ABB Ltd (ABBNY) Earnings Call Transcript & Summary

I wish it was like that every morning when I get to work. Welcome, everybody, to this ABB Capital Markets Day. We have a big crowd joining us virtually, and we have a full house here in New Berlin in Wisconsin, wherever you are, thank you for choosing to spend the day with us. You should know that it's appreciated. At this motion site, we actually host 3 divisions in motions. The biggest one being dry products, but then we also have system drives and service. It's a little bit of a nice proof point of ABB leaders actually collaborating where it makes business sense. It's brand new. I realize I'm biased, but I think it's beautiful. You will see it later on. You will meet the people, those of you who are in the room when you go on the tour. I hope you agree about the beauty. And you will also get to see a little bit of the value creation that Motion generates here on its own, but also together with some of the other businesses within ABB. I know the local team is really excited about showing off their new home. I want to take this opportunity to extend a big thank you to the team. I couldn't have done it without you. Really, really thank you. We want you to be safe when you're with us today. Those of you who join us virtually. I hope you all safely buckled up in your seats. In the room, if for any reason, you don't feel well or 100% today, please reach out to any of the ABB people or reached out to the reception desk and we'll make sure you get the help you need. You saw before on the screen, there was a little noticing Phone is Not Allowed. We actually mean it. We kindly ask you to respect that today, whilst on the premises and a small but important point about restrooms. You find them as you leave this room, both right and left, you'll find them there. Some of you joined us for dinner last night. Thank you very much. You got the chance to meet with the whole executive team of ABB. Today, you will meet with the 3 BA leaders. We have Giampiero, Brandon and Peter. You will also meet with Tuomo who -- this is his home turf, he will proudly present the site later on because he head the Dry Products division. But first of all, we will kick off with our CEO, Morten and CFO Timo. They will talk about the full power of ABB. They will talk about why lean and clean makes sense. And they will talk about why we think that ABB can deliver even stronger performance in the future. First of all, we will kick off with a little bit of a video, but I should also mention that we have a little special feature during the day. Every now and again, the light may go off at full blow Don't worry. We're just making sure you're awake. They will go back to this little cool mellow lighting within short, don't worry. But now we kick off with a little bit of action from ABB. [Presentation]

A warm welcome also from my side, and I think it's great to be here in New Berlin in Wisconsin. This was one of the times when I was in Motion back in '22 before I moved over to Electrification. One of the last things I did was to approve the investment here, which was north of $100 million. So we were a bit kind of even uncertain at the time if the -- because that was a lot of money on one site. Looking back, I think it was absolutely the right decision. We are very proud to show you also where capital -- when we talk about CapEx and capital allocation, what you will see here today is how money is being deployed into United States and around in many of our sites. So I think we were 2 years ago, many of you were with us in Frozen in Italy. Today, we're hearing in the Motion -- one of the Motion diamonds here in the U.S., and I think it's another great example on how really we help customers outrun as you saw in the video, coming up with great technology. So it's good to be back again. 2 years later, for me, the first time here by looking at -- in this role, looking at the performance we've had over the years. But being in the Executive Committee since 2019, both in Motion we've been all kind of part of this journey that we've been on as ABB. And I think one of the key elements, and what we should be proud of, when you're looking at the financial performance is the high say-do ratio. For me, this comes very much from the ABB Way operating model. The ownership to performance, the ownership to an accountability to taking the [ best ] Swiss forward to the next level. So we have been on a good journey, and we have added some of the charts here. You see some of these elements. I could have added also gross margin or order backlog or a strong balance sheet, but we selected on these 6. And what does for me is important. It's about record breaking, doing better than ever before every year, year after year and having an ambitious team that own the performance that each division today, we have 16 operating divisions who owns their own performance, and they work together where it makes sense for customers or where it makes sense, like on this site where you work together under the same roof. That is what drives performance over time, having that ambition always to do better than you did last year. always looking at what's the next step we can make. So that kind of record-breaking attitude I think is one of the key elements to say about the ABB Way and the culture of what we also want to foster in the company. And that's what I do also when I look at selecting leaders. And I know also my team when they select the right division precedents, and the right leaders down in the organization. It's the ones with ambition who wants to achieve and don't take just the short-term view of doing a quarter or a year, but driving performance year-over-year. So this is the financial performance we've had, but it's not the only way how we measure success. We also made ambitious targets back in 2019 on how we drive our sustainability agenda. And I think this site is a great example of how technology can help reduce emissions in manufacturing. This is one of the net mission to 0 and net zero site, that is by using our own technology. And we have here, you will see later on, we do a tour. You see that room up there with a lot of the orange and blue equipment. That is our own technology from electrification, motion and automation that is bringing -- being kind of enabling that low carbon emission site that we have here. So a great example, and already now, we are -- this year, we'll be able to be closed already over 2030 ambition of 80% reduction of our own scope 1 and 2. The journey continues, of course, when you're looking at how we continue to help our customers reduce their emissions. And that is really how we drive our business, and that is our ABB business today. Another area that I think we've done really well is also around the employee engagement. Because I believe that success comes from people who have ambitions and have our teams with high engagements. So therefore, we also measure this every year. And we did that also since 2019. Both the engagement score, but also the number of respondents goes up year by year. We are now here at the 85% of our 110,000 people answer the 37 questions about how they feel about ABB, how they feel valued and if they are motivated to get up in the morning and contribute to ABB's success. And we are now at the 80% mark, which is above the high in the industry. And you can always argue a bit of the chicken and egg discussion. Does it come -- does engage people create success? Or is the success also creating engagement. And I think this is just a positive spiral that you're working together. So highly engaged teams and people is creating the success today of ABB. So we don't really well. And it's something I always say we should be super proud at ABB and what we have done over the last year is a great journey, but we should never be arrogant always proud that never arrogant, is somebody who will -- internally, they will know that phrase very well because I believe we can do much better than what we're doing today. And we have identified 6 areas that I would like to talk about where I believe we can use these 6 elements or areas to continue to drive the performance of ABB to the next level, doing well, but more to come. Let me go straight into the first area. And many of you who have worked with me or talk with me over the last year, we have often heard me talking about the beauty of mix. And that is because I believe this is a driver for performance. It's how we use the ABB Way thinking of stability, profitability and growth about driving performance of the company. Today, out of the 16 operating divisions, which then we put robotics and e-mobility on the site. With our 16 operating divisions, we have only one in stability. And that's our machine automation business and Peter, who will be up on stage later on we give more clarity or more color to how we are also improving that business. If you look at profitability and growth. That is about the 2080 mix. And again, the beauty of mix is that everybody focused on their own mandate and they got targets and they got incentivized according to those, which means that the profitability teams are looking at how do I reduce cost, how do I improve the performance of my division and the target is then also less on growth and more on profitability improvement. While on the growth team, are -- it's all about how do we continue to drive that performance at the same or a bit higher level on profitability but focus both investments and on the growth side. And that is also reflected, of course, the same targets, but also in the incentive plans. And this is what we have taken also to the next level in an even more systematic way. But it doesn't stop here. We want to take this 1 level further down in the organization. because under these 16 operating divisions, we have around 75 business lines, which is the subgroup inside the divisions. And even taking in electrification, who has 5 divisions in growth mode, they also have business lines with profitability or even stability mandate. So this shows the kind of -- but using that methodology using the thinking that the business line managers and the team knows what's our strategic mandate that target is set accordingly and also their incentive plan are following this way is what drives performance. We know that this is working very well in ABB. And it's important just to they use the same methodology also on the next level because I believe and I will that this will drive the performance of the company also for the coming years. Right now, all these 75 business lines know their mandate, they have targets for next year setup, but this will be the first year that you will see also this comes through in the next level of the organization. So this is -- I mean, how we kind of use the beauty of and using the whole ABB was thinking. But another area where I believe we can do even better, it's in the field of M&A. You've heard -- you know that we had an ambition of 1% to 2% of bolt-on acquisitions to the company. We have so far not been able to deliver fully on that commitment. So this is an area where we also we agreed that between the division presidents and in the leadership teams we have to step up and putting more focus around pipeline building, looking at what are the targets and the comp technologies or channels that would kind of help us accelerate growth in our business. We have a scoring system with about KPIs that it goes through, so we can do a real valuation. But long disease down to the divisions now to come up with these bolt-on acquisitions because they are the one who knows the business and know what can help. Larger deals will also, of course, be considered, but that is more with the business area presidents and Timo and myself in over roles when we're looking at the bigger targets. And here, we believe that we can really make this also part of the performance culture of the company because the say-do ratio, what I say in many of the other fields has kind of shows that ABB can deliver on our commitment. So this is another way. We work the same way. We build this into business reviews. We have more of the board discussions and there is a firepower. You know that already when I have a balance sheet that can clearly justify more investment into M&A. And especially with the robotics divestment happening next year, I guess sometimes the question, will you have a $5 billion check in your pocket, burning a hole in it? And I say, absolutely, no. Therefore, I also want to underline for us, the value creation is key to any M&A decision we do. It has always to beat the alternative of share buyback to do an acquisition. So that is kind of, let's say, just a fundamental. Let me come back to also how we want to use M&A as a real value creation opportunity in the time to come. But this is one way to create value for the company. Another very important part is what we call the power ABB. We are today three business areas. And you may see and also describe one change from what we had earlier. The business area of process automation is renamed to automation, and we will do that from the beginning of next year. It just shows also the whole -- now when we take machine automation together with process automation, we believe automation is a good name. Automation has a special role in ABB because they -- the automation business is very often the ABB ambassador, the one carrying the ABB flag at end user as large end users. It also pulls more than $700 million of business from electrification and motion as a package deal when they go out. So this -- that's why we also see later on the expectation to margin is different to our automation business than it is to electrification and motion. It's a bit how we have set up the business model internally at ABB in this business. It -- so therefore, world-class performance is a bit different when it comes to numbers, but they -- our automation basically plays an extremely important role being that ABB ambassador out there. And I think now we have a very balanced company, which looking at with electrification, motion and automation, they share often technologies. They share about products that be used in each other systems take large motors from motion that is used as part of the propulsion system of Azipods in the Marine business but there comes also medium voltage and low voltage switchgear from electrification. These are examples of how you pull technologies together and come to customers with one offering. Because at ABB, we want to serve customers as they -- how they want to be served. It's not an inside out that we define how customers need to work with us. We adopt how customers want to be served from their side. And that is the guiding star for how we organize ourselves, how we work internally with account management, with contracts and how we are able to serve customers in a way they want to be served. That for me is a super important part and that also goes into what [ Ansi ] already talked about that smart leaders collaborate in ABB. This is how you set it up as long as you make customers in charge of these decision that then we line up at ABB and serve them in that way that they want to be served. And I -- also, we have good opportunities between this business area when it comes to technology. There's a lot of common technologies. There is a lot of common procurement activities as well. And this is covered in what we call today our community, so practice where experts are connected throughout our organization, not in a matrix model because that's something we discontinued, but we let the business take the lead. And normally, it's the one with the broadest shoulders who bear the heaviest backpack. That means that those with having highest revenue would take the lead towards the customer and bring the other colleagues with them on project as an example. This is how we are able to work well together inside the company, supporting customer better or reducing our own cost, that be in procurement, that bidding quality being in any aspect of the business. And I think to show this with an example on how we work together, it's a project I know really well because it's in Sweden, where SSAB as putting in their new mill on the new steel mill in the north of Sweden. This is that complete upgrade on their old facilities where they're able to put it up just kind of the new facilities, we are able to reduce the emission for the whole country of Sweden by 7%. So it's a massive -- when I'm talking about making things cleaner, this is a fantastic example how one plant can reduce a country's submission of 7%. But as importantly, they are able to reduce their operating cost and drive productivity in the new facility. And that is where we come with ABB, with the all control system from our automation business, but also all the electrification from medium voltage to low voltage and all the equipment there. And then you have to work also with the OEMs of -- in the steel industry for a hot and cold rolling mill. And this is where our motors and drives goes in there and the electrification so that you have everything on site is ABB, which means we have a service opportunity and that's what SSAB want as an end user, they want ABB to be there and service all the equipment on site even some comes direct and some comes indirect through OEM. This is the true power of ABB. And here, we are one of the very few or maybe the only one in our industry who have this one-stop shop and one complete offering of this space. And I have another example, we also like to show which comes from Shell and how we work with them and we can listen to the customer and how they are seeing us as a partner for some of their large projects. [Presentation]

And I think it's a great example and a testament from Shell and how we can partner with them to help many of their offshore installation become both more productive and better and safer, but also helping them also reduce emissions in what they do offshore, this one coming from the North Sea. I think this kind of lines up a bit what does customer like about us. This is one of the things where I get really proud when I meet customers, tell kind of -- and I ask the simple question, kind of why do you buy from us. And normally, these are the two things that come back. It's how you're able to use technology by great product systems, services solutions, and it's about your people, the know-how, the skill sets. Because we have been in this industry for 140 years, and we plan to be that also for a long, long time in the future. And we know that the technology is what is the partnerships that customer need. Always using the new technologies that's available. We talked 10 years ago, it was all about IoT, the Internet of Things. Then we talked about digitalization. Today, it's all about AI. And I think today, it's all about using the best technologies that are available always and being the first company to deploy those new -- that new technology at the customer site. That's what customers are looking for. Are you able to help me becoming more productive, being leaner, helping reduce my emission being cleaner that is the objective. The technologies we use is a bit kind of it's a second, it's not that important for the customer is how -- what's the outcome? How do you help me? And that is the ambition for us. We want to be perceived as the technology leader by our customers in the industries always being the first mover. So you see, you will see also here today many good examples of how AI is applied within ABB, but more importantly, as our customer site, making the skill set and the know-how of ABB available at the fingertips at our customer side. So we make their life easier and better. That's our main goal. So I think this is one good example of how again Shell, you heard it, but we could have many other examples and the feedback were very much. So that's also why you see our investments in technology and being that technology leader together with also continued investment in our people and making that domain expertise available is key for our future success. And when we -- you heard me talk about now a lot about the -- how we make sustainability part of our business, but it's again, back to what I say here is about how we make our customers helping them to become leaner and cleaner. And this is an end equation. It's not an or. You don't have to choose. That's the nice thing about it. If -- because the whole part of decarbonization, which is often comes out with electrification, it's the better way to operate. It's lower CapEx and it's lower OpEx. And that's why electrification business will be a long-term solution for industries. Because we see about the power of the future is all about electricity. And here, just to show it, it's kind of three takeaways is that the electricity demand will outpace the energy consumption, electricity will be the #1 source that is growing. And that goes across segments, talking about buildings, industries or transportation and it's all over the world. It's not the U.S., Europe or Asia or China, India, phenomenon, it's everywhere. So that's kind of the whole backdrop of the energy equation. Because we need more energy, and we talk today so much about energy expansion, making more energy and more electricity available now. And therefore, we have to use all the tools in the toolbox to make that happen. And that's what we can do as ABB helping both on power generation, but also about on the demand side, driving energy efficiency, you will see many examples here today about also not just using motors and drive for things to work well, but it all can work even better with better energy efficiency because being able to reduce driving energy efficiency will drive kind of reduce some of the energy expansion that we will face. And on top of that, we have the energy transition, which when you look at the curve here on the lower part, you see that today, the electricity coming from fossil-based power generation is the same as in 2019. So the big kind of takeaway is that the energy transition hasn't even happened. All the additional energy we need comes from renewable sources. But the underlying equate still, the energy transition globally has not even started. So that's a further upside for the future. So if you look at the one -- and we all talk about this today, the size of data center, and Giampiero will share more about data centers in his electrification presentation. But it's a kind of from 23% and up to 2030, we are looking at in 7 years, a quadrupling of the electricity used in data centers. In the past, we're talking about like a 200. That was a large data center, now we're talking in the 1 to 1.5 gigawatt data center, which means that you need a nuclear power plant in your backyard, firing and giving electricity today. So that's kind of the enormous use of new power that is coming. And of course, also other industries is benefiting just from that ramp up, if that talking about in the mining sector on the whole utility buildup, but also on the semiconductor side. So if you look at this kind of from an overall perspective and looking at all markets, we're looking at from a 3% on the lower side and up to the 12 or double-digit growth on data centers, many of the faster-growing markets. And we're looking at these for -- over the cycle here, we're talking about from around 4% to 6.5% of growth in the market that we address as ABB. So kind of the whole takeaway of this we are in really good markets. And I believe we have the right setup as ABB today. And with the ABB Way, we can do even better this way. I think we have or really have a right starting point to continue the journey of improvement, breaking new records and doing better than ever before. That momentum will continue in ABB. And therefore, what better than today, we are here also looking at it, what should be the future ambition for ABB. And we have looked at both our growth and margin side because the 16 to 19 million margin range that we had up to now, we will -- we are at the end of that journey. And as ABB, we always say, what's the next step, what -- how do we want to go forward. Starting with the growth side, we have kept over 5% to 7%. What I want to say there that this is what we've always said is over the cycle. This is not a midterm target when we meet 10 years from now, you can hold me and the team accountable, we are committing to the 5% to 7% over a long cycle, not about what's about a few quarters or a couple of years. So this is why I believe that the 5% to 7% is a good range for us at ABB, and then we're adding another 1% to 2% of acquired growth on top of that from bolt-ons. And larger deals would come in addition. And when looking at the profitability, there, we have also now made a change on that when it comes to the business areas. Because I said earlier, what is world-class in our automation business is a different business model and a different setup than for instance, in electrification. So therefore, when you see here also the electrification where we define the range from '22 to '26, where I believe the world class of '26 would be at comparable numbers when I look at the automation business on the 14% to 18% because of the business mix and the business model that we have because automation is purchasing at market pricing from motion and electrification. And I believe that is the right way to do it because then they need to create value by themselves in what -- how they are pricing and how kind of the value they create for the customers on their side. So I believe that's the right setup for us at ABB to do it, but then it will also be a bit of a different margin. So therefore, we need to recognize that when we do targets so that we also -- for the people who works in these different businesses will be, again, targets and incentive plan will follow in the same direction and Motion, we have at 18 to 22 as what we would define there. The upper end is what I believe is kind of the ambition over time is where we need to work to. And then on return on capital employed, we want to continue to be also here on a very high level as ABB. We have now increased that from 18% to about 20%. And that also taking into account the acquisitions that we are planning to do in the time to come. So that should also be taken into -- in that picture. So I believe ambitious targets, and we have a strong commitment from myself, from the three Business Area presidents and the Executive Committee and the division leadership team that sits below here that these are ambitious, but a strong commitment targets from all the leadership team that this can be fully achieved in the time to come. And I think with that Timo, I'd like to invite you up to give a bit more color to some of the targets that I haven't talked about. So please.

Thank you, Morten, and good morning, good afternoon for everybody in the audience from my side as well. Now Morten introduced the overall targets, and we really think this is an ambitious and balanced set of targets. Now we have strong targets for growth and profitability, and we aim to grow EPS faster than revenue. And if we would operate at the higher end of these targets, that should also lead to a double-digit EPS growth. So let's see how it goes. On top of that, we have also best-in-class targets for return on capital employed and also for, let's call it, cash drop-through. So as said, ambitions, balance that of targets, driving value creation. Now let's talk a little bit more about how we are looking to achieve this because we really think they are well achievable in the ABB Way operating model. So let's start with this higher target margin range. Now First, good to remind that all our target setting happens through our bottom-up long-range planning process. So our leaders are really committed to these targets on a group level. business area level, on division level and so forth. Now if we kind of like look at where we are at the moment, and we take the last 12 months, margins, and we take out robotics. We put corporate cost to 300 million. And also, let's put for this example, e-mobility to break even. So whether we can compare. So with that, you come to current margin level of about 193,194 that kind of number. Then if you would take the business area midpoints and do weighted average on revenue, you come to a margin of about 2.3%, 2.4%. So there is kind of like from where we are now, about 100 basis points upside to the midpoint and further maybe 160 million or so to the high end. So that's kind of like how we look at this overall situation. Equally important is that even on a down cycle, as Morten said, this is through cycle targets. We have no intention whatsoever to drop below 18. Then how are we making this happen? So the strategic mandates play a really important role here. And as Morten said, we are taking this to the business line level. This is about 75 business lines. But let's look at some examples on what has happened here in the past. So when we look at the divisions, which had growth mandates 2023 and then we compare against to the last 12 months, these divisions have grown about 2.6% faster than the other divisions. They have higher margin, so good for mix. Then when you look at the profitability mandate, it's a little bit more difficult because some of the divisions have moved around here. But again, if you take 2023 and you look at the profitability improvement of the divisions, which had profitability mandate at that time. They're up about 370 basis points comparing to the current last 12 months. So clearly, the system for us is working. And there are two things to further improve. It's actually quite interesting when we introduced the strategic mandates. It was a like everybody in the growth, good in growth, bad not in growth. And that we are really changing now. Because if you look at ABB's overall performance and supporting ABB's overall performance, it is actually equally good to be in profitability or growth. supporting the total. And that we have changed now, let's call it, in an educational way, of course, led by Morten and the Business Area leaders, and this is yielding results. And I also think taking mandates to the 75 or so business lines will drive further optimization on this area. Then to one of my favorite topics, which we have been talking about some, whatever, 6, 7 years now, is this quality of revenue topic. And we really have a balanced situation between short cycle and service and long cycle business, as you can see. We also now after COVID, are in a situation where we have growth on both short cycle as well as long-cycle orders. And on the balance, I would say, most importantly, even if the gross margin of the short-cycle business orders have improved the gross margin of the long-cycle system and project business has improved even more. So we expect it to continue to have lower earnings volatility coming from mix. And then equally so, you see that our backlog has actually normalized after COVID. So we have kind of like same type of backlog on long-cycle service. But then when you look at the backlog gross margin we actually have a really, really good development, and it really shows that ABB's project and solutions business is really driving real value to our customers. which was also clear from more intense examples from the customer side. And I mean, improving backlog gross margin, 12% in 5 to 6 years is not kind of like a small feat. It's quite an achievement in my book. And it really is a testament to driving a better quality of revenue. And this really is coming from better pricing better content, ABB content in our project business and also really better focus on project management. So I think this is really a fantastic job done by ABB teams on this area. Then on productivity. This is the other one which we are sort of quite proud of. So first of all, since we introduced ABB Way, we also had productivity on all our business leaders targets. So we don't believe this stuff actually kind of like happens automatically. And 2020, we introduced revenue productivity. And then maybe even more importantly, 2023, we introduced gross profit productivity. And if we look at this, since 2020, our revenue per headcount has increased about 25%. And maybe even more importantly, since 2022, when we look at gross profit per head count is a move from about $90,000 to about $120,000. So that's about 30% improvement in gross productivity in a bit over 3 years. And I think that really is a testament to the efficiency of our operating model. And this can, I think, come even better when we have better support from our systems landscape. So you all see from our disclosures that we have been investing into this ABB Way transformation programs. And this is basically wiring ABB HR systems and finance systems to the ABB Way operating model. And we have done a lot of work and our business areas have done a lot of work on making stuff better, for example, looking at this SKU by SKU, gross margin development, that kind of stuff. But that has required quite a bit of manual effort. Now going forward from about early mid next year, onwards, we will be having a system where basically every oneness of a button, we will get the P&Ls of group of business areas, of divisions of business lines and that will make this work a lot easier. We will have a drill-down capability, as you can see on this analytics cloud, even to a transaction level data and we can really sort of automatically then slide and dice, for example, these gross margin components we have been talking about. We can also, with this easily compare performance of businesses which have similar business model, say, somebody is performing really well, somebody is a little bit lacking behind. So we can then check in the spirit of good leaders collaborate what could be done better in the other place. So I think this is going to be a really, really powerful set of tools for business performance management. And as we are now coming kind of like to end of these programs and we move from development mode to run mode. We are expecting that the difference, the delta between EBITDA and EBITDA will, going forward, be on this around sort of 100 basis points. area because, of course, it has taken money to invest in this. Then on gross margin. I mean, Morten has spoken about this. I have spoken about this quite a bit. And our aspiration is really to be an over 40% gross margin company. And this, I think, is a good level for an industrial tech company because it really shows that you are driving value to your customers. And we have achieved this by mix optimization through strategic mandates, quality of revenue in many ways, driving that concept, higher backlog gross margin focusing on gross profit productivity as we discussed, and also building these systematic data analytics tools making sure we're really wired to drive ABB Way operating model in the best possible way. And we firmly continue to think that we are going to stay above the 40% level going forward as well. which will then always allow us to invest where it matters, which basically is mainly R&D and CapEx. And when we look at our R&D to revenue ratio, excluding robotics, at the moment, about 4.1%. So we are a little short of our 4.5% to 5% target level. So we have sort of more investment to go. And we also take into account on this figure, the venture investments. This is kind of like externalized research for us because we all know that driving any kind of disruptive innovation inside a big company is really, really hard. Because you have these big labs and then these become kind of like pet projects and what have you, and they are difficult to sort of redirect I see this in my history as well. And it's kind of like difficult to see the business benefit and then somebody starts from scratch and kind of like runs past due. So that's why we really think this is an integral part of this. And we have actually two examples where we have sort of first invested and then bought the whole company. One is this $0.07 in robotics, another one, actually, where we invested 23 and bought the company this year is a company called Lumin in electrification, smart buildings. So we think that's important. And we also really think about this investing where it matters. And just an example of that this year is little sort of pluggable MCB, Miniature Circuit Breaker. Now our solution is such that you can just stick this in there and take it out and take Giampiero word for that. and you don't need any adaptation layer. So basically, when you run the process, you don't have to do anything. So just a small example of investing where it matters. And we are here at the motion side now. So we continue to be, to my understanding, the only company which really only with software platform can change a use case of a drive in the same power or the voltage level. And that, of course, gives us a huge scale advantage on our Drive business. So just a couple of examples on this investing where it matters. So we continue to believe that driving our embedded software strategy to drive customer value is really the right way to go for ABB. And then on CapEx, I mean, this is a fantastic new site. But of course, CapEx is also making our current stuff better. And I think Giampiero has some examples on that as well. Overall CapEx for us, maybe sort of after robotics, I think we can continue to drive this kind of growth well on sort of framework of about 800 million of CapEx also. Then a couple of words on the BA specific margins. So I mean, Morten spoke quite a bit about this. Now we have been driving ABB Way operating model now for about 5 years. So kind of like we think this is a good time to introduce these. And yes, we spoke about this 22 to 26 for EL, 18, 22 for motion and 14 to 18 for automation. I think the important point here is that all the business areas have upside on their margin ranges. And as I said already earlier, for the group, there is also a clear upside going towards the 22% margin. And you will, of course, hear from the business area presidents later how they look to drive both growth and profitability to be operating at those higher margin levels. So then a couple of other favorite subjects here, cash and return on capital employed. So I think we can be really proud of our consistent cash delivery. Now clearly, this is driven a lot by improved operating performance, but also, we have changed our net working capital measure to trade net working capital so that these are really the components which our businesses can control. So that was an important change. And another change, what we have done to drive better cash performance is that we changed our KPI especially for the divisions to 13-month rolling average improvement. And that means that you can't meet this figure if you do some kind of last quarter wonder like ABB was quite famous of 18, 19, all the cash came Q4, boom. Now you can't do that. You have to work on this systematically throughout the year, and this is really an important change. And I think there actually is still more upside here because when we now take this to the business line level, we can even more focus kind of like those areas where the net working capital improvement can be the biggest, and also with these new tools, we have, for example, defined something what we call harmonized sales orders and purchase orders by data elements. We have better data quality. And already this year, actually, our days of sales outstanding has improved. So it's a driver for this year quite good cash performance, so knock on wood, let's see where we end up. But I think we are on a good track here. And we continue to drive good drop-through. That's why our new 95% conversion target is higher than, for example, 1 minus growth. So we, of course, want to become more and more efficient on this all the time. Yes, then on ROCE. So we want to drive best-in-class return on capital employed. That's why this new 20% target is important. And as Morten said, we are looking to meet this target also including inorganic growth, i.e., we have some room to stick goodwill and PPA into this equation. And also, we measure return on operating assets, i.e., without goodwill and PPA. And here, we are at the moment at over 50% levels. So really, really strong number. And of course, we continue to invest behind the organic growth as much as we can because the payback is really, really strong. Now I've gone through all the targets what we put out today. So I think it's a good time to hear from the new CFO, what he thinks about the targets. So let's run a little message from Christian.

Hi, everybody. This is Christian joining from Zurich, and I hope things are good in New Berlin. Regarding the new financial targets for ABB, I think they are a good reflection of how we challenge ourselves towards continuous improvements. They are realistic, they're bottoms-up driven, and they're supported by strong market fundamentals. I support these higher ambitions, and I look forward to working with our teams to deliver on them. And with that, I'll turn it back to you, Morten, and to you, Timo.

Okay. So looks like both the outgoing and incoming CFO are pretty well aligned on this stuff. So we feel good about it. Then just a couple of words about our capital allocation principles. I mean you guys are familiar with this, but I think it's still worth repeating because these are really cornerstones of systematic long-term value creation for ABB. Now of course, first, we want to invest in organic growth because that gives the best risk return. And with this 50% return on operating assets, that's kind of like a no-brainer to have there on top. Second, we want to continue to pay sustained growing dividend per share. And as you can see, after the Power Grids transaction, we had a fairly high payout ratio, which was actually planned by the model. But then I think since 2021, we have been systematically increasing dividend and the payout ratio kind of is now around 50% of net income. So let's say that there is good room there as well. Third, we want to drive value-adding acquisitions. We continue to think that small to midsized deals are really best value for the buyer. But of course, as Morten discussed, we don't rule out other kind of stuff as well if it's really driving good value for our shareholders. And then finally, we do share buybacks. And we think that our business performance will allow also going forward us to operate on all of these components in this capital allocation framework. And then finally, to wrap this up a couple of words on sort of forward-looking stuff. So we really think that ABB Way operating model supports systematic business execution, short, medium and long term. And this is a really important balance because, of course, it is all about long-term value creation. But kind of like if there is no good short term, there is kind of like no good long term either. So you really have to drive all. And based on our financial framework and our capital allocation principles, we should be in a really good place to support double-digit TSR growth through cycle. Now our EPS growth has been 17%, 22%, 25%, excluding divisional exits. So let's see if we get quite to those levels, but our organic revenue growth and also continued margin expansion in line with our new target framework should drive strong earnings performance and also good [indiscernible]. So it should really be -- or we should be in a good place to drive further value creation for our shareholders. And maybe to finalize this as this is kind of like most likely my last ever capital markets presentation. So I want to thank everybody in the audience for your interest and support towards ABB. It's really been, for me, a fun and energizing ride, and I'm sure it's going to be like that for my colleagues in the executive team for my successor, Christian, and also for other folks at ABB as well. Thank you Okay.

So now Q&A, I like it, many hands in the air already love it. I hope I don't promise too much now, but microphone is on, no need to tap, no need to blow into it. You can just talk. Okay. Lucas and Beat will help with questions. So we start over here with the #1. And then we have here as #2. Don't worry about the camera. We're fine.

Lucky positioning. Thank you. I wanted to ask firstly about large M&A, I think, one of the key topics. Is there a pipeline for that? And will such deals be subject to those 20 KPIs that you mentioned?

Yes. No, thanks. First of all, the -- we're building a pipeline of M&A, both from small, mid and larger targets. That's kind of the -- so there is everything included. Yes, we are using also the framework when we're looking at because it has to be value creative for ABB. As team also underlined in his presentation, that's kind of how we look at it. So we are not desperate to make any big deals. That's kind of -- but we are looking at -- if these are good opportunities, and we really believe that we could get the right synergies and the right setup. Yes, we are able to do it. I just maybe also to highlight, when we talk about big deals, the largest deal ABB ever made was Baldor Reliance Motor business for $4.3 billion. Thomas & Betts was $3.9 billion, GIS [ $2.6 billion], just to give you -- that's the three biggest deal we have made as ABB. So I see a lot of kind of big numbers flying around, but I think we should also put that in perspective. And we were confident to making those or bigger deals than that, but that kind of sets more of the framework.

And if I may ask a second one, probably more to team or to both of you, that change in attitude or approach towards profitability versus growth mandate and saying that it's not necessarily growth, good, everything else bad. Could you just explain a little bit more what you talked about that both can be accretive to the final outcome? And how does that translate into actually change to day-to-day operations and how those businesses prioritize?

Yes. Maybe if I kind of like throw a couple of words here. So I think this is really, really important because we have margins, divisional margins, which can be sort of, I don't know, low double digit to clearly over 20%, like way, way up there. And of course, you can't necessarily expect that somebody who is on those kind of, let's say, lower double-digit levels will suddenly get to group average. And that's why we have created this framework where we take into account both the capital intensity of the business. So if it's very low, then you can drive a little bit lower margin if it's very high, then of course, you should be on higher margin as well. And in that way, it is totally okay to continue to improve profitability as part of the overall mix setup for ABB. And that's why I really want to give message also to our business leaders that having a profitability mandate for a longer time is totally okay to support ABB's over our performance.

That's really the thing. Maybe to give you a bit of insight in the house, so to say, of how we do this. Every year, we have a President Seminar, where we have our operating division presidents in the same room. And there is a small it's one of the elements we're looking at, we do a scoring from last year. That means if you had a gross mandate, did you grow. So we gave a little green, yellow and red marking on performance. And that is kind of -- and the whole point is that if you are in profitability and you are improving profitability, you can still be green because you're adding value to the company. So it's not like the growth people are the heroes in the corner and everybody else should be ashamed. You are all adding value to the company if you're delivering on your mandate. So that's kind of how we sit in practice.

Thank you. Daniela?

Two questions as well. So first on the free cash flow target on moving to 95, and I think you say because of stronger growth, but you didn't upgrade the growth and you're not doing more CapEx as a percentage of sales, I guess, you're doing better on the working capital. So can you elaborate like sort of what is the -- what else are...

Yes. That's why it's not a range. It's higher than but I said already, I think, 2 years ago in my presentation that the toughest target for us of those would have been cash conversion at about 100 if we kind of like improve our core growth performance and that we have done. And sort of, let's say, of course, our aspiration is get closer to the higher end of these ranges. And in that situation, kind of having that approximately 100 is just like not through cycle target, which is overall may be achievable. But that's -- we always try to do better than, let's call this 1 minus growth. So we really want to drive really, really good cash drop through all the time.

And I guess you had a very interesting chart on revenue per employee and then the gross profit, and you mentioned a 25% increase versus pandemic. Can you help us understand within that, how much was the cumulative net pricing you got that helped on that equation versus the really underlying changes in the business?

Do you want me to? I can start and maybe -- yes, I think this is like a really important point because that is exactly why we changed to gross profit productivity. Because we were kind of like saying, wow, there is so much revenue coming from inflation, maybe somebody will get a free ride. We don't like that. And then we look at different options on how to measure productivity. And then we came into, okay, the inflation is both sides of gross profit. It's also kind of like on the input cost and it's, of course, on our pricing. So we think that this new measure where we actually have improved even more is really a better measure for ABB because it drives focus on really invest where it matters, drives better gross margin. And on that measure, we actually, as I said, we have improved like from 90,000 to 120,000. And about sort of 30% improvement. Of course, it can't continue forever like that. I mean -- but it's really, really, I think, a good measure, and that's exactly why we changed it. So in the new measure, there is like no special component, which is just coming from inflation.

Thank you. And then we have one -- we go to Martin here first, and then there was someone else. Yes, Joe down there, please, Lucas.

It's Martin from Citi. The question is on the 5% to 7% growth target. So since last time we had the Investor Day, you've got more business units in the growth mandate than you had before, but you've kept that target unchanged. I mean you did mention that's a long-term target. But just in terms of how we think about the next few years, arguably, the end markets are stronger than they were last time around, particularly in electrification, more business units in the growth mode. So when we think about the time scale, how do we think about that 5% to 7% over the next sort of 2 or 3 years?

No. What we said is that 5% to 7%, I said it already, it's more 10 years from now, that's what you should hold us accountable for. It's the 5% to 7% range over a longer period. So we don't give like a 2 to 3 or 3 to 5 or all these different. So that's a long-term ambition with the market exposure we have today. And there, I think you will see that there are business areas that will be above also the 5% to 7%, and there might be some years, and there might be some below. But that's why we say that this is over the cycle on a longer horizon. So -- and I think that's the -- if you look at the numbers back from 2019, that's what we have been able to do at 6. Of course, there is still then up -- some room up to the 7% that we argued. But that's kind of what we -- where we are.

And as a follow-up, when the business units are in a growth mandate are in a fast-growing market, they could also get a almost like a free ride from being a very good market at that particular point in time. How do you make sure that they gain their fair share or more of a growing market to make sure that ABB is at least in line with the peers or gaining market share.

I mean, we measure not only the financial performance of the BAs and the divisions, but also the market share gain or loss that may also happen because I think that those -- you need to look at both. But in the end, we measure success in dollars and not in market share. So you have to -- should gain market share. You have to strengthen your market position, but then that needs to come out as money and dollars in the end because that's kind of what -- when we create value for the company. That, in the end, will be the ultimate test. But maybe to complement this here. So clearly, we can have divisions which have higher growth target than 7. Absolutely. So of course, they have to be best-in-class. That's the whole idea of our portfolio metrics on the other axis. So we measure if you are best-in-class in growth, profitability and return on capital, that's how we sort of evaluate. So kind of like that we have this range for the group doesn't mean that we can't have businesses inside ABB, which have clearly higher targets. So there is no ceiling. I think -- I mean and also there are areas here like we talk about this stability mode. There is -- we say you're not allowed to grow, you need to get your act together and fix your kind of clean your own house. And that means, of course, that the other team members of the other divisions need to grow more to compensate because 5 to 7 is for the whole company. So there's clearly others who need to be at times to double digit in the market, but we have not.

Thank you. Joe?

I just wanted to talk about like the interplay of some of these targets related to M&A. So you're narrowing the focus of the company a little bit into areas at least for now, are high multiple expensive acquisitions like are you willing to acquire something that might hurt your ability to hit some of these profitability targets, but might be a higher return based on what you pay? And how do you think about the interplay of those 2 things?

I think, again, you're back to the value creation opportunity we have in front of us. Would I do another GIS? Yes. I think it's one of the best acquisitions ABB ever made. It was highly dilutive at the time but we've been able to bring it up to a level today that has shown kind of the value of the whole electrification business. So similar targets, yes, we would do again, which would hurt us, you could say, short term where they will be dilutive to margin, but the in maybe 3, 4 years, we'll be getting back to the -- in 3 years, we get it back to the level that we have today, yes, I would be ready to do that. As long as we have kind of strong confidence that we can bring it up to the same level, and that you get of course at the price that you see that we -- because we are the 1 that have to do all the work, and therefore, we should also keep most of the value creation and not give that away to the seller.

Okay. It's a little bit hard to see. We have George here as #1, and then there was someone else here.

Thank you. George Featherstone from Barclays. Just coming back on M&A a little bit and just to talk a bit about data centers. A few of your peers have made a lot of progress on acquisitions into areas like liquid cooling and more in the white space. Is this a focus area for you to capitalize on the opportunity of that market?

Yes. We're looking at the -- I mean, data center is fast-growing area. You saw that already, Giampiero will talk more about it. So it is clearly a great interest is where we allocate a lot of our organic investment. You can see that when, for instance, with the medium voltage UPS system, which I think is a fantastic story, how we bring a completely new and innovative technology to the market. And we're looking at that, for instance, with the technology collaboration we do with NVIDIA when it comes to the 800-volt DC infrastructure. And we're not excluding also to do M&A. I mean we're happy to look at M&A in this field. But we're back to the same thing that we -- it needs to be a strong value-creation opportunity for ABB. And we don't want to kind of pay out completely, let's say, outracious prices to be there. And I think that's a bit of -- it's the approach we have taken a more kind of we need to be convinced about also the long-term value creation of this and not just jump on a bad wagon. That's just a bit kind of my feeling on it.

Okay. One more question just on e-mobility. It's obviously quite a bit of a drag to you guys today. Can we have a bit of an update on the plan there in terms of is it an asset that will stay with you? And when should we get breakeven?

It will -- we are looking now at the -- we're targeting getting kind of the losses out, which will be a focus again for '26, and I think our original plan remains, which -- but there will be more into -- it will not happen in '26 and doing the IPO. So that is still the end result, the end target for our mobility business. So first is about getting -- running the business well and getting it at least to a breakeven even level, and that is ongoing. Then it's about also the markets, the e-mobility, the charging market need to be ready. I think here in the United States and North America, it's better at the moment. Europe it's kind of been very slow. So when the market is ready, we will also proceed with the original plan.

Yes, fire away.

It's Ben from [indiscernible]. My question is just about the divisional growth. I'm sure we'll get on to it in the divisional sessions. But qualitatively, how do you think about the 5% to 7% between those different divisions. And the reason why I ask is, obviously, some of your peers are seeing outsized growth in electrification, energy management, whatever you want to call it, and then basically subpar growth for one of a better word, in the other areas. So in terms of your targets and how you're thinking about it, how should the 3 divisions compare?

Yes. There will be different growth rates between Electrification, Motion and Automation. That's clear. Because as we see, they are exposed to a lot of the Electrification trends, but I mean there is some market volatility that which also reflect, I mean, just looking at our Q3 numbers, where we had very strong growth rate in electrification and not as strong in some of the others. So -- but this is why we say this is over the cycle. And therefore, to get to that average of 5% to 7%, they all need to perform in the markets where they operate. And we will have -- hear more about the growth rates or the -- from Giampiero, Peter and Brandon in their sessions about how they kind of see the market from their side.

Understood. And then one more, which is for Timo. In your presentation about an interesting comment about I don't know how it was uncalled at 1 point to be profitability and then it's cool to be growth. What do you kind of mean by that? And is there any difference in the actual incentivization between profitability and growth, i.e., do I get paid more to be growthy?

You don't get paid more, but you get paid on different KPIs. So that's how it works. It was kind of like what Morten said. So if you are a stability, you will not have a growth no matter what. If you have profitability, you could have a little bit of growth, but your main targets will be improving margin, driving good cash and productivity. You might have 0 growth, you could have a little bit. And then if you are in growth, of course, your targets will be like, I don't know, 40% growth, and then the rest is like the other KPIs. So there is a big difference on this. And because in our system, just a reminder, we don't have like that much common targets. So we have 20% 1 level up target. So already, if you take a division president, for example, in Motion business, that person will have 20% common target from motion level, nothing from group and 80% is the division own targets. So we really believe on this kind of accountability model. And that, of course, means that divisional results can vary quite a bit come year-end, and that's fine. Okay.

Then we have two here, I think, we go Magnus, one, and then we have Jonathan and behind.

Magnus from Nordea. First of all, can I ask you when the prior margin target was set 16 to 19, there wasn't kind of underlying expectations that we will track towards the upper end of that range within few years. How should we think about this new margin target in that context?

I would I mean we're setting target because we want to reach them. So that's the -- but we would need some time. And I think we needed a few years for -- to get to the 16 to 19, and we need a few years also to get to the upper end of. But that, of course, is the ambition now. As I said in my presentation, this is not dreams. These are bottom-up commitment in our own planning with each division, we add this together with this is what we are very confident about telling also here today. Because we set targets and then we deliver on them and -- but we will need a few years.

Got it. And the second one, I think you moved from about 55% growth mandates 4 years ago, so to -- was it 80% now or close to what would the steady state be there between growth and profitability, like over time? Obviously, it will vary from year-to-year, but what's realistic to reach?

Yes. I if I'll just start on this one. So we don't kind of like look at it that we have a target. That's exactly the point on this. Profitability is good. Growth is good, kind of thing. It can vary sort of. But I think maybe if it will be this sort of 70, 80 type of area that would be a good area.

I don't think we will ever be in the on stability profitability and 100% of growth. There will because you also have to remember, we have raised the target to be on -- because being in 2020, you could be in a growth where if you stand still, you would now be in profitability or even a stability because we raised the bar all the time And that is also true because I always say nobody should be below average, and that's a bit -- of course, a challenging part, but that's what happened when you move the average. Everybody has to move up.

Okay. Thank you. And we'll finish off this Q&A session with Jonathan.

It's Jonathan Mounsey from BNP Paribas. Just going back to -- when you're answering George's question about e-mobility, we've got new targets today for margins. And I remember the almost IPO of 2022 free mobility. And I think the targets it have been. I know at the moment, the job is to get to breakeven. But back then, its targets were quite a long way below what the groups are today. And you said the plan is to IPO it not next year, maybe 2027, who knows. But back then, I think you were going to IPO it and continue to consolidate. With the -- probably the potential for profitability in that business, are we saying that the plan now is to IPO it and say goodbye to it?

I think the plan was always to IPO and reduce over time the ABB holdings mistake in it. So that was always the plan, and that plan hasn't changed. So that's still what we're planning to do. Let's say, when the business and the market is ready for it.

Okay. And as a follow-up, today also you've mentioned a commitment to consider buybacks, and you said the money won't be building a hole in your pocket, but you will get quite a bit of cash in from robotics and the pipeline is building for M&A. But if we get to that disposal and the cash comes in and you haven't bought anything, is there a kind of commitment to start buying back more stock? Or I mean, are we going to build a kind of war chest here in anticipation of potential M&A?

I think we need to deal with that topic when we get there. I mean, there is still quite a bit of time before the money comes in. And as we said, we will continue to systematically operate within the capital allocation principles and that framework. So let's see how goes. But maybe the final -- we're not going to waste the money. That's our commitment here from states. We'll make good use of it and or the best use of it. That's kind of -- that's what we have to do what we want to do.

Okay. With that said, take of a little breather. Coffee and refreshments are available in the where you had breakfast and we'll meet back here at quarter to 11. [Break]

Feeling fresh? Ready for the next business area, automation, formerly known as process automation. I'd like you to welcome up on stage Peter.

Thank you, Ansi, and good morning. Let me start our session on automation with a quick reflection of where we're coming from as process automation. We're a $7 billion business. And for those of you who've been in 22 Helsinki 23 Frosinone, Capital Markets Day, you recognize, we've also reached and passed our strategic ambitions that we raised last time. That's one of the factors here, and Morten mentioned it already, we're an important conduit and I'll talk more about it in this presentation, also for electrification and motion, we benefit from them, they benefit from us. And that is also one of the factors that allows us to actually have the trade net working capital that you see here, so lean, which helps us excel on the return on capital employed, KPI that stands strong. In terms of content, that's, of course, all based on what we're doing for customers. We have a leading position in price control and in a number of industry specialties largest of them being Marine Electrical Propulsion, where we're really strong, but also, for instance, process analytical. If you saw the drone in the image video earlier, it's actually a real thing. This drone is sniffing methane, and that's both from a sustainability perspective, quite important because it's a potent greenhouse gas, but also from a safety perspective. If you have methane concentrations, those could lead to explosions. So people producing oil producing gas, but also in city gas networks are actually using are analyzers, sometimes deployed on drones, sometimes on cars, sometimes stationery, together with our digital solutions to pinpoint leakages. So, just wanted to highlight that not all our analyzers are flying around, but also this is not just pure fiction, but it's actually what we do for a living. And then there's a lot of further industry-specific anchors, and we call them anchors because they anchor ABB first in mind, when you're thinking about, for instance, doing a new mine, a new paper mill, an offshore rig, a marine vessel, we've got the equipment that you really want to think about first because it's performance critical, it's differentiating, and that helps us start the conversation of what else we can do for you in terms of the electrical, in terms of the motion content of the solutions we provide. We do that with 87% direct sales. So we have a great degree of customer intimacy that is very important for us. And we do that in a sales after service serve is after, say, this kind of way. So we are convincing with customers at the capital project phase when it comes to cost schedule and risk being the main criteria. But then also, as these assets that we have built, get used over decades of life cycle, we basically help them manage those for safety, productivity and sustainability. Still as process automation. We've had a pretty decent run in recent years. So we're looking back at 20 straight quarters of positive book-to-bill of more orders than revenues in each of the last 20 quarters. That's provided us to quite a level of order backlog. And definitely, without compromising margin because the margin is also up by more than 500 basis points since 2020. So we look at that as a good starting point also when you have volatilities, when you have different cycles in the different industries that we serve, that provides us with resilience, short of being able to make really accurate forecasts, which are, I think, in volatile and uncertain times, not so easy. Actually having a backlog provides resilience and gives confidence in where you're going. Now we have called a session automation, and Morten already talked about that bringing process automation and machine automation together, we call the whole thing automation. I'm excited about it. Machine automation is really a high-technology strong in customer and industry and domain knowledge, just like process automation, actually. And they're really very well differentiated through their competence, through the engineering. It's a niche business, but it's a niche business that brings opportunities to process automation where we will be able to tap into certain technology synergies, and at the same time, some of the things we are strong in, in process automation will -- and I'm convinced of that, also had the machine automation business beyond that. And I think that's further out on the horizon in the hybrid industries, if you really think the strengths that we have on the process side in industries like, for instance, the pharmaceutical industries or parts of the food and bev together with the secondary that they bring more on the machine level. I think if you look at long-term trends like personalized medicine, personalized nutrition. I really think there's opportunities there, but they're not for this strategic period, they're rather for us to lay the foundations now. If we do the translation from process automation to automation as the combination of process automation and machine automation. You have the numbers here. So we're looking at a $7.8 billion business in terms of revenues. The margin was -- were machine automation right now is a little diluted, but we're still looking at $1.1 billion annual profit here. And on the net working capital side, we clearly have room to apply some of the recipes we successfully applied in process automation, also more strongly in machine automation so that the 22% return on capital employed that you see there right now, can basically make their way back towards the 30%. I mean we've been performing at more than 30% ROCE. I think that will not happen so quickly, this will take time. But clearly, we also don't just want to sit where we are right now. Now as automation, what are we actually doing for customers? And this is independent of what we've been calling process automation, which also in fairness, if you think of container ports in the marine and port called that process called that discrete. I mean we do automation across a broad range of industries that we serve. But basically, automation is always about closing feedback control loops, like you're sensing a condition you're taking algorithmic decisions in controllers. You're then acting through, for instance, the motors and the drives when we're talking here in a motion facility through switching electrical equipment that you're taking action on this process or a machine that you want to control, where we are really feeling unrivaled is the integration of process and power from an automation point of view that you control process and power under a single pane of glass and really, really quickly. That's of growing importance to the industries that we serve. Why is that? So -- if you think of a growing share of renewables in the grid, then basically that comes with a certain amount of intermittency and at the same time, when I studied electrical engineering admittedly a few years ago, you wanted stable baseload power for reliable industrial production. But that's not the reality of the electricity supply today. So our quite differentiated competence is to combine the control of process and the control of power so that basically was in milliseconds. So very, very quickly, you can decide, let's focus the electricity on keeping that compressor running while, for instance, shutting down the seater really, really fast because it doesn't actually matter to the process. If it goes down for 5, 10 minutes, there's enough some capacity here at the process can continue to run. So that's one of the areas in which we differentiate really well. Another that we look at as a strength is really the process unit and in the future, the machine, so basically the plant all the way up to the cloud. We're also having a strong integration between our automation and our digital offering. All of that serving the interest of our customers to drive safety, productivity and sustainability or to be -- to help our customers be leaner and cleaner as we say these days in. For those of you who've not been so exposed to automation, it's really the backbone, the nervous system and the brain of industrial operations. And reliability is super important. We're talking about 99.999% availability here. So you're way beyond what you would normally get out of normal computers or service level agreements out of the cloud. This is really high criticality equipment. And if you think of the consequences of a shutdown be that on an offshore rig, be it in a refinery, be it in many of the other processes that we're serving. Basically, immediately, you have to deal with a complicated situation where your revenue starts and so you're not producing and you have to take care of, for instance, a material that's building up if you're in a petrochemical plant and it goes down. You have to actually put a lot of your product to the flares. It takes you often a day until you're back to full production. So the reliability, the dependability of these technologies is really essential and our customers value that both from a safety and sustainability and productivity perspective. Now how we're organized is we're organized in divisions, each of them fully accountable for their profit and loss. At the same time, of course, working together with each other and working together with our sister divisions in motion and let like we heard from Morten already. So what we do there is in three of them were basically organized by industry verticals. So in energy industries, we have both the conventional hydrocarbon kind of industries. We have renewables. We also have power and water there in process industries, mining, minerals, paper, those kind of industries. And then marine imports is quite self-descriptive. Whereas measurement and analytics is basically a technology offering across. And also if you look where those machine automation solutions are deployed, it's actually across a range of industries. So that's how you can picture that. We've also indicated the strategic mandates here for you. So you can see we have profitability mandates in energy and in process industries. If you look at them, they're both actually grown quite a bit also over the years, but we've always said before we take projects that basically dilute our margin and we compromise on the risk/reward curve, we rather want to stay selective, either we're really adding value and customers are willing to pay for that also or then we're not actually able to add sufficient value, and then we will also say no to a bid. So that selectivity remains in place with up both the margin and the volumes in both. So we've kind of straddled nearly the edge of that. And underneath energy, under nice process, there's different business lines that then have some of them gross mandates, others, more profitability mandates. Marine imports really been on a super strong growth journey as of lately. We've really had a lot of orders in this field. It's a cyclical business. It's a very long-cycle business also. So some of the orders we've been booking lately they will only be delivered 3, 4, even 5 years out. So it's good to have the resilience of an order backlog here also in the measurement and analytics growth mandate, I mentioned the process analyze leading position that we have, for instance. So clearly, we have great technology there, and we're certainly aiming higher with that. And machine automation as the newest addition to automation now. That one is clearly on a stability mandate. It's seen quite some shocks from the markets it's serving from the supply chain. And I think we want to put that back together and really bring it to its full potential. So for the time being, we're on a stability mandate there. If you look at them, we share certain capabilities across them, not in a way to dilute the full P&L responsibility of each division. But more in the sense of competence pools, we're commonly using R&D and engineering capabilities, operations centers in just poor location where everybody still has control over their part we have the same processes. We have some of the same locations. And the same is true for digitalization. At a megatrend level and not all synchronous in terms of their cycles, you see the big trends for us. Energy growth and transformation is clearly big for us, security of supply, both on the energy side, but also the critical raw materials is essential process electrification as a way of bringing to those material and energy-intensive industries that we serve more renewables as a electrification is a conduit there for renewables for decarbonization. And then, of course, digitalization and AI is a big driver for us. Across all of that, how do we win? And you have the wheel here, and we heard it from Morten also earlier, technology leadership and domain competence for us really two main drivers for that. And then we're basically able to integrate automation electrical and digital elements into solutions for our customers with an ability to execute anywhere in the world. So we have a local presence. We have a global reach we're able to serve that over a long life cycle. So sales after service, service after sales to help our customers out run leaner and cleaner. So that's recipe for success. We've been at this for quite some time. And if we want to look at specific examples, and we saw the left-hand side of this chart also already, then very often, I mentioned automation often gets decided early and at senior levels. industry anchor products that we have for the different industries that we serve like the mine hoist or the Giles Mill Drive, the paper quality scanners, the [indiscernible] propulsion in Marine. Those are the things that really get you in the conversation early and that allow us to then say, in order to really do the best solution, let's bring in these drives, these motors and generators, let's bring in this differentiated switch gear, for instance, maybe on a marine investor. What are the advantages of going to direct current to DC where the colleagues great technology. So we often win together. We're sometimes first through the door, especially with industrial customers, and then we check, is this is a solution that the customer is looking to procure in an integrated way and have service in an integrated way. Or is it more we make an introduction and people actually want to buy separate lots. You have to be selling the way customers want to buy. So that's clearly our mantra here, but it's a great collaboration. And it helps us in process automation, the credibility that comes with the ABB NIM and the strength of electrification, the strengths of our Motion businesses also helps us with credibility because customers also know we have a competence to integrate these things will be interoperable and will be coming together for solutions that will then also be supported over long life cycles. So I think it's a strength that plays both ways for ABB. Specific examples here in the U.S., ongoing Rio Grande LNG, we really have the automation, the electrical, the digital scope. We have the motors, the drives. We've got the switch gear. We've got 800xA on the process automation side and digital solutions on top of that. So it's really quite comprehensive. And if you look on the second example shown here, Northern Lights first commercial location where you can actually bring your CO2 in order to have that sequestered, we're basically here again with the motion, the electrification and the automation content as part of an integrated solution and then providing the services along. So quite proud of that and also actually the first commercial CO2 tanker for that purpose is actually also equipped with our technology. So there's real opportunity in this integration, not everywhere. But there is, and then we're very happy to take this business. If you look from a strategy point of view, our strategy is fairly simple. It's about strengthening the core, it's digital and AI and its energy and sustainability plus some inorganic across. So that's the strategy we've had at Process Automation. It served us really well also in not only meeting but beating the ambitious targets we had set at previous Capital Market Days. So we'll stay with the structure of this strategy. Obviously, some of the individual items will keep evolving. And you can see on the left-hand side in gray and the black where we were able to get to with executing just the strategy and then the restatement with the addition of machine automation, what you see in red here, that's where we now start from as automation. And we see more potential to unlock further value. And if you look in terms of strengthening the core. What do we mean by that? We, of course, mean being systematic with the mandate at the level of each business line so that we strengthen it from a numerical perspective, if you want to look at it this way. But also in terms of content, we continue to invest in our leading technologies. We continue to drive our service value proposition, our market penetration of our own installed base and then also beyond our own installed base. In digital and AI, clearly, automation has like a blurry top, if you want to look at it this way. So above automation, there's clearly a growing space for digital solutions. And as presented in previous Capital Market Days, we've decided to go about that largely organically, but with some bolt-ons. And then, of course, in the energy and sustainability space, there's always movement between the three corners of the so-called energy trilemma between the security of supply, the sustainability, the affordability. So there's constant movement, there's movement as a function of where you are in the world of industry but clearly, a lot of things for us to do. Let's have a quick look one by one. In terms of leading with technology, one of my challenges is always how do I depict software because 80% of our R&D teams are actually working on software, both embedded as well as automation software and then digital solutions. So that's kind of in some sense, pictured on the left-hand side with automation extended. Easier to picture and always quite impressive for those of you who are in Helsinki 22 Capital Markets Day, in the Azipod factory. I mean these are electric hybrid solutions and for those of you who haven't seen them, they're quite large. And basically, what they do is they help marine vessels, especially those that have dynamic load and maneuvering schedules, save something like 15% of the fuel bill simply by taking the big diesel engines to generate electricity and decoupling the RPMs of that diesel engine from the RPMs at the propeller. So that's an example and a prominent one of an industry anchor product. We have many more. We've launched [ Dynafin ] as an innovative propulsion concept. We continue to invest on the analyzer side, so this gas chromatograph that is pictured here, for instance, is able to pick up a single molecule in 1 million. So it's doing PPM parts per million level accuracy, while at the same time coming with built-in cybersecurity coming with WiFi also. So it's pushing the boundaries here. And on the machine automation side, some really fascinating things with Becatronics in the development and productization pipeline. On strengthening the core, I mentioned service as the other one. And here, you have some numbers how we've actually not only grown on the project and new business side, but also grown on supporting our customers' installed base once you've made this initial investment and you're operating those assets over decades of life cycle, then basically keeping them up to date, modernizing, extending, future-proofing them, including from a cybersecurity perspective. All of these are important, and that's why this sales after service, service after sales model is so crucial for us. If we support your installation really well, you will also consider us for your next project. And if we wouldn't that next project, there's an installed base to be supported. So it's really a virtuous cycle that we're benefiting from, and we see significant further potential as this large installed base continues to both grow, but also the older parts, age and need modernization. On digital and AI, on a high level, this is basically about the journey towards autonomous operations. When you look on the left-hand side there, it's a real picture from our archive. One of our customers in Sweden in 1890. And you can see probably a dozen, 2 dozen signals that this operator is handling. And then sort of in the 1980s, they started having color screens, pretty small screens, quite a lot of people still. And then in the collaborative operations, which is roughly where we are today with technologies on average, that's where you actually collaborate between different functions in the customers' enterprise. So for instance, between driving operational performance and looking at maintenance, looking at managing the asset working across different locations potentially also. And we are talking about this trend towards autonomous operations, which doesn't necessarily mean total lights-out factory sort of production as the Japanese were envisioning in the 1980s, but it does mean a lot fewer people in difficult dangers hard-to-access areas. And if we look at specific examples, we find them on the right-hand side here, the upper one, for instance, when you have mines that are above 4,000 meters in the end, it's some pretty harsh environmental conditions there. You won't find a lot of people who want to work there. So if you have technology, it will allow you to actually put some of your key operations people far away from the action, but relying on technology and far fewer colleagues who are locally on the ground that gives you safety. It gives you productivity. It also gives you better sustainability and on a smaller level, not here on the slide, let's also if you would go into a container port today. Basically, there's not the crane driver cabins anymore where every crane has a crane driver who's sitting up there in scorching heat or cold. And with the vibration 50 meters above ground with all the challenges that brings if you need a break, but it's basically jobs that have been concentrated to control rooms where basically technology and people work together to move those containers around the yard where more than one crane can be operated by an operator, while at the same time actually making these jobs much more broadly accessible to Vedanta and others lately. And then finally, strategy and sustainability. It's really -- the energy expansion and the energy people are increasingly concerned about how do we produce. At the same time, in many of the processes that we serve, there is electricity brought in as for renewables as a conduit for decarbonization and you see that symbolize in the pictures here. So actually, some of the very material and energy-intensive industries use electricity, and that's also why electricity is growing faster as part of the solution then the overall energy demand is expected to grow. Finally, the inorganic side, we're actively building pipeline, but we're also executing on some of it. there's the industrial software and AIP I talked about earlier. In this one, actually, middle of last year, we closed the acquisition of the weather-based routing business from DTN, that today is part on our marine business on the digital solutions for the Voyage solution suite that we have there. So we've got Voyage and Vessel kind of services. One is more process performance, the other is asset performance in generic terms, and that's going ahead really well. So that's in this category. We are generally looking at decarbonization of hard-to-abate industries that goes well with our themes of anchor products. So we're always scouting the market for what's next in this area, be it through more venture participation, but also outright acquisition if we see the right target. Advanced sensing, we did two actually last year. We acquired Dr. Fortis as a continuous emissions monitoring technology on the process analyzer side, but also water analyzers Dr. Fortis in Germany and Realtech Water, actually a Canadian company, mainly a technology that we're adding to our portfolio to be sold through our existing sales force. And of course, we continue to develop that pipeline, be it on marine, be it for segment leadership in general. Let me wrap it up here. In terms of where we start from is automation. I think we've come a long way as process automation. We now have this opportunity to bring machine automation to its full potential. So we stand on a stronger basis than we did maybe at the '22 Capital Markets Day, we did specifically for PA, quite proud of the team that achieved that with our 26,000 people, we have an easy-to-remember strategy. I talked about it a moment ago, strengthening our core, including the technology, including the digital aspects of it, the digital and AI basically as part of our journey towards autonomous operations and the energy expansion and energy transformation topics in energy and sustainability. On the gross and margin improvement side, we're basically at a point as automation where a point of growth and a point of margin if you do a valuation sort of contribute similarly to value. So we're taking a balanced approach. You saw different divisions. And underneath them, different business lines, some on this mandate, some are on the other and really pleased to see automation at the heart of ABB's purpose and contributing to it. The pictures that you see there, all those photos are actually the real thing. This is things we're doing for a living. And over the cycle, we're looking at a 5% growth ambition over the cycle. We'll have years that will be above, some that will be below depending on the cycle goes. But again, here, resilience from a strong order backlog will, for sure, help us. And we have the margin corridor of 14% to 18%. You saw that was machine automation initially. We're to work our way towards the 30% ROCE again. And that's [indiscernible].

[indiscernible] procedure as last time. Hands up in the air. We start with Max, yes, we have two there actually next to each other.

Yes. I think we used to talk about this being quite a good margin at 15%. That was a good level. yet you're kind of showing us two quite big pieces, which are still in kind of profitability improvement. So maybe if we were thinking in kind of old terms of where could that division go to, maybe just sort of what would we think about for process automation? And for those two big pieces, what are you really doing in them? Is it about selectivity of projects that you're taking? Is it about cost efficiency? Is it pushing price? Maybe help us understand those big two pieces where they're in profitability mode and what you're doing?

Yes. So we're talking about the energy industries and process industries. Those are the two that are in profitability mode. And underneath that, there's clearly parts that are margin accretive and that we would drive with a strong focus more on the growth side. I mentioned service as an example, it's clearly important for our customers that we service them over a long life cycle. And we have further headroom in this area that we will continue to drive with a lot of focus. At the same time, when you look at greenfield projects around the world, you always have to ask yourself, okay, how is this something that still makes sense for us also considering ABB overall. Is this something where we do an integrated automation and electrical solution including managing the cost schedule and risk consequences for the customer? Or is this something where the customer is really saying, "Look, if I buy this and that from maybe before electrification or motion colleagues as an example. So, not your focus. Of course, you can also buy the pieces individually. That's what is under the profitability mandates here.

Okay. Maybe just a very quick follow-up. I've always thought your division is one of the ones where you could also do larger M&A. May be in the sort of valves or actuator space. Do you see those as white spots? And would that be something you would be kind of interested of proposing maybe sort of similar to Emerson have done?

I mean you would always have to look at what position could you acquire for yourself? And would you be spot fish in a big pond or would rather be a big fish in a small pond. And it's the second. We'd rather be. So I don't think we would want to copy the model of one of our competitors where they've established themselves very strongly and sort of come late to that party. We'd rather find our own party.

Please go ahead.

I have 2, maybe 3 questions on the mission automation part of the business. Sorry, I'm here.

Yes. Sorry. Yes, it's very hard to see the lights are quite blinding on the stage.

Based on the numbers you provided, so it seems that Mission Automation had $600 million of orders last year, $800 million [indiscernible] again, so that's question number one. Question number 2 is more on the M&A side, maybe a follow-up to Mark's questions. I guess your business today is obviously skewed towards process. From a strategic perspective, on the M&A side, would it make more sense to double down on process, we invest more in your core or actually make acquisitions potentially on the discrete side, expanding your positions into mission builders recs, semis, whatever.

Yes. Okay. If I start with the machine automation question, and you mentioned $600 million, roughly speaking, on orders and $800 million on revenues. There's been, in parts order cancellations and that also, if you think of the Bulwer effect that travels through the machinery OEMs, the component producers, supply chain. So both from the customers as well as the supplier side that led to some sort of transient effects. My sense right now is we're probably at a point where this is starting to stabilize more, but then I've only taken this business [indiscernible] from October 1. So that's an early and preliminary and specifically the machinery OEMs market in the way we're serving them there. But I think in the coming weeks, in close dialogue with our customers. And I think more of that bolt-on type of deals would fit our logic here.[Presentation]

So good morning. Good morning, to all of you and for sure, electrification make it all possible, in particular, make everything possible. I started my career 30 years ago in ABB just after the graduation as electrical engineer, and I knew it that it was an important industry, but I couldn't believe or imagine at all that electrification was becoming one of the most important and critical sector in our era. Today, we are in the middle of a big revolution. We are in the revolution where hundreds of billion dollar flowing inside of our business, inside the electrification business because electrification is going to be the energy of the future. And in particular, it's going to create the possibility to sort it out one of the biggest challenge that our planet has to create more power with lower emission. Today, I would like to guide you through 3 major topics. The first one, how our market will grow, our segment will grow in the future and for the next cycle. The second is related to how we were successful versus the last Capital Market Day that we did the -- that we did in [indiscernible] a couple of years ago. And the third one, we will show you how we will continue to grow in sales and in profit margin. So let's start with the market. This is the segment that we are doing business in electrification. This picture is related to the revenues of 2024. And today, we will go through the 3 major sectors that represent about 70% of the total business electrification. That is the building sector, the utility and the data center that is, of course, the most growing sector. So let's start with the building. Building for sure is the biggest sector where we do business, and we are very strong in the building sector. We're doing more than 1/3 of our sales, and we do believe that in the next 4, 5 years, the growth of this segment is going to be in the low single -- low mid-single digit, creating additional $20 billion of additional market in 2030. One of the big things that sometimes we underestimate is how the building sector is in transformation. Within 2050, the additional consumption of the building sector is going to be like 13,000 terawatt hour. What does it mean, 13,000 terawatt hour? It means twice time the entire consumption of United States today. Just because there are going to be a conversion from the fossil fuel to the full electricity, just because there will be more cooling in order to adapt to the climate change. And just because electricity is going to be the primary source for all the HVAC system inside of our building. We are very well positioned in this market also because this -- you win in this market if you have a great network of channel partners and distributors on a global scale. And we have more than 12,000 of those. And 90% of the business through this segment is passing through distributors. On top of that, more consumption, more electric consumption is going to happen in the building and so large building, a large hotel chain that will focus more and more on automatize, the electrical system to reduce the energy consumption. That one of the clear example that is reported there, for example, is Sokos Hotel is a chain in the north part of Europe, where we enabled them to reduce by 50% their HVAC energy consumption, connecting our ABB automation KNX system with the reservation system. The data has changed among the reservation system and the energy and electrical system. And so based on the guests that are in or out, based on the comfort that we want to provide to them, we could be able to reduce such a team. You know, what does it mean 50% of less energy for the HVAC system, roughly 25% of the energy bill of the hotel chain. So it's a big, big reduction. And this is going to happen everywhere in particular for all the energy for all the hotel chain and the large buildings. We were talking about, Morten this morning, I guess, during all the presentations so far, we're talking about a lot of demands of power. And for that reason, the utility is super important. Much, much more demand and all of us knows that we are trying today to run a 21st technological economy on a grid infrastructure built up last century. There is no way. We need to change, and we need to update all the electrical infrastructure in the world. That's why the IEA has foreseen that within the next 15 to 20 years, almost 50 million miles of transmission distribution line need to be upgraded, just because there is the aging of the components. Most of these grades were built up in the year 60, 70. They start to have 70 years old, the components are already beyond their respect of life. We need to be upgraded because the electrical grid were established when there was no renewal energy. And so they are not adopt to that. So they need more control function. They need more grid automation. They need more possibility to be resilient. Nobody want to have the experience that happened already in some countries. This year up and already in Europe, if you remember, in Spain, it happened in Portugal. It happened in Mexico for a big portion of the country. And unfortunately, it could happen again. But many, many investments are going on that. And ABB is very, very well positioned to support all the utility with all of our component with our medium voltage, in particular with our relay with our grid automation system and our balance of the entire network. We talk about balance of the entire network. This is a clear example that is in synergy. Synergy is -- in particular, this project in Western Australia was done to try to build up one of the biggest campus in the world with better energy storage system. We talked about almost 0.5 gigawatt. So like the power generated by a nuclear reactor for 6 months. Half gigabits massive. This is done in order to compensate the peak of generation of the sort of power plants that are happening in that area. What we did for them. We built a massive, gigantic, e-houses. We're talking about e-houses long 130 feet. So like Boeing 737, where we built up in-house in our factories with our control system, all the low voltage and media voltage switch gear with the automation grid, we tested. We have done all the quality check, we ship, we plug in and it works. This was helping the customer to save almost 25% of the project completion. And such e-houses, we are doing every day for data center for any kind of application in order to support the customer to make them faster implementation. We will talk about data center. Of course, data center is the big role. We are talking about a growth of double-digit market growth. We have a big portfolio of solution from the electrification businesses, from the motion businesses and from the automation business. I think that a couple of days ago, there was a big announcement. I think that is a great things that Peter did with this team here in U.S., where they sold the synchronal condenser that is a great device, a great technological device in order to balance the power generated by the gas to buy. And the [indiscernible] today, they are mainly used for data center. It was 2 gigawatts. It was a big project and for -- saying that, we also sold a lot of switch gear and a lot of components to the VoltaGrid. In the meantime, one important thing that I would like to underline that sometimes we underestimated is this one. Of course, most of the data center grow is happening here in U.S., right? 60% today of the business of the data center is happening in United States. But one important thing that I would like to underline is that in 4 years from now, it is foreseen that the same investment in data center, like the ones that happened this year in the United States, will happen in Europe and in China. We are already strong in the United States. You can imagine how we're going to be stronger with our position on the market that we have in Europe and in China. One other thing that is super important is 1 out of 4 data centers today, they are using our technology. What does it mean? We have a great market access to hyperscaler, to co-locators, to OEM, to liquid cooling or air cooling OEM that are supporting the data center. So we have great assets with our technology because, of course, the data center are super important from the group perspective. And we are foreseeing that this market for the electrification business is going to be $25 billion, they create additional $25 billion for the electrification market in 2030. Roughly, to give you an idea for the electrification every investment in data center every $100 of investment in data center is about $7 at the moment today with the -- with the potential market for electrification. Of course, we are continuing to invest. We are continuing to grow in the data center space. But at the moment, this is the picture that we are doing. An important piece that where every data center builder and every hyperscale that is looking for today is power density, much, much more power density because the data center are becoming bigger and bigger. And on top of that, they are consuming much, much more power. So they need a lot of efficiency. That's why Morten has already mentioned this morning, three years ago, we launched in the market. We launched it in the market, the medium voltage UPS called HiPerGuard. It's a big success at the moment. We are doing installation in U.S. and Europe, in Southeast Asia. And why we are doing that? Simply because it is creating a huge amount of value for our customers. Today, we are the only one to have such a solution. And today, the most of the hyperscaler data that are using SaaS solution is because it's going to reduce the CapEx investment by almost 20%, they'll just need less copper and less component. It's much, much more simple. This architecture with the medium voltage UPS. The efficiency of this medium voltage UPS is more than 90%, the highest in the market. And with this architecture, just to the fact that it's much more, more simple, they're going to create a bigger model. Therefore, the giga-scale data center is important to reduce by 20% the time of completion of the project. I think it is a great product, but I wanted that also one big partner that is using this data center here in U.S. is going to provide you now in this video some of the key value of our partnership collaboration. This is applied digital and is going to have the Chief Technology and Innovation Officer that is going to talk about this collaboration. [Presentation]

As Todd was saying is like the space race, and it's exactly what's going on. And this is what's going on for the AI data center, but we'll love technology. That's why also with developing technologies that help our customers to succeed and to make it better. This is our focus for today and for the future. And that's why developing new solution and technology was enabling us to grow for -- during the last 20 quarters in a row. We were growing the last 20 quarters in a row with an average CAGR of 8% since 2019. And in the meantime, we were able to grow substantially our profit margin, reaching more than 23% that is higher than the target that we were setting during the Capital Market Day 2 years ago. How we did it? I think that the most important part for any kind of business is always the people. And we don't not talk so much about the people. I think we have a great team of people. We have a great team of professionals that know what they are talking about, and they know the technology. That's always important. And if you combine a great team with one of the best operating system that is the ABB Way where you try to embed the culture of empowerment, accountability, ownership at the divisional level and the business line level, and we aim to do it at any level inside the organization closer to the market, you have great results. It's always our appetite to do great business. On top of that, of course, this thing was creating one important fact. 4 out of 5 divisions that were growing profit margin during the last couple of years. And on top of that, we were able to make and manage between divestments, investments inorganically and in investing more than $2.5 billion in research and development during the last 5 years, we managed in a very, very good way our business portfolio. That's enabled us to grow in a great way also in terms of profit margin. And other big things that we were able to do it, it was 2 of the division like distribution solution and the installation product that we were talking during the last Capital Market Day that we're growing in a tremendous way during the last 2, 3 years. U.S. turnaround. You remember, we were talking about in [ Frosinone ] about that U.S. need to improve. This is what it was done. We walked the talk. We improved substantially. There's still significant room for improvement, but a lot of improvement were done in U.S. in profit margin, but also in market position. We grew substantially also in many product lines here in the United States from the market standpoint. Local-for-local strategy, that was our long-term strategy. And it's there, was always there, and we will continue to aim to invest in order to reach 90% of what we sell in every region to produce inside this region. There was a strategy that we have since many years and in particular this year -- we were -- it was helping us also to get out or to guide us among the tariff and the trade risks. This is what we did. But now looking forward, let's see, because the best is yet to come, we do believe. And the best yet to come, and we will work now for the next cycle on the 4 area that is reported on the screen. The first one is related to the continuous improvement with the U.S. focus again. The second one is related to continue to invest and keeping our leadership position in the market that we serve. The third one is related to the big investment in innovation for the future technology. Remember what I said at the beginning, we are in the middle of a revolution. So we need to invest much, much more than in the past on the innovation to create the future technology. And the fourth one, we will have much more focus also in the M&A and inorganic growth. Let's go 1 by one, U.S. U.S. is our largest market. It's where we're growing the most and where we, in particular, during the last 2, 3 years, we were growing with an average of 20% every single year. We invested during the last 5 years, $0.5 billion. And this -- just this year, we announced $130 million of additional investment. Why we did it? Local-for-local strategy. It's always our strategy. We aim always to reach 90% of what we sell, we need to produce inside the region. Of course, one other important thing is this one. We improved substantially our profit margin in the United States, but we are still below the average of the electrification, operational EBITA. So what we aim during the next strategy period is that we would like to reach at least the electrification average and go beyond of that, because there is big room for improvement. How we could improve it -- how we could improve here? I think many of you that were in Frosinone in the Capital Main Italy, 2 years ago when there was the last Capital Market Day. I think you saw a beautiful factory, also because I grew up there, so there is also my heart there a little bit. And there's a beautiful factory, very lean, not vertically integrated, great productivity. That's a number. Every year, 20% of productivity improvements. This is what we need to learn, and we are bringing here in the United States, where today, we have just -- the robot density in our factory here in U.S. is roughly 1/3 of the robot density that we have in other places in the world. Why we didn't -- we have not done before? Because you cannot do everything in one step, that simple as that. We did big capacity improvements. And now what we are working is fine-tuning and go step by step in order to improving continues to the profit margin. So these are one of the biggest area that we will need to do it, and we will have a plan to do it during this strategic period. The second one is keep the leadership position and make it better. This is a one-tier example. There is a beautiful product. It's one of the most successful or better, I can say -- the most successful product line that we ever done in the electrification business -- in the history of the electrification business. We launched in 2013 [indiscernible] and this one has become the market leader, worldwide business. We have more than 5 million of product installed base. This is the most profitable product line inside of our company. We are launching in July in Malaysia. We did a new launch, and we created the Emax 3. Why we did it? Because we are -- we were a market leader and we want to make another -- we want to make another leap forward versus our competitor. And now we introduced more digitalization, more controlled aggregate, more automation and more control of the power needed. And there is a full compatible -- full backward compatibility. So if the customer want to make an upgrade, he can rack out the product, racking the new one and you have upgraded. That's one clear example of the big investment that we are doing in order to keep our leadership position. You can find those products, a huge amount of those products you can find in data center. You can find in hospital, in airports, in all the critical applications in the big industry. We were talking about how we're investing to keep our leadership position, but as I said, when it invests also for the future technology because we are in the middle of a big revolution. DC and so the direct current, DC distribution is here and this time is here to remain. We talked about this since many, many years. We are in this industry since many, many years. And why is important. Let me talk about one thing also because why the direct current is important. You saw the benefit is enable higher power density. It can reduce the cost because you can use less raw material, for example, very simple, in AC distribution you use 3 or 4 cable. If you're in DC, you use 1 or 2 cables. And after that, here, we are more than 100 people in this room. Everybody of us here has a laptop, has a mobile phone, we are having LED, so lighting, TV screen, projectors, air conditioning, all of those are working in DC. But due to the choice down at the end of the 19th century, the standard became the AC. But today, the power electronics enable the possibility to move part of the distribution network in the DC. Today, every one of us has a charger or have a converter, it's a small one stuff. All of the things that are hitting and when you plug it in is there are a lot of hits. There are conversion. There are a lot of losses in hit. Every one of us is wasting a lot of -- a lot of energy during the conversion. But what if we can distribute with the direct current. That's why the importance why the data center provided, why Nvidia, why every single data center provider, they want to invest in DC. We need more power density with the easiest way, arrive with the medium voltage -- with the medium voltage power as close as possible to the rack and afterwards go direct with the DC. That's the strategy if you want to have that the data center are becoming bigger and bigger. That's the only way to do it. And that's why for who of you were in Frosinone 2 years ago, I think that you saw the gray box that is called there solid state [indiscernible]. We launched it during the Capital Market Day. And you were seeing these big great boxes. We were the first one in the world to launch. It was done for the DC application. Why we did it? With a great collaboration that we are having with process automation because in the DC vessel, the DC is already a reality. And we tested, we already use it together with the process automation colleagues in many electrical vessels around the world. Same type of grid is going to be implemented or the data center, exactly the same LEGO blocks will be implemented for the data center. The second big investment that we are doing, of course, the DC is the research and development. We are in the DC since many, many years. We have more than 700 patents, and we will continue to invest. We're making a lot of partnership. One month ago, we announced also a great collaboration that we are doing with the NVIDIA in order to build up the future DC architecture that is not available yet. But we are working with many other peers to build up this DC architecture. We did equity investment like Digi Matrix to build up another LEGO block that is a solid state transformer. So there are many lego blocks that need to build up in order to arrive -- to have data and bolt to DC that is going to happen. We are making a lot of course, working with many of our peers also to build up the new standard with Current OS and ODCA, one in United States, mainly for the Americas and the other one mainly for the rest of the world in order to build up the future -- the future standard. The last point is related to the M&A. We did $800 million investment in the last couple of years for between equity investments or acquisitions. And I think that we did it in a very disciplined way because our ROCE was improving from mid-teens to more than 30%. So I think that when we do -- already Morten and team were talking about that, when we do acquisition, we try to do in a very disciplined way in order to see if we are creating value for our shareholders. And this is what we did during the last few years. But now we're already also for a larger deal. We have a pretty big pipeline and the 4 areas where we're going to focus is related to the -- to improve the grids and to improve the reliability and the stability of the grid on the high-performance data center on the smarter building and of course, to spend from the geographical standpoint in higher growth geographies. In conclusion, as it was already mentioned before, we are thinking that we are well established. The market is growing. We are very well positioned to grow in terms of revenue towards the high end part of the range that it was mentioned this morning by Morten and Timo. And in the meantime, we are very confident and we have planned to reach a profit margin between 22% and 26% over the cycle. And we will continue to invest in innovation and create the best experience for our customer. We have a clear path. I'm very confident and super confident that we will reach this plan. Thank you so much.

Alright. A few questions before we head out for lunch. We have 1 question here at the front. We start here, and then we continue on the second row there with yes.

Just a question regarding sort of how you think about like liquid cooling and if you would think that would be something complementary that could add something to the portfolio, your thoughts on that, please?

Yes. liquid cooling, there is -- there is no doubt that if the AI is going to grow, there will be a growth in liquid cooling, and we are working already with many manufacturers of the liquid cooling to try to help them also from the electrical standpoint in order to optimize and to make a better efficiency also for their system. So we are already working with many of them on such part. And for sure, we are investing a lot, as I was saying. At the moment, we are 7% of the investment in data center, and we are mainly present of the gray space where we are -- where it is our strength. But if there is value creation, we could spend further also in the white space.

Sean from HSBC. On your margin range, I mean the progression has been impressive over the last few years. And I'm particularly surprised at hearing about how important this U.S. story is that it's been sub margin. And now in theory straightforward, it is for you to catch up. I mean looking also at the growth targets, I mean, why should the bottom end of that range given also where you are today be something you're even considering?

You mean for the growth or the profit?

For the margin.

For the margin. I mean, over the cycle, we fix the range. It doesn't mean that we cannot go beyond that for sure. And it doesn't mean that we will be able to do beyond that. Over the cycle, we do believe you can have ups and down. And so that's why we did -- we will have also a range. I think that is pretty fair also as a range.

Then maybe just a follow-up on the U.S. I mean -- are we at peak CapEx now for U.S.? Or do you still see further acceleration?

At the moment, no. I don't -- I think that what we did to the $230 million that we announced this year, we're going to be good enough in general, making -- we will not foresee for the next future to make some other big investments.

Thank you. Do we have any -- yes, we have 2 analysts here on this side, if we start with Anders Idborg and then we have Anders Roslund following after.

Anders Idborg from ABG. Just an interesting comment you said about the potential growth in data centers in Europe and China and your higher market share there. Could you give us some numbers on that differential? And also, in terms of the profit pool, it has been very attractive here in the U.S. What do you see there in Europe and China?

Let's say this way, in China, we're already growing significantly data center because the data center market in China is growing very nicely. And I can tell you that the profit margin for the data center or the data center in China is in accordance to the profit margin that we have normally for that market. We are not providing data for any single market. But we can say that if we are the growing China data center is providing the same profit margin that normally we could have for the rest. The same for Europe. It's very similar to the profit margin that we have for the rest of the business in Europe. For sure, the growth perspective is very interesting because the -- for many years, the growth was up in [indiscernible] here. Now we start to open in Asia starts were up substantially, and now it's going to make a boost also for Europe and in China. And that's -- we are much better positioned there for sure.

Thank you. And if we could just pass the microphone to Anders further down there, too.

Andres Roslund from Pareto. I have a question regarding the data center and the smart building. I mean those are focus areas for all your competitors as well. And [indiscernible] seems to have been growing the last 5 years, the percentage point faster than you, and how will you catch up and they have a growth target of 7% to 10%. What are the key reasons for you to catch up? Is it M&A or organic growth or both?

I take that. First of all, when we talk about our growth, we always talk about through the cycle, when we talk about 7%, 10% of -- or number 6 to 9 of some of our period I talked about midterm. So there is significant differences of those numbers. I think that Morten and Timo were already explained before. I think that we are very satisfied on our growth. I think that if we are looking at the growth that we are having data center is comparable to our peers. But by the way, remember always the data center, it's just 12% of our growth. There are much, much room for improvement in all the rest of the 88% of our business.

Yes, I mentioned smart building, for example.

Yes, the smart building, the building sector is an area where is 1/3 of our market. For sure, the grow will not have most probably the same trajectory of the data center, but it's significant for us. And as I was mentioning to you, if I look to the -- through the next 10 to 15 years, the area for improvements of this market is significant. We are investing on -- today, we are mainly focused on the KNX part, but we cannot exclude also to try to expand our portfolio for the future.

Okay. Do we [indiscernible] Martin here at the front, and then we'll have the second one from Andres at the end.

Just coming back to the DC technology that you mentioned. Obviously, the penetration of that today is relatively small. What's your positioning there? I mean, obviously, technologically, you've got a lot of products. But if that was to develop, will your market share be similar in that market? How should we see you versus peers in your offering in D.C.?

You know, the DC, as I was saying, we were the first in the world to develop the solid state you could break that is the basic LEGO block for any kind of electrical architecture. So I do believe that we were very well positioned. We started earlier on that just because we used to have in the Marine & Port division on Process Automation, they were already working in the DC vessel since 2013, if I'm not wrong. And so that's why we start to work there. After that, there are many other Lego blocks of the data center of the -- sorry, of the DC distribution that are not available yet. Everybody, including us, we are working hard to develop those lines. I'm going to mention one, solid state transformer. We have in our laboratory. We have a prototype of that. We have an internal incubator, where we invest a lot of our resources. We invested in an external company to build up this kind of, in a faster way the solid state [indiscernible] but nobody has it at the moment. So it's still in the early stage, but it's going to be a super important future technology for the future. Now of course, we are in a hurry because there is a data center, but we have done just to give an idea, the solid-state breaker that I mentioned before, you can find today in the vessels, in the DC vessel, you can find today, for example, even in the building. We were the first one that last year we did -- we enable a big industrial site with offices in Germany for a primary automotive industry where we help them to build up the first hybrid distribution network where you can have the AC distribution and the DC distribution, solid State breaker were there.

And we have Andre here at the end.

Sorry, I'll keep going on data centers. Could you give us an idea of your dollar per megawatt in data centers. And I think you mentioned some number of 7%...

7% of the total investment. If we talk about dollar per megawatt, close to $2 million, right, roughly like that for the electrification part.

Great. 9 And that $7 per million invested number that you mentioned...

7%.

Okay. So you get 7%...

We get -- the market potential for us is 7% of any dollar that is invested.

Perfect. And one other question I want to ask is about that kind of DC microgrid infrastructure. Is there a point in the rack density where it just becomes a must, a bit like with the latest NVIDIA chips of 1.2 kilowatt you have to liquid cool. Is there a -- is it 100, 200, 500?

Yes, we have talked about now at this stage with the new chips, the plan of NVIDIA is to reach 1 megawatt per rack. Rack is like the switchboard, right? And today, until last year, it was 30 kilowatts. So it's 30x. You need to bring the 30x the power of last year -- 30x the power that we were using last year inside the same box. It's going to become no alternative.

But is that at 1 megawatt, is where it's an alternative? Or because it 100, you can still [indiscernible]?

I think that the strategy, and that's why we were developing a medium voltage UPS is to try to arrive as much as possible with the medium voltage distribution as much as possible closer to the server. And after that, you need to go with the DC. Otherwise, it's going to become the block of copper. So that's what it is.

Do we have any more questions for Giampiero? Yes, we have one at the back, Lucas, if you may, please.

[indiscernible] Trust. Pretty philosophical question here. The growth drivers are really obvious, but here in the West, we're seeing more pushback on power prices, electricity prices from consumers. How is ABB helping to lower electricity prices for consumers?

Yes. I think that, as we said, one of the examples that we were -- I was showing, for example, one of the buildings and the hotel that I was showing before. One of the things that we are trying to help is to try to reduce the energy bill of the hotel chain. The auto chain that I was showing you before that was able to reduce 25% of their energy bill. That is significant, particularly if you're using all the -- where all the HVAC system and the lighting for an hotel is about roughly 50%, half of the energy bill. This is something that we are doing well then. We acquired, for example, a company that is called [ sensor fact ]. It's a Dutch company. We acquired this company in February of this year, is software as a service company that the major focus of them is try to work on the middle size -- from the small mid-sized enterprises and the midsized building in order to help them to reduce the energy consumption. So we have many solutions to help them to reduce the energy consumption. Because we -- many times, we are talking about more power, more tanks. But the best way to have more power is to reduce the energy consumption, as it was mentioned by Morten this morning.

Yes. And we have one final question here at the front.

[indiscernible] The profitability upside in the U.S. market, 1/3 of the business there. What is the time line of that?

Yes, we were able to improve the profit margin during the last 2, 3 years from low single digit to ITs. I think that we could have the same type of time on that in order to arrive to the electrification average. After that, more we grow here, of course, more we grow the electrification average. But then so to catch up, it's going to be raised, but that's for sure, something. That's why also the $230 million investment that we did this year, it was not just for capacity expansion. It was also to build up. One of the biggest things you can build up a factory. Great. You have a great building, you need to fulfill with people. You need to train them. You need to have molding. You need to have a supply chain that in U.S., unfortunately, it was not existing. So we are, in some cases, asking to our suppliers in India or in Europe if they open their -- all their own facility here in order [indiscernible] because if we're doing that, we are much faster instead of trying to search others. So it's something that you need to work every day on such a thing. But 3 years time, during the next strategic period, that is 3 to 5 years.

So thank you guys very much. It's a pleasure to be here. We'll bring you home with motion and then we'll put you in motion, and we'll walk around the facility, kick the tires and see some of the toys that we have to show you guys. So hopefully, you can continue to learn more about ABB, what differentiates us and kind of why we think we're on the mission that we're on. So I'm incredibly proud to stand here on behalf of my colleagues, 23,000 strong around the world. Market leader in what we do around having the most comprehensive portfolio in drives, generators, motors, power conversion and then the services that complement that. So we've been on a really great journey. I'm pleased to stand up here as the market leader. Certainly, that differentiates by portfolio, by geography. We'll step you through a little bit of that of where it's most relevant. But certainly here in the U.S. can stand here confidently with what our position is, the strength of our go-to-market, our customer intimacy and really the results that we've been fortunate to deliver thanks to the teams across the U.S. So how are we set up? We're set up with 6 divisions now. One of the changes that I made coming in that I'll touch on a little bit more is combining 2 of our largest long-cycle divisions. And so I'll touch on why we did that and what that means for our customers because that's why we do everything that we do. We have 3 businesses that are short cycle. If you think about our low voltage drive products, our low-voltage motors here in the [ NEMA ] market and then our low voltage motors all the rest of the world. We then have 2 long-cycle businesses, which is high power. So that's large motors and generators combined with our high-power drives. And really bringing those things together because that's how we see customers buying across industries, marine industries, LNG industries, carbon capture example that was mentioned earlier. All those are great combinations of that portfolio. The traction business might be interesting for some that have a long history with ABB that we don't have a train there. Obviously, we're known for that in the rail industry of what we do in propulsion. But now we're taking that propulsion and as another growth vector, we're going towards off-road. So we call it rail to wheels. And so what can we do in order to drive off-road growth for mining, for construction, buses, other types of transportation and even into the marine industry, where we're having some successes. So that's why we've got a different picture up there for traction. And then we pull it all together with service. Our attachment rate to our high-power division is where it's the strongest, but there's also upside and headroom for us to move across the short-cycle businesses. Whether that comes in actual service business, or whether that comes in replacing the equipment, it's a great opportunity for us to continue to grow. The widest portfolio in terms of motors and drives from the lowest kilowatt [indiscernible] and everything in between. And then you heard Peter talk about it. You heard Morten talk about it in terms of having software and the importance of software. Some of our differentiation comes through the software applications that we have across our drive solutions and how we exercise both control and efficiency. So you've heard all of my peers talk about the importance of not just doing it the most efficient way, but also doing it with the most control, and that's where ABB differentiates itself, especially in terms of our drive technology. The business is running at an all-time high from an absolute side and in some of the KPIs from a percentage side. So you can see what our growth has been across the cycle from 2019 to now, a little bit of a lull there in '23 and part of '24, and now trying to return that to growth and deliver where we're going to be across the cycle, certainly across profitability as well. So my peers, as you know, Morten was here. We had another gentleman running the business, and then I've been here since March of -- or since August about 1.5 years ago. And so really running well in terms of productivity, in terms of what our manufacturing footprint is, making sure we can stay competitive, keeping gross margins where we think they should be and pushing towards that 40% that Timo talked about earlier being an elite industrial company. And certainly, we're trying to have -- make sure that we contribute to that from the motion standpoint as well. So what are the industries that we play in, $57 billion or so industry. Industrial part, the heaviest side of that, you can see what's happening in transport, power generation, a huge topic with electric expansion, which you've heard about as a theme all day to day. And then certainly, buildings being relevant for us. What are we doing in those spaces? We're protecting the operations. We're improving grid stability. Giampiero talked about it, but let me give you a little bit more color, the VoltaGrid project in Texas. We're taking synchronous condensers, which is our technology, our large motor technology within my high-power business. We're working together with process automation and the Energy Industries business to package a solution around it that includes stuff from Giampiero's business and core offerings from Peter's business. And we're delivering a value to the customer at a speed, reliability and execution and service package that our peer group can't match, and that's why we've been selected to execute that project. It's a great opportunity for us, not only here in the U.S. to provide grid stability. We're doing it in Central Europe. We're doing it in the Middle East. We're doing it in Australia. And so this is a really nice growth vector that's come in, I would say, in the last year or so where we see the pipeline really growing around the synchronous condensers. And then lastly, renewables. Morten talked about, the energy transition hasn't begun yet. It is -- renewables is expanding. And so we like that in the medium term and long term, which is how we think about these cycles. And certainly, our power conversion technology play a role in that. We like the renewable space and what we can add and offer value there. Local-for-local, you've heard about it from my peers. Let me show you what it looks like for Motion. In the U.S. market where we're standing, that was part of the investment decision that Morten made when he was back in the role. Now in fairness, we're a very selfless executive committee. So I got to cut the ribbon and be in the pictures and everything when we opened this facility. So Morten was very gracious to allow me to do that even though it was his decision to make the investment. But it was a great investment and it supports our local-for-local strategy. You can see 80-plus percent here in the U.S. of what we sell here we make here. India 85, China 90, Europe 95-plus, and we'll continue to drive this investment. That doesn't only account for our brick-and-mortar our factories within motion. It also accounts for our service footprint. And that's critically important. You heard Peter talk about service in his presentation and the importance of that and what it offers. It's the same thing for Motion. We're running really critical assets for these LNG plants, the marine industry, the data centers that we're doing for the cooling and the importance of that. So having a service capabilities, whether that's replacement, spare parts that can come quickly from our footprint here, our channel network and distribution that we have with inventory that sits close to our customers and their needs, all that is part of the differentiation. So when you think about competitors coming into certain markets, there are barriers to entry into coming into these markets because of the footprint that we have, the go-to-market that we have and the relevance that we have, not only with our customers through motion, but through my brothers in Electrification and in Automation. The macro trends are the same for us in Motion that you saw from Peter and Giampiero. The amount of data that's moving around the world continues to grow. Electricity demand continues to grow and then energy transition. Whether it's energy expansion or energy transition, it's a growth driver for us in Motion. All of these businesses require motors, drives, generators. And that's what we're world-class at, and then they require the services to support it, which is where we deliver extra value. And so all of these are really nice drivers for us fueling growth. Regionally, of course, it matters a little bit, but if you talk in India, we're seeing growth in India. China, in my heavy industries businesses, we've continued to see growth there, while there was a little bit of a slowdown in some of the commercial and res, where we see some positive signs there. So I think it really does -- it does move around a bit, I'd say, geographically, but we really see a tailwind and ability for us to grow across these sectors. One thing that's probably the most important of my presentation today is to talk about energy efficiency. This is not a brand-new topic. But the relevance of it is gaining more and more importance. We talk in ABB all the time about the greenish unit of energy is the one you don't consume. This needs to become more meaningful in our industry. As Giampiero talked about the challenges that exist to add enough power to the grids, what it costs -- what you need in transmission lines, what you need on investment, all these sort of things. With energy efficiency, we can put 10% capacity back on the grid today with technology available right now. So that means no new transmission lines, no new substations that you have to build. It's just doing more with the technology that's available now. And I'm going to walk you through a couple of examples and also show you a customer so that you can hear from them and not just from us. When we talk to energy efficiency, we talk high-efficiency motors. So let's use the most efficient products that are available. Right now, majority is still what's being bought on the market is kind of in this IE2 efficiency. We have IE5, moving to IE6 On the efficiency side and then the use of drives. And we're going to show you in the facility that we're standing in what the benefits of that is. When we take a drive motor and attach it to a pump for our geothermal system, what does it save us in electricity? We didn't build this facility just to bring customers in here to show them something that we don't believe in ourselves. We built it because there's a business justification for the return on investment of spending some more money on the CapEx side and benefiting from it in the OpEx side, and we'll show you that on the tour. So what does it mean in terms of a specific example? This is an IE2 motor that you see on the left-hand side. So you can see the size range of it, call it, $15,000. And then we say, okay, Mr. Customers spend 3x that amount of money. So first response is 3x, that's crazy. Why would we spend that much more money. The return on investment is 9 months for that 1 motor and drive. It will use $1.3 million less electricity across the lifespan of that motor. And that's assuming, by the way, 25 years, our customers run these motors for 30, 35 years. So make the numbers even more in terms of what the savings is. And this is, again, technology that's available today, proven, reliable, robust service capabilities, all those things there. So don't just take my word from it. Let's listen to a customer and what they have to say about how they view energy efficiency for their business. [Presentation]

I think it's a real appreciation to them for doing the video. And I think it's a great example of making it real, 6,000 households, 25-plus percent less energy consumption, associated electric bill that, moving from 40-plus vendors to 1. And so at dinner last night, I talked to certain people and they asked questions about will companies go retrofit their plants and these sort of things, all the motor, some of the motors. So this is a great example of just moving the motor efficiency up. Not adding drives and those sort of things, just moving the motor efficiency up. So there's then a need another level of this that we can move to. And so really proud to see what we're doing there and trying to make this real and relevant. R&D, investing organically in the business, really important to us. We're spending a little bit more money right now because we're updating some of our motor portfolios that have been around for several versions of those product families, and we want to make sure that we can drive competitiveness, drive efficiency and really compete around the world. And so both in our Nema business and our IEC business, we're also doing some things where we're spending for specific markets to take here in the U.S. we've lagged in the U.S. on medium voltage air cooled drives. That market was predominantly driven by others. Now we have a factory footprint here that you'll see. We've come out with some technology that's really, really impressing our customers, and we're starting to take market share in the medium voltage air cool space, and we will build it and deliver it, service it from here with those R&D innovations coming from here. So that's again part of our local for local. Three examples here, really cool the first one. Whenever you're the world record holder and you break your own record, that's a great day. And that's what you see is this first one. This is a customer in India for a steel mill application, a large motor. It will consume $6 million less electricity in costs across its lifespan and a 3.5 month payback for the customer. And this is the highest efficiency motor in the world. And so a great job by the team. AI, you've heard about it as a theme throughout. And what's cool here is we've taken an internal example to show you of how we're driving it to use efficiency internally. We get stacks of specifications from customers this big about what they need from an application, what they need from a motor these sort of things. We've now created a tool internally where we take this, use the AI tool that we've created and through the innovation and entrepreneurship that we have within one of our communities of practice around AI. And they've condensed that into instead of days, they've convinced it in the minutes and it creates a proposal and a bill of material for that motor. And so that's a great way for us to be responsive to customers, speed matters. We learn from all these specifications, and we continue to improve. So a cool example there. And then something from Timo's business on the machinery drive side. This is an innovation where we didn't have a product to serve this market. It opens up a machinery market to us, which is a very large market for us and allows us to go play in that space. Highest cybersecurity in the industry, most connectivity in terms of protocol, in the industry. And so we're really excited about kind of a homegrown innovation that opens up a market for us to go play in and to grow. In addition to organic, we talk about inorganic. And so I would say we've probably lagged here a bit in motion, and we want to be a strong contributor to the group in terms of the 1% to 2%. And the role that Motion can play in that. And so we think there's some great opportunities. We do have a really nice acquisition that we just -- that we closed earlier and that we just officially integrated into ABB about 4 weeks ago, which is BrightLoop, company out of France. They made DC/DC converters, which can be used in a lot of industries, a lot of applications from F1 to Formula E, to the marine industry, to the mining industry. And when we did this acquisition, I got several personal e-mails from some of our largest customers that said, this is a fantastic technology that we're happy to see come inside of ABB for you guys to help us scale. For me, that's the most rewarding kind of e-mails you can receive as validation from your customers, that you're spending money in the right ways. And so we're happy to have these guys on board. We also do the equity investments. So we invest in the different companies, partial investments with the potential to take larger roles in those companies or completely acquire, like happened in Automation or electrification as well as companies that are helping us with our manufacturing. So one of the companies is here in the U.S. that we're using to help with smart manufacturing for us to become even more efficient, more productive. And so we're trying to come at it from all angles of how we serve customers, but also how do we do things the best way. And so inorganic is a big push for us. This is done at the division level. So I had some discussion at the dinner last night as well, and I want to be clear. The mandate for acquisition, for building the pipeline, identifying the targets, these sort of things is done at the division level in ABB. That then comes to the business area and we look at overall capital allocation and how does it make sense and those sort of things, and then we make recommendations to the group. And so this is now reviewed quarterly with my businesses at the global level of what are they doing on their pipeline and what are we advancing through that funnel. And so really important for us as we look at how do we grow inorganically. So let's take 2 examples of why it matters being part of ABB. This is something that's near and dear to my heart. I've been here for 20 years. I started as a front-end sales person, down in Houston, which is where I'm still based out of. And so serving the LNG business, I've had a pleasure being a part of these things. I worked for Peter directly for 8 years. So I think I can speak pretty credibly about what happens in Automation, Electrification and Motion and how that comes together at the coal phase, which is the customer. The value here is tremendous for us to help them optimize from the beginning, how they design these facilities, optimize them to operate with the highest efficiencies that we can and the highest reliability. On the Electrification of LNG, we have customers that are telling us they're going to build an eLNG, to electrify the trains. They're going to build that and assume that 1 day green electrons will flow to it. So instead of building in a conventional way, they're going to build it from an electrification path forward. And so we're helping them from the beginning of that. Also on data centers. So data centers plays a key role in my business in HVAC on the drive side, we're the leader here in the U.S. We're very strong around the world. And so it's a great opportunity for us to tap into some of the growth that's happening in that industry. Same with motors that we're providing to the OEMs, that are going into these facilities. And then a lot of the companies that are doing the backup generation, you have to have 100% redundancy on these data centers. So the companies that are doing the backup generation are using ABB generators, that they're attaching to their turbines and generation. So a great opportunity for us. And then we're looking at how do we continue to drive some of the questions around cooling, electrification and the trends that are happening there. Where is the best trade to capitalize? Is it organic? Is it inorganic? What do those options look like and how we best work together with EL to influence specifications and really help drive efficiency. Efficiency matters tremendously in the data center because of the amount of power they're consuming. So every bit that we can open up in percentages is value for ABB and value for the customer. So 3 things that myself and the leadership team have taken on in the last year that have all gone live now. First is implementing business lines all the way down into each of the divisions. So we've got 6 divisions. We have 25 business lines. Some of those are in profitability. Some of them are in stability and about 65%, 70% are in growth. And so we've got a mix within those businesses. We incentivize based off that. We performance review based off that. We set annual targets based off that. And we govern based off that. So we've implemented that as of July 1 across motion. So that's now got a couple of months of run time in terms of how that's working. Creating customer value and being kind of customer-centric. This was combining large motors and generators with our medium voltage system drive business. And that is purely a revenue play. That's about going after the markets and selling solutions, deeper penetration of share of wallet and penetration into certain OEMs that are buying both or might be buying one and not the other. And really gives us a value proposition to focus on applications and how do we bring this technology together, how do we innovate this technology together with our customers in order to grow. And then the last one for about 45% of the revenue base, we've changed the go to market towards the ABB way. So we previously had a matrix structure in how that was set up. And it was not clear accountability, not clear empowerment, and so now we've changed that. And we have that by division in the countries, people that represent motion there and really are purely accountable for delivering on the business targets per the mandate that they have. And so these are 3 changes that went alive November 1. And so that's only got a couple of weeks underneath this belt. But certainly, myself and the leadership team fully confident that this will have the impact we're looking for to make sure that we stay at those thresholds that we've committed to from the ABB group side, full confidence there. When we talk about priorities, I talk to my team about something called big rocks. You might have heard of that analogy before, but it's really about driving focus. There's lots of things to distract us and lots of things to take away from what our peer mission is. Our big rocks are here in terms of the business lines and the mandates of how we want to drive and govern this business. M&A that we want to strongly contribute to the group, and we want Motion to play a role there because we think we've got value to add independently as Motion, but also to my brothers in Electrification and in Automation. We want to strengthen the service attachment. Our service attachment is probably in about the 40% range of our installed base. We've got upside, and we get to Peter service attachment. And we have upside for us to have penetration in the industries to take better care of our customers and really add value to ABB. Work together across the industries and across our business areas critical for us. And then lastly, we're not going to stop innovating. We can't be comfortable as the market leader. We have to continue to spend money. We have to continue to come out with new products, new offerings that push the limits, push our industries forward and really help drive value for our customers and for ABB. And so with that, this is a perfect picture of what I just said. A lot of you might not have seen a motor before. If you haven't seen a motor before, I got bad news for you because that's the most beautiful motor you're ever going to see in your life. So this is a product that we developed that we're the market leader on. That product has a different technology where we don't use rare earth minerals. It has the highest efficiency. It changes the game for us in ABB. And we will continue to drive business towards that. So 25% attachment just so you know, on motors, where it drives attached to them. As we can drive the efficiency message, and we can look at business models and profit pools, we think there's a way for us to push that forward. So we like to have a motors in our portfolio. We like having the best drives in our portfolio, you bring those things together, and we think we can move the market. We like our structure in Motion. We like our strategy in Motion. So I would expect some consistency in that in 2026 and for us to go have a high safety ratio. What we commit to the EC and to the board is what we're going to go deliver. And that's what the commitment is for myself and the management team. You've seen the ranges there, 5 to 7 of 18 to 22. We're somewhere in the 19.5 range. And so there's upside for us on margin. That can come from our footprint. That can come from productivity, product innovation. We do variances local for local in order to make sure that we're competitive while also maintaining margin. So there is headroom for us to move further up in that quarter that you see there. And then we're going to invest organically, and we're going to push to make sure that we find those value-accretive things inorganically. And so really proud to have you guys in this facility to do the tour that we're going to go on here in a few minutes and see the technology and most importantly, meet the people. In Motion, we talk about people, customers and results, and we start with people because that's what we rely on. That's who drives this innovation, that's who delivers the results. And so I'm humbled and proud to stand up here and represent the 23,000 strong in Motion and also commit on their behalf that we're going to go do what we said we're going to do. And so with that, I hand it over to Tuomo.

Thank you, Brandon. Yes, very good afternoon, everyone, and warm welcome to our brand new ABB Drives U.S. campus. This campus has been designed, built and engineered to outrun. And we are very proud to say that this is the first one-stop shop for all the customer needs and drives whatever a customer needs and how this value proposition is made. Morten mentioned earlier that we want to serve the customers how they want to be served. So we acquired a land, a good customer in the middle, which is pretty much the area where we are now. And we define the story what the customer needs here. And when customers come to this building, first, they see the portfolio, which is usually available here. Behind is the wall, which shows our building automation system, how this building is controlled with all the ABB products. But what is very unique thing, we have here the HVAC mechanical room visible on this side. Usually somewhere hidden in the basement. We made it visible. It's full of ABB products, our drives, motors, but a lot of electrification products to run the pumps, sands, chillers. And you also see here the green color pipes, our geothermal system. Now even more unique is that customer can enter this area while the building is in operations. And also all of you today, you will see this HVAC, the mechanical room with your own eyes while we run all operations. And this is, by the way, the hundreds of participant remotely good showcase and reason to visit here in New Berlin, Wisconsin to see all that. Now the customer journey continues. We think about the value proposition. Our products are quite complex technical products. Our customers really want to pay the training. And now we continue the journey with our training area, our hands-on training classes and our remote class, the places, and we provide there multiple different locations, the continuous different type of training practices for our customers and our partners. And what we need then, we need very strong presales support for our customers. So what you're going to see after that is the application laboratories. Whatever customer needs, we tested in the real product here. We designed the application, and before we go to commissioning, we make sure, together with our customers that everything works. And actually, this is a very unique value proposition because often the customer sites are in the complex locations. And if you can save time for the commissioning, have low risk, make it much faster. That's a big value add for our customers. And now you will see all this today after the break. But then we also have a factor here. By the way, this is becoming one of the largest drive factory in the world, and it's brand new. So you will see that we are just now in the commissioning phase. So we will see a lot of opportunities to optimize that. But at the same time, we need to remember that this is the industrial electronics factory. So many of you were 2 years ago in Italy, our Capital Markets Day, and you saw the beautiful electrification factory, very high-volume products for electrification. Now, you see this larger industrial electronics products, which are often configured to order or even engineered to order. But the common thing is both our best-in-class, state-of-the-art facilities. Now what else we see here, we combine the warehousing. So all the warehouse supply activities are interconnected, same building and the flat floor, which enables unlimited automation opportunities. And on top of that, we have a very large R&D center. More than 100 R&D and application engineers can develop a very complex new product. They help us to be local. We have a lot of different local needs in the U.S. and our team here help to make the perfect fit for our customers. But what we need to remember, the R&D is a lot more than development. Our customers have a very demanding question. So while we have here the tech suppert available. If they need some help, we don't need to go back to Europe or other region. We have the highest level expertise of R&D here, and we serve our customers in minutes and hours, not days or weeks. And when we combine all this technology together with all the services, the service workshop and life cycle management, we can say that we have the one-stop shop for all customer needs in the same place here, and it's a very unique value proposition. Customers are willing to really focus on that needs here. And if you still talk a little bit this investment, this $100 million single investment this facility, but 20% out of that, so $20 million is ABB products, meaning that when we count all the electrification, automation here, we have around 20% of ABB products. There are a lot of opportunities for facility investments. And when you see any of this kind of facility investment, at least 20% is a great opportunity for ABB. We see here, this is a large-scale R&D center, the office, also the office part, we have right now around 700 people, but we are hiring more why we grow very fast in U.S. for U.S. market. And we have here all kind of discipline. So we cover all the functions and create this highly skilled workplace. And people really appreciate this modern office, which is really fit for purpose also working here. But then if you think about the warehouse and [indiscernible], we used to have 6 facilities here, 4 warehouse locations. Then we had 2 other facilities, factory and office. We combine all the 6 as a 1 here. If you think about the example of the warehousing instead of 4 all the shadow trucks, massive complex setup, everything is one, which is interconnect that directly here. We already optimized a lot of inventories and still serve the factory much faster. And at the end of the day, our customers. Yesterday, I had a question about that, what is the output of the factory. Next year, we target to deliver 350,000 drives. But what is even more excited 350,000 drive next year out here will save more than USD 2 billion of our customers' electricity bill. And I really want to repeat the story because, the output of this factory in 1 year, U.S. for U.S. saves more than USD 2 billion of our customers' electricity bill. And this is counted with the industrial standard as an average in a conservative way. So in many cases, it's much more than that. But overall, summarizing that this value proposition is such an incredible and amazing the customer really appreciate this. Now I want to share 3 examples about this case and starting first, the global climate player and innovator wanted to make a step change for the product. Now the outcome was that they want to have this high speed, which means that from typical 1,000 to 2,000 RPM have like 10,000 RPM or even beyond, which means that the product is smaller and also higher efficiency. But at the same time, it's very complex and demanding development. We took the challenge together here and realize what we need to do our product, develop that. We also realized that it's so demanding for the cooling that we need to use our technology development and have a new cooling system that's, by the way, presented and make the solution for our customer. And at the end of the day, we see the picture here. Instead of any external cabin, it's highly integrated solution as a high-speed compressor, having drives and every ABB component building, it's smaller than before, it's higher efficiency than before, but it's still better serviceability. And we guarantee the life cycle management over the years in future for that solution. Very close collaboration. And at the end of the day, the customer is most happy with the fast support with the speed and agility of what we can provide. And this particular business is starting to grow very fast. We take another example, data center part. It requires a lot of know-how and expertise. So we will see in here that we learn and have a high knowledge of data center cooling. And now together with the [indiscernible] Technologies, which is one of the leading company for this cooling applications, the -- we sit down here that there is a long list of requirements. What we do? We want to meet all those requirements, make highly advanced, highly optimized and customized the chiller for data center cooling. A lot of innovation behind there, but it was really a mandatory that our both customer and our side, the experts sit down together and understand each other. But at the same time, the speed is so important that we need to count days, not months or quarters. And also the train required that this has to be brand labeled, meaning that it's ABB inside, but then we also have the brand label for that. And we combine all the needs and make it on time, and also we see that this business is really start to catch up fast. Now third one is we deep dive under mine. So we go the underground mining with a long list of requirements and very, very special restrictions. This major automation player needed a bigger drive. So this is coming from our high power division side. But the key was the speed and engineer to order. We deliver this 10x faster than typically before. We understand the needs. We work together all the details, and if you think about a loan the logistics from 2 months to 2 days here locally. And at the same time, we meet all the tax incentives for the customers and also minimize the tariff impact. And so well known the [indiscernible], the built-in and also the buying in America requirements. We met all those. But at the end of the day, the customers said that the most important thing was that they get the direct access for our local engineers because it's a demanding application that they want to get the engineers available right away with their needs. And we were able to provide that because we have so high-level expertise for R&D and engineering here. So combining these 3 examples, these are very unique value propositions for our customers. What we built here with our people, the customers and the new facility here. All those are very fast growing. Our customers are very, very happy for that. At the same time, we grow faster with our -- the growth mandates and our growth with this nicely profitable businesses. But then I want to enter facility because, it's important that we serve the customers. But now this is the first largest scale our motion, the mission to Zero site. On top of that, everything is controlled with ABB building automation system. And then we made because we are cold area, very thick insulations around here. But on top of that, we built this geothermal heating. So we are not using gas at all anymore. We have 24 kilometers, which is equal to 15 miles of geothermal pipes around here. And wintertime used the [indiscernible] mirror from the soil and helped to decrease a lot of electricity bill. And summertime, it's opposite. When we do the air conditioning, then we use a lot at the cold area from the ground. So amazing story how we can save a lot of energy and have the zero emission, which is combined with the solar panels on top, and we also have a lot of EV charging stations. And if something goes wrong, even our backup generators use biodiesel so that we are super green here. So a very unique value proposition for our customers. And then I want to summarize that this is the first real one-stop shop for all the drives need for customers and partners in U.S. And this complete campus is designed, build and engineered [indiscernible]. Thank you very much.

So Q&A. Put Brandon and Tuomo on the spots. Is there anything that didn't come across. Here's the chance. We start, I think, ladies first, Daniela, and then we have Martin here on the front row, please.

I thought it was interesting that you mentioned you did that motor without rare earth. So I was wondering if you could give a little bit more color into that? And how dependent the business is on rare earths, how is your supply chain given that's a big topic at the moment?

Yes. And I probably can't answer the technical question on how we solve that riddle. I don't know if my colleagues know. But the rare earth metal is a low intensity for us. So it's not a huge bottleneck or a supply chain topic for us. It is an issue, obviously, in general. But also now we're found a way to engineer our way out of it. And so that's a great development for us and not have to deal with that. And it goes along with doing things the right way. So we always say that the [indiscernible] matters as much as the what it's an opportunity for us to do it the right way. If I can get some answer the question for you.

If I still add a little bit that there are a lot of high-efficiency motor called permanent magnet motors available in the market, but they need those very available materials and are much more expensive. So this means that the availability is so much better, and then the cost is much more competitive, meaning the value proposition for our customers.

Is this an ABB unique thing or the peers without motors without rare earth?

There are available those in the market, but we are, by far, the forerunner of that. So if you talk about the portfolio, also the efficiency, then we are by far the forerunner this industry -- in this industry.

Just a question on the adoption of the technology. You mentioned about this fantastic payback in terms of the save energy, but obviously, not every customer is buying it overnight. So what's the catalyst for the customer to make the investment? And is that changing either because of high electricity prices or maybe even shortages, can something really accelerate that adoption?

Yes. I think there's probably several things that are catalysts. I mean, sustainability is more in the front ground now than it was previously. So people have footprints and KPIs that they're trying to reach a corporation. So that's one topic that drives electricity prices, obviously makes the return on investment shorter. And so that helps drive it. And then the regulatory environment. So as we -- as different countries, governments, different things push the regulatory environment higher, that obviously can also be a catalyst to it. And then lastly, education. I mean there's a lot of people in the value chain. So there's an end user, but then there's an engineering company. There might be a system integrator and OEM, the original equipment manufacturer. And so getting that through the value chain because the savings ultimately are for the end customer. And so how do you get that through the value chain? What's the business model there. So we certainly believe that the adoption will continue to pick up because the need for power is so great. The capacity can be online and there's good for the wallet, good for the planet. So we think that the -- all these things come together as a catalyst for it to move faster.

Thank you anymore. We have Max. We go first with Max and then we have Joe as #2.

Max from Morgan Stanley. I noticed when Morten was talking at the start in his opening speech, he talked about kind of Motion being the one area where he thought you could get to the upper end of the target range.

I don't hear him say that.

I heart him say that. I was just wondering why sort of -- was there any reason you particularly mentioned your division? Is there anything felt like maybe there's something kind of outstanding in terms of a single division or a unit where there's a real opportunity? Is there anything in particular like a 1 underperforming business that still turn around or really big opportunity that you'd highlight in your business?

I mean, I don't want to put words in our CEO's mouth so you can ask them on the tours, I would say. But I think there's a belief in the capabilities of where we were, where we are and where we can get to. So I think we've proven that we can continue to drive profitability and growth. So it's not an ore equation, it's an and equation. And so I think if you look at our productivity and our footprint, that we're doing are design variances that we do in different countries to be local for local, our strength in go-to-market and our channels that we have and these sort of things and then growing our service business, growing Tuomo's business, some other ones that are accretive in the upper end of that. I think it provides an opportunity for us to reach into that headroom.

So ITT, I know is making a big deal about selling like pumps that they make that are fully integrated with their own motors and their own drives is like a single solution. I know you guys mentioned integrated pumps and motors at a CMD a while ago, I kind of -- but I haven't really heard about it since then. So just curious what that has looked like? And if is that a way like what could help manufacturers kind of disintermediate a little bit by installing these products themselves rather than meeting like -- separate motor and drive manufacturing?

Yes. I think it's more an opportunity for us, especially in the North American markets, say, because it's certain size ranges, certain applications that, that could make a big difference to have an integrated motor drive. And so Tuomo can maybe give a little color on it, but I think it's more of an opportunity and upside for us. But if we have the right technology that fits those applications at the right price point, we can grow in that space. And so there's always organic activity going on to say what kind of white spaces do we want to close the gap on? And does it make sense for AV. And so we certainly look at that maybe you want to add a little.

Maybe I'll add a little flavor. Because of technical reasons, those are usually the very small power range, which is really a lower part of our offering. And we see opportunities to grow there, but that is kind of a little bit below our typical core. So it's more like additional offering, not necessarily a big driver for the industry today.

Okay. We have one question here on the front, please. And do we have any other hands in the air? No, there is 1.

It's Will from Kepler. Two questions. First one comes back to your motors business. I think it was in 2022, '23, there was a huge surge in electrical steel prices, which have been collapsed. How did you respond with your pricing? And how much did you give back? So how does the price dynamic relative to the input costs on some of the core biller materials cost structure work? I'll come back to the second one.

Yes. So I mean, I think we've been able to do pretty well in terms of holding price, holding margin and managing on the cost side. So our local-for-local plays a role in that. Some of the modularity that we do plays a role in that. And then even in the tariff situation, because of our footprint and our supply chain, some hedges that we've done and different things, we've been able to remain pretty competitive in that without having to do big price drops. Now we have seen price compression, certainly competitive pressures in India and other markets where price compression has pushed things down 5%, 7%, maybe even 10%. And in some of the markets, and we're able to combat that with working on our bill of material and some of the organic development that we're doing to take cost out. So I think it's something we always have to manage material costs are the biggest cost, obviously, that go into building a motor. And as you go towards more high efficiency, it's more metals, which is how you get to that efficiency. So it plays a really important role in our supply chain management.

And the second question comes to the drives business. I mean it's been an incredible growth story from a small beginning over the decade or so that you've started here. I mean how much further have you got in the journey with regard to expanding penetration, gaining share and further growing the business and the utilization in these facilities?

Yes, it's a very good question. To be honest, we are in different geographical areas, strong with the different segments. We offer the full portfolio globally everywhere, but it's variating still quite much where we are very strong and where we are strong. So that means that when we go through all the different segments, subsegments and applications, we still see a lot of growth opportunities. And what we've done in this year along this -- the overall leadership, the development and the overall, the Motion development that Brandon mentioned that we go even more granular level of every segment, subsegment and application. And now we have a great plan that how we will penetrate more on the different applications. But also geographically, even broader. So we are very confident that we continue to drive this also several years ahead.

Tuomo set his business lines up from a geographical perspective versus a product perspective because there's differences in each market, what the offerings are, where we are relevant in the industries and these sort of things. And so now there's very specific mandates for those geographies of where they can excel. So maybe it's HVAC here, it's industrial there. It's water, wastewater there, whatever may be. And so that's how we've broken down the business in order to put the right growth targets on to Tuomo's business overall.

Thank you. And we'll have the microphone pleased to go all over here.

I think you said you wanted to contribute strongly to the group's 1% to 2% M&A growth. But you're already, by far, the #1 player in both motors and drives with what I think are pretty high market shares. So can you grow organically in motors and drives? Or shall we think about you moving into adjacent areas?

I think all of the above. So adjacent areas, if it makes sense and kind of along with what my peers and what Morten has said, is that if we can see it being accretive, fits our purpose and kind of aligns with what [indiscernible] we have in also can expand in-house. Then adjacency is certainly something that we're interested in. I also think the rules of the game are a little bit different now with some of the regulatory environments where we could have more favor to move up in terms of market share, even in our core offerings around motors and drives. And so I think there's opportunity right now for us to be specific and to try and play offense in this category.

Thank you. And then we'll finish off with a question here at the front, please, with Magnus.

Magnus from Nordea. I think you mentioned that the price point of a very efficient motor could be up to 3x less efficient one. Is there any way you can sort of slice the revenue mix that you have in your motors sales at the moment. Is it a relevant way to look at potential growth opportunities?

It's definitely a growth opportunity. The predominant amount of motors that we sell are still in the mid-level efficiency. So in the IE2, IE3 range, and that's common across the industry. So it's an upside as we push efficiency standards up as the prices of electricity and demand restrictions exist. It's an opportunity for us to push into the IE4, IE5 plus category. So majority of the share is still in those kind of mid-level efficiency classes.