ABB (ABB) CMD 2025 summary

Strategic direction and operating model

• Enhanced ABB Way decentralized model, pushing accountability and strategic mandates to over 75 Business Lines for greater transparency, speed, and productivity.

• New structure consolidates into three business areas—Electrification, Motion, and Automation—leveraging shared sales and technology opportunities and divesting the Robotics division.

• Emphasized a bottom-up, division-driven approach to target setting, with accountability and incentives aligned at the business line level and transparent KPIs linked to remuneration.

• Continuous improvement culture with annual 5% internal gross profit productivity target and disciplined hiring.

• M&A integrated into performance culture, targeting 1–2% acquired growth through bolt-on deals aligned with strategic fit and value creation.

Financial guidance and targets

• Upgraded Operational EBITA margin target to 18–22% (excluding Robotics), with business area targets: Electrification 22–26%, Motion 18–22%, Automation 14–18%.

• ROCE target raised to over 20%, supported by margin improvements and efficient capital management.

• Free cash flow conversion target set at over 95% to net income, with FCF margin at 11–13% in recent years.

• Comparable revenue growth target of 5–7% organic and 1–2% acquired growth through the cycle, with at least high single-digit EPS growth.

• Double-digit total shareholder return (TSR) targeted through cycle, supported by dividends and share buybacks.

Business area strategies and operational highlights

• Electrification targets high-end growth and margin, driven by innovation in DC technology, digitalization, and strong growth in buildings, utilities, renewables, and data centers.

• Motion focuses on energy efficiency, local-for-local production, and R&D leadership in high-efficiency motors and drives.

• Automation integrates process and machine automation, targeting digital and AI-enabled solutions, lifecycle services, and selective project participation.

• All business areas implement granular business line mandates (growth, profitability, stability), with tailored incentives and governance to optimize performance.

• Service, digitalization, and sustainability are core themes, with customer partnerships delivering energy savings, emissions reduction, and operational resilience.