when you think about how energy generation goes forward, we hopefully see more and more renewables kicking in. So more renewables also means more prosumers. So you produce your own energy, you use your own energy. So imagine you have a car -- an electric car at home. You have a huge battery at home. So you need to make use of that battery. You need to make use of that bidirectionality of energy flow. So in your home, you can actually make an optimization between when the energy you produce you consume or you charge your car or when you use your car to charge your home or when to tap into the grid or when you want to give it back into the grid. So this is this bidirectionality, and there is plenty of good business cases for you as an individual driver or prosumer and using it in your home. But also, if you think further into a commercial fleet and you want to really make use of a larger fleet and have thousands of batteries -- of car batteries connected and even if you think then about a couple of years down the road, when really we see electric vehicles all over the place, when you tap into gigawatts of batteries, so the virtual power plant, which was mentioned earlier, becomes an absolute reality then. And here, we have a pilot project. I mean we're not that far down the road yet. So we're talking for bidirectionality currently more about pilots. But this is probably the largest pilot project in Europe, together with DREEV, a joint venture of EDF and Nuvve, and quite proud to support that. So R&D is a big, big topic for us. I mean the whole industry is fast-paced. So if you want to stay ahead of a fast-paced industry, you need to invest in R&D. There's no other way. So besides the money we spend, we also are nicely diversified in -- geographically. So whilst our core is Europe, we are also very strong with R&D in China, and we are also positioned in the United States and built out there even further going forward. We currently have about 17% of our revenues in R&D. So we were at the high end, what was shown earlier. But it's good. It's the right business to be in. And also, there was a question earlier regarding software and software play. I think it was addressed to Björn. But if you look here, we have 2 examples. We started our own corporate start-up for fleet management for EVs in Berlin about a year ago. And now we have Amazon Web Services as a partner developing that. Another example is then more inorganically, we just took over majority of a company in Belgium, really diving deep into virtual power plant for residential, et cetera, a company called Enervalis. And so we will develop that model going forward. So -- and there's also been the trend where we develop towards is really to make charging an integrated experience for the user in the home, but also, and that's the picture on the bottom right, this frequency regulation for utilities if you talk in scale. So that instead of switching on a gas turbine, the utility can actually tap into the car batteries and make that a model. But of course, we're not neglecting our core, which is the hardware. And in the hardware, also the journey moves forward. So here, we're currently developing so-called megawatts charging systems. So when I was saying earlier, 600 kilowatts is what we do today. Here, we talk about 1 to 3 megawatts per charging. So that's a solution which is currently developed in the industry. From our position, obviously, we're part of that development and leading it, and we have the first development contracts agreed upon. One is here a nice picture from Lilium, the Lilium jets with electric vertical takeoff and landing. And that will also use that standard and that type of charging equipment. Back to financials, to numbers. So this is our growth. So you saw it earlier in orders and in revenues and the 57% compound annual growth. I think I do not need to walk you through the numbers again. But what you see on the far right side, the $479 million order intake at a $263 revenue, and that's the last 12 months. There's clearly a backlog we have in front of us, which puts us in the nice pace that we will have a very nice revenue next year. And so that is actually a fantastic growth also ahead. So to sum it up, I believe, really, we're in a great space. We're a global leader in a very fast-paced market. We are technology-wise at the forefront of multiple innovations. Sustainability is really our DNA. That's the core of what we do, reducing greenhouse gas emissions through switching to electrical. And by IPO-ing, we can really realize our potential and create a platform for growth. So thank you very much, and I think back to Ann-Sofie.

Yes, let's open up for some questions for Tarak and Frank. Let's see if we have any questions here in the room in Zurich. Anyway, hands waving? No? Then we will move to the telephone line, where we have Andreas Willi from JPMorgan. Andreas, your line should be open. Have a go. And while we wait for Andreas' line to open, I shall ask a question that's come through on the chat line. And it's aimed, I guess, for you, Frank, the teenager coming out taking up a lot of their attention, I think. It's from Alessandro Foletti. He says, I think that both your offering and product portfolio in EV charging are really strong. But do you think at ABB, you also have the brand recognition by the end customer? In the U.S., for example, everybody knows ChargePoint, Electrify America or Tesla, but not sure about ABB.

Yes, that's a good question. I mean that goes back to the business model, right? When I explained earlier that our portfolio is nicely diversified in our orders, so a big chunk were the so-called charge point operators. Electrify America is one of them. And that means that the branding is then their branding because they are customer-facing. Now the industry knows very well, let's say, who supplies the chargers. So this is kind of an open book. To the consumer, probably not that much. But when it comes to the consumers, then it's a question of how do they buy? And they buy -- and here the electrification kicks in again. They buy -- usually when you want to have a charger at home, you go to your electrician and the electrician goes to his distributor. And here we go again, it's exactly what we're strong at.

And so we'll try again Andreas.

Yes, can you hear me?

Now we can hear you. Great.

Okay. I have a question on EV charging and how you assess the longer-term profit pool in that industry maybe compared to electrification overall given the different market structure in terms of having more customers that buy in bulk basically and how that potentially can impact the profit pool. And the question for Tarak in terms of electrification overall. Battery storage is a big topic in the sector. We haven't really heard ABB talk about that in the future. Is that something you look into, something you think would be an attractive expansion for ABB to go into battery storage projects to a greater scale?

So let me then probably start it off. I mean on the -- obviously, we do not give guidance now on profitability numbers. But what I can say is that the gross margins in that business we see is, if you know ABB, we are in a similar territory, right? And profitability, of course, depends then on all the investments, and we already said it's a growth business. So probably before I hand to Tarak on the battery storage, didn't really flag it. But we already built out charging sites, including battery energy storage, which is needed in a couple of cases when the grid is weak or the upgrades take very long or when you have kind of demand chargers and want to cross that over and reduce it.

Yes. Thanks, Frank, and thanks, Andreas. We talked about this solution, for example, for Los Angeles Airport, which is very much about integrating. And the storage is -- energy storage is the battery. So our distribution solutions business, which is the biggest division we have in Electrification, is very much involved all over the world with battery, energy storage and recovery systems along -- not only sustainable transport side, but also we have critical infrastructures, including data centers, packaging the whole thing into one solution. When it comes specifically to the batteries, we are not in the battery manufacturing space. We're not interested in being in the battery space. What we are interested in, and we have a significant business there, is in the management of the energy, management of the protection of the battery systems, but also the exchange of energy back into the grid, both at large scale, but we also have smaller scale solutions that we are deploying in different parts of the world. And to supplement Frank's input when it comes to the margin profile of this business, please do not forget a significant part of this is an AC charger solution that goes via distributors into -- with installers, which has a stickiness to it and margins which are even healthier than what has been mentioned by Frank. So there are good possibilities in that business beyond just the above part of the business, which tends to be a little bit more competitive for sure.

Great. And I see no hands waving here in Zurich. So we'll take another question from the telephone line. Gael from Deutsche Bank. Are you live?

Yes. I have 2 questions, please. The first one is about the EV charging business. So you've talked about a $4 billion addressable market size for EV chargers if I include those cars and buses. But from a profitable perspective, is the opportunity for ABB really in charging stations? Or can it actually be more in the additional low voltage and medium voltage breaks that will be necessary to support the management of all of these millions of -- potentially millions of mobile electric appliances and their connections to the buildings and the grids? So what do you see in terms of the potential market size for electrification in relation to the chargers but excluding the chargers themselves?

So I would say that's -- that market is growing extremely fast. We do not break -- and so far, the industry doesn't break down the utility and the consumer investments in the infrastructure to install what we said is about a $4 billion is the charging -- the charger and the charging infrastructure. But what speeds power, which is what you mentioned, Gael, that is not quantified in a very precise manner. We do believe that as the number of cars go up, as the number of electric buses goes up, there will be a very significant growth on the electrical infrastructure, feeding power into all of those places, and this is exactly in the sweet spot of the electrification business of ABB, with some of the biggest businesses that are globally spread, with service capabilities, which these are new consumers, not utilities, nor they are industrial customers. We have the opportunity to provide not only the electrical infrastructure, as ABB and Frank with his team, the charging infrastructure, but we also have the opportunity to maintain that infrastructure for customers going forward into the future. It's difficult to put a number on it. We would love to have a number on it, but this is always part of the utility spend if it's big numbers. And it's something that we are gathering -- collecting information on in terms of what potential it is. But when I speak to the distributor CEOs, they see this as one of the biggest potential, like it was when LED lighting came up, like it was when the rooftop solar installations came up. They see this as the next really big wave in terms of their own installation opportunities from a turnover perspective. So good profit potential, good growth. Difficult to put the exact number on at this point.

Okay. Can I have a second question, please?

Fire away.

Okay. A bit earlier, Björn has talked about the focus on automation and electrification and about the rising convergence between those 2 on the back of the overall trend towards more sustainability. I guess some of your competitors would add to this that software is increasingly becoming the binding material between the automation and electrification technologies. So I guess my question is, do you think that it's enough to have a software business accounting for about 2% of sales? I'd just like to hear your thoughts about that and your own strategy in this respect.

So let me repeat the question just to make sure that I understood it again given the audio -- some of the -- little bit of the audio challenges we are facing. You're saying we're the merger of electrification and automation. Where do you see the software play the role and being software the most important glue to drive business forward. We already participate. If you look at solutions from -- and you'll hear that from Morten later on. If you look at shore-to-ship solutions from Peter, and he will talk about that along with the ships that Björn showed earlier, in all of those applications, electrification is a key component, a key supplier, key partner to develop it further. We are looking more from a vertical perspective, what does the software, what does the digital solution. And I don't want to take -- steal the thunder, but you will hear that from Peter later on and his team. Those solutions are more for us focused on a particular vertical segment, whether it's marine, whether it's traction, whether it is bus people. We provide software as well as automation to make that application work for the customer, and that software is targeted for that particular vertical. So as we said before, the platform, while it's important, we can get it from Microsoft. We are connected to AWS. We are connected to Huawei. So the communication between the devices and what needs to happen can take place along public platforms or industry platforms. Where we are focused at ABB is more as electrification on vertical solutions, whether it's food and beverage, whether it's electrification of e-mobility, or it could be also solutions for marine and rail. We provide the solutions that put these 2 together.

And then I have another question coming through here on the chat, and it's from Olof Cederholm at ABG in Stockholm. And he says, a question on E-mobility. How do you see growth going forward? Will it be mainly in AC or in DC? And in what segment do you see most growth? Home, public, highway charging?

That's a good one. In both and in all. Now let me try to elaborate a bit on it. So what we see is charging pretty much depends on your circumstance, on your use case. So there is not a convergence towards AC or convergence towards DC or a convergence towards home versus highway. At the end, you will see charging in each and every place where it's convenient to do so. So if you have your grid connection at home, you want to charge at home, extremely convenient. If you can do it at the workplace, perfect. When you have a longer distance, obviously, you need a station where you can do it fast, and you don't want to spend too much time. So that is of the essence. And obviously, if you want to do it fast, you're automatically in DC. So -- and the other one is more AC. So we see in a number of chargers, about 70% to 80% on the numbers will be AC, and about 20% to 30% is DC. Also, different by geographies. China, for example, is more like 60% to 40%, actually. Just as an example, I think Switzerland is more like 80-20. So just to give the difference here. When it now comes to the revenue translation on the $4 billion, however, you will see that DC is, of course, the most dominant one. So I'm not sure whether this answers a bit, but you see it in all -- in the different areas of life. So you do not really go to a petrol station to refill and then are good for the next few days. You charge when it's convenient or when you go shopping, when you're at work, when you're at home and sleep. So this is where you want to do it.

And one of the use cases that you mentioned, the DREEV, is a completely new use case, which most people are not familiar with, which is, can I rent your car battery to do something else with it since 92% of the time the car is not moving? What do you do with that energy? How do you use it? How do you monetize it? These are the opportunities that we see.

And we have about 1 minute left. But Tarak, I will squeeze this in. If you answer, you have to talk double speed. It comes from Ben Uglow and it's, your main competitor in this space believes that it can achieve another 1 percentage point margin increase in the next couple of years. And ABB's margins are still a couple of percent lower than its current margin. Can ABB close the gap?

It's a function of 2 things, and we're working on both dimensions. One is the function of scale. We are in a business where scale matters. And if you are 20%, 30% bigger, that has an impact and you do get the benefit from that. The other one is the scope, and that's where we are actively looking at our portfolio. When the scope is comparable, our margins are comparable. To give you a perspective, in 2019, we said 60% of our business was at 18%. Today, 90% of the business is at 18%, and 10% of our business is around less than 2%. So it's a question of portfolio. It's a question of scale. We believe we are up to the challenge. But more than the competitors, we want to serve the customers and really grow the business with a profitable business even faster.

Thank you. Thank you, Tarak and Frank, for that. And with that, I will get out of your way.

We welcome now the next business area, Robotics & Discrete Automation. And Sami, please take over the show from here.

Thank you very much. Thank you, Ann-Sofie. Welcome, everybody, to the world of Robotics & Discrete Automation. Sustainable transport is an exciting business, and we in Robotics & Discrete Automation have been driving innovation to our customers since many years, and we are one of the leaders of this industry. And I'm very proud of that, helping our customers evolve into this new world. You heard from Frank and Tarak our sustainable transport strategy from the charging side. We support the e-vehicle side from a manufacturing perspective. Now if you look at the underlying megatrends that we were driving automation over the last years, actually, COVID has accelerated all of them. If you take e-commerce, you take the uncertainty, digitalization, and all of them have been really accelerated. And if I use the words of our customer that I met yesterday, he talked about a turbo of his business. Now our customers are asking always for improvement in productivity and in quality. But since 2 years, the word flexibility is becoming equally important. Give me automation, but give me the flexibility to protect my assets because of this huge fluctuation of demand. So we are here to serve our customers to provide them with solutions and flexible automation. What I'm going to show you today, sustainable transport from a bigger picture, the electric vehicle perspective and also the role of automation there. I'll give you a little bit more insight. Second, that we are well positioned to continue to capture above-average market share in this business to drive flexible automation, but also sustainability in that area. Give me automation, but give me the flexibility to protect my assets because of this huge fluctuation of demand. So we are here to serve our customers to provide them with solutions in flexible automation. What I'm going to show you today are sustainable transport from a bigger picture, the electric vehicle perspective and also the role of automation there. I'll give you a little bit more insight. And second, that we are well positioned to continue to capture above-average market share in this business to drive flexible automation, but also sustainability in that area, and resulting in an incremental profitable growth for us. And then I sneaked in a couple, 2 slides at the end, about the wonderful world of robotics and the high growth potential in really profitable businesses outside the automotive at the end. So let's get started. You heard from my colleagues before about the huge demand for electrification of the e-vehicles. Now you can argue about the growth rates. 2035, half of the cars sold will be either electric or hybrid. And we can argue that a 30% growth, 20% growth, we all know it's a high double-digit growth that is coming out there. But what is important also for our customers, because this uncertainty of is it going to be 20%, 30%, 40%, if you are a production head of automotive, how do you plan your capacity? That is why it is so important to provide solutions that are flexible, so can I adjust capacity up or down, or even be able to produce electric hybrids and combustion in the same line. And this is all demand that will drive our solutions in the market. More than USD 500 billion announced investments by OEMs until 2040. Now these investments go across the incumbents, Volkswagen, from Porsche and Audi and so on, go through many of the other great brands here. But you also have the pure e-vehicle players like Tesla and others. And here, we put really only the announced because the non-announced, which are many players that we see in China, at least several hundred million additional investments in e-vehicle. I can tell you today, most of the offers that we actually go with into the market are already electric vehicle. So these are the investments that our customers have. Now the portion of -- for automation and robotization is obviously different. Now I wanted to show you how the world from a combustion engine manufacturing changes into the electric vehicle world. So here, you see a car, very simple, the world of automotive device that in the body and then the chassis. So let's have a look at the chassis. So traditionally, ICE was built out of a combustion engine, a lead battery we all know of, the transmission, highly mechanical, fuel tank and exhaust. Now the big portion of it, obviously, is the internal combustion engine, which is a quite complex and manually designed to be produced by our customers. So it has actually more than 1,000 parts. So what will happen? What will be replaced? So first, the internal combustion engine, obviously, will be replaced by a motor, electric motor and an e-transmission, controller and inverter. We know these 2 businesses well in Morten's area, the battery, lithium-ion and a charger. Now some of our customers use the same platform, and they insert basically the battery in, some others use new platforms. But from a manufacturing perspective, it is important to know that it will change the way that we approach the manufacturing of it. So let me tell you what will change. So first of all, I spoke about the chassis, this is the round part that has the motor on and so on; engine components, this is mostly done by the automotive suppliers, the engine machine; and then the chassis assembly. And then we have the body, we do the assembly, the press and then you do the paint because you paint the body and not the chassis. And then there is this famous docking or marriage of both. And then you go to the final trim and assembly where you put the boxes, you put the seats and so on and then you do a final inspection. So what will change when we go to EV? So first of all, there are significant changes. There are 2 of them. First one is the electric motor assembly, this is the one you see in red, which will completely change into electric motor, with less parts, but easier to automate. So for us, the chances to automate an electric motor is significantly higher than in a combustion engine, and we do that already for our colleagues in Motion. The second is the battery. Now the battery consists of battery cells, a module of batteries and then the battery pack. Now here, we put the example of cylindrical batteries that we know from households that are combined together in a module and then put in a pack, all of this is automated by robots from ABB. Now you can divide this into the philosophy of the manufacturer, you might do the cells yourselves. You might do only the thing, the modules, but most of them do actually the battery packs. So these are the 2 major changes that will introduce actually more automation/robotization for us. And there are 4 other areas that we will see minor changes. But still, the engine components, obviously, the rotor, the stator that go into the system, the chassis assembly. Why will the chassis assembly change? Because the structure of the chassis needs to be more rigid because for safety reasons, when you put the battery in, it needs to be more stable. So there, we have new welding solutions, for example, to make this body more rigid. And then the body shop itself, because of the weight of the battery, you need to reduce the weight of the rest. So use of new materials like aluminum and others, so switching from welding to actually gluing. So these are all processes that we are quite familiar with from our other industries that we're providing solutions for our customers. And then the docker/marriage needs to be more flexible to accommodate multiple types of cars. So you see here fundamental changes, but also minor changes, all helping us to actually have more automation need in this industry. We are very proud that over the last 4 years, we've been driving innovation here. And you can see from the chart, as seen from our colleagues before, 50% order growth from 2017 to 2021, while the market grew at 40%. So we gained market share, and that is great for us. So our customers love our solutions. We expect that the market will continue to grow in the mid-teens. But obviously, these high growth rates are based on a smaller starting point. Now what will be driving this growth? New powertrain architecture, as I mentioned, the motor and the battery, more variants. So customers will ask for having flexible automation to be able to serve all. Lower powertrain complexity, so we can do that. And then new players, obviously, the BYD and the Nios and many others in China, but also in the U.S., will drive growth in this industry. The transition of the total business for us, which is about 20 billion automotive business into the future, you can see that we have an average growth rate of 5% to 7%. But the portion of the battery and powertrain automation is actually growing by 10%. At the end state, almost 100% of the new manufacturing, as I showed you before, will be completely electric vehicle. Now we are well positioned since years, as I've showed you, we've been gaining market share to serve our customers and to innovate in this industry. I've shown this in our last Capital Markets Day, but very simple, we have -- our philosophy is built on core products, which is the robots. We're very happy that we heard also from Timo before we acquired the company ASTI, a leader in AMRs, mobile devices that move around, that will really significantly change how manufacturing is operated and then the machinery automation. All have in common that we have the core product, take the robots, and then we add the software to it. So as we all mentioned, 60% of our work is actually software in the robot. And then we add a vision system, we add a gripper, most technologies will come from us. And then we come to the next level, we build scalable cells, which means they are repetitive, that have -- address a specific solution for our customers and then the smart system. Both will add applications on the service side, but also on the software side, and these 2 will grow with the businesses. So with these 3, we can really provide new solutions independently, but also jointly because we put robots on the machine, show an example later, and we put the robot on the AMR. So all of the 3 combined gives us a unique position in the industry to actually drive even more innovations than anybody in this industry. Now this is an important philosophy from us. What makes us different? You heard this morning that we have a strong technology portfolio across in our robotics, large or small robots, cobots, collaborative robots. Our domain expertise is really unique. We understand the industries. We have been in this industry for more than 40 years driving innovations. How does this come all together with the software? We have a unique simulation tool, a digital twin tool called RobotStudio, and Automation Studio and B&R, that we can actually model the whole line before even touching an asset. So we can take basically an existing facility, look at it, make a proposal virtually, completely virtually, and explain to the customer that this will be your productivity improvement, your flexibility improvement and reduction of space. And that same software that we model with is actually the onetime software for the robot. And think of the efficiency gains and the risk that we're taking away from our customers with using these tools. Then we take that and we model for the powertrain, body shop and many others. We use the same tool to do all of this modeling, and that gives us a huge advantage. Now I'll give you a couple of examples that we are very proud of because we are leaders in this industry. So the first one is we call nondisruptive spot welding, quality inspection of electric vehicles. This can be done for ICEs, but also for electric vehicles where we use really cutting-edge AI technology and ultrasound, we inspect every single weld on the body shop. Now why is that important? Because when we introduce that to our customer, we could -- in the past, 1 person could do 85,000 inspections of welds per year. Today, we can do with 1 robot, 1.8 million spot welds checked. So think of the magnitude of productivity improvement. That's 20x more than what was possible before. That drives productivity, but also quality improvement and it's scalable. So the system is robust. We can scale it across that customer, but also other customers as well. This is a great example of how when we bring technologies together, where we bring here in a battery manufacturing environment, our high-speed track system from B&R that does build a portion of our battery. We do the same for other customers, but because of high-tech reasons, we cannot show all of the videos. But we mount an ABB robot on the track. And here, we are able to produce 45 million units of parts for a battery, that means serving with 1 system 0.25 million cars. And this is unique because we can provide the robot and the track system from 1 hand and the software as well. And this is another example of a scalable battery assembly cells. We saw at the beginning the inspection. So using cameras, we do the inspection of the battery cell and system. Then it comes in. The robot also inspects all the parts of the battery system and then glues and then put the material on it, and then it's done. Again, a huge productivity improvement. We do 40 of these cells and systems per hour. So improving from 20 to 40, that is really huge. And also, we can track back the quality, which is important for our customers. Another great example, this is a simulation that we did for a customer, and we build it. We designed -- this is a typical car seat manufacturing environment where you see waste, people walking around, high inventory, the inventory and the logistics separated from actually operations, and that is not state-of-the-art. So we introduced a new concept for the back-end inbound logistics using AMRs to take actually all the kitted parts, use robots to actually feed the AMRs. The AMRs, which is the autonomous model robots, they go into the factory and they can actually go to the cells that are available. So this type of cell manufacturing is really key because you can adjust the capacity as you go. In the past, you have these rigid lines, and if capacity was there, was good, but if not, then you had a problem. With this new concept, you can actually add capacity or you reduce by adding these type of cells. So you can see here, in this case, we were able to reduce the floor space by 25%, and increase the productivity of this cell here for -- by 15%, but you can also expand if needed. So adding the robots, the AMRs, and the flexible manufacturing cell concept really improve productivity for our customer. And this is the way the future will be. We see that coming across other industries as well, and we are driving these innovations for many of our customers as we go. Another great example, when we bought ASTI Mobile Robotics, we were the first one with a so-called outdoor SLAM navigation. That's a system that actually maps the environment while going and then navigate in the environment. And you can see here that it's actually able to navigate outside, taking huge parts in that plant and move around. If it detects a human, it actually stops. It's called 2D scan of the environment, but it actually learns as it goes. So ASTI was the first one to actually do that. We were able to do more than 60 of these travels per day, which is equivalent to 3 to 6 employees doing that work. But what is also great, you saw a list on Timo's slide, a little that we invested a company here in the ETH in Zurich called Sevensense that actually is one of the first companies to come up with a 3D SAM solution, which is using vision system to actually navigate around. And while doing that, really detecting boundaries, detecting if there are humans and so on, distinguishing between a human and a fixed foundry. Now why is this important? Because traditional AMRs walk -- go around with fixed lines. So you have to put a magnetic line, you put the AMR on, it follows that fixed line. So what happens if we change the manufacturing setting? Take the example of the flexible setup. You change the cells, then you have to reprogram the whole thing. Reprogram means, in this case, you have to pull up all the lines, put new ones in and so on. What if you want to navigate outside? So with this 3D SLAM, we will have the technology to enable these mobile devices to be even more flexible and more productive. Last but not least, I'm very proud this year because we got many, many awards for our newest PixelPaint solution where you're able actually to order your car and put a picture of a cat on it. I don't know why would you do that, but maybe somebody wants to do that. It's a PixelPaint, it's similar to your inkjet print at home. Instead of spraying all that paint that is actually waste, some of you might have seen how a paint shop really looks like, as you can see here, it actually paints exactly, uses the paint that is necessary to do exactly that part. So it reduces, significantly the use of paint, 1/3 of electricity used, and you can paint whatever you want, and it has the same quality, similar to what you have using that big spraying of the paint, less waste and really, really innovative. Our customers really love the solution. We'll see more and more of this coming. We lead through technology. In this industry, there are multiple places you can be with parts of your technology. As you heard before, you could be in the EV body shop. EV body shop, we all have probably seen these hundreds of robots that really do constant work. That is really done and we know how to do it, but there are areas that are really emerging. The final trim assembly is a great innovative place that we are a leader; the EV subassembly; the powertrain battery, as we have spoken, these are all areas that are really emerging. The battery assembly itself is also an area that we will see significant improvement as we need to drive the cost down of the battery since it is one of the most significant cost drivers of the car. And then we have really innovative areas where we're working on are really in the early stage. An example is the battery recycling. You heard from Timo this morning about this great example. We look at start-ups, we look at outside, how can we really make sure that these batteries are recyclable. In there, robotization really can help. And also fuel cells EV, where we're still at the beginning, but we're looking at technologies to support our customers there. Now this all will result in incremental growth. Now the total bucket of robots plus solutions would be a roughly USD 20 billion business. The ICE powertrain portion will go down over the next years. But the EV powertrain and battery will overcompensate for the reduction there, as I explained to you, new technologies needed, new areas. And then there is a less affected part, which is the body, the paint shop and so on. These are areas not affected. So in total, we will see an increase, but there will be a shift inside of this portfolio, and we are very well positioned to serve that market. Now I come to another world, which is the other high-growth areas that we have in ABB Robotics & Discrete Automation. So again, the same philosophy. Fantastic technology portfolio, the main expertise that really go across multiple industries, we bring that all together with our simulation and digital twin tool, and then we can enter new markets. We started automotive, went to electronics, and then general industry, consumer segments and machinery automation. This is really fundamental for who we are because software and the digital part is really core, but we perfectionize also our robots and our solutions for our customers. So what does that mean in terms of opportunities for us? Brought you a couple of examples where today, there are opportunities for us to grow. Now it goes from food and beverage, aerospace, logistics, a high double-digit growth business for us. We started in incubator, and now it's significantly beyond the USD 100 billion business. Retail, driven by e-commerce, and it's not going away. It's actually increasing. Wood and furniture, lab automation. We started an incubator in Texas Medical just before the COVID situation, and it was one of the best decisions we made because really, we could help our customers in the lab to automate COVID testing and many, many other areas. And really, these are areas that are all driven by the 4 megatrends that I mentioned to you, starting by labor shortage to digitalization and e-commerce. So I fundamentally believe that the next 10 years in robotics industry and automation are much more exciting than the last 10 years. Thank you very much for listening. I'm happy to take your questions.

Thank you, Sami. So I try again here in Zurich, see if we see -- have any questions here in the room. Not that -- oh yes, there is 1 here at the front. If you just hold on for a little minute. There's a microphone coming your way.

Yes, [indiscernible] here. Just maybe on the Slide 25, when you were showing the growth rate and the effect of price versus the EV, is there a way you can quantify that -- those effects in percentage terms, how much headwind versus tailwind?

Well, we expect that the portion of the EV vehicle growth will be in the mid-teens. We cannot really predict. You saw my first slide. I was trying to avoid leaning towards this more conservative or less conservative, but mid-teens. So that will be the growth rate that we expect in the e-vehicle. And the rest, which is the combustion, will go down to almost 0. So we see today about 75% of what we deliver our customers are actually all electric vehicle, 25%. And over the next years, I cannot tell you the exact year, but I expect it to go down to 90%, 95%. Obviously, if you look at the really trend of the electric vehicle development, there will be a significant portion of cars still running around as I see, and it depends really significantly on the region. China and Europe more, Americas less. So we'll have that market need to be served. But from a portion of the new vehicles will be less, which is actually what is relevant for us because we build actually mostly new factories. Thank you.

And with that, we'll try a question from the telephone line. Andre from Credit Suisse.

I wanted just to go back to this EV versus ICE debate. And thank you for all the details you disclosed. If we think about ABB-related content, or ABB Robotics & Discrete Automation specifically, related content on an ICE engine car versus EV. And looking at your Slide 24, it seems to imply that you calculate about 2x of the content for EV versus ICE, just comparing the gray down versus green up boxes. Is that kind of the right way to interpret this? Or is there a better number?

Yes. I mean this is not an exact science, these numbers, or we would have put a number on. But yes, you're right; the rate of increase is significantly higher. So we will see a swap in this. And as I said before, just -- this is from the math, 75% today of new investments that are relevant for us are in electric vehicle, and it's going to go up to 90%, 95% quite soon. So -- but your assessment is right, yes.

And if I may, just a second quick question on cobot. I presume this wasn't covered much because we're talking about sustainable transport and applications there are relatively limited. But could you just update us on your strategy in this space? It is obviously a market where the competitive landscape is quite different and your position is quite different in cobots versus where you are in industrial robots. So I just wanted to hear the latest on that, please.

Thanks, Andre. No, we are actually -- this is one of our key focus areas, cobots, and we're very happy that in April this year, we launched a unique family of cobots, GoFa, and 2 other members of the family and more is actually to come. We started actually with the YuMi. We were the initiator of this industry more than, I would say, 6 years ago. And now is the time where the cobots that you'll see them going into multiple places. Now to your question on the automotive side, yes, there are even places in the final trim and assembly that we see also demand for cobots, but more so coming from the general industry, smaller shops, even bakeries, furniture and so on where you have basically the challenge of you cannot change the whole factory, so you look at a section. And if you want to introduce a robot, you need to put cages on. So the alternative, you put a robot without even changing the manufacturing space. So that's why cobots are really great for our customers. Now our position is quite strong in that industry, as we just don't disclose the market share numbers, but it is growing quite well, and it's a great business for us. Although it's still on a smaller scale, much more smaller, but on a higher trajectory growth than the other industries. But it's a core business for us.

Thank you. And I'll take 1 question that's come through, through the chat tool here, and it asks you to give your view on the apparent overcapacity in EV OEMs in China.

Yes. I mean, I think that there was a huge boom that came over the last years. And there might be some consolidation happening already and going forward. I think that this market will continue to grow. And I think there will be a place for multiple players. There will be a place for the ICE manufacturers who really perfectionize this business. But there is also a play, obviously, for the Teslas and the new players as well. But will every small company that wants to produce an EV car will survive? I cannot tell you. But I assume that there will be a consolidation because this is going to be a play of scale, and you have to really understand the battery part, which is really core, and that is the scale play. And the motor manufacturing, it is also a scale play.

And with that, we take another question from the telephone line, please. Joe Giordano?

Two questions for me. Just first, can you talk about the competitive landscape a little bit? Because you talk about being the #2 player in that space. But then on Slide 24, the market share still looks pretty small. It suggests a very, very fragmented market. So can you describe that a little bit? And then secondly, can you differentiate a bit between you're deprioritizing the systems business versus kind of highlighting here some of the integrated cells that you could do that you see B&R technology and Delta robots and ASTI. And so can you kind of differentiate between leaving those big systems orders, but also kind of like prioritizing some of these integrated cells that showcase all of your technologies?

Thank you very much, Joe. So on the first question, so I distinguish the competitive landscape robotics in a couple of categories, there are some pure manufacturers, that means that produce the robot as is; no additions, no cells, no -- not much in terms of solution. Many of the Japanese competitors actually do that. And then we have a big player in Germany who does, obviously, larger systems. And then there's us. And then you have multiple other niche players. You have the cobot manufacturers that are also growing, and then we have manufacturers of robots also in China, smaller ones emerging. So this is the general landscape that we look at. We consider ourselves #2 depending on how you add. If you look at the pure robot numbers or you put at the system, if you add the systems to it. But in average, we are the #2. And this is important for us because as you heard this morning also from Bjorn, I mean, we have to have the certain scale to be able to develop and invest in R&D more than the others, and we are quite capable of doing that. You heard from Timo this morning, we increased our R&D investment by more than 50%. So that also helps us quite well. Now on the other question on the systems side, yes, we decided 1.5 years ago to actually exit what we call the turnkey business. So the total business in robotics and the robotics automotive business going down. But because the system business part is actually reducing. That business, what is it? When we do -- there is a market out there for building manufacturing lines, including all the turnkey to it. High risk. It's a different scale of technology that you need, project management and so on. And in many cases, you cannot even dictate that to use your own ABB robots. So you could be actually building a system business for a competitor. So this is a business we said we want to exit because we want to bring in our own technology and software into the market. And also the margin quality is significantly better in the pure provider solutions business than the system business. So we decided to exit that. We are quite well on our way to finalize that now this year and beginning of next year.

Very good. And we will take another question from the conference call. Martin Wilkie from Citi.

It's Martin from Citi. Just on the fast-growing markets that you mentioned towards the end of the presentation, you highlighted logistics there. And obviously, you have made the acquisition of the mobile robots, ASTI, during the summer. Can you give us some insights as to how that's progressing? Obviously, you bought a technology there, presumably can plug into some existing AV channels to grow that business? Just keen to hear the early progress in that integration.

This is going absolutely in the right direction, like we expected it. It's a high-growth business for us, similar to the logistics business itself. Also we have big plans there. As you also heard when we announced it, it's going the right direction. And there are multiple areas. One is the business will grow on its own. And it's been going over the last years at a significant level. What we will also now do is that we will use our own sales force in robotics to boost the sales there, and that is going quite well. We see demand in automotive, in tier and general industry, also in logistics. So we are not only doing the logistics in the logistics; we are doing the logistics in the rest of the industry. The examples that I've shown you of that manufacturing of a car seat is a typical one where you have the logistics embedded. And there, you need the AMRs. And then you have the bigger solution where we sell the AMRs, plus the modeling software, plus the robots together. So all of this is enhancing quite well, and we have also plans to produce the same AGVs in China. As you know, next year, we're very happy that we're going to open up our new factory. So we will also bring the AMR there to introduce it in that thing. So going in the right direction. Thanks, Martin.

Thank you. And with that, we close this Q&A session. We take a 20-minute break now, and we will meet back here at 3:35. Thank you. [Break]

But they are often also the more energy-intensive industries. So in order to tackle the sustainability challenge, the energy transition, getting it right for the process and hybrid industries is essential. And take this as an example, the example of marine transport as really being a good case also for the wider challenge of the process in hybrid industries when it comes to sustainability. On the one hand side, you've got a growing demand, rising standards of living, growing world population basically means an increase in demand over time. And for marine transport, you can see it here, it's a factor of 2 or 3 growing -- growth in demand that is expected. At the same time, emissions must come down by at least 50%. Or in other words, there's more than a factor of 4 that emissions per unit of transport need to come down. This challenge of our customers is our mission in sustainable transport. And here's how we go about that. We have basically 3 ways in which we're contributing. The first, and you've heard a lot about this already from the colleagues who already spoke, is the electrification of transport. Clearly, electrification offers not only an entrance for renewable energy, replacing fossil fuels in transport, but it also offers a path for efficiency gains in the overall system. It offers secondary advantages like lower maintenance in very many cases. However, there are also within especially the process in hybrid industries, some very hard-to-abate industries where electrical connections don't reach. Energy densities in batteries will not be large enough, so there is a need in certain situations for alternative fuels. So enabling those alternative fuel chains is a second aspect of what we're doing in this area. And finally, across everything we do for our customers, increasing the efficiency, transporting more with less is clearly important throughout it all. Now if you look at this from the perspective of process automation, how do we serve these markets? We have a portfolio of automation and digital offerings. We have the offering from our colleagues in electrification and in motion from where we get world-class components that we can integrate, and that we can integrate together with industry-specific anchor offering as well as the domain know-how we have to form integrated solutions that help our customers to get on a path towards net 0 transport. Now this is not all moving at the same pace, and it's not all equally advanced. It actually spreads out across this S curve in quite a way. If you look at the highest part here, variable-operation ships, Bjorn already talked about our Azipod offering. We came up with that 30 years ago, hybrid propulsion, basically using engines to produce electricity and gain efficiency from how well we operate this chain. We have more than 300 vessels in operation with that already today. So you can see it as a commercially already fairly advanced market. At the same time, further down the curve, and we'll talk about all 6 parts that are shown here, we have 2 other market segments that are part of the marine market. And because of that, let me, at this point, hand over to you, Herr. Koskela, to give you a more in-depth briefing of what we do in the Marine business. Juha, over to you.

Thank you very much, Peter, and very good afternoon also on my behalf. So as Peter already mentioned in his briefing, shipping industry is on journey to reduce greenhouse gas emissions 50% by 2050. So we in ABB are fully committed to support this transformation with our market-leading [indiscernible] and digital solutions, allowing cleaner and more efficient shipping operation. Let me then play a short animation to introduce these solutions more in detail. [Presentation]

So as also video introduced, there are no 1 silver bullet solution to decarbonize shipping industry. Operational profile, duration of the voyage and size of the ship defines the feasibility of variable technology options and decarbonization paths. Accordingly, ships can be categorized into these 3 categories. In the right side, variable-operation ships are still powered by the combustion engines, but it also includes the [ ethical ] power plant concept and [ ethical ] powertrain for the propulsion system. And in the middle, short-route ships are becoming increasingly powered by either hybrid or even full energy propulsion system due to the rapid development of the marine batteries and the charging systems. The more harder-to-abate cargo shipping segment, this are directly driven by the combustion engines, but also where electrification is contributing to increase the efficiency. I will come back to that later on. So a real transformational step to decarbonize these ships will be when the new alternative fuels are becoming available and commercially viable. But when that will be realized, we will also see new energy converters, such as fuel cells to be at least partly to substitute the combustion engines. We are, by the way, already testing these technology in the smaller vessels quite successfully. So we believe that our solutions are really driving sustainability across all these categories. And this is a significant business opportunity for ABB. So electrical propulsion that our CEO also successfully introduced has been default solution in the variable-operation ships, like cruise ships, for more than 20 years. Our typical scope includes electrical power generation, electrical distribution grid on board the vessel and the electrical powertrain for the propulsion system, including propulsion units as well as the power management system and other control systems required to operate the vessel. And recently, we have been more and more also integrating battery energy storage into these vessels to further optimize the electrical power plant operation. Key anchor product, as again, already mentioned a couple of times here, is our Azipod propulsion system. This is already selected in more than 300 vessels in 25 vessel segments. That solution has a superior customer value by up to 20% energy and emission savings. Just the cruise ships alone, it reduces greenhouse gas emissions by 1 million tonnes every year, which is equivalent to the emission from 200,000 cars annually. It is also powering ice-breaking tankers capable of breaking 2 meters thick ice while transporting oil and gas in Arctic. But it's also utilized in many other specialized vessels, such as a growing fleet of offshore wind turbine installation vessels. So putting all this together, we have a very strong share in USD 2 billion addressable new vessel market and a solid USD 1 billion service market. It is also worth to highlight, as you can see from the list of the products that we have, up to 90% ABB product content, and half of that comes from the other divisions, from Electrification and Motion business areas. This means that we are driving additional value also across the other ABB business. So to ships operating in the coastal areas and inland waterways, such as road ferries or harbor ducts are becoming increasingly powered by hybrid or full electric propulsion systems. Our onboard DC grid power system can integrate any power source such as a combustion engine or batteries or hydrogen cell fuel cells in the future. It provides up to 30% fuel and emission savings in these vessels. And in combination with the batteries and the solar charging system, it enables full electric zero-emission vessel operation. So we are already deploying this solution in these type of vessels all around the world. One example is the first LNG hybrid pack in South Asia operating in port of Singapore. Forsea Ferries have been converted from conventional engine operation to world's largest battery-powered full electric zero-emission ferries. These ferries are transporting 7 million passengers and 2 million cars in a busy ferry route between Sweden and Denmark. In addition to onboard power system at the batteries, we have also delivered a fully automatic ABB robot charging stations in order to maximize the connection time and the charging period, which is very important in such a nonstop ferry operation. Looking ahead, we see this USD 500 million fast-growing market that's very attractive, especially with the rapid uptake of the battery solutions. In fact, today, there are already more than 500 battery-powered vessels in operation or construction, which is 40% annual growth since 2016. Ocean-going and cargo ships are responsible for a large portion of overall marine emissions. Electrification -- sorry, while these zero-emission fuels are not yet commercially viable, stepwise approach, focusing on the energy efficiency, will be key to decarbonize this vessel segment. Electrification solutions such as sub generators or batteries used in a hybrid configuration in combination with combustion engines provide up to 5% fuel and emission savings in these vessels, which is significant considering that the cargo shipping is standing for more than 30% -- sorry, more than 90% of the overall emissions from marine industry. So in addition to these onboard electrification solutions, ABB's solar power solution is connecting the ships to the shoreside power grid. It includes the power connector both on the ship side and on the shore side and also power conversion to adjust the critical electricity with the right voltage and the frequency level on board the vessel. So electrification is representing some USD 500 million opportunity in this segment, which currently looks like that might be a bit modest estimate as there will be a high demand of cargo ships such as the container vessels currently. And we also see increasing demand for the shore power solutions. So these were our electrification solutions to drive the decarbonization in the variable operations, short route and cargo ships. Good news is that our digital solutions are applicable across all these vessel segments and are already utilized in more than 1,500 vessels. So our portfolio include collaborative operations in order to support the products and the solutions that ABB has delivered on both vessels. We also have a wide portfolio of software solutions to optimize the vessel operation such as Route optimization and Motion and Energy advisory. Our cloud-based fleet software helps ship operators to analyze and optimize the performance of the entire fleet of the vessels. And in addition to these 3 categories, we are also focusing on the stepwise development of autonomous ship control system, utilizing the latest digital technologies such as machine learning. So these solutions are comparable to, for example, lane or parking assistance or adaptive cruise control that we have in our cars. We already have some solutions available in the market, such as situational awareness software that provides full augmented view for the ship captain around the vessel. We also have our collision avoidance solutions already available. So in addition to electrification, also our digital solution provides significant opportunity in shipping market. To sum it up, climate change and sustainability is a hot topic everywhere in the world, including the maritime transportation. We have a leading technology to drive the decarbonization in the $4 billion market, including exciting and growing segments like these [indiscernible] cruise ships. We have a solid installed base to drive the service growth in more than 1,300 ships. And there are more than 30,000 vessels addressable with our digital solutions. And as already mentioned, we drive value not only my division but across the many other divisions in ABB. So by that, thank you, and I hand over back to Peter.

Thank you, Juha. And definitely, the marine business is the largest area in which we, from Process Automation, are contributing to sustainable transport, but by far not the only one. So let me give you a quick run-through of other areas in which we are making a difference, battery gigafactories, eMines and alternative fuels. Batteries have, of course, been produced for decades. So what's new about battery factories? I think a lot if you think of the number of times people have said battery and charging today, in the electrification of transport, that is part of sustainable transport, batteries play a major role and the size of new batteries factories as well as their number has literally exploded. So the way we participate in this market is -- that we're contributing with the automation and digital offering, our electrical systems, our instrumentation. And you also saw from Sami that we team up with our colleagues from Robotics there. And on our side, the cell manufacturing, coating, a foil surface with a slurry is actually using many of the competencies we developed in the paper industry and in the minerals industry. So we find good reuse of some domain competence that we already have from other areas. In this situation, we're quite proud of the contribution we've been able to make and the partnership we have with Northvolt. And this is really important in terms of reducing the cost of sustainably manufactured batteries and enabling those new factories, which is, of course, a rather capital and material intensive business to also come up faster. It's a sizable market already today and definitely a market with also promising future growth prospects. If you think of the boom in batteries, clearly, they need to come -- the materials for batteries need to come from somewhere. And mining is, of course, a good part of that somewhere, especially while we're not having as many batteries in the system for circularity and recycling yet. And at the same time, of course, if you think of the integration of renewables, the strengthening of the grid, conducting materials like copper are also in high need. So sustainability actually demands materials, while on the other side, the greenhouse gas emissions from the mining and mineral sector account for roughly 7% of global greenhouse gas emissions. So it's part of the solution and it's part of the challenge. And to reconcile that tension, our customers in the mining sector are looking at ways to substitute the consumption of diesel and other fossil fuels with electricity. And we're helping them in that process. We, in fact, have recently launched our eMine electrification and automation offering to enable customers to run, for instance, the big mining trucks that are rather large fuel consumers on electric power lines. And if that is already an advantage in surface mining, if you think of underground mining, where the diesel fumes then also through ventilation have to be removed so that actually people can work underground also and vehicles can operate there, then the benefits of electrification and automation in mining are significant, and it goes way beyond just introducing renewable energy sources by means of electricity to the sector that has traditionally been fossil fuel powered. At this stage, the market is still relatively early and emerging. But on the positive flip side of that, clearly showing a lot of growth opportunity, a lot of excitement when we're talking with customers in this sector. And Juha touched upon the alternative fuels, the green hydrogen value chain. If you look at it from an electrical engineer's perspective, basically, green hydrogen is a pathway from renewable electricity through electrolysis into basically molecules. And you use it wherever electrical connections don't reach, energy densities are insufficient and where you need the energy dense molecule that hydrogen is or also further molecules that you can make from hydrogen, where you need those as a fuel or feedstock. So this is also an early emerging sector, but with a lot of momentum right now. We're having on many fronts promising customer interactions here. And it's, again, the competencies we've developed in serving the energy industries with automation, safety and digital solutions, with electrical systems, but also with power rectifiers. You need some very large and very reliable DC, direct current, in order to operate these electrolyzers. That's, of course, something we're very familiar with from decades of serving the aluminum industry. And then, of course, this is about gases for the analyzers, the instrumentation that are used in this market. All of this goes into these solutions to really industrialize a sector in which green hydrogen can only benefit from improving its competitiveness relative to other fuels so that it becomes more of a mainstream alternative. If I look at it in totality including marine, it's a very large piece including the other areas that I've just described also. In Process Automation, we already have developed nearly a $1 billion business in -- or relating to sustainable transport. We've developed market-leading positions. We have a strong growth outlook about this also. And yet, of course, you see the different parts of the market have different levels of maturity. We're proud to say that where the markets have advanced the most in terms of technology, in terms of commercialization, we are confident to say that we have also outgrown that market and we have taken share as we've gone along. And at the same time, on the more emerging pieces that I talked about, we're more uncertain about the exact size and growth rate. But we do see that those are in all likelihood going to grow significantly faster. So these numbers are estimates, but they're confident estimates because greenhouse gas reduction has to happen, including in the energy-intensive and hard-to-abate industries. It won't happen otherwise if we don't succeed here. In addition, regulations for emissions beyond greenhouse gases are also only tightening and the demand for transport will continue to increase. And on top of that, after now a few really low years in the Marine sector, we're also quite optimistic about the cyclic recovery in Marine. Finally, and I really want to bring this home, sustainable transport is deeply embedded in our purpose. And when I say that I don't mean we have a vision of sustainable transport. I mean we have a business in sustainable transport. And each of the pictures you see here stands for a real business offering. We create success by substituting diesel with electricity in this mining application that you see here. These super big trucks running under trolley lines. We address the world's energy challenges by, for instance, what Juha described, offshore construction vessels that build these offshore wind farms more energy efficiently and more agile than alternative would. We had to transform industries by basically combining the power and the process automation under a single pane of glass in one system that reacts within milliseconds to reconcile the reliable power needs of the process type of industries with the volatility of renewable supplies. And we embed sustainability. If you look at the picture with the drone, again, this is real. If you take natural gas as a substitution for coal in many areas, then natural gas has about half the emissions as long as you don't have leakages. As soon as you get leakages, you've got a safety hazard and you've got a greenhouse gas that's about 30x more potent than CO2. So what this application does, this analyzer that we can put on a drone or on a car and combine it with a digital solution, it actually precisely locate these leakages in order to avoid the safety and sustainability hazards that result from it. And finally, we are leading with technology. You saw what Juha presented, our 30 years of inventing and advancing hybrid propulsion and then also increasing the electrical and alternative fuel-based vessels. So with that, I hope we have some time left for questions and answers.

Yes, we do. And we opened the telephone lines immediately. And James from Redburn, your line should be open now, I hope.

Yes. I have 2 questions on Process Automation, one on marine and one on general growth of the whole business area. On Marine & Ports, I think your divisional revenue is roughly flat from 2008, down 20% since 2014. It's nice to hear about some growth segments, but what do you see as the through-cycle growth potential from Marine & Ports, that's my first question. And then secondly, perhaps more broadly on Process Automation as a whole. Can you talk a bit about the through-cycle growth target that you see within the group's 3% to 5% organic? And how do you see that differ between the other segments of Process, Energy, Measurement and Marine?

So if I may start on the Marine part. So actually, quite the large portion of our revenue comes from the service business, and that obviously was very much impacted by the COVID situation, given the fact that some of our customer segments such as cruise was really suffering, ships were not in operation. And that has already now recovered. So we are back in the level of 2019 revenues in service side. So -- and we still have a very strong backlog in that segment as well as many other segments to drive the revenue growth going forward.

If I then continue with Process Automation as a whole, then it's clear that we are both serving some strongly growing sectors, and we talked about some of them today, as well as we're serving parts of the energy industries. I you think of fossil-fired power generation as an example, they're clearly not growing. And so the combination of serving a few markets that are actually not growing with some markets that are indeed growing. And then as you've also seen in the chart that Björn and Timo showed earlier in terms of the profitability versus growth focus, we're clearly balanced. And we have a number of areas in which we rather focus on the profitability, on higher value-added solutions, higher software content, where we would also say, no, if it's just an undifferentiated kind of run of the mill electrical integration job without much value-added potential in terms of understanding the domain, combining it with automation or digital offering, then we will take a more critical look whether that job is for us. So on the whole, for us, clearly, we have areas of driving mainly profitability improvement and other growth. But we're slightly overweighted on the profitability improvement.

That's great. If you weighted on the profitability side, I guess, you're going to have 100 basis points or more dilution from the disposal of turbocharging next year. When you think about hitting, say, the midpoint of your range over the next couple of years, could you say which divisions or even product lines are going to have to be the biggest contributors to increase?

No, I think we're not guiding on that level. But as you rightly pointed out, and as Björn and Timo already shared, the expected exit of the turbocharging business is indeed something that over the last 12 months was 180 basis points of margin difference for us once it would be out. But beyond that, we're not disclosing margin at the division level.

What wasn't asking for the margin, just which areas are going to be the biggest driver of improvement from the rebased level?

Biggest driver of improvement, if we just look at the COVID crisis, then clearly, we've seen our service business across the different divisions suffer. Juha alluded to it already. When people couldn't travel, that did 2 things to us. On the one hand side, it meant that, for instance, cruise vessels on which both our Marine business as well as our Turbocharging business actually have quite substantial service exposure. Those vessels weren't operating, that was one factor. And the other factor was that our service people couldn't get to site, couldn't get to the customers in the same way as before. So across the board for PA, which is a very much sales after service and service after sales proposition, we couldn't go to customers in the same way, and that is why service actually across what we're doing were suffering the most.

Thank you. I have a few questions here coming through on the chat, and we'll take one here on the eMine. And it says, "What is the competitive advantage in this space for ABB? There are equipment suppliers such as, well, Epiroc or Sandvik as mentioned here, and they are claiming similar digital offerings."

Well, I think eMine for us is the combination of electrification and automation offering for the mining industry. And you always have in such markets, the competition between a single vendor standard aiming at creating more of a customer dependency in the long run versus an open architecture that provides customers with optionality. And we have heard loud and clear from the customers we are serving that they look for optionality, open architecture rather than deciding wants to go with a single vendor and then not being able to back out of such a decision. And so as in many other areas, as with our digital offering, as with many areas in which we also combine power and Process Automation, we're committed to open standards here and rather provide an open ecosystem than a vendor lock-in.

And then we'll take another question from the telephone line. Andreas Willi, your line should be open now, please.

I have a question for Juha on Marine. If you could elaborate on 2 things, please. One is you mentioned that the service business there has already -- has by now kind of recovered. Can you maybe explain that a little bit in relation to cruise ships where still a pretty large chunk, 30%, 40% of them are still not running? Have you seen, therefore, already kind of some service activity coming back before they actually go back in operations? And the second question on the Marine outlook more in terms of the equipment sales. What are you seeing there? Obviously, you've had a very large backlog you built up in areas such as cruise before COVID hit. How far out does this backlog stretch because obviously, the new orders have largely disappeared?

Yes. Thank you for the question. Starting from the service side, yes, so even though not all the cruise ships are on operation yet, but all of them are preparing to start the operation, and that has really driving our service growth. So we have been having several activities to prepare these cruise ships to be able to resume operation. So by that, so we are already back at the level of 2019 when it comes to the service business. Then the second piece, yes, you are right. So I think our order backlog, especially in the cruise ship building has been stretching. But the good news is that none of the projects are being canceled. So we have some stretch which means that our growth is more balanced going forward. But again, so no cancellations. And that way, we have a solid order backlog.

And we'll finish off with another question here from the chat tool. And it's sort of a follow-up on the previous discussion on the profitability mandate, et cetera. And it says, "You did a strategic review of Process Automation recently, were there any changes prompted on the back of it accelerating the strategy for PA to improve returns?"

I think it was rather an emphasis on the changes we have already initiated. So the exit of Turbocharging, finding a new home for Turbocharging is clearly one, if you look at an entire division level and then in each of the areas within Process Automation. And I think it was Timo who has said, we've been conducting portfolio management all the way down to what was the [indiscernible] said, all the way down to the single SKU. So in each of our divisions, we have basically looked what is the offering, what are the portions of the offering that makes sense for us to continue offering and where do we make a different growth versus margin trade-off today in the context of the renewed ABB strategy that we would have made differently in the past. And clearly, software and digitalization continue to be important for us. We continue to invest organically in this area and build business organically just because we actually find alternatives that would come from the outside, quite pricey in terms of multiples for the time being. But then I think there's a lot we're emphasizing on pruning the offering at the more detailed level, but there's no big news that we would have to share here.

Thank you very much Peter and Juha. And I know that some of the members in the oncoming business area management team argue that today, we have saved the best for last. So there is a little bit of a pressure on Morten Wierod, Head of the Motion business area as he comes on stage to finish off with the last session for the day.

Thanks a lot, Ann-Sofie. And a warm welcome also from my side and finally, the world of motion and sustainable transportation. And I'm very happy to have that opportunity to present what we do because most of you know probably what we do in traction in our rail business. But we do a lot more. And this is great to have that opportunity to show what a very passionate team of the Motion business area and highly competent people, how they are able to make the world turn while saving energy every day as the same motion. And we are truly believing that the future of transport is electric. So we say that how do we work and how do we -- how are we successful in the field of sustainable transportation? It starts, as always, with our pioneering technology leadership. This is the cornerstone of our success. And as a Motion business, we invest more than $250 million every year in R&D. When you add that together over this longer cycle, you're able to develop a huge portfolio and a common modular platform that we can then redeploy across applications and across industries. And when we add the software over high-performance controls and also our digital solution because today, most of the motors and especially also the drives they are coming already IoT enabled. That means they can automatically connect to the cloud. That be the ABB Ability Cloud or our customers' preferred cloud solution, if that is something else or they have their own solution, or to an edge device. We are ignorant when it comes to that, we let the customer decide. So these technologies, that is what is the foundation. But of course, it's not just about technology. It's all about the domain expertise and that having people with big ears. That means people who listen are able to understand what the customers are looking for. What makes it different? How do we become more successful working with Motion and ABB than working with somebody else? That's the feedback that I am very proud when I hear from customers what they tell me that that's why we work with you in the Motion team. So when we add those 2 things together, our technology leadership and the domain expertise, we are able to put the building blocks that we use in sustainable transport together, drives and motors, traction motors and also part of our industrial motors portfolio, but also the drives portfolio with the industrial side with modules, complete drives, but also the [ end of traction ] converters. Then we're adding even battery energy storage systems, which is a new part of the portfolio that sits on the trains or the buses or the transportation units of the future. So when we put all these together, we are able to have a complete offering. Some customers would like to buy a single product, maybe just a motor. Somebody wants to have a complete aligned propulsion system, a driveline and even adding the battery storage systems, we let the customer decide, and we are able to support them along that direction. Sometimes, we are also working very closely with our Process Automation colleagues like Juha Koskela, we always telling here on stage what we do in the Azipod business, where we are the component suppliers for the great Azipod solution of ABB. But we're also working with third-party system integrators across the world because the scalability and having access to all types of customers, small and large, is vital to our success. So with that, and how do you decide? It's really about setting us up but asking and setting this up like the customers want to be served. That is our guiding principle. But let me rather guide you -- now take you on the journey around the world in a field of motion. So you can see and realize what is this all about when I'm talking about the building blocks and applying technologies into different applications. So I want to take you on a journey, and let's start here in Zurich because I hope that many of you came this morning when you arrived here by train. And this -- and maybe even you came with where it was powered by one of the locomotives that what you see here on the screen. It is the fleet of SBB, where we have a large upgrade program. The train, the locomotive itself, it's still in very good shape, even after running more than 20 years in operation, all the mechanics are really in great shape. But the converters technology and the field of power semiconductors has happened a lot during that same time period. So therefore, we can come there and replace the old converters with new technology, replacing the oil cooling with water cooling to have a better environmental-friendly impact. But maybe more important is to have the energy saving, the higher energy efficiency of the new technology, being able to save 30 gigawatt hours of power over every year. To put that in perspective, it's around like 10,000 Swiss households. And when we add the reliability that comes along with the new technology, it makes that SBB as an operator can do what they're best at and what they want to do is to, as we always know, in Switzerland, is to arrive not too early, not too late, but just on time. So with that, let's move on to the next country and it's an example from the Netherlands. And in Amsterdam, we had the first electric ferry that crosses the canal. It takes about 10 minutes to go across. It [indiscernible] and comes back again. Then it stays for 3 minutes. In those 3 minutes, it needs a power boost for the battery. And there, you have -- you can use our industrial portfolio of converters and drives that powers and give -- are able to give that massive power boost in those 3 minutes. And then it goes over to the other side again and back. And that is the part where we, as Motion, again, using our technology to make this happen. But now we're talking about transportation of people and goods. We can also talk about the transportation, for instance, of minerals. So if we travel up to the north of Sweden, Boliden, they have one of their copper zinc mines, where they have a very high ambition, a very tough ambition about emission-free mining. And how we can, as Motion are playing a role here is to work with the equipment suppliers and the manufacturers of the mining equipment. This example is with Epiroc, who is there making their mining trucks well moving from diesel combustion engines to full electric. So what we do in addition to provide the building blocks again of motors that fits 2 on each axle, one for each wheel, and also that drives the converters that is powering with the right frequency and voltage and current at the right time. So we are able to move here emission-free. But it's not just about this product. We also are the technical adviser and helping Epiroc coming up with that kind of new complete solution. So playing overall in helping Boliden moving towards the emission-free mining in the north of Sweden. And again, if we move across the border, we go and you may know or if you don't, you will move to my homeland of Norway. And I'm sure you know that Norway has been one of the leaders in the applying electrical vehicles across the country. Now the next step, of course, where more or less everybody or at least 70% of all the new cars today being sold being full electric, now the next step is what can we do more? Here, emission-free building sites is one of the projects that is now being looked into and say, because we see that here, we have still large emissions on building sites. So what do we do then? We would help retrofitting an existing diesel combustion excavator and putting in our electric drivetrain. And again, having the building blocks but also the local know-how to be able to speak with the companies in Norway who is doing this retrofit. And of course, the next step having also the capabilities and the know-how to talk with our large OEMs that build now the new generation of full electric excavators. This is what we do in Motion. But if we move over, this is 3 examples from Europe. So let's move over to the other side of the globe over to China, to Asia, and the green ports of China. This is the shore-to-ship connections. As Juha was also presenting what we can do here in this field, we provide some of the building blocks that makes the shore-to-ship make -- how we make it happen. It's about to having, again, applying the technology of drives so that you can turn off the diesel generator on board what produce electricity and using the power grid on land with the right then conversion of frequency and voltage, so it fits with equipment that sits on board. What we can also do here and what we are doing is to connect all these drives to our cloud solutions and help then the operators, the port operators with digital services. That means we are online and seeing the status of the drives 24/7. And that we can know-how that we also can avoid downtime of these things. We know that if something goes wrong, we need to see the maintenance engineer before something happens and not afterwards to fix it. But as we are at the port, let's move on further south across the Pacific on the ocean and over to Latin America and over to Chile and fish farming. This example could also have been from here in Europe because here, we are really looking at the same technology being applied. You heard it already about the ability maneuver with electric propulsion is superior to diesel. So here, you will also see that you're able in rough sea and where you have to stay still around next to the fish farm. We are able to operate safely and better than with traditional combustion system now with electric propulsion. And as a very nice award or the next premium, you get a 20% saving of diesel. So another great example of how you can turn -- do the decarbonization of the marine sector also is form of the fish farms. My next example is up in the air out from the sea. We're not flying, but we are on a cable car. And if you take a ski-lift or a cable car, and it doesn't matter really if it's in the Rockies, in Akaishi or here in the Alps, it's very, very high likelihood that it's ABB motors and drives that makes you come safely to the top and back again. So here is an example from Zugspitze in Germany, the highest point in Germany, where even these examples have 3 records. I'm quite proud -- we are quite very proud to be part of it. First of all, it's the highest steel columns that is built for this kind of application with more than 130 meters. It also has the highest elevation from the bottom up to the top. We're talking about 1,950 meters. So it's a really steep journey. Second, it's the longest span of [indiscernible] the longest journey of a cable car [indiscernible] that makes you [indiscernible] down again [indiscernible] trusted partner or [indiscernible] cable car industry over many, many years. The third [indiscernible] we're able to avoid the noise of buses. At least when you're talking about line 83, which is the 8 buses here from -- supplied with complete ABB setup where we have the full portfolio from motors to -- that drives the converters, the battery system and the chargers. So the whole electrical system beside and then supplied by us working with the bus OEM who makes the complete bus to the city of Zurich. So this is working well. And it's not just kind of it reduces the noise on the ground, it reduces the diesel emission when it comes to the NOx, I mean the local pollution, but also the global pollution. We're talking about the saving of 200,000 liters of diesel with these 8 buses as of this one example. And we have hundreds of buses running with similar system around in Europe today. So I hope you see some of these examples is how we use our technology, our key building blocks. And together with the know-how of our team, to be able to decarbonize the transportation sector and making it more emission-free. And you'll see also here that we are really represented along the maturity curve. The rail and the ski-lifts being more the mature businesses that we have been in many, many years. But we use the know-how and the portfolio to be the go-to partners also to all the new applications, which we want to serve and the new customers, which is coming up quickly. Some already emerging, and we see a good progress already and some of which is still in the early days, still in the cradle. But we know in a few years, they will be up walking and then finally running around. And that's why it's important to be the go-to partner early on because that sets standards in this industry. That's what we have learned across the board. You need to be the first mover and playing on a wide scale. And then you'll be able also to, let's say, buy the tickets in all the different lotteries. So that's the advantage of having a wide portfolio and have done the investment in the past. Today, sustainable transport. It's about 15% of our order intake in Motion. And the margin is -- they are in line with our expectation and the Motion average. So we've come from a very strong backlog because as you've seen, our market here, when we compare, we're looking about the 7%. But we have been growing almost double of the market. And when I look into the future, and I see with the urbanization trends and how the society is developing, the modernization of public transport, that will continue to grow what we see today. But on top, we are adding decarbonization and the need for decarbonizing the whole transport sector. And with that, energy efficiency is also a must. And when you take all this together, then we have a very interesting future ahead of us. And we as Motion, I think we're really well set up to drive it. And we have the right starting point. And I'm confident also that together with the team, we will also capture those opportunities in the future. So with that, I would like to end also with a video, but also to say, I hope you're fully convinced as we are that the future of transport is electric. [Presentation]

And with that, we open up for Q&A. And as per now, we start with a question from the conference call. Joe from Cowen, your line should be open.

Thanks, Ann-Sofie. What percentage of your -- of these drives and everything -- that would you think is digitally connected in your installed base? And maybe how would you compare that to what you're currently selling right now as a percentage of like new sales that are going out the door?

Morten?

Thanks, Joe. The -- what we do today, first of all, all our drives, our large drives that we deliver on today are already what we call IoT-enabled. Still a relatively small percentage is connected at first. But we do -- we have seen now over the last couple of years during COVID that the acceptance for remote digitally connected devices has increased a lot. Some just do because people are not allowed to go on site. And therefore, kind of in desperation, you are able to say and then when you see -- you're connecting and then you're also seeing the benefits and then you don't want to disconnect afterwards. So I think that has been the big -- the adaptation. But -- so today, we're talking -- probably on the large drive, we're talking around 20% that is being connected. But we see now when we are coming up with the new technology, and it's really a plug-and-play solution. We are also very proud that we launched this year, the self-connecting drive. That means that it's automatically just by pushing or clicking on, you are able to automatically connect to the ABB Ability Cloud or also the preferred cloud, if that is another preferred cloud of the customer. So that is something we launched this year, and it's something that I have great faith that we will see a much faster adaptation and more rapid adaptation in the coming quarters and years because this is -- If we make it plug and play and you make it easy, then you will also see that adoption rate will go up also on the smaller equipment.

Can I just clarify quickly that, that 20% [indiscernible] like new drives that you're selling now, and if they click it on to connect to ABB Ability, I assume that opens up like a recurring subscription-based revenue stream?

That would be correct because what we do during -- of course, during warranty, we could use this to help our -- I mean, on customers online. And then it's a question then of course, you -- then it's up to us to show the value during that period so that nobody wants to disconnect in the future.

Okay. I assume he was happy. He's gone quiet. We have a couple of questions here from the chat tool. And one here is on growth, and it says, "With your excellent exposure to global megatrends, including energy efficiency, do you expect growth to accelerate going forward?"

Short answer is yes. And I think we've shown that also both with the last year's performance. I mean, if you look at the cycle over the last 4 years, [indiscernible] did not happening [indiscernible] that you see most [indiscernible] see that a lot of the [indiscernible] into this [indiscernible] The efficiencies [indiscernible] But also [indiscernible] the [indiscernible] see about the future.

And let me just [indiscernible] check if there are any questions here in the audience in Zurich? No. So we'll take another question here that's come through on the chat from Anders Roslund in Stockholm. And it sort of refers to new potential markets. He wants to know if and where you enter into for, say, the heavy truck market where you do not seem to be present right now?

No, we are working with some of the truck manufacturers. I think the kind of over -- But I also see that there is a balance here where it's the over expertise and our kind of where we are really strong is when we are talking about more engineered solution where you need to -- and having a close collaboration with an OEM to understand their cost levels, to understand their challenges and how we can help. When you're able to have that kind of working relationship, then you're able to be -- also we have shown that we are very successful. If we come more on the pure automotive side, it's a bit of a different working environment for those who have been exposed to the automotive industry will know a bit the difference. And I think the truck is a bit of kind of in the middle of those. So we do have collaboration in some areas, and we have even some trucks, for instance, you can see the ABB Scania truck that is running as toward -- between our logistics centers and own factories here in Switzerland in Baden that people in Baden can see on a daily basis. So we have trial installations and piloting. But here, we have still some more work to do and with -- on the truck side.

And I'll carry on here because they keep coming through on the chat here, and now I lost my way here, yes, it's asking about, "Assuming supply chain impact normalize, what is the margin potential for Motion in the next years? Can you further increase from here? And what would the drivers be?"

I think the -- I mean, we have in line with what we have said earlier on our Capital Market Day. We have an ambition both to grow, but also to improve our profitability. And that -- those statements that we made before still stands. So that is clear. And how we do it, it is quite simple in some ways. It's that over 7 divisions in Motions, if they deliver and as I'm confident they will do on their strategic mandate. And I still have 2 out of the divisions, it's about profit -- improving profitability, and they have some more cost actions and actions to follow on that side, while the 5 other divisions are all about profitable growth. So that -- if all follow and which I am confident they will do, they will follow up on their strategic mandates, and that's what we follow up every month. Then the quality of revenue will go up just while the most profitable business will grow more than the others, and we are able to get the improvement of margins -- of those who have still some works to do. But -- so I can confirm our earlier statements that we will also improve the profitability in the coming years.

And I think that's a fine way to end this Q&A and thank you, Morten. And we should welcome Björn back on the stage to close this day.

Thank you very much. It's been a long day. A lot of information, a lot of exciting stuff from ABB. And I take the opportunity to thank you all to bearing with us and hanging in there during the whole day and the whole afternoon. Just a little bit of a summary from this. And of course, this last part of the presentation here, what we've seen from our business leaders that make things happen in ABB. We've been talking about innovation, about new technology. But we also talked a lot about domain expertise, the expertise that we have in all the areas where we operate, among our customers and the long experience. And the third party is the scalability. How we bring our solutions, our products into scale into different operations, but also move between different kind of segments. I think it's been a day where we've seen the real ABB and what makes ABB take. This sustainable transport is an area where ABB is contributing where we are investing a lot. But we're also outgrowing the market. It's also probably the part which is growing the fastest. And in the future, will be a bigger part of the ABB portfolio. The development towards electrification and the automation, which is actually the core of the purpose of ABB. So this development is actually going to support the growth of ABB and also the security to deliver good financial performance also in the future. So once again, everybody that has been presenting, the whole team, everybody that has been supporting us and making this day a great day. And of course, me as CEO, I'm extremely proud to be part of this team. So thank you very much.