Good morning, everyone, and a warm welcome to our Capital Markets Day here at the Motion site in Helsinki. Some of us met already last night for dinner, and now we're also joined by, I think it is more than 150 participants through the virtual setup. I say we are very much appreciating all of you taking the time to spend the next couple of days with us here. First with Motion, and then tomorrow we move on to Process Automation at the Marine House, just about half an hour away from here. I'm Ann-Sofie Nordh. I'm heading up the Investor Relations team, and really, again, really appreciate to see you all here. When we leave you today, we'll aim to be finished at about just before five. You will have met with Business Area Head, Tarak. You will have met with the Motion CFO, Bernd. Not least, you will have met with all the divisional leaders. For those of you here in Helsinki, we will take you down to the electric motor manufacturing and also through the assembly of drives and Drive Products. Safety, as some of you may know, is a big thing here at ABB. Let me just talk you through some of the safety items to remember for the day. There are no drills planned for today, so if you hear an alarm, it's the real deal. I ask you to make your way towards the staircases, which you have here on your right-hand side, and ABB people will take you down the stairs, and we'll meet up at the assembly point just outside of the entry. I will also make you aware that you have some QR codes on your desks. There you can download the app. For those of you who are here in Helsinki, and it's also available, of course, for the others. There you will see all the agendas, and you will find the details if need be. If you do register, please do so with the email you actually used to register for the event, then you will get push notices, et cetera. We will give you the opportunity during the day to put questions to the presenters. There will be sessions after each presentation. There, those of you who prefer to put questions through online, there's a chat tool available on the CMD website. Use that, and they will come through here to me, and I will put them through for you. Otherwise, for you in the room, there will always be microphones available. Just before we move on, I should make you aware of the information we have regarding our safe harbor notice and our use of non-GAAP measures. This is available in the beginning of the presentation, and this is valid for all the presentations through the day. With that, I think we're just ready to kick off. We'll do so with listening to the Business Area Head, Tarak. Please, Tarak. Thank you. Thank you, Ann-Sofie. A very good morning to all of you. It's a pleasure for me to welcome you to the Motion team. What a world we live in. Three months ago, we didn't think energy would be so front and center in our minds. Availability of energy, security of energy, and most importantly, the cost of energy is front and center in the minds of most of the population in the world. Our Motion team at ABB have many solutions to help on many dimensions of this particular problem. Starting first and foremost with efficiency. We have great solutions, fantastic ideas, and the Motion team, some of you met yesterday evening, will give you specific examples of how we are helping our customers overcome the challenges, meet the expectations, and also, thanks to the investment in technology, develop the solutions for the future. When we look at Motion, how do we drive sustainable value for both our employees, our customers, and our shareholders? Number one, we have a strong market position in many different and very interesting segments. We have a leadership position, not only from a share point of view, but also from a performance point of view. The performance is driven by three key factors. Scale. Certainly size helps us invest, whether it's R&D, whether it's manufacturing, and that certainly helps us drive the profitability. Proximity to the customers. You will hear during the course of the day from the different division presidents how being close to the customer, trying new ideas, developing new solutions, has been a tradition for this business and will continue to be a differentiating value for our customers. Specific examples, in one instance, Chris will talk about how the hydrogen business, which is a lot of hype these days, but he actually has orders. $30 million worth of orders. Please listen to him. He gives you the perspective of how we got them and how that business can be very fast-growing and a big driver for his business for overall growth perspective. The world is moving away from fossil fuels. We are contributing, and our portfolio is at the center point of this transformation, the transition of energy from fossil fuels to electricity. Electricity will grow twice as fast as any other energy source based on the IEA reports. We are in the middle of the electricity business. We will give you an example and illustration of what we do. We believe the next five years, the next 10 years, there will be a bigger growth in our markets with our customers demands for our products. We see it in the results, we see it in the orders that we face or we get right now. What is driving the transition in the world? I mean, I don't need to tell you that, you are familiar with it. It's very clear. It's the shift towards electricity. It's the shift towards a low carbon future. A couple of things to keep in mind. As the world moves towards electricity as its source of energy, our motors and drives are at the center point of that transition. When you look at these drives, which we love a lot, they are giving for a particular application between 20%-30% savings. Combination of a motor and a drive gives substantial savings overall to the customers, but also help reduce the carbon emissions. When we look at our portfolio, our estimates are conservatively, our business will double in the next between now and 2040. It might actually accelerate if the world decides they want energy security vis-à-vis renewable energy sources, then our business will move even faster. We are in a $50 billion market. 80% of it is industry and transportation. Please keep one thing in mind, 45% of the world's electrical energy goes through motors. Having the number one position in motors means we're at the driver's seat to see the transition for our customers. We are there when new applications are developed. We are there when a turbine is replaced with a motor and a drive. Having a motor portfolio gives us, with the market leadership, an opportunity to be in the driver's seat. There are other drivers for this market as well. Think about customers. We did a survey with about 1,200 customers. Good news for us, important information for you, 90% of our customers will invest in energy efficiency in the next five years. Why is that relevant? Energy efficiency is the best way to manage the CO2 reductions in the world. It's immediate, it's permanent, and we, with our solutions, can help you get there very quickly. It's the combination of regulation and customer intent that we can accelerate with digital solutions. You'll hear from Adrian how our service business, through sensors, connectivity to the cloud, is able to provide not only energy efficiency, but also the capability to improve the customer's processes. When I joined this business, many of you who I know for many, many years have asked me, "Can you please simplify what is the Motion business?" It is not complicated. It's two things. It's motors and it's drives. Motors which we make more than 1 million pieces in the small size per year to some that you will see during the course of the day, maybe 15, 20 in a whole year. The understanding of the customer's application and the mechanical design of the motors do not change. If you understand a food and beverage location, then clearly the one horsepower motor up to the one megawatt motor has to perform in the same environment from the customer perspective. That knowledge helps us design and tailor-make solutions for that industry and that segment. Certainly, the scale provides us with a cost advantage. When it comes to the drives, we have a common software platform that spans from the very smallest drives to some of the very biggest. Two platforms practically cover the entire range of our solution. It's the embedding of the customer's applications in software, it's the scale of our drive business, and it's the proximity to the customers is the reason why we have a leading business across the entire range of our drive portfolio. Enough about discussions. Let's take a specific example. If you're in Germany and you have to make a decision for your particular industrial location, you have two choices. You can buy an IE3 motor and a drive combination, which is quite efficient. Or you could spend and invest another $200 buying an IE5 combination. The IE5 combination will cost you 2,000 approximately EUR more. In the first year of operation, we can save you $2,000. We can give you back all of the money that you've invested. On top of that, you can also save 7.5 tons of CO2. This motor that you see in front of you is equivalent to 100 hair dryers that are hopefully sitting in your bathrooms in your homes. It's not a very big motor, but the kind of impact it can have is quite tremendous. When we look at our own portfolio, our business, 19,000 colleagues, about $6.5 billion, $6.4 billion in turnover, 16.5% margins once you take away the divestment we made last year. What you see is an industrial location where the motor, the drive, the sensor connected to the cloud gives our customers and us the opportunity to reduce the cost, increase the reliability, but also in many instances, help the customers improve their processes. We've talked about the business. Now, what has been driving the performance when it comes to Motion over the years? It's been focused on specific segments. Whether it is water and wastewater, whether it is transport and infrastructure, whether it is buildings, the specific focus on these segments has resulted in tailor-made solutions for that particular application. Those tailor-made solutions in those particular applications take the heating, ventilation, air conditioning solution. That is an industry-leading product from us with industry-leading market shares and great profitability. That tailor-made solution is the reason why we grow significantly in that segment. Think about data centers. Data centers is nothing but an HVAC application when it comes to motion. One data center represents maybe an entire city's worth of air conditioning load or cooling load, but it is just in one city block. Space, energy efficiency, impact is an important criteria. What has been the impact of this particular portfolio? 100 million tons of CO2 in 2021, saved by the portfolio that our customers have. What does the future look like? You'll hear from our colleagues. From Edgar, you'll hear about how the next level of transportation, the solutions that we can bring that make the cities even greener, make the electrical transport a reality, get the buses off of diesel into electric. These kinds of solutions you will hear about and what kind of impact it can have. Food processing. We have a great solution in one of the applications in a paper drying process, which we believe has a natural transition into the food industry. District heating, cooling. The biggest cooling plant in the world has our equipment, and of course, as you'd expect, in Dubai, co ols an entire district. What makes all of these applications real is our focus on technology, our focus on making sure that our solutions are industry-leading. What you see here in front of you is the next generation of a motor and a drive as one package. This is an HVAC solution for heating, ventilation, and air conditioning. If you are a customer, you just need the same bolt pattern for your existing motor, but now it has an integrated drive. You don't need to select the motor and the drive, we do it for you. It's tailor-made for this application. It's called EC Titanium. It is the brainchild of Jesse, and he will give you much more details on the genesis of this particular solution. Our technology is at the cornerstone of our success. When you look at the next application, if you remember, I discussed about the ultra-low harmonic heating and ventilation drive, which is a market leader, both in penetration but also in performance. That technology has been transferred and applied to a water and wastewater solution, and that enables us to transfer the competence and the capability from one application into the specific needs of another. Water and wastewater needs both ultra-low harmonics, but a specific solution for making sure the water hammering that you hear doesn't happen. It provides a mechanical integrity to the solution that you can expect. Many such applications exist. Technology is at the heart of what we do. Please make sure you give your time and ask the questions of our division presidents on what are the technical solutions that give us the competitive advantage, which eventually result in the performance which is industry-leading. How do we run the Motion business? Very simple. We focus on three things. As a team, we focus on the direction of the business. Which segments, which customer segments, which geographies, which applications represent not only the potential of today but the opportunity of tomorrow? Which are the growth areas where we should invest our R&D? Which are the areas where we want to get a technology capability? We're not good at everything. We don't have all of the possible solutions in this world, so where can we make some acquisitions? It's direction. With the direction comes, what's next? Investment. If we're going to penetrate a particular market, and you'll hear that from Tuomo, where he has a very successful business and he would like to penetrate a particular area, then of course, we will have to make investments. What will those investments be based on? R&D. Our number one investment we make in the business for the future and today is R&D. What proportion of the R&D goes for maintaining current portfolio, and what percentage and proportion goes for the future, that is up to the individual divisions to decide. How much do they want to invest? Where do they see the returns? At the end, great direction, fantastic investment plans. Success only comes when you have the right people executing. At the very beginning and at the very end, it's about people. Picking the right direction, finding the right profit pools, and making sure we have the teams who can execute. It's building the capability, the digital capability of the team when we look into the future that will determine our success. We go through each one of these in sequence. First, let's start with the direction. What you see is all of our divisions which have a profit mandate. A couple of examples to illustrate the point. Each one is in a 1 or 2 position in their respective market segments. Each one has a specific criteria for improving that business, whether it's growth or improving the performance of the business from a profitability point of view. This is the ABB Way in action. Each division has a different priority, a different focus to move and improve its business. This is not a Motion-wide campaign. This is each business working together, deciding. Of course, we have to agree, 'cause after this comes an investment. Then each of these businesses have an M&A mandate. Please help me by asking them the questions on what's next on M&A. 'Cause this is a business and a team which hasn't done M&A for quite some time, and it's an opportunity for us now to reinvest some of the profitable dollars and value back into the business to grow it even faster. As you can expect with all businesses, we have a couple of businesses where the leadership is focused on improving the performance. Then we have the newest business with Adrian. Stefan and Heikki will go through what are their action plans to improve the business performance. Where do they see the bright spots, and where do they see opportunities to improve? We have a service business which we've kept to the last, the pièce de résistance for you, which is led by Adrian. A very exciting business, fantastic possibilities where we will probably invest the most when it comes to R&D. This is to bring proximity of the customer into business growth for us, but also making a specific impact, improving the yield of the customer's process, taking reliability and efficiency to a new level for our customers. That's what that business is all about. We talked about the direction of the different divisions. Now let's talk about the investments. We look at investments on two axes. The bottom axis is performance. Clearly, profitability, return on investment. On the y-axis is competitiveness, strategic relevance, market growth. Are these businesses in the right areas from a profit pool and from a growth perspective? It's not that we take the seven divisions and plot them across these two axes. We actually take 30 of them. 30 product lines within Motion are plotted along this axis. Of course, given the fact that Motion is a profitable end market leader, we have a lot of businesses that are doing extremely well and are in the right area from a strategic perspective. There are of course opportunities for us to improve performance, or we don't see the relevance, so therefore we took an action like we did with Dodge. Great business, fantastic performance. We did not see the strategic relevance. We monetized and found a better home for the Dodge business. We also have workshops which Adrian decided, along with the different businesses, that it didn't make sense to have the service workshop for motors. We have divested or shut down close to 15 motor workshops. Of course, each division has homework. For those of you who are trying to decode this chart, the blue represents the drive product lines, and the gray represent the motor product lines. Why is it relevant? Because one of the myths of this business is motors are not as attractive and are not as profitable as drives. What I'm here to tell you is there are many significant motor portfolios which make even more money than our drive portfolio. Every single division has homework. If you have a product line in this part of the matrix here, which is under review, two alternatives, fix it or sell it. You cannot be in this box, the penalty box, as you might call it, under review box, for too long. We wanna make sure the divisions are moving that business from this location or this particular position to, at the very minimum, improve the performance trajectory, and it doesn't look like there's a long-term future for the business, we will exit this part of the portfolio as well. At the end, what we are all about is people. We talked about direction, investment, and now let's focus on the people. We're successful because we are close to our customers. We're successful because of our partners, who are the key enabler for our success. 6,000 of them. We need to make sure when we put the education program, the upgrade program, we also take care of them. They're the multiplying force. They're the ones who are very close to our customers. People keep asking me, "Are you digital? Are you moving in the digital direction?" One out of four R&D colleagues is in software. We're writing code, we're writing application software to make the water application specific, to make the food and beverage application specific, to make the HVAC application specific. I have talked enough about the business. Let me introduce Bernd, who's our CFO, to walk you through how we create value through the cycle. Over to you, Bernd. Thanks, Tarak, and a warm welcome also from my side. It's a pleasure for me working for this exciting business area with a lot of opportunities as the CFO now since 2019. We have been able to keep and even overachieve the promises given to you. We have gained share by outperforming the market and have selected the best growth opportunities without sacrificing our profitability. I'm specifically proud that even with two years of COVID, we have been able to add $160 million to the bottom line. Q1, with a 9% growth in revenues year-over-year, and with a record profitability of 17.4%, is a nice continuation of the good development and was a great start into 2022. For comparability reasons, we are showing these figures without the Dodge business that we have divested in Q4 last year. The main reasons why we have been successful in the past was growth in focused segments, cost and investment consciousness based on our division respective mandates, and last but not least, crisis resilience due to our balanced footprint. I do not want to talk too much about the past, but would like to provide you within the next 13-14 minutes with how we are planning to continue creating value for Motion over the next years. Continuous focus on high growth and value-adding segments is our biggest lever to create value. 89% of our customers expect to invest more in energy efficiency over the next years. With this expected increase in energy-efficient motors and drives, having the right product portfolio and solutions at hand, and having selected the best growth opportunities, we are convinced that we can continue to outgrow the market by 1.5%. These revenues will for sure not come for free and require growth investments. This is why we will continue to invest in R&D and sales initiatives. To achieve the right quality of revenues, all our seven divisions focus on cost investment consciousness based on their respective mandates, continuous improvement in productivity in operations, supply chain management, and sales, and last but not least, in active price management. Now, let me provide you with some concrete examples how we are planning to grow in Motion. Our Drive Products division is the global market leader in a $10 billion market with a 15% share. Something we are really proud of, but nothing to lean back. In most of our targeted segments, we are the number one by far, and we are trying to make the gap to number two even bigger. However, we have still areas where we have potential to grow. In our food and beverage segment, for example, we are investing in our offering and want to build further expertise to add the best value to our customers. In the machinery OEM business, which is a $4 billion market, we are only number seven. Here, we plan to be one of the top three players midterm. Tuomo, our Drive Products head, will give you some more insights on how we plan to do that. Growing our market share in one of our most profitable divisions by more than 100 basis points will for sure help us create value in this area. Traction business. We have been substantially growing our Traction business during the last years. Our Traction division provides us with the most energy efficient propulsion packages, enabling the decarbonization of transport. Investments in battery energy storage solutions are complementing our propulsion and auxiliary portfolio. Having the right traction technology at hand and using this, we have great growth opportunities in the area of heavy electric vehicles, like electric mining trucks, other large construction vehicles, and e-buses. Growing our share from rail to wheel is a great opportunity, a great growth opportunity, supporting energy efficiency, and will also help us to further diversify our portfolio in Traction. Service is another very important growth area in Motion, and the key enabler to achieve our ambitious targets is to substantially increase the number of connected motors and drives. We are continuously working on outcome-based models and other form of subscription models that will drive annual recurring revenues. The main benefits for our customers in this area are asset health with less downtime, higher productivity, energy efficiency resulting in cost savings, and last but not least, fast and effective support when needed. Growing high-value adding revenues in this area requires a transformation in the way we work with our customers and investment in digitalization of our business. Growing our share in annual recurring revenues from 4% to 15% in our service division is another important enabler for sustainable value creation and customer intimacy. This was the first flavor of our growth initiatives. Now let me comment on how we are working on improving our profitability, supporting our growth. To have the right quality of revenues, we are systematically managing our portfolio. We have closed 2 motor factories in Italy and in the U.S., and we continue scrutinizing further footprint actions to improve our profitability, specifically in our profit mandate divisions. Our portfolio management also applies in our growth mandate divisions. As Tarak mentioned, we have already closed or divested 15 unprofitable motor service workshops around the globe. Even though we are number one or number two in all our growth mandate divisions, we are still planning to gain share in new areas. To foster our growth ambition, we are willing, in some of these areas, also to accept flat or even in some areas, lower margins. Now productivity and pricing. The initiatives around productivity and pricing have helped us to offset the swings in commodities and inflation during the last years. We are planning to continue this path. Continuous productivity improvement is part of our DNA in Motion. In our major locations, like here in Helsinki, and you will see that a bit later, we are working on numerous productivity improvement programs around operational excellence. With more than 200 Black Belts in Motion, we are working on around 1,000, and there's smaller, medium, larger productivity programs that resulted just last year in $70 million of savings. Once implemented, we copy into other locations around the globe. This is how we use our global scale. The same applies also for supply chain management, where our global category managers negotiate the best sourcing conditions for all our seven divisions. This is how we utilize global scale. Last but not least, pricing. Having the right pricing approach and being able to react fast has probably never, ever been that important than in our days. Our product divisions act as market and price leader in many areas that allows us to set the market pricing and manage the commodity exposure. In selling solutions and packages, we can achieve the right value by adding value, a value base for our customers. R&D, the area very close to my heart. R&D enables our growth ambitions, and this is where we invest. We are the largest player in Motion industry and have, during the last years, increased our spend by 30% to up to $270 million now. We are planning to invest another 20% midterm. In line with our division respective mandates, we have spent 95% of the additional R&D spend in our growth mandate divisions around the areas around software-enabled motors and drives, battery storage solutions, and also common platform developments. With 1,200 R&D engineers, we have a good mix of supporting our bread and butter business, but also investing in digital business. Last but not least, 300 million motors in the field, most of them not yet reaching the requested energy standards, are very good reasons for us to invest our R&D in the area of energy efficiency and sustainability. Finally, SG&A. Cost control in SG&A helps us investing more in R&D without sacrificing our profitability. If we in Motion plan with a CAGR of, let's assume, 5% in revenues, SG&A can only grow 2.5%. The simple rule of thumb, SG&A growth in percent should only be half of the revenue growth. Some divisions with growth mandates may spend a bit more, others less. This is how we try to control our cost in this area. Let me give you another example which I really like because it's a mix of how we can save costs, but on the other hand, also foster growth. This is regarding our channel partners. We have a large channel partner network in many areas around the globe. Our channel partner network is one of our competitive advantages we have in the market. Because first of all, it enables competitive sales cost, and on the other hand, we have demand generation with a strong local coverage close to our customers, and finally, great support in pre and after sales. Here's where we plan to intensify our existing collaboration, but also want to extend our channel partner network over the globe. Let me conclude and summarize how we, Motion, as a team, are committed to value creation in the future. First, growth in focus segments with a healthy contribution is the biggest lever. That growth will not come for free, hence, we will increase our R&D investments. Productivity in operations, sales, and supply chain management, combined with the right pricing approach, will also in the future help us to offset the commodity and inflation swings. Finally, we continue cleaning our portfolio and continue to accelerate our search for acquisitions that support our growth targets. Thanks for your attention and Thanks, Bernd. Ladies and gentlemen, let me conclude with very simple thoughts as a team, from a team perspective. We're in a market-leading situation as Motion. Fantastic segments, number one or number two market position, strong profitability driven by scale, by technology, by R&D investments, and proximity to customers. What's wonderful coming to this business is the future looks quite bright. We have the world moving from fossil fuel to electric, electricity as part of the transition away from fossil fuels to enable a better world from a CO2 and emissions perspective. What does that mean? That means we have tailwind. We have applications we never thought of which would be electric. During the course of the day, you will get a good example and a good representation from our divisions. We're in the right market segments with the scale and profitability that proves that with a tailwind from a market perspective and a focus from our team to outgrow the market. That's where our commitment is. We wanna outgrow the markets with this team. With that, I thank you very much for the opportunity on Bernd and my behalf. Please, Ansi, if you can join us, we are ready to take your questions as a team. Since I'm new, I have a lot of help to make sure your tough questions can be answered by my colleagues, yeah. Thank you. Thanks, guys. We'll let you loose here on the floor first. Please, do we have any questions here coming through? Anyone? Yes, plenty of hands in the air. Please, yes. Yeah. Morning, thank you. It's Martin Wilkie from Citi. You've highlighted M&A opportunities in some of these business areas, but many of these applications are very new if you look at electrification of heavy transport and things like that. Just to give some sort of sense as to where you're looking for these acquisitions. Are these technology startups? Just to give some sort of sense as to Yeah. how you're looking to accelerate. Let me kinda direct that question to Chris, who is looking at the hydrogen revolution or hype, depends on your perspective, and what he as a division head thinking about from an addition from an M&A perspective, huh? I think some of the technology that is used to power some of these new applications, things that Edgar is involved with, things that we're involved with, has been around for a little while. Finding people who have some interesting IP for improving the efficiency of, say, a water electrolyzer that could be bolted on to some of our existing products, these are the places that we're looking. I mean, today at expanding our ability to serve some of these markets as they grow. We know that, you know, cost effectiveness and efficiency, maybe in the first three weeks of the hydrogen market boom is not gonna be the biggest thing, but we know that cost and efficiency is gonna be a big deal down the road. How do we do this at a lower cost? Probably not all on us. We're looking for partners to help us with those types of things. I don't know if that answers your question about hydrogen, but it's That's an example. Reliability and efficiency on an application is not necessarily always something we have a broad platform. The ability to understand the customer's challenges and to encode it, remember, we talked about the control software platform. We're not necessarily always looking for hardware, we're looking for application knowledge. In these fast-growing segments, we often find people who have that specific application knowledge that we can then acquire that business and take the knowledge and make it part of our solution. Chris mentioned on the hydrogen electrolyzers, a small half a percent increase in efficiency is worth a lot when you have tens of megawatts of power. Those are bolt-on type of acquisitions that. During the course of the day, I mean, each of the division heads, not only Chris and Edgar, each of them have some ideas. We're in the beginning process. As we looked at the motion business, this is something which I'm pushing for, with the little bit of experience I have, which I think I can add some value with my background, on M&A to encourage, support and look at these type of add-on bolt-on acquisitions, but also portfolio additions, which can be in a fast-growing segment. Take Edgar's, for example. New technology, more silicon carbide technology might be more appropriate for the vehicle propulsion rather than rail. What could be acquired in those areas as an example. Thank you. We have another question here on the right-hand side, if you would, please. Thank you. Good morning. It's Gael de-Bray from Deutsche Bank. Over the past five years, we've seen a number of your traditional competitors exiting or downsizing their operations. I was actually wondering to what extent this phenomenon has actually supported your outperformance, and whether it could actually justify that going forward one cannot expect you to repeat the same outgrowth in the market. Two questions. I'll try to answer both of them. When competition struggles, we do smile. That's clear. It's about execution, it's about proximity to the customers. Yes, we know in some cases the competitors have struggled, and that have led to us gaining market share. Even in the current supply chain environment, we're not immune, but if we execute our supply chains, redesign our product portfolio in today's market, we will gain share. Some of our colleagues have done that. Some of the leadership teams have done that. Redesigned and redirected R&D to new chipsets. Not easy to do in a very compressed time schedule. Again, not easy to do, not without risk, but that has led us to, we believe, a slightly better performance from a customer and availability of our product perspective. That does give us some advantage. We believe that the markets will be the main driver for the growth. These segments we have highlighted will grow more than GDP. As we said, the example of hydrogen, but there are other examples, whether we look at what Edgar and his team have done, significant growth, double-digit growth in that segment for quite some time. We believe there are pockets in the overall market which will grow substantially more than GDP, and our game will be to have number one market position and outgrow in those fast-growing market segments. We have a little bit of a history on that, but we will put even more emphasis as a way to grow our business. Those are the two levers that we see from a growth perspective. Of course, as you saw, we are trying to be very clear. We have some homework, we have some portfolio that we might not necessarily have next time we meet. That's where the inorganic comes in, to get the right acquisitions in the right segments, and then potentially divest businesses or business lines or products which don't make strategic sense mid to long term. The combination will allow us to drive growth. Thank you. Just as a reminder, before we take the next question here in the room, if you want to use the chat tool to put your questions through, please, that option is available in the CMD website tool. Yes, please. I think we have here still on the in the middle of the room. Logistics is a bit of an issue here, but there you go. Thanks. Thank you. It's Jonathan Mounsey from BNP Paribas Exane. On the slides, I think you talked about improving the ARR proportion of revenue from 4%-15%. Just maybe comment on how much of that's going to be M&A driven versus organic, and also how much is, say, service engineers doing more service versus asset performance management, new software offerings, new verticals, et cetera. As a follow-up, what proportion of the service opportunity on your install base do you capture today? Have you benchmarked that? Are you already best in class on that? Are the rivals doing better? Just sort of evidence that you could actually grow that relative to what you do now. I think the best one to answer that here is our Division Service President, Adrian. Thanks a lot for the question, and certainly excited to talk later on about some of these topics. There are, I think, three questions you posed, you know. It's kind of how we grow this ARR, inorganic versus organic. A majority is coming from organic growth. It's about changing the customer intimacy. It's about how we interact with the customers. The value creation, I think that was a bit of the second question. The value creation comes mainly from the fact that we reduce downtime of our customers, and that's about proactiveness in how we approach the customers. A majority of our customers still run to fail. They are wasting a lot of money every day. I'm gonna talk about this later today. This is basically where we have benchmarked ourselves and we see us. This is also why it was written we're number one. If we take an external benchmarking from external companies, we have clearly the highest service attachment rate, especially when it comes to the mission-critical type of applications like Chris is gonna talk about or Heikki will talk about it. This is where we're really very close to the customers. I hope that answers a bit of your questions. Jonathan, if you just turn around and give the microphone to Joe. Thank you. Thanks. Joe Giordano from Cowen. Yeah, some of the stuff you said makes a lot of sense, like we're number one overall, but we're number seven here, so we can grow there, and I get all that. What about the areas that you are number one in the specific thing, how do you incentivize the people there to take risks and not just do whatever they're doing is already working, obviously. How do you make them push harder to grow faster? That's- in a region they're already winning? I think, honestly speaking, the way we have worked a lot on margin in this business over the course of the last years. Now we need to focus on growth even more. Doesn't mean we're gonna abandon the margin. It's about accelerating and taking risks. Exactly as you've said, this is something that is in the DNA to get to the number one position, but you also need to take risks in order to maintain your number one position and accelerate the performance. It's really when you come from the customer in, we're not number one in every application. We're not number one in every geography. Take drives, for example. We'd love to have a higher market share in the United States. While it might be very profitable, a good business, we would love to have more business in that area. When you think about our motors, our most efficient SynRM motors are 40% more efficient than the next class. How do we promote? A big part of our leadership is also to promote and make people aware. That example I used of the motor, I can assure you many, in fact, most maintenance departments do not know that for a EUR 13,000 investment, they can save 7.5 tons. Part of our responsibility, and that's why we've launched the Energy Efficiency Movement, to bring competitors in as an industry to make people aware that if you are trying to meet your business' objectives for CO2 emissions reductions, we have great solutions for you. If you don't know about them, what are you gonna do? Unfortunately, in this industry, we do not have those ratings as you have for the cars, as you have for the dryers and the washers, the A through E rating, where you can automatically pick the A rating. We will have to educate the world and our customers on what is possible. Some of these savings are so dramatic, it's hard to believe. It's hard to believe that you get a payback of less than two years. Drives has had that for a long time. Thanks to the increase in the cost of energy, those paybacks of two years are now becoming a year and a half. Thanks to the commitments made by the CEOs to reduce CO2, Chris will talk about something we never imagined. The number one position is not only about technology, it's also about education, it's also about taking risks, it's about developing new solutions. It's on the risk side that we will need to work as a business more, where in some cases, you are right, we might become complacent with a number one position. The way to get around that is to start to take some risks. Not ones that affect the performance dramatically, but certainly one that shows to the customers that we wanna work with them. Yeah. Thanks, Joe. Yes, if you hand them over to Alex there. Thank you. Thanks. Morning. Alexander Virgo, Bank of America. Could you talk a little bit about the moving parts on the margin development over the next five years, I guess? Are we expected to see quite a lot of front loading of the R&D costs, some of the mix shift around the transition to ARR, for example, in service? Just talk a little bit about the trajectory of that margin, please. I think I've tried to highlight the separate elements. First of all, growth is the most important enabler to have additional contribution. That's number one. Number two, we will invest more in R&D. Still true. With our SG&A, with our 50% rule, this will give us operating leverage, and through that, we will be able to continue the path with our profitability that you have seen. When we make an acquisition, we will not make it based on a margin accretion criteria only. You know, when you are at a level of profitability, which our divisions are, rarely will you find something out there that is significantly more profitable and from day one is margin accretive You might not want to pay that much either, by the way, for that. Given the track record of this team, we will encourage, and I will encourage the team to look at also performance improvement, kind of acquisitions, where you, as a division, might be at 19% margin, and the acquiring company might be at 10%, but can you get that 10%-15% in a 2-3 year period? Because that drives a lot of value. It might not drive a lot of margin, but it drives a lot of value. Disconnecting from obsession on margin is a component that will drive our future growth and value creation. Once you are at a certain level of profitability, the next is growth, and that's why we said our divisions have growth mandates. Five of them do. My expectation and our expectations is those divisions are leading the growth. Yeah. Through either acquisitions, but most importantly, through organic, because that's the least risk. The best return is organic investments. The number one market position in many segments means we can drive it fast. Thank you. Alex, if you would just turn around and give the mic. Oh, sorry, Jim to Ben. Thanks. Thanks. It's Ben from Morgan Stanley. Can you talk a little bit about the penalty box, the sort of bottom left quadrant? What are the characteristics of the businesses in that penalty box? Is there just one theme? Is it scale? Or do you see a sort of common theme? In terms of rationalizing that portfolio, you know, how long is it gonna take? How are you thinking about it in terms of are we gonna be looking at another $1 billion of divestments over 12 months, or how long is this gonna take? I think, as we said, these are under review. So not every one of those product lines have a similarity in terms of what needs to happen. Some might need an injection of technology and capability which we do not have. Some of that could just be pure footprint. We are not competitive with that portfolio in that geography, so we need to make a move. These are like two examples of what can drive value. The third component of this one is what is our skill base capability? We always are lacking, in all businesses, talent. I don't think we have enough talent to capture every single one of those bubbles and say we're gonna improve it. At some point we'll have to say, "Okay, given our capacity, capability and timeframe, we do not have infinite time. We will make decisions with the division president saying, "Okay, this one we invest in, we try to fix it, get it better. This one doesn't look like." They might say, "Look, we don't see the kind of returns that we want." We look at it from an investment and return, people capability, and most importantly, is there a long-term future of that portfolio. If we might improve it from a performance point of view enough for it to be a divestment candidate. It's not a simple answer, it's the beginning of the process for us. Maybe in a year from now, we can probably give you a better view on how much acceleration, how we are gonna address it. I fully expect that new product lines will appear 'cause it's a competitive dynamic. What is competitive today might not be in the future. That's a concept that says, we take a look at our businesses objectively and not at the division level. We look at it one level below. That's our thinking at this point. Okay. We have a question coming through here, from Guillermo at UBS, and it's aimed for you, Tarak. He says, "Could you comment on manufacturing capacity? Do you have enough to meet your growth aspirations, and where would you invest in further capacity, if needed? I would say in today's world, I mean, we're beggars for chips, you know? There's no question that if we had availability of microprocessors and electronic components, we could grow more. You'll hear also from many of our colleagues we have, especially in some of our businesses, a scaling model that is not dependent on CapEx investment. We are encouraging our businesses to not use CapEx as a means of serving the market, but rather partnerships through EMS or other contract manufacturers to build scale and have the ability to flex if the volumes go up or down in particular geographies. That will be our main criteria. With the growth ambitions we have, we would love to have the problem that our factories are full and we need to add more capacity. We are adding, in particular hot growth segments, but right now our capacity constraints are typically outside of our manufacturing footprint typically today. There's a quick follow-up here, on reshoring. Is that a trend you are observing? We'll make that a final comment before we move to the next presenter. Thank you. Yes, we do see reshoring, but more importantly, we see the customers and the regulations very much focused on efficiency, improvement, and CO2 reduction. Even more than reshoring in our business, we see the customers wanting to meet their commitments, the public commitments that their CEOs and their boards have made. We have never seen so much inbound interest in trying new ideas and new technologies to replace gas as a form of energy to bring in electric propulsion into fossil fuel-based propulsion systems. The world is being driven towards electric mobility, electric powertrains, and electricity as a way to transfer energy from one point to another, which means good news for all of us. Thank you very much. We'll have more questions to answer for you. Now we would like to welcome Heikki on the stage, who runs our Large Motors and Generators business. Over to you, Heikki. Thank you, Tarak. Thank you, Tarak, and good to be here today with you all. 10%. 10% of the world energy can be saved by using highly efficient motors and generators. This would be great benefit for our customers and huge impact for society. My name is Heikki Vepsäläinen, Division President, Large Motors and Generators. I have worked at ABB almost three decades on product, system, and service businesses and seen the value of those. Today at Motion is the place to be as world goes electric. In my presentation today, I will explain you what we do, where we go, and how we are going to do it, and attract these markets we operate, how energy efficiency and sustainability will be decisive factors while world goes carbon free, and why our customers do see us as their trusted partner, what is our strategy and what are the actions how we increase the profitability, and how we drive customer granularity through our regional structure while moving to quote mandate. On right-hand side of the picture, you'll see one of our typical motors. It might look like a piece of metal, but actually it does incredible things for our customers. Let me walk you through one of our recent customer case. A Large Motors and Generators team designed and manufactured induction motor having efficiency more than 98%. It's a great milestone for innovation and for engineering skills. It's not about the record itself, it's about customer value we create, which reduce the energy bill, total cost of ownership, and most importantly, it reduce CO2 emissions. This one motor over 20 years of operating will save roughly 6,000 tons of CO2 emissions. To put this into perspective, that is roughly at least 3,000 continental flights between New York and London. This is a one motor. We produce thousands of these kind of motors every year. Imagine what great benefit this could be, and is, for our customers and for societies. This example is from our traditional industries, from plastic extrusion, but same principles do apply on hydrogen, carbon capture, and district heating while world goes towards a carbon-free. As Tarak mentioned on his presentation, by 2040, there's a double amount electric motion around us in the world. Important to remember is energy efficiency can accelerate transition towards sustainable future. Let's have a look at our business at a glance. We operate roughly on a $7 billion market. We are the number one or number two on our product lines where we do operate. We do have roughly 10% global market share. It's all is possible having 3,000 highly motivated and skilled colleagues around the world, driving superior customer experience on a daily basis. Our strategic mandate is to improve profitability, as currently, we are not fully meeting our set expectations. When Large Motors and Generators was formalized in the beginning of the last year, we created a strategy with actions to address to increase the profitability, and sequentially, the growth, which I will elaborate on my presentation today. Let's first have a look where our motors are used and how we create the value for our customers. For today's presentation, I have selected a couple of customer segments to illustrate really the importance of our offering, the value we provide. On the left-hand side of the slide, you'll see the overview of our portfolio and a couple of segments how the products are used. The induction motors, they're really the main part of our offering. The workhorse of an industry could be used, for example, running a pump at a local water authority, providing reliable water supplies 24/7 that we can have our relaxing morning hours. During the factory tour today, my colleagues will walk you through more different customer segments and applications where products can be used, like running the liquids at a chemical plant. At the synchronous motors, it's a slightly different technology than the induction motors typically used on larger power applications and really the driving efficiency differences at the end. Synchronous motors could be found, for example, at air separation plant, providing life-saving gases to hospitals like oxygen or compressing hydrogen, providing green energy, and keeping our customers' billions of dollars investments running on its highest availability. Special design motors could be found, for example, on ABB's proprietary Azipod propulsion solutions, the ones which are used, for example, on all the world's largest cruise lines, driving the energy efficiency over traditional propulsion solutions, taking the passengers for their relaxing cruises and safely back to the harbors in the evenings. Tomorrow, on Process Automation day, my colleague, Juha, will explain more about marine Azipod opportunities. Our digital solutions, data connectivity, and access will further help our customers to increase their process reliability and availability. Today, my dear friend, Adrian Guggisberg, on his Motion Services presentation, will explain you how we increase the service attachment rate and how we generate recurring businesses with our digital offering. One common nominator with these few examples is our products are typically running our customers' mission-critical applications, and our customers are looking energy efficiency, by the way, more today than ever before, reduce total cost of ownership, and as we call it, RAMS, reliability, availability, maintainability, and safety, as a failure of this nature of the products would typically lead to very costly production shutdown. We have the credentials to provide for our customers, experience on multiple segments and applications through domain expertise and wide market coverage. That's the reason our customers do look us as their trusted partner, and that's why we are number 1 or number 2 on our product lines where we do operate. As we now know where our products are used and a little bit how they look like, let's have a look on our business mix. As described, our products are literally used in all of the segments on industries, infrastructure, and transportation. This all is possible having global common product platforms in place to be able to serve that large amount of the customers. That really gives us the scale, so we are able to configure and modify our products for different customer requirements. Let me explain to you what this means in practice. Like induction motors, the one you see later today, can be configured to run a pump at local water authority, or it can be tailored to run a fan on infrastructural tunnel project, the ones you will see on top of the highway tunnel, or it can be modified to run a pulp and paper, what Chris will talk this afternoon. In a geographical mix on the centerpiece of the slide, roughly 40% of our sales do come from Europe. Roughly 50% come from Asia, including to China and Middle East Africa, and 10% from the Americas. This is the point where a customer do purchase the product from us, but not necessarily illustrate where products are used. Well, anyhow, we want to increase the orders outside of Europe, and therefore, we implemented the regional structure last year in Large Motors and Generators, which I will explain to you later. On channel mix, on third-party orders, 2/3 of all orders are coming from OEMs, where it's really important to convert all of those end user EPC and customer requirements into product features, what we call domain expertise, and that is our strength. Let me explain you how we increase the profitability at Large Motors and Generators. We have areas where we already are happy, and we already do meet and exceed our set expectations on profitability. We also have areas that myself and the team, we are not happy of our performance. Let me walk you through what we have done and what we are doing to increase the profits. Large Motors and Generators, increase in the profit is driven by three elements, increase in the capital efficiency and productivity, being closer to our customers, and further getting leverage of our scale. Increasing capital efficiency and productivity. Last two years, we have closed two factories, and we have merged two factories into one large operational unit. 2020, we closed our factory in Italy. We transferred the products to be produced in Finland and put those on our common product platforms. Unfortunately, there were some delays to get the benefits because of the pandemic, but now we complete the productivity gains by end of this year. Last quarter this year, we completed our factory closure in North Carolina in U.S. We discontinued some of the product lines, transferred the products to be produced in China, and now we are going to ramp up the production in a full scale, and we are going to get the full benefits in next 18 months. Second part of last year, we merged the Finland and Estonian factories into one large operational location, having two locations, Finland and Estonia. Getting the high labor intensity work out of Estonian labor markets, and we aim to get the benefits now to be complete with cutting the overlaps on similar works by first part of the next year. We've been transferring products between the relocations of factories to balance in the global trade flows, dampen the volatilities, but also mitigate the possible global barriers to come. We've been actively managing our portfolio. Last year, we'll exit new build wind turbine generators out of Europe as that was distracting our profitability. When we closed the factory in U.S., we discontinued roughly 50% of our offering. The remaining half we transferred to India, where we saw the future value to be generated. We can actually conclude that roughly in last 12 months, we have discontinued $100 million offering as that has been distracting the value. We have pushed the pricing and pricing intelligence, seeing the customer value of the products on regions, product lines, even a custo of customer level, that driving the pricing intelligence, pushing the boundaries, and journey continues. Being the closer to customer, last year in Large Motors and Generators, we introduced the regional structure. You could kind of say it's a continuity ABB Way, as the regions are fully accountable for driving the orders. Having accountability on end-to-end profitability, they are fully empowered to drive the customer granularity. It's a lean, decentralized organizational model, and we already see great benefits of that on increased orders, and we are more agile, being able to make the decisions closer to our customers. Also have to highlight different regions are on different stages, and that goes back to what I stated earlier. We have areas where we do well, and we have areas where we need to further improve. China, the world's largest single market, we already do meet our set expectations on profitability, so it's all about driving the growth in China and Asia, where the market size is not the limiting factor. In India, we do have roughly 25% market share on Indian domestic market. It's a relatively tough, competitive market, so we can say we have done well having 25% share. Now, with the position we have in India, through regional structure, we are penetrating to Middle East, Africa, and South America, and I need to say our Indian colleagues, they are rock stars in driving the growth and penetrating the market. U.S. now, closing the factory, we have reshaped, refocused ourselves, and almost today we have the same amount of orders from North America as with the factory, and we all can think how that contribute greatly when we get the leverage of our rest of the supply units. It's all about the driving growth now into North America. In Europe, we further need to continue our cost measures, driving the productivity, and balancing that with the growth with the product lines where we already do meet the set profitability expectations. We continue to leverage our scale. This all is possible having common tools, processes, and product platforms in place. For example, in sales, we use common sales configurators. We have relatively wide offering, but our sales configurators make it easy for our sales people to understand the entire scope. Smooth configuring of the product and reduced cycle time to support our customers. Common engineering platforms enables us to cross-use the resources between the regions. For example, we're able to do urban engineering from India to China or from Finland to India, depending the competence and resources how we need. We continue to strengthen our common product platforms to further increase the customer coverage, production flow, and better utilization of common suppliers. Those common product platforms, what you see today, like the induction motors, we produce them in Finland, India, and China, and this really enables us to utilize the common supply base, maximize the component availability with the minimum cost in place. I also have to say we are not fully happy of the utilization rate of the common suppliers in Europe, and therefore we have now heavy focus through mass customization to increase the utilization rate of the emerging market suppliers to further tailwind the profits. In Large Motors and Generators, increasing profitability is done to increase the capital efficiency and productivity, being closer to our customers, and further getting leverage of our scale. With that, we're able to maximize the market coverage and to drive economies of scale through our common product platforms to increase the profits. The plans we have in place, myself and the team, we are confident that profits will increase to the level where it needs to be. Let me highlight today's presentation's key points. We operate in attractive markets which has interesting growth opportunities. Energy efficiency and sustainability will be decisive factors while world goes carbon free. Our customers do look to us as their trusted partner. We have clear strategy and actions in place to increase the profitability. We turn factory closures and product transfers into the profits. A strong implementation of regional structure continues to drive the customer granularity while moving towards the growth mandate in 2024. Thank you for your time today, and good to be here with you all. Next, I would like to introduce my colleague friend, Stefan Floeck, to talk about IEC Low Voltage Motors. Stefan, please. Yeah. Also, warm welcome from my side. It's great to be here. I'm Stefan Floeck, the Division President of IEC Low Voltage Motors, and I am here today to tell you two things. The first thing is, why is our division, why are our products relevant for the company? The second thing, of course, is how will we deliver on our mandate? I'm convinced we are having a leadership in the energy efficiency performance, and that can only happen by having a pioneering technology in place. That's what we have achieved over decades in developing the most efficient products. Why is it relevant? I wanna share a personal experience. I joined ABB 20 years ago, and I was hired as a sales engineer, and I was focused 100% on drives. In order to secure our pioneering technology, I was asked to join an intensive training. Guess what I was asked to learn in the beginning? It was how to dimension and how to select a motor. If you not know how a motor, which is integrated in the mechanical operation of our customers, how this is operating, you cannot perfectly select the drive. That is the first point why our motors are very relevant to secure our domain expertise. I have a perfect example of this package. Please start the video. The massive growth of electrification and urbanization now means that 45% of the world's electricity is used to power electric motors. With more demanding regulations and efficiency levels to cut emissions, the world needs more efficient motors. ABB's SynRM delivers ultra-premium IE5 efficiency. With significantly lower losses and the same dimensions as induction motors, it's the perfect choice for new projects, replacement, or custom OEM builds, helping you save money and reduce emissions. What's more, ABB is one of the few suppliers that can provide you with the SynRM and variable speed drive perfectly matched at point of order, so you can get the best setup from one source. Our legacy and expertise in this domain are unmatched worldwide. Our customers and partners have been utilizing this solution to save energy and money for over a decade. We support our customers throughout the whole life cycle, helping them maximize operational uptime and performance through preventive and condition-based servicing. SynRM motor and drive packages offer a dramatic improvement in energy efficiency. Implementing them worldwide would help substantially reduce global energy use, powering the fight against climate change. Imagine we would exchange 80% of today's motors with this package. We could save 160 terawatt-hours of energy consumption, which is equivalent to the annual power consumption of a country like Poland. This is our mandate in IEC Low Voltage Motors. We have the mandate to improve profitability. We are positioned as number two globally, but there are some regions where we are already today the market leader. To understand our focus and where we have to improve, I wanna explain to you shortly our portfolio. Our platforms, our offering is based on two platforms. We have a standard platform, and we have a premium platform. The main difference is that the premium platform is only using premium components, such as roller bearings. On top of that, we have a versatile segment and application-specific offering based on our platforms, but also having special designs in place, such as the food and beverage motor. A motor which is installed in application where hygiene is key, so you have to clean the motor with high water pressure. We have motors which are installed under the earth. Our mining motors, which are really operating in harsh environments. We have motors which are installed on deck, so where the sea conditions are really challenging, that the motor's not generating corrosion. We have our high-performance motors, which are installed, for instance, in a package with sort of drives to have a perfect crane application. The third segment is we are staying ahead of the curve with our premium efficient motors, and the synchronous reluctance motor is one example of IE5 efficiency classes, and we are also offering our IE4 motors. Where do we do this? You have on the right-hand side, you see the typical IEC market. It's a $10 billion market. On the left-hand side, you see the darker gray areas, the American market, where my colleague and friend, Jesse, is having a very dominant market-leading position. We are very balanced. Of course, still a European footprint, but we are growing in areas like China and India. How is our position, our portfolio positioned if you talk about attractiveness? We have motors in our portfolio which are already in the profitability area. Tarak mentioned we have motors in our portfolio which are even more profitable than drives. These are our premium motors, our high efficient motors, and also our special motors. We have our standard motors especially in the small and mid-sizes. There's nothing wrong with the portfolio design. We have some issues in some parts of the world. How do we sell them? I will explain that a bit later. How do we increase our profitability? I will focus on three things. The first thing is we have to strengthen our leadership position with our special and our premium motors. We have a premium position. The second thing is we have to develop solutions to drive profitability in the key markets. The third thing is we have to simplify our standard offering and the operating model accordingly. Let's have a deeper look. Our premium portfolio. Here we have certified motors for many applications. How have we achieved that? We have invested over decades in the development of these motors. You have to ensure that you have the certificates in place. Let me tell you one example. We have a lot of Swiss colleagues here, so there are a lot of tunnels, and you see these tunnel ventilations. That, these fans are operated by motors. This fan has also to ensure the operation when a fire is occurring. You can engineer that. The theoretical work is one, but you have to ensure, and you have to test them. You have to burn the motors in the test field to get these certifications. This is only one example. What we have to ensure daily to update our certifications, that can be regional certifications, but that can be technical certifications. Here we are staying ahead. We have invested in machining and in having the allowance to sell in these critical applications. Why are customers buying from us? In the areas of flame-proof motors for safe areas, marine motors, they wanna avoid the risk. They wanna continue to collaborate with a reliable partner. How do we ensure that? We have 300 R&D and application engineers in our unit, and these colleagues are not sitting in a centralized R&D center. They are sitting in our local units as close as possible to customers. Our quality reputation is on 99.96%, so the reliability is really high. I talked about risk avoidance. Our customers are convinced if I buy an ABB motor, this application is safe. The other thing is where do we do that? I have one example that we are doing it close to customer. My friend and colleague, AK, talked about India. We haven't invested in India now over many years, and we have 100% localized portfolio in that country. India is one of the fastest growing economies in the world, and we have achieved to be the market leader with IEC Low Voltage Motors in India. We generated over the last four years 60% growth and a nice, attractive development in profitability and productivity. If we can do it in India, we can do it also in many other countries. We can learn from India. Second point, leadership in energy efficiency. This is a growing area. The market is with us, and we are really well-positioned with our offering. We were growing in our premium efficient motor segments by 105% year-on-year. We gained market share according to that by 3.1% in the last year. These motors generating a 15% higher profitability compared to our IE3 motors. If you talked about this in SynRM, you saw the video, you saw the example from Tarak this morning. If we compare that offering, this is a technology which we can offer in a really wide range, up to 315 kW. You may be hearing a lot of discussions in the news we have to develop premium efficient motors. We have this technology available, proven in thousands of applications. We have the package. We are offering the right software and the drives complete together. It's ready. It's unmatched. What. How have we done that in China? I talked about empowering and localization of our portfolios. We have decided to do similar things in China, not deciding what is working well in Europe is also working well in China. We have empowered our team, and we have launched a new localized product based on our standard offering within 12 months. On top of that, and based on that portfolio, the team in China developed a premium IE4 motor based on our standard offering, and we were the first in China who did that. We were the first who offered IE4 standard motors, and we did that in a record time of eight months. On the right-hand side, you see a great example. In China, we do not have specific energy efficiency regulation which are requiring IE4, but there's a huge demand. Maybe you have heard also how the energy prices in China are rising. This is a fan application for OEM in China who's building electric cars, and we offered IE4 motors, and that was leading for a saving of energy consumption, which cost CNY 320,000 per year. Empowering the local team, knowing the market, having the right products in place was the key for success. Third, simplify our standard offering and operating model. We can learn from India and China. We have to clearly differentiate our position between standard and premium. In Europe, it's too close to each other. We have to clearly differentiate. We have to reduce the complexity of our standard offering, and we have started that. We've consolidated from six to three product lines, and we reduced 200 option codes. This is just the beginning. We have to sell these motors. We have to sell it easy. They have to be easy to sell and easy to select. How do we do that? The business area and the division is investing in the right selection tools and in e-commerce. That will be the preferred channel to position and sell these motors in the future. You need more? You need an engineered motor for harsh conditions. We have our premium offering. We are securing you are getting the right support from our experts. By the way, we have a customer experience center with our expert who's answering 1,500 technical questions per week. Maybe then the pricing execution, and I got a lot of questions also yesterday. Very important, especially in these times. We have been able to implement a current pricing strategy in line with the different channels and markets, and we were fast enough to implement it. In Europe, we have implemented five price increase rounds over the last 12 months. We have to be consistent and selective with the pricing execution. Pricing excellence is something we have to continue, and we are tracking it every week, by the way. Finally, the global footprint optimization. We are just currently also investing in how to produce motors. We are installing our automation system, and that is what we have to continue in some parts of our portfolio. Make or buy strategy is key for reducing the cost and for being flexible. I'm convinced that we are continuing our profitability path. We have a proven track record over the last year. We have consistently improved our profitability over the last years, so the direction and the trend is showing in the right direction. If I can conclude, energy efficiency is a key driver in a $10 billion market. The demand is growing. The demand for electrical motors will double in the next 20 years. We have to ensure and strengthen our pioneering technology leadership. If you ask our customers, they will confirm you have the best products. There is very often no doubt. I started my presentation with a personal experience. Finally, it's up to our people to execute it, and I'm convinced with our new ABB Way, empowering our units as close as possible to the customer, having a committed team behind me, I am convinced we are heading towards a profitable growth mandate by 2024. Thank you very much, and I think now we have time for some questions, and I would ask Ann-Sofie and Heikki to join me. Yes. Thank you. We'll turn to the room in one go to see if there we have questions. Yes, we have some questions. Yes, it's coming. Microphone is coming. Thank you. Thank you very much. Will Mackie from Kepler. You're both working with profit mandates. I guess the world is more fun if you're working with a growth mandate. What does it take to get you into that category of growth mandate? When you look at your profitability as the two divisions relative to the rest of the BAs, divisions within the BA, I mean, how far are you away from the average profitability for the group, for the BA? Maybe I can start here. First of all, we don't disclose individual division numbers as details, but as I highlighted on my presentation, we have geographies and product lines where we already meet and exceed the set expectations. Maybe that gives you an indication like we outperform in China, how we perform in India. Also in Europe, we have product lines where we already are very happy on profitability levels. We have areas where we need to further improve our profitability to be, all in all, the level where we need to be. That all needs to be balanced with the growth. It's not only about the cost, it is balancing the profits with the product line growth where we already meet the set expectations of profitability. Stefan, do you want to comment as well or? I would have the same comments. For you specifically, or is it the same? I think the focus is important. As the bubble charts are there also indicating, so we have to focus on our strength and to improve a little bit how we are selling geographically and which kind of tools we are using to simplify the variants, so to reduce the option codes to make it easier for our customers. Okay, thank- Which is also saving costs, what Bernd was also explaining. Thank you. We have some more questions here in the front row, please. Yeah. Sebastian Kuenne, RBC. Two questions relating to technology. Several times you mentioned CO2 savings, money savings with your motors, but I missed a little bit compared to what. What is it compared to a motor that has been installed for 20 years? What's your comparison here? Another question, also technology. I was wondering if you could follow up a little bit with hard facts. You say you are number one. You mentioned your IE5 and then the IE4 motors, but I wonder where is Siemens, for example, on that ladder? How many years are they behind? Do they have a similar or comparable product? How much better is yours percentage-wise, energy-saving wise? Thank you. I take the first part, and then Stefan, you take the second part. Everything is relative because efficiency, we talk about percentages. Later on today, illustrating the relative terms, there will be an explanation or a read of a recent customer success, one of the larger irrigation jobs in India. One-tenth of the efficiency of a motor, regardless what is the base, but one-tenth improvement will mean $20 million savings over the lifetime of the project. It's all about relative terms. We don't need to go back on too much in the past, what it was. Today, we are clearly better, but it's all about how we drive the pioneering technology, convert those customer requirements, all of that through domain expertise to product designs to get the maximum performance while meeting the customer requirements. That is actually the key. It's all about relative terms. Yeah, I can add to that. We saw the example from Tarak, the saving example from Germany. I think that was compared with an IE3 motor, which is the current standard of energy efficiency in Europe. If I talk about 80% of installed motors, which could save 160 terawatt-hours. This is of course compared to an installed base, which is including also low efficient motors, IE2 motors, for instance. It's just that. No, it should be on. It's just that your customers will not say, "I buy your motor because it's so much better than my current installed motor." He will say, "I buy your motor because another one doesn't have the same features." I'm not so much interested in what's the current standard, but more where's your competition today? We honor fair competition, but I will, of course, not comment now what is the competition's offering. I cannot comment. Of course, there are similar offerings, but from less competitors in the premium segments. This is maybe an easy answer to that. But it is even more important how we are selling it. What is the customer communication nowadays? In the past, we easily sold kilowatt and what is the price, the comparison. Nowadays, we have really to explain what are your savings. We have to go in the details with our customers. We have to have a look on the application and then Adrian will explain to you later on how we are doing that. We really have to argue with value and explain to the customer, "These are your savings, and that is not the price per kilowatt." I think that is important when we talk about also domain expertise. It's also this, like you can think this in a car industry. Everyone is saying that these electric cars, how fast it accelerates. Everyone can make a fast accelerating car, but can you really to drive the economy scale of this one? Is the market interested? That is actually the key, how we really gonna grind the domain expertise in economically feasible customer applications while driving the energy efficiency on larger scale. That is the key. Okay. If we go to Alex again, please, with a question. Thanks very much. I just wondered if you could talk to the relative sizes of premium and standard markets in the $10 billion, and then your relative size in those two buckets. Perhaps I guess I'll ask you a quite aggressive question, I suppose. If you've been ahead of the game on the premium side, would you describe yourselves as late to the game on the standard side? How far behind do you think you might be? First of all, it's difficult to differentiate because we are selling in all segments and with all product lines. The premium side. The main differentiator is really the quality reputation we have achieved over years. What is the difference, the share between premium and standard? Maybe it's 50/50. As mentioned also the premium motors or the specific application motors are based on these platforms. We have another question from Ben, please. Is the strategy in terms of your, you know, premium versus standard, different from any of your competitors? If you think of Wolong or whomever, are they not doing exactly the same thing? How is what you're doing actually different? That's question number one. Question number two is, stepping back, it's a really detailed presentation. Very interesting. But can we just simplify it and say, if we look at China or we look at India, markets where there is, you know, double to triple normal levels of top-line growth, that's where you have the easiest path to profitability. If we look at other countries more mature, it's more challenging. Is it as simple as if we've got the volume, then we get the profit? Well, I can take this one first, and then Stefan Floeck, maybe you can continue. Partially right and not fully right. Let's put it this way. We need to have the right presence on product line level to have, let's call it, right contribution in place. The need to set expectations for the customer requirements, turning that into the product features. That goes back to that we call it more investment in global product platforms, expanding the customer coverage, increasing the production flow, and further utilize our common suppliers. I think it's kind of combination of multiple elements, not only driven by the volumes itself. Volume you can do with the price, but I think it's better to have a pricing intelligence in place and balance that with the right cost base in place. On the strategy, just in terms of what you're doing differently from competitors. Well, what we do, I think that is also one of our secret sauce for our success. Global product platforms, we've been relatively, let's call it, straightforward over- th years, driving the execution of global product platforms, common tools and processes while driving to increase in the productivity. I illustrated in my presentation in 2020 we closed the factory in Italy. I mean, that was the last factory that we exited, and now everything is on common product platforms. Those products, by the way, we transferred from Italy to Finland. We already put those on common product platforms and transferred those to be produced in China. Now we get the common supply base back to Europe. I think what we've been doing for several decades is starting to pay off. Can it be copied? Yes. Let's wait 10, 20 more years for someone to do it. Regarding your question on the portfolio and how are competitors doing, I think I don't wanna comment how the competitor is doing, but I think we have a very competitive portfolio. I think that the principal design is very competitive. We have to decide how we are continuing in different countries and how do we operate. If we make it really quick, because I know some people are dying for coffee now. We'll have one more question, please. Martin, are you wanna take that one? Thank you. Yeah, thank you. It's Martin again from Citi. Just a question on the Large Motors and Generators business. You've closed the factory in North America, the NEMA business is down substantially. What was the reason behind that? Is it the market wasn't attractive? Was it your position? And is there an intention to get back into that market? 'Cause it's a very small part of the pie now for the business. Yeah, we do roughly in Americas 10% of our overall annual revenue. The reason actually we closed the factory is that we saw that we are not able to meet the set expectations with the U.S. footprint. We discontinued 60% of our offering. We transferred the products to be produced in India. Surely, we have also redundancy of the footprint in Finland, but also in China. The purpose here is actually to get refocused, reshaped from the general market to high-end market, actually leverage the volumes and productivity from other footprint factories, not only standalone in U.S., because let's be open here, we were a little bit too small in size to maintain the profitability as the standalone in U.S. factory, in simplified terms. There you go. Sorry, I know there's some desperate coffee drinkers here now, so we have to break it up there. These guys will be available down there. For you here in Helsinki, please make sure you visit the exhibition down there where you will have the opportunity to ask more questions. We'll take a break now, about 20 minutes. We'll see you back here in the room and also you in the virtual setup here at 10 to 11. Enjoy the break. Right. I will now sort of urge the ones of you who are not back in your seats again. Please take a seat, and we'll kick off the next session. We do so by listening to Jesse, who's head of our NEMA Motors division in the U.S. Please, Jesse. 45%. 45% of the world's electricity is converted into motion into electric motors. Almost half. Even sometimes I forget the difference that it makes. I was boldly reminded of this last month when we were in Rome. I had a meeting, and what's the first thing when you get out of bed? Two things you need, right? You need coffee, and you need a hot shower. I get up, I turn the shower on, and to my surprise, nothing. No water, no nothing coming out. I was running a little bit behind that morning, so I definitely panicked a little bit, but then at the same time, I thought, "Wow, there's an electric motor somewhere in the basement of this hotel that must not be working because I don't have any water right now." Thankfully, I was able to call the front desk. They came up there, and they got it all fixed, and they did it in a quick matter, so that worked out pretty good. Even better, I knew it had to be an ABB motor in the bottom of that basement. The reason is, when I turned the faucet on, I could hear that pump running right through the pipes. It was running. It was a water problem that was the whole deal. We do forget many times the impact that motors make in our life. Actually, everything you're touching, your computer systems, your phones, the desk, it's all brought to us. Somewhere, a motor is probably involved in making that happen. They're very important to what we do and important to our life. When I think about for myself, you know, I've been in the industry for 25+ years. Half of my career has been in the drives industry. I understand how important motors and drives are together as one and what difference they can make inside of our business. When you get to know me, you'll quickly understand I am extremely customer-focused. Most of my career has been in sales, product management, and leading P&L roles, but customers are the passion for me and the center of everything that we do. So much inside of my business, we have a mission statement, and it simply says, "Our mission is to be the best, as determined by our customers, marketers, designers, and manufacturers of industrial electric motors." You can see behind me 3,500 employees. Every one of our employees know our mission statement. We know what's important to us. We know if we take care of the customers, we listen to the customers, we provide the products that they're looking for, then take care of our employees, our shareholders will absolutely also be taken care of. In every decision we make, that's critical to us. You can see our market. It's a good size market we have. We are the leading position in electric motors, not only with the NEMA, but across all of our divisions of motors. We do that across seven manufacturing plants, mainly inside the United States, because that's where our market is. One thing you'll find is that you may ask, "Hey, what's the difference between NEMA and IEC, and why do we have two different divisions that's leading this?" Well, when you look at the portfolio and the product itself, there's much more than just the mechanical differences on the outside. The market that Stefan and I lead into, the inside also is just as important. Our customer demands are different inside and out. By us having separate divisions, being close to the customers, deciding what their needs are, helps us enable and lead the market. Now, for my business, we have profitable growth mandate. We're really looking at three key areas of focus. We're identifying the white spots where we can grow, so we can grow our market share. Then we are also looking at M&A opportunity. There's areas that we want to improve upon, and there's also areas we wanna expand within. Those are key focus areas that we look into as we grow inside of our business. When you look at our portfolio, there is no question that it's the broadest portfolio in the marketplace. That's what it takes to service the NEMA motor market. We do that with four key different areas. General purpose, our severe duty product lines, definite purpose, and specialty. Those feed, and this is just a sample of what we have to offer inside of our portfolio. We have over 1 million solutions available today that we can produce at any given time. When you look at our product mix, half of our business is customized solutions. We provide exactly what the customer needs are, and the other half is standard off-the-shelf stock product that we deliver to the marketplace. Those are key differentiators that separate us to help us not only be in the lead but continue to stay in the lead. The other key foundational thing for us is that we must be close to our customers. You've heard others talk about that. Now more than ever, as we see things change in the future, our buying patterns from our customers are also changing. We talked about localization earlier, and you asked some questions about that. The differences are going to happen in the future, where our customers are gonna demand more and more closeness, so they can get their needs and applications, and domain expertise will be critical to the future of that. When we look at where we operate, we operate mainly where our customers in manufacturing, and that's inside the United States. You can see our business, 89% of it is inside the U.S. Majority of the market for NEMA motors is inside of North America. Now, we are definitely global, and we sell on a global scale. Most of those products are coming back into the U.S. marketplace. There's a big foundational difference there that it's not that we don't have the market share everywhere, because we do. It's more of an area that's where the market for NEMA motors is mainly in North America. Outside North America, it's more metric-based, and that's where it falls into to Stefan and his team. Now, we also have a broad portfolio that lead in some other markets, like our cooling tower product. That is a more of a global platform that we can lead and change into the market space. Then you can see there our overall segment mix. We're very balanced in what we do. When we sell to the marketplace, we go mainly through two channels. We have our channel distributors, so our distributors themselves, about 42%, and the other part of it is really focused on OEMs. Those are critical to our success in taking our value proposition to our customers, so we can continue to lead in the marketplace. When you look at our market-leading position and across the segments that we serve, we service the entire market space, but this is some of the key ones where we are. Now, there's opportunity for us also to grow in all of these. You can see like water, wastewater, where we're number two, and we have areas of focus there to be able to grow inside of those segments. We're also very diverse in all the segments that we lead into. As markets go up and markets go down, we can weather those storms because of the balance. Where that one industry may be going down, another one is going up, and our new products may be feeding those market spaces. Because of our diversity, it helps, and also our balance in the way that we go to market, it supports those changes. You may ask, where are we gonna grow in the future? We really have three key areas of focus of growth within our business. First and foremost, continuing our energy efficiency legacy that we have. Now more than ever, there's a big fundamental change, and energy efficiency will be key. We talked about the opportunity where almost half of the overall energy consumed is by electric motors. I wanna talk to you a little bit more about that and what that means. There's some big megatrends happening in the marketplace, so we wanna capitalize on that, and we already are, and there's a big shift from in-person to online. We have not only new products we've launched for that, but there's also a lot of areas for growth that I wanna share with you today. The last part is embedding sustainability in all that we do. Absolutely critical. Majority of my R&D investments in the future will be sustainable products. That's what we can make a difference in the market. I personally believe that we have an expectation as leaders in the business to do exactly that for our future generations. We will have a big focus on that. You look at our business, it was started over 100 years ago, and it was started with one ambition to build a better motor that used less electricity, and that's exactly what we're still doing today. In 1976, we received an award. It was a merit award for leading the way in improving energy efficiencies. This was a moment in time where this business started taking off and growing rapidly when that occurred. We did it again in 1983 when we launched the Super-E motor. It was an energy efficiency motor that was 25 years ahead of its time. Once again, we started growing rapidly during that time. In 2001, we launched the energy efficiency label, so the side of every box you could see the savings that could happen on a motor. Then what happened in the marketplace? Question earlier was around what's difference in the efficiencies? Why now? Because we've always had a focus on energy efficiency. There was a standardization. You heard the IE3, right? IE3 is pretty much now the standard in the world. There's not been anything that has truly come out to be a full replacement in that. That's what we have focused on doing, is creating that. We are working on revolutionizing the motor industry again, and that is with the EC Titanium product that Tarak talked about earlier. We have taken that product and they're now best-in-class energy efficiency available, and we've also combined the best of the best motors and drives together as one overall package solution. I wanna share with you a video to let you see a little bit about what this product line is really about. The most sustainable solution is the energy you never use in the first place. That's the opportunity we really have in front of us right now. We can truly make a difference. When you look at this product, not only is it best-in-class efficiency, it has the drive integrated in. It has the drive from 1 horsepower to 10 horsepower. Until now, it's always been much smaller horsepower. It is doing this efficiency without using rare earth material inside of the product. That is a big differentiator you typically do not see in the marketplace. It is a drop-in replacement for those 300 million motors that are installed out there. It drops right in. Again, across all of our divisions, we have best-in-class energy efficiency available to our customers. We're giving them a solution. When you look at the total cost of ownership of an electric motor, only 3% of the upfront cost of the motor is the actual total cost. When you're talking about a 12-month payback by choosing a more efficient product, it's an easy, simple solution, and our customers see that. I'm gonna share with you some megatrends that we have going on that is taking this product by storm. It's our fastest growing product right now. I cannot build enough of them, and it has nothing to do with supply chain issues. It is growing that fast because our customers see the benefit in what this brings to them. When you look at the megatrends that we have, there's a few things. Shoppers are changing. We're all now buying our stuff online, but 96% of today's shoppers are doing it online, and that's gonna continue to change. That's driving big megatrends in warehousing, conveyor systems. We expect it to be delivered instantaneously. The other area is data is at our fingertips. It's on our computers, it's on our phones, and we expect information right now. Data centers are growing by 8x by 2030. The demand is increasing rapidly. When you look at these areas here, these are growing, and these are with customers that are on sustainability journey, journeys that see the impact this product can make. I wanna share with you one example of where we are making a difference and an opportunity what motors can really do in a use case. You look at a data center. 2% of the world's energy is consumed by data centers, so not that much, 2%, but it's, you know, a fair amount. 40% of the energy used in a data center is with cooling, so it's used with electric motors. If you pair motors and drives together, which is the great thing, we have it integrated in, but we also take this product to 20 horsepower where we can leverage Tuomo's business, which he'll talk about, and put a full package solution there together also. 20%-60% savings you can have with a motor and drive solution. Let's look what that means. We have created dedicated products by listening to our customers, and we also launched a critical cooling motor. This is where our common platforms that we have and the things that we do in our business we can leverage. We've taken the platform of the EC Titanium, and we've made a product now dedicated for cooling towers or for data centers called the Critical Cooling Motor. It meets all the requirements that those customers need. A typical data center is gonna have 54 of these motors inside of it. When you look at the potential savings that will have just by using the latest generation product, $174,000 annually can be saved in just one data center. There's 7 million data centers around the globe. When you think about the opportunity of savings just in data centers alone, there's about $1.2 trillion of opportunity. It's just one case. That's only 2% of the overall consumption that we have. When you look at our strategy, it's clear. We can truly make a difference in the climate, and we can make a difference with the products, and our customers are demanding that. 45%. Motors will double by the year 2040, so the growth path is there. We're gonna do that with three clear distinct areas: our energy efficiency, capitalizing on the data trends that we have, and then embedding sustainability in all that we do. We're strategically looking for M&A opportunities to fill some of our white spots, and we'll do exactly that. We're also looking at the future technologies. Being a leader in the industry, I expect my team to lead in everything that we do, just like the EC Titanium here. This is a game changer in the marketplace, and we're gonna continue to develop products based on our customer needs to do exactly that. I'm gonna invite Tuomo up because there's another half of the story on Drive Products and how the, well, the difference that we're making there. Thank you for spending time with us today, and I hope that each and every one of you have nothing but hot showers the rest of the week. Hello everyone, and welcome to Drive Products Journey. My name is Tuomo Höysniemi. I've been 20 years with ABB. I'm originally from Finland, but I worked multiple years in Asia, and now the past five y ears in United States, and I'm still located in U.S. Drive Products is a market leader. It's a clear market leader with a 15% market share. We are truly global business. We have 2,800 people across the major markets, and we've been highly resilient during this challenging COVID times, having very strong revenue also in the past couple years. Our strategic mandate is a profitable growth. What comes to the growth, we are accelerating our growth. We clearly grow faster. We have the market-leading margins, so our profit is really the industry high level. This was yesterday, we had a lot of discussion, many of you. I got multiple questions about how can we have so high margin? I would like to summarize that with three different things. First is the best-in-class supply chain management with unparalleled flexibility and agility. Secondly, the premium product, the premium quality with the lowest cost structure, thanks to our R&D and technology leadership. Thirdly, the optimized pricing through our value-adding channel partner network. Those are also the three topics that I will cover and repeat today. I also like to highlight that today you have a great opportunity to participate the factory tours, and we also have the visibility to our reliability laboratory, which is a quite unique part. When we talk about reliability, it's really the proactive way to secure the quality. I really encourage to focus on that part of the factory tour. Now when we talk about the overall summary, we covered a lot of those different parts, but then the question came, what is really a drive. I got the question a number of times yesterday, also today, that what is a motor, what is a drive. Here you can see a few pieces about our drives, different sizes, different colors, integrated, and it's a really high-end computer. It's really high-tech product, but we made it easy to use. It's plug and play. You connect motor and drive, then it works. But then when we go to our customers, what they need from the drive, they get electricity, drive, and motor. The drive takes care of regulating the power to the motor and then match the speed and torque you. That's the key function. Like Jesse said, motors are there, drives are there. You took elevator this morning, then there is motor, there is also drive. It's everywhere. The major advantage, saving energy, improving process accuracy, also productivity, saving resources and cost. A lot of advantage and customer really want to use those. Now, we said several times earlier, 45% of the world electricity is used for electric motors. We see here 25% is the typical savings when we use drive. It can be 30, it can be 40, but typically when we have a drive, it's 25%. Take an example, the payback 2-3 years very commonly if you have the new investment. With today's electricity price, it can be only 1-2 years payback to have a drive. After that, you save a huge amount of money. It's really a significant advantage for our customers. Now, how we go to the market. If we start from the left side and follow this red color, our value-adding channel network is really a major advantage. When we talk about our value proposition, it's not only product and offering. It's our product and offering together with expertise close to the customers. The way how we do that is our highly expert channel partners, which are very close to our customers. This is an advantage that our customers are willing to pay. They want to get this service, like, only one hour away from the branch or two hours. When the experts are close, that's really a significant advantage. On the right side, when we still continue to follow the red color, we see that our biggest market area is Asia, 45%. But it's still only 45%. We are well-balanced around all the major regions, at least 25% of our business. In the middle, we see that our largest segment is only one quarter, which means that we have very high resilience with our segment strategy, and we have a number of different segments how we go to the market. Combine those all, we have significant advantage of our go-to-market. The next one is how we utilize our portfolio offering. We have the most modern platform and the advanced offering in industry. What we see that we have a number of different variants, but the core is global platform, which means that we have the scale and we maximize the global usage, but then we can very quickly customize the local products. You see the products right here. Gray one is the general purpose. It's plug-and-play for multiple different type of needs. We have the blue one with our high-end software development, and we made very specific drive for water. Most of the water needs are also plug-and-play. On top of that, we call it all-compatible. The big thing for the customer is also the ease. Now you can pick any of the product, like small micro product, the high-end premium industrial product. When you start up one, it's plug-and-play for the other one. This is very unique in industry that the startup saves so much time that when you know one product, you're very familiar with all the other products and save a lot of time and also have a high-quality installations. Combining all that with our digital offering, we have the full scope of the customer needs. Talking about the segments, we see now left side, our development, 13%-15% market share. What we see right side, this was already mentioned earlier by Bernd, we have the strongholds with HVAC, water, and process industries. We still see opportunities there. We bring new product, new offering. We continue to grow with our strongholds. Especially food and beverage and machinery OEM are the areas where we have even more opportunities across the globe. This is the extension for our strategy. We've been very strong with those three strongholds, but now we focus a lot more also different food and beverage part and also the machinery OEMs. We earlier talk about the M&A part. When we talk about the M&A pipeline and our interest, it's specifically focusing on the areas of food and beverage and machinery OEM, where we have the most opportunities. Behind all this is our leadership of R&D and technology. Let's look at this example about the R&D highlights. We have the long history, very strong expertise, but we are working a lot more with the software and digital. Around 60% of the resources are working with the software and then fast customization, fast development for our customers. Now, take this example right side. Tarak mentioned already or earlier called ultra-low harmonic. Harmonics is a difficult term, but it means kind of pollution in electric network, which might cause some overheating and challenges in the network. The typical way in the market is to solve that with this very large cabinet. How we do that is simplify and put it in the one module, which is 90% smaller, 80% less weight, 75% less wiring, and still performance is better. We have a fourth generation. Only few competitors have similar products, and they have a first generation in the market. This is also the example that we talked about HVAC earlier. We are very strong, having a very strong position, but with the newer technologies, we continue to grow. This is our fastest-growing product series, and we don't talk about 10, 20, or 30%. It's a lot more than that. It's really a breakthrough. Combining that with a global platform and then the quick variation and customization close to the customers, even this most complex products, we make plug and play for our customers. How does the customer see that? Let's take an example. This is Australia. It's a water site, because now, as Tarak said, we convert the same technology in the water side also. Very difficult site, lot of technical work, weeks and weeks measuring, but a lot of problems. Customer decided to take based on our discussion, the ULH product. It's plug and play. Everything works right away. This is also our philosophy. We want to make complex high-end products easy to use, plug and play, and simplify the customer needs. Customers are willing to pay for that. In this case, on top of that, 20% efficiency improvement. The good thing is that the world is full of this type of opportunities. Tens of thousands of these pumping stations, even hundreds of thousands of these. Really full of opportunities. Now, combining the offering with the digital, we have a three-tier digital approach, and the first tier is to make the user's life easy. Instead of massive manuals, there is QR code on top of all our products. Just read the QR code, you get all the data, very simple to read, easy format in the digital format. Second level is a Bluetooth connectivity. You can see the drives or at the back here, there is always built-in Bluetooth connectivity. When there are any issues on the site. Just having mobile phone, the drive can be connected via the Bluetooth, our back end, get the online connection and support. No any major investment. No any other devices. We'll take care of that. The third tier is the integrated cellular connectivity. We are the only player in drives industry who has the integrated cellular connectivity built in the drive. Even we see this great drive here. On top of all the major features of drive, it's also a mobile phone. It's built in even you don't see that, and it can be connected. That is really the enabler when it's a built-in for the recurring revenue and the new revenue streams. I let service colleague, Adrian, to talk more about those opportunities. Combining all the technology and product offering, we focus more on the OEMs and the key for OEMs to be close to the customers. Now the other extension of our strategy is so-called OEM hubs. Traditionally, the highest level expertise is at the factory like here, but we are far from the major customers in many areas. Now, we established a concept called OEM hubs, which means that in the sales unit, we have the highest level of application expertise. When the OEM needs pre-sale support, any support there, we have the highly expert team available. That means that we can really be agile and flexible for the customer needs and also strengthen the support, and at the same time, accelerate the sales. So far, regardless of the COVID challenges, we've opened three of these hubs in Europe, and then we are extending several more this year. At the end, happy customer is our key. We want to demonstrate video about one of the new happy customer that we enabled with this OEM hub. Let's have a l ook [at a] three-minute video about GEA Group, our machinery OEM customer. GEA Group is one of the largest suppliers for machinery and engineering solutions for the food, beverage, and pharma industry. We support customers across diverse industries with solutions that improve production processes and ultimately the quality of life for people around the world. From breakfast to bedtime, GEA Group engineering is likely part of our day-to-day life. Let me give you a couple of examples. Roughly one quarter of processed milk comes from our production systems. Nearly every third chicken nugget is produced by using GEA technologies, and every second liter of beer is brewed with the aid of our systems and process solutions. The overarching goal of our sustainability strategy is to achieve net zero greenhouse gas emissions along the entire value chain by 2040. We will not only focus on the emissions of our own operations, but will engage the entire value chain in this effort, tackling both direct and indirect emissions. ABB's focus on sustainability and commitment to net zero also goes hand in hand with our climate strategy and our commitment to net zero by 2040. ABB has done a great job here in recent years and has established itself as an innovative leader in drive technology. The ABB drives in combination with other products out of their portfolio is a great way to optimize the energy use. Here to stay, the synchronous reluctance or the permanent magnet motors are a good way to achieve the ambitious goals of GEA's climate strategy. To achieve this, we need to rethink together and change previous approaches, such as the design of drive concept in terms of dimension or energy consumption. This is where ABB scores with its ability to offer a coordinated concept as a system supplier, for example, the motor drive package out of the ACS580 together with a SynRM. The strong application expertise, which is easily available in the same language and the same time zone, this can help with quick customization. An old advertising slogan from the quality management in the 1980s described talking to each other creates quality. I think this credo describes the flexibility and the proactivity of ABB in Germany quite well. We were able to experience the so-called can-do mentality in many areas, and it underlines the excellent support from the OEM hub in Germany. Furthermore, the dedication of experts who are willing to walk the extra mile for a joint success. The last few years together have shown us that this targeted application of expert knowledge has produced an enormous time advantage and multitude of new ideas. I personally would like to see us expand this globally together to be able to act even quicker and more actively in our growing market. Yeah, that's really our target, happy customer. What we work there, the can-do attitude. With this OEM hubs, we are closer to the customers and really meet our customer needs with a local language. Also, the importance of motors and drives. The key thing is that we put those together and make our customer's life easy. Now summarizing the overall messages, I've been now 10 months in this role, and with a great Drive Products team, we really demonstrated that we accelerate the growth. We continue to grow faster and keep the industry high margin, and then first 16% market share and then beyond. Global technology leader now close to the customers. Driving growth focused on segments and digitalization together with the service, together with partners, OEMs, and our customers. Combine the message from Jesse and myself, the future of electric motion is now. Together with ABB Motors and Drives, we make the difference. Thank you. I'd like to invite Jesse and Ann-Sofie back on the stage. Right. Same procedure. Do we have any questions here in the audience? Yes, please, from the in the on my right here. Hi, it's Calvin from Credit Suisse. Actually two questions, probably for Jesse. You mentioned your leading product, EC Titanium. What is the price of your product compared to your previous modules? Or probably this is one of your first modules in the space. And also, how do you expect this price to evolve going forward, given your leading positions in the market? That's the first question, and second question is on your M&As. In terms of your pipeline, do you expect any actions in the coming years? And also going back to your point, given that your product's already leading in the space, so what's your strategic focus in terms of your M&As? Thank you. Yeah, sure. The first question there around the profitability of the product lines. We always take into account what the market needs are and understanding the value proposition that we can bring to the market. The great thing about the EC Titanium, when you integrate the drive and motor together, there's a lot of opportunity for additional value to the customer. An example of that might be on a conveyor system. A typical conveyor system has a drive, and then it has a motor, and they're separated. That drive goes inside of a panel, and the panel has to be wired up and connected, and a lot of times they're smaller horsepower that fit within the scope of the EC Titanium. By being able to now mount the motor and drive together as one solution on the conveyor system, the value and the cost overall is reduced for the customer, but the value goes up, but then our value also as ABB goes up. There's a lot of advantages we bring. Another example would be many HVAC systems use traditional pulleys. They have a pulley and a belt system to get the ratios that they need. Again, a drive that was mounted goes separate from the fan enclosure. Combining that together dramatically reduces the cost for the OEM or the final customer, but it lifts their value up for them. Again, that lifts the value up to us as ABB and the premium we can get in the marketplace. Those are things that go along with just not only leading in the technology, but we're truly changing the technology and the application and the way that they're put together. That's just a couple of examples there. On M&A, we are absolutely focused on that. When we look at the M&A opportunities, there's a few key areas that we're focused on. One is additional emerging technologies. What is the future of motors going to be 10, 15, 20 years from now? Where do we need to invest in those areas to be an area there? The other one is some of the things we talked about around white spots. What white spots do we have that we wanna grow across our segments and that we may need to invest within? The last piece is anything around value chain. Where do we need synergies that we may wanna grow into separate markets or things like that that could come into play? We have a balance, and we are looking. Absolutely within the next couple of years, I would say we're aggressively, without question, looking for M&A. Right. Thank you. Can we hand the microphone to Joe here, please? Hey, thanks. Jesse, good to hear another American voice, so, thank you for that. We talked a lot about that EC Titanium, and for someone with no engineering background, like, combining those two things seems fairly obvious, so why was that not obvious? Like, why was that product? Why didn't that exist 20 years ago? Was it people weren't willing to pay the premium that it likely has? Like, why is that now a new innovation? Yeah. Really good question. When you look at the technologies itself in the past, drives have really advanced and also motor technology. Motors are hot, and they generate heat, and the outside skin temperature of those are hot. To put an electronic device, I don't know if you've ever had your cell phone in the sun in your car, and it gets over hot temperature, right? To put that on top of a motor in the past has not been necessarily right. Components, electrical components have gotten better temperature ranges, and then also our motors with our latest designs are getting cooler on the skin temperatures. Now it becomes feasible to start putting that together. In traditional for this system is typically below one horsepower. Those have been around for some time, and they're used a lot, but they're really low power. Us taking it up to 10 horsepower and getting that scope and that range, that's the big enabler there is being able to do that. Okay, just before we let you loose here again, we have one question coming through for Tuomo. It says, Tarak mentioned that market share in the U.S. is not where you would like it or where he would like it to be. How are you increasing this? Yeah. We have a special initiatives focusing US, investing their resources sales side, but also the local expertise for R&D, production. That's the major part of Drives investment utilizing the segment strategy. The other part is that we work very closely with Jesse and with our partners, the channel partners, to bundle the motors and drives offering. The major enabler that we will get more share is the joint offering and then the go-to-market together with NEMA Motors. Those are the main activities that we already started in North America. Thanks. We have one in the middle here. Thank you. Yeah, good morning. Will Mackie, Kepler Cheuvreux. Thank you for the deep dive into the value drivers for the business. I think in the context of perhaps the last 10 years or so, we've operated and you've operated in an environment that is characterized by low inflation. As we go into the next 2- 3 years, you've got an unprecedented road ahead of you with respect to inflation across your bill of materials in the motors business, not least on, also on the supply chain side for drives. Can I ask a question with regard to motors? How much do you need to raise pricing to offset the inflation coming through or across the bill of materials for transportation or steels or copper? With respect to Drives, how do you manage the disruptions that you see at the moment across the Chinese supply chain from lockdowns and other measures? I'll start on the overall first question that you had. It really comes to agility. We have to be very agile and stay very close to what's going on in the market. If you think about electric motor, copper, steel and aluminum are the core components that drive the cost of that. There are certain strategies we have internally to balance that out so we can ride it up and down and manage the overall business. It ends up being about seeing that and driving price into the marketplace as you need to quickly before that you see that cost come into the business. That's something that we've been able to do over the last 12-18 months very well. Stefan talked about the price increases that he's had to have in his business. Same thing with the NEMA Motors business. When you look at Q1 and where we were positioned at, you know, our price curve was ahead of our cost curve in the right way. Maybe adding the Drives part that what I mentioned earlier, the unparalleled agility what we have in the supply chain. We take this our motor and products, we started the research work already almost 10 years ago to build the multiple sourcing, and we have active multiple sourcing for all even key components. If you take an example, this control panel, even the microprocessor, we have two active sources. It's not only the vendor only, it is second tier, third tier, which means that also the silicon wafers, we have alternative sources. That means that with this unparalleled agility, we see difficulties in one area, we use other area to support. Even quarter one, we've been highly resilient against this challenge. We'll have a final question. We have Gael here in the front. Please. Thank you. I think Tarak mentioned earlier that Motion overall has about 1,000 salespeople, 6,000 channel partners and so on. It still looks relatively low in comparison to the $300 million installed base you have and maybe you know in comparison to the fact that some of your customers and apparently a lot of your customers are not necessarily aware of the decarbonization and energy efficiency benefits you can provide to them. My question basically is, I mean, would it make sense to sort of invest massively in selling expenses looking forward? How do you think about that? Yeah. If I take the global view, I'll let Jesse give the motor side. From price perspective, we are investing quite much for our new channel partners. It's really the channel partner development and find the right partners and also get more partners who do the market making and hunting activities. That is really a major investment already. It's very effective way to do that when we find very professional channel partners. On top of that, while we are growing, we are investing heavily also sales. We still need to have the right balance that we can train them and support them. Compared to the past, we are investing even more our channel and go to market. Yeah. For the motor side, it's really about from the customer's perspective and what they need to make sure that they're supported. We take you heard our mission statement, determined by our customer. It's very critical that we make sure that we're very responsive in the marketplace, and that's exactly what we do. We're also proactive out there. When you look at our mix of 42% channel partners. You know that we sell to over 10,000 customers that we have really close relationships with that also take our value to the marketplace on our behalf. The model that we utilize inside the United States, where a majority of our business is, we do that through an independent rep model, which gives us significant improvement in our overall reach that we have, and they are dedicated to ABB in the way that they lead into the marketplace. Thank you, guys. I'll let you wander off while I'll give some practical instructions on the factory tour and which we're gonna head into now. For you guys who are with us virtually, there will be a video showing as the rest of us leaves out of here, showing how you may bump into the benefits of Motion's offering on a daily basis, knowing or unknowingly. For the rest of us in here, Let me start here. There we'll have some safety measures just to make you aware. Energy is transformed into motion everywhere all the time. In nature, man-made systems, processes, and tools, often without us even noticing. For example, electric motors and drives support our everyday life. Hidden workhorses without which modern civilization would grind to a stop. Water. Everything in nature depends on it. Water keeps us hydrated and clean, helps us manufacture things, produce food, and generate energy. But all too often, we take it for granted. When we turn on the faucet, we don't think about what it takes to clean and move that water. Invisible drives and motors touch our everyday life, keeping water clean and flowing whenever we need it. They are the hidden heroes behind our clean and wastewater management. The bad news is it takes a lot of energy. The good news is we can do better. Transportation. Getting from A to B should be smooth, comfortable, safe, and energy efficient. We climb aboard, take a seat, and let our minds settle on something else. Electric traction chains power our trains, buses, and ships, each one unique with a specific purpose. Variable speed drives control the motors and regenerate braking energy, getting you there efficiently in one of the most environmentally friendly transportation modes on the planet. Buildings. We care about our comfort. Elevators and escalators move us effortlessly up tall buildings. Heating, ventilation, and air conditioning systems ensure the air we breathe is just right. Behind the scenes, working hard to make our lives easier are electric motors and drives. How we feel affects our productivity. Buildings are responsible for over 30% of the world's energy consumption, but we can do better. Investing in energy-efficient HVAC with variable speed drives can result in significant savings over a building's lifetime. Efficient use of electrical energy, helping us be more productive and comfortable. Life is best enjoyed with others. A lunch with colleagues, friends, and family brings us closer. In the demanding fields of agriculture and food processing, motors and drives are key components. The right gear for each application ensures efficiency, no matter how challenging the conditions. Irrigating crops and plants, saving energy during production, keeping the temperature just right while producing and transporting the food so that we can enjoy our meal with the lowest environmental impact. We're creative beings. Building is in our nature. However, extracting the natural resources we need to realize our dreams takes a lot of energy. Optimizing energy and cost efficiency is key to achieving higher productivity, safety, and lower cost per ton produced. The motors, drives, and sensors of the mining and metal industry do the heavy lifting, producing iron, copper, and concrete, along with other building materials. Safely and efficiently. Our world is more connected than ever. While shopping is easier, everything we buy affects our planet in one way or another. A good example is the packaging our goods are delivered in. They're produced by the pulp and paper industry, where electric motors and drives have a direct impact on the productivity, energy efficiency, and quality of the paper or cardboard used. Recyclable packaging is a vital step on the way towards a carbon-free future. You flip a switch, and a dark room is immediately flooded with light, your coffee brewed, your music played. Electric motors and drives enable us to move, produce, grow, and thrive. To do all that, we need energy, a lot of it. With our growing population, urbanization, and rising living standards, we'll need even more. At the same time, to fight climate change, we need to reduce carbon emissions. The good news is we can do better. Right. Welcome back. We will now take you through the last three divisions. I hope you enjoyed the factory tours and some meeting with the guys down there and got a good impression of what the people up here on the stage have actually been talking about. With that, I will just with no further ado, I'll hand over to Chris, head of the System Drives division. Please, Chris. Good afternoon. I hope you all enjoyed your factory tours. My name's Chris Poynter. I'm the head of our System Drives division. I'm a Canadian based in Switzerland, and I've been working with ABB in one form or another in motors, drives, and Process Automation for about 40 years. Today I'm gonna explain a little more about the System Drives business. I think it was interesting talking to a number of you over the last day or two and trying to explain what we do. I hope in the next 20 minutes we'll give you a thorough understanding of where we are and what we're doing in the industry. One of the things we will be talking about is the great opportunity we see with energy transition and decarbonization. System Drives is the market leader in high performance, high powered drives, and an independent supplier of power conversion equipment for renewable energy and some other industry applications. We operate in a market of about $6 billion, and compete with the likes of, you know, the big guys, Siemens, Rockwell, and Schneider globally, and a whole range of small to intermediate local and regional competitors in different market segments and in geographies. Business operating revenues in the range of about $1 billion and has a very high service attachment that Adrian takes care of. Our strategic mandate in ABB is to continue our profitable growth, and with that, I'm going to show you a little video that gives you an idea, now that you've seen some of our products, where you might find them in industry and some of the exciting things our customers do with them. The business has its roots in heavy industry. Today, we're doing a lot more than that. We've still got about half the business in process industries, where you'll find our products running critical manufacturing and material handling process in industries like mining, metals, pulp and paper, cement, and a number of others. In infrastructure and utility, for us, this is big air and big water, where our large drives and drive motor packages will operate, things like desalination plants, large water infrastructure projects, district heating, district cooling, tunnel ventilation, and a number of other things. Transportation for us is marine, where you'd find us in propulsion systems for cruise ships, ferries, cargo vessels, and icebreakers. We'll have drives on deck equipment like cranes and winches. We make a range of modular products, marine-certified modular products that our integration partners use for putting together fully electric battery-powered vessels. Renewable energy. You saw the picture. Most of our business in renewables is wind, where we supply converters, power converters to wind turbine manufacturers all over the world. For all of those industries, and all of those customers, our brand promise is performance and reliability in mission-critical applications. Give you a little idea of scale and capabilities. When NASA decided to put together the world's most powerful wind tunnel, their transonic test facility in the U.S., they came to us for a drive motor package. It's about 135,000 horsepower, one unit, and it's driving what you would say is a fairly large fan. In India, I think in the motor tour, they discussed the Kaleshwaram Lift Irrigation Project. Single pumping station with 1,150,000 horsepower motor drive packages moving water up a hill. We control precise heavy loads with incredible precision. Paired with our ABB Azipod propulsion system, we'll navigate and position a cruise ship, a 100,000-pound cruise ship, while it's moving around in the Caribbean Islands and docking at those little places. Synchronize the operation of 40 motors on a machine that's making paper at a mile a minute. Customers use our products wherever they are, highest altitude. In the case of this pilot application for a subsea drive on the ocean floor at 3,000 meters below sea level. The business has performed well in some pretty volatile times over the last couple of years, with order growth, revenue growth, and profitability through the period. We see a pretty good outlook for our core markets going forward. We still see some good recovery in process industries. Infrastructure, we're still looking forward to seeing some of this post-COVID stimulus money hit our books, but we still see a future in big water. Marine for us, we see some kinda midterm recovery in cruise, some increased cargo capacity and a really good opportunity for these small to medium-sized electric vessels. In wind, we're looking at probably the whole industry, onshore and offshore, going about 8%. Where we play, which is large, high-powered offshore, we're looking at about 25% growth if you believe everything you read. We're not just waiting for the market to look for our growth opportunities. I'm gonna say Tuomo fell on his sword for me a little earlier. Somebody asked him about market shares in the U.S., and I think that was directed at me. Our market share in the Americas wasn't what it should be. About three years ago, we started a program to remedy that. We built up some new portfolio, invested pretty heavily in sales, and we're seeing growth in the Americas at about twice the rate we're doing around the rest of the world. To reach out and connect with some high growth but pretty fragmented new market opportunities, we've launched an integrator program where we finished developing a full portfolio of air-cooled and liquid-cooled modules. I think you saw the modules when you were out in the factory tour. For integrators in a number of industries to put solutions together for their customers using our equipment. We think this is gonna give us an opportunity to reach some of these markets faster, and helps us improve our mix and reduce our risk a little bit as we try and expand into these new market opportunities. In the next few minutes, I'm gonna talk to you about the decarbonization opportunity, and how we see this as a real interesting growth opportunity for our business. You heard from everyone this morning that energy efficiency at scale is probably the key enabler for industry meeting their carbon reduction goals. We look at this maybe a little differently in System Drives. We're looking at a decarbonization opportunity that is gonna drive some real growth opportunity for us and our products. You can't decarbonize anything without renewable energy, and we're in the wind business. In 15 years in that business, we've delivered over 40 gigawatts of converters to turbine OEMs, which is about 5% of the total installed wind generating capacity in the world. We see that market continuing to be pretty strong on the offshore side, and today we're delivering some of the biggest power conversion applications in the newest and largest wind turbines in the world. You can't have renewable energy without some need for grid stability. What we're talking about here is things like battery energy storage, pump hydro, compressed gas storage, where we've got a whole bunch of new energy storage applications that are supporting the grid stability. Every one of those applications needs some pretty sophisticated power electronics and software to reconnect that energy to the grid. We see two interesting opportunities for us emerging from this. One of them is some of the new energy transition opportunity with things like hydrogen, carbon capture utilization and storage, and a number of biofuel applications that we're starting to get involved with. These are new markets that didn't exist a couple years ago. When we look at the growth opportunities that people are talking about with these new emerging industries, we see some really interesting potential for our business. The last thing here is decarbonizing industrial process, and I'll talk a little more about that later. For us, this is removing fossil fuel-based applications from our traditional industries and replacing them with electric motor and drive solutions or electric solutions. This for us allows us to keep... Take advantage of the connection we have with the markets today, with our end user customers and our OEMs, and really start looking at new ways we can power our business for the future. The hydrogen hype, I think Tarak mentioned that a little bit earlier, is just now starting to turn into business. The growth opportunity that we see here for our products and services is tremendous. We're involved in all aspects of the hydrogen value chain. In production, we supply power supplies to electrolyzer OEMs so that they can make green hydrogen. Our OEMs and integration partners today are repurposing their businesses from oil and gas and some other industries to move into these new high-growth opportunities, and we're right beside them when they start working on these new applications. Then downstream, we've been involved in fuel cell electric generation, for some years now. We've got a good business on the marine side, and we're starting to reach out and work with some partners on, stationary power, applications with fuel cells. If we look at what we see for this market, we think there's $1 billion-$1.5 billion in new accessible market available to us by about 2030. We go back to industry, and we start looking at ways to replace fossil fuel-based applications, and one of the big ones is turbine replacement. This is replacing gas turbines and steam turbines with electric motors and drives. These are big electric motors and drives. Heikki and I are working pretty hard to continue to work with this. On the greenfield side, I think I spoke to a couple of you guys in the last few days or last day about LNG, where the investments in LNG seem to be headed towards electric solutions rather than using their own gas and gas turbines to drive their compressors. Our customers are telling us this is a more efficient way to operate their plants. It's also an opportunity for them to enable carbon-free operation if they can find some renewable energy to power their facilities. On the brownfield side, where we see a long-term sustainable revenue stream, we're talking about replacing aging turbines in industry and replacing them again with motor and drive packages. We're still looking at this market and how we might get there, but right now it seems to be shaping up that our turbine OEM partners today are trying to find ways to replace some of their turbine business with alternatives and go after this aftermarket opportunity that they have access to because of their air compressors. Some interesting things to come. When we look at that retrofit business, we're pretty excited. There's thousands and thousands of turbines out there ripe for replacement. At about $1 million-$5 million of ABB scope per replacement job, we can see this looking like an interesting business for System Drives. The customer intimacy that we built up over the years with our sales and service reach is giving us an opportunity to talk to customers about some strange things they're starting to do in their own industries to reduce their carbon footprint. We launched a series of products for industrial process heating in 2020. We've started working with customers now on large process heating applications, where they're removing fossil fuel-based heating applications and replacing them with electric. Now, there's no motors in this, so I'll apologize to Heikki for not having too much going on for him, but we're providing pure electric solutions for heating instead of gas and oil. In this case, we have a customer in Norway who took a 9-megawatt oil heating system for a pulp dryer out of his plant and replaced it with an electric system. Now, he's got a more efficient operation, and he's claiming he's saving 14,000 tons of carbon a year. We're not improving his energy efficiency, we're eliminating the use of carbon fuel completely. We see an appetite for this in industry, and our industrial customers in metals, oil and gas, in pulp and paper are telling us they wanna start having these conversations. We're there with some of our integration partners, finding ways to solve these problems for the customers. The last one I wanna talk about here is our marine business. There is regulation coming into play in ports all over the world to eliminate carbon emissions in the harbors, which means you stop running diesel work boats. You shut off the diesel generators on the cargo ships and the cruise ships when they dock at the ports. You find other ways to provide electricity to the docked ships, and then you find other ways to operate the work boats in the harbors. In this case, we've used our marine-certified modular electrical package to provide, through an integration partner in Turkey, a fully electric battery-powered harbor tug, three of them, that's actually coincidentally going to a small port in Western Canada. This is gonna save this customer 5,000 tons of carbon a year, compared to using a diesel. For us, this is opening up some fantastic new opportunity where when we looked at how many tugs were in operation around the world, and it looks like 18,000-20,000 small to intermediate-sized work boats that we're looking at. At $1 million a vessel in ABB scope, we think if we can get some of this conversion started to electric, and really drive this again through a bunch of regional and local integration partners, we're looking at some interesting new emerging business opportunity. Without showing you a lot of our big products, they don't fit on the stage here, most of them, I hope I gave you a little more insight into what we do. We've got a great brand. We've got technology leadership, and we've got some incredible reach globally with our sales and service network that we've built up over decades. We think there's a pretty solid market outlook for our core products, and I hope I've given you an indication that we see the energy transition and some of this decarbonization opportunity as a tremendous growth opportunity and an opportunity for us to continue our profitable growth for ABB. That's it for me, and I'm gonna hand it over to my friend, Edgar, who's gonna tell you how rails and wheels are gonna save the world. Anytime you're ready. Thanks, Chris. By the way, we would be pleased to use a lot of your renewable energy to run our vehicles. Yeah, Edgar Keller, close to 40 years with ABB, and more than half of that time around the railway business and supporting the growth of this business. Let me explain a bit what we are doing around trains and other vehicles. We do propulsion systems, and this means we are able to design the whole propulsion chain of all kinds of trains, from high-speed locomotives, metros. We also produce most of the components like traction converter, auxiliary converter, battery chargers, energy storage and traction motors, but we also connect everything together. I hope you realize that we also in the EMUs, you realize the powerful acceleration this morning in the train, and then the smooth ride afterwards. That's our part, what we are contributing to the performance of such trains. It's clear the customer of our customer, they are selling seats, and they are selling tons of freight. They don't want to have heavy electric stuff and big electric stuff to use all the space on the train. We always push to minimize, to put it together to make it lightweight. Yeah, if you use the train, we want to be punctual at the place to go and back in the evening on time, so reliability is really a key driver. Availability only to give you such a train is 18-20 hours a day operating. If you compare that with your private car, standing most of the time in the garage at home or at the parking space close to the office. That's really a different world, what means availability and daily usage. Yeah, all my colleagues have also stressed energy efficiency. I will do the same. That's really in our case, it's also not only to drive energy efficient, it's also to be able to give as much as possible braking energy back to the network. You can be sure if the train starts to slow or to brake, your mobile charger will immediately be supplied by braking energy. The same is with the air conditioning and with the lighting in the train. We are using directly the braking energy in the same millisecond, second on the train. Our market is around $4 billion. We are, from the numbers, number two globally. Growing in Europe with all these different voltage systems, different frequencies, different signaling, we have by far the broadest portfolio. We have the most systems which are crossing the borders, where we have two systems or sometimes even four different energy systems on a train. We are convinced from the portfolio, we have more or less everything what you can use on a train. To give you a bit, an impression of a replacement, to also see how it looks inside a vehicle and the size of such a converter, we have a short video. Here our customer is removing the old converter. In our factory, we are building the new one. The customer is also doing some other optimization, and then he is putting in the new converter, and the locomotive goes for test and back in operation. This project is a replacement of converters in 120 locomotives and was running around four years. This is saving 30 GWh a year, which is similar to consumption of 10,000 households. Also with the energy price from yesterday, this is cumulating to $1 million savings every year. That's clear. That's really a lot of energy. We are working together with the OEMs in a more strategic partnership because we are close together from the concept phase where we designing our stuff into the train. Started with Stadler, growing with Stadler, but then working with many others, OEMs and also directly with the operators. With these operators and they sending the vehicles around the world, we have then reached really a nice installed base around the globe. Clearly a bit more cloudy in Europe. What is also very crucial for us is this project are mostly public financed, and it's taxpayers' money. They are also looking for some employment in the countries. This is why we also have to fulfill a certain local content. In some regions, it's clearly defined. In others, it's more a nice wish. It's also what the customers are looking for is really they want to operate these vehicles for 30 years. They are looking that there is somebody who has a bit more knowhow to maintain that. This is also why we are local with local production, with some knowhow and also to understand the different requirements in the different markets in this more, I would say, complex environment. Why we are strong in that market? We see us really as a technology leader. Somebody has asked this morning, "Can you prove that?" We will do that. That's again energy savings. It's really important. What is also a strength is really we working to in the beginning with the OEM, but later on with the operator. That's really a long cycling business. As already mentioned, we have some dedicated production sites for Traction products, but we also can count on the whole Motion ABB network service. All that we can rely on if the trains are going then to other places. To prove the energy efficiency, we really ask our customer he should do a measurement with two similar trains on the same network with the older two-level technology and compared with the three-level, which we have developed and introduced some years ago. That's 20% savings. More than 20% savings on train level. Means less consumption for the whole system. This is mainly because of the harmonics, which are making losses in the motor and with much lower motor temperature, it's clearly proven there must be less losses. Yeah, what next? We thought about what can we do with our knowledge? We have realized that a heavy mining vehicle is very similar to a locomotive when it comes to the components which are used in. A locomotive converter, it's more or less the same power, it's the same robustness, and very similar requirements. Yeah, let's imagine we also have the battery in the meantime. Let's imagine we go uphill on the catenary. We use the payload of more than 200 tons to charge the battery if we go downhill, and the rest we run on battery. That would be really a sustainable solution. We have some early examples, but this we really see as a heavy growth segment. Because the mining is really. They are different numbers than in rail. That's much higher quantities, much higher volumes. If they would change to electric, that would mean that a really sizable market. The same is with E-mobility, the electric buses. That's, yeah, in principle, you cannot see a new tender with diesel buses in the public area, in the cities and so on. Everybody is asking for electric today. Yeah, from this side, we are in a mature market, rail market. The market was growing in the last two decades. With the investments which are announced, it will further grow. The steep growth in the e-bus market, where all the new tenders will be electric. Including our extended portfolio with the batteries, and then the new area in the heavy electric vehicles, we really see a growth potential, a sizable growth potential here. It's close to our knowledge, which we have today. Another example, electric bus. In addition to the converter and the motor, we have put an energy storage system there. This is the trolley bus system, where the operators are mainly struggling with the crossings. There is always something happening, difficult to handle. In the meantime, with the battery, they can remove the crossings. They can run on battery and connect on the other side of the crossing. If there is a construction work on the street, they can pass by the battery, reconnect later on. That's a bit of a renaissance of these trolley systems in the city. Also, if they want to extend a street which has no catenary, they can do it with the battery, and then they come back to the catenary. They charge again, and that's one of the only systems you can do revenues during charging. That's really going the same as moving the people. We asked our customer what he thinks about that. Let's listen to them. In Zurich, the goal for our bus fleet is to become widely emission free by 2030. As a first step, we changed line 83 from diesel to battery trolleybus operation. The line runs partly under existing overhead wires and covers the rest of its route by battery. On these new buses, we have electrical components in the drivetrain from ABB, including the battery, and they allow us an even better recuperation rate compared to the older trolley buses, and we can save about 15% of the energy consumption than from what we have before. For us, the combination of an existing trolleybus system with these new efficient technologies has opened new possibilities to electrify our main bus lines, which is also in accordance with the city's environmental goals. With this little project that was really nine buses, they can save over 200,000 liters of diesel or 540 tons of CO2. Because it's a bus that's also running 18-20 hours every day. Yeah. The future of transport will also be electric. I would say the rail industry, we can bring more than 100 years of experience to that table to get it electric. With our global leadership in technology, with the access, the local capabilities, the domain know-how in the rail market, in a steadily growing rail market, and with the opportunities in emerging markets, we see strong growth in the coming years to further growth like we have done in the last even 20 years. Thank you. Then I would ask Andy and Chris to come to the stage for question and answer. Yes. We will have a few minutes for questions to these guys also. Do we have any in the room? Yes, please. We have Andy here in the front, on the second row. Hi, it's Andy Wilson from J.P. Morgan. I just wanted to ask, Chris, on the U.S. business, you kinda talked about the market share that you'd gained there from, I guess, what sounds like an underweight position to a much improved position. I just wanted to, I guess, understand how you did that, and if there's anything you can take from that into either other regions or onto some of these new market opportunities that you talked about. Part of it was with some of these new opportunities. I mean, maybe not the new opportunity, but this new way of getting to some of the market. Look, we made some fundamental mistakes with portfolio about 15 years ago, and we lost some real ground, and we lost some connection with end user markets when we did that. Recapturing that's not easy. We've invested in sales, account management people. We do know these customers. We're still very involved with the high end. The really big compression and these kind of things, we're still part of that market. Getting down to the some of the products you saw in the factory today, getting those back into the market, working with integrators and things, this is just. It's heavy lifting on the sales side. We're about to launch some portfolio in there that's gonna get back another piece of that for us right now. No, we just dropped the ball there some years ago. I'm quite optimistic about us finding our way again. There's some real headroom for us there. We have one question there with Jonathan. Thank you. Yes, Jonathan Mounsey from BNP Paribas Exane. You mentioned on the mining, using the sort of learnings and technology from the traction business and applying it there. We already hear a lot of talk from the likes of Epiroc about moving over to fully electric mining vehicles. I mean, where are you on that? It sounded like you were just getting started. Do you actually have some of the OEMs, Epiroc, Sandvik, Cat, signed up as a supplier to them? Secondly, is it much of an aftermarket opportunity? When you showed the rail, you were showing retrofit of existing rolling stock. Is that something that's likely to. I would guess it's perhaps not possible when it comes to mining equipment. Is it purely a new equipment opportunity? No, it's for sure a new vehicle. Where we have started now with different projects, also you mentioned that Epiroc is really a replacement projects. It's still a bit in the early phase, but the first vehicles are already running on batteries, and it's really replacing the diesel engine. They are partly already electrified with a generator and then a converter and electric motor behind. And this whole is replaced by battery and DC-DC converter to run it full electric without the diesel engine. There we are working on several projects, but also on new projects. You mentioned the aftermarket. My example with the locomotive. This is a locomotive. Forgot to mention that that's 25 years old. Then it's if the mechanic is strong of such vehicles, then typically with the electronics it starts to become obsolescence problem with some control components. Then together with solving this problem and have a huge energy savings, many customers are really thinking about to replace then the converter or even some other parts together to. Then such a locomotive, it's even better than a new one. That's our aftermarket, I would say. The new vehicles, they are expected to run 15 years without bigger issues. 'Cause that was like a midlife upgrade. Yeah. You were showing the That was the midlife upgrade, yeah. Of course, the OEMs, they sign up the customer to a, usually a service package, 10 years day-to-day maintenance. Yeah. Do you capture any of that? Just spares or do you actually We have more and more service level agreements with either the OEMs, if we are back-to-back with them, or if they do not have the service agreement with their customers, then we have also direct service agreements with the operators. That's really availability. Today we are really so that we have the spare parts on site in an ABB container and with a digital solution, they can take it out even at 1:00 A.M. and make the replacement. Then they send us back the data and we are replacing the material if needed. Because we cannot be in every depot, but we do the training for them, and we give them a nice diagnostic tool, and then they can do it by themselves. We only have to make sure that they have the right material on site. Because the train is standing only between 1:00 A.M. and 4:00 A.M. I mean, if there is something to do, then they have to do it in the depot. Thank you. Yep. Yes. We have one question on the right-hand sid es. Yes. It's Calvin from Credit Suisse. Just one question on your emerging markets. You mentioned quite strong outlook in emerging markets for traction. In terms of your double-digit growth, if I'm understanding correctly, how much is it coming from e-mining or e-mobility, and how much is this from your traditional rail? 'Cause I think you mentioned that in your presentation slides, product line growth 25% around 25% from e-mobility, 75 from rail. What does product line growth mean? And in terms of your revenue growth, like how much is it from emerging? How much is it from traditional? ank you. Yeah, you have seen from Bernd this morning that we have been growing in the last year by 12%. Yeah. Sorry, everyone. Can you just wait. Thank you. Okay, good. We have been growing 13% CAGR over the last years in Traction general. The slide that I was showing was regarding moving the portfolio to 25% of e-mobility midterm. We are not yet there. It will be a part of the growth. Clearly, this 25% will be part of the overall growth. Is that answering your question? Sorry, can you just. It would disclose how much of that 12% is from your emerging markets versus, say, traditional rail, or is it something that is not disclosed? No. This we should not disclose yet. No problem. Thank you. Sorry. Okay. Do we have any more questions from the floor here now? Yes, we have one at the front. Thank you. Just a very brief one. I saw that, Siemens is not one of your partners, in Traction. Although you have so many different electrical systems on trains, is there really so much competition or infighting that you have no cooperations with Siemens? We have a little bit of cooperation, but it's clear Siemens is an electrical company as well. They are sourcing their propulsion systems mainly internally. When competing on the rail level, on the train level, it's a bit they are fighting with the competition. They are not really seen as an independent propulsion supplier on the market. I should not talk so much about the competition. Okay. We have just one question coming through here through the online tool, and it's heading for Chris. It says you talked a lot about your hydrogen offering, and it says here, this person wants to know, do you need to increase R&D in order to capture the potential growth in hydrogen? Yes. Can you elaborate, please? I can probably do that. Today and R&D in two ways. In hydrogen, I mentioned three pieces. Let's start at the end of the process. The grid-connected converters for stationary power with hydrogen. Fuel cells, hydrogen fuel cells, stationary power. We have a range of products that we're using in marine for grid-connected converters. I think we need to broaden that portfolio, obviously, to get into some other markets. There's some work to do on the downstream side. Probably not much R&D to do on the distribution and compression. I mean, these are businesses that we're already in. Pumps, compressors, any size you'd like. Heikki and I can deliver product to that market right now. We are upstream on the production side. We've done some incredible work trying to map where green hydrogen production is going. Who's gonna win the race? How many horses are in the race? What voltage ratings, what power ratings, what level of modularity these industries are gonna start operating at? All I can say is, we're working on some things. I think we talked about some inorganic opportunity. I think there's always a question about that. We're looking at, you know, other companies out there that may have some technology that might be interesting for us. Right now it's more trying to understand what direction the market's going and what size and power rating and voltages and things that we need to focus on. The short answer to the question is that's where some of our R&D money is going these days. Right. Still no more questions in the room? No? If not, we'll end it there, and we will have a 20-minute-ish coffee break. We'll be back here at 4:00 P.M. in the room, but also for the virtual audience. As we say in these days of virtual meetings, stay hydrated and stretched. I'll see you back here at 4:00 P.M. Thanks. Bye. Thanks. Let's go. Right. Welcome back. It's time for the last session, and hope you've had some time to re-energize, both here in Helsinki and also you behind the screens at home. It is now mainly one guy who is between you and dinner, and that's Adrian Guggisberg, who's running the service business in Motion. Without further ado, I will let you loose. Please, Adrian. Good afternoon, everyone. This is the last presentation of the day. Why should you pay another 20 minutes of attention? I feel bad to be in between you and the dinner, but there is a good reason to pay attention. The industrial service business is in front of a major transformation. I'm convinced about this. We have heard throughout the day about carbon neutrality and energy efficiency. Out there is a huge installed base which is by far not energy efficient. We have to reduce waste. Circularity, you hear it everywhere. Today, to my opinion, it's a buzzword, but it will change rapidly. New regulations coming in, and this new regulation will require new services. The fourth thing is digital. During the last two years in the lockdowns, we got very innovative, and customers started to accept sharing data in a new way. It's accelerating digital. The fourth thing is there is a change in workforce, and this change is also accelerating. The new people coming in, the young guys coming in at our customer site, they don't have the experience of the people which have been maintaining this equipment for years, and they look for a complete different way of working. A change is always a risk but also an opportunity. In the next 20 minutes, I'm gonna tell you how we're gonna capture this opportunity and how we're gonna grow our annual recurring revenues from about $40 million to $200 million in the next coming years. My name is Adrian Guggisberg. I'm leading the Motion Services division. Let me start to give you a glance on this division. First, I'd like to highlight my market. The market of the service division, the main market is the installed base. I can tell you, I'm actually cheering up every day when my colleagues are moving more products into the market than anybody else. Being the number one or two in most of our segments means we are growing the service market faster than anybody else out there. This is great news. Actually for me, it comes for free. It's excellent. The second thing I like to highlight is the mandate. I have a growth mandate. If I'm talking to Tarak, he would tell me, "Grow, grow." I would also like to talk about profitability and profit. Bernd mentioned about the profit we have improved over the last years in Motion as a business area. About 1/3 of this profit improvement comes from Motion Services. How have we done that? Speed. Speed is key. We were very fast in starting to do portfolio management, looking at the things where we do not have any competitive advantage and start thinking about stop doing it or changing it. We exited some of our motor workshops, but also some other things we stopped doing. With that, we freed up the capacity to focus on the things where we really add value, where we create a lot of value, and we were growing that part. With that, we immediately increased the profit pool. The second thing is we started to look at end-to-end processes and started to remove waste. Simplify, simplify. That's the two things what we have done in order to increase the profit. Let me a little bit explain what we are doing as Motion Services. At Motion, we're actually saying we keep the world turning while saving energy every day. I like this slogan very much. You have seen throughout the day so many applications. Everywhere we watch, we find something moving, and if something is moving, most likely there is an electric motor behind which is moving it. We keep the world turning. I don't think I need to talk furthermore about energy savings. You have heard so much about this through the day, and the technologies are just great we have in our hands. It's about getting them out there. That's our. That's why we exist. Now what do we do? Let me try to explain this a little bit kind of there are three value pools or three areas where we create value which are super relevant. If I take a kind of illustrative picture about the life cycle cost of somebody operating motors and drives, there are three parts. The first part is basically you invest into equipment, and you wanna ensure this equipment keeps the value and is always there when you need it. That's the traditional services. That's the purchasing of the equipment. That's the first part. There we optimize the life cycle. The second part, when we go especially to critical applications, like you have heard from Chris, where we have actually also a great service attachment rate or from Heikki, it's cost of downtime. You would be surprised how many customers are out there which still have a service strategy of run to fail. They are wasting so much money because whenever they run into a failure, the downtime is gonna cost them a fortune. Let me pick a rolling mill, like the picture a little bit indicates. If you have the main drives in a rolling mill, you may invest $1-$3 million for this equipment. The downtime of such a rolling mill can be $100,000 per hour. One day, the whole investment is gone. One day. It is not a lot of time to react if something goes wrong. Limiting the downtime is a huge value pool for us. The third thing, no surprise, cost of energy. Cost of energy has been exploding this year, and if you think about the 25% saving of energy, what Tuomo mentioned, what we can do in many applications, and you compare it just to the investment into new equipment, this is a no-brainer. Most people which invest in this equipment, they will run it for 15-40 years. Now, our equipment typically will not last for 40 years, which means we're gonna renew it at least once, and Edgar had just such an example with the locos before. Also the same applies for many of the industrial applications. Chris was talking about the NASA wind tunnel. Also this, we have upgraded with new electronics. It's a normal life cycle, and it's the business we are doing on a regular basis. How we do that, we have a couple of tailored services. The one thing what we try to drive is we define a portfolio which is relevant for our customers. Recovery services as an example It's all about when something goes wrong, how fast can you be there and how fast do you get back to operation? That's all that counts. That's the value, speed. When you think about data and advisory services as another example, the value of making the right decisions is just tremendous. We are maybe not always the best ones right now in commercializing this, but that's where we are working, and I'm gonna tell you more how we do this. Now, to be practical, just one example of a customer where we had a journey together, but I'm not gonna explain you that story. Let's listen to the customer. Jämtkraft, an innovative Swedish-based utility company that was founded in 1889, has been synonymous with environmentally friendly energy. For more than 20 years, the company has relied on ABB to provide lifecycle services for the motors and drives that control critical equipment at the plant. ABB has been our trusted partner for many years. We are certain that the solutions we get are tailor-made and contribute to our sustainability goals. To extend the lifetime of our assets, we realized nine drive upgrades over-th e- years. The modernization solution enables us to avoid premature scrapping and reduce waste by keeping the existing cabinets and changing only the components inside. This helped us to realize this solution in a circular way. Proven cooperation and proactive on-site support over- the- years resulted in signing a service agreement with Jämtkraft. In 2019, the service agreement was extended by adding the ABB Ability Condition Monitoring solution. This digital solution helps Jämtkraft to stay one step ahead and indicate any possible failures before they even occur. This enable us to monitor and analyze the performance and operating conditions of our critical equipment and alert us to potential problems. This allows us to plan maintenance easily, so we can prevent unexpected downtime, unplanned stops, and production losses. Our service agreement with ABB gives us a peace of mind. A reliable partner, that's the key thing I need to be to capture the value from our customers. That's what they look for. Let me explain you four things which are essential to be successful in my business. The first thing, it's about the end user focus. The portfolio we have and what we are doing, we're focusing on end users. As the service division, we're also having the maturity of the direct business with end users. However, we are also doing partner business, and this is where I invest the most, to grow the partner service business. Tomorrow, you're gonna meet one of our service partners, the TA run-to-fail type of service strategy, and our ambition is to convert them into proactive. They're gonna save tremendous money, even though the services they spend, the money on services is gonna go up. The savings they get from the reduced downtime is so much bigger. It's a no-brainer. Digital is key here. Chris is already putting into his products large drives as a standard to connectivity and some kind of algorithms in order to give us the right advices. That's a kind of a success factor to get this information out there. Then the fourth thing, again, no surprise, energy efficiency. That's where we go after. Last week at Barcelona IoT World, we just launched the digital energy appraisal. What is this? We're using the asset health what we are using with smart sensors, the same data, and based on that data, we're gonna tell the customers what energy savings they could do if they would upgrade to newer technologies. We have been piloting this solution for about nine months because you need to collect data. One of the pilot sites of the solution is a Swedish pulp company, and there we identified the top 10 energy improvement potentials in their company. Just based on data without any additional investment for those guys, they are upgrading six out of them immediately because the payback is so fast. That's the way we're gonna deploy this. These are four things. Me, I'm always convinced when you run a business, you need to know what is your competitive advantage. That's the next thing I quickly would like to go through. There are three things which is our competitive advantage as the Motion Services division. The first thing is intellectual property. You went through the CSI lab. That's intellectual property. Knowing exactly what goes wrong, where it can go wrong. The intellectual property in the PCBA design, nobody else can supply these type of parts to the market. That's intellectual property. The second thing is about know-how. Translating this into the right information, having the field service engineers out there with the right capability and the right information, that's how we have the know-how in front of the customers. Together with the partners, we have the customer access. That's the third thing. Being close to customers. I think you have heard it from some of my colleagues, especially also Tuomo, Jesse, Stefan mentioned that, to use partner networks in order to be close to the customers, that's a success factor. Now the world is changing. I mentioned that before, and I mentioned these four things, which are here again on the slide. Now, if I'm looking just at some of them, and if we take the aging workforce, the younger generation, they expect things to be completely different presented to them as in the past. We believe to be a step ahead, and this is really important. Tuomo invests a lot into the user experience of the Drive Products. He talked about digitalization. If you had the chance to use your mobile phone on the drives down there is a QR code. Some of you guys were together with me on the factory tour, and I quickly demonstrated this. You go to the drive, there is a QR code on it. It opens immediately the app. Not the app, actually a web page, and the web page gives you access to the information of the product, but also to support. Think what this means. In the past, if somebody needed an information, he was looking for, "Who did I buy this? Where? Who could I call? Where would I go?" Until a question would reach us, it takes ages. Now it comes to us directly, and we can dispatch the work to the partner. We are managing the partner network in the future in a completely different way because we have the digital network. That's the future. Now, what this means for us in terms of being successful, we have to digitalize all of this. The first thing actually will translate into outcome-based business models. Taking the IP, the understanding of what can be done, we are able to make better decisions than anybody else in order to maximize uptime, for example. The second one is about digital platforms. While knowledge today is in the head of the people providing training, in the future it will be within digital platforms, which gives you the guidance and the advice on what to do. The last thing I just explained, the networks, which just with the QR code is one example how you create a digital network. For us, digital is key for the success of the future. Now, what is the thing we have to do? What we have to do now to get relevant. The way we have defined relevant is we aim to have 3.5 million connected devices by end of 2025. That means 3.5 million interactions with customers. That means 3.5 million opportunities to help customers to do better. That's what we aim to do. How to get there? Because Bernd showed you we're around 40,000 right now. If I take best in class, just to give you a bit of a perspective of somebody with rotating equipment monitoring, the best in class have around 70,000 today. We are aiming to go to 3.5 million. The way we wanna do this is twofold. One is about one million connections from brownfields, so from installed base, which is out there. That goes very much through service agreements and kind of service connections. The big majority comes from pulling or getting connectivity as a standard. This equipment here, what you see from Jesse, here is connectivity integrated already. Bluetooth connectivity is available in this one. You can immediately connect it. The ones which have maybe seen one of our announcements just lately, we have announced an investment in Cassia. Cassia is a technology leader in Bluetooth technology. Bluetooth is one of our connectivity technologies we are using. We have actually also 1.5 million of drives out there with an integrated Bluetooth connectivity. Now we just add the cellular connectivity, which is even more plug-and-play to be fast to get things connected. That's basically the way how we differentiate. Differentiation for us is really around plug and play. It's kind of B to C experience. If I compare ourselves with competition, most of our competitors, they have automation systems, and they manage connectivity through automation systems. You need to be an automation engineer to connect. What we are aiming for is no requirement on you. If you can use your mobile phone, you will be able to connect our devices because you just plug it in. You just activate it in an intuitive way. That's our aim. That's how we're gonna get to the 3.5 million. Now, having this 3.5 million connected devices, what does it brings? You know, especially the community here can say, "Adrian, great, 3.5 million devices, but what's the fun out of it?" The fun is basically what I said in the beginning, that's growing the annual recurring revenues. How do we do that? There are a couple of services or a couple of things how we commercialize it. Let me start with the first one, data as a service. I give you an example. Ergo Hestia, an insurance company in Poland, they are using our smart sensor solutions, digital solution, in order to manage the risks. Now, this is a very interesting case because the end user is actually using the same solution in order to manage the life cycle of the equipment better to reduce downtime. Ergo Hestia is looking at it from an insurance point of view and says, "Do these guys proactively manage the risk, or they just let things happen until it blows up?" The customer itself, by doing the right thing, he benefits from a lower insurance rate. Three times the win. The second example I like to make is platform business. Also Tuomo mentioned this one, MobileConnect. MobileConnect is a platform where we give to partners or OEMs, and now they can provide direct support on some of our equipment. For us, the license business, access to the platform, access to the knowledge. The third one. Sorry, I was too late in clicking here, but the third one is service agreements. That's the core of the service business. Service agreements, I would like to go through three steps in service agreements because I think there is a different value proposition, and it's good to understand. The first thing what we do today, actually, as a service agreement, the value we create is easy access for our customers to the services. What does that mean? I pick up again the example of my rolling mill. If you have a rolling mill and you go to—I'm not sure if you have ever visited a metals plant or an industrial plant. The first thing you're gonna get asked is to go through a safety training. The safety training may take you four hours, and then you can enter the plant. We have no service agreement. Yes, we're gonna send a service engineer as quick as possible, maybe not with the right parts and the right tools because we don't know. Then he goes through the safety training. Four hours, $400,000 gone. Only safety training. They will not bypass the safety training. We have a service agreement. We guarantee you that we have service engineers available, which went through the service training. They will enter the site in minutes, and they're gonna know where to go. Value. The second step is we have customers which rely on us as a service provider. Now, what is the difference there? Here we start to guarantee a performance on our services. We say, "You're gonna get a reaction time if there is something is in two hours," for example. You're gonna get access to our experts 24/7. We're gonna have the parts available within 12 hours at your site, whatever fails. That's service performance contracts. Here we need digital, which makes a difference. If somebody has digital connections, we can actually guarantee very shorter response times, which is service performance. That's the difference. Now, having it or not having it, that's value. Then we go to the last step, and that's probably something you have heard from many also of our competitors. This is going towards outcome-based services. When we add outcome-based services, what basically changes is the risk is moving from the customer to us. We take some risk. We guarantee the availability of the equipment. We guarantee the energy saving of the equipment. There are two things which you need to do in order to be successful. You need to have access to the information, means digital is a must, and the expertise. We think on some of this equipment, we can do way better decisions than any of our customers because we know much better what can happen with the equipment. Again, I remind you on the CSI lab you have seen. There are insights we have which nobody else has, and that gives us a competitive advantage to manage these risks. Here we are in a very early phase. That's not something which is mature. I give you an example. We are doing a project with a Statkraft which is installing synchronous condensers, and the synchronous condensers equipment you need to stabilize the network, in because you have a lot of renewable energy. With those guys, we have a 10-year contract where we guarantee a certain availability. All is digitally connected. Heikki's, Heikki delivered their large synchronous motors, and we supervise them with digital solutions, which gives us the insights if we need to act, so we can manage the risk of the availability. That's the future. These are all steps which will help us to grow the ARR, and there was the question about how much software content is in that. There is everywhere software content. Without digital, this is not gonna happen. It's very much relying on software. Let me summarize, and I know actually I'm running out of time, but I was worried that was gonna happen because there were so many good comments during the day. Let me summarize three things. First of all, we are a very successful division. Service business is a successful business. It's naturally successful business in the industrial businesses based on three things. Customer access, being close to the customers. The intellectual property and the expert know-how. These are the three key ingredients which differentiates us. The second thing, things are changing. I'm convinced the service business in 10 years looks completely different than today. We are running fast to get there. We are investing into the right things in digital, and with that, we are able to grow our annual recurring revenue from 4% to 15% in the coming years. With that, I'm at the end of the presentation. Thank you for paying attention, even though I took a bit more time than I supposed to take. I guess Ann-Sofie will need to support me now on the questions. I say, if you're left to last, you're allowed to take the liberty of running over a bit. No, thanks. Now, we have a question here from Joe straight away, please. Hey, thanks. What percentage of new products that go out the door come with the sensor already on it and the digitally enabled capability? For stuff that's already in the field, can you just, like, give this stuff away and, like, not charge anyone and sacrifice margin just to get stuff installed, and then tell them to turn it on and see if they like it, and then go from there? Yeah. No, when you asked the first question about how much percentage, you know, there are two ways to measure it. One is related to the value of what we ship, because if Chris ships, you know, this with a large drive, it's just one drive. In number of units, it's negligible. In terms of value, it's huge. In large drives, quite a lot, we have connectivity embedded. That is more a question of, will the customer allow us to connect? Will he wants to try it? Then we go ahead and do it. For example, in China, we have connected more or less the majority of medium voltage drives, which are shipped from the Chinese factory just as a part of the warranty phase. Our benefit is we manage the warranty phase much better, and we get kind of the user experience there in order then to have recurring revenues afterwards. The concept of giving it as part of the product, absolutely, we are following this concept, but we are marketing this as part of the product. Tuomo is going out there with kind of smart products, and then the idea is really that we work the first one year or two years where we help the customer to learn with a basic package, and we have the upsell, and we have the extension as a business. Yeah, 'cause there's companies that do just that part, right? Yeah. Don't make any of the hardware. Maybe, I don't know if you guys are just going to customers and saying, "Here, let us put these things on, even if you don't need them, and then let us know if you like it, and then. We do that. We call it try and buy. Yes. Because the cost is so low to do it, and the value is immediately there. There we have another one, please. Thank you, Adrian, for your presentation. You mentioned you're serving around 3 million units of motors and drives right now, and how much of them are using your IoT solutions or connected? You mentioned you're now hiring 1,200 field service engineers, and how much do you expect that number to grow into by 2025, please? Probably you did not then. I was probably not saying it correctly. We do not hire 1,200 field service engineers. We have 1,200 field service engineers. That's what we have. We're not hiring them. The 3.5 million, this is what we are aiming to connect by end of 2025, and all of this will be based on our connectivity solutions. Yes. The mix of smart sensors, the mix of IoT connectivity of the drives. Yes. You're not hiring, but, like, you're using 1,200 service technicians, and how much do you expect that number to grow by 2025? I do not expect any big growth in that because where we invest, as I mentioned earlier, was we invest actually in our partner network. Yeah. You know, if you look into the future and when you say we're gonna use digital solutions, especially the platform solutions which will enable others to provide services, we get much wider reach. We will never as a company, as ABB, build up the reach as we can build up if we start to use a partner network. Sure. no substantial growth in field service engineers. Sure. Thank you very much. Thank you. There's one at the front here, please. Yeah. Thank you. I thought I would hear a little bit about growth on the installed base, but didn't happen. I'm sure that this is one of your growth drivers. Can you tell me of the 300 million motors that there are in the field, as you told us, how many of your own motors you are already serving and how many are somehow lost that you may recuperate? That would be question number one. Question number two, of these 300 million motors we're learning from other industry that are made, presumably a lot of them that don't have the manufacturer anymore. Is there an opportunity for you to grow on, so to capture that often installed base? Let me maybe put a couple of things in perspective. First of all, I think the 300 million, this is the industrial motors, which is our estimation, which is out there from any brand. About 40 million of the motors are ABB brand. Now, the majority, when you take number of units are small power ratings. I can tell you, we don't know where they are. This is something. It goes through channel. It is indirect sales. We don't know. Where we know very well where installed base is, when we talk about the couple of hundred thousand of equipment, which is the large equipment, where we have also the high service attachment rate. That there we know pretty well where things are. Now what we aim to do with the motors specifically, the digital solutions we provide for motors, they are not for ABB motors unique. We go to any motor. Here we go way more to the customers where we have customer access, and then we propose our solutions independent if they are ABB motors or non-ABB motors. That's the path there. When it comes to the drives, by adding standard solutions, digital solutions, by having the QR codes, we're gonna expect that we get a way better visibility now over the coming three years on where we ship things, where it's gonna be installed, which will help us to drive actually the upsell on services. I hope that answers the question. Could you give a number? Well, we are shipping, I mean, we are shipping about 1.5 million drives a year. That's how it grows. We are shipping about 3.5 million motors. Is that approximately right per year? That's how it grows. Okay. All right, just because it's you at the very back. Thank you very much for taking the question. Very interesting, this outcome-based services you were mentioning toward the end. I'm just wondering whether that will be the first step in going into products as a service for ABB? That's the first question. The other one is more on the group level. I don't know whether you can answer this question, but the concept of this service push is that something only limited on Motion, or is that spread out throughout the group on automation as well? Let me try to answer these questions, and maybe, Tarak, you can fill in if I'm not accurate enough. The first thing is, yes, this is towards kind of equipment as a service, but we will focus certainly on key parameters. The two key parameters for us is availability, which our customer is looking for, and it's energy efficiency savings. It goes into this direction. Now, I think where you're hinting, it's actually not only risk management, it's also capital allocation. The scale what we are having right now, this is not a question on capital allocation. This is way too small. If that comes in the next phase of the growth to a topic, this will be a board decision. That's not my decision, you know? The way we are heading towards will be we will partner up with somebody which looks on the capital allocation. That's what we do right now. The second question, are we the only one? No, we are not the only one. At least that's what I see from some of my colleagues from other business areas. They are also testing some of these models. They are looking into this as well. I think, you know, we are all at the same place and the same stage. We are testing it. We have to learn together with customers. I must say from my perspective, there are two things which need to happen. One is technology needs to enable it, and the other thing is our process and customer acceptance need to be there. I think technology is not the problem. It's customer acceptance of the new models and the way we go to market, the way we interact to make them successful. The learnings we are doing is not so much on the technology right now. It's way more about, you know, how can we negotiate the contract, what will be terms, how simple can we keep things? Because in the end of the day, if we do something as a service and things get very complex because of who owns the risk and what, and then it's dead because it's too complex, it's too cumbersome. So we need to find simple ways, and that is a learning process together with customers. That's what some of my colleagues are doing in other divisions as well. Now, I'm gonna ask the rest of your team to come up on the stage just in case there are any more questions from the audience to put through. Please make your way up here. We will give you the opportunity to put some final pressure on these guys. Very good. You can ask the questions to the whole team. You've been here for the whole day. Thank you very much for your attention and engagement. Please feel free. If one of us cannot answer it, then we will find somebody who can. Probably not now, but. I think probably if this team can't answer the question, then we're worried. Anyway, please. 'Cause- If you would like any questions that we haven't answered or you would like to ask based on the day, please. Thank you. It's Martin again from Citi. You've obviously been in the role now for less than two months. If this presentation had happened two months ago, I mean, what has tilted? What has changed? I mean, has there been any sort of shift in emphasis in that initial period since you've taken over? I mean, look, first of all, the fact that this was six weeks after I started was itself an interesting experience to be in front of you representing the business. Thank God, I know a few of these colleagues from the past. I would say the only emphasis is much more on growth. That's what I would say. That's probably the one part. Also to look at it from a portfolio perspective when it comes to the components, the product lines below the divisions. We're committed to improving the business as a team, but objectively looking at the product lines that are part of everybody's solution. Those are the two things I would say. The rest is, of course, the business is what it is, and the strength of the business is obvious. That will become the decision criteria for us. Where to invest, what to invest, and then to pretty much focus on growth. I mean, at 16.5%-17% profit margins, industry-leading margins, our aim is not to blow the top off the margins, but really to grow the business faster than in the past. That has to be the mission from my perspective, because that's significantly more value enhancing than another 0.1 of a point or 0.2 or 0.3 in margin. It's really the growth that has to be driven. The reason growth is important is when we start talking about M&A, and we discussed it with many of you, very few targets will be available to any of the division presidents which are margin accretive from day one. If you're gonna do something on M&A, chances are it will be dilutive to the divisions. From day one, maybe in a couple of years, they will get, you know, that would be the requirement to get it up in terms of margins and performance. Overall, as a business, we do wanna focus this business on the growth because the market is there, we wanna look at M&A, and each of them have articulated the kind of opportunities they see. When I see that, we said we focus on growth. That's probably the only small change. Thanks. If I may, another question, just a follow on. I mean, some of your technologies are so obvious for saving energy. Yes. Obviously, we're now in an environment where, you know, the European Union is supposed to give more details in the coming days about energy efficiency. I mean, do they come to you? Do regulators and governments come to you to say, "How can we save energy? What regulations should we put in place?" Or how do we sort of match up what governments are trying to do in terms of increasing energy efficiency and what you can deliver? We do have, you know, the European Union, for example, when it starts to think about the standards, they do come to manufacturers. Not only us, but let's say the cohort, which is the leaders to say, "What do you think?" 'Cause at the end, whatever is proposed needs to be executable. If you propose an IE6 standard, for example, can we deliver? Can the market deliver? If the minimum efficiency standard becomes IE4 motors, is there a capacity in the supply side? Given the current challenges, there's no capacity anywhere, practically speaking. Yes, this is something that we are as responsible leaders, but also as part of the business, they ask us and we give feedback. Thank you. Maybe I can just add one more comment. You know, we are actually influencing this very actively in order to promote and explain what's possible. To give you an example, actually the product Tuomo you shared is this low harmonic drive. You know, in the latest update of the EU regulation, the regulation would almost have prevented this equipment from being put on the market because they didn't understand the technology. In the last minute, we educated them and explained. They say, "Well, for sure, we cannot block something like this because that saves so much energy." We get very active in these topics, you know, to explain. Yep. Please. For Ben, please. Two questions. I'm a little surprised by the comments, not that you want to drive growth, but I would have thought that Motion as well had a mandate between somewhere between growth and margin. Is there anything that you can bring to the table straight away from electrification in terms of growth? In terms of the way that you drove the growth in electrification and the trade-off between top line and margin, is there any obvious parallel that comes straight across to Motion? That was question number one. After six weeks, I can't pinpoint exactly what that could be. We see green shoots, which I need to work with the colleagues to identify whether they need the same kind of investment. Take, for example, the e-mobility business in electrification, which we took it from $40 million to now $300 million in 2021, probably on its way. A hyper growth opportunity. Is hydrogen such opportunity? I don't know. Is rails to wheels such opportunity? Difficult. Are there such pockets within Motion? At least I personally believe there are such pockets. To make the investments, you need to understand the business. For that, I don't think six weeks is not the requisite time to make such investments or support the division colleagues to make such decisions. Where my personal experience hopefully can come in handy is on the M&A side. When you say the difference is M&A needs to be part of the growth story. Yes, the team has been growing, no question. We had the discussion in the coffee. The market is growing more than it has in the past. The reason for the emphasis on the growth is both organic and inorganic. The main reason for the growth focus is primarily we believe the market will grow more. Even if we were growing 1.5 times market in the past, the 1.5 times market in the future is worth more. In dollars, worth more in terms of shareholder returns. You add to that some inorganic. Now you start to drive the business at a slightly different pace. Keep one thing in mind, that's because the market is moving. This would not be the same comment five years ago because we see the shift. That's why we try to do today as a team, is to give you an insight into how we believe, and it's not, I mean, six weeks, I don't believe anything, right? It's basically what they believe, and we represent it. It's how we see the opportunities and allocating capital. The structured framework of looking at the product lines. Are they in the strategic growth areas? Are we going to invest in that? That is the framework we will use as a team. To make the proper investments, both in terms of R&D, in terms of people. If rails to wheels is a fantastic growth opportunity, we try to take the best people and put them with Edgar to say, "Can we drive that? And can we increase R&D investment to be 20% of today's volume?" Those kinds of opportunities exist, but the decisions have to be made by the division leaders. I can provide some guidance with Bernd, but at the end, the call is theirs, because the risk is theirs and the results are theirs. Yes. Okay. We have couple of hands up in the middle here. If we start with Gael, please. Thank you. I think for the motors business you talked about five rounds of price increases over one year. So I guess it equates to about 20% price increases maybe on a cumulative basis. My question is, could you also give me some sort of indications regarding the pricing dynamics for each of the different business units? Thinking about this 20% price increase for the motors business, how do I square this up with the price increase we've seen so far in Q1, which was more in the 5% range? I mean, we have the division presidents here, so they can probably give you that, their own individual perspectives on the price increase. It's different depending on whether I will only qualify it by one way. Depends on where you are in the cycle in terms of how quickly you can make the price increase. The longer the cycle, the longer it's gonna take us, from a price increase perspective, to recover both the cost but also to execute the price increase. Maybe Jesse and then Stefan probably would be best to give that perspective in terms of how they see it from their businesses. Yes. When you look at the price, there's no question that we had to take action because of the raw materials. Not only inflationary costs on the raw, but also logistics and other areas drove us to the need to do that to protect our margins and make sure that we protect the shareholders' value at the same time and take care of our customers. That's absolutely very important. When you look at the maturity of that, we've been doing that not only just in the last 18 or 24 months, we've been looking holistically at our business at a very granular level, understanding it in detail to see where we needed to implement overall price into the marketplace. It's very mature in my business in how we execute it and how that we deliver it. That's something that's very important going forward to stay on top of that to ensure that we take care of the business. Stefan? Not so much to add. I think we have also learned a lot over the last 12, 15 months with these 5 price increase rounds. We are also now very regularly tracking what it means. What is happening, we are in close contact with our suppliers. It was also learning curve for us nowadays. As Jesse correctly stated, it's very important to do that together with our customers. We have different customer groups. How to implement price increase with our channel partners might be something completely different if you talk with OEMs, where we have also contracts in place. The world is changing, and our customers are also aware of it. Key is speed and being aware and alerted and in close contact with suppliers and customers. To kind of summarize the answer to your question, you're saying, "Well, you didn't quite answer the question." The group is 4%-5%. We don't disclose at the Motion level how much was price, but certainly Motion helped the group get to 5%. We are above. And within Motion, certainly the motor business has been the biggest business where we have had because of the content of material and the commodity percentage of overall volume and revenue we have been far in excess of those numbers in the motor businesses in general. Versus the service business, versus the drive, and versus even the large motors, which has a more project-oriented. Many times it has already a built-in commodity clause in it. There, we're not necessarily looking. We're just looking for recovery and not necessarily looking to drive it on a price perspective alone. That gives you a little bit of the answer. Right. Conscious of time, because we are heading for dinner with the PA team in just a while. I'll hand over to Tarak to close if you have some- Sure. Look, Final words. Thank you very much for spending the time with this team. It's a pleasure for me to be part of this team. As you leave today, I would like you to keep three things in mind. We are an exciting business with leadership position because we have scale, because we invest in technology, and we are close to customers. The market is moving in our direction vis-à-vis the investments in electrical mobility, investments in carbon reduction mean more electricity. More electricity means more motion, and more motion means more drives and motors. Three things to keep in mind. Market is moving at a higher growth rates. We have the team and we have the technology and we have the products. A winning combination. We hope to keep the growth as proof of this winning team and combination, and I'm certainly glad to join this team on a personal level to really make an impact with this team on efficiency, cost, but more importantly also to save carbon emissions as it fits very much within the mission and vision of ABB. Thank you very much, ladies and gentlemen. Enjoy the time with our colleagues from Process Automation and make sure you have a few more tough questions for them as well. Thank you. Have a nice day. You can stay. Just before you go, just some practicalities. As you move out, you will get tickets, 'cause you will be catching the train back again. The train station is like, as you know, two minutes from here. As you make your way out, tickets will be handed to you. There will be people showing you how to get there. Then we will meet again in the hotel lobby at 6:15 P.M. See you there. Thank you. Make sure you catch the.