The future focus is on maintaining the consistency of the operating model, accelerating growth and continuous improvement
Raised its long-term comparable revenue growth target to 5-7%
Increased operating margin before interest, tax and amortization target to 16-19%
Publish more ambitious science net zero targets for 2030 and 2050
Today, ABB is holding a Capital Markets Day at its electrical business facility in Frosinone, Italy. At the event, ABB Group CEO Robion, Chief Financial Officer Tianyi and the presidents of ABB’s four business units gave an update on ABB’s successful transformation, financial targets and how the company is benefiting from key long-term trends related to its business. ABB’s Head of Sustainability also gave an update on the company’s sustainability agenda, including the more ambitious net zero targets for 2030 and 2050.

Robion said: “During the transformation period over the past three years, we have aligned ABB’s business portfolio with our goal of enabling a more sustainable and efficient future through our leading technologies in electrical and automation. During this phase, we strengthened accountability, transparency and speed through the ABB Way operating model, resulting in significant improvements in financial and sustainability performance.”

With the new standards set, we are moving out of transition and most of our business units are moving towards strategic growth mission goals. These sectors are now focused on tapping the full potential of the market, which, in my opinion, is at the heart of the transition to electrification, energy security, energy efficiency, automation and digitalization. We achieved our margin target a year ahead of schedule and became a more agile, quick-decision making organization, which gave us the confidence to make even more ambitious plans and further improve our margin target. I believe ABB is in a very good market position, both now and in the future.

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Higher goals after the transition period

In its latest financial framework, ABB has increased its target for comparable revenue growth to 5-7% over the economic cycle (previously 3-5%). The M&A growth target remains unchanged at 1-2%. ABB also increased its annual operating margin before interest, tax and amortization target to 16-19% (previously ≥15%) and adjusted its annual return on capital target to 18% (previously 15-20%). In addition, the company has increased its target for underlying EPS growth over the economic cycle to at least high single digits (previously, underlying EPS growth was higher than sales revenue growth). ABB also confirmed its target of 100% conversion of free cash flow to net income.

ABB’s updated growth targets are based on a number of external and internal factors, including the growing demand for sustainable electrical and automation solutions as the world moves towards a common emissions reduction target consistent with the 1.5°C temperature control target. To achieve higher growth, ABB has also adopted a new collaborative approach in which each business unit takes full responsibility for growth, makes decisions closer to the market, and realignments its business portfolio around enabling sustainable and efficient growth through electrical and automation.

ABB has increased the proportion of business units in growth mode, which now account for about 70% of total group sales. ABB is focused on both organic growth and M&A opportunities to fill technology gaps, complement the product portfolios offered by business units for high-growth markets, provide access to new geographies or achieve market consolidation. ABB aims to make five to 10 small and medium-sized bolt-on acquisitions a year.