ZURICH, Switzerland — ABB hosted its Capital Markets Day on December 7th. Leaders gave an update on ABB’s ongoing transformation into a more profitable group with increased growth rates, its updated financial targets, and its portfolio management efforts. Furthermore, they gave insights into its technologies and offerings that promote sustainable transport.
The company says it expects annual sales to rise 4%-7% through the economic cycle, up from the 3%-5% annual growth rate it previously targeted, while also lifting its profit outlook as measured by EBITA of “at least” 15%, compared with its prior target of 13%-16%.
“Over the last 24 months, ABB has made solid progress in implementing its decentralized organization and improving quality of revenues. But we are still not where we want to be,” said CEO Rosengren. “Our technology leadership in electrification and automation, aligned with sustainability and the global megatrends, is at the core of ABB’s Purpose and gives us a competitive edge. Nevertheless, we need to cement a high performance and integrity culture in everything we do. Therefore, a sharpened focus on accountability, transparency and speed in 2022 will help drive growth, lift profitability and create further value for shareholders.”
Rosengren added: “Order activity has remained robust this far and we anticipate a positive market momentum in the business year 2022. That said, we still have to manage the disruptions in the supply chain, which most likely will impact customer deliveries in the fourth quarter and at least the early part of next year.”
ABB is expecting to make five or more small to mid-sized acquisitions per year. This will be funded through the Group’s “continued strong cash flow generation,” said CFO Timo Ihamuotila. He also reiterated ABB’s capital allocation priorities of funding organic growth, paying a rising sustainable dividend per share, making value-creating acquisitions and returning additional cash to shareholders via share buyback programs.
Portfolio management progress
Last year, ABB announced the exit of three divisions of which the Dodge (MPT) business has already been successfully sold in November. At today’s event, CEO Rosengren will give an update on the Group’s ongoing portfolio management efforts. This includes exiting the Turbocharging division (PA) through a spin-off to existing shareholders or a divestment and is targeted for summer 2022. The final decision will be based purely on which route creates the most value. ABB also plans to divest its Power Conversion (EL) division in the second half of 2022 as it continues to improve its business’ performance.
In addition, ABB is continuing to work towards an initial public offering of its E-mobility division (EL). The legal separation is expected to be completed during Q1 2022 and if market conditions remain favorable, a listing in Switzerland would be targeted for the first half of 2022. ABB would retain a majority shareholding in the future listed entity.
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