ABB (ABB) CMD 2025 summary

Strategic direction and operating model

• Announced new long-term financial targets: 5-7% organic revenue growth, 1-2% from acquisitions, and increased margin ranges for each business area, reflecting more ambitious goals.

• Enhanced ABB Way decentralized operating model, driving accountability and performance through over 75 business lines, with mandates for growth, profitability, or stability.

• M&A focus intensified, targeting 1-2% acquired growth via bolt-on and larger deals, evaluated through a rigorous KPI framework prioritizing value creation.

• Capital allocation priorities: invest in organic growth, sustain growing dividends, pursue value-adding acquisitions, and conduct share buybacks as appropriate.

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

Financial targets and capital allocation

• 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% 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 highlights and operational improvements

• Electrification: Strong growth in buildings, utilities, renewables, and data centers, with innovation in DC technology, digital solutions, and local-for-local production strategies.

• Motion: Market leader in motors and drives, focusing on energy efficiency, local manufacturing, and R&D leadership in high-efficiency motors and drives.

• Automation: Integration of process and machine automation, targeting 14-18% Op. EBITA margin and ~30% ROCE, with growth in digital and AI-enabled solutions and lifecycle services.

• All business areas are driving digitalization, AI adoption, and service growth, with significant investments in R&D and targeted bolt-on acquisitions.

• Portfolio reshaped by divesting the Robotics division, enhancing the value proposition in electrification and automation.