James Moore

James Moore from Redburn asked about current trading, inquiring if the recent implementation of tariffs has materially affected daily order rates in the U.S. and whether customers are accepting price increases on products imported from Europe.

Answer

CFO Timo Ihamuotila explained that for many products imported from Europe, there are no local U.S. alternatives, so price changes tend to affect the entire market. CEO Morten Wierod commented on current trading by stating they have not seen any fundamental change in customer behavior but declined to provide further detail.

Asked a series of strategic questions for the new CEO, including what needs to change, portfolio strategy (including a potential sale of Robotics), the breakdown of the data center business, and how the 'ABB Way' will be fine-tuned at the business line level.

Answer

Management detailed the data center business, highlighting strength in 'gray space' (switchgear) and 'white space' (UPS, PDUs). On strategy, the focus is on adding to the portfolio via M&A, not selling units like Robotics, whose performance they intend to improve. The 'ABB Way' will be driven deeper, applying strategic mandates (growth vs. profitability) at the business line level to increase accountability and performance.

James Moore of Redburn asked if there was any material change in the daily order rate after U.S. tariffs were implemented in April, and whether customers are accepting price increases on European imports or switching to local competitors.

Answer

CEO Morten Wierod stated that no fundamental change in customer behavior or trading had been observed in the month so far. CFO Timo Ihamuotila explained that for many specialized products imported from Europe, there are no local U.S. alternatives, meaning market-wide price changes are generally accepted.

James Moore of Redburn asked about live trading conditions, questioning if there has been a material change in order rates since tariff announcements. He also asked if customers are accepting price increases on products imported to the U.S. from Europe or switching to local competitors.

Answer

CEO Morten Wierod stated they have not seen any fundamental change in customer behavior or trading rates in the current month. CFO Timo Ihamuotila explained that for many specialty products imported from Europe, there are no local U.S. alternatives, meaning price changes tend to affect the entire market rather than causing customer switching.

James Moore of Redburn Atlantic asked about the Robotics and Automation business, specifically questioning the timing of cost savings and the potential for the division to reach double-digit margins by year-end.

Answer

Executive Ann-Sofie Nordh explained that while cost savings have begun in the Machine Automation unit, their impact is being offset by low production volumes and resulting under-absorption. She anticipates customer inventory adjustments will conclude by the end of Q1 or early Q2, suggesting performance will remain weak in Q1. Executive Morten Wierod separately confirmed data center order growth was in the 30-40% range in Q4.

James Moore of Redburn asked about the Robotics and Automation business, specifically if the Q1 margin guidance includes expected savings, the timing of those savings, and the potential to reach double-digit margins by year-end.

Answer

Executive Ann-Sofie Nordh confirmed that cost savings have begun to materialize but are currently offset by low production volumes and under-absorption in the Machine Automation division. Executive Morten Wierod added that data center order growth was very strong, implying a 30-40% rate in Q4 based on his commentary.

James Moore of Redburn Atlantic asked about the margin trajectory for the Robotics and Automation business, inquiring about the timing of cost savings and the potential to reach double-digit margins by year-end.

Answer

Executive Ann-Sofie Nordh stated that while cost savings are materializing, their impact is currently offset by low production volumes and under-absorption in the Machine Automation division. She anticipates customer inventory adjustments will conclude by Q2. CEO Morten Wierod confirmed data center order growth was in the 30-40% range in Q4.

James Moore from Redburn inquired about the expected margin seasonality for the year and the specific drivers behind the revenue step-up in the trains (Rolling Stock) division.

Answer

CFO Laurent Martinez identified two drivers for margin seasonality: more zero-percent margin sales in H1, which will weigh on the margin, and the typical acceleration of sales in H2. For Rolling Stock's strong Q1 growth, he cited a large step-up in the Americas (both North and South) and continued ramp-up of regional train projects in Continental Europe.

James Moore from Redburn inquired about the visibility on wage inflation following recent negotiations, the company's stance on a potential equity issuance after the Moody's downgrade, and the key drivers for working capital in fiscal '24.

Answer

Chairman and CEO Henri Poupart-Lafarge stated that wage negotiations are typically annual and firmly dismissed any plans for an equity issue, citing the company's significantly improved risk profile. CFO Laurent Martinez added that for fiscal '24, working capital normalization will continue, with provision consumption expected to be slightly lower than the €230 million in fiscal '23.

James Moore asked for the completion percentage of customer settlement negotiations, the revenue phasing of the remaining challenging backlog, and a re-explanation of the EUR 199 million contract provision increase.

Answer

CEO Henri Poupart-Lafarge stated that just over 50% of commercial negotiations are complete, with the remainder expected by year-end. He noted that the trading of nonperforming projects would be slightly higher in H2 than H1. CFO Laurent Martinez reiterated that the provision increase was a non-economic, mechanical accounting catch-up under IFRS 15 related to booking accretive options on legacy contracts.