ABB Ltd (SWX:ABBN)

CMD 2015

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Sep 9, 2015

We're very excited to have you here today with Uli and Eric as well as the Total EC. Just a couple of housekeeping items before we start. If the fire alarm goes off, it's not a drill. There's no drills planned. So we ask that everyone please get out of their seats and walk to the exit signs as soon as possible. As you can see behind us here is the agenda for the day. So we will start off with a presentation by Uli, followed with the financials of Eric, a Q and A session, then we will have lunch for about an hour. And then in the afternoon, we will finish with 4 sessions to talk about how we're really going to implement this next level Stage 2. With that, Uli will close out and then we will have a Q and A session and an apro attended by the Total EC. So welcome. If we look now, I'd like to draw your attention to our Safe Harbor statement for any forward looking statements that we might say today. And with that, we would like to start the movie. For 120 years, our technology has been driving the systems. The modern world is powerful. The world is changing. And we're driving that change. Across the globe with a staff of more than and 40,000, ABB continues to lead the way in power and automation, empowering utility companies with a new generation of renewable energy. Pioneering high voltage direct current transmission to send more power further than ever before. Automating the industry of tomorrow with more industrial robots in operation than anyone else, enabling transport and infrastructure from revolutionary ship propulsion to electric vehicle charging. In the power plant to your plug point. ABB, taking power and productivity to the next level. Good morning, ladies and gentlemen, and welcome to ABB. I'm excited to share with you today how we will drive accelerated transformation in ABB's 2nd stage of our next level strategy. We will transform this business to more market and customer focused operation. We are putting in measures to safeguard the delivery on our ambitious targets, and we will unlock additional value of the portfolio. So next level, stage 2, is all around acceleration, the transformation journey that we started last year. I would like first to take stock and share with you how we did in the 1st year, what went well, what could have been even better. And then going to the stage 2 details. How will we accelerate in a world which is uncertain and quite difficult around us at the moment? And I will close out with a perspective on our ambition on value creation. For the ones that have not been following us so closely, let me just repeat what ABB is all about. ABB is about power and automation for utilities, industry and transport and infrastructure globally. We are nicely balanced across end markets, and we are nicely balanced across global regions. We benefit from having a third in Europe, onethree in the Americas and onethree in Asia, Middle East, Africa. With all the worries of the world around us short term, we are well positioned in attractive markets looking forward. Our position is strong on the utility side, and the growth drivers there will remain intact for a long time, whether it's renewables that really drive grid complexity and will be a significant share of global power generation in the next years. Whether it's an industry, the demand to drive energy efficiency productivity, especially in times like now, when a market is difficult and we really have to help our customers to drive best uptime, speed and yield in the operations Or we'll take the growth drivers in transport and infrastructure like urbanization, like electric transport, like more and more power energy being consumed by wire, these are all growth drivers that will be able to help us deliver strongly in the long term. Since we got together last year, ABB has made a lot of progress in many dimensions. We are a technology pioneer, and technology is what differentiates us. Last 12 months, we have come out with a firework of innovation, And a lot of that was fueled by investments that we never cut even in the years of the crisis. We get now paid and we get the rewards for our continuous focus on innovation and technology that helps our customers to differentiate. Next Level last year was a clearly articulated program. We said we're going to build the future of ABB around profitable growth, relentless execution and business led collaboration. We said very clearly what we would do. And we said that we would like to be measured on having done what we said. Now on the right side of the slide, you see some of the key accomplishments. On the profitable growth side, we have the ambition to change the center of gravity of this operation. In doing so, we have been able to get the first results since we started implementation of the strategy. In the first half of this year, we brought revenue back to growth. You might remember we were a shrinking company, and now we are back on the growth path again. We have also been able to drive positive earnings growth momentum. And whilst we stay humble and appreciate that we are not in the target range of 10% to 15% EPS growth after the 1st 6 months, we have significantly changed the pattern here. We have also improved our operational margin in a good way. Our cost savings, which is a hallmark of ABB and execution, they're on track. We have taken out €1,000,000,000 of cost every year, and our commitment to take our 3% to 5% cost of sales equivalent is unchanged. Very important, you might remember, some of you might not even remember anymore, we had a problem that was called Power Systems. And under the leadership of Claudio Joaquin, we have made solid progress on this program. We are not done yet, but we have achieved significant milestones and have derisked the situation. We have implemented a completely new business model for new orders, and we were able to address the legacy projects that we had in the backlog and really get our significant milestones achieved. We handed over Dovin 1 this summer. We progressed on Dovin 2, which has sailed up from Norway to the North Sea on time, just to name some of the few examples. We talked last year we will drive transformational growth in ABB through our 1,000 day programs. A lot of people did not really understand what it's all about. Now they are up and running. I will later on talk about it. We have 4 on growth. We have 3 on execution. And it will be one of the reasons why we are confident that we will deliver on the ambition that we have given ourselves despite the fact that the world is more uncertain than when we started the journey a year ago. The change in our performance management and compensation system is probably one of the most fundamental changes to articulate what we mean by the new performance culture of ABB. We want to have a team based approach, but we also want to reward individual performance. And I come later on back how we did that. Business led collaboration means we want to play the grand piano of ABB and play to every customer the tune that he wants to hear. Doing this right, we need to collaborate better, and we have put a lot of measures in place to get this going. We have supported it with significant investments in collaboration tools. We have made a partnership with salesforce.com to ensure that our salespeople spend less time in the back office and are more together with the customers out there and have more time to drink. Our regional structure is really working well. I'm very, very happy with the collaboration between the regional presidents and the divisional presidents, and we have already made the 1st steps forward in establishing regional shared service centers. So this is what we did. If you take what we delivered in terms of the numbers, we did not make all of our numbers yet, but we have made good progress. If you take revenue growth, we are back in a growth pattern in a much more difficult world than what we assumed a year ago. Our operational EBITDA margin came up 60 basis points in the first half year compared to the previous year. With that, we are now in the lower end of the bandwidth that we have given as a target, and we clearly have an ambition to move further up. Cash, cash conversion is a hallmark of ABB, and we delivered on that in the first half of this year in a solid way. So altogether, we have been able not only to deliver on our targets, but we also let the shareholders, let you participate in the journey that we have started. We have returned $3,500,000,000 through dividends and the share buyback in the 1st 12 months since implementing the next level strategy. So altogether, we have delivered, and we have made much progress in many dimensions. But we also have to acknowledge the world has changed. The GDP assumptions that the experts gave us last year at this time of about 3%, 3.5% of growth have been moderated. Last year, the prediction at that time was you might still remember that the prediction on the oil price was $100 plus Well, you know where we are today and the predictions are. If you look at the outlook of our end markets and if you look at the outlook on the emerging economies, it's all more subdued than it was last year. We acknowledge that. And with Stage 2 of next level, we will take decisive actions to move the acceleration 1 notch up to get transformation going and really shape the company for better competitiveness in a more difficult environment. So let's get right into that, and let's talk about how we will accelerate transformation in the second phase. What will not change is our overall next level framework of profitable growth, relentless execution and business led collaboration. But the way we address these focus areas is emerging because we have done a lot of homework in the first stage and here's the focus on the second stage. We will continue to shift the center of gravity of ABB in terms of competitiveness, in terms of lowering the business risk profile and in terms of addressing organic high growth market segment opportunities in a more targeted way. To support this, we are announcing today a massive divisional realignment towards customer segments. We are bringing the shape of our business in the shape of our customers. Doing this, we will not slow down on our journey of driving organic growth through penetration, innovation and expansion. And Greg Choi, the President of our Americas, will later on this afternoon share with you how we really live this every day, but how does it really influence our daily operations. Having done the homework and having now more management capacity available, having a strong balance sheet, we are ready for value creating inorganic moves. That does not mean that we will become undisciplined. We will keep the discipline pattern that you have seen of the existing management team in the past, but we are ready to engage in a meaningful way should the right target be available. And we will drive growth also by getting more value from our partnerships that we have formed and I'll come later on back to that. But all the growth is not possible without solid execution. So we will keep our journey to advancing towards a leading operating model. And appreciating that the world is tougher out there, we're taking out €1,000,000,000 white color cost in addition to the cost ambition that we have had so far through structural changes that will be later on described by Jacques Dovde Lauf, who will have a separate section on that program. We appreciate that our balance sheet is strong, but we also appreciate that we have still room for improvement. We benchmarked ourselves against best in class in terms of inventory turns on the working capital side, and Eric will lead a program to take out CHF 2,000,000,000 of working capital in ABB to free up cash for growth. I'd rather have the money for innovation, for R and D and for acquisitions than having it stuck in our warehouses. This will be supported by living the new performance culture that we have put in place over the last 12 months. On the collaboration side, whilst having made good efforts and good progress on simplifying ABB, there is still room for improvement. And we will continue the journey of simplifying this organization, taking complexity out and having more agility and speed in serving our customers all around the world. So with that, let me get started on the growth piece and how we will drive growth going forward. Last year, when we came out with next level, we showed this graph. And it basically logically describes the ambition that we have. More competitiveness, less intrinsic risk and a strong focus on high growth segments of ABB. We have taken many actions to deliver on that. And with the strategic portfolio alignment that we're announcing today, we are addressing exactly the opportunities that we have to change the center of gravity of ABB even further towards more customer orientation, towards differentiation. Let me take you in the world of our customers, and let's take a look at the customer value chain that we serve. In the utility space, we serve customers in transmission and distribution and power generation. On the industry side, we serve factories all around the world. And in transport and infrastructure, we serve both transport companies. We serve infrastructure activities like data centers, like residential buildings all around the world. If you look at the pattern of these customers, these customers are basically consolidated, public and government owned in the majority on the utility side. And the growth drivers are renewables, microgrids, more and more energy is flowing by wire. And on the other side, you have a pattern of customers, which spans across industry and infrastructure, which is around privately held or listed companies. It's typically a wide range of different sizes, and we sell products and solutions and systems to them. And the growth drivers are Industry 4 0 or the Internet of Things as the Americans call this or Internet of Things, services and people, how we call it, they're automation penetration, energy efficiency. So if you take these 2 growth patterns, in very simple terms, you could say what ABB is doing on the one hand, we provide power and automation for the grid. And on the other hand, we provide power and automation for the site, the site of electrical electricity or of electricity consumption. Now if you take the world of power and automation for the grid, it's absolutely paramount nowadays when we meet with our customers to have an offering that both addresses the flow of the electrons and the bits and bytes that control the grid. It would be really, really bad for ABB to split power and automation in 2 different buckets serving the grid. We need to have the common offering to that segment to drive value for our customers. On the other hand, it's exactly the same power and automation for the site. If you go into a modern home, you want to control your stereo system, the heating, the electricity, all with your iPad solution. Splitting that apart would be like splitting the hub from the spoke of a wheel. Does not make any sense, but having it focused on the customer segments makes a lot of sense. So this is the reason why we are realigning ABB with the pattern of our customers out there, making sure we take our leading offering in power and automation in a segment specific way into the future. Based on this, we are reshaping ABB. We're forming a new division called Power Grids. The Power Grids division will be globally number 1 in power and automation solution for transmission and distribution customers. This division will provide network automation. It will provide substations. It will provide HVDC technology. It will provide transformers and build a one stop shop for utility customers in transmission and distribution. It has the largest installed base of any competitor, has global reach, and it's definitely the number 1 in terms of its offering, its technology and its scale. Addressing power and automation for the site, we will also make steps to reshape our portfolio to bring more value to our customers and tap the value creation potential easier. We are bringing together our medium voltage and low voltage offering under one roof, making sure we are a great discussion partner customers, for our distribution partners out there and matching up to the pattern that most of our competitors are already acting in. Discrete automation will stay largely unchanged. And under process automation in the future, we will make process automation the umbrella for all industrial control solution provided by ABB. So this means in detail, if you look at the future, we will have a divisional setup of 4 divisions: Power Grids Electrification Products, combining medium and low voltage discrete automation and motion and process automation. And to help you to understand the journey, let me run you through the key steps how we really move from the old into the new divisional structure. Number 1, the current Power Systems division, the majority of the activities will go in the future Power Grids division, but we will take the DCS part, the distributed control systems for power generation and put them together with process into automation. Because whilst you need a differentiated front end, there is still a lot of back end opportunity of bringing IO development together, developing certain software elements. And we will have this in the future as a multisystem approach. So don't get concerned. We will not repeat the mistake that we made some years ago by trying to put everything under one system. It will be a multisystem approach, but in a coordinated way using the leverage opportunities that we have. 2nd, the second pillar of the future power grids division will be the leading portfolio in transformers and high voltage that we have today in the Power Products division. We are global number 1 in transformers, and we are very strong in high voltage products as well. And that means we are bringing together a unique offering under power grids for the future. The Electrification Products division will consist of the strong leading medium voltage capability that we have built over many years, and we will combine it with the business units of the low voltage products division that we have established. Discrete Automation and Motion will be largely unchanged, but we are moving the PLC business, the programmable logical controllers, from discrete automation to process automation. And last but not least, we take process automation into the new divisional setup. So with this setup, we are much better aligned with the markets. We are serving power and automation for the grid out of one common division. And we are addressing electrification needs for industry and infrastructure out of one hand. We bring together process automation and industrial control like we have never had before. As a consequence, there is a shift in the center of gravity of our organization. And if you take the lineup of these divisions, each of them supply into a market which is more than €100,000,000,000 Each of them has a specific lineup of competitors, whether it's Alstom, GE, Siemens, Toshiba on the power grid side, whether it's Gint, Eaton, LeCroy, Schneider on the electrification side, and the other ones remain unchanged compared to the past. So this is the way ABB will look like in the future. Now what's our aspiration for this portfolio? Our aspiration, we announced it last year, is clearly we want to be number 1 or 2 in all the businesses that we operate in. With Power Grids, we have the number one position in transmission and distribution. We will drive the existing market and technology leadership into the future. And having formed this new portfolio, bringing together different building blocks of different people, we will engage with these people and conduct a strategic portfolio review how to best safeguard, further develop the leading position of this business going into the future. We will consider all options for this review, which is the responsibility of a serious management task. On the other hand, our electrification products, discrete automation and process automation businesses will be managed for market leadership and for technology leadership. We appreciate that we are not everywhere yet in the number one position, so we really need to keep working hard to make progress in this direction. So I would like to invite you to take home today ABB is aligning itself better with customer segments, power and automation for the grid on the one hand, power and automation for the site on the other hand. So this is one driver how we will accelerate growth and the transformation in ABB going forward. But we will maintain our focus on driving organic growth through competitive differentiation. And here, I would like to give you some examples of the today, the tomorrow and the long term perspective how we're going to differentiate. Today, take our offering on high voltage, take our offering on transmitting over long distances at low losses in a very reliable way power over the grid. Our 1200 kV AC transformers and breakers are a technological wonder. We have really taken physics to the edge, and the team has done a fantastic job delivering this to our customers. So the efficiency of this technology is being combined with environmentally friendly product innovation. Not so long ago in this month, we opened or last month, we opened up the first installation in Switzerland of our new eco efficient gas insulated switchgear. You might remember the switchgear, when it's gas insulated, it has SF6 in there, which is environmentally very unfriendly, very poisonous and very dangerous. The team has, together with the supplier, found a solution to replace this gas and have an eco efficient eco friendly installation now and a product out there in this gas insulated switchgear. This is a true revolution for customers that want to see more ecological friendly products. When we move from the products into value chains of our customer, we are working strongly to benefit from the Internet of Things service and people to really drive digitalization in industries where people might not have looked at it so critically in the past. We're working with customers to develop the digital mine, and we have the first installations already out there, where we basically take mining control to a completely different level, ranging from electrification to the smelter and bring the pattern, the drumbeat of supply on electricity, the different operational elements in sync and with that, driving better uptime, speed and yield in this environment. One customer where we have installed this solution is Boliden in Sweden. The ore grade of Boliden in Sweden is in the 3rd in the lower third of ore grades in mining. The yield is in the top quarter. And when you sit down with the CEO of Boriden, and I did that just recently one more time, he really attributes the high yield of an average or below average ore grade to the power and automation solutions that we put in place in the digital mining environment that we have worked for in. So there's an opportunity to really differentiate in industries that might be a little bit difficult at the moment as we see them. Combining our capabilities on software with domain expertise has put us on the leading front in software in enterprise asset management. We have done a lot of homework, and ARC says that ABB today is the leading player in enterprise asset management software for power generation, transmission and distribution and mining. You might remember in the center of gravity shift ambition, we said we want to drive competitiveness through a stronger focus on software. With this application software offering, we're doing exactly what we announced as an ambition a while ago. When we look at our customers in process industries and in discrete at the moment, there's a lot of effort to get productivity up in existing brownfield operations. Driving our service capability to the next level by developing a cloud based analytics platform that allows us to really take data, bring them into a big data repository, analyze them with historic operating pattern and have better predictive maintenance, it allows us to differentiate very strongly. To fill this platform with data, we have invested very significantly to make our product speak, to have sensors on the product that feel the condition, to have a communications platform on the product to articulate, whether it's long range Bluetooth capabilities, whether it's GSM capabilities, whether it's a router based technology, we have worked very strongly to make our products speak. So when you have a speaking product, when you have a platform, when you bring the data together and you combine it with historic operating data, you can really help your customer and the service technician out there in the field to do a better job and make sure competitiveness is ensured in a tough market environment. When we look at the long term future, you know ABB is a technology pioneer. In 'fifty 8, we invented HVDC. In 'seventy four, we invented the first industrial robot. But we are not sitting down and only say, great that we have that. We're looking at the future. And we are working on topics like artificial intelligence and machine learning. Take our new YuMi robot and look at the quantum leap that it has done, operating safe outside of the cage and being able to self learn certain operating parameters. That's only the beginning. So we are investing in artificial intelligence and machine learning, and we do that not only standalone organically. Our ABB Technology Ventures Fund that we set up a couple of years ago is really the arm through which we invest in smaller startup companies. We are investing in the carriers together with Elon Musk and some other pretty well known technology investors. And with that, we shape the ABB of the day after tomorrow to long term perspective. Same when you look at the opportunities on technology to disintermediate supply chains. 3 d printing combined with robotics will be able to produce stuff where you historically need a very large factory with many different machines, where you might need a logistics chain producing it cheaply in Asia and shipping it over the ocean, you can totally disintegrate your supply chain with this breakthrough technology. Now this is small plants at the moment that we are watering carefully and we grow up. We keep them a little bit hidden to make sure nobody is trampling over them, but this is the future of ABB on a long term technology basis. So technology, a hallmark of ABB. The third element of driving organic growth is the fact that we are addressing high growth markets in a more targeted way than before. I mentioned before, we have set up 1,000 day programs for growth, and here are three examples. Food and beverage is one of the largest fastest growing automation markets in the world. If we look at food quality and the relevance of power quality going into a process, it's paramount. So ABB has the clear ambition to become a leading player in this field. And I can tell you since we started the program last year, we had double digit growth in the first half of the year in food and beverage. Microgrids is another element, and you will see later on Claudio and Greg both talking about the exciting opportunities that we have there. There will be no one grid topology in the future. There will be a coexistence of multiple topologies between microsolutions, nanosolutions in the house and the grid overall. They will coexist and ABB with its right offering is really a pioneer in that field, and we are well positioned to really articulate the opportunities in this field in a fantastic way with our customers, whether it's in Kodiak Island in Alaska, whether it's in Africa together with wind power supply where we're teaming up with FESTAS. This is an area where I'm really excited about to really drive growth going forward. And that brings me to the Africa situation. We have historically focused a lot on China. We are focused on India. And we said in the last year when we started working on next level, we need to do more about Africa. We have about 6,000 people active in that continent today. If you look at the size of the population and the growth pattern of that population, there is a very strong domestic market, and it will evolve even stronger. But the continent is also rich of natural resources. So, the natural resources will find a way in industrial supply chain, and people will spend more money. With our dedicated focus program on Africa, we had double digit growth starting with a 3 in the first half of the year in that part of the world that we really saw fantastic opportunities to do more. So high growth segments articulated with 1,000 day programs in a focused way will help us to navigate in a pretty tough environment out there that's being impacted at the moment by quite some headwinds. When you take the center of gravity shift concept and look at it, we have an example in the portfolio where we have really lived it and where we have used it to transform industry. There is an opportunity to transform the industry in the future through robotization and make the Internet of Things, Service and People really an actionable present in the not too distant future every day. How did we do that? Technology leadership is one point. If you look at robots today and then compare it with 10 years ago, it looks very different and has different functionality. We worked very strongly on the customer value proposition, and we changed the value proposition from selling the cheapest kilogram of robot to selling a robot with a purpose that does something that a customer wants him to do. We have increased our service pattern, and this is now one of the businesses with the highest attached service rate of any business in ABB. But we also responsibly changed the business model to avoid non controllable or large intrinsic business risk in this business. With robotics, we are tracking high growth segments in food and beverage, where we are handling a lot of material or in the 3C industry. And we have brought together fantastic solutions across the ABB portfolio, taking safety solutions from Tarak, putting it together with motors and drives from Pekka, combining it with some medium voltage technology from burner and bring it all together on an industrial environment. This is an articulation of what we mean by transforming through the shift of center of gravity, And it's also a proof that if rightly done, the concept might add a lot of value to our customers and to you as our shareholders. So organic growth is the core focus of ABB's growth ambition in the future. But we are today ready to reengage in inorganic moves. We plan to conduct value creating acquisitions, but we will stay selective and disciplined. We will not buy at any price, any asset. As we have been in the past, Eric and myself have been together on many deals. You have seen us stepping away from Gloride in 2010 when we had the deal and somebody else did a blowout bid and we didn't match it. We can spell the word discipline in every language of the world. And you can count of us that we really keep that pattern. The space where we are looking is pretty wide, but it's generally more going into power and automation for the site on the industry and transport and infrastructure side. So you can expect ABB to engage subject to the right conditions. We need to have an attractive target at a reasonable valuation. We need to have a team ready to integrate, and we need to make sure our balance sheet warrants it without jeopardizing the balance sheet quality. Erik will talk later on a little bit more about capital allocation principles. Now that's one element to complement the core focus on organic growth. The second one is we are excited about the value creation opportunities from the 6 partnerships that we formed over the last 18 months. We basically went through the world out there and thought there are the great opportunities for ABB. We went through end market by end market, segment by segment, and we were humble enough to appreciate that in certain end markets, whilst being attractive opportunity, it would be very risky or long term or very capital intensive to engage with a full set of capabilities. And that's the reason why we went out and sought out partnerships to complement our strong offering with strength of global or local players that complement what ABB is doing. I believe very strongly energy storage combined with renewables will change the world. Energy storage is an area where we have employed or deployed 2 partnerships. The one with BYD in China, who is the largest producer of electrical storage devices for the 3C industry in the world. And the second partnership we have with Samsung, where we are working together in a completely different segment of quality, of technology and storage solutions. With these 2, we cover the full range without deploying ABB's balance sheet, taking the risk on technological redundance and still be able to provide storage based solutions for a wide range of end markets that really makes a big difference. As a second example, take what's happening in the house and residential building and take the initiatives that Tarek has done there. The collaboration with Philips on the one hand on building automation and on the other hand with Bosch and Cisco to make really devices environment speak and communicate and print them all together and use the ABB platform to do that is a great example of very strong partners coming together with complementary strengths. We will not strive to compete with Cisco on router technology, absolutely not. But we will work with them to deploy automation and power solutions in the domestic environment. So you can probably feel that despite a subdued market around us, the difficulties that we see in China, created by the oil and gas price, there's still a lot of room to drive organic and inorganic growth in ABB going forward. Now let's move on to the second focus area of our strategy. It's relentless execution. In relentless execution, we have made good progress over the last years. The one thing that I'm most proud about of the achievements of the team is the delta in customer satisfaction that we're achieving every year again. It's fantastic to see that the customers appreciate our efforts, that they see that we are trying to get closer with them, listening to them. We appreciate we are not perfect, but acting with a customer in a different way is a key growth driver and we are measuring that with our Net Promoter Score. We're taking stock with more than 30,000 customers a year to really get their input on how we can improve, how we change the operation. The second element that we have been successful with is taking out cost every year through supply chain management and operational excellence. 3% to 5% cost of sales out has been the ambition in the past, and we confirm that ambition through the levers in the future. But we are as disappointed as you are with the share price development and the fact that we haven't had margin accretion in line with our ambition. So we have done a lot of homework and peer benchmarked ourselves and said, what is really the difference? And there is one element that we really will be working on even stronger. In the middle, you see 2 benchmarks of 2 very well known company. The one has a unique gold operating system. The other one has an intrinsic business system that they have built their platform on and look at the share price performance of these companies. And if we compare this to the SMI or the SPI or the S and AP, it's still okay. If we compare it to our own development, we cannot be happy. And to address this gap, we will work stronger on forming a leading operating model. We got some good building blocks. You see them on the left side, but we appreciate there is a gap, an opportunity that we need to work on, and we will match up to the best in this field over the years to come. Tarak Mehta, my colleague on the executive committee, will be leading this effort and be responsible on taking us on this journey. So this is a long term journey that we have started years ago. We're going to accelerate that. And acceleration is also the theme of the second key topic that we will address in the second stage of next level strategy. ABB has 100,000 white color people and 40,000 factory workers. In the 40,000 factory workers, we have deployed Lean 6 Sigma processes in an excellent way. A lot of our factories become Factory of the Year somewhere, and we have done a good job there. On the 100,000 white color, we have significant room for improvement, and we will address that in 3 focused areas. The one is, we will drive our business function with the same lean concept that we have adapted in manufacturing or in supply chain management. Freeing up resources for growth on the sales side is a key theme there. ABB salespeople, if you benchmark them in average against the total best in class performance, spend half of the time with the customer in some cases, and that's not acceptable. And in some cases, we spend 3 times the time on internal administration than best in class competitors. Now can you imagine what will happen if we unleash the force of our salespeople, take our pie approach and focus them more and take some of this productivity savings also to the bottom line. This will be really a key element of change in ABB. 2nd, whilst having done a good job of putting SAP in as a common platform, we operate today our support services in 68 shared services centers all around the world. We will move from the 68 to 6. We will have 2 global supported by 4 regional hubs shared services centers in ABB. And the third element is, if we are honest and look at ourselves and say how complex are we running ABB, we started counting how many layers are between the CEO and the customer. And we had up to 12 layers in there, and we are cutting that bet to a maximum of 8. We are increasing the span of control, and we are taking massively organizational complexity out of our management setup. So with this all together, we commit to you today to take €1,000,000,000 out on our white collar cost base on a gross savings number by the end of 2017. And I will keep this cycle going by asking Eric later on to disclose to you how much we commit to take to the bottom line out of that one. Jean Christophe Delhaize will be leading that effort going forward. Jean Christophe joined us 2 years ago from a rich industry experience as business leader and HR head. He will be driving that effort going forward. The 3rd operational theme, leading operating model, €1,000,000,000 or €2,000,000,000 working capital will be the 3rd element. We are taking €2,000,000,000 working capital out of our working capital structure in ABB. Erik Elswick, our CFO, is driving this effort. He will later on give you an update on that. A company that has €8,000,000,000 to €9,000,000,000 of inventory and a significant opportunity in payables should do its homework. And again, we did some benchmarking there, and we have set ourselves some quite ambitious targets. This journey of driving execution better will be supported by living the new performance culture that we put in last year. You might remember, previously ABB people were all compensated on the same group scorecard. So the Head of Power Systems and the Head of Power Products, which were 2 businesses going in totally different direction in terms of operational performance, got the same bonus at the end of the year in terms of their short term incentive. And I firmly believe that's the wrong approach. So what we built is a model where we differentiate between institutional and individual performance. We want to keep a team based element in compensation. I think it's important in a global team. But we will differentiate individual performance stronger than in the past. The closer to the customer, the more the higher the share of SDI will be. The closer to run on overall company responsibility, the more common this target will be. Now on the individual element, we have put in a completely new performance management system in ABB. Number 1, we will measure people in their line of sight financials. Number 2, 1st January 2014, we put in what we call a relentless execution dashboard, which builds on 4 elements: care, customer, cash and cost. Care is about the incident rate and health and safety record. Customer is about NPS on time delivery. Cost, you can imagine, and cash is, for example, inventory turns. That's the 2nd bucket of individual performance. The 3rd bucket is we have taken our next level strategy down all the key actions to the division, to the business unit and to the local business unit level. Everybody knows what he has or she has to do to contribute. There are milestones, actions defined, and we have put in our system that we call NEX, which is basically a strategy follow-up system, performance management system, where we don't monitor the numbers, we monitor the actions where the people are doing what we said we're going to do. And 4th, we want to have a different culture in ABB. We have clearly articulated the 5 value pairs, how we want to run the company. And under that 5 value pairs, we have developed a leadership competence and leadership behavior model. Against that, people will be assessed. So altogether, we will have a performance culture in ABB, which is more grounded in a mix of individual performance, looked at in a differentiated way and institutional performance. In the Q1 of this year, after deciding that system last year, that system was rolled out to 70,000 people. We have today 70,000 people on a differentiated individual scorecard in ABB that matches with our financial ambition, with our operational improvement opportunities and with the key actions in next level. And you can imagine with that, we get a momentum going. And I expect when people see at the end of this year for the first time how valuable it is to run the extra mile and outperform, this will create then a momentum over time and people will realize it's worth doing it. Now the 3rd element of our next level strategy was, is and will be business led collaboration. We have come a long way, but we will further simplify the organization of ABB. We will drive collaboration at the front end, at a customer where it really matters much stronger, building on the successful path that we have built so far. And we will continue to develop our leadership team. Now let me give you a concrete example of what we mean by simplifying the organization. When I started as CEO of ABB, we had a portfolio of a certain amount of business units serving countries around the world. To execute this management task, we had 5 divisions. We had 1 Head of Global Markets, and we had 8 regions. So, we needed 14 senior leaders to manage the world and our business lines. In the new organization that we're announcing today and where we have already taken some steps previously, we cut it by half. So, we need 7 people to run the world and the portfolio of ABB businesses. That's a very strong signal to the teams when you start sweeping the stairs at the top and make sure you set up an organizational setup where you really demonstrate what you really want, strong collaboration directly between business line and region, between business units and countries. So with this, we are really sending a strong signal, and this will be the core of the white color product our white color productivity efforts that Jean Christophe will talk about later this afternoon. So in terms of taking this into real life, we have announced this morning quite some changes in the leadership structure of ABB, and I would like to take a minute to run you through them. If you take the ABB key building blocks on the senior level, we will continue to have divisional leaders, corporate officers and regional presidents. Now on the divisional heads, Tarak Mehta will run the newly shaped electrification products business, consisting out of building blocks of medium voltage and low voltage business units. Pekka Titinen will continue as the Head of Discrete Automation, Peter Turbis will continue as the Head of Process Automation and Claudio Fakine, who has done really a great job in the turnaround of power systems, will be leading the newly created Power Grades division. The corporate officers will remain unchanged, but we have a change on the regional officer side. Valimasi Renikola, who has been with ABB for 22 years and on the Executive Committee responsible for PA for 8 years, has informed me and announced his desire to retire by the end of the year from full time executive roles, and he will move into a portfolio of Board mandates. Now when you look at what we have in front of us in Europe, Europe will be a key element of the future opportunities for ABB, both from a growth perspective, but also from implementing the white collar ambitions that we have. And I'm very, very happy to have with Bernard Juker, our proven long term business leader that has built power products into the industry leading, well performing power products offering of the world. He has accepted to take on the challenge to lead Europe as the President of Europe. In addition, Bernard will take on the task to oversee on my behalf the transformation of the divisions of 5 divisions today into the 4 divisions into a complete new structure. He will be Chair of what we call the division transformation team. Given his background on power and automation, he is ideally suited to lead this very, very strong and very important path in addition to the large transformation that we have in mind in Europe. But we are not only making changes on the most senior executive level. Last week, you saw that we announced Basmi Hussain as the new Chief Technology Officer of ABB. Basmi is an Indian citizen. He is very, very well known inside ABB. He had a long term carrier between business line responsibility and R and D responsibilities, both on the automation and the power side. Basmi, in the last couple of years, has transformed ABB India, has really led a cultural change as the country manager. So he brings a wealth of technology knowledge, a strong track record as a business leader, and he is the change agent that we need to take ABB from today into the technology space of the future. Basmi will be based continuously in Bangalore. So we're going to run the city office out of Bangalore, capping the huge opportunities that we have there on the software side whilst bringing together our strength in all the other research and development activities all around the world. So next level, stage 2, we will accelerate the transformation of ABB. Profitable growth, relentless execution, business led collaboration, we are making massive change to really get the full potential of ABB unlocked. Our ambition regarding the financial targets is unchanged. If we look on the profitability and on the cash side, we confirm our targets despite a pretty difficult market environment at the moment. And we are marking to market our revenue ambition. You might remember, when we went out with 4% to 7%, the expectation at that time was the world would grow at 3.5 percent, orders would be 100, emerging market would be about 100 basis points above where it is in terms of growth. So what we are doing is we are keeping the ambition relative to the market. But since the market is a little bit slower or is slower, we are marking the revenue growth ambition to market the revenue growth target to market whilst keeping the ambition. So summing it up, next level stage 2 is all around accelerating transformation and laying the foundation for accelerating sustainable value creation. We have attractive shareholder value creation opportunities and how they look like in terms of the financials, the key drivers on the P and L and balance sheet side, my colleague and friend, Erik, will now explain to you. Thank you very much. Thank you, Ole, and good afternoon to all of you. I will now take you through how we will deliver our targets by accelerating the transformation of ABB through the 2nd stage of the next level strategy unlocking the full value potential of ABB. As Uli said, we have returned to growth. We are increasing our margins. We are stepping up our efforts on cost and cash to deliver the operational earnings per share growth and the return on cash flow invested on cash flow return on investment. Our priority remains strong to outgrow the market and we have aligned our growth target in line with the market outlook. We are continuing to drive an efficient capital allocation and we have returned substantial amounts to the shareholders over the last 12 months. This is a snapshot of our key performance indicators. The revenue growth in the first half of this year was back to 3% growth. The cost saving is firmly within our target corridor of 3% to 5%, which has been over the last 6 years. Operational EBITA margin operational EPS is up by 8% and our free cash flow and free cash flow conversion is clearly above our target level. Strong cash flow is a hallmark of ABB and it shows the quality of our earnings. The cash flow return on investment, we are driving hard to get to our mid teens target level. As we have heard, the market around us has changed significantly since we met a year ago. We are now facing this reality and taking full and proactive action to drive our business to our targets. Let's take a deeper look into the growth target itself. In this chart, you see in gray our assumption by end market a year ago in growth and the blue bars is our current assumption for the outlook. So all our markets are growing faster than GDP and our firm ambition as I said is to outgrow the market. Our growth target on a like for like basis on average for the next years until 2020 is now 3% to 6%. We will drive this growth from our strong market positions and firmly implement our penetration, innovation and expansion actions along our pie concept. And in addition to that, with our new organization that we have announced today, which is more customer focused and more direct to our customer segments, we will have an additional support to drive the growth. Over the last 18 months, we have built a good backlog. We have had positive book to bill in all the months over the last 18 months. So we have a backlog at the end of June, which is 9% higher than a year ago. And you can see it is also stretching out over 2016 2017. So based on this, we also have a better margin quality because as we are executing the legacy projects predominantly in the Power Systems division and taking in new orders following our new risk profile, we are driving the quality of the margin in the backlog. So this is a good platform for revenues and margin as we move into the future. On operational EBITA margin, the target remains unchanged at 11% to 16%. We have increased the margin in the first half of this year by 60 basis points through our cost out measures and through the turnaround of power systems from the step change program. We have also taken down our general and administration cost by 7% in the first half of the year. And as we move forward, we will continue to make this cost out and we will continue to benefit from further improvements on the step change program for the rest of this year and also into next year. But then in addition to this, in order to ensure that we drive the margin, we have the white collar productivity program announced today, which will save $1,000,000,000 of structural cost on a run rate basis as of the end of 2017. This is a very profound program going through the functions of the company and my colleague Jean Christophe Delhares will take you through more detail on the program in the afternoon today. So taking those actions together, we are driving clear margin accretion towards 2017 and our clear aim is to be in the upper half of the margin range in 2017. This is a deeper look at the financials behind the program. On the savings side, you have the SEK 1,000,000,000 I mentioned. And you can see in the chart how we will ramp it up year by year on the gross savings side. We'll drive this very hard and we feel very confident about the gross savings. And we will be very disappointed if not at least half of those savings will go to the bottom line. Obviously that depends on market development, mix development and a lot of other factors. But our firm ambition is to drive so that at least half of it gets to the bottom line. On the cost side, the program will have restructuring costs of up to SEK 900,000,000 dollars and implementation costs of some $350,000,000 The implementation cost has mainly to do with system improvements, process improvements to drive the productivity improvement in the various functions around ABB. And as you see on the last line, the cash outflow is mainly coming next year on the program. So overall, this is a very financially attractive program. You can see the cost is a little bit more than SEK 1,000,000,000 and the run rate of cost savings when we are fully up and running is approximately the same amount. Now let's take a look at 2 the 2 of our real value creating key performance indicators, earnings per share growth and cash flow return on investment. We have the drivers in place to drive our operational EPS growth with the revenue growth, as I mentioned before, with our penetration, innovation and expansion actions. And in addition to that, our 1,000 day program on the growth side that we have mentioned. On the cost side, we drive the continuous cost out program year by year on cost of sales of 1 $1,000,000,000 And in addition, we have the white collar program that I just mentioned. On top of that, we are working hard on our tax rate and we are working very firmly on also the finance net. And obviously, the buyback program we are running will also help with the earnings per share. So we are firmly committed to drive the earnings per share on the operational level to 10% to 15% on a CAGR basis during the strategic period. Then on the right side of this chart, you have the capital return on investment. From the left side, you will get the higher cash effective earnings. And on top of that, we now drive the working capital improvement project of $2,000,000,000 which I will come back to in a moment, which helps us increase the cash flow and reduce the asset base. So with those measures, we will have strong support to drive the return on cash the capital return on investment into the mid teens. Here you have in summary the targets for the group. We talked about the revenue target, 3% to 6% on like for like basis, organic growth on average for the period, operational EBITA margin at 11% to 16%. On the right side, you see the transition of the margin ranges by division from the 5 divisions to the 4 new divisions. Electrification Products will have 15% to 19% as a margin range and the Power Grids division 8% to 12%. All other targets remain unchanged. Looking more in detail to the pro form a numbers for the new divisions. These are estimates and we will provide together with the Q1 report 2016 a full restatement on this division structure. Electrification Products close to SEK 11,000,000,000 of revenues, SEK 1,700,000,000 of operational EBITA with an operational EBITA margin of 16.3%. Power Grids is SEK 12,600,000,000 revenue level, SEK 600,000,000 earnings and 4.7 percent operational EBITA margin. It is our clear aim and target to drive this into the margin range of 8% to 12% next year. And we are making progress already this year. These are 2014 numbers as you can see on the chart. Now let's take a look at our 1,000 day program for working capital improvement. As I earlier said, we have a consistent solid cash flow generation. But behind that, we still sit on a significant potential to take additional cash out of our working capital. Our inventory turns and net working capital percent of revenues are below the benchmarks. And on the right side of this chart, you see the working capital structure where we have some SEK 8,000,000,000 tied in inventories including the unbilled receivables on larger projects and also $8,000,000,000 in receivables. So there's a significant potential and the first focus will be to work on the inventory side. The way we run that program is with a very profound approach going deeply into the value chain, changing the processes, routines and systems around running this on a global basis. It is a corporate program that we are driving as a group, but the actions and the implementation is done along the global business units with an undiluted global responsibility for the value chain. It is done in a way to make it sustainable and permanent. So we don't have an increase again in inventory when we have gone through the program. And for that reason, it takes some time to make the implementation, but we are well underway around the world on this. The approach is very systematic and detailed plans and milestones to achieve the targets. And above all the accountabilities for achieving the results of it is firmly tied to our performance management system that was mentioned earlier. In order to ensure that we are successful, there's a rigorous follow-up process around it, quarterly targets and milestones, monthly follow-up and correction corrective actions taken if we are not on track. And I would also like to highlight that this is not only benefits for ABB. It's actually a win win program in a sense because it is clearly proven and we have seen it in the pilot that when we improve the inventory management with better tranche and better management of inventories, we improve the on time delivery and the lead time to our customers. So it's also a big customer benefit from this program. We have some early successes. 16 out of our 23 business units have started to show improvements in the first half of this year. We have trained about 300 inventory responsibles around the world and certified them because this needs to be done down in the detail. And we have to be done down in the detail. And we are rolling out now further into the whole system business of ABB. We started on the product side and now we are working on the system side. So with this program, we will free up $2,000,000,000 from our working capital until the end of 2017. Now let's look at the balance sheet and our capital allocation. We are consistent cash generator. We have a good profile of our borrowing at attractive interest rates over a long period of time. We are targeting an efficient balance sheet with a single A rating, which gives us a flexible and strong balance sheet to implement our strategy to drive this change of the center of gravity, to drive the growth, the increased competitiveness and the risk management and reduction. Our capital allocation priorities also remain unchanged. 1st priority and the most attractive is obviously investments in organic growth. Our dividend policy remains unchanged. And then further, we are signaling that we are now ready to go back into value creating disciplined acquisitions and we will be disciplined in this area. I'll come back to that also in a moment. And we are shown with the buyback program that we announced last year that we are returning excess cash that we don't need to the shareholders. Looking to the expansion side. The investments on the organic side in R and D and in CapEx are the highest return investments we have. And we will do that to help drive the change of the center of gravity complemented by value creating acquisitions that will bring ABB's change of the gravity in the right direction. Can I have the next slide, please? Thanks. Looking to the organic growth, the first priority. It has been our priority and will remain our first priority. You surely show the chart on how much new technology and technological innovation we have brought to the market. And we will continue to invest. We have about 4% of revenues in R and D and all the investments are done with the same stringent evaluation on return on capital. And we are also looking hard at the productivity of the R and D resources as part of the white collar productivity program. On the capital expenditure, the investments are driven towards our 1,000 day programs and to drive the productivity in our facilities, whether they are in the mature markets or in the emerging markets. We are spending about $1,000,000,000 per year in CapEx and we foresee to continue on a level around that number. Turning then to the inorganic growth and acquisitions. Uli has already talked about the priorities and where we are ready to spend the money. On the right hand side, you see our clear criteria. They are qualitative criteria that the target should fit, which would have good integration plans and we should have a good cultural fit with the target we bring in. But the financial criteria are even more important where the return should meet our criteria and we should design the setup of the financing for the acquisitions in order to retain our credit rating that we think is the right one for ABB. As a part of the capital allocation, we are committed to returning cash to our shareholders. We do it through our steadily increasing dividend over time. This policy has been in place for quite a while and we think it's quite attractive to the shareholders. We have today about 3.5% yield on the dividend. And you see on the right hand side of this chart that this has been a consistent payout for quite a few years. We will look to value creating acquisitions. But if we don't find enough of them, we will clearly then also return additional cash to the shareholders. The current program of SEK 4,000,000,000, 2 year program, we are in the middle of the execution. We have done about SEK 1,800,000,000 until the end of August and we will continue the implementation of that program. So all in all, since the Capital Markets Day last year, we have returned $3,500,000,000 to shareholders. So to sum up from my side, we remain committed to deliver the 10% to 15% operational EPS growth through our growth actions and through our reinforced cost actions to drive the growth on the operational EPS. We have a strong focus on cash and capital efficiency to drive our returns higher and that will be helped by our SEK 2,000,000,000 we are announcing today on the net working capital side. Capital allocations remain unchanged with a clear priority to drive value creating investments on the organic side and the inorganic side and to continue to return substantial amounts of cash to our shareholders. And with that, I will hand back to Uli for a sum up. Thank you, Erik. So we took you this morning through the journey of what we delivered in Stage 1, how we will accelerate the transformation in stage 2 and what it means in terms of the ambition and where we want to take this company in the future. If you take ABB overall, why should you really own ABB? We are a pioneering technology leader with strong positions in attractive markets. We have a clear transformation agenda in mind, how we will drive earnings per share and cash return on investment. We have a strong balance sheet, and we are committed to really drive attractive returns for U. S. Our shareholders. So to sum the next level up one more time, we are committed to accelerating sustainable value creation. With that, I close the morning. Thank you for your attention and hand over back to Alana. Wonderful. Okay. We're going to if we can have the lights come up, please. We're going to actually start with some Q and A. Hey, Mark, in the back there. Thank you. It's Mark Trotman from Bank of America Merrill Lynch. Uli, a question in terms of a strategic review for Power Grid. Could you just tell us how you're going to undergo that process? What exactly or how are you going to undertake that exercise? Is that dealing with the micro businesses within that division? Is it for the division as a whole? How are you if you can give a bit more color on what process you're going to go through? Related to that I'm a bit curious medium voltage transformers I think is in that group. Is that because there's a predominantly utility customer base still? Or how do you think about the industrial part of that division which I think was more profitable? And thirdly, in terms of the organic investments, when we look in the past, I guess ABB has struggled a bit with operating leverage I. E. Growth has been relatively good compared to competition, but margins have drifted. And we do see a lot of what looks like organic investment. Is ABB well invested now such that you can get decent operating leverage? Thank you. Thanks, Marc, and welcome to our Capital Markets Day. On the strategic portfolio review, it's exactly that. We will look at the entire portfolio of the business in its total and in its pieces. And then we will determine what's best to keep and safeguard and further develop the number one position in transmission and distribution. This is a world leading business with world leading profitability in many of its buckets. We need to make sure we take a responsible look at it together with the newly formed management team because don't forget, there are people coming from different parts of ABB together in this new division. We will work with them and say, how do we run this portfolio best for long term prosperity and long term value creation both for our customers and for our employees and for ABB. So basically, what we're doing in this kind of situation, we are taking an outside in perspective and go through the whole business in all the pieces and in its entirety. I can give you a concrete example where we did it in the past. In 2,000 end of 2009, Erik and myself were appointed as the lead team for the Discrete Automation and Motion Business. At that time, the discussion was all about robotics. It was a business that was in very difficult situation. People said, what will you do with this business? And at that time, we embarked on a strategic portfolio review on robotics. We said, should we keep it or sell it? There was a huge pressure to divest the business because it was operational. It was losing $200,000,000 on a €1,000,000,000 business volume. We did the review. We did our homework, and we decided we're going to keep the business, but we're going to turn it upside down. We have changed the strategy. We have changed technology. We have changed the leadership team. We have changed the value proposition. We have included more service. And today, out of that portfolio review, I'm really glad we did it, and we did not just blindly sell it. We have a really leading robotics business that is growing very well and is highly profitable, and we are very happy to have done that homework. So that's one of the potential outcomes. It could also be that the outcome is a divestment, a partial investment or partial divestment. We are not ruling out any options, and we will do this in a responsible way over the next quarters. There is no rush on it. The newly formed management team will be involved, and we're going to do that together to ensure the long term prosperity of this business as a market leader. Now when you do portfolio alignments that we have just done, you will never have the absolute perfect set, and you will never able to cut and slice it just in the way that you do. Our transformer business is the number one globally. ABB has the best transformer business in the world in terms of size, in terms of technology, in terms of profitability. If you take the profitability that Bernard Jochen together with his team has developed and delivered over many, many years, this is a really strong business. And we have delivered that because we have a common platform on configuration, on supply chain, on the value chain. Now you could argue to rip certain bits and pieces out of the transformer lineup and move that somewhere else. And maybe from a way how we sell it, it might make sense, but operationally, it does not. Now we have a common front end between all the ABB entities that address the utility space, and we are working strongly to build that also in the industrial side. So the challenge is we need to keep the operational efficiency and leave the transformer business intact as it is, whilst tapping the opportunities, as we have done historically, in the different segments, in the different channels that we have. Because it's not only an end market question, it's also a channel question. Do you sell direct? Do you sell indirect? Do you go through distributors? And we need to work and align on that one. Now on the organic investments, I'm as disappointed as you are on the margin development that we are not able yet to get it up. So that's one of the reasons that we are launching the white color productivity program because some of the money that we have earned the hard way was invested in complexity, and we need to take that out. Look, some of the metrics that I gave you before, and Jean Christophe will give you more examples this afternoon, we have grown in a shape that deserves a serious look, and we need to question ourselves whether that's the best way we are set up, and we will drive this efficiency going forward. So there's definitely an unchanged ambition to deliver margin accretion over the next year. Eric has given you a little bit of a guide in which direction it will develop. We will need the structural change to ensure that we deliver on that despite a pretty tough market out there in terms of process aspects. Okay. Next question. Let's give it to Colin here. Let me go on the other side. It's Colin Gibson from HSBC. Two questions, please. What, if anything, do you want to say today about portfolio review in the remainder of the group, the other 3 divisions? And second question, in today's announcement, I think the focus is more on the power side of ABB than it is on the automation side of ABB. But it seems to me and maybe you disagree with this, but it seems to me that the margin gap, it appears, is actually bigger on the automation side. So how do you square that paradox? And what do you think you're doing enough within the automation portfolio to close that gap? Thanks. Look, let me start with the second point on power versus Automation. If you take the profitability of today's Power Products business, It's industry leading. So we are there. If you look at the scale, the technology that was built, it's a very, very strong business. Now if you go into the profitability of some of our automation franchises, you need to look at the underlying business structure. Let's take process automation as one example. In process automation, to do automation in industry, you need the sensing and the measurement, you need the brain and you need the actuation. Comparing us against one of the leading competitors, we are number 1 on DCS, but we are not as strong on the measurement and sensing piece, and we are not as strong on the actuation side, for example, on control valves. This is where you make a lot of money, where you dress up the Christmas tree of the DCS with these nice goodies all around, and we don't have enough of them. So that's a structural explanation, Colin. And then also the reason why we are saying a lot of the inorganic investments will go in that space because we acknowledge there's an operational performance improvement opportunity, and we're working on that, as you see. But there's also structural performance improvement opportunity by adding and working through and ensuring that we add to the portfolio, for example, in Process Automation. And with that, then lift the average margin of the business up. The other question was really about portfolio review. Look, I'm a strong believer you should take one step at a time or not too many steps in parallel. Last year, when we launched next level stage 1, we really had to do some serious homework. We had to work on the power systems restructuring. We put in a completely different comp system. We changed the organization. We saw through the integration of Thomas Embeds and PowerOne and completed that. Now we're doing a divisional realignment, and Yucat is right. It's mainly on the power side. So that's stage 2 of next level that we are really driving. We're really convinced that with the new setup, we address our customers in a better way. And whether it's a step 1 and there's a step 2, there might be other steps in the future. But at the moment, that's the focus of the activities. Next question to Andrew there. It's Andrew Carter from RBC. I had a couple of questions. First of all, in terms of the power grid separation, is there a cost associated with this? I think previously you've talked about that part of the business being quite closely aligned with Power Products and it sounds like there's some changes there. That was the first question. On M and A, you've both been very clear that M and A is going to be I think more of a feature going forward. I wondered exactly though what are you actually getting at there? Is it that you've identified certain things that you're particularly keen on? Or is it that you're actually looking at sort of different returns? Or is it that you're potentially prepared to pay to look at bigger things? And then the final one was just in terms of the margin targets. When I look at the margin that you had been looking at for Power Systems and I look at Power Grid today, it does actually look a little bit as though you're slightly lowering the targets for what was Power Systems. Is that the case? Or have I missed something? And if it is the case then what's the background to it? Okay. Let me take a high level perspective on targets and I will later on get Eric in the power grid and then ask Eric to come talk a little bit about more about M and A piece. The target is a mathematical computation from old to new in these two divisions, so there is no change in the ambition level. And Eric can talk a little bit more on that one. The power grids are set up in the future. Look, we are moving from 5 divisions to 4. And that naturally has some scale advantages. But the other time, these divisions have worked very, very successfully Because if you take the common front end that we had already established to serve customers in the utility space, there is already a lot of cost leverage. If you take the G and A structure, for example, of Power Products historically and compare that to any benchmark in the world, I'm happy to take the benchmark because I think Bernard has done a really, really good job in that one. If you look at the profitability, one result is that we had already a very lean setup. So there will be some advantages in bringing Power Grid and the other three divisions in line with that it is, but there is nothing dramatic to be expected in terms of change of the cost structure. But there will be some savings. And J. C. Will later on also talk a bit more because we are not only addressing the business in a vertical way with the alignment. We're also addressing in a horizontal way where we look at business functions all across ABB and take bicolor productivity to the next level. With that said, I hand over to Erik to some comments on M and A. Yes. Thanks, Uli. So on the M and A side, we have a good pipeline of potential targets in all the divisions. And the reason we are driving it that way is really so that we have a choice and don't get too excited about deals, which may not make sense from a financial or even from a qualitative point of view. This pipeline has been there all the time. Have been through a period where valuations have been relatively high and we cannot speculate what it will be in the future. But if valuations are in the level where we can have it make sense from a value creation point of view, we will obviously move ahead and look at those transactions. And as to the size, we don't make specific comments. Obviously, in those pipelines, we have from small to medium sized to maybe also somewhat larger targets, but there is no specific prioritization on the size. Ben? Ben, Nicola, Morgan Stanley. So back to the portfolio review and the strategic announcement. I realize that it's far too early to make judgments. But let's say we get to the end of the portfolio review process and ABB decides that the utilities exposure in high voltage is not really where you need to be in future. How easy is it or how easy is it from a manufacturing standpoint to disentangle what you do on the high voltage power products, the switchgear etcetera with everything that relates to basically it's the industry portion isn't it of the existing Power Products division? How much overlap is there in those big manufacturing facilities in India and China? Can this simply be carved out? That's question number 1. Question number 2 is more for Eric. From the balance sheet of ABB, I think it's fair to assume that customer advances and down payments in power are very material to your overall net debt and cash position. How do you think about that business in broad terms about if we were to look at a potential exit what does that do to my numbers? And final question, you've made the announcement that you're doing the review. Have you has this started? Have you appointed advisers? Where are we in the process? Okay. And the last one, look Ben, we are not commenting on the process of the internal review. Just we do it in a responsible way. And we will announce, as the progress comes in, how far we got. It will be I expect this to be completed within 2016, and that's all we're going to say about it. But one thing is very, very clear. We're going to have acting management deeply involved, and we're going to have people that really run this business deeply involved in driving this, as we have always done. When we had done a portfolio realignment, then we get the people that come together involved in that one. On the carve out, look, when you take the way we run manufacturing in ABB, there are a couple of elements to consider. The one is we have a relatively light value chain. So we have outsourced a lot of heavy duty manufacturing. So machines or this kind of stuff, casting machines, we buy it from outside. And that would mean when you relocate something or split something, you just take the supplier with yourself, and that's not the big issue. The second piece is we have a focus factory concept in Power Products, Maybe really depending on the offering type and the scale that we can build, we have brought together to really build up scale economies all around the world. So basically, we are, for example, in certain areas, we have global focused factories and local configuration centers. And this has allowed us to have agility towards the customers whilst keeping scale in the background and doing that. Now no task is ever easy, but is it doable? Yes, it is doable. And there is definitely a way if we would decide to go in that direction. Erik, you want to take the next? Yes. So then on the balance sheet, Ben, it is clear that we have advanced payments on the power side, but we also have quite a bit of advanced payments on the side of the other 3 divisions specifically in the process automation area. So we should not assume that all of that has to do with the Power Grid business. And how the balance sheet will be configured and could look in different constellations when we make the strategic review It's too early to comment on that. James here. Hi. James Stettler from Barclays. As you look out and the environment is getting tougher, I mean, what have you factored in terms of increasing pricing pressure across the portfolio? And how are you going to react to that? And then secondly, clearly service is something you've talked about in the past. I believe you're around 17%. Is there anything that's changed there? Can you maybe be a bit more ambitious especially in a tougher environment? Look, I'll take the service piece first and then have Erik answer the pricing piece. If you take where we are working on service, there are a couple of drivers to really get this business going. The one is, you need to understand your installed base better, and we have put a lot of investment in there. I'll give you an example. When we started the 1,000 day program on Africa, we realized we have an installed base out there that we have not tapped sufficiently. So what you need to do to get really the momentum out of that, we need to take the service products that we have developed and make them adaptable to the local environment and make sure they are available. Then we need to have the execution capacity to do that, and we need to have the service sales activities going up. So that's basically a pattern where we see there are buckets of the installed base that has been under addressed in the past that will give us a delta in the future. So that's one of the drivers. The second driver, if you look what we are doing on service, I think enterprise asset management, helping our customers with uptime, yield and speed, not only through a repair and react kind of activity, but through predictive maintenance is definitely an area that we invest in. The cloud based service analytics platform that I shared with you earlier today will be a key enabler to get us going. Ben called before and said, look, you have invested in certain kind of activities. That's right. This is one of them. And we're going to yield results out of that over the times to come. Because when you have a big installed base, you have the operating information of that, you got reach into the customer and you understand his domain, you can really make a difference how he's driving his activity. So that's one element. Then you will see this afternoon, Claudio will talk about what we're doing in the power grid space in adding engineering and consulting services. At the moment, every mayor of a significant sized town in Germany is faced with the problem, what do you do with all the solar roof is coming in? What do you really do with your local utility? How do you drive this? And having a partnership approach where you have consultative resources that can help to drive this is another one of the growth opportunities that we see going forward. So there's a wide facet. If you look at the service number this year, it's really interesting because there's some underlying really good growth, but there's a massive contraction in the discretionary service spending in oil and gas, which is impacting our growth rate this year. So I firmly believe we're doing the right things in getting momentum going. We're investing in capabilities and people. We are tapping through our pie approach more opportunities to penetrate the installed base, but we need to compensate the tough impact that we have had. Now the last point is, I think you need to create a service opportunity by telling your customers a little bit louder in which shape his assets are. Having a speaking motor, a motor that has sensors, 7 sensors on itself and has a little device on itself that competes the data right away and transmits via Bluetooth arrangement directly or router based arrangement, its operating condition is another enabler that we are working on. We have launched at our Nova Fair this year, the technology concept of the speaking motor, and we have made really good progress. And you will see in the future speaking transformers, which we already have in certain dimensions. So having assets that speak, having a serving platform to administrate it and great service products and service people to conduct and sell the activities will be a key driver. With that, I hand over to Erik on the pricing question. Thank you. So on the market and on the pricing side, obviously, we have said very clearly that it's hardware desailing in many markets. You have seen in our quarterly reports where we show the net between our cost saving program and the price effects that we have been able to keep that on the positive side. So we are driving very, very hard on supply chain, on operational OpEx improvements around our factories and in our supply chain to counter effects of the price situation. Obviously, we are doing everything we can not to use the price in this market situation. Andreas? Andreas Willi from JPMorgan. First question on the new divisional setup and review. Uli, you did a review when you came in as a CEO and then first decided to leave the 5 divisions unchanged. Has this been the kind of the right setup? Was there a catalyst over the last 12 months that kind of drove that reassessment that you announced today? And for Erik, on the working capital, we have had working capital initiatives before. Maybe you could just give us a bit more breakdown for the SEK 2,000,000,000. What is due to just supply chain? What is what you kind of need to destock and therefore would have an impact on your own production? And what is basically trapped cash in Power Systems where you should make progress as these orders get completed? And on the restructuring, should we still assume the same kind of ratios than in the past for the normal 3% to 5% productivity? So basically, the restructuring announced today, is it purely additive to the kind of 50 basis points of sales we normally have per year. And given that restructuring is a recurring industrial company, why do you still have an operating EPS prior to restructuring as a target? Okay. So I take the easy one on the portfolio assessment. Now look, Andreas, when you come in as a new CEO, you need to look at what do you want to do, when do you want to do it, how do you want to do it and with whom do you want to do it. Now when you get into a situation where you discover that one part of the portfolio is seriously sick, the last thing that you want to do is combine it with well performing pieces or even splitting it up. You want to address it. So when I came in, I discovered the power system magnitude of the problem that we were really facing. And it was pretty disappointing. But when you have that kind of situation, you align your ambition with reality and you say, okay, I need to fix this business. So there was any divisional change at that time was not in the making because we had so much going on in parallel that putting that on top would have really jeopardized operational continuity, which I will not do. So that does not mean that there is no plan, but it's just a conscious decision when and how to execute. When we sat down with the board on next level and worked with them during last year, we had a clear understanding what could happen over time with ABB and what the drivers of value creation would be. But then you need to have a realistic, well grounded implementation plan and say, how much can I do at the same time? How far can I stretch? And how slow do I need to be in certain things to make sure you're not jeopardizing the performance? So this, what we're doing now today, is something which I had in mind for a long time, but you need to do it at a time when the company is operational ready. The great job that Bernard is doing continuously on power product, combined with the turnaround in power systems, allows us to make this move now. It's still a significant move now. We are still concerned, taking all of our people with us and not jeopardizing operational performance, but now is the right time to execute that. With that, I hand over to Erik. Thanks, Uli. So on working capital, Andreas, it's clear that we have had programs to reduce working capital in the past. Some of them have been successful. Some of them have been less successful. But with this program, we really now go deep in the value chain with a very systematic approach driven from the group and executed in the business units. So it is a completely different approach that we are taking in terms of ensuring that we also get the results permanently over time. Your question on the supply side, the destocking and the work in progress and cash which is stuck in the larger projects, The answer is all of those are contributing to the improvements and I will not specify the detailed pieces, but it's clear that all of those are helping to reach this target. Sorry go ahead. On the restructuring side, the number I use today is for the white collar program. And you should assume on top of that that the normal restructuring will be in the same range as we have had in the past. And then just to reflect on your question on the EPS, we are using the operational EPS because it's really the true measurement on how we run the operations. We want to take out the effects of one time gains or losses on sale. We have effects of the foreign exchange movements on the derivative portfolio, which we also would like to separate them because those are moving up and down over time. So we firmly believe the right measurement is what we are using namely the operational EPS. We'll go with Daniela and then with Maarten. Thank you. I have one question to follow-up on the cost savings because you made the point of emphasizing that the €1,000,000,000 was gross and net you would aim for at least 50% retention. And I was looking to understand exactly what are the offsets because things like pricing, I guess, you're already offsetting by the old COGS 3% to 5% reduction. With 3% to 6% growth, you probably have some operating leverage or at least no negative operating leverage. So is there anything in those offsets that are like competitive dynamics changing further or in the way you operate? Can you elaborate on exactly what those offsets are then? Okay. Daniela, thank you for your question. Look, one thing that I learned last bit in the journey between last year and this year, the world might not be what you think it is. So what we are doing here is we are committing to at least a 50% realization rate of the €1,000,000,000 in any circumstance. And we face at the moment a voltage is highly uncertain. Now 2017 is on the journey between now and 2020. We just want to be cautious to say this is the minimum that we're going to regain. The ambition is naturally higher. Okay. I think it was Martin here. And then Simon. Thank you. It's Martin Milkey from Citi. Just a question on your growth outlook. As you say, you've marked that to market given where the world is going. But obviously, it's still higher than a lot of industrial companies are seeing at the moment. You had a lot of large orders over the last 18 months that you said in the past will start delivering from next year. So I wonder if you could talk about how much of that growth target is driven by the current backlog and perhaps the tender outlook you see currently And how much of it is based on an assumption that the short cycle business stabilizes or picks up from current levels, particularly what you think about China, your oil and gas business and so forth? Thank you. Okay. Look, Martin, let me go through a couple of buckets. Let's first look at our book to bill ratio. We had positive book to bill in the last three half years, if I take 6 months buckets, somewhere between 1.08% and €1,900,000,000 So we are building backlog. We have now about a €2,000,000,000 higher backlog than we had a year before, which is something which is attractive on the paper, but we also need to appreciate the timing on the backlog in there. If I look at the short term trading environment, if I look at what we have flagged in the Q2 as hard weather saving, this is unchanged. China is tough out there. It's really tough. If you look at oil and gas, it's tough out there. If you look at the sentiment, economic sentiment at the moment when I talk to the friends in the U. S, it's not as good as people expected at the beginning of the year to be. So we need to be cautious and realistic. However, 3% to 6% is a target in average until 2020. If you take the efforts that we have taken in shifting our attention, the food and beverage momentum, the Africa momentum, a couple of others, they are not yet as significant to the scale of ABB that I would like them to see. But you see that the teams are really seeing the payback and the momentum coming. So with our pie approach, where we really go through segment by segment and say how can we articulate growth ahead of GDP, which is basically the ambition here or growth ahead of the market, I'm confident that we're going to get there. Is it easy? Absolutely not. It's a tough world out there. Craig will talk this afternoon a little bit more what you're doing. Tara gave some segments in his presentation. So they will articulate how we really lift that ambition to give you a good feel on that. Simon there? Thanks. It's Adam Anderson from Berenberg. The first question is also on the sales targets. Given the volatility you're seeing in several end markets, why didn't you use today as an opportunity to remove the absolute sales target and just say we're going to grow relative to our end markets certain basis points. And then obviously, if you have further volatility, you wouldn't have to comment back on that. 2nd question is on competition and pricing. You don't really disclose the pricing and the savings anymore. You only disclose net savings. But interestingly noted in Eric's presentation that the cost savings as a percentage of COGS have gone up in H1 versus last year. And given your net savings number was lower in the first half, has pricing changed in any way? What are you seeing particularly in process automation? And what are you thinking going forward? And the last question is just on PLC, which is which we've historically always looked at as a part of discrete automation. Can you just talk a bit more about why you think that, that fits better into the Process Automation business? Okay. I'll take the sales target and the PLC and let Erik comment on the pricing piece. Let's start with the last one first, PLC. ABB has a subscale PLC business. We need to acknowledge that, and we have not been successful making that the multi billion that we would like it to be. If you take the customer decision pattern today in many, many situations, there is no clear delineation line anymore between situations where you use a PLC and where you use a DCS. And quite honestly, you have many situations, for example, in the process environment, where you have auxiliaries run by a PLC solution and the main process in DCS. So there's a coexistence there. And we feel very strongly bringing it together under one overall industrial controls umbrella will really help not only with the back end, but also with the front end piece addressing the markets in a more aligned way. That's the reason why we are moving it over in an environment where we have more engineering resources. If you look at how many engineers we have developing PLC and have domain expertise, specific process expertise there, In the smaller PLC business, it really makes sense to hook it up to a larger mother system over there. Then on the sales side, look, it's a philosophical question. How do you run your company? Do you want to be do you want to have an absolute number, which I would never do? Do you want to have a growth number and give yourself a range? Do you want to say relative to the market, we decided on that one, and we decided to stick to the philosophy on that one. And with that, I hand over to Erik on pricing. So on the competition and the pricing side, it is clearly some verticals also in PA where there is more competition and some more price pressure. I think we have commented that also earlier in the year. And as I said earlier in the Q and A, our clear ambition and target is to drive that we have savings to compensate for the price pressure as we have had in the quarters up till today. Nathalie? Thank you. Thank you for the interesting presentations. The first question is on the portfolio review. Can you help us understand why you single out power grid? Because if I look at that, it's you have a good group of costs. You have unique position, a leadership, something that you strive for in automation. And you have also the renewable space actually experiencing a revival. So for me and maybe yeah, just asking you how you're reason surrounding that. The second question is on the cost cutting program. Is it this SEK1 1,000,000,000 in this current environment? So if you have a deterioration for example to 2% or 2.5% or 1.5%, you'll need to do more in order to drive your current growth targets and also keep your margins at your target levels? And the last question is actually on Humu. You had a very nice and vocal launch of the robot. And of course, I understand that wasn't only for us. It was for your customers. But in any case, can you give us some more update on how the interest from Asia has been? Thank you. Look, I'm happy to do it. I will take the first and the last and let Erik talk about the cost cutting piece. Now if you take Power Grids, why are we doing it? Look, we are bringing together teams from different parts of ABB that will form this leadership team of Power Grids in the future. When you do this, you have an opportunity to look at the business model. You have an opportunity to say, how do I weigh products, solutions, services, systems? How do I drive that? How do I really engage with the customers in the future? And how do I drive my value add in the future? And from my learning, I can tell you, when we did it in robotics, it was a unifying effort where we brought the team together, aligned them, and then afterwards, you see how powerful they are today doing that. So this is not only an exercise where you do the logic and the market piece. This is also an exercise where a uniform management team comes together, develops jointly a unifying vision, what they're going to do with the business. Naturally, we will be involved in that one and take this forward. You cannot do too many of them in parallel in a company, and you should not do that. But I think it's the right time now with the large organic organizational move that we have to trigger this review coming from outside. Now on Yumi, look, I talked last Saturday to a customer that has bought a Yumi in the Black Forest in Germany. It's a company that does small gears and have a lot of manual handling. And it's so exciting. The only thing he has now a couple of installations going. He has complained bitterly about a long lead time of this product because we have so much interest now for it that we have now, I think, 9.5, 12 weeks of lead time getting there. But it's really starting. And what we are doing with these customers is we are not only helping them to get a product there. We work with them on application gripped. And the one had a slippery surface and the other one had a little bit more rough. How do you do that with the same type of hand? So we learned now, and we need to differentiate a bit more. The YouMe thing is the start of a very, very exciting journey of putting more intelligence in the robot and have a completely different collaboration between the human being and mankind. So don't think this is only for mobile phone assembly in China, where we have a lot of customers that are very interested and are buying in a really good way. But it's also here in surrounding in Europe, in the S. Where we take it. Take the Middle East, where you have really a certain hesitation to do blue collar work in the environment. People are more tied towards engineering work. That's another application. So we are only at the start of a very exciting journey there. And with that said, I'll let Erik take the cost cutting piece. So on the cost cutting side, on the €1,000,000,000 white collar productivity cost saving, that is really out of the current structure cost that we have. So it is not projected into the future on the cost base in 2017. That is out of the current cost structure that we have. And on the cost of sales 3% to 5%, obviously that one is dependent on the volume that we have. And there we are driving hard to get as much as possible out of it and to at least then compensate for the current price situation in the market. With that, I think we're going to close the session. We have another Q and A after the afternoon session. And I promise you, Frederic, you can have the first question. I saw your hand, so. Please join us for lunch out there in the area and we look forward to speaking with you. Thanks again. Welcome. I hope you all had a wonderful lunch. And with that, I will actually hand it over to Uli. Thanks for coming back. We have an exciting afternoon in front of us. Next level, stage 2, we gave you the high level perspective this morning. I run ABB to a very simple principle, and that say do. We say very clearly what we will do, and then we do what we said, and people will be measured accordingly to that. This afternoon, you will get a feel for SEDU in ABB, both on the ambitions that we have going forward and making next level of success. Harak and Claudio, the 2 division leaders of the newly shaped divisions, will be on stage and share with you what how they look at their business, how they really want to address customers, what will be the difference of this new setup. We'll then have a break. And after the break, we will have Jean Christophe Delas, our HR Head, sharing with you white collar productivity. And there, we will very openly disclose to you in a very humble way where are we today, what's the starting point, and how will we deliver this €1,000,000,000 cost out in the next couple of years. And we're going to close off the afternoon by having Greg Shawyer, our President of the Americas, sharing with you how he runs his business. So what does it really mean to have pie and heat maps and how does it really work in daily life in terms of how we run the business today and how we plan to create more value going forward. These 4 sessions should give you a good feel that there is a lot of more substance between the say that we said this morning, but there's a lot of do going on in ABB as we speak. Now when you do a transformational change in a company of our size, you need to be ready to have certain patience and see through the change with perseverance. We got a crystal clear agenda. We know what we're going to do in terms of transformation, but we're also humble enough to realize that changing the course of the Green Mary will take a certain time. And therefore, it's very important for you, our analysts and investor base, to really understand what we are doing to change the course. With that said, I hand over to Claudio. Thank you, Uli. Good afternoon. So I'll make sure that you stay awake after the lunch. And I'll run you through, let's say, 2 parts. One is, first, I'll give you a summary of the step change as I took over the division power system, as you know, in a turnaround situation together with Uli and the executive, we decided to go through the step change program addressing all the challenges. And basically showing that we're on track on that one and that this step change actually help us to establish a strong footprint and a strong solid base for the next stage of the next level, which is then the new division Power Grids. So let me start with the step change program. Remember, the first thing of course, the first goal at the very top of the list was to turn around the business and make it profitable. We slowly and steadily delivered the quarters, last three quarters on positive operational EBITDA and we continue in that path. We also addressed some of the key milestones that we you just saw we communicated on the offshore wind. We handed over 1 of the platforms all in 1. We have now installed and we are on the commissioning phase of the 2nd largest actually grid connection 900 over 900 megawatt worth of power through this offshore platform. It's on the commissioning phase and on track to be delivered on plan. And we also closed out, if you remember, we had another part of the EPC type of solar power plants that we went in. In the past, we decided last year as part of the step change to close that part of the business and concentrate on our key technology on our value add. And basically that piece of the equation is done, is ticked off. We closed that part. And we actually have some quite good successes in quite some markets on addressing just with what we call the system integration, delivering our technology both in terms of automation and control as well as in terms of our core components, our core equipment like inverters and medium voltage switch gears that basically complete the solar plants. Another key element that we focused on, Uli touched on that one, you've seen is the partnership. And the way we see the partnership on the PS side was basically to de risk our business model. So the partnership that we have in Japan with Hitachi help us addressing a new market where we didn't have really access in the past, but also with a new business model where basically the construction piece, the EPC part of those projects taken care by a local well established player like Itachi, while we deliver the technology, the engineering and the system integration. So that's just another example. We're also looking at partnerships for the new high growth areas like for instance microgrids. I'm going to show you one of those examples. But obviously in order to for us to be able to provide a full scope to satisfy the needs of those microgrids, we need also energy storage, battery storage. And that's one of the partnerships that we did with Samsung to have that part, that component within our scope to be able to deliver the whole value through to our customers. Last but not least, power system, piece. We're going to focus on the automation part. And that also has shown piece, we're going to focus on the automation part. And that also has shown quite some steady progress on the growth path despite obviously the difficult market situation out there. Within all this, we also addressed some structural changes in the organization. We pushed management closer to the market. We created project operations teams that help delivering the execution of the projects and we cluster our engineering capacity so that we can create critical mass. So that's in a nutshell the let's say the progress report on step change is not over. As you know, we said it's going to take a couple of years to execute all this, but we're at least ticking off some of the key milestones and we will continue on this journey going forward for the next few quarters as well. So that help us in setting up a strong foundation as I mentioned before to go to the next stage of the next level. And the next stage is, as already introduced by Uli, creating a unique player in the power grid market. And when I say unique, it's unique in terms of number 1, in terms of markets, in terms of technology, in terms of installed base. We have an unmatched installed base when you put it all together from a system point of view and products point of view in terms of grid connections, in terms of grid equipment, products, systems and components. And that is something that we really want to leverage even more so going forward with a team that will address that both from a system as well as from a product standpoint. So, obviously, global reach. We serve utilities, but obviously not only. Some of you mentioned that as well. And we start from basically now with this new focus division from the connection of the power plant where we generate the electricity and take it from a step up transformers, go through, transmit it through substations all the way to the point of consumption where it then becomes distribution. And from that point onward, then Tarek takes over with its new form division electrification products. So that's where we are, power and automation for the grids with our complete portfolio. But before I go into that level of details on what is it that we can do for our customers, let me give you a quick perspective from a market standpoint, why do we see that we have growth opportunities in a market that might seem quite mature? It is quite mature. You know that the utility market has been quite conservative, But the changes and the level of transformation that we have seen in the last few years in this environment is unprecedented. We have seen that across the geography by the way, not only 1 or the other specific region. On one side of this chart, you saw you see the traditional way of dealing with transmission and distribution of electricity. One way flow, you have fewer points of generation and fewer points of consumption. That was the past. Nowadays, with all the trends in integrating renewables, leveraging more and more the distributed power generation, it creates a much higher complexity out there in the system. So we have many more points of generation and also many more points of consumption. So what we need to do in this case, as you see, it's not just one flow, it's a multidirectional flow. It's a multidirectional flow of electrons, but also of data. Uli mentioned that in his presentation as well. It's not only about taking care of the assets from the hardware standpoint. We now need more and more automation. We need more and more software to be able to help our customers in optimizing those assets and optimizing the system, so that ultimately deliver efficiently and in a reliable way the electricity to the end users. So that's the big change that is happening out there, which creates a lot of challenges for our customers, but also a lot of opportunities for us out there in the field. Now from a geographical point of view, a few years ago, this might have looked a bit more differentiated. We had different trends in different markets. Mature markets would act differently, would have different drivers from emerging markets in this space. Nowadays, it's less so. If you look at across all the regions, renewables is on top of the agenda. We see that everywhere. We see it in China. We see it in India. We see it in North America and certainly in Europe as you well know. Tied to that, the whole concept about smart grid, intelligent substations, intelligent grid, This is connected to the fact that the complexity requires much more intelligence to run those grids. And that is a trend that obviously we see developing in different ways, but having the same ultimate goal is to run more efficiently those grades. Then you have still some specifics, like for instance in North America, very much the aging infrastructure. Greg will touch on that one as well. In other parts of the world, on the other side, China, still very much focusing and investing on delivering large amounts of power from remote areas where they have either hydro or wind and they have to carry that few gigawatts worth of energy for 2,000 plus kilometers toward the east where the consumption is. So those are trends that we see specific in those countries. And last but not least, microgrid is something that comes up not just in emerging markets, but also in mature markets. Microgrids is one opportunity that we see, for instance, in North America. And again, Greg will also take on that one. So we're able to cover all that, obviously, because of our global footprint, but also because of our offering, because of our complete portfolio. And here is just to summarize, you see on the bottom end, again, you start from the power generation. We have all the technology, power transformers, high voltage equipment to transmit that energy. And we have also the full complete portfolio to manage that transmission of energy with the grid automation. And that's the portfolio that I'm going to touch base a little just after this. What you see also here is couple of examples on what is the value that we can deliver to our customers. Interconnection, we talked about that Europe is at the very center of this transformation where there is a plan on the long term where we want to create a common grid in Europe and interconnecting those grids is a key challenge from a technology point of view. And I'll show you an example, by the way, interconnecting and leveraging also the renewable usage across those countries. Then microgrids, I have a good example there that I'll show and the asset management. Asset management is about optimizing the assets that are installed out there in the grid in order to make those grids operate in an efficient way. And I will touch on that as well. So first of all, we have now in one team, in one division, all the products and components that are needed to do that to deliver that transmission. And we have also all the capacity and the competence and the capability to deliver the systems that are needed many times to deliver a solution to our customers. And last but not least, we end up in having a full fledged portfolio from a service offering standpoint. And also what Uli mentioned, which is very important for this division is given the changes that we see out there in the market, we see more and more customers coming to us and asking for help on how to redesign those grids, how to redesign their own processes to operate those grids in a more efficient way. And that is what we do with the consulting. That is why we're investing on the consulting piece and we combine that capability with the know how that we have on the product side as well as the software piece that Uli already mentioned where Enterprise Asset Management were a very strong player on the T and D arena. So that's the portfolio. Technology is a key differentiator. Uli mentioned that from a group perspective for this division, it's even more so. Innovation is at the core of our growth and also the core of our profitability. Innovation for us is delivering products with the right design, with the right cost basis and also with the right performance that support our customers in a differentiated way compared to other players. And we don't only talk about when we talk about technology, we're not only looking at addressing the boundaries of ultra high voltage. As you know, we are the very first one delivering technology at that level, 1200 kV AC or 1100 kV DC technology. Werner and the team has was the first one in testing those transformers worldwide. It's not just about that. It's also about making sure that we leverage our competence and we design products that also support the smarter piece of the grid and also the greener piece of the grid. So the EcoEfficient, the GIS, the one that actually Uli showed, which was just inaugurated in Switzerland, that's a great example on how can we not only deliver a smaller footprint and a much more efficient way of operating those substations in the middle of the town, but also with a much more eco efficient footprint. And that's what we are driving going forward. Grid automation, as I mentioned before, that is not just about having the protection functionality, the monitoring functionality on the grid. It's also about managing the whole software piece and I will come back to that. It's about the software in terms of asset management, but it's also the software about the SCADA, which is obviously a supervisory control system, also the DMS systems that we deliver to customers in order for them to improve their managing the distribution part of their grids. All of that portfolio is within our new division. So examples, interconnection, 1400 Megawatts. This is one example just announced a few months ago. NSN connecting Norway to the U. K. What does this does? It helps the 2 grids to 1st of all stabilize each other because of the functionality of the voltage source converter HVDC technology, which by the way, I want to remind you that it was introduced by ABB. And out of the 22 installations out there up and operating, 16 have been done by the team in ABB. So that is what helped customers interconnecting and also leveraging the win from the U. K. All the way to Norway to save the water flow. And when there is no wind blowing over here, then they will use the hydro from Norway to put energy into the grids in this country. So this is just one example combining those drivers and those trends that we just talked about. Another one is on the microgrid. And this is a very nice example. It's a small project, but it's very important for us because as Uli mentioned, we're focusing on some key specific growth areas. And this combines the microgrid, which is one of the 1,000 day program that we have at group level together with the Africa dimension. And this is basically making energy reliable and accessible to a small village in the middle of Kenya. They were using diesel generators. You can imagine difficulties to get the diesel up there, difficulty to fix the problems on the diesel generator when it's not running. So what investment here is basically is adding wind and solar capacity into the system and adding what is right at the core, at the center of this slide is the grid automation piece. It's not just about the pure automation and control, it's also adding components that help stabilizing this microgrid, so they can be run-in the same reliable way as any other larger grid. That's what a microgrid does and that's what our technology is supporting in this case. Last but not least, this is a key for us, shifting the center of gravity for us means also leveraging this unmatched opportunity that we have with our installed base. And it's not just about doing more of the same. It's also pushing ourselves to leverage more the software piece that we talked about. How do we do that? Well, we have an asset management part. We have a know how on the products, on the technology, on the core of the technology. And we have the portfolio that help us in monitoring all that, the SCARA systems and the EMS and the EMS that we talked about before. So putting all that together with the key competence of our field engineers out there, of our R and D engineers that understand how a transformer operates, we're able to help our customers not only in optimizing the functionality of the grid and the performance of the grid, but also optimizing the performance of their teams when they go out there and do the maintenance, avoiding shutdowns for instance, reducing those shutdowns, increasing the uptime, extending the lifecycle because if we avoid shutdowns, we obviously do something good for the assets. We extend the lifecycle. So that's one key area. We're going to leverage this to grow on a profitable base going forward. And again, the difference, we will have all this competence now in one team, in one division. So to summarize, I think the big shift is clear. It's there in the market and I hope it's clear to everyone that yes, it creates a lot of challenges, because it's a big shift indeed, but it creates a lot of opportunities. It creates a lot of opportunities for our team, because we have the complete portfolio. We have the technology to support our customers in that transition. It will help our customers in dealing a little easier with us. It's one team. So we can go there. By the way, we have a common front end sales. Uli mentioned that in one of the Q and A. We have a common front end sales. We will maintain that. That is one of our assets. In all the markets we're present, they have the knowledge of our customers and they can share that also across the 2 newly formed divisions. And we will drive that. We will make sure that we optimize the back end and we transfer all those resources and that faster and more agile way of dealing will be a benefit for our customers. As I mentioned before and I will highlight it over and over again, we have an unmatched installed base and we're going to leverage that much stronger going forward. This is going to be one key driver for us in terms not only of generating growth, but also generating profitable growth and differentiating from our competition. And last but not least, obvious, putting together will look for synergies, the We will look for synergies, the whole white collar productivity that J. C. Will touch in detail later on. It's going to be part also of our journey going forward. The net working capital that Eric mentioned is going to be a key element for us to improve our performance. So we're going to look at synergies on the back end, certainly on the engineering side, on the supply chain, on the logistics, also on the R and D, but also synergies on the front end. As I mentioned before, we have a common front end sale and I think we can leverage that much more going forward. So in a nutshell, why is this going to be better? It's going to be simpler. It's going to be simpler for ourselves internally and it's going to be simpler for our customers. And we're going to drive that simplicity hard. And last but not least, we're going to focus on our resources in order to get the growth there, but at the same end at the same time on the back end to grab the productivity out of this new form team and push certainly for the profitable growth. With that, I can then hand over from the transmission side to the distribution to Tarek, and he will take over the journey to the point of consumption. Thank you, Claudio. Good afternoon, ladies and gentlemen. It will be my pleasure to give you a perspective on the new Electrification Products division. You heard earlier in the day, it's power and automation for the sites. And I've stood up here as the Head of Low Voltage Products Division quite a few times to explain to you the strategy, the direction, the results, what are we planning to do and also when we were discussing the Thomas and Betts acquisition and integration. But let me take a few minutes to give you a perspective on medium voltage. So the new division is actually the combination of low voltage and medium voltage. So here is a perspective on medium voltage from a portfolio point of view. This is Bruno Melas, who runs the medium voltage business and his team. This is how medium voltage has become the highest market share leader in the medium voltage business on a pure play basis. This portfolio and the approach of developing solutions, which have embedded intelligence, so that the wind farms and the solar panels are effectively connecting into the grid to make sure that bidirectional flow of power is possible in a more efficient way is a key part of the portfolio development for medium voltage. We've talked about the eco efficient products. Bernhard mentioned that from an investment and from a press perspective, we had given you a very good overview on how the echo efficient really supports ABB's power and productivity for a better world. So here is a medium voltage team that has leveraged technology across ABB. When we talk about China and India, you must design in those markets to cost, not to features, not to performance, but it must be designed to cost. So the success of medium voltage is based on a portfolio, which delivers across many dimensions of performance. And with that, let me take you through what does this new division do. From a portfolio point of view, from an offer point of view, and in order to explain it to you, let me take you through a small journey. This is a visual image of the portfolio, but imagine not imagine, you probably did wake up this morning and push a button to turn on the lights in your room. That was us. So if you have a nice apartment or a house, you walk down to the kitchen or you walk over to the kitchen, you open the refrigerator and find out the light is not on. That's us. The reason the light is not on is because the low voltage product portfolio managed to ensure that when your son or your daughter experimented with electricity, put things in the socket which you shouldn't, which happens to all of us sometime in the life, We managed to protect both the people and the assets. You go down to the basement, you open up a cabinet, you hope you never have to open, But there you see a miniature circuit breaker, which clearly shows that it was tripped. And because of ABB's selectivity, competence, only part of your apartment or house was dark. Then you flip the miniature circuit breaker and then you move on to the garage, hopefully after you had a good coffee and a good breakfast. And then you disconnect your electric car. The charger infrastructure is us. We provide the protection. We provide the delivery. And in very often cases we also provide the system that monitors the distribution of electrical charging infrastructure. You go to work, if it's an office, you go into a garage and you walk into a beautiful building, temperature, its light, its comfort is something that we manage as ABB in electrification products in our building automation part of the business. If you happen to be in a factory, the entire power coming from the grid all the way down to the socket that you use for a small fan or to plug in your iPhone, that is us. So that gives you a perspective of all of what is electrification products. So from the connection coming into a data center, which can be 20 to 30 megawatts, which does require a medium voltage distribution control and protection scheme, all the way down to a plug or a socket that you use to charge your iPhone, that is electrification products. So from a portfolio point of view to an attractive market perspective, let me give you an idea why we believe the market is interesting for us. From a renewables perspective, the growth far exceed the normal GDP. So the combination of low voltage and medium voltage provide a significant amount of the value chain of a renewable connection from a point of generation to the point of consumption on both directions. When you look at electrical distribution in industry, very much focused on safety and performance. That is also where we have a portfolio that ensures that people, assets and your processes are protected. When it comes to buildings, between the green building codes, the push for efficiency and to ensure that renewable power is used for as much of the building's energy consumption as possible, we are also there, both with building automation solutions, but also with the capability to manage multiple sources of power and generation and storage in a building site. So with all of these attractive markets, with the portfolio, we are well positioned. We are number 1 in medium voltage on a pure play basis on a global scale. We're number 2 with a breaker portfolio. The breakers are an important and critical ingredient for power distribution and automation. It is one of the key elements of the entire infrastructure. Scale, competence, capability on the breaker technology provides ABB with long term sustainable competitive advantage. Because with that critical component in the scale that we have, with the technology that we have, with the innovation that we have, and I'll go through an example of the innovation, it provides us with a competitive advantage, All of which puts us into a global top 3 player when it comes to providing electrical products for electrical distribution. Channel partners, electrical distributors, wholesalers, they go by many different names, but they are a critical component for us to deliver excellence from a logistics point of view, technical support point of view, and from a competitive advantage point of view. So with attractive markets addressed, hopefully, you understand that we are well positioned, but we also have clear competitors. So what you see in front of you are what we consider as our global competitors. We have many local ones, but these are the ones which we believe we match up well against, and they are on a global scale of our key competitors. So with this, we believe we have a market leading portfolio that's geared towards high growth markets. So walking from markets to how we deliver. So here is the approach of how ABB goes to market. It's not only electrical products. It's also in many ways, one out of every $4 of ABB's product business goes through distribution channels to the end customers. So here you can imagine a combination of low voltage and medium voltage. Imagine, you are an original equipment manufacturer that provides equipment to a desalination plant, then you need both medium voltage and low voltage components. In the past, you had 2 salespeople visiting you with the technical competence, with the ability to cover your needs. In the future, you can imagine, we will train so that one salesperson is visiting you, meeting your needs. Same holds true for a distributor because our coverage in low voltage is so much more extensive than the coverage we get with our medium voltage and front end sales. We can leverage the exposure to the end markets and possible points of sale by taking advantage of our low voltage channels to sell medium voltage products. And conversely, we have the opportunity to sell our low voltage products through the medium voltage channels. So let me give you a specific example of how we have accomplished this in a country hopefully you all know, China. So here is an example where the low voltage products team and the medium voltage products team managed to cross sell the product portfolio. And by cross selling the product portfolio, we got a double digit million increase in sales last year. When I just checked 4, 5 days ago, we are on track to actually grow another 5%. So even in a difficult market, the cross selling represents a very good opportunity for us to leverage the channel access to drive growth, both on the medium voltage side of the portfolio, but also on the low voltage side of the portfolio. So moving on from cross selling to growth, shifting the center based on organic growth and penetration, let me walk you through the example of Thomas and Betts. If you remember, we added Thomas and Betts to the family in 2012. Chuck Treadway and the team joined ABB, and we've been very happy with the financial returns and the targets that we originally set that we were able to meet. With that, if you remember, we said one of the potentials we had from a synergy perspective was to leverage ABB's organization. ABB's sales channels and access to sell the Thomas and Betts portfolio outside the United States. So what Chuck and his team have done over the last 2 years is to actually develop a portfolio for that channel to sell, that access to take advantage of. And I'm very happy to report that in the first half of the year, after having 2,000 new SKUs to sell, we are able to get a double digit growth in the Thomas and Bets business outside the United States. So we are now right on track to double the business that is outside the United States for Thomas and Betts. So going from penetration example to technology and innovation. Let me walk you through, remember we mentioned the breaker being a key component. Here is how innovation can propel us into power and automation for site. So here what you see is an EMAX breaker developed by Jean Piero and his team. It was an electromechanical device whose job was it to protect and control power. But the team decided to make it into a smart device, into something which has more intelligence. So there was embedded hardware and some very specific software and a lot of application knowledge, which translated for Ecuador State Oil Company into a very nice application for them to increase the reliability of their oil drilling rigs throughout the country. So this is an example of how the protocol, the intelligence, the power distribution and control capability embedded in a device that was electromechanical, converts it from a power device into an automation device. And that value is recognized by Ecuador State Oil Company, and they gave us a very substantial order in order to help them get the reliability of their entire system up so that their generators and their oil rigs keep running on a continuous basis. So this is a significant impact from a customer point of view. So moving on from innovation, growth to execution. So let's take a look at relentless execution. Now we talked about relentless execution last time. Here is an example of how we took 3 components of the value chain. As an organization, we said what is the maximum we can get out of it in a very short period of time. So we took a look at marketing, manufacturing and supply chain management. With the effort of the team, I'm happy to report that before the end of this year, we will realize more than $30,000,000 of savings in 2015. Now such an effort provides us with a strong foundation to say now not only do we look at 3, but why can't we not look at the entire value chain? So of course, looking at the entire value chain means we can also address one of the requests that Erik Elsberg has, which is can you reduce the amount of net working capital? Can you look at what happens between the different segments of the value chain and do you find ways to do you find buffers, do you find a better coordination opportunity, can we be more productive? Can we work with the suppliers in a way that is integrated with our needs on the financial side? So we use less capital to deliver the same profit and the same performance that you're used to. So here, it's the foundation that we have built in 2015, which will be the launching platform for us going forward into 2016 2017. So really focus on the white collar side, taking into account the entire value chain. So another example of relentless execution, you remember last year, we talked about the regional distribution center in Singapore. I'm very happy to report after 12 months of operation, if you were a customer, hopefully you are a customer today, but if you were a customer in Southeast Asia for electrification products, low voltage products to be more specific, you would have seen an increase from 5,000 single kitting units available on stock to meet your demand up to 20,000. So we've tremendously increased the availability of the portfolio for quick shipment. That has led to an 80% reduction in lead time. That has led to us meeting 80 environment where we measure externally the customer's perception of our ability to serve them, the customers are twice as happy as they were and are willing to recommend us twice as much as they were a few years ago. So learning from that experience, we're going to translate that into something that we do in Dubai, something that we take a look at in Southern Europe and certainly the challenges of South America are something that we feel very confident we can attack, given the logistics platform that we are building here. So this is on the execution point of view. Let's move to the customer perspective. This is an example that we are especially proud of. If you are a customer of ABB, over the last 2 to 3 years, Bruno Melas and Sanjeev Sharma, 2 business unit leaders in 2 different divisions have collaborated to take a business where the requirement from the customer was very clear. They want one point of contact for low voltage and medium voltage solutions. They wanted one order, one process, one invoice. They wanted one place, one organization to go to for has resulted in a $400,000,000 growth over the last 3 years. That is just the beginning for us. Now that both teams are part of the same organization, we will plan to leverage this kind of service and performance in every single market where we see the need. For all who want the pre engineered package, we will have not only the ability to deliver what we have been in the last 2 to 3 years, but we can also think about integrating the products so that they work even more seamlessly across the portfolio. So that gives you, if you are a customer, easier access to the portfolio. So with that, hopefully, I have managed to give you and we as a team have managed to provide you with an insight on how the new division will provide value from a customer point of view and drive performance from a growth perspective. So in summary, we are very excited about the combination. It's something many of our customers have asked us for. We're happy to meet with a structural change the needs of the customers, which is can we get low voltage and medium voltage products, solutions, pre engineered packages and services out of 1 organization, efficient, quick, fast? Can you be easy to do business with? Yes. We will sell the way the customers want to buy. The combination of a world class medium voltage business, which over the years has proven itself to be far ahead of competition from a performance point of view, with a very good low voltage products business, that combination will be the best team in the industry. We are absolutely sure that this combination will be great. It will provide us with fantastic opportunities to serve the customer, address the cost, take a look at the scale, take a look at where there are synergies from an efficiency point of view. I mentioned 1 on the sales side, but there are also footprint synergies. So this team, I'm confident, will provide a very good leverage and platform for us to grow. And this is really built on a strong performance culture. So medium voltage has a long history of good performance and low voltage business even when I started, I inherited a business which was very strong and very good, and the team has done a very good job to scale that business up from where it was to where it is today. So with that, hopefully you're convinced, I am convinced, the people that we've spoken to over the last 2 days are convinced within the team that this is the right move forward for not only ABB, but also all the employees. And specifically, we believe within next year, the customers will also experience the same sense of excitement and energy and enthusiasm that we have for it. So with that, I think we are well positioned for growth, and I hand it over to Alana for the next part. Thank you. With that, we're going to take about a 15 minute break because I'm sure some of you are starting to fall hopefully not fall asleep. Maybe you need a coffee and a bathroom break. So just a quick break before we have the rest of the session of today, and we're excited to take you through working white collar productivity, the Americas and then the closing remarks and the Q and A. Thank you. With that, I would actually like to introduce JC Dillard for the next presentation. Thank you very much, Alana. Good afternoon, ladies and gentlemen. Stage 2. Stage 2 is an exciting journey. And our 1,000 day program, White Collar Productivity is part of it. So let me explain to you what we want to achieve. Yes, we want to achieve a $1,000,000,000 saving, you understood that, by the end of 2017. 2017. But in particular, we want to achieve a big transformation. So the $1,000,000,000 is the result of it and not a means in and of itself. I want to start telling you that over and over again in the past 6 years, year after year, we've achieved a $1,000,000,000 cost saving in focusing on supply chain and operational excellence. Now the new program called White Collar Productivity comes in addition to these savings and is focusing on our 100,000 white collar employees. Indeed, that's approximately 70% of our entire workforce. We will look at the opportunities in a systematic approach and this in particular in 3 buckets: in business functions, which we want to render more effective and efficient in support functions, in particular by means of global shared service centers and thirdly, by simplifying our organization. So let me go through these 3 buckets of initiatives. I will start with the business functions. And in the business functions, which typically are marketing and sales, R and D and supply chain management. I will take each of these three functions to explain what we intend to do. Starting with marketing and sales, we today have a quite fragmented organization as a result of the many mergers and acquisitions over the years. We want to consolidate the back office in order to be able to have our salespeople more in contact with our customers. We want them to be in a position to spend more than 60% of their time with our customers. Now face to face is not sufficient. We want to increase also the channels through distributors, but also through digital. And all of that will increase the productivity of our sales force, which is 20,000 people strong today. We will have all our customers being served with a better mix between the various channels and we will have a streamlined organization. Now that's not an easy undertaking through our 20,000 employees. So let me just give you a couple of examples how we want to proceed. We want to standardize and automate our platforms. We want to make sure, as I said before, that the back office is as effective, as efficient as possible so that our colleagues can spend really the majority of their time with the customers. In doing so, we will deploy a global platform in order to make sure that in an automized manner through e based tools, We have quotations that are possible, to give you an example, pricing possibilities and serve, hence, our customers better. One example is salesforce.com that we will implement throughout the 90 countries. As an example of what has happened already, we have launched 6 pilots. And by the end of this year, we will have implemented the tool across 30 of our countries. Let me move to the second function, R and D. Now Eric said it before, R and D is hugely important to us. So we will continue to invest importantly, and you've seen the figures before up to close to 4% of revenues. So the question is not about reducing the R and D investment. It's about how we invest, how we drive the R and D function. And in this respect, we have to look humbly at where our R and D locations are and we have 260 of them today. The idea is to move the majority of our employees to 20 locations. 2nd, we have developed lean R and D with quite some success, for example, in the DM division. So we will take the learnings in this respect and move them across the R and D organization. Thirdly, we have developed R and D programs essentially in our various work streams, meaning businesses. And we believe that we can lever better our spend in looking at the core markets there where we can have most profitable outcomes and look hence through the entire portfolio across ABB. And that is the 3rd lever, which we believe is important in R and D. If we develop these three initiatives, we plan to have a 20% more productive function, and we will move roughly 500 additional scientists in our growth markets, like the U. S. And Asia. As a proof point, you've seen that Basmi Hussain has just been nominated Indian and his base will be in Bangalore in an office in Switzerland, but he will be based out of Bangalore. An example in terms of the complexity of this implementation, but also a proof point of how we believe this will be possible to implement is the Indian R and D center, which we have set up. We today have more than 850 software engineers in this center. Now to be in a position to do the moves that I was explaining before and look at approximately 100 R and D centers that today are subscale in terms of their size. We will have to transfer, recruit and also train approximately 1700 of our colleagues in the R and D function. We will increase software, in particular in Bangalore and Croco. And our aim is also to establish footprint in the Silicon Valley. I move now to the 3rd function still in the business function effectiveness and efficiency improvement bucket. Supply Chain Management in 3 areas. 1st, we want to set up 10 centers that are focused on logistics. So imagine like the flight control center that looks at all the material moves and is making sure that these are as effective as possible. And we have one pilot. I'll speak about our Chinese pilot just in a moment. We today have 1 third approximately of the entire supply chain management workforce that work in transactional activities. These today are only in a few shared service centers. We want to move them into shared service centers so that 80% of these activities are in shared centers and I'm going to get to these in a bit. And finally, we want to manage our spend globally. Today also as a consequence of the mergers and acquisitions, we are too much in silos, if I can say it in a humble manner, and we want to leverage our big scale. In doing so, we will have, according to our plans, approximately a 20% more efficient function and we will reduce by 30% the transactional resources. An example there is our Chinese logistics centers. And we take that as a pilot. I want to create 10 similar centers as I was stating before. Now the results in China are very encouraging. More than 30% improvement in resource efficiency and the freight cost were reduced by more than 40%. So let me move now from business function effectiveness and efficiency to the next lever, which is the global shared service centers. You see that we have today 68 shared service centers, and we want to move to 2 global and 4 regional shared service centers. That needs clearly more standardization than the 20% approximate standardization we have across the various processes in finance, HR, in IT, in transactional supply chain management. Indeed, in the next 24 months, we want to increase that by more than 50% of the processes. Planning these initiatives will mean that if I take the entire cost of the today's 68 shared service centers, these costs will be reduced by 30%. Not only do we plan to reduce the cost, but through the standardization and automation of the processes, we will also increase clearly the quality of the service delivery to our various businesses. Let me here again tell you that, yes, it is a challenge, but we have very good examples of progress. A challenge in the sense that we will have to lift and shift the colleagues who today work in shared service centers across the various countries, the 68 centers I was talking about before. We will have to recruit, train and not only transfer people and finally create a global business services organization, whereas we work across the functions and not only function by function in the shared service centers, across the functions with 4,000 colleagues. Now we have a fantastic example. If you have visited Krakow, you know how intense this city is, how young it is with the many people who are excited to work for companies like ours. And we have today, if I take just the IT function, 700 people who work in the shared service center with a 50% increase of efficiency, 50% increase of efficiency. So that gives us the confidence for the execution of the shared service center plan, not only in terms of the cost reduction, but also if I look at the result of our surveys in terms of quality in our Krakow shared service center. This brings me to the 3rd level, the market oriented and simpler organization. We today have 5 divisions. We have 23 business units and we have 125 product groups. We also have spans in control that are too narrow. And in some parts of the organization, we have up to 12 layers. We want to and you've understood that from preceding presentations, in particular, Ulys, we want to reduce the complexity in terms of organizational units and also in terms of layers, and that roughly by 20%. If I look at the headquarter, we have sort of a mix between the traditional headquarter where you would find strategic activities, but we also have colleagues who are working on transactional processes and we even have quite a number of business leaders at the headquarter in Zurich. We want to make sure that we move from this head office to a headquarter that is focusing on strategy, governance and control that we move the business colleagues closer to the businesses, there where we make the difference with the customers and that the transactional processes are put in the shared service centers I was talking about before. So if we get that 3rd bucket right, we will have business leaders closer to the customers. We will have near term savings and a leaner headquarter focusing on strategy, governance and control. Now as an example, again, we've worked on this already in stage 1 of the next level organization. Indeed, right after the Capital Markets Day a year ago, we worked on nominating 1,000 people in the top 1,000 positions. We have clearly defined what we call undiluted business line accountability, P and L accountability on the one hand. On the other hand, we reduced from 8 to 3 regions and gave to the countries a clear mandate of customer relationships, fiduciary tasks and shared service centers responsibility. So we here also are confident that we will successful in implementing the market oriented and simpler, more agile organization. Now that's the what, these three levers, right? Business functions, more effective, more efficient the shared service centers global and regional and a simpler more agile organization. Now what about how we will achieve it and what makes us confident that we will achieve the $1,000,000,000 saving? Well, first of all, the execution discipline. And for sure, we have examples, great examples. We have a track record in this respect amongst others in supply chain and operational excellence. 2nd, the pay for performance. Uli explained it before this morning when going through our new compensation scheme, which allows us to incentivize our colleagues not only from a company standpoint, but linking all our colleagues to individual targets to render them really accountable for their achievements. We also want to make sure that the accountabilities are set at the top. So the $1,000,000,000 that we're talking about is being divided by executive committee member and that's where it starts in terms of accountability. That's also the level where the reporting will happen within the Executive Committee and to the Board. And these objectives are obviously also linked to the compensation. These are the 4 summarized elements that make it into our implementation plan in order to achieve our targets. Let me summarize the white collar productivity program. Next level 1 makes us confident because we have achieved already much of the various examples you have seen in my presentation. Next level 2 is focusing on the 100,000 white collar employees, 70% of our workforce. We will have a more focused organization on customers. We will be more effective and more efficient in business and in support functions. We're presently, obviously, in contact with our stakeholders. In fact, just minutes before joining the conference, I was with the full European Works Council on the phone, because at ABB, we work always together. It's together with our partners. It's together in teams that we achieve our results. So yes, ladies and gentlemen, you're well understood. We want to transform our company. We want to bring ABB to the next level. So thank you very much for your attention. With that, Greg, over to you. Thank you, Jean Christophe. What I'd like to do as we summarize in this next presentation is take a look at how the regions and countries or in other words the markets are living next level strategy stage 1 and now stage 2 in action every day. And second, really come back to the growth framework and show how we use this in the local markets to drive penetration, innovation and expansion. And with that, how we identify the growth segments because the market is dynamic and it's one that we constantly have to be in touch with reality. And then 3rd, I'll touch on how white collar productivity after JC's talk affects the region and what we're doing to drive those kind of cost savings. So let's get underway. 1st, looking at the market itself, and you've heard it mentioned from my colleagues, the kind of dynamics we have in the market today. On the utility side, in the Americas as featured here as the region, the renewable is very active, whether it be wind or solar. We're also seeing grid build outs in more of the emerging or South America area, but a lot of grid changes in terms of even the mature markets. Why is that? It's not just the renewables. It's things like in the U. S. Coal is being decommissioned and gas power plants are coming on with the shale gas lower cost and the EPA regulations on coal. And with that is a grid going through change and rework, which is good for ABB because new connections, new points of generation, new transmission, new distribution needed. A lot of activity on the digital side, as Claudio mentioned, and I'll come back to microgrids. On the industrial side, we're seeing a lot of activity around reindustrialization in the U. S, but also in other countries. Take Mexico. Look at what's happening in Mexico right now with energy reform, with what's happening with automotive, food and beverage and a lot of resiliency in terms of how markets are responding in North America. Energy and operational efficiency stay on the agenda at a very high level, plays very nicely to the value proposition that we bring in ABB. On the infrastructure side, I think the U. S. Has been the market that's seen massive data center build outs. Those data centers are getting larger. What's becoming now a bigger and bigger load for the grid and it's not just about the data center, it's about the grid connection. And that also plays nicely to the ABB connection with our utilities and what we need to do with our customers as some of the larger data centers now are 300, 500 Megawatts, which to put in perspective, 500 Megawatts is half of a nuclear power plant output with one major or mega data center. A lot of electrical transport going on. We have that taking place in automotive, which is a growing area for that application, but we're also seeing it across electric rail. I was recently in Bogota and Colombia, a full program to do electric buses across Bogota with converting the diesel buses over to electric and we're seeing more and more of a move towards urbanization. And underlying all this is the Internet of things, services and people, which is a trend that will continue. And that plays into our installed base. Just in the Americas alone, we have over 100 $1,000,000,000 of running equipment, whether it be automation, power or systems that's out there. And we've cataloged where this is and we have a transparency rate of about 2 thirds of that installed base we know where it is by customer name, by location and now the connection of those smart devices as they come through into these new value equations. So looking at the growth framework, I think what you see here is the stage 1 kickoff last year at Capital Markets Day of what we're doing around the 3 core pillars continues. And now we accelerate the transformation that comes from this. On the profitable growth side, it's really the job of the countries and the region to really drive that organic growth, especially across the business lines. As we look at customer touch points that we have in common, this is an area that we should see higher growth. Identify market by market those high growth segments, I'll come back to some of those in just a minute. Getting even closer to our customers, which is a very local activity and we count on the countries to really drive that local Net Promoter Score feedback that we get in terms of how we're serving our customers and improve that every year. In the Americas for the last 5 years, we've been improving Net Promoter Score every year and also we've been doing that at the group level. And that's something that is the voice of the customer very, very important. Driving the changes that come through the 1,000 day programs there, we have 4 market facing as was mentioned earlier, and we have 3 that are really driving networking capital and cost savings. Looking at the collaboration, this is a real key for me in terms of where I see value coming is how do we take those business lines and find the right connection points to drive the additional growth that can come from working together. And I've got a number of examples that I'll go through. Really 3 themes come beyond the end market segments. 1 is around account management and really teaming up with the customer especially on some of our larger accounts. The other is around the go to market strategies what we call channels. And the third is around project pursuits. And I'll show you some examples of what we've been doing in each of those areas. So when we think about the heat map framework and what we use in the countries and by the way this is the same framework that we use in the executive committee every month to track in our growth board the strategic aspects of this. But down at the local level, we track it in the countries to see what's happening in terms of the results in a country. And so what we do here is we map our current position in terms of where we have leading market share. Here it's not shown as market share, but I'll just say it's green. Green would say we have a strong position typically 1 or 2 in that category that business line against that segment. Yellow would say it's a medium position and red is something that we haven't penetrated yet or at a very low level. And the fastest way to grow is take customers that already buy things and sell more to them in terms of other business lines, other business units. So we really look to see can we team up with those customers and drive more growth where it's green, make it greener across more business lines. Yellow, you already have a presence. Can you improve it to a green? And red may take a little more time, frankly, but try to get those to turn to yellow. And what we do is we align and focus the business lines and units against what are the priorities. And we also take an external view, how big is that market, how fast is it growing, what's the profit pool to really understand where we can create that kind of growth. This has been a breakthrough for us in the countries over the last 18 months because we have a common language. It sounds simple, but we have a common language to talk about market segmentation, priorities and resource deployment, which is really key. We do this monthly. We go through this framework. We measure our progress. We look at the shifts in the market as to where we're going to reallocate resources, where we're going to push on various growth initiatives and then we stick to it and track and follow-up. So one of the themes that we're seeing and on the industrial side as well as somewhat on the utilities, distributors become a very important partner for us going to the market. And the acquisition of Ballard and Thomas and Bets, not only do we buy very good product companies that have good market share and very good margin, but we learned a lot about accessing markets. Whereas ABB, we have been quite strong in a number of areas. I'd say this was an area we lightly penetrated to some degree in Tarek's business, but not to the full degree of what the opportunity holds for us. So by taking that knowledge from Baldor and Thomas and Betts and some of the best practices within ABB, we've really designed this as a growth area where we can bring bundles of products together for distributors that either serve industrial customers or utility or maybe even installers or contractors on infrastructure. Now where we might have hundreds of customers in a market, distributors would have tens of thousands because they're very local in terms of how they do it. And for instance, I was in Chile and Chile is a huge country if you look at it from north to south. It's longer than from Miami to Maine. But across that, we met with 1 distributor has 10 branch locations and 80 outside salespeople, because there's a series of local markets in Chile that those customers have relationships with those distributors. And the more we can penetrate those distributors, the more we can serve those local customers. And what really happens there is now we've taken and really simplified the ABB offering. And in that offering, we've said here is the basket of products that fits well through distribution to go to your end market. And with that, we work across the organization. And what we're seeing is this area is growing at twice the rate of GDP where we focus these programs for these distributors with very good points in terms of where the margin is because a lot of this is bought on speed, convenience and service. On the large accounts, which we call group accounts, which are global or strategic accounts, which might be more local, in the Americas, we have over 40 customers that we've named and designated our best sales resources to that cover the full scope, the full offering of ABB. And their job is to really get to know that customer inside and out and map with again the heat map process, how can we do in penetrating that customer even more deeply. So this example I use here is with Caterpillar, well known company, where we've sold many things to Caterpillar. And now 1 by 1, we're taking the business lines and say what more can we do together? And we had a breakthrough recently where Caterpillar worked with us and said, hey, look, you have a great line of motors and we're used to selling engines. And what we want to do is be able to offer our dealer network, virtually their distributors, those kind of motors that can be a complement to our gas fired engines or diesel fired engines. And so now CAT has gone so far as to brand label our product and use their dealer network, again reaching many customers through their local network of strong relationships. And this is exactly the kind of example that through these heat maps, we expand and penetrate into those customers and we're doing this as I mentioned with our best sales guys and we track and really measure how we can grow even more. When we look at the project activity, it's very, very interesting. I've been in the industry for over 30 years in the U. S. And watching the energy renaissance that's going on here with shale gas has been amazing. And even with the oil price, although maybe some upstream things are a little bit changing, the midstream and downstream still very active. And so what we do not just on industrial projects, but on utility projects as well is we identify these projects very early in their announcement in their cycle and we sit down with the end customer and talk about how can we partner with you to address the things that really drive value for you. And if you see some of the categories there, it's about managing risk on that project for our customers, capital efficiency, how do they get the equipment optimized, so after the project's up and running, they can train and more easily bring their maintenance and operation staffs online with these large expansions, schedule efficiency on the project itself and really making sure that the start up goes on time and on budget. And when we sit down with the end customers very early, this is an example of where we did this in Lake Charles, Louisiana for Sasol, which is a downstream chemical plant really taking advantage of the lower price natural gas as their feedstock. What we did here and what's really interesting about this is we were involved with the end customer 18 months before the project came to anything being procured. In sitting down and understanding the customers' needs and mapping across all of the categories of ABB, all business lines, here we have 4 divisions playing in this particular pursuit, which includes over 12 business units. And 1 by 1 looking at what we can do together and then providing that kind of team that helps the customer be successful on the left hand side there with what you see with these key value drivers. We have identified growth segments that are very attractive for us. 1 in particular is food and beverage. It aligns with our 1,000 day program. Why is this so attractive? Well, if you look at food and beverage, typically the capital spending year after year can exceed automotive. And automotive having the cycles, which is also a good industry for us and we like when the cycles are up, food and beverage is rather steady. And diversifying and really penetrating this particular industry more deeply fits so nicely with what we do. Why is that? Well, customers want power reliability, power security in running these plants. They also want automation in terms of what they're doing. They want energy efficiency. And there's a fair amount of validation required here in terms of food safety and hygiene and things like in the U. S. The FDA requirements. So there's a sophistication that comes with your control systems that can help you really go after this. And it fits very nicely with our overall value proposition in terms of how we can collaborate and go after it. So we're doing a lot of automation especially on the packaging and then working back up stream, but also on the power side. And the example here with Nestle in Mexico was really helping them address the power requirements for some big compressors of ammonia where they wanted not only lower energy cost, but higher reliability due to what they were working with and what they were compressing. So we wrapped it together with savings in terms of what the energy savings can be and also the ability to service the equipment, which became really vital for what they're doing. So taking a look at another one of our growth segments is certainly microgrids. And we're at the front end of what we see happening today in many markets on microgrids. And as you look at this, you might see this in a remote area, but you might also see it in an area that is looking for power, security and reliability. Areas like New England, New Jersey that was hit by Hurricane Sandy, we're in discussions with our utilities and local municipalities that are saying we want to have some degree of assuredness around what can happen with power when a storm or something else happens. Also on the U. S. Government side, which is really around power security again. This particular example is an island off of Alaska, Kodiak Island in particular, where they installed wind to bring power to an area and certainly have it more secure, more renewable and local. But what they found as the 15,000 inhabitants then could get their energy from this, as they turned on the port with a larger crane, the load of the crane would pull down the grid. And so what we were able to do is go in and it's much like Claudia was saying and it's a great example of it and really sit and consult with the customer about how we could solve that problem both on a control system and also on the alternative power needs here with battery storage and a flywheel where battery storage through our power conversion and power electronics we can tie to the batteries and that will give you longer running time if the wind dips or if the crane asks for a lot of load. But at the same time, the flywheel gives you instantaneous pickup for huge demands on the power from a peak standpoint. So this became a creative example of exactly how ABB's value proposition across multiple businesses can come together to solve customer problems. You've known rail is a growth area for us. I mentioned it earlier what's taking place in rail. And certainly, we're seeing more and more of this. What I wanted to highlight here is not just our actions that we have in our rail focus on the car builder. We're inside the actual propulsion, well, the motor, the converter, the transformer or on the connection to the grid, we'll have the wayside connection. Energy would go off in mechanical energy or heat. What we've now done is made that an electrical conversion. So we're able to use regenerative braking and bring that energy that would have been wasted back onto the grid and save it for the future. And so what we end up now is a much cleaner setup in terms of energy efficiency. This was outside of Philadelphia at SEPTA, which is the local transit authority in that area. So taking a look at Internet of Things services and people, we're doing a lot in this area. Uli talked about the cloud that allows us to bring in the data across all our business units in a secure way and also the analytics that we're running on that. But in addition, not only are we doing this product by product, but new ecosystems are being created in terms of how we work with the customers to create different business models. And I thought this was a great example to share with you. In the marine industry, whether it be on cargo or cruise, on the ship is quite a lot of ABB equipment, whether it be the power grid on the ship, whether it be the propulsion system on the ship or maybe even the control system. And with that, we have the ability and the intelligence to connect that back to not only the owner's operation center, so they can see how the ship is performing from a maintenance or an operating condition, but we can also map that together with weather data which is what we've done. And with that weather data, we can look at how the ship's route coincides with where weather or seas may be changing. And we can also then give information and add more value about rerouting, saving fuel efficiency in the 1,000 of dollars and also looking at the improved uptime that can come with knowing the diagnostics of what's taking place on that particular ship. So this is a great example of how business models will evolve and ones that ABB is leading. Now coming to white collar productivity, JC did a real nice job of showing the many dimensions of white collar productivity across all of our different employment areas out there. And what I wanted to do is just touch on a little bit. Now what does it look like in the Americas region? So if you look at us today, we've acquired a lot of businesses. We've brought in different ways of doing things. One of the real benefits here is to drive standardization and to really look at getting efficiency and scale. And it's to get the scale, you have to have some type of standards and driving that across especially our back office with our AP, AR, our HR and our IS systems, we'll be able to move from 9 to 2 centers in the Americas. And this unlocks a lot of the savings that we've talked about in the earlier presentation. We'll choose those against lower cost locations. And we've already started doing things since we kicked off last year on the areas of what we can save. And one of the areas that we said we don't need to wait, we can get going right in the U. S. On a payroll system that cuts across. And so we've already launched and we're well underway with some of those wins in that area. So then bringing it all together in summary, what I'd say is you can feel that on the ground in the markets, in the countries, in the region, stage 1 is in place and now we accelerate the transformation in Stage 2, driving growth and finding those opportunities with the process that I mentioned. And I think that's really taking hold and creating some good momentum. And at the same time, driving productivity on the cost side, so that when you sum up what you can see going forward, strong growth and also lower costs. And I'd like to thank you for your attention and turn it back over to our CEO, Ulrich Biessefer. Thanks, Greg. Thank you. So ladies and gentlemen, it was a long day. A lot of documentation on what we say for the future in the morning and some proof points on what we do in the afternoon. I think Harak's Peter's sorry, Thadio's presentation together with Greg supported by J. C. Gives you a feeling that we have not only the idea that we could be doing something, we got pretty granular plans worked out to really address the opportunities in the next stage of next level quite swiftly. And we are far advanced, for example, in our 1,000 day programs, both on the growth and on the operational side. So to close out, what did we really say today? We delivered on stage 1, and we are ready to transform the company and to drive acceleration in next level stage 2. Profitable growth, shifting the center of gravity of ABB has been the theme last year and it will be the ongoing theme. But with a different emphasis, the realignment of the divisions will give us a really strong platform to be even more customer focused. And I think Claudio and Tara did a particularly nice job, how it will all come together and why we are convinced that it will create additional value for our customers, for ABB and naturally also for you as our shareholders. We will be cautious and disciplined on acquisitions, but we are ready to engage in a meaningful way at the appropriate time. The partnerships, you can see now how they really come together, Storage based solution in an environment of microgrids is reality today, and we already get the first benefits, but there's much more to come in the future. We know we have to earn the rider to serve our customers every day. And that's the reason why a strong focus of the next stage of Next Level will be on execution. And you are seeing we are firing on all cylinders. Our Chief HR Officer has documented that he has his feet deeply on the ground and will be really leading this exercise on white color over the next couple of years during quite some difficult times that we appreciate. But you have also seen the consultative approach that we will take, working together with the Works Council and do this in a responsible way, how we have addressed people all the time in ABB. Eric's approach to take €2,000,000,000 working capital out will work this time because we got a much more granular approach to it and we really address the supply chain end to end. It might take a little bit longer to make a fundamental change, but then it's there to stay. And if we take the organizational simplification, the journey that we have embarked on, I'm really proud that the team has held together and has now engaged on the next level. There is no fallout. There is good working relationship amongst us. And on the next level and the levels down in terms of collaboration, in terms of changing ABB, I'm very concerned to take our customers and our people with us on the journey that we're embarking on. I think that's the most important element that we really should never let out of the eyesight of ABB. We have seen continued leadership development. We are bringing in selected people from outside, but mainly the way of developing leaders in ABB is from my inside, and we have a good mix of externals and internals today represented in the most senior leadership teams. So let me just repeat what is really our value proposition to you. We have demonstrated, I think, today to you that we are really a pioneering technology leader that is well positioned in long term attractive markets. We acknowledge there is short term ripples and waves, but long term, we are positioned in a really good way. Our transformation agenda is consistent. It's clear. We're taking the entire organization with us and people are more mobilized than before. We will build a future on our strong balance sheet, and we will not let you down and take undue risks in this area, and we are committed to deliver attractive returns. So we will transform ABB, we will deliver on our commitments, and we need to ensure that we unlock the value creation potential of this company. Thank you very much. So we would like to reduce the opportunity that you can address questions and comments to the speakers of this afternoon. So you give us 2 minutes. We need quickly a small logistic change here. And whilst we're doing that, invite the speakers of this afternoon up on stage together with Alana and Eric to join me here. I can tell you when Craig told me first time this Kodiak Island solution that you need a flywheel to operate a crane, that the lights don't go out in the city, in an island, it's a quite exciting opportunity. But it just what you really can do today with technology. And imagine, this entire island is on renewable industry and renewable power supply. And it's absolutely amazing bringing flywheel battery storage altogether, shipping it out there and have the industrialization on a very small scale supported with renewable energy. So then if we can do it today on a small scale, I'm convinced we can do it in the future on a larger scale. With that said, I think we are getting ready to take some questions. Alana, why don't you facilitate? Okay. I'd actually promised Frederic to begin with. So please start, Frederic. You just have to give a second here. I think they're just coming. Thank you, Alana. It's Fredrik here from UBS. I was wondering if, Uli, you or Erik could maybe give us an idea how many white collar workers you expect to leave the company whether voluntarily or otherwise? Secondly, given the strategic review in Power Grids, should we assume that there will be no M and A in that division during the period? And is there anything else, if that's the case, that you would put on hold during the evaluation? Thank you. Okay. Look, on the white collar side, let me just give you a little bit of wider picture. When I started as CEO of ABB, we had 152,000 people. Today, we have roughly 38,500. And we have done this in a very responsible way. We have divested a couple of 1,000 people with the portfolio pruning that we have done, and we have used natural attrition, reskilling, retraining to really change the workforce quite significantly. And it's our firm ambition to put the cost savings, the speed up, the agility of ABB in the foreground. There will be as a consequence a change in job structure, but we are committed to do this in a continued responsible way. We have engaged last night before we went out today to the press, before we went out to the investors with our works councils. We have had so far a great journey collaborating in a consultative way. We want to keep that. So there will be no guidance on any headcount from my side. We're going to do this jointly in a responsible way with the works council who have been very supportive in the last couple of years. And when we have something to report, we will do that. The second question is on M and A. If you take the position that we have in the Power Grid division, we are globally number 1. We got a fantastic technology platform. We got great global reach. Would we consider acquiring a small service team somewhere of 20 people that helps us to complement our service offering? Yes, absolutely. But would we consider during the strategic portfolio a very large kind of scale move? Absolutely not. We are doing our homework and get going forward on that one. And if you go back to the capital allocation priorities that Eric shared, if you go back to the space where we're going to spend our M and A money in, we have a wide range of opportunities. We're monitoring them. We have certain ideas that we could be doing. And when the time is right, we will share that with you. Ben? Thanks. A couple of power questions and then one for Eric. Ulrik, this morning you were talking about transformers and the leadership position. And basically I felt giving a fairly strong endorsement of that business. But could you say a little bit about Power Systems because historically that's where we've had what I would call continual margin volatility. It hasn't been just in the last couple of years. I mean we're going back 10, 15 years. And what I'm really asking is what is the synergy between Power Systems and Power Products? Why do we need it? Why do we have to do systems engineering at all around your Power Products portfolio? 2nd question which is actually for Claudio. Again on Power Systems, could you tell us how the joint venture with Hitachi is structured in Japan? And what exactly is ABB contributing in terms of technology or product? What is Hitachi actually doing in terms of EPC? And obviously it's a loaded question. If this model works, why wouldn't you roll out something similar globally? And the final question is for Eric and it's just current I don't know what you can say, but just in terms of current trading. In terms of the FX guidance that you gave earlier this year, we've seen enormous emerging market volatility in the last few months. And particularly, I'm thinking of the Real and the Roux really, really insane moves. Does this impact your expectations? Or what can you tell us about those FX moves? Okay. Thanks Ben for these 3 questions. You have addressed me first, so let me make a comment, but I'll also invite Claudio later on to make more comments on Power Systems. C and C has taken over that business. If you look at first, if you look at the power systems and the power product space from a customer's perspective, let's assume we go out together and we sit down with the utility. The utility have a need for a strong technology partner and they have a need for somebody that helps them to engineer solutions in a more and more complex getting world of power supply. Because the times where we were 20, 30 years ago, you switched on in the morning the power plant, you had it running during the day, you switched on the factory, you had your domestic consumption, there was one way of power flow, there was easy control, these times are over. Now you have days where you have more power in the grid nowadays in Europe coming from renewables than you can swallow, so you need to have some load management. You have volatility when a cloud goes through Bavaria. You can really see in the pickup of the power plants whilst the cloud is going through, what solar does and solar volatility does. So that complexity needs to be addressed. And the question is with which business model do we address it. And I think there we made some mistakes in the past. In the past, the ambition was to get as large an order as possible and to load us up with as large as possible of volume, sometimes things that we understood really, really well and sometimes things that we should have better understood really, really well. Because if you take the volatility, I give you a couple of concrete examples. A couple of years ago, we took the responsibility to dredge a cable in the North Sea, and we had a seismic kind of material where people gave us seismic information. They gave us information on the underground. We trusted it. We started digging the cable. We made a commitment to the customer. The cable will be at least 1 meter 50 in the sea ground. And then we realized certain amount of kilometers was a double digit amount of kilometers. It was not sand, it was rock. And you had your full obligation to put it 1 meter 50 into rock. Now we all know from very tough experience, it's a little bit harder to drag to a dredge into the rock than it is in the cable. €100,000,000 later or much more than €100,000,000 later, we have learned that you shouldn't do a project that way. So I think it's not only about what do you do for the customer as ABB with your offering. It is how much are you loading up your risk profile and what business model do you take going forward. Take the offshore wind part and the offshore wind converter stations. It's basically three simple things. It's a tin box on stilts that needs to be installed in the North Sea and filled with power electronics. What did we do? We said we can build a better spin box than anybody else, and we had no clue about it. We said we find a new way of installing it out in North Sea, and we had no clue about it. And we put in the most modern and most advanced power electronics that had just arrived in the laboratory rather than putting in the most proven technology. Now that's a very, very contagious and contaminated solution. So I think what we need to do is we need to add humble pie and go back to the basics. ABB is an incredibly strong technology player in certain fields. If we play this right, if we have a poisonous model where we offer this to our customers and we get rid of an omnipotent aspiration doing everything for everybody, then we have a much lower risk. If you take the backlog of Claudio that he has now got over the last 12, 18 months into Power Systems, it's a completely different quality backlog. We talk on every project what is the ABB content, who is the partner, what's the risk profile, do we know the technology, and we do this as a team today. The large projects we take in the executive committee, we take them in the Board, we talk them through extensively. Sometimes we send the team home or we get sent home by the board and they say, go one more run. So I think it's a disciplined approach, Ben, to solving a customer problem. Because the fundamental technological question and the scope that we are good at, we should keep going. But we should be careful on how we run the business model going forward. And that means basically when you have a strong product range and you have some great engineered solutions where you put them together, do it, but don't do things that you are not good at and that you don't know how to do. With that said, I hand over to Claudio to address the second part of your question here on the JV on Hitachi. But also, Claudio, if you want to make some comments on the first part. Sure. Thanks, Ole. I think you said it pretty much. The volatility on the Power Systems side comes very much from what Ole was describing, which is the dealing with the non core piece, dealing with the offshore platforms, dealing with the construction and logistics on the EPC Solar. We stepped out of the EPC Solar, all the problems we had and it was related to the construction remote sites and dealing with subcontractors that were not able to deliver. Yet the commitment was on our side to deliver the full turnkey. Now we have quite some successful cases where we do support our customers in that case EPC contractors that do the turnkey of the PV solar and we support them with our system integration approach. So the main change as part of the step change that we talked about, there is one action item there. That is for all the business units in the power system is to refocus from the turnkey EPC large projects to the system integration. In order to do that, we need to find partnerships. And that's the case of the HVDC in Japan. HVDC in Japan bring us 2 things. 1, of course, is, as I mentioned before, the access to the Japanese market, but also the capability of executing those projects. As you see, as you know, the HVDC is a technology that it's yet customers are not comfortable to unbundle, and therefore they ask you for a turnkey solution. Well, we do that now with our partner in Japan and Itachi has all the competence and the capability to execute that part. Our contribution is the core technology, in this case, predominantly the VSC, the one that we talked about, the example I just show, and the engineering around it. We go to the customers together with Itachi, define the solution and then design it according to that. And then Itachi takes care about turnkey execution. And that's the model we're going to push forward. So your point on going global with that, we will find more of those cases and find also customers that are ready to basically procure those solutions in that way. Look, just taking 3 steps back on what Claudio just said. Go back to the shifting the center of gravity model. We are doing that in every occasion. Look at this. We take out intrinsic business risks by changing the business model. We are driving competitiveness by teaming up with the right partner, and we are addressing a high growth segment, renewable installation in Japan, with that approach. That's a life example of what we are doing. Erik, you had Yes. Just a few comments on the foreign exchange question, Ben. As we said earlier in the year when the dollar was strengthening significantly, we have a good footprint globally with quite a lot of value added inside most of those emerging countries. So from that we have in a way a natural hedge to quite some extent. In addition to that we are hedging our flows on a 3, 6, 9, 12 month basis on standard products and also for projects on an even lower longer horizon. So we smoothen out the effects. So the real transaction effects we are pretty well taken care of and does not change in front we have said before. And we have a translation effect that the dollar is getting stronger as we report our numbers in dollars. We will have a reducing effect on the dollar numbers we are reporting. And we gave guidance in Q1 and Q2 to which effect that could have and we are not changing that guidance today. Even though the oil has come back a little bit against the dollar, but it's hard to say exactly where it is going for the rest of the year. Andreas? Thank you. Follow-up question on what you just explained Uli in terms of discipline and risk taking. So you try to outgrow competition in your end markets by being disciplined. Not all of your competitors may be disciplined. We have various examples in the past and in the future maybe as well. So I can understand how you want to outgrow competition if you look maybe just at the product business, but this does this apply that target to the whole group and also kind of the system area of the power side? Why do you still kind of target to outgrow the market and haven't narrowed that maybe a little bit more to certain areas where you want to outgrow? And question on for Erik on the cost savings, SEK 1,000,000,000, what's the number of costs today that that SEK 1,000,000,000 relates to? So as a percentage, how much you want to save? And is this just ABB cost? Or does it include bought in services and productivity around that as well? And you have done white collar productivity in the past. You've talked about that in the past. What's been kind of an ongoing level of annual Y Color Productivity we see, for example, this year, so we can get a better sense of what the step up is because it's not all new in that sense as an initiative? Thank you. Look, let me take the first one. I think Andreas, your point is a good one, but we need to put it in relation to the market. The total market in Power Grids is about €150,000,000,000 market. And in that market, you can be selective. You don't have to be desperate. We never want to run any business in ABB for desperation, absolutely not. So what we will do and what we have done and what we're doing every day is analyzing all the opportunities out there. I can tell you, we basically know all the projects that are going on in the utility space around the world years out. We got a fantastic radar that scans all these projects. And we do that in the budget discussion, which is coming in the next couple of weeks. We go through this business, but also with the regions. And then Greg, Frank and Wery Mart in the future, Bernard come in. There is an open dialogue on the project tender pipeline that is out there. And there are certain project tenders where ABB doesn't participate, where we say it doesn't fulfill our criteria. We stay away. I'd rather have a high hit rate with great technology with a good value proposition in a focused part of the market than trying to get desperately a large part. Our ambition in Power Grids is not to have 100% market share. Our ambition in Power Grids is to keep the strong number one position that we have established by continuing to investing in differentiating technology, by having great solution and engineering capability, good domain expertise for the specific situation that the customer is in, and then the right risk management approach to say no at the right time to a project that might get us in trouble. If you take the underlying pattern of where the industry is going, I think the long distance power transmission will get an unfair high share of the overall market spending because connections in renewables is something which will grow significantly. So we'd rather go in that space, use our 1200 kV AC technology or use the DC technology that we have there to differentiate ourselves there. Then going into the day to day bread and butter kind of system projects where we on a very low voltage level, no technological differentiation in remote areas that we might not have any capability to deliver, we go after. So it needs to be a differentiated approach. And I think under Claudio's leadership, we have really refined the existing risk management approach. I wouldn't say we are perfect. We also make mistakes, but the amount of mistakes have really been reduced in a significant way. Yes. Let me comment on your question on the cost savings. The $1,000,000,000 we are talking about is over and above the normal savings that we are doing. And obviously, we have a white collar productivity. We are driving costs down, but this is a massive step up. And I will not quote you a specific average percentage, but you have seen in J. C. Presentation that in some areas we're talking about 30% cost reduction. Some other areas it is quite much less depending on the potential that is there. But it is a significant reduction in percentage from the cost base, specifically when we look into the self-service side of the equation. It does not include material costs and all the side of services that we are buying. So just take it down all ABB headcount basically. ABB headcount and costs associated with that headcount. So basically when you have assistance platform it's in there That would be counted there, but not the classic third party Spain. But Andreas, look, I'll give you an example. If you take the white color piece, go with me to Oerlikon. You will see a colleague that is doing supply chain management in ABB. He is an expat living in Oerlikon with 3 kids coming from a foreign country, so we paid a schooling for the 3 kids. And every Monday morning, he gets on a plane and flies to China or somewhere in Asia and does his sourcing job. That job might be better located somewhere else than in Enercon. And when you compare that then on a total cost base, you might later on have a 70% cost reduction, not having to pay the housing fees, local salaries, the kids in the school and all of that. So we look at the total package that we have there. And it's really amazing on white color how many additional costs you have, the offices, the systems, the family that you need to relocate because we have a lot of expats in there, and we need to take that one on. Will? Yes. Good afternoon. Will Mackie, Kepler Cheuvreux. A couple of questions staying with the restructuring again please. On the €1,000,000,000 that we're targeting of the white collar costs, are you prepared to at least try to allocate how that may fall across the 4 future divisions? Are we staying at a very high level from a corporate perspective? Or can you see that there'll a greater proportion in one of the 4 divisions going forward? And then for the current year, I mean, a lot of this is about execution and an element of that to deal with what we can see in many of your end markets is a cyclical slowdown. You've already indicated a step up you've already indicated a step up in restructuring charges for the current year. How do you expect those to fall? Are you still comfortable with the range of what you've put out there for this year? And do you think we should expect an elevated level of underlying charge for the ongoing restructuring and productivity into 2016? Thank you. Henrik, do you want to take it? Yes. So I take that. We stay with our guidance for this year of the increase by SEK 50,000,000 or so of restructuring charge compared to our earlier guidance, which we did earlier in the year on the normal restructuring. And I think this type of level is the one you should count on also going into 2016. On the €850,000,000 to €900,000,000 we have for the white collar program, we will not break it down by division now in the external communication. But as we said, the targets are allocated and come up division by division. So obviously, we have those by division on our internal follow-up. But it is not that it's one division is doing much more than the other. It's really has been through the detail division by division where the potential is. Natalie and then Gail. A couple of questions. In Power Grid, how much is outside utilities and municipalities? Or is it just completely 100% one customer group? Then, no one speaks about Dolby 2. I just want to break the strength and quickly ask you about what is the next milestone? And how much of the project completion have you done in Dolby 2? And then Eric mentioned on the cost cutting program that you would be disappointed if it would be at least than 50% of the net level. Is that after tax or before tax? And the last question, I'm using that I haven't the mic. Keep going. Just on the current conditions in China. Uli mentioned at the end of May beginning of June that it was a deterioration. And just wanted to ask maybe divisional heads, how do you see the current conditions stable? Do you think you'll have you'll be happy if you have flat sales this year? Or you still hope to grow them? Thank you. Okay. Let me just modify quickly your last question. We are not giving forward trading update. Nice attempt, but we can give an overall market condition. We can make some statements on how we feel the market is going. I would invite both Tarak and Claudio to talk about the China situation without giving any guidance for the quarter and the rest of the year. I'm sorry. That's ABB principle how we run it. Tarek, what do you want to take that one first? Yes. I mean, as we have communicated and you've learned from also our competitors, it's a difficult market, and that difficult market has continued. That's about all I can say. I mean, we see pockets. I mentioned a couple of pockets of growth in my presentation. But does that compensate for the challenges we see at this point? No. I mean, it is a tough market. Claudio? Yes, maybe I'll take the Dolby 1. Dolby 2 milestone. We're now on the commissioning phase. We announced in August that we basically installed the platform. And the next key milestone is what we call the start of the trial operation, which then gives basically a defined time line between which then we do the final runs and then start the procedure for the handover. And all of that should happen within the year. Okay. You want to tap on with the question on power grid, how much is out there? Yes. Roughly, when you look at utilities, and we obviously include in that not just the TSOs or the transmission system or operators, but also the municipality. So the utilities that take care about sub transmission distribution, all of that is roughly 80%. And the 20% is, what I would say, non utilities, mainly industries, but also infrastructure, transport infrastructure. We have a great portfolio for traction transformers, for instance in power plants. And the last one was on the cost cut, Erik? Yes. On the cost cut and my statement that we will be disappointed if we don't get at least half to the bottom line, I refer then to operational EBITA. We will not get the tax effect on top of it. I'm sorry about that. But nice try. I think Gail was first and then Peter. Thank you. Gael DeBret from SocGen. So you're going to step up massively the restructuring effort. I mean you're probably going to spend twice or more than twice as much as before on restructuring. So the question is why did you decide not to raise at least the low end of the margin corridor really? I mean do you think there is a risk that the margins by the end of 2017 could remain unchanged compared to the current level at about 11%? That's question number 1. And then the second question is for the Electrification Products division. I mean, what would it take for the division for the group to become either number 1 or number 2 in the electrical distribution channels? I mean, you said yourself you were only number 3 and I guess there is a common ambition across divisions to be either number 1 or number 2. So I mean, where would you need to invest maybe in terms of geographies or in terms of product categories? Thanks. Thanks for your question. Jan Luc, I think if in 2017, the margin level would be still close to 11%, somebody else than me would be explaining it, what's going on. So we have a clear ambition to move to the throughout the target range. But we need to stay humble. We are at 11.5% at the moment, and there's a lot of room for improvement within the target range. And we are close enough to the 11% that we enjoy at the moment to be just above that level. Remind you, last year, we had a situation with the very, very severe heat that we had to take in Power Systems, maybe we are even short time outside of that. So we keep that margin range intact, but we have clearly the ambition to navigate through the period of our strategic plan until 2020 upward in that range. Now can I predict how the economic conditions will be? No. Can I predict how all the detailed market will be? No. But I can share with you, if I take the ambition that we have on white color, if we look at the growth ambition that we have and if we stay disciplined and make sure that we get some drop down effect when growth kicks in, we should be able to navigate to the upper half of that bandwidth in the not too distant future. With that said, I'll let Parag address the question on EP. Yes. I mean, let me repeat the question. What does it take to be number 2 or number 1? The electrification business is still local. So it's a mathematical formula that gets us to the number 3 position, but depending on the market. So for us, the highest priority is where do we have market access. And where we have market access, can we increase the penetration? Can we increase the share of wallet with the help of distributors? And in that environment, the areas of focus have not shifted for us. It's United States, where we believe we are underrepresented relative to the market. We see an opportunity there to move up in terms of our scope, scale and share. In terms of emerging markets, that's something where we are under penetrated. Our competitors are ahead of us. So if we are able to and we see some concrete evidence that we are able to outgrow the market, if we continue on that trajectory, we'll start to catch up with some of our key competitors when it comes to the total volume. So it's a story of where we have market access and where we see the growth that we need to make our investments. Yes, we have portfolio gaps we'd love to fill, but that's a function of whether there is something attractive and interesting out there with the right valuation. So we have in mind what is interesting. We are scanning the field and discussing it with Uli at the right time and with the board, if necessary, on where we think it will make sense. But now that the division is just formed, we also have to take into account the opportunities we have in VMO. So I think it's a little too early for us to say all the opportunities on the portfolio we know where we have holes and we need to plug. But we'll take a look at the portfolio side too. Let me just complement on that one because it's an interesting way. You can be number 1 globally by having the most number 4 positions in the most countries, and it adds up to a number 1 globally. And that's exactly a danger that we have fallen in, in the past sometimes. Our heat met approach where we go really segment by segment, where we go country by country is really focused on getting leadership returns in the operations where it really matters. So our ambition is to be number 1 and 2 in the segments where we operate. And Craig has given you a nice example how granular we go really on the market side. The ambition is to be globally, number 1, that's great. But be locally in the relevant markets and get paid on a leadership position is even more important. And so that's the granular approach that we are driving. I just wanted to end to that. Peter? It's Graham Phillips from Jefferies. Two questions. Just if I could ask Tariq about Electrical Products, what percentage of customers are utilities? And what sort of business is that as products? And the other question is on the cost saving program. What sort of auditing will we be getting on a quarterly basis? Will there be a profit bridge giving us the old saving program, the new savings program? Is it going to be gross or net? Because I know we've moved away from having the gross and the net just to the net on the old program. Okay. Tarek, you take it first? Yes. Roughly of the new electrification products division, 85% of the revenue will be industry, transport and infrastructure, and about 15% of the turnover will be with utilities. So that gives you a relative weight of the new division. Looking at the on the savings granularity, you will get the appropriate update when we start to get the savings. Erik is working on his team with it. We will build on what we have had so far, but we will also give you an update on what's really happening out there, not only the numbers, but the key actions and how fast how far we have come on certain regular intervals, not on a monthly basis, not on a quarterly basis, but we'll give you that on a half yearly basis, we'll give you some intervals. Any other thought, Derek? No, I think that's right. And obviously, on the restructuring charges and the implementation costs, we will also show you some transparency to make sure that we talk about the same numbers on operational EBITDA level and so on. I think Mark you had the question there. Yes. Thank you. I guess we've heard a lot today about efficiency and cost management and risk management, which is all good. My question is, how do you get paid for your technology? You have innovation in 1200 kV this that and the other and lots of nice robots, but and you've got good market positions and you're looking to strengthen them. Are your sales force are they do they fully understand the value of what they're selling? And how do you ensure that you get the maximum unit contribution from that? Let's ask the man at the front how he's doing it every day. Well, it's our job of our sales force to not only get orders, but always get more for what they're selling from a price premium standpoint. And I think first of all, when you're dealing with a lot of our customers, this is an ongoing relationship. If you look at us from the market, this is something where we have some history. Certainly, when we work with our business lines and we price products and we look at even new product introduction, we're always trying to position that product for some type of margin gain as we introduce new things or even when we upgrade families of products. Right now, we've over the last 24 months done a drives upgrade and we always try to bring in something that allows us to sell value. And value is always in the eyes of the beholder in terms of our customers. And so we're trying to drive that value equation in terms of what's important to them and train our sales force as to how to speak to that, whether it's quality, whether it's technology, whether it's speed and really put together these kind of custom value propositions that you always have to be competitive, let's face it, but you don't want to be the guy that's always selling on price. And so that is an ongoing effort, something that is important to us and we drive that through our training, our product positioning, our product marketing and really trying to bring value to the customer, whether it's high technology or frankly, it could be a standard product. And we do the same thing with our standard products. Look, Marc, maybe complementing Greg, let me give you a concrete example. Let's imagine we go together to the mayor of New York. And that mayor has a couple of 100 substations around New York City. And he's thinking about upgrading or building, rebuilding a substation. He can choose a competitor's product and rebuild the substation. He can choose the ABB product and use less than 30% less space for the same substation and take the space and redevelop there a commercial building or whatever. That's where you can really ask to get paid. When we go in robotics and we sell to an automotive company, that the assembly of the car gets significantly cheaper because they can change the design of the car by working with a new adjoining technology, for example, on fiberglass or magnesium or titanium, which is really difficult to put together. That's where you get paid. And that's where the job of the portfolio management and the product management in the divisions and the business units is to articulate for the guys on the front end the value proposition very clearly. And then on the front end, we train up the people, the track team gets fired up, he goes out to the customer and has a differentiating value proposition. We are not successful every time, but more and more we're getting there. And maybe I can add. Some of the tools that we are developing allow us to provide very clear value propositions to our sales force. So you heard about the salesforce.com. That's a great opportunity for us on a simultaneous basis on a real time basis engaging with the sales force on look, here is the integrated value of the product. These are the 5 functions that we have now collapsed into 1 device that has embedded intelligence. Now here is how we think on average the customers will perceive the value. So it's leveraging technology also beyond the product with the infrastructure that JC talked about. That's really providing us with a modern way of dealing with selling value versus the old fashioned brochure sales training for 2 days. That approach is the past. I think the future is very much an interactive approach with the customers. Thanks. It's Martin again from Citi. Just a question coming back to the distribution. Obviously, part of the reason for the Thomas and Betts transaction was access to distribution channels. So just how much of this opportunity is fully realizing what was said at the time of that acquisition? And just perhaps you could give us an update as has that all been achieved? And then related to that, obviously, some of your peers or competitors work in a slightly different way if we look at Rockwell with Thai distribution and so forth? Is there a limit to what you can do in that market just because of the existing market structure? Maybe we do a mix of answers between Craig and Tarak. Greg from the local perspective and Tarak from the global. Is that okay? Yes. So look the distribution channel, the electrical distributor channel and on the Ballard side the more mechanical distributor channel, we knew was a bright opportunity for us when we went into these acquisitions. It was not only the good product companies that we are buying with good brands, but it was really getting the market opened up for us, especially in their home markets, in particular U. S, Canada, to some degree Mexico. And that's exactly what we're acting on. So those relationships coming back to my earlier comment, these are existing relationships they have with very solid locally based distributors. I mean, if you look at a huge country like the U. S, you have many natural markets. Seattle is different than Dallas, is different than Boston, different than Atlanta. And these distributors have set up in these markets. And having these existing relationships, Baldor and TMB, has allowed us to come in and really introduce a wider value proposition to these distributors against end markets they serve. And part of this is really an awakening. Although we had lightly touched this area, take the U. S. And Canada, we didn't have the same level of owners of these distributors that we now have and taking not only that relationship that exists with those acquired companies, but also frankly the learning in terms of what are the success factors. We talked about selling value, not price. The distributor has a whole unique set of characteristics that they're looking for in terms of speed, ease of doing business, quick availability, standard sales policies to know how you're going to behave and act in a market as to when it goes through them, a certain amount of pull marketing. So we've been really bringing these through in each one of our business lines that are appropriate for their end segments and really demystifying ABB in terms of how we can work with distribution. And that's really been I think the benefit. I think although we've seen some nice gains here Tarek where we've targeted these distributors, when I look at the U. S. And Canada, I think we're still at the front end of this opportunity. We're still learning and growing and really bringing up our sales organization as to how to think about serving a market where we've done a lot of direct and large project work, how to deal with customers that go through distribution and really open up a wider slice of the market. And I think that's a major opportunity going forward for us. I would agree with Greg. We're in the beginning. We're happy with the access and the growth that we have received for the ABB part of the portfolio that our T and B colleagues who are now part of the low voltage products business that they have been able to deliver. There are 2 aspects to the distribution. Don't forget, T and V has a portfolio that really grew our available markets substantially. And that had an element that had volumes outside the United States. And there, as we discussed earlier, we've seen very healthy growth rates. I mean things that are multiples of the GDP that we see clearly that we're able to drive. Of course, you need to understand the market, have the portfolio and have the access all. And both of that is true when accessing the United States with the ABB portfolio and Thomas and Betts accessing through ABB channels the rest of the world. So it takes time to develop the portfolio that meets the local markets. But so far, we've been quite happy with the growth that we've achieved in the U. S. And Canada through the support of the T and B organization. And we are extremely happy with the growth that we see and the acceleration of the momentum that we see in the rest of the world selling the TMB portfolio. Probably have time for one more question. So who's the lucky one? No one? Good. Good. We are done. Okay. With that, we would like to thank you very much for joining us today at our Capital Markets Day. We would also like to thank the Executive Committee. And now we're going to have a brief apro with everyone outside. So please feel free to join us. Thank you.

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