ABB Ltd (SWX:ABBN)

CMD 2014

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Sep 9, 2014

I just want to wait until your seat. May I ask everyone to take their seats? We're about to commence. Welcome. We are very excited here today for the launching of ABB's next level strategy. We are very pleased to have with us today ABB's CEO, Ulrich Spiethaufer CFO, Erik Alsvik as well as the entire Executive Committee. Before we get started, I would like to review the agenda. The day will start with presentations from Uli and Eric, followed by a Q and A session. We will then break for lunch, where we would like to invite you to participate in our exhibits. They are located at the back of the room, as well as in the reception area. These exhibits were tailored specifically to let you know about ABB and its offerings. In the afternoon, we will have 4 presentations where we will actually demonstrate how we will execute ABB's next level strategy. At the end of the day, we will have Q and A followed by an apro. Today's event is being webcast. A couple of housekeeping items. Some of you might not have some handouts on the desk and we apologize for that. They be coming shortly and they will be handed out. During the event, please wear your badge for security reasons, as well as if there is actually alarm going off, it is not necessarily a drill, it is actually the real thing. You will not be able to actually use the elevators. Let me now draw your attention to our Safe Harbor statement for any forward looking statements that we might make today. With that, welcome and please enjoy the event. For 120 years, our technology has been driving the modern world. From power plants to industrial robots, transport to control systems. The modern world is powerful. 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 charger. In 120 years ABB's businesses have never stopped innovating, shaping the world of the future from the power plant to your plug point. ABB, taking power and productivity Good morning, ladies and gentlemen, and welcome to our Capital Markets Day 2014 and to the unveiling of our next level strategy for ABB. We will shape the global leader in power and automation. And the next level strategy is aimed at accelerating sustainable value creation. ABB today is a company that is well positioned in attractive markets. Therefore, we don't need to talk about fundamentally changing the portfolio or doing dramatic things. It's about taking a very well established company to the next level of performance in many dimensions. Last year, we introduced the 3 focused areas of profitable growth, relentless execution and business led collaboration and the new strategy is aligned and building on these three focus areas in a next level set. We aim to realize the benefits of this strategy over the course of the next 5 to 6 years, and we are committed to delivering attractive shareholder returns over the period. This morning, the journey of attractive shareholder returns has started with our announced $4,000,000,000 share buyback that allows our shareholders to successfully done over the last 12 months. And it shows the confidence of our entire team into our own strategy and the plans that we have put together for the future. Profitable growth will be driven in the next year with a very strong focus on organic growth. I believe very strongly in a company that's so well positioned in such a vast market opportunity management team. We will do this by shifting the center of gravity towards strengthened competitiveness. We will drive organic growth momentum and we will derisk ABB. And you will not only hear this morning from me, we will have this afternoon our colleagues from the Executive Committee talking about it. For example, Claudio Fakin, the leader of Power Systems will give you much more details that we owe you, I feel, on the Power Systems situation and the way going forward. In execution, will be developing a leading operational model building on the successes in supply chain management, in quality and operational excellence that we have delivered over the last years. We will drive change with a robust and clear and prioritized 1,000 day change program that will allow us to realize what we say in a much more focused way. We will link strategy, performance we will link strategy, performance and compensation tighter than before and make sure that both individual and institutional performance is rewarded. To get there and to support this move, we are simplifying ABB. We are simplifying ABB. We simplify processes and we have announced this morning a streamlined corporate structure, taking out one hierarchy level on the regional side, having a stronger market focus and moving from 8 to 3 regions, whilst putting undiluted global business responsibility as the mandate of our business unit leaders that are being led by our division heads. So all together, we will accelerate its sustainable value creation for a company that's well positioned in attractive markets. Now let me give you a little bit more flavor than just this short summary. ABV today is a company that some perceive as complex and difficult to understand. In truth, it's not. We do power and automation for utilities, industry and transport and infrastructure. And we do this globally. That's ABB. If you look at the shape and the quantification behind what I just said, we are today about 60% automation, about 40% power. We are about a third in utilities, about half in industry and about 20% in transport and infrastructure, a segment where we had recently some really nice successes. And I would like to invite you over lunch break or later to look at one of the exhibits of the Marine business, for example, that we have down there, which is a fantastic demonstration of our capabilities in that field. The 3 end markets that we are serving, utilities, industry and transport represent a €600,000,000,000 market opportunity for ABB. Today, this market will grow in the next 5 to 6 years by 3 to 4 ABBs to about €750,000,000,000 And each of these market segments have underlying drivers, which make it an ideal playing field for technology leader with global reach like ABB, whether it's renewables, of the grid, the introduction of new consumption points where you have more energy by wire, for example, public transport and cars, personal mobility. These are all areas where we have strong opportunities to drive ABB ahead of the market growth. If you look at our 3 customer segments today, there are many fields where we are already in a strong position. Last year, we took a navigation check. We said where does ABB stand in each of the segments of our portfolio. And the outcome was a lot of good news regarding positioning, but also a lot of good news in areas where we can do even better. Our ambition is to be a number 1 or 2 in the segments where we are active. We are building on the strengths where we are already there and we are allocating resources, capital and people in a way to make sure that they become more over time in a focused and balanced way. Our power and automation offering is an integral part of ABB's value proposition to our customers. And if you look just what we're doing for our 3 customer segments with our 5 divisions, each of the divisions is providing power and automation capabilities into the end customer segments. So the common theme that has built the strengths of ABB over many years will be the common theme in the future. Our portfolio will be in the future as today built around power and automation for our customers out there. So we are well positioned, but I also said in attractive markets. Now let me talk a little bit about the markets. If you look at the electricity value chain around the world, there is a big shift going on in this value chain. In generation, in 2,035, which is only 20 years away, 40% of the global installed capacity will be renewables. That means more volatility, less predictability, more more feeding points that we have to deal with. Then you have on the grid side longer distances to overcome. You cannot build a solar plant in the middle of New York. You have to build it outside. You cannot build it in the middle of Shanghai. You have to build it outside. So you tech transmission of power in the future. Controlling the grid with more feeding points, with more takeoff points is an art and ABB is a master of that art today already. If you look below the distribution level on the micro and nano grid level, there's a tremendous opportunity to do more on and off grid on micro and nano grid level in the future. This afternoon, you will hear Bernhard and Claudio talking a little bit more, our 2 power leaders, about that space. So let me give you a concrete example what this means. Historically, on the left side, you see the power flow as it was, power flowing from a single power plant into the grids to the consumption point. And that was the times when people described the power value chain as pretty dull and boring. This is over. Today, you have a grid that you see on the right side, multiple takeoff points, multiple feeding points, complexity of control and the relevance of controlling this grid, meaning controlling the bits and bytes to steer the grid in the right direction rather than only looking at the electrons flow is a key differentiator. And ABB is already leading in the transition towards what we call the digital grid. We are strong there. We got the software capabilities that we have built over many, many years. And today, we are well positioned to benefit from this big shift in the electrical value chain and our customers like us as a partner. And as you have seen just 2 hours ago, we are very proud to announce today breaking news a large $800,000,000 orders here in the U. K. It's still in the U. K. Up in Scotland where we're going to connect with 2 converter stations, renewable energy to the overall grid. This is a project that we like. We have done 13 of the 14 global commissionings of that type of project successfully on time with good profitability. I would like to congratulate Claudio and his team. They did a great job. I was with the customer a couple of weeks ago trying to listen and understand what we really need to do to win this. And it was a fantastic Systems division and this is just one signal of that one. So taking 3 steps back. In Power, we have a strong portfolio today, and we will address attractive growth segments in the future. The strength today is not only the flow of the electrons. It's the control, the software piece coming together to bring an overall very strong value proposition to our customers. In the future, more interconnections, higher voltages, grid automation, new grid topologies, microgrids, advanced services and software are key elements that will differentiate us not only today, but also in the future. So the first shift along the electrical value chain. The second is in industry. In industry, we're seeing a development from our industry of the past to what we call Industry 4.0. Today and tomorrow, the connectivity between things, people and services will be a key differentiator for industrial enterprise. And ABB has already well shaped offering to work with our customers in that space. We proactively develop them and today are already deploying them. Let me give you a concrete example what this means. Imagine we go to a 3C assembly plant in China, where we have a robot assembling products. And that robot starts to have a little bit of vibration in 1 of the 6 joints of the robot arm. The robot calls and says, I'm starting to shake. I have the following symptoms. That signal goes into our service operation center. That signal is being compared with a big data archive of historical operating data of other robots. And the system says typically with this kind of symptoms within 20 2 hours, you will have a breakdown. The signal goes to the service team. The service team dispatches crew that goes out there to make sure before the 22 hours we address the problem. The service crew arrives on-site. It's a new site that person has never been. He takes his iPad out and sweeps the iPad camera around and shows the video and the screen and the information of the local setup to the service center. The service center says, to to obey. The person follows that up and make sure that it does a safe and on time addressing the issue that the robot has. That industry China have done a great job penetrating the space in China with robots. We have done that all around the world in other places and it's a key differentiator. It positions us in the forefront bringing the Internet of Things, the speaking robot, the services, the service center and the people, the mechanic all together to serve our customers in a better way. Again, if you take the overall picture in automation, we are strong positioned and there are tremendous growth opportunities ahead. This is why we talk about attractive markets for ABB. But we are not only well positioned because of the what and what we do and with whom we do that. We are also strong positioned because of the wear. If we look at the global reach of ABB and the balance that we have, having about onethree of our business in Europe, onethree in the Americas, onethree in Asia, Middle East, Africa is a wonderfully balanced portfolio that we're really proud of that we have built over many years. But it's not only the presence of the activities. Even more important is our cultural diversity. Three quarters of the top 200 managers of ABB come from outside the 2 founding countries, Switzerland and Sweden. This is unmatched in industry. Nobody else in industry has a similar kind of executive committee that you see here, we have 8 different nationalities. And that allows us to have a globally sensitive team and culture, which really knows and is at home in the relevant markets. What will we do in the future? The next level strategy is building on the 3 focus areas that we announced last year in 4: profitable growth, we want to do it better and we want to do it together. Now let's talk about the more and the profitable growth piece and let me give you some the Here is the ABB of today. If you look in 3 dimensions, competitiveness, growth and risk, this is us today. And our aim is now to change the setup and move towards a strengthened competitiveness, stronger focus on organic growth, while derisking the portfolio across ABB. Let me make some concrete examples to share with you what this really means and what we will do to drive the 3 topics. Let's start with competitiveness. In competitiveness, we will work very strongly of enhancing our customer value proposition. Now that sounds awfully theoretical. What does that mean in practice? In practice, it means that we want to become more relevant across our customers' entire value chain and be not only a provider of product systems and solution in the build base of our customers. Today, we are very strongly positioned and we will keep that strong position. We will not move away from that. But we will complement that strong position by a stronger focus of becoming a planning and design partner partner and an operating partner for our customers and lift both pieces up on both sides to basically enhance the relevance of ABB throughout our customers' life. That means we will add on the front end piece and the planning and design piece. We will add engineering consulting activities. We will add new software tools like we have done with Robot Studio already or our grid planning software that we have today successfully implemented. On the operating partner side, we will add new software capabilities and service management capabilities to the already existing very strongholds of ABB around the asset health center or the service solutions that I demonstrated to you earlier. So driving the customer value proposition up is one element of driving competitiveness. The second element is around service. We started a couple of years ago a successful journey on growing the service business of ABB. It's today an important growth pillar and performance pillar of our portfolio. Greg Schroy together with his team has done a marvelous job in laying out a clear strategy and we are executing the strategy we are following rigorously up for every single action. We have dashboards in place. We have investment plans in place to really make sure we are doing what we are saying. But in parallel, we are embarking on the next level of growth by addressing additional levers, such as engineering and consulting, such as more software based services. What I said before, the big data information that comes out of our install base, whether it's a robot, a motor, a transformer, we can do much more for our customers. And this is a key focus for us going forward. So the ambition is to increase the service share of revenue by 1 point a year. It sounds maybe a not very ambitious target, but I can tell you given the size of ABB, this means a lot. And this is something that we will drive very hard in the years to come. Again, let me give you concrete example of what this means. Let's take the field of mining, where at the moment the market is being seen as being a little bit moderate, there are tremendous opportunities to do more to drive uptime speed and reliability of brownfield assets. Historically, we were a break fix job. Customer calls, I have a problem, we fix it. Today, we are an asset management partner. We provide remote uptime, speed and reliability in a pretty competitive environment. The 3rd part that I would like to mention competitiveness is around software. Now let me just give you some facts around software. Today, more than half of our offering is already software based. So we have been in that field since many, many years and we will be in this field many, many more years. So at the moment, there's a little bit of hype around digitization. We are already in that and we will drive our software capabilities going forward even harder. Whether it's embedded software where you have a piece of hardware where some of the functionality comes out of the software element. That is the automation software where we are leading without our 800XA offering. And I invite you, we have an exhibit here on the newest generation X100, 800XA, which is fantastically easy to install and really has a good connectivity with other system. It's an robot studio for operations and for software for design like a robot studio for operations and for services like the asset health. So all together, we are already today a very strong software capable player. We already differentiate ourselves very strongly. And if you look at the breadth, the smallest piece of software is 100 lines of code in a single breaker. And the largest software piece that we have, for example, in a network manager is about the software complexity of a Boeing 787. We are in that home and that's a natural part of ABB. We will use software also in the future as we have done in the past to drive software based differentiation, whether it's the ease of installation through easier or next level of embedded software, whether it's leaner operations as a customer value or higher energy efficiency through better control or whether it's faster, easier design on the planning side or service efficiency on the operations side, we will continue to drive our software activities as a key competitive differentiator and as a hallmark of ABB's competitiveness. Now ABB today would not be ABB if we wouldn't have strong technology base. We have seen over the last weeks many announcements on new breakthrough technology. One of them is our 525 kV cable. Now you might say, what is the cable doing? It's pretty boring. No, it's not at all, because if you are a utility or somebody responsible for infrastructure in the country and you have to decide whether you use the common technology where you might need 2 cables to connect certain renewables plant with distant point of consumption or you need only 1 because the ABB cable has more capacity than anybody else. In fact, the double the capacity that the Nextbase has to offer. That's a clear differentiator. And it just shows that our high investments in R and D are really paying off. But it's not only the big things that matter. It might be sometimes very small things like a sensor that takes its energy that it needs for operations power supply. The world of sensors is growing very, very fast. We have more and more products speaking and having a strong capability in this field is another technological differentiator of ABB. So competitiveness, better value proposition, services, software, technology are key levers that we continue to work on to make ABB an even more competitive player in the world out there. The second piece that I want to talk about in terms of shifting the center of gravity is around attracting high growth opportunities. During the exercise that we call the navigation check and the strategy exercise now, we looked at all of our markets. And there's a tremendous opportunity in a lot of segments to drive high growth in certain areas of utilities, industries and transport and infrastructure. And the good news is, it's everywhere. In each of the segments are high growth opportunities and we will focus our capital, our investment, our our drive growth faster, it's and especially in an engineering culture like ABB, it's not only important to understand what we could be doing. It's very important to speak on to deliver on the how and to determine how can we drive better growth in the future. Last year, we successfully introduced a new approach of driving growth. We call it PIE, penetration, innovation and expansion, where we have very clear priorities and clear understanding what does it take to penetrate a market further with stuff that we already do or customers that we already serve. Innovation, where we constantly enhance our value proposition to customers and drive more value. It does not always need to be a product. It can be a process. It can be delivery times. When I look what Tarek has done with his portfolio and taking down lead times, that's a very innovative value proposition to our customers because they can change their supply chain based on our capabilities. And last but not least, it's around expansion, where we will do more in new segments. We recently launched a robot packaging center in Singapore to address the fast growing needs of the food and beverage industry in that part of the world and it's a fantastic success. We will do more of that. Now let me share with you how we have operationalized this. Basically, the first step was we did heat maps all around ABB. There in a very well segmented way, we went through and identified where are growth topics and where we give that a yellow or whether we are below the number 5 and that's a red. On the red, if they are future core, we will invest. We cannot take all them at the same time, but we will invest in a prioritized way. If they are not part of the grow core, they go. And you have seen us pruning the portfolio in the last 12 months. We have successfully executed a pruning program where we had multiple divestitures very well executed by the team. And this will be a pattern here to stay. So driving growth with clearly articulated measures along the with clearly articulated measures along the heat maps that we have is key differentiator of us. People are aligned. There are milestones, personal accountabilities and local division or business unit manager about his heat map. He knows exactly what he's talking about. He knows exactly what he needs to do. And that's really a differentiator and will drive and will help us to operationalize a higher level of growth momentum. So now I talked about the competitiveness piece and I talked about the growth piece. Let's talk about risk. And I will take a first stand at it and Claudio will this afternoon talk a little bit more specifically for PS what he's doing with his team on the PS situation to derisk the business that we have in the ABB portfolio. And for each of the risks, that we have in ABB portfolio. And for each of the risks, we have now a targeted mitigation plan in place. It can be sometimes if you look at engineering, putting up a stronger standardization and platform approach to make sure we have repetitive skills and not try to make a new thing every time again. It's engineering pride, but sometimes you don't earn money with it. So the mitigation program together with the identified risks are part of the management plan, the annual plan that have to be delivered going forward. So let me sum up what we mean by shifting the center of gravity. Accelerated growth momentum with a strong focus on organic growth, reduced risks and improved margin. This is a key reason why we commit to a margin accretion over the planning cycle that we announced today. Now profitable growth will not only be We have done about 30 of them over the last years. And I can tell you, we expanded our portfolio successfully. We are on the map in North America like never before and it's great timing because that might be a part of the world that takes up before Europe really takes up strongly. We have delivered value, the synergies, we have maintained the strength of the team and the best of both worlds integration principle has proven to be really the acquisitions. They have been better become better by adopting certain practices and together we have lifted a level of performance. But we have also been disciplined and we will always remain attempts on chloride where we had the Board recommending that ABB gets the deal. Somebody else came with a blowout bid with a very high valuation. We stepped away and said not for us, not with this valuation. Play. Play. If there is an issue around financials, we will not play. And we're going to keep that discipline going forward. Now a lot of you want to talk about very large acquisitions. Let me tell you there is also very exciting smaller ones that really moved the needle in ABB. We announced a couple of weeks ago the acquisition of Spirit IT, which is a liquid computers and software company up in the Netherlands. We are already strong in gas measurement and software. Spirit IT is strong on the liquid side. When you go to a process industry player, you need both. So we combine our strength on gas with the market access that we already have with the software and measurement product capabilities of Spirit IT, which is smaller company and we scaled it up and it's a wonderful growth story at relatively low risk and very, very attractive long term outlook. So going forward, we have defined a clear strategic direction for M and A. We have defined the fields where we will be active. And here you see a couple of examples in there and they range across the whole range of ABB's activities, but our criteria will stay intact. We will be disciplined. We will be ambitious in terms of our return requests that we have. The 3rd element around growth beside organic growth and acquisition and that's a new direction of ABB is around partnerships. You have seen us announcing in spring this year a partnership between Philips, global leader in lighting technology and ABB. Together, we drive really partnership for commercial building automation. Karg and his team have done a great job hooking up with Phillips there. And I'm particularly proud about the partnership that we announced last Friday. BYD, the leading player in China on battery technology, with more than 180,000 people, the leading position in providing batteries the electronics industry and one of the leading players for the emerging automotive electric automotive industry and ABB are joining forces in a partnership aimed at providing leading grid energy storage solutions. Now if you know that 600,000,000 people in Africa today don't have access to the grid, 30,000 villages in India don't have access to the grid, There's an opportunity for off grid solutions. If we look what storage can do to dampen the peaks in developed economies like Germany, like U. K, like Switzerland, it will change fundamentally the paradigm and we are with this partnership now extremely well positioned. And I'm convinced the microgrid, nano grid market over the years will evolve in a multibillion opportunity and ABB is now uniquely positioned with its offering. So to sum it up, profitable growth, a tremendous market opportunity, clearly identified areas. We shift the center of gravity. We continue making incremental acquisitions and we will drive partnerships to keep growth going. Now our company is not only about growth, it's around execution. Now let me share with you the story on execution in ABB over the next years. We had some really nice successes in functional excellence that we're going to broaden to an operating model. We will drive change in the future in a different way, focused, prioritized with a rigorous program management that we call a 1,000 day program. And we will link strategy, performance and compensation even stronger together on individual and institutional level. So let me put some beef around what I just said. The leading operating model. My predecessor, Joe, he installed Net Promoter Score as a key measure to drive customer satisfaction and customer service in ABB. And boy, that was a great idea and it was very well implemented. If you look where we are today, we have improved our net promoter score from a score of 16 in 20 10 to 46 today. This is a position that we are proud of. We will not stop at that level. We are aiming even higher in the strategy period. And we have the same success on the cost take out. You have seen us becoming a cost take out machine, where we basically every year find a way or have a clear program in place to take out more than a $1,000,000,000 cost of our cost base. And this is there to stay. We will deliver by widening the scope. We will include white color productivity. Roughly 2 thirds of the ABB people are white color people, 1 third are blue color people. There's tremendous opportunity to free up resources, but we free them up for growth. We will not go in with a massive restructuring program because out of the heat map and navigation check exercise, we got so many segments where we need additional resources to drive growth that we will free up the people on the one side and put them into the opportunities where we can really move forward. A concrete example, look at Germany as a market where a lot of people say at the moment, how is that going? The service business there is booming. So we are requalifying our people to become strong on the service side, just as one example. So these kind of leading practices, we will expand across the entire value chain and all the operations of ABB. With this change, you will see the next level of performance and profitability in this company. As of January 2014, January this year, we have introduced a new performance measurement tool, very simple. Relentless execution dashboard, we call it. Tarak will talk this afternoon a little bit more how we use it in practice. It's basically focused around cash, cost and customers. And all the businesses are being measured the same way on that common tool. And it shows very nicely already a shift in focus and a ramp up in attention to operational opportunities. Now when I talk about execution in ABB today, I need to talk about Power Systems as well. Now here is a quick overview on Power Systems before Claudio talks more about it this afternoon. Look the situation we have described a couple of times before. It's a handful of projects that got out of control, legacy projects that we really had some operational issues. We have also taken some low margin projects in the backlog that we need to flush through the backlog. What we have done, we have today a much better grip of the situation. We know what we got in our hands. We understand the risk profile. And now Claudio and his team are working very hard to derisk the business going forward and execute successfully the projects which we still have in the backlog. On solar EPC, 90% of the projects will be done by the end of this year. On wind, we had some really nice successes now over the summer break. We energized Dolby 1, which was really an important step forward. Dolby 2 has arrived safely in the Fjord in Norway to be fully equipped with power electronics. We have changed the business model. We tendering in a different way. So very good progress and Claudio will share with you more this afternoon. So this is all about the day to day execution. Now let's talk about the execution and the operations of change. When you run a company, you always have ambitious projects and say, okay, this is what I want to do better. And we have now defined a way how we will prioritize, focus and drive change. We are establishing a program that we call the 1,000 day programs. So a market entry or market ramp up in Africa, what Eric is doing around networking capital will be put into a rigorous 1,000 day program approach. We will have 1,000 day program office reporting to me. And Chile, our CFO of North Asia has been promoted to the role of running this program office. Jill is here in the room with us. She sits over there. She is a Singaporean colleague that has done a marvelous job. It brings the right interpersonal skills, change management skills and attention to rigorous approach program management. And I look forward to work with her together with the regions and the divisions to get this all going. Her role will be to bring it all together and to help to prioritize. To make sure when we starting when we would like to start 7 things in parallel, we might say, okay, let's do only 3 of them and let's do them right to make sure that actions, milestones, accountabilities and responsibilities are defined, followed up and let you do the performance management. So this is really a change how we drive change and we have a very strong belief that this will help us to articulate and drive more successfully, even more successfully than we have done in the future. The last building block around relentless execution is on compensation. We will build a compensation system around financials, operations, changing change and leadership, building on the system that we have in place today. But the combination of institutional and individual performance will be measured in these four dimensions for all senior management in We have talked about execution. How do we get there? We need to make sure that we take business led collaboration in ABB also to the next level. To get there, we need to simplify how we work. We announced this morning that we are streamlining the organization and we have some targeted focused leadership appointments. And basically, what we want to achieve, we want to have a customer focused ABB, where we really have the next level of external focus in daily operations, where we strengthen gross business collaboration and where we effectively empower people closest to the customer that we are fast, agile in serving our customers' needs. We need a we have an organization that will be designed around business orientation. What we mean on that, we want to have undiluted global business line responsibilities for our business units and divisions. That means that all business functions will be located within the business. That means the person that calls the shots is at the very end the P and L manager running a global business unit. With these principles, we are establishing a much clearer and simpler and more effective ABB. We have clarified the roles and responsibilities. This morning, we are informed in our conference call the top 900 people in ABB about these changes, and the executive committee members will work with their teams now until 1st January when the changes are effective to get this all ready that we roll in 20 15. The resulting organization is pretty lean. We have 5 divisions and we are reducing the number of regions in ABB that we have today from 8 to 3. But at the same time, we are taking out one level of hierarchy and we are moving the regions directly into the Executive Committee. These three regions will be led by experienced ABB Executive Committee members. Frank Dagan will lead Asia, Middle East, Africa, a fantastic growth opportunity for ABB. Greg Choi, currently running North America, will run the Americas. And Velimati Renikola, who has very successfully built the Process Automation business over the last eight years up in ABB will take on the role of running all of Europe across the entire ABB portfolio going forward. The focus of these three roles is simple customer collaboration, shared services and running the countries. That's it. And all other functionality needs to go through the business line or the corporate center. This means, if you look at the new executive committee structure, we will now have we will continue to have 5 divisions. And here, the leadership appointment of Verimatti is already done. Peter Terlisch, who is here in the room with us, will assume as of 1st January the succession of Verimatti. Peter grew up as a control and process automation engineer. He grew up in our process automation business in leadership roles. He turned around some softer businesses in part of the portfolio and did that very well. Afterwards, he became CTO of ABB for 6 years before going out and running Central Europe, one of our largest regions in ABB very successfully. So Peter will be joining the Executive Committee and his wealth of experience in process automation and his strong management skills position him as a great successor to take the successful story of Welle Marti to a next level. But we are not only changing executive management and working on senior management. We also announced this morning a change on board level of ABB. Following quite intensive discussions, as you can imagine, around the Power Systems situation, the Board decided to add capability and competence in the field of EPC and project management. David Constable, sitting CEO of Sasol, a strong company in South Africa on Energy and Chemical Management will be proposed to join our Board at the next AGM as of 1st May, 2050. David is a great guy. I had the opportunity to sit down with him. His wealth of experience is next level is being lift in ABB in all dimensions. We're changing the focus on the portfolio. We are driving execution. We make leadership appointments. And even on board level, we are stressing competence building opportunities to complement what we have already here. With all of this together, we are committed to deliver to you attractive shareholder returns. This morning, we announced a significant share buyback to allow our shareholders to participate in our strong cash generation, the proceeds of a very successful portfolio of over the next period are clearly formulated and I will hand now over to my colleague and friend Erik Elswick, our CFO, who will explain more in detail what they mean. Over to you, Erik. Thank you, Ole, and good afternoon to all of you. We will now cover the financial targets and capital allocation as the basis for driving sustainable value creation in ABV. In the next 30 minutes, I will go through the targets and the capital allocation, but there are 3 key takeaways that you should take. We will drive the operational EPS growth even harder based on the organic growth on volumes and the margin accretion we see possible within the corridor we have announced. You have already heard us talk significantly about the cash flow return on investment. Our definition which is a fairly tough one to drive the return on the capital that we are investing. So we will push the cash flow from the earnings and we will drive the capital both on net working capital allocation side. You have seen the And we will be more active on the capital allocation side. You have seen the announcement of the buyback. We have talked about it before. That's one of our instruments. And now we have announced a significant buyback today. Behind the plan we have made assumptions. On the global GDP growth, we see 3%, 3.5% over the period, which is underpinned by a good growth in the emerging markets some percent. And we have as you have seen from Uli about half of our business already in emerging markets. We also see recovery continuing in the United States and North America and also a recovery coming in Europe even if on a more modest level. Also the industrial production, which is important for the growth of ABB is recovering to a higher level above 3% even towards 4% if you look further into the years. And there it's important to see the assumption we have made on the oil price that it continues on a high level where it is today, which is driving the investment on the oil and gas side, but more importantly, pushing a lot of the energy efficiency investments that our portfolio is designed to drive. If you look at those underlying fundamental assumptions, which is behind the plan and the numbers we have put together, you see on the left side of this chart the 3% to 3.5% GDP growth. The ABB market if you average it out between the different segments we are active is a 3.5% to 5% growth. So we see the ABB markets growing faster than GDP. On the and infrastructure, you see a growth corridor on the utility side from 2% to 4%, somewhat higher than the CapEx growth in utilities we had on the prior chart. And that's because of the growth areas on the higher growth parts that Ulrich talked about in the utility sector that we are aiming at. Industry 3% to 4.5% is the centerpiece of the growth with a good growth rate foreseen. And then on Transportation and Infrastructure, we see a higher growth rate because of the new segments that we are active in there. So overall, the organic growth target on a like for like basis over the period as growth momentum we get out of all our efforts on the pie side that Ulrich has already covered to quite some extent. If you look at the delta growth over the next 6 years from which part they are coming, you see on this chart that 70 5% of the additional revenues approximately that we see over the next 6 years is coming from Industry, Transportation and Infrastructure, where you have the higher growth rates. But importantly, 25% is coming out of utilities, where we are focusing on the high growth segments. You will hear more this afternoon from Bernhard and Claudio talking about the power business and how we focus in on the attractive of that market. So that is the growth target. If we then turn to the margin target, I would first like to explain what we are doing with the change from EBITDA to EBITDA. We had the prior target on EBITDA level. We will now have targets on operational EBITDA. And the A we take out is only the part related to acquisitions amortization. This is a better measurement, because it includes those operational costs of depreciation and normal amortization into the management cycle and the evaluation we do inside ABB. So this is not only the external target. This is what we drive down the divisions, BUs, product groups and inside the countries. Our aim and target is clearly to move up within this margin band of 11% to 16% that we have defined. We see the trough year to be 2014, obviously pushed down by the situation that we have in Power Systems. But we see a clear possibility to have good accretion in 2015, mainly from the results out of the PS step change, but also the successive benefits we see coming out of the 1,000 day programs and all the efforts we are doing on running a more stringent operating model in ABB. So good margin accretion. The margin target is 11% to 16% on the group level. So the important drivers behind the margin is coming out of productivity. You are well aware that we have over the last few years been successful to drive a 3% to 5% cost reduction in cost of goods sold. That will remain the cornerstone of our cost management program to drive productivity and competitiveness savings from process improvements in ABB. We are adding to that the white collar productivity. We have about 100,000 of our 145,000 employees in the white collar area. And the productivity improvements we can do on the engineering side, on the administration behind it are significant as well as what we can do on the shared service side, the common services in the areas of HR, finance and so on. So from this, we see clear contribution to the margin accretion together with the existing saving program that is in place today. These two parameters are then the 2 main levers to drive the earnings per share growth. We will measure it as operational earnings per share. And the key contributor to driving the absolute is obviously the growth target of 4 percent to 7%, even if we also see some contribution from continuous activity on the M and A side, which we see in a more incremental fashion over the next years than we had in the past. The productivity improvements and cost savings and the change of the operating model will help drive the margin up. So those two pieces will obviously then be the key help to lift the earnings per share on ABB. But we should not forget the items we have below the line, below the operational EBITDA. And that's the finance net where we have been quite good in recent years to drive it down and have achieved a funding basis in ABB with a good average interest level. And the tax rate has been around 27%, 28%. The target we have for the period is to keep that at 27%, which is ambitious target, but the fundamental for the plan that we have. So if you put all this together, the target is now to deliver in the next 6 years a 10% to 15% compounded average growth rate on EPS on the operational level until 2020. Next target is on cash flow conversion. Here we have had a good track record. We have delivered our target over the last few years above 90%. The target remains there at above 90%. But it's very important to point out that we have significant potential in the capital side of ABB. And on net working capital specifically, we were at the end of last year close to 15% because of quite some investments in net working capital. The long term target is now to drive to 11% to 13% net working capital as percent of revenues. And the way we do it is in a comprehensive program, which first of all goes to the inventory and logistic inventory levels and logistic processes in ABB where we are attacking the processes down far down in the sustainable improvements. So this is not about pushing the targets and pushing down the level and then it comes up like a balloon again, but really changing the way we're operating. And that fits well with the focus on 1,000 day plans and operational improvements that Ulrich has already described. What is also beautiful here is that we get the operational improvements on the finance but those programs that are already running we see a clear benefit also on the growth side with faster delivery times, higher on time delivery and more attractiveness from the customer point of view. We have seen the first effects since we started this couple of quarters ago and this will be a continuous effort that will deliver results over time. You see on the right hand side of this chart on the bottom IABB's inventory turn on average including sales in excess of invoicing compared to the peer group and we have a substantial potential here to release cash in the coming years. Then to the cash flow return on investment. And you know we define this as cash flow, operational cash flow after tax divided by the capital invested. And that is the capital we have invested over time. So we add back depreciation and amortization. So it's a fairly demanding measure where we score well against peers in the industry. We are around 12% after the large acquisitions we have done. And we see this moving into the mid teen range. So our target is clearly to deliver in that range, driven by improved cash from operations, but also the discipline not only on net working capital, but also on capital expenditure with having higher asset efficiency, which will be helped also by the margin target that we are driving including the operational cost of depreciation and amortization. On the M and A side, we have disciplined criteria that I will come back to and we will have them in continued so in force to make sure that the money we spend on M and A is really done in a way where we get the right returns. So overall, the aim is very clear active long term cash return on investment to shareholders in the mid teen range. Then summarizing on the target. So there are 5 key targets on the group. We had 5 before and we will still have 5. It's the revenue growth of 4% to 7% as a like for like growth on average over the 15% cash flow conversion 30% and then the cash flow return on investment at mid teen level. These group targets will be supplemented by divisional targets on the margin side and you have them on the right side of the chart here. We have during the strategic work refined them a bit between the divisions. And you will see in the back half to my documentation how this also compares to the current ranges with an approximate translation to see where we have adjusted the target. What is important to point out is Power Systems. We have here a target range on EBITDA level of $7,000,000 to $11,000,000 And we see that we will get into this range in 2016. So we see a recovery from today during 2015 and getting into this range in 2016. So those are the targets and the background why we have set them the way we have. Let's now take a look at the balance sheet and where ABB is on the balance sheet side. We have a strong foundation and a solid balance sheet today. And we need a good and strong balance sheet to support our strategy and the growth behind it. But the balance sheet we sit on today also has the flexibility to be more active on the capital allocation. You have seen the cash flow generation. It has been stable. I covered it before. This is the free cash flow year by year. We have an attractive profile of our outstanding long term debt, which runs into 2,040 2. Average life is some 6, 7 years. And we are now in a net debt position coming from a big net cash position before we started big acquisition program. We are committed to our A rating, which is the right rating we believe for our industry and having a balance sheet that is supported also for all the bonding lines and things we need for the customers around the world. So if you then look at the priorities for capital allocation, the 4 item list is the same as before. We stress more on the first one the return on investment on the organic growth. Obviously these typically have the highest and best returns to build the organic growth and we will do that as the high first priority. Our dividend policy 3% yield today and we will continue to 3% yield to date and we will continue to drive in that direction. Value creating acquisitions on an incremental basis primarily has to meet the strict criteria we have on M and A including the integration aspect. And my colleague, Greg Shai will talk this afternoon on the success we have had on the M and A so far and how we drive those processes to ensure a when we have them available. And that's precisely why when we have them available. And that's precisely why we have today announced the $4,000,000,000 buyback program program that will run over the next 2 years. So let me go a little bit more in detail on what we do on the buyback program. It is clear that we have had a great success in our program. It is clear that we have had a great success in our divestiture program of pruning our portfolios. Over the last quarters, we have collected more than $1,000,000,000 in pretax proceeds from the divestitures. So that has strengthened the financial position. We have a high confidence in the cash generation and the big potential in net working capital. And we are committed to running ABB with an efficient balance sheet. As I said before, we need a solid balance sheet for the customers with an A rating behind it, but it still leaves space to return additional cash to the shareholders. About 3 quarters of the $4,000,000,000 will go as a conventional buyback where we also then cancel the shares later on and about 1 quarter of the needs is going to support our employee share option programs that we have both to hedging and also for delivery of shares. So all in all, we are very firmly committed to attractive shareholder returns over time as you can see today's announcement. So let me then sum up what we have said. Attractive growth targets and profitability targets with a corridor over time and the aim to drive higher into this corridor over the strategic period. 4% to 7% organic growth, good cost saving programs behind to support the move in the margin range heavier focus on cash and capital efficiency through the networking capital program and a disciplined assessment of all capital spending be it organic or inorganic and then driving the shareholder value through increasing earnings per share and a return on cash flow return on investment in the mid teens level, which we believe is an attractive return in our industry. And then still having a solid balance sheet to support our strategic plan that we have communicated to you today. So with that, I will hand back to Uli to sum up his portion. Thank you very much, Erik. So next level. What stays, what changes and where will we go with our program? What stays? ABB is strongly committed to health and safety and integrity. There will be no compromises. There are none today, and there will be none in the future. We keep the focus on power and automation because we are convinced that these are attractive fields for an enterprise like ours to be active in. We will continue to deliver on our cost out. We keep the discipline, we widen the focus. We will continue to drive focused incremental M and A. And we will build on our unique global team and culture. As you know, what we recently changed already, we accelerated the organic growth momentum through the introduction of pie. In the 2nd quarter results, if you look at the order momentum, there is a good momentum building up and I'm confident that this will remain that way if we keep doing our homework. White color productivity is an opportunity resources better for growth. Networking capital management, the strong focus on the capital side, on the cash side of ABB is something that we recently reintroduced and made sure that it's a key part of the Performance Management System. The Power Systems step change is well underway. The risks are ring fenced and we understand what needs to be done and have very strong actions in place to address the legacy situation. What is new is the shift in the center of gravity towards a very strong focus on organic growth in a vast €600,000,000,000 plus market that will grow by 3 to 4 ABBs over this planning period. We take comprehensive operating system. And we will drive change with focused 1,000 day programs to ensure what I call a high say do ratio in execution of change. With high performance management, compensation and strategy closely together and we have simplified and strengthened the customer focus of our organization, complemented with some focused leadership appointments. So what do we want you to take away from this morning? ABV well positioned in attractive markets. Three focus areas will be the key elements to deliver attractive shareholders' returns and a strong signal of confidence and our commitment to deliver this shareholder returns by announcing a €4,000,000,000 share buyback program. With this, we are convinced we will accelerate organic and inorganic sustainable value creation. Thank you very much for your patience in this morning. I suggest we go now over to questions and answers. With that, I'd like to open it up to question and answer. Before we actually start with the questions, it is being webcast today. And for anyone who is actually on the webcast and would like to answer ask a question, On the screen, there is a box where you can e mail your questions in and we will answer them once we get them. When you get the mic, put up your hand if you would like to ask a question. Wait until you get the mic before you actually speak. And please limit your questions to 2 questions. I know there's a lot of questions today and all of you guys want to ask a lot of things. We have another Q and A in the afternoon, but two questions, please. So with that, let's start. To the right. James? Yes. Hello, everyone. It's James Moore at Redburn. Two questions then. In terms of the savings, I just want to be clear. You've got the COGS saving target, which has been there before, but you've also mentioned the white collar and the 8 to 3 regions. Could you help us quantify those savings from those two aspects and just confirm they're separate to the COGS? Secondly, on slide 33, you talk about product and software gaps. Can you say what the process and electrification product gaps are? Are we talking valves and process, for example? And on design software, can you say what you're talking about here? Is that PLM CADCAM or is it simulation or is it something else or the whole spectrum? Okay. Thanks Thanks, Jens, for your questions. First of all, on the cost reduction ambition level, we said we're going to keep the momentum of taking the equivalent of 3 percent to 4% cost out every year. To deliver this, we are sorry, it's 3% to 5%, thanks, Erik, for the correction. Deliver that, we're expanding the scope and the focus. So in the 3% to 5% ambition level, we have now a wider scope, including the white color measures to make sure that we are delivering year on year the equivalent of 3% to 5% COGS. And I hope that clarifies the situation around that one. If you look at the product gaps that we have today, look take the process value chain. You need sensing, you need a brain, you need actuation to deliver process automation. On the sensing piece, we got a good measurement portfolio. Could we be doing more? Yes, up around 800xA. There's no need to do more. Up around 800xA. There's no need to do more. And then if you look at the actuation side, we got the segment agnostic, the motion actuation. We are very strong on that. Our motors and drives, we are there. But if you look at actuated control valves as an example and other elements, there might be an opportunity to do more. So that's around the process chain. Now let's talk about the software question and that you had. Look, we have today already great software tools. If you go out and talk with the robotics guys, we have a software that's called Robot Studio that allows you to do 3 d simulation of a robot cell in an environment. We are widening in that capability. If field to complement what we are doing very specific, domain specific or asset billion PLM activities. That's not what we are seeing in that field. And I hope that helps you to understand a bit better. Thank you. And Daniela? In value, this was 2.5 questions, but well done. Good morning. It's Daniela from Goldman Sachs. One first question. You mentioned in the press release and in the present during the presentation as well that you were changing compensation structure a bit to adapt to the new targets. But can you talk a little bit more precisely through exactly what you're doing in terms of variable versus fixed and which metrics given the targets change a little bit, but they are not radically different from the prior ones? And then second on digitalization, a lot of your competitors and particularly the biggest capital goods companies are talking also about playing a role in software and in digitalization. Can you talk a little bit through when I'm assuming you've mixed or reshaped a little bit about their product portfolio, what is really different do you think at ABB versus what you see the others saying they have they can do in this field? Thank you. Okay. Look on the compensation, I will give you some structural comments. We are working as we speak with the Board of Directors on the finalizing the new compensation structure, and the details will be announced together with the annual report and the compensation report then going forward. But basically, the principles that I laid out that we have finance, operations, change and leadership as key elements of compensation and and process, but these are the key principles around the compensation that we are adapting. Now in terms of the digitalization, yes, look, it's really interesting and I tell lot of people. In 2000 and 1, 2002, you might remember out of the sudden everything in the world was e. It became e procurement, e everything. And if you look at it, it was not that disrupted. It was basically a continuous development of a DNA of an enterprise. On digitalization, the ones that realize that it is important, I can just say welcome to the club. We have been in this business for many, many years, and we have a strong software business today, as I said. We have about more than 50% of our offering already software based. We are continuously developing it. Now one thing is very, very clear. The individual digitalization, that will play a key role. If you I'll give you some examples. Look at the people that come out of the high school today, they all are used to a human machine interface, which is completely different than what the generation 20 years ago had. So we are adapting, and we need to make sure that we address the needs of that part of the workforce as one example. The second piece is if you look at the affordability of sensor technology today, you get a lot of functionality that would have cost multiple 100, if not 1,000 of dollars. You might get that 4, dollars 5, or $10 The change is really the capabilities in the product that we have. Bringing that together with our capability to store data cheaply at Mars and have operating data available is a confidence that ABB is continuously shaping and building on and we are on the leading front of it. So for me, digitalization has been and will be a part of ABB's way of doing business. We're investing strongly. Our 2,500 software engineers will be more in the future. We continue to invest. But I wouldn't say this is something that totally out of the start and popped up and is a big surprise to us. It's a continuation. It gets a stronger emphasis going forward because we, as we said, we want to differentiate even stronger on a software basis. Andreas right there. Andreas from JPMorgan. Thanks for the time. My first question is on the margin target that you've provided for the group, the 11% to 16%. It's a very wide range for a diversified company that didn't even experience that kind of range in the biggest recession in recent times. Also in your business plan to 2020, you don't really forecast the business cycle. So why such a big margin range? And it's before restructuring, why have you chosen to give a target excluding restructuring given that restructuring is a business expense like any other in my view? And the second question on investments. Since Q4 last year, we have seen R and D and SG and A go up as you drive this organic growth initiative. At what point in time should we expect that to stabilize as a percent of sales? Thank you. Okay. I'll take the second one and let Erik answer the first one. On R and D and SG and A, we have front loaded the system. We have identified the opportunities out there, and we wanted to make sure that we address them in a swift way. You have seen now the order uptake. We are going through 2014 is an interesting year because we have the lower opening backlog for the revenue in 2014. So I call it the bathtub. We are really going through the bathtub in terms of revenue this year. And then the new orders can come in and pick up the revenue base. We are conscious on these investments. So this is not creeping up of R and D. This is conscious investments that we have taken. And you should expect during 2015 that we get some accretion out of that activity. I'll let Erik answer the 11% to 16% question. Yes. So we have narrowed the range somewhat Andreas. And it is a range think is the right one to have. We believe we can drive into the upper end of that range in a good situation we are today in the lower half of the range. So we believe this is the right size of range that we have. And then your question on restructuring, we believe it's for consistency reason correct to track the operation a little bit up excluding the amortization and deal with the restructuring separately. We are going to be restructuring separately. We are going to be completely transparent on that as we have been in the past and also giving indications of what we believe the restructuring will be. But for consistency reason over time, we have decided to leave that outside the operational EBITDA definition. Is there any questions from the back there? It's Tim Schulz, Mandarosa from JPMorgan. Maybe just to add one question. What have you assumed in terms of the pricing environment within your margin and financial plan? We have assumed that we have a net gain on pricing over the time, meaning that the cost savings will outweigh pricing impact over the activities over the next years. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Up here on the right. Thank you. It's Simon Tonneson from Credit Suisse. Two questions. The first one on your growth targets. Looking at the midpoint of your expectations for ABB market growth and the midpoint of your own targets for organic growth 4% to 7%, it implies a bit more than 100 basis points of faster growth. Is this how you generally think about gaining share compared to your competitors? 2nd question on derisking. Could you just elaborate a bit more on that? How did, for example, the tendering process changed since the beginning of the year? I presume you would still bid for offshore wind technology despite the issues you've seen because the technology becomes a a bit more mature. But how do you approach new technologies? Are you generally aiming for a smaller share of project business where you become probably less of a turnkey partner? Thanks. Okay. Look both excellent questions. On the growth ambition, look our ambition is very clearly to outgrow the market. I think we got the resources, the understanding of the market, the actions in place. We have a rigorous, what I call, organic growth machine now going where we have clearly defined responsibilities of people. We want to grow ahead of it. The reason why the two ranges are as they are. On the one hand, the GDP forecast and the market forecast is a little bit narrower. And we want to stretch ourselves and we want to have ambitious top of the range targets both on the growth and by the way also on the margin side. And that's the reason why you see that. Let's see what we deliver on that one. We have a clear ambition that we're going to outgrow with our organic growth target now of 4% to 7%. We signaled clearly that we will take share over the years to come. Then the second question was around the tendering piece. Look, I've been personally involved in some of the projects and the project this morning that we announced this morning, this $800,000,000 project up in Scotland. What are we doing? If you take in offshore wind, we have changed what we offer. In the past, we took complete end to end turnkey not offering that anymore. We're focusing on the areas where ABB is really good. If you take an offshore platform, think about it in 3 pieces. It's a tin box on stilts. It is power electronics and it's installation. We are really good at power electronics and we are the leading edge with our technology there. We learned that you need to be really good at installation and on the tin box as well to make money in this field. So what we are doing now is we are partnering with players that are strong on these two dimensions whilst we focus on our core. That might mean that the one or the other order on the top line looks a little bit lower, but it's a much better quality of activity for ABB. Hope that addresses your question. I think there's another question here Olivier. Thank you. Olivier, Snow, Exane. Coming back on 2014, that's a tricky year because it's the transition between the one plan and the other. So you said in the release that you were confirming target. I wanted to know if you could be a bit more specific about what you have really in mind that you will meet this year in terms of targets, so we have a clear view of the base? And the second question is on the share buyback. Because in terms of messaging so far to ABB it was really kind of down the list. I think I could quote you quote some of you saying it would happen only if you run out of it M and A ID and you had too much money. So the question really is your thinking, your rationale here. At times, you also mentioned that PS was a drag that the way Moody's was looking at the balance sheet was a drag. So are there some of these things that have changed as well? Thank you. Let me start with the share buyback and then let then Erik talk about the 2014 situation. On the share buyback, why did we decided to do it today? We have done a great job in cash generation. If you look at the amount of cash that ABB turns out regularly in 4 out of 5 divisions, it's a really strong cash generated portfolio. Divisions, it's a really strong cash generated portfolio. In addition, we have been successful in pruning the portfolio and get about SEK 1,000,000,000 of proceeds out of the pruning. And then you look and say, okay, what do I do with a balance sheet that could be looked from outside as pretty inefficient? What do we do with that? At the moment, given the homework that we're doing in PS, given that we are driving the integration in the large acquisitions that we have done very successfully and given that we knew we will make a structural change to this organization on the regional side is that it would be prudent not to take on more risk by doing a large scale M and A on top of what we are doing. And we decided together with the board to look at the 4 option that we have. We have already provided for M and A the M and A activity, but to take the share buyback as one of the instruments that we have always laid out as one of the areas. What we also want to demonstrate very, very clearly with this step is we have high confidence in our plans and the commitments And then on the outlook, what we have said today in the communication, if we confirm the outlook that we provided after the Q2 for the rest of this year, we are not giving guidance on the running quarter, but the total outlook for the year remains unchanged as we had before. And in addition to that, I mentioned the margin in Power Systems where we also confirm with what we said after the hard to deliver overall breakeven for the year for the division. Okay. And with that, I would like to just ask one of the questions from the webcast. How much of your installed base are you today targeting for service? And how big do you expect it to be for 2020? How will your penetration rate change from today to 20 of years, one key element of success that we have today was to establish transparency, to make sure that we know what we have installed out there. And we have today, we know more than twothree of our assets that are installed out there precisely where they are. That's a fantastic opportunity for us to drive that further. And our commitment is that we're going to increase the share of servicing revenue by 1% point annually until 2020 in average. With that, Frederic? Yes. Hi. It's Frederic here from UBS. China State Grid is buying up grid assets almost monthly right now across the globe. You have quite an ambitious rightly so an ambitious growth target. So you must have thought about the potential market share losses as they're not really prioritizing Western suppliers. How are you going to tackle State Grid's accumulation of assets? Yes. Look, first of all, we are not in the business of acquiring these assets. So we just have a different customer than the link that is backward integrated. We got a great relationship with State Credit. And I met meet with the Chairman on a regular base. We have good management level contacts. And it's an interesting one because we work together on multi projects with State Grid. And if you look at most of the HVD easy projects in China, we were intimately involved either with wider solutions or with certain components and that will stay that way. We need to earn our right to be considered by every customer, not only Sacred, by every customer out there by having leading edge technology. I can tell you when we announced the 525 kV cable, HVDC cable, the first one they called were our friends over there. They said, wow, what can we do with it and what can we do together? So we really need to stay at the forefront of technology development and drive that in a very active way to have a great value proposition for Stagewood as a customer and others. And at the and clearer what we can do to address growth opportunities on the grid side. The grid control capability that we have, the software based differentiation that we have in that field that we are driving very strongly. Now the microgrid capabilities where we have together with BYD are pretty strong storage solution that puts us at the forefront. And let's not forget about the market access, the installed base and the service network that we have. All that together puts us in a strong position. But Frederic, we should never be arrogant. We should take them very serious as a competitor, which they are in their own dynamic. But I'm not scared of it. We have the mitigating actions in plan. So technology investments, reach and service will be key differentiators. I think there's one hand left hand side of talk. She's coming. Thank you. It's Peter Reilly from Jefferies. Two questions please, both quite high level. You've cut or trimmed most of your targets competitive environment? Is it a bottom up analysis of customers having lower investment plans over the next cycle? And then secondly, on a related note, you've cut your cash return on investment target from over 20% to mid teens, which is a pretty big cut and shouldn't really be affected by a low growth environment. So what's happening there? Is it more acquisitions in future? Is it historic acquisitions not delivering the returns you expected, more CapEx? Maybe you could just give us some high level commentary on why the targets have come down please? Yes. I assume you referred them to the growth target mainly where we have now a 4% to 7% on a like for like basis. The old one was higher and maybe in hindsight quite ambitious given the way it was set at that time. We have really done it by analyzing the strategy bottom up and we believe that the 4% to 7% is an ambitious target as it stands today That's why we have adjusted on the growth side. On the return on capital, the above 20% was always set the proviso in absence of larger M and A during the period. Obviously, we have not done larger M and A and that's why we are on the 12% level today. We firmly believe also benchmarking with different measurements and different trying to equalize the calculation of different return calculations that the mid teen is the right level and is an attractive level compared to where we should be. And we also will continue to do incremental M and A and that might then temporarily push downwards in this range. But we think it's the right level and we want to have the right return on capital to also drive the growth and the earnings per share and not the return in itself only. When I look at the targets to complement Eric, I think we have today attractive realistic targets in place given will take 2 more questions. At the very back, Ben, I think. And then Mark. Sitting down. We can barely see you. Hi. It's Ben Hugler, Morgan Stanley. Two questions. Power Systems, I don't know if this is a question for Ulrik and Eric or for Claudio, but the target is basically unchanged over your former target. So 7% to 11% if we adjust for D and A is what it was before. At the same time, the competitive environment seems to be a lot tougher than it used to be. On an underlying basis, I would have said across the industry those margins are down 2 to 3 percentage points. So in terms of getting back into that range, what are you thinking about the competitive dynamic that's going on in Power Systems, are you assuming the pricing conditions and the competitive environment actually improves? Or is this all to do with ABB's own portfolio? So that was question number 1. Question number 2 is just a very general question. Eric, when you talked about the margins, you very kindly said that margins are at trough. We've talked about COGS being 3% to 5%. But what I'm curious about is in some of your highest margin areas like low voltage, like discrete automation, do we really think we can actually drive those going on in Power Systems and on the cost side? Let me start with the Power Systems situation. Let me start with the Power Systems situation. I think that goes in line with the question that Frederic asked before. Clearly, in every business that we are in at scale, we have a competitive environment. If you look how we are positioned in Power Systems and exclude the headache that we have created on the offshore wind side, it was a house made headache, we are very strongly positioned in many parts of the portfolio there. If you look at our technology that we are providing, just as an example, what I said this morning on the HVDC LightLinx, we have commissioned 13 or 14 of them in the world. That means we have got a clear competitive advantage around technology. If you look at the amount of R and D that we spend, the way we can use the wider automation capabilities of ABB to drive reliability, uptime and control in the grid, we have a clear differentiating unit. And it's clear that if you look at the R and D base on some key R and D building blocks, we have a benefit compared to some of our competitors. We are longer in the business. We have more scale and we have more punch because we are investing more given the scale that we're in. The second piece is if you look at the commercial behavior, look, we have a discipline in place that will not allow us to do something strange or load up the backlog one more time with low margin stuff. If others want to do that, let them be my guest. They can do that. ABB will not play in that way. What we need to make sure is that we have good margin at competitive prices, and that's what we are working very strongly on. The modularization for example, in Power Systems will help us to get the cost down and maintain the margin. And Claudio will talk this afternoon even more a little bit more detail then on what he's doing about his business. Over to Erik on the margin question. On the low voltage and the DM margins, we may drive higher in the range. The important part is that we will have efforts and processes in place in all divisions to continue to drive cost efficiency and margin accretion. So I think exactly where we end up in the range, whether it's in the upper closer to the upper end of the range or middle somewhere in the range, it really depends on the mix and the competitiveness. And don't forget that both also have above average margins, which will help drive the EPS growth of the for the group. So we look at the EPS and look at the margin. We will not single out one that's more important than the other. And with that the last question, Marc? Yes. Thank you. Mark Trotman, Bank of America Merrill Lynch. Just two questions please. Firstly, Power Systems. Just trying to understand the drag that will still be there in 20 15 beyond maybe some lower margin backlog to get through. It feels like solar EPC is largely complete this year and perhaps one of the major problem platform projects as well. So first question is just what are we facing in 20 15 in terms of major challenges for Power Systems? And the second question related to what Ben was margins to where you really want them margins to where you really want them to be 1st as a platform and deliver the growth through that? Or is it a growth led margin enhancement? I'm a little bit confused to where ABB is operationally really focusing to deliver its financial performance 2015, 2016 and beyond? Thank you. So, Marc, first on Power Systems in 2015. Look, Thadio will share with you this afternoon the homework that he has been doing and the plan that he has going forward. But basically 2014 is the trough. We aim to be or we commit to be at breakeven in the Q4 and we aim to be at breakeven for the full year for 2014. 2015 will not yet be in the target bandwidth, but we will go towards that one. If you look at the remaining risks, the solar EPC is pretty much flash through by the end of the year. It might be 5% to 10% left, but the rest is all gone. On the platforms, we have made significant progress the the scrutiny until everything is done in that field to make sure that we are delivering it on it in the right way. The second question was on Margin trade off. Yes, the margin trade off. Yes, look, we want to drive both. To be very clear, we want to have organic growth ahead of the market and we want to deliver to your margin accretion. Now you might say this might not be possible. Well, let's show whether we can do it or not. On the growth side, we got the machinery in place. It does not necessarily mean we need to add more cost in the future. It might mean that we allocate when we went through this strategy exercise, we really went through the is when we went through this strategy exercise, we really went through in detail what can we do in the operations given the cost competitiveness, given the competitive environment? We did a lot of benchmarking, what is possible, what can we do. I'll just give you one example. If you take at the moment the program that Erik is running around net working capital, and let's assume we take out over time about SEK 2,000,000,000,000, SEK 3,000,000,000 of inventory. Let's just assume that for a moment. Dollars 3,000,000,000 of inventory is about $450,000,000 inventory carrying If we get this going, that goes straight to the margin. So with that, I'd like to close out the morning session. We now will be serving lunch in the reception area. I remind you again that we have the 3 exhibits here in the room. We actually have Yumi robot, collaborative human collaborative robot. We will be back here for the afternoon sessions at 2 And our Executive Committee will be joining us for lunch. So please feel free to ask some questions. So thanks again. Welcome back everybody. I hope you have recharged the batteries and got something decent to eat. We have enough energy for a good and exciting afternoon where we will show you next level in action. This morning, you heard Erik and myself sharing with you the key building blocks of the next level strategy. Now what we will not do this afternoon, have every business in detail running through the entire business strategy of what they're going to do in the next years. What we did, however, we repaired 4 teams that will show you what will be happening in distinctive pieces of the ABB portfolio that should give this morning's strategy presentation a little bit more granularity that you understand what we are really doing in the field of implementing next level. So the teams that you will see this afternoon will focus before a small coffee break on the big shift in power. And we will lay out that there are a lot of attractive opportunities. Looking over lunch, I got many well, what is it really in power that gets you so excited? Bernard and Claudio will share that more with you. Then we will have Verimati and Pekka talking about pushing the boundaries of the Automatable and basically show you in 2 examples what's next and what is coming and how will we drive growth, profitable growth on the automation side and to give you 2 distinctive very clear examples. After the break, we will have Frank and Chunyang Gu presenting to you what next level really means in action in the regional and industrial focus with a strong focus on what does collaboration mean, bringing ABB's different businesses together and delivering on the promise of business led collaboration. And we're going to close out with a session on execution. Execution is a hallmark of ABB, and it needs to be a hallmark of our strategy going forward. We will have 3 blocks there. Tarak will share with you on execution, how we drive Relentless Execution in daily operations. And he will give you some very practical examples out of his business. Greg will show you how we drive integration execution and what we have learned. And he will be pretty black and white on the good things and the things that we learned that we can do even better. And then we will have Jill Lee talking about how do we drive the 1,000 day programs, the big change topics in the future in ABB. The team that you see this afternoon is a very, very good sample of the Federation of Nationalities in ABB. You see people from all around the world that are taking leadership position already have leadership position in the context of realizing the new strategy. We have markets all around the world and we got a team from all around the world. So welcome to this afternoon and over to Bernard for his presentation. Good afternoon, ladies and gentlemen. I would like to share with you some insights into the power sector and our strong presence in this domain as Ulrich covered in his presentation this morning. My team is responsible for Power Products, PP and Claudio's team responsible for Power Systems, PS. We see significant changes in the power landscape. And grid complexity is increasing both on the supply and on the demand side. For instance, increased renewables are leading to more at higher power. New demands and more consumption points, for instance, data centers and electric vehicles are changing the grid as well. This has many implications on the grid. As you see from the graphics, we need to manage multidirectional power flow. We have increasing need for power quality and reliability. We had need we have need for more interconnected grids as well as storage energy storage capabilities. Private investors. The timing of investments by utilities is still somewhat uncertain. And these significant changes are bringing many opportunities for growth where we automation and asset management just to name a few. Let me take a deeper dive now into such an example where ABB is pushing the boundaries on AC and DC voltage levels. DC up to 1100 kV that is 1,100,000 volts as opposed to what we are used to at home, 110 and 220 volts. On the AC side, we push it up to 1200 kV and these levels are called ultra high voltage. Ultra high voltage means longer distances up to 3,000 kilometers just to give you some of the key figures. Significant opportunities for these technologies are in China, and subsea links integrating renewables. For these systems, we provide advanced control technology solutions. Another area where we contribute significantly is the digitalization of the power value chain to deal with the increased complexity and the transformers to the whole range of smart switch gears. We work for instance on pilot installations of a digital substation into automate the grid where we merge the flow of electrons and the flow of bits and bytes. A substation is a core installation in the electrical grid to transform voltages and to switch power. In addition to serving utilities, we have a significant presence in the industrial sector be industries, mining and minerals, oil and gas or even as you see in the chart here, be it for packaging, pharma, semiconductor, food and beverage and even the automotive industries. The needs these industries have are power security and grid access. What we provide as solutions is the grid connection, storage and power quality. This is yet another value to the customer. Transportation is also a growing sector where we play a major role, be it rail, marine or electric vehicles. We provide fixed and onboard solutions to serve these applications such as automation and power equipment for fixed rail installations or rolling stock, then electrical vehicle charging with a cloud based control system and the customer interface on the iPhone And marine and short to ship solutions are also some of those solutions which we provide. These examples show that it is all about smart electrification. I'd like to wrap up my presentation with a few words on the Power Products division. We have a balanced business, balanced across products, sectors and sectors industry, then utilities And when it comes to the markets, we have a balance between emerging markets and mature markets. Deep product and service offerings, deep product and service offerings, diversified end market exposure as you see on the chart. And then we have 80% visibility on market opportunities, thanks to our global presence and our front end sales, which we have in all these markets. Another key differentiator is the pipeline of innovations. Be it digital switchgear, the new range of high voltage gas insulated switch gear, or be it environmentally friendly insulation gas, which we announced as a breakthrough 2 weeks ago in Paris at DC products. Another key differentiator is our globally dispersed footprint, which keeps us close to our customers. All of this enables us to drive sustainable and profitable growth and puts us in an industry leading position, be it market share, technology and financial performance. Thanks for your attention. And now over to Claudio. Thank you, Bernard. So good afternoon, everyone. The next 10 minutes, I'll walk you through the PS part. Uli has already briefed you very well on some of the topics, but I'll start with taking over a burner message on the market. The dramatic changes that we see in that market actually creates good growth opportunities for us also on the power systems side, be it because of the distributed power generation with the microgrids topic that we'll talk about later on, be it the whole complexity of the grid nowadays requires much more intelligence, therefore, much more automation. As you can see in the slide here, as part of our core technology and portfolio, we do have both ends of the portfolio, the automation side, both for the power plants as well as for the grid. And we have the whole transmission part, distribution, hardware and the service software and the consulting piece, which allows to tap into those growth opportunities. So a traffic market definitely for the power system as well given the changes and given the completeness of the portfolio that we're having. One just good example of it of course is the HVDC. As you all know, we're market leader in that segment, very much driving technology, pioneering technology. We've done this for the last 60 years. The very first project that was commercialized, as you can see in the slide here, just 10 megawatt worth of power capacity transmitted at that time. That's about the equivalent of 2 of the large wind turbines that are applied now in offshore. And after 60 years, again, we're reaching the 10 gigawatt that Bernard just mentioned, which if I'm not mistaken corresponds more or less to the whole wind capacity installed in the U. K. And that's with the technology that we've been pioneering for the last decade. Another key element of this strength here is our installed base. As you can see also, by the way, we have added technology into the portfolio moving into the VSC, the voltage source converter technology which is in our terms HVDC light. We started in 19 97 with that. And now we basically are proud to say that 13 out of the 14 commission systems out there have been done by our team. So technology, the footprint and the installed base are key elements for us to drive this leadership. Now when it comes to this part of the business, of course, also we have to work on the execution piece as most of these projects entail large complex turnkey environment. With that, I'll go into a bit more granularity of what Uli was giving you in the morning on the step change where we are. Uli mentioned about the critical areas that we've been addressing. The offshore wind part there we have started we hit a couple of important milestones. We have started energization for Dolwin 1, which was one of the projects that have been challenging us in terms of execution, in terms of delaying, because of the weather conditions that we have been talking about end of last year, beginning of this year. Finally, we've reached the milestone of initiating the energization and we are on good track to get completion on that one. The other big milestone that we have achieved is in Dalwyn II, which is the last large offshore wind project that we have taken. And that one is basically now safe in the Norwegian harbor of Hagee Sund where we started commissioning phase. And the plan is to basically to then sail it out sometime in 2015 to the final destination and to the and for the hand over. On the EPC Solar, which is the other bucket that we discussed in the previous quarters that where we've been challenged with charges. Good physical progress there as well. 7 out of the 10 projects are basically handed over. And as already was mentioned earlier today, we basically believe that roughly 90 percent of that piece will be will go through our books and we will hand over most of it within this year. So obviously, in these 6 months, we've been learning. We've been taking pragmatic, but also solid actions to define the risk to confine the risk and build up resources that can help us in addressing those challenges. We've been doing this as you know with the support of external resources that came with the knowledge and the know how from the offshore wind. They went through similar activities of turning around couple of challenging projects in that area and they brought a lot of expertise that we will also be able to use that's the next the center part of the slide here. We'll be able to use then for the rest of the portfolio as well. We want to make sure that all the efforts we take here and the expensive efforts that we're taking to fix this problem that at least we can leverage the learning and make sure that the portfolio going forward will be in line with the expectations. Of course, besides improving the risk profile, like I will comment on that one later on, there is the basics have been also addressed in the last few quarters. Number 1 is taking out cost. As you know, we have been starting the year with a very low backlog. We're down on revenues if you see the Q2 results. There is a positive a positive momentum on the order both base and large, which is good. But we need to make sure that we need to adjust our capacity according to the deliveries. One piece that also which is very important that Uli mentioned is the standardization and the modularization. One learning that we want to take going forward is that we need to improve our processes standardize it so that we actually can concentrate our resources in generating value for the customer instead of spending too much time in sort of reinventing the wheel and fixing the problems backwards. So that will drive us to the basically what we believe is going to sustainable change by looking at adapting the business model as well, the de risking part. I'm going to come back to that one in the next chart. And really important, there is a healthy part of this business, which is growing in a profitable way. It's all about the service piece and I'll comment on that later on as well. It's about the whole automation portfolio that we have, which is mostly base business. It's also rather short cycle compared to the large projects. And all that part of the business is investment, resources, sales capacity to grow that part and will help us in getting where we need in terms of performance. So here it is what we said we were going to do in order to reach the 2020 goals. Number 1, obviously, we have an area that needs to be addressed that is the EPC turnkey large complex project. That one what we're going to do is consolidate that business, adjust the processes, adjust the organizational design to be able to execute those projects with the right performance. We will not step out completely of that business because we need that capability in terms of delivering turnkey projects for instance to be able to support our customers in large HVDC projects like for instance the one that we just announced this morning. Its largest complex, but it's not really related to offshore risk. This is something that we've been doing all along in the last decades and so on and we want to make sure that we have the right structure, the right capacity to deliver those projects going forward even better than in the past. Then there is a whole piece, which is the darker blue in at the bottom part and that is the base business that I mentioned before. It's the service, it's the product portfolio that we have also within our own division and it's the whole later on with an example of that one why we think this is so crucial for us going forward. But again, as I mentioned before, that's the base that is already delivering today the profit that we need. We just need to make sure that we grow that proportionally over proportionate compared to the rest of the business. And in between, we have what we will push forward as what I would call system integration. It's basically de risking the turnkey business, focusing, concentrating our efforts in what we're good at. Uli mentioned instance of the EPC Solar. I mean, our role for instance of the EPC Solar. I mean our role is to support customers to design and optimize the footprint of the solar, the electrical connection, the whole performance of the inverter piece, making sure that the control, the protection, the overall scala system on top of it works and improves the performance of the solar PV. We will leave the construction piece, the installation of those panels to other companies that are more local, they have more expertise and they can deal with that in a much better way than we do. So system integration, what we would call sort of the electrical part of the plant that is our core. We can support customers with that and we're going to concentrate on that piece. So today the mix is more or less illustrated on this end. And obviously going forward, we're going to then grow also the system integration in order to maintain our profitable growth targets as talked about earlier. Just two examples, microgrids and I won't spend time on that one as I'm running out of time. I just encourage you to go and talk to Otto and Massimo right there. They will explain why we believe this is a high growth market. And by the way, thanks to the partnership that now we have with BYD that Uli talked about today. That's something that will help us in differentiating ourselves and being able to provide either components or a complete system again with the principle of the system profitable base that's a service piece. Align with the group's profitable base that's the service piece. Align with the group strategy, we're targeting to grow over proportionately the service piece. This is crucial for us. We have the single largest installed base in most of our portfolio. We need to make sure that we tap into that one. We want to increase the penetration. And as a matter of fact, we have a hard target there to reach 25% of the total share of revenues out of the service piece. And we're going to do that in also in an innovative way. We're going to leverage more and more the software piece. Uli mentioned about that. The software led collaboration that's something that we are working on pretty hard in our division. We know that we can leverage that software. We know that support customers in developing their installed base and making sure that they leverage that installed base with the right optimized footprint. To conclude, why we are here? The market is attractive. We have a number of high growth areas. We have a very strong position on the technology. I also encourage you to go and look at that cable that is back there in the end of the room. It's about that size and it can pull through 2.6 gigawatt worth of power. That's a breakthrough. That's more than doubling the capacity with about the same size of cable. That's what we can do in ABB. That's what we can do to support our customers that to address all the challenges that they have. So technology is number one pillar as you can see it here in the chart. Then strong footprint, strong position on the market. Also Bernard mentioned that we are present in most of the markets out there, not just with front end capacity, also with engineering capability, with consulting that we can support customers defining their needs. And then last but not least, the breadth of our portfolio. So those three pillars are there. What we just need to make sure is that going forward we balance right the mix as I showed in the previous chart and we will get there delivering not only technology, not only supporting customers, but also reliable returns. With that, I'll take I'll hand over to Pekka and Welimati. Thank you. So let us take you with us to the next boundaries of automation. My team is for the Discrete Automation and Process Discrete Automation and Motion Division and Telemat Perenikolas for the Process Automation division. I will talk you through today what is happening in the robotics industry and how we do see the future of the robotization going forward. Let me first though introduce what is the Digital Automation and Motion division in short. We have a leading position in our drives and motors business and the derivatives of that actually robots are built on drives motors gearboxes and plenty of software around that. We also use the drives and motors in traction or we have a very strong position in the wind which is basically using the dry sand motors to convert energy from the wind. We entered to some new Today, we are leading player in fast charging of electrical vehicles. We have more than 1,000,000 solar inverters installed in the world. So as together we are the biggest power electronics player part of ABP Group in the world. Let me show you the part of the robotization in the world. It was actually ABP in 1970 4 who introduced the 1st electrical driven industrial robot in the whole world. It took some time. The came to automotive. And you can see around 95 the market saturated. Today the automotive body and white paint is practically fully robotized. The amount of the cars produced in the world and the needed capacity doesn't grow substantially for the future. But since 2,009 crisis, we actually see a quite fast growth of the robotics market in the world. And ABP plays a key role on that. And we actually have been growing fast than the robotics market in the past few years. You heard Ulrich Spissofa talking about APP APP Robotics is already today and developing that further on. APP has a presence in more than 100 countries. In robotics business, we are established in 50 countries and expanding. But more important that is that we have thousands of APP people engineers for the robots programming servicing and a solid growing network of 700 channel partner system integrated companies with their So it's really a platform there to grow further. Let me explain a bit how the growth of robotics is going forward. The traditional values for the robotization when it came was very much of the product quality that the spot welding in automotive get precisely to the right position that the quality of the paint in the robot is precisely right. Productivity and the cost. In a modern automotive plant there comes a car out every 50 to 90 seconds, 24 hours a day, 7 days a week. Health and safety key driver. The robotization expanded to the foundry to the arc welding. Actually our first robot was precise for the arc welding. It's a bit of tough work to do. Today we see the drivers more on the total cost reduction not only the massive help of the simplified programming. It's actually the robot is like an uneducated man and the real difference is what is the software inside the robot? How is the gripper? And how does it do the job? And the new trend in the robotic business is of course the robot itself. The robotic business is of course the robot itself, the solutions around the robot making the sales, the concrete line which can be hundreds of robots in body and white line, the paint line following on that as well as this products all together this products all together as a building block to build up the systems. As I said, the programming of the robot is the key thing. And there the robot studio helps our customers to smoothly optimize the design and make it off-site. Further on, we are taking steps on the simulation tool, which makes it more easy for the customer the production to optimize the production. The key topic is how fast you can change the type of the production in your process. And we are there to support 24 hour operation and be proactive seeing that now in 20 hours or 50 hours time please make this step and avoid the stoppage on. The first robots created in '70s and onwards, they were actually blind. They could not see. They were programmed to go after the trajectory make the spots or make the ceiling, but they could not see what they were doing. APP brought first as a market the FlexPicker robot which can nicely pick from the production line chocolates and really fast position then to the right position to the chocolate box with the vision together. And that is actually not so easy thing to do at all. Now with the FlexPicker originally gone for the pig, you can also use that for leveraging the pasta, the tomato and the pizzas do it for fish processing and so on. And the applications to go further are just expanding. Let me take another example in electronics assembly. Here we help our customer to produce more than 1,000,000 computer mouse per month and keyboards in China. China is actually the biggest single robotics market in the whole world. And it's about the quality. It's about the repeatability. It's about the speed of the process and productivity. And the same type of thing goes further on to the toy production for the consumer goods. It is expanding. The amount of the people understanding the robotics and the benefits of that and capability of programming it, it kind of self expands the market itself. Then going shipments. Computerized each shipment can be very different to each other and serve thousands of stores from the same location. And actually, if you look the same thing, the same could be applied for IKEA packaging. You will have the nightmares to put the products together at the home, but make a consumer package of the small wood parts where you can build up your furniture at the home. And the speed and quality and repeatability of SS. But as you can see, it takes fair amount of the space. The robot needs to be isolated from its environment. You cannot have a human being robot next to each other. The heavy lift robot can lift 500 kilograms with single arm like that and with the accuracy of 0.1 millimeter. If you happen to be on the row it's not good thing. So the next part in the robotization is actually go towards the collaboration. How the human beings and the robots working together side by side in a safe manner, in a certified safe manner. And that further enables the automatization to go further, because many of the cases is that it is worth to automatize only part of the production and you need to have the people next to each other. And that we can offer with the Yumi. You will have an opportunity to meet Pervek Atneset and Doctor. Sunyanku explaining more with the opportunities of the Jumi. So putting together, it's an expanding market. APP is working and expanding the market itself. We do have a large range of offering. We do have the capabilities. We do have the footprint, the people. And the nice thing is that that is a kind of self feeding process. More industries and the education of the over to Welimaty Reinikala and take a different view of the automation of the next level. Thank you, Pekka. So warm welcome to the world of Process Automation. And just a few words on the division before we go to mining. I think most of you know that we are the leader in in the DCS area, but we are also building a lot on top of the DCS in different kind of software applications. And maintenance is also playing a very crucial role for this division. So some of you might wonder why did we check mining for this presentation, because oil and gas is obviously much bigger CapEx spending. But because we have there one station where you can discuss the oil and gas quite well and because Frank Daken will have a few of stories from oil and gas in from my division in his presentation, I think it's good to talk about mining. Here you see the history of mining. You don't see it all because this goes only back 130 years. But mining is a very old industry. Actually the oldest corporation with limited liability was registered in Sweden in 12 70s from Stora Copperberg and those archives can be still found in Sweden. So it's an old industry also from a corporate point of view. But as you see here, vast majority of the history was just manual production and then some mechanical production. And even today, I think it would be fair to say that mining industry has a long way to go compared to for example to oil and gas and especially in regards to utilization of potential going forward by using automation similar way as some other industries have gone through already say 15, 20 years ago. The need if you think for example oil and gas and mining if you compare them, they have a lot of similarities. They are in very remote locations usually. So even to get the basics there which is power, water, people, it is a challenge. And productivity, of course, in today's world is another challenge, which certainly is present in the mining business. So how do we see the mining going forward? One key element is that we need to get people out from these processes. They are very expensive. It is very expensive to keep people in a mine and it's also from a safety point of view, it's never good to have too many people around those processes. They are dangerous. Remember 10 years ago in China 5,500 people got killed in mines. That's 100 a week. That's about like 100 too many a week. Today, it's still 2,500 which is still a lot. And then if you take places like India where mining is a big industry, but not so structured as it is in China, nobody even knows how many people get killed every year. So safety is a big driver for automation in addition to need for higher productivity. So we need to have equipment a lot of equipment in a mine, which is controlled and monitored outside the mine and the remote technologies, which ABB has makes this possible today. So all this can be done, but of course it needs a mindset that automation has to come to the mining industry like it has been already in other industries. Here you could say something which we call from a philosophy point of view a Mine 2.0. It's a bit of reflection of the industry fircomannul or Internet of Things people and services like Ulyvos referring earlier here on the stage. This is a different way of running a mine. This is a mine where automation plays a key role. And you see the different say parts or control the whole value chain from the pit to the port to the market. And I think if you think of mining industry and a company like Glencore Xtrata, There were 2 companies where one was a trading company and one was a mining company. Now they form a total value chain. We believe that this is the way how the mining companies will also start to think, Because you get the great value for your production, if you don't only count it in the pit, but you know what you have in the port, You know what you have what kind of ore you have in each ship, which is on the way to China in most cases. And if your sales force can identify, locate all this material in the right time that creates value for that salesman and sales event. So we are very strongly believing that this is the way how this industry is no major CapEx. We are working on the maintenance side in the meantime relying on the OpEx spending which keeps us going. And we are getting ready for an automation revolution in this industry. We see it coming and we are ready once the next wave of larger investments will take place. Here we have one example of an advanced company in mining Buliden for sure not the largest in the world, but very advanced. And here ABB was able to offer an integrated power and automation solution for the mine and ventilation on demand. And for example, a system where the location of the people, vehicles and tools can be identified in a separate control room. You know that in underground mining the efficiency can be as low as 25%. This is due to the shift of the people getting them down, getting them up, having the brakes. And when something is needed like a tool, a drill or whatever, if you don't know where the next tool could be, it takes a lot of time. So we are partnering with software companies, which are bringing sort of very cute small applications. And together with ABB's Process Automation, they can help the mining companies to get significant improvement in their productivity. So this one is just one example of what we have done so far. So as I said, we believe that there is a big shift coming into this industry. We are ready for that and that's kind of the main driver. But we can also see that for ABB, the geographies we have not penetrated at all the geographies yet. So that's a kind of add on into this whole thing. And in addition to the mining or Mine 2.0, which is a bit automation integration, we also have a lot going on in the underground mining for explosion proof products. So we believe that safety is another driver still going forward. And companies like ABB who have the resources to develop this equipment which makes the mine safer place, we will be in among the winners for this industry as a supplier. So just a quick one on mining. And then the next one will be coffee break. So I can invite all of you back to the end of other end of the room and have coffee and then we continue with the other presentations. Thank you so much. Gentlemen, and welcome back for the final session of the day. In the next 20 minutes, Chung Young and myself will show you opportunities from a customer and market perspective. I will focus on mainly the oil and gas market as a if you look at this chart here, you can see many of the drivers for market development are actually in the sweet spot of ABB's offering and capabilities. So you've seen throughout the day, the heat maps from various countries divisions we use. I think it's true to say that we're not constrained or limited by the markets. We have growth opportunities in all markets and in all market conditions. I'm sure you're saying why can't we get faster organic growth? I believe we are. We have increased the focus on the markets and on the customers. We're becoming more customer focused. The heat maps and the pie are a very good tool process to focus attention, to raise opportunities and track the actions to capture those opportunities. We have also raised the expectations and focus on our sales organization. In my 30 years in ABB, I have never seen this level of attention to sales as I've seen in the last year. We want to lift the sales organization to the next level of professionalism. Today, we announced the formation of a group function for marketing and sales to accelerate the development of our sales organization. Last week, we announced the collaboration with salesforcedot com and this will enhance the environment for collaboration across the divisions and the BUs. We are also working on other front end processes and tools and what we call an integrated front end. The benefit from that will be a more productive and efficient sales organization. We're seeing results of this. Up to the end of Q2, we have a growth in our orders. And I believe this is coming from the focus and attention that we're putting on it. But if I look at on the market, the maturity level of the countries, on the left side you see a number of drivers, which really focus the attention that the world will continue to need hydrocarbons. And hydrocarbon will grow in exploitation and exploration and in usage downstream. In this part of the presentation, of extremely strong and this is driven by our focus on account management. We also use a process called capture team where we bring together the relevant parts of ABB to focus on an opportunity. And the goal here is to ensure that the sum of the parts are greater than the individual parts. So if we look at some examples, this is an example from ExxonMobil in the gas field development in Alaska. This project is extremely critical for the state of Alaska. This is the first phase of the project where they extract the condensates, reinject the gas. The gas will be the dry gas will be then extracted at a later stage when they have the project is built Alaska, the project is built with prefabricated modules. ABV was selected for the full scope power and automation, because this ensures for Exxon that they derisk the project by having one partner who's able to deliver the full scope for the plant control and electrification. But we were not only selected because of our full scope portfolio, we also have a long experience of project execution in Alaska's harsh environment. And significantly Exxon noted our strong local service. This was also very important for them. This is the first phase of this project. Relentless execution will position ABB very well for the remaining phases to be done, which are substantially bigger than the first phase. I'll take a second example. This is for BASF in a new plant in Ohio. They had a new product, which they wanted to bring to the market quickly. So it was a fast track project. Here, they selected ABB for the full scope power and automation, because they really believe that this would enhance the speed of building product and support their goal to get the product to market as soon as possible. We all know first to the market is a competitive advantage. But on top of the speed of execution, we were also able to deliver additional value because the Planck wide smart grid, we were able to optimize and ensure a more energy efficient use of the power for BASF. Another example is Sadara from Saudi Arabia. This is the biggest petrochemical plant ever constructed at one time. It has 26 different plants. ABB was selected as the sole provider of the control system for the whole plant. It's one of the biggest control systems in the world. So we were also we also have a scope of other power and automation products and solutions. The customer obviously and the owner done top because of our state of the art 800X8 technology. As Welle and Matti pointed out, there is a demo of it on the left side of the hall here. But we were also selected by the owner, because ABB was deemed to be the company with the best capability to execute the project across more than 15 different EPC contractors in 10 different countries. We have been involved in this project from its team and we will be there for a long time because we have a team. And we will be there for a long time because we have a long term service agreement for the life cycle of the this positions ABB for many more opportunities in the future. And I think you should note the size of this project because this is a classical ABB project that comes together in many different parts. A final example is from Australia. This time I'd like to highlight the customer relationship. When BG Group went to Australia as a newish market for them to extract gas from coal seam and then convert it to LNG, they really wanted to have partners with them who had credibility and a proven record. ABB had that in other markets. ABB was selected for the power and the electrification. We've delivered 50 prefabricated electrical substations. They are installed all across Queensland across the field. Again here we have a long term life cycle relationship with the customer. And as you know, there's another 4,300 wells to be done. Again, relentless execution of value for the customer. And it's not just for projects that are complex or in remote locations. It is also going on today and the same value and advantages come to customers in other industries such as metals, pulp and paper, cement. So I think clearly from my perspective, the full power of our total scope of ABB bringing together in a structured way how we can create more value from is better than the individual product. So with that, I'd like to hand over to my colleague, Zheng Young, who will take us through a market example. Thank you. Thank you, Frank. Good afternoon. I will give you an overview of ABB China's capability and how it fits to the future growth driver in the country. As you can see, after being present in the country for over 100 years, we have today very strong local footprint and capabilities. And today, we can serve our customer locally with a whole portfolio in power and automation by 19,000 highly skilled people in 100 and 9 cities. We have also recently built up a very strong R and D force with over 2,000 scientists and engineers. This gives us the capability to respond faster to the local market demand in China. Our revenue in the 2013 was US5.4 billion dollars of which 40% was from power and 60% from automation divisions. Divisions. And overall, the group has invested about US1.8 billion dollars in China. And here, I would like to share some more examples of investment we have done in the last three years and also what were the key objectives for those investments. 1st, we invest to take care of our customer, because today we have a very big install base. So we have invested many full portfolio service stations around the country on different place to offer the sales, spare parts, service, service products very closely to our customer. Secondly, we invest to strengthen our competitiveness. As you can see the example localization of X support factory in Shanghai, EV charging center, HVDC valve packaging with a JV in Beijing, just a few examples. We have also invested to look at our engineering productivities. We have created engineering center in Chongqing, which is a Middle West city in China and for our process automation to get the productivity and efficiency. We have also invested R and D. As I mentioned, we have a very strong R and D force now in China to look at the future. One of the example I want to elaborate is this dual arm robot, the YuMi, which you most of you have seen outside. This was started from we created an application center for the precision engineering in Shanghai by putting together a team around 10, 15 people combined with a very well experienced scientist from the U. S. Located back to China and most of the Chinese locally Chinese graduates and engineers. But working together closely with our leading customers that is a key, looking at the future assembly solution. So finally, the group has also invested a lot of our future. The latest announced this US300 million dollars Xiamen Harbor project. When it's completed, it will be a world class factory for our low voltage, medium voltage, high voltage products to serve domestic and overseas market. So why are we taking these steps? As you can see, look at the China's 5 years plan. These are the key objectives has been written. And productivity, reducing the energy consumption for GDP, reduced emissions for energy use, smart grid, etcetera, etcetera. You can nearly think this is written for the company like us ABB, because we have a very strong offer in the power and automation, which can meet this medium and long term objective set by the local government. So what are the actions we are taking to capture these huge opportunities? Here are some examples. So when we use the same methodology, the heat map, you have heard in the morning industrial segment and geographically. So in China, it's not just one country, actually it's many, many regions. So where we are strong, where we have opportunity and define the actions to capture these opportunities. Here just some of the examples like the penetration. Today, we are present in the 109 cities directly with our sales and service. But through our channel partners, we can cover additional 500 cities in China. And with this latest e commerce technology platform, we can reach additional 600 cities. So most of our customers, if you look at, they need both power and automation offer. So by looking carefully at our customer base, we can further penetrate the sales by business led collaboration. So sales more with our existing capability. Innovation. With today's challenge and opportunities, there is a big room for the innovation. It's not only technology and products, but also the business models, the process, etcetera. The example we have talked about is this small part assembly, because we can foresee in the future due to the development of the country, there will be a labor shortage, there will be increase of labor costs. These are the things country developed of course people get more and more wealth. So that means also generate a big demand for the robot based automation, particularly in general industry. And last but not least, expansion. We are talking about 2 dimensions. How can we fast expand to the new market segment? Here what we are doing now is elaborating the collaboration and partnership with a strong local Chinese player. For example, we have been partnership with Dansa to supply EV charging and the latest announced partnership with BYD in energy storage for the renewable integration is another great example. We want to speed up the new market segment expansion. And we also should look at the geographic expansion. I will come back in one minute. So I hope you agree, we have the good actions defined. But to generate great results, excellent results, we need good people today and tomorrow. So here, actually, I'm very proud to share with you ABB China was voted as the best employee by local graduate university students in 2014. So I'm really proud, because we have been working very hard to get these results. Geographic penetration, as I said, China is big. Today, we have a strong footprint, covers the part of country. But also by looking at the heat map, by looking at the different region, there are still many, many areas cities where there's fast growth potential, which is not covered by us. So we have made a plan to accelerate the local footprint expansion. So our plan is we will add additional 150 within the next three years to capture the opportunity in this country. So finally, let me share with you some of the success story we have together with our customer. Within the utility sector, ABB is the technology leader in HVDC. We have participated 19 out of the 24 HVDC projects in China today. And the latest example you see is from the Xiluzu and Zhexi is a world record DC line, which transmit 8,000 megawatts clean energy from west to the east over 1600 kilometer. It clearly demonstrates our strength in this field. And if you look at the industrial sector, here we ABB, again, we can talk about the robotics for example. ABB has been pioneering in the robot automation in China for more than 20 years, years, mainly start from automotive industry. I was thinking about back today, if you look at every OEM, automotive OEM in country, either the Chinese one or the Western, I think everyone use either AVB robot or AVB solution or automotive OEM. But we also look at the new segments like 3C looking at the future opportunities. And again, we have been working robot automation solution industry is industry today used by our customer. We have been involved in most of them during the development phase. So we have a very, very strong position. Another example topic is ABB is a very, very strong to provide energy efficient solution for the Chinese industry. And one example I want to share with you is aluminum plant in Xinjiang. Xinjiang is the far most west province in China. And there our ABB's efficient energy efficient solution combined with motors and drives could save customers' energy costs by 30%. Transportation and infrastructure is another segment, which is very, very important for us in China. And here, all our 5 divisions are actively present. The example you have seen is, for example, like next generation wireless intelligent building control for the 4 season hotel. Here we can provide good comfort and energy efficient solution. Another example is integrated is a power and automation solution with the platform and very energy efficient solution. And the last, not the least example is this EV charging. ABB announced a partnership last year with Daimler BYD's newly launched car, denser car, where ABB will supply the DC fast charging in the next 6 years. In conclusion, I feel we are very well positioned for the next level growth in China. Thank you for your attention. So the next section will be the relentless execution will be presented by Tarak, Greg and Jill. So good afternoon, everybody. Since Chunying does such a good job of introducing us, I thought I should give you a demonstration of what do we mean by relentless execution from multiple dimensions. So first, I want to give you an overview of low voltage products and then go into a little bit more detail what Uli talked about this morning in terms of how are we in low voltage products executing and getting results on the the products, From the perspective that you might have, you might think, well, it's low and it's voltage. It might be high margins, but is it really innovative? Then I want to show to you a product which you wish you had in your hotel room yesterday evening or this morning, which actually is a socket that actually charges all the cell phones with a USB connection. So this is a Red Dot award winning product. And you might not think of this as very innovative until you try to fit the transformer inside a socket And then make sure that it actually does charge your phone and doesn't electrocute somebody with 120 volts, which is what is sitting inside the socket 24 hours a day, 7 days a week basis. So that is low voltage. We are producing 4,000,000 parts a day. It's almost like a river of parts that we ship to our customers. We have a $7,500,000,000 to 7,700,000,000 dollars in revenue last year. We generated a profitability of 19%, which is respectable, but I'm sure all of you wish it was higher and so do I and so does Uli. So we'll talk about how we increase the performance of this business. But what's very interesting is in the last 4 years, the number of customers who have requested to us that, yes, you have 150,000 parts in your portfolio, but we need everything in 3 to 5 days. So imagine you have 4,000,000 parts that you are producing on a daily basis and then you need to deliver whatever the logistics challenge on our business. And then to top it off, you're selling it in 100 countries. So for us to continue to be successful in low voltage, hopefully, you see not only do we have to be innovative in technology to command the price premiums that we need to sustain the profitability, but we also have to be extremely good at executing because nobody is waiting for a low voltage product in the market. They like it, but if it's not there, there is always an alternative that customer can grow. So from execution in the business to what Uli talked about in terms of relentless execution. So here is the dashboard that you saw from Uli earlier today. I will go through one example each in the customer segment, in the cost category and from a cash perspective to give you a little bit better flavor of what do we mean when we talk about requested on time delivery from a customer perspective. How do we use automation to implement a cost saving program that is meaningful both to the business and to the customers? And the most important piece, which is what Erik Elswick always asked us to do, can you run this business with less money? It makes shareholders happy. It also forces you to make operational improvements because it's not easy to run a business like low voltage, which is very much a make to stock business with lower levels of net working capital. So let me go through one example each. So taking it first from the customer perspective. For those of you who were here, if you remember in February, we talked about the execution of high concept within low voltage products. So here you see not only do we look at the heat maps from our market share perspective, but also from channel penetration. What is our go to market? Whether it's an original equipment manufacturer, whether it's an end user, whether it's installer or more importantly in this case distribution channel. So some 55% of our business goes through distribution take, as Uli mentioned earlier in the year. And we decided we will focus on distributors as a way to grow the business. And what has been very interesting is a razor sharp focus on distributors. And you might think we've been in the business 30 years or even longer that we would really be able to deliver on a daily basis with distributors. But it's the systematic, methodical, razor like that has resulted in growth, which we think is quite impressive in the current environment. Last year, we got about 2% to 3% growth. This year, in the 1st 6 months, we got 9% growth through distribution and distribution channel partners. That does not match the distribution industry. However, because of our broad portfolio, because we added Thomas and Betts and because we focused on execution through distributors, we were able to drive both the top line, but also as you see at the bottom. One of the most important statistics for low voltage is how are we doing with the customers. So we were also able to increase our NPS score substantially at the same time where we were growing the top line with the distributors. So here's a good example, customer focused penetration from a channel point of view, not a product point of view, not only a geography you just need to remember when was the last time your child or you accidentally put something into the socket outlet and all the electricity in the house went away. Then you went down to the basement and you turned on a switch and all of a sudden all the power was back on. We make about $50,000,000 to $60,000,000 of those switches. Thanks to all the customers like you who actually trip and because it is developed markets need nowadays. And we produce those all developed markets need nowadays. And we produce those switches or miniature circuit breakers as we call them. We used to produce them in 5 different locations all over the world with 5 different engineering systems, platforms for manufacturing. Then we took a look at a systematic approach, very much like what Uli talked about this morning, how do we make it a standard? How can we make the manufacturing process modular? How can we make a design that is local to China? But the equipment, the process, the quality that we produce in Germany is also produced in China. So here you see an example of how we have taken a business that makes 50,000,000 to 60,000,000 pieces all over the world and put a uniform standard on it. And by doing that, we've lifted the quality and we have executed our own discrete automation and motion capability within our own facilities. And the bottom line of this particular investment has been a $20,000,000 savings. We didn't do it just for the customers. We didn't do it just for the quality. We also did it because we knew by executing something like this, we get a $20,000,000 bottom line impact. Some of you who have been on the tour in Beijing among the investor community might have seen one of these locations that we have or the one in Heidelberg. It's a really true world class showcase of a marriage of automation, control engineering platforms that deliver really a great value to the bottom line. A third example, you remember we added Thomas and Betts to their portfolio and to the family. One of the things we noticed is the focus on customers that Thomas and Betts has from an availability point of view. So here is an example. We have taken a concept. We've had the concept in mind for many years within the division, but now we've executed it in Southeast Asia. So what you're looking at is our logistics center in Singapore. What we have done is a customer in the region. There were 14 locations in the region, 8 countries. If you were a customer of low voltage, you would be expecting us to have between 5000 to 6000 parts in inventory and a delivery between 5 25 days. So if you wanted something that was not in the 5,000, it would take us longer. But since then, what we have done is we've consolidated in one location all of the inventory from 14 locations. And if you are a customer for ABB in the to 25 days, but in 3 to 5 days. The reality is we're actually below 3 days today in the countries that we have started this process on. So these kinds of execution have allowed us to really reduce our net working capital by 300 basis points in the division. So again, these are three examples of how we are actually executing some of what Uli talked about in the low voltage products division to really drive performance, both from a customer perspective, from a cost point of view and most importantly from a cash and a cash flow perspective to a place which is better than it was before, but also something that we are absolutely convinced we can continue to execute in many different locations within low voltage products. One of the areas of low voltage products execution has been Thomas and Betts, which we integrated into the family. And to give you a perspective of that, let me hand it over to Greg, who will go through the M and A process and the value that we get from M and A. Thank you. Greg? Thank you, Tarek. Good afternoon, ladies and gentlemen. I will cover relentless execution in how we drive value from our integrations of M and A. And what I'll really touch on is three things. 1, how do we approach integration along with M and A? Number 2, what have we accomplished over the last 3 or 4 years in doing this? And thirdly, I'll come back and take a look at where do we go from here as we go to the next level of excellence with our integration processes. So really when you think about integration and there's a lot of discussion on integration, you have to go back to the strategy as we look at it in ABB and say why do we want to acquire something. And that thinking, that process begins in our overall group strategy and it's a regular iterative process. We shared some of the ideas on our 2020 outlook for some of the space we see that could be interesting. But this goes on and it's really a living process amongst the EC with the business leaders that would have responsibility for the acquisition taking the lead, looking at the market, combing the radar and that process is one that's well thought through, very systematic in terms of the screening. When we do get to an interesting target, the M and A process has a lot of discipline. We go in with certain assumptions. There's a deep dive on due diligence that you might expect. But what you may not know is we pull forward on And we're beginning to think about as we do due diligence on one hand, on the other how difficult is this going to be to integrate? Can we see a clear path on how 2 companies will come together as 1 in a new family arrangement to get us to the targets? That's a cultural look. That's a people look going through the strength of the management team, really testing a lot of our assumptions prior to going in and spending time with the organization. We also bring forward all the learnings from our past integration, things that worked and I'll come back to that and things that could be even better. And we asked the due diligence team to start writing some basic plans for the day 1 and day 100 integration activity, so we don't lose the thoughts that we're right there at the moment as to what the due diligence team is seeing and then the idea is to continue some of the same people into the integration setup. We align a cadence process. We look at the synergies. We really go for that management continuity because when you think about it, these are complementary businesses, but they may be in spaces where we don't have the depth whether it's geography wise or technology. And we want the knowledge buying a good company of people that know how to run the company. And that's certainly a part of what we do. We set up a common scorecard right upfront, because when you're on integration, you want to move at the speed and the speed is usually based on trust. And the more you can say and then follow-up and do, the more you can explain upfront as to what their roles are going to be, if it does come together, the more people understand how this is going to work. And most of all, you start getting their ideas, because that's really what you want. No one company has all the answers. And what you're really trying to do is create that connection between 2 companies that takes us to a better place. So what have we done? Well, Uli mentioned this morning, we've closed some gaps certainly in my other role running North America and now the Americas. We've made a major move in terms of the automation market, how we now see a much wider part of the market. And this is really balanced ABB where we've been quite strong in power and okay in automation, but not seeing enough of Tarek's business in the market. So as the integration manager for the 1st couple of years on Thomas and Betts, Tarek and I were working hand in hand, the business owner, the integration process knowledge to figure out how are we going to map opening up the market even further and riding the backs of that logistics model that Tarex showed and really finding out more about the distributor channel partners that we can have a larger conversation with in Tarex business. And that's exactly what's happened. The same thing working with Pekka and Uli when he was running DM as the integration manager for Baldor taking a look at the things we could do with the strong motor presence. We didn't just buy a motor business in the U. S, we bought the number one player. And that number company had deep roots in terms of end user OEM and distributor relationships and that really opened up the market for us greatly. So you could see we've closed some of the gaps in software and instrumentation, solar inverters, one of our newer acquisitions and certainly well on its way with buying the number 2 player in the world. So we've made a number of moves, roughly $10,000,000,000 invested. You can see the larger moves in terms of the investments, Baudor, TMB, PowerOne. But other important don't always have to be just big, important fit in terms of how we fill out our portfolio with smaller bolt on acquisitions. And then as we said to you, our goal is to push for that cash return against our working capital targets, EPS accretive and also making sure we maintain our A rating in your eyes and also in the eyes of our customers as we do this. So looking at what happens and what we've accomplished, we run a scorecard process and you can see here the five areas we look at. Certainly, the financials are on the top. We keep track every month. We come back through process that includes the EC business owner from the division and other members of the EC, Eric, Diane, myself, JC and of course Uli, really keeping track on how are we doing in moving through. And looking at this, we not only measure the financials, but what do the customers have to say about what we're doing? Because it's very easy to get internally focused on an acquisition, but if you want to grow and you want to stay relevant, you got to keep pushing for that external focus and that's exactly what we do. So we measure NPS. We come down. We look at operational excellence, how well are we doing in getting things done, but also the employees. The employees have to feel that this is a better proposition than it was before or else you'll lose some of your key talent. And then overall a summary. So looking at the big acquisitions on Baldor, this is one now that we're after our 3rd year anniversary. We're into about a 39 month, our 3rd year anniversary. We're into about a 39 month period. And you can see that our cash return is above the targets. The customers have voted not only with ongoing NPS ratings that get higher each year, but they've come back and us more business as a direct connection to what we've done on Baldor. First, saying now you're a full line motor supplier around the world, you will be our global standard. Then coming back saying we want to add service in the next year. The following year coming back saying we want to add drives and just recently this year saying low voltage systems with ABB. And you can see how it brings us into a different level. Cost synergies at Baldor and across are tracking well. We're above plan. After our 3rd year in Baldor, Thomas and Betts moving much the same way. Power 1 very early, but in line with the plan. And across the board, you see a track record of successful management retention. And that's something we work hard at. Obviously, bringing companies together and we've given people even bigger jobs because we look at talent regardless of where they've come from. Did they come from PowerOne? Did they come from Ballador? Look, if they're capable and they can go to the next level with us, we give them bigger jobs and not so much about what brand they carried as they came in. So Thomas and Betts well on track as well. There's been a lot of great learnings. We've really gone after it in terms of completing the integration, using the Thomas and Betts Logistics and Business Systems and Tarex Business and then commercially reaching across all the divisions to figure out how we can open up the market. And PowerOne just at that 1 year mark, maybe 1 year and a couple of months, but moving in the right direction. We've got a good company here and we also bought a company that has strong market position and has accelerated us. And what we noticed and Pekka was very much involved as the integration team working with the business, the customers are saying, okay, what's going to happen with the product lines because we also had a solar inverter at ABB. We harmonized the product line very quickly and we created one brand. And it made it very clear to the customers, okay, the commitment's there, we know the investments over there on the products and let's go forward. What you've also seen on the other hand is we look closely at all the assets of the acquisition and found the ones that were not core, but also not just moved on these as Uli mentioned when he came in as CEO, we'd be doing some pruning, but doing it in a very responsible way. What do I mean by that? Doing it in a way that we bring back more value than what we paid. We do it in a way that there's continuity on that business, so the owners strategic owner in many cases that is a better fit. And that's exactly what we've done in these cases moving for instance in the gensets which the largest component and most of the material was a combustion engine that was inside that product. We're not in the combustion engine business. We love Baldor, but that small piece of Baldor wasn't such a great fit. On Thomas and Betts, we sell a lot of things motors into the HVAC industry, but this was a heating business. This was space heaters for rooms. That's not a business we're in. It's a good business for someone and we divested that along the way along with Steel Structures. And then Power Solutions was a very small power supply business that things fit inside of a computer to keep a computer running. That's more at someone else's level and a fuse company came along and bought that. So we've done this to prune and make sure we have the right pieces and the things that don't fit, let's bring back the value to ABB. So in summary, we've had a solid execution on our M and A so far. There's been learnings. I'd say on the things that have worked well, it's that say do ratio creating trust early on in the process. It doesn't mean you can't run-in the challenges and things are different than what you thought, but you do it together. Upfront, a lot of discussion on what a are measured in a way that is the same as the people in ABB. It's one scorecard across. So everyone knows what they have to do. They know what's in it for them. They also know what part they have to play. What would I say the learnings have been? Well, there's been many in terms of this journey over the last 3 or 4 years. I'd say even more communication, because when you're doing change, it's a lot of face to face. Emails typically don't work. It's not about sending out broadcasts. You really have to spend time together. It's a lot of eyeball to eyeball contact as you're building trust. I'd say even more of that would increase speed to another level. Dedicated resources, we're now dropping in the pie methodology to really make sure we plan well in the markets. Where do we need more resources? It's not that people aren't excited and said they can do it, but where can we have a bigger impact on that one? And I think what's really interesting about ABB and I've had 30 years in this industry about 14 with ABB is the culture of ABB. We have a strong management engineering culture. There's a lot of science. There's a lot of metrics and process and follow-up. But really what I'm most proud of in ABB is the leadership side which is art. In that ABB takes time to listen and really understand the company because it's that combination integration of not just I think principles, good discipline ties right back to that strategy right at the beginning and making sure we have the right companies before we start and we have the right people involved. So far, we've had a great track record. We think we could take this up. There's always room to do better and we'll drive for the next level of excellence. So with that, I will turn it over to Jill who's going to talk about the 1,000 day programs and change management. Here you go, Jill. Good afternoon. I'm going to tell you the exciting stuff about how we're going to run our change program. This morning, you've heard from Ulrik and later on our business colleagues, how we are going to drive our organic growth momentum, accelerate value creation and bring ABB to the next level. And in the earlier presentation from Tarak, you have heard how we run relentless execution in our day to day operations. So at this point, what I want to show you is how we're going to take the same relentless execution spirit to drive our transformation program and realize our next level strategy and how do we do it. We have for a start set up the next level program office as you've heard from Ulrik this morning, which I have the honor to drive. And as you know, success is very much about 5% planning and 95% on rigorous implementation, implementing all that we on rigorous implementation, implementing all that we've talked about in terms of our strategic priorities. For best in class execution, what Ulrik normally would say the perfect say do ratio. We will be launching 1,000 day program for each of the strategic priorities that we have identified. Now to do that, what we'll do is that we will have a common approach focusing on a few key strategic priorities. And by that what we are referring to would be the ones having high impact on generation of growth and generation of systematically across divisions, across regions and functions. Concrete targets will be set and we will break them down into action items, responsibilities will be assigned and we will have rigorous monitoring throughout the duration of each of this program. And how do we do that? Well, let me elaborate with a couple examples in my next slide. We will align the entire organization with a consistent framework. Dedicated teams will be put in place to run the respective projects that we have identified. For each of this 1,000 day program, we will have the oversight by EC responsible member. This is to ensure that we have the highest level of empowerment and attention on this major project. At the same time, what we'll be doing is that we will be identifying key prioritized topics. The reason being that we do not want to overload the organization. So you have seen here a couple of examples that we have listed to surpass China eventually at the rate that is growing. There's a high growing middle income class as you've heard from Frank just now. And at the same time, there is a strong push for urban urbanization. Now what this means is a strong demand for local consumption and a strong demand for city infrastructure. On the other side, when you look to the power side, you find that the power generation capacity is remains low and insufficient. Just as a comparison, for a 1,000,000,000 people, we're talking about a power generation capacity that's less than Germany for 80,000,000 people. Microgrids demand for microgrids is increasing and so are the investments on the oil and gas front. And guess what ABB has the solutions to provide for all this demand. So what we're going to do is that we will have a focus team led by Frank on the EC level that will generate and will execute on the growth actions. And our program office will support Frank to coordinate to facilitate and certainly to monitor the progress. Let me show you another example, which is on the net working capital optimization, which you have heard a lot just now from Eric's presentation, how we see the potential to drive to increase our net working capital efficiency when we are comparing ourselves to the best in class in the peers. This I can show you in the next slide. When we talk about net working capital optimization, we will ensure a complete coverage of the end to end value chain from design to delivery. And the reason why we do that is because we are seeking a game change effect, an effect that is sustainable as Eric puts it just now. This is a program that we will run as part of the 1,000 day program. And Eric on the EC Board is overseeing this. Now at the same time, let me share with you some examples of what we have already done on the net working capital front. Let me share with you the projects that have been done in DM, motors and generators and our drive unit. Now in the last year, we have carefully reviewed the entire value chain in this unit and we have consistently and carefully reviewed the element underlying element that was driving the net working capital. And in doing so, we review for example our supply footprint to see where we should appropriately drive localization. The cycle time in our production as well as in our logistics. We also look and work with China partners in order that we could improve our planning and coordination. So what you can see is really a systematic follow through and working on every element of our value chain. And with that, what have we achieved? We actually have achieved in a number of these units where we have driven our projects double digit percentage reduction in the the inventory level. And we see that there is a lot of potential where my program office can take the learning of this best practices, apply them and deploy them to the other unit, so that we can get across the board optimization. And that is the reason why Eric has talked about the potential of unlocking significant cash generation from driving inventories and driving greater networking capital efficiency. But how do we do it all that we are saying? Let me share with you our implementation approach. What we believe is most important are these 4 elements. It's about focus, it's about face action, clear ownership and accountability. As I mentioned, we will be driving our 1,000 day program in ways. We do not want to have an overload on our organization. What's important is that we want to have a balance of focus on the operational demand, while at the same time addressing the changed project demand. We want to take care that we have the right amount of resources allocated to this change program, while ensuring that the relentless execution as we have been doing in our operations remain intact. And certainly, you have heard the old saying, what gets measured gets done. So one very key cornerstone of our 1,000 day program definitely is about rigorous follow-up. Concrete actions will be set and tracked, we across the organization, making sure that the milestones that we have set are followed and successfully done. And if not, we will have to do whatever necessary alignment, but remaining always with target insight and making sure that we do what we say in this regard. And that what my program office would do to support the respective teams and to support the EC level to ensure that we have transparency of performance progress and the transparency of performance matrix. Thirdly, we will dedicate resources to run the 1,000 day programs. And when we talk about the resources, we refer to not only the availability of resources, but really ensuring that they have the right expertise, that they have the right information and they have the right facilitation from us, but most above all the right empowerment. And that brings me of course to the final cornerstone, which is the fact that we believe strongly that there has to be a strong linkage between the performance and the target of the business and of course the personal incentives. We will take care that the contributions to the change project as you've heard from Ulrich this morning will be well recognized and will be rewarded. And similarly, of course, accountability will also be similarly reflected. And you see that means that with this cornerstone, what we believe are the very important transparent steps systematically done will be the key success factor to ensure that we have effective implementation of our change program. And that brings me of course to the end, where I hope that with this short presentation of what we are planning do that I have shown you and convinced you that we are ready to do what we say and we are well prepared to bring ABB to the next level. And with that, I'd like to invite Ulrik to come up and do his summary. Thank you. Over the lunch break, some of you asked me why am I so confident when I talk about the next level program. And I can tell you what you have seen this afternoon is the key reason. We have great ideas. We have wonderful plans. And we got a clear direction in ABB how to accelerate sustainable value creation. The team that you have seen and hopefully experienced now that you could feel that is ABB, that's ABB on the most senior level. These are the people that will get it done. And I'm incredibly proud to work with all of them in the next phase of this company. So let me sum up. Next level in ABB, we will shape the global leader in power and automation. And we will deliver by building on the strength that make out ABB for many years. We will continue what we have started recently and bring it up to full momentum. And we will implement what we said this morning on the key new elements of this portfolio. You have seen some examples how we're going to shift the center of gravity. I think Tarak has done a very impressive overview what it really means day to day in the business to build up a comprehensive operating system. Jill has just now given you an overview on the 1,000 day programs and what they really mean in daily action. And I think all of the colleagues on the automation and the power side have shown you that we are well positioned in very attractive targets. We will deliver to you sustainable, attractive shareholder returns. We will drive profitable growth, relentless execution and business led collaboration. And with the team that you just saw, I'm sure we will accelerate sustainable value creation for our shareholders. That's the story on next level. That's what we wanted to share with you today. And we would like now to open up for the last round of questions and answers. And since we will do this as a team, I would like to ask you quickly for patience. We need to rearrange the stage quickly because the entire team will be on stage taking your questions and hopefully providing some very convincing answers. This was operational excellence in daily execution. Before we start the Q and A, I would very much like your feedback. We have a survey that's in the deck that you have in front of you. We've spent a lot of time today presenting the next level strategy and we would very much like to hear your thoughts. It's very important to us. So as we're doing the Q and A today, I know many of you are going to want to rush out of here after it. So please take it out, fill it out, leave it on the table. And if not, if you don't have time right now, you can find it on the Internet. But please, it's very important that we get your feedback. And with that, we will open up the Q and A. Who wants to be first? Frederick, behind you there on the right. Yeah. Hi. It's Frederic Stahl here from UBS. Maybe I can start with at least on my numbers, it seems that your dividend and the buyback adds up to roughly my net profit forecast. So you will spend a large proportion of your cash flow on the shareholder return here. And then my question is how much are you prepared to gear up if those acquisitions come along? I would suggest to see if he will take this question. So the buyback program is over 2 years for SEK 4,000,000,000 And of course, it depends on the pacing over time on the buybacks. As I explained in my presentation, we also see to generate quite some cash from net working capital. And one measure is to do it against net income, as we say, and the other one is to look at the balance sheet and the cash flow and the compliment Frederic, look it's If I may just compliment Frederic, look it's not a bad ambition to tell the business leaders, if you want to go shopping, find the money in your inventory. So that's definitely an incentive to do a little bit more in that direction. Pierre, to the left. Hello. It's Peter Reilly from Jefferies. I've got a question about the mining automation opportunity. You paint a picture of a very sort of antiquated industry. Can you talk a bit about the payback? What sort of payback you get on a major mine automation project? And whether it really only works for a greenfield project or whether you can retrofit to an existing mine? I suggest very Marty you take that. Well, I think project by it's difficult to say what the payback is. But normally you could say that if there is a major job for us that could be say from $50,000,000 to $100,000,000 job. And that itself is profitable. I wouldn't say that we have done jobs in mining which don't have a return immediately. But moreover it is that usually when you get with the €100,000,000 project in into mine, you also get the aftermarket for that equipment and over the time probably even for more. So I would say that mining is not one of those sectors where you have to buy a job to get in. Usually with the technology you can get it immediately. I'm not saying that it's gold mining, but it's mining. I probably didn't phrase it very well. I was thinking more from a customer's point of view. If you're a customer and you got the opportunity of spending a lot of money on automation. I think it depends a lot what the customer is buying. Like now if we take the Carajas for example, which was in the they kind of save the drivers and the trucks and all that operating cost. I don't know how they have calculated the difficult to get people there. If you get people there, it's very expensive. And also all the trucks which would be 100 at least in this case that would be a major investment in the first place. And then to carry on with that fleet and renew it and all that. I'm sure that there is a pretty good payback. Look, when I met with the customer visiting him together with Verimati, the expectation was somewhere between 3 5 years. If you do automate right, you got labor savings, you got energy savings, you got cost capital avoidance because you don't need to expand certain kind of equipment. Ben? Thank you. A couple of questions with everybody up there. First of all, I couldn't resist the opportunity to ask about power pricing given that we've managed to get through a Capital Markets Day and nobody seems to have addressed it. So, Bernad Junger, how do you feel about power products pricing at the moment? And you put up your capabilities in ultra high voltage. Obviously, some of the Asian competitors are getting pretty good at that themselves. So how do you feel about that? That's question number 1. Question number 2 was really just going back to Power Systems. Could you I am correct to see the trajectory of margin. What you're basically saying is it's going to take us 2 years to get back to 7%. I just want to double check that. Okay. I suggest Bernard takes the first question on power products pricing. I mean the price pressure and the pricing is of course an integral part of our business. And yes, there is always price pressure. It depends by product line, by markets what the actual situation is. But we need and we did balance it so far. And it's all about competitiveness that we can also compensate for it being by taking costs out, then leveraging our global portfolio and platforms which we have at on one the customers. Then when it comes to competitiveness and cost effectiveness, it has to do with innovation as well. So we invest quite a significant amount in R and D to have new solutions, more cost effective solutions and more value for the customer. Then it is about when we talk about cost reduction, it's about relentless execution be it supply chain management or be it operational excellence where we drive of course or where we are very cost conscious and drive the cost out programs. So this is just in a nutshell to answer your of course, as I said, an integral part of the business and we have to cope with it. And just one comment in terms of the competition. Look, we had some customers in Saudi that stopped buying ABB product for a while and went for very, very cheap competitors' product from emerging countries. The first time one of them blew up, they came back and said we want to have high quality products. So it's about value. Some Typically, they come back and realize how good the product is. And we need to continuously work on our technology that we really are ahead measurably ahead of the others. On the Power Systems piece, look, your question is a good one, but last time I counted, it was 15 months between end of September January. And January 2016, start the year 2016 for which we have committed the 7% margin to start. So it's about a year from now where we want to be a run rate to really get there. Let's do James first. Hi, there. 1 on PS and one on order momentum. On the PS, you talked about 0 for the full year. I presume that's the old EBITDA, not the new EBITA going up to 7 in 2016 on the new EBITA. Can you help us at all on 15%? Are we talking can we just assume halfway? Or do you have a message that we should be at one end or the other? And on order momentum, can you say whether the positive momentum that you saw in the Q2 in base orders has been broadly continued into July August? And some companies have talked about China worse, U. S. Better. Is there any color you can put just in words regionally or by end markets to what's happening at the moment? I would broadly say that you're pretty narrowly fishing. And honestly, we don't give any further guidance than what we have said before. We have said that we expect in the Q4 Power Systems to be at breakeven. And we have also said that we aim very hard to get the full year at breakeven. And what we also said is that even. And what we also said is that 2015 will be the year where we complete the step change. And in 2016, we want to be measured against the target range that we have given ourselves. In terms of the order momentum, yes, look, you have heard the team today. You have seen the numbers of the Q1, of the Q2, and you have heard the team today what we are doing around growth. And let's keep the fingers crossed. Andreas? And just specifically to the question on EBITDA and EBITA. The old definition is valid for this year. We are going to report this year on the old definition. Good catch. Andreas from JPMorgan. Two questions please. First one, we listened to a lot of company plans. A lot of your peers competitors, they also target to outgrow their markets. They also want to run more efficiently, reduce costs, increase profitability. Some of them also do a buyback. If you have to single out one point that makes ABB different in terms of what you're doing and what you believe you're doing is it gross? Is it margin? Is it the balance sheet? What do you is it gross? Is it margin? Is it the balance sheet? What do you really see as a standout relative to the other plants that are out there? And the second question on robotics, there's a lot of excitement about robotics outside industrial in terms of service robots, hospitals or whatever else logistics. You see ABB has a great robotics business in factories. Do you plan to take that outside the factory at some point in time? Thank you. If we can drill on the stand out, I would like to give you 2 answers. The 1, this team. I think this team is top class, is very experienced and is very, very to execute. So I think we got the right team in place. And the second point, if you look at the logic behind it, it's execution. It's a very rigorous approach to execution than anything that we will do. We will drive, say, do we have the process in place, we have the rigorous performance management, we tailor it, innovate at its stage and realistic, and that will be the hallmark of the next phase of our development. On robotics, look, we are already outside of factories with our robots, whether it's in the wine cellar of champagne producer turning around to champagne bottles, whether it's in a slaughterhouse in Australia using the robot in a way that I don't want to describe more drastically in this room. So we are moving out there gradually and really make steps and inroads getting out there. The field of service robots is one that we are looking very, very carefully at in the industrial context. There is so much opportunity around the 3C 3C industry, around assembly and manufacturing that we want to also make sure that we stay top class and then ahead what we're doing before we wander out in too many additional areas because the underlying market dynamics are very strong. So the core focus will be around what's happening in the factories. And then we're going to stage way in different parts on the robotics field. I think Mark in the back had one. Yes. Thanks very much. Ulrich, just wondered your view on and the team I guess on how you see M and A opportunities at present? Are assets too expensive? Is there not enough growth? Is it hard to execute in terms of building relationships and things? So just a bit of color on the M and A. And in the context of the share buyback, how you went through the decision of balancing that versus your M and A options? Thank you. Look, a couple of different perspectives on your question. Number 1, if you look at valuation today in a lot of areas, it's pretty high and steep. And we don't do M and A just to do M and A. We want to create value as we have said before in the track record that we have created. The second piece, attractive value proposition. And then you have a management team when you have certain things ahead of yourself that you want to do, you need to balance off and allocate the resources in a way that you don't start overheating or over risking by taking out too much at the moment. We have at the moment the homework on the Power Systems side that's going on. We will now change the organization on the regional structure and get that going. And that means basically we all need to work on one to make sure that the customers don't feel it, that feel it we feel it internally in the transition phase as an improvement So for me, it's a balancing question. If the right opportunity comes along, look at Spirit IT, that's a wonderful smaller one that we added, highly complementary, fantastic upside opportunities. We're going to go for them. We'll be doing the next 3 months a multi billion huge acquisition, jeopardizing what we have just started now that will probably not happen. I think there was something up here. Daniela? Thank you. Actually, two things. 1 on low voltage regarding distribution and how you've been growing at 9% and faster. Can you comment on whether that was gains of do you think you've gained market share and where and how do you do that? Because I guess distributors are also quite focused on volume and rebates and so was it through pricing or something else? And then the second one just on mining, I think there was a comment during the presentation that there will be a mining automation revolution when the next investment wave comes. Just your views on that on what you're seeing on mining and how soon that might be? Thank you. Let Tarek start on the low voltage side. You mentioned on distributors. Exactly, you're absolutely right. We did not use price to drive our volume through distribution. It's really old fashioned hard It's a scope expansion that the distributors find very attractive. It's actually performance and delivery, which they see great value in. And most importantly, we have dedicated a tremendous amount of investment in the market to create demand that then we then fulfill through our distribution partners. So first, you need alignments in terms of where you want to go with the portfolio you have. You need to create a demand. And to create demand, we need access, whichever distribution partners will agree to provide us access to and give us a view into the end customers that distributors have. And so working together, we've been able to create a demand. And that means we have dedicated accounts to distributors on a geographic basis. So we made significant investments in terms of relationship with distributors. We've taken advantage of the capability that Thomas and Betts has. And that team brought to the distribution portfolio and distribution partners that we have in U. S. And that's what has driven our growth. Geographically, I would say we've grown through distribution almost everywhere, where we are focused, be it China, be it Europe or be it United States. But U. S. Is where we have seen the biggest success. Thanks, Tarek. The mining piece, our mining pulp, I give it over to Welle Matti. Well, if you look at the spending of mining companies that went down very dramatically last year for in some cases beginning of the year in some cases midyear. And if you think of the investments regarding the new mines. And that's always a very strategic big decision. But if you look at the existing mines, they either grow if they are open pit or they go deeper if they are underground. Believe is that the companies will need to do some investments to keep them going. But more importantly, the productivity improvement need is in place. And mining companies would continue when the say the wave comes back. I believe strongly that there will be this kind of automation investments which will then cut the operation cost away because otherwise it doesn't really improve the situation in the industry. And the examples comparable examples like from oil and gas they are so evident that it's only a question of time when the investments will restart. So, Kania, when you want to know where an industry is going look what kind of leadership gets appointed. In the mining industry, a lot of appointments out of oil and gas and out of the automotive industry at the moment up to the CEO level. These guys know what automation can bring. When we sit down today and very Matti and I now and then go out and see a customer together or as when I see CEOs, they speak all the same language. Same operation, half the people, less accidents, more safety. Olivier? Thank you. I just want to grab your mind on to what extent you could say the upcoming Alstom GE merger in grid has influenced your strategic thinking in power? Question number 1. Question number 2, coming back to pricing overall. What I appreciate that the heating map and your potential to gain market share you're not necessarily playing the pricing game. We're also hearing from some of your competitors that pricing is a little bit tougher. So I just would like to have some comment of in general terms how you view what's your view on how pricing is developing into your next five year plan versus how it's been doing over the last 5 years? It looks like we take the second one first. There are competitors out there at the moment that see us coming. And all of a sudden, they start talking, taking their pricing down. And that does not mean that we need to follow that defensive move, which we will not. On the GE Alstom situation, look, we have been monitoring the situation. GE Alstom is a lot around power generation. Now if you look at the world, more than 80% of the global electricity market is unbundled. That means by law, the company that operates the generation piece cannot operate also the transmission and distribution piece. So there is a clear split. And the argument that some people brought to us and said, ABB, you should buy this, then finally you get into power generation, then you are full liner to offer everything. People haven't understood the market dynamics behind it, where a significant part of the world is not deciding that way. So let's first on some rumors on whether we are interested in that. And the other one is, look, Alstom, GE, Siemens are all formidable competitors. And you can bet that we are ready to compete with them in a way which is appropriate when they have done this deal. I mean, they are going for it. I think Peter you had a question. Peter Lawrence from JPMorgan Asset Management. There's been a lot of focus today on growth. And the second message has been the lessons learned from Power Systems. But I'm wondering as you put together the next level program and as you thought about the change in regional structure, how much focus was there on what you needed to do to improve your resilience in case the base case scenario you're presenting just doesn't materialize, I. E. If the oil price falls below $100 or if the upturn in mining automation is delayed, what have you felt needed to be changed to support the margins if there is to be if there were to be a significant downturn in demand? Thanks. Look Peter, I think this is an excellent question. Given the volatility and uncertainty of the world, what we will do is we will manage the cost for the worst and the growth for the best. That means we are extremely cautious on adding cost. We are also pulling on all cylinders, making sure we even widen the cost reduction focus. If you look at the own at our top line ambition and take that on the upper end, you would say why are you as a cost concern? Well, we are. We are a lot. And that's the reason why what Erik showed to you today, the strong approach in sales services. We will be very, very tight on our capital and we will be looking at capital efficiency much stronger. So the direction that the team is taking is high discipline on cost and whatever we can do in productivity and cost reduction, we're going to do as if we would be in the worst case scenario. And on the other hand, knowing now where the pockets of growth are out there in the market, go after them full steam with a leaner and an efficient resource setup. Okay. Fredrik? Hi, Frederic here from UBS again. You highlighted data centers as one of your growth areas. Could you maybe talk a bit about your business there and your ambitions in that area? That's the first question. And then second question is, obviously software is another enabler of your growth strategy here. And I personally think you'll make more acquisitions in this space, big or small. What have you learned this is for Greg then. What have you learned from the Ventix acquisition? I suggest Para takes the data center piece. Yes. I have the responsibility within the EC to look after the data center business in terms of the approach that we take. We believe the data center market is polarizing in terms of large players and very, very large data centers. So we're in discussions with some key data center players where the size of the data center is approaching 500 megawatts. That means you need a power plant just to feed the data center. And the concept of building a data center in a Lego brick approach from a building concept on up to 500 megawatts does not work. So it's really a big part of the market is moving towards very high power consumption, huge power generation needs, a clear discussion with utilities to get that kind of power. You cannot just put a 500 megawatt data center anywhere you want. You really need to work with the utilities. So we see that part of the market coming towards what we believe in ABB is our core competence, which is really providing very high quality power distribution and power transmission and protection capabilities, which the data center players need. For the lower end of the portfolio, which is the smaller data centers, we're taking a look at a different way to approach the market than all the key competitors have done. We very much believe in supporting the system integrators and the construction companies in providing a packet solution to offer them more options and more choices than some of our competitors have done, which they're going with a full line solution. So we take a slightly different strategic approach in that market. And we believe the data center market will continue to grow quite substantially in the next 5 to 10 year period. The growth might be not balanced like it was in the past. It might be much more in Asia than Europe or U. S, but we really see the market taking off. Thanks, Tarek. Greg, you want to take a shot at the Ventex? Sure. So look, on the Ventex integration, it's Claudio's business, so maybe he wants to jump in here or 2 on the business lines. A couple of things I've learned. One is, certainly software is different as it relates to speed, agility and software cultures. But the basic underpinning of the business is still the same in terms of making commitments, keeping your commitments, delivering for customers. And a lot of it is on the people side is very much like other integrations in terms of credibility, performance, trust, very similar to what I've seen elsewhere. What I'd say on the customer side, it's been really interesting that the customers are trying to sort out all this and Lou was mentioning it about the e business craze is now the ABB connected with a software business brings some ABB connected with a software business brings some stability and reality to what I'm seeing from customers. And I think that comes back to this differentiation piece. I could tell you that we're in the B2B business world and you're dealing with utilities. We're dealing with oil and gas companies. They want to make decisions that they know the company is going to be there 3 years, 5 years, 10 years from now. And there's a lot of come and go entities. And so that whole thing really has struck me in terms of the value connection to ABB being in a business like this. Claudio it falls in the earpiece. Yes. Maybe just on a from a strategic rationale point of view, I'm glad that we don't need to convince you that software is a key part of our portfolio. Do we need that? We need that across the whole portfolio. Certainly, on the power side. We gave you some ideas on how we can leverage and where we see the synergies. We start seeing that. Maybe one learning also that we would take out of that is that, as you know, when we acquire Ventex, we also asked them to kind of reverse integrate part of our business. And therefore, it took a bit longer for the whole integration to go ahead. But I'd say we're on the right track. And basically, look, if you buy our application software business, what ABB brings is very, very deep domain expertise. And if you got then a rocket of an application, Natalia from Carnegie. Two questions. On the robotics side, I imagine that automotive in China has been driving growth in robotics and that is that penetration is leveling off. How do you see the general industry is actually picking up the demand there? Will they do that? Or will that shrink for a time? And the second question is on the mining. Do you see mining equipment providers having the similar offer that you have in automation? Or are they not at all penetrating that market? Thank you. I think it's 2 excellent questions, Natalie. Just from my perspective and then I asked Chun Yang to step in. Look, on the robotics side, one situation that I experienced in China was the following. We gave Chun Yang and his team start up money to do a small part assembly workshop with robots for the 3C industry in China. And we had some pilot installations with some customers. And one day, one of the customer, a company that was in the press, Catcher from Taiwan, came and said, Look, we really like this pilot we would like to order. I said, Okay, that's great. How many would you like to order? 5,000. 5,000 robots in one order. I think that just shows the tremendous potential that we have outside of automotive and that we have in the 3C Industries and others. But I'll let you compliment you. Actually, they just ordered 1,000 more last week. No, actually, no, it's true. We didn't tell the boss. No, no, no. First, the automotive is still going strong. Automotive is still going very strong. And the general industry already picking up like I always mentioned in 3C industry. And as a driver, it's not only for the safety. Course, no one wants to work on the unsafe environment, but also for the process. I give you one of a good example. You are using Apple Computers and all these computers, iPad, as polished, right? So typically it needs to be polished. And 10, 15 years ago when I visited the Chinese customer, it's polished by hands, but this is gone. The A, because you don't find that people wants to work it, because when we talk to the manufacturer, they say the turnover rate is more than 100%. That means they have if they need 5,000 people, they need to have at least 10,000 people ready. On top of that, these are the skilled people. You need a month of training, so you don't have the supply. So this already have a very, very high penetration for the advanced electronics like Apple, but also for the general industry like type, etcetera. So general industry already picking up. So today the limitation is not on the demand. It's more are we able to supply enough engineers who can integrate our automation solutions. So looking on the mining side, your question is a really excellent one. When a market is down, you see all kind of behavior of people playing in that market. We have some people in that field that have some very wild ideas to diversify and whatever hardware players thinking they can get short term into automation. But I think the more mining side where ABB might be also on the front end not receiving only ideas but also pushing out some ideas for some partnerships to combine ABB's very strong value proposition with some other players. I think sorry right there. Yes. Thank you. Johannes Borner from Santander regarding the derisking coming back to this point. The first one is, if you have a look at your portfolio, do you see any need to do some more derisking over time, so be it closing down rescaling or even selling businesses or activities? And the second one that's regarding the future. How can you make sure that what you see in terms of legacy in the Power Systems side? And you had more legacy in the past. If I have a look at the project management and you always did adjustments. So I wonder how you make sure this time that we won't sit here in 10 years' time and have similar legacy things in Power Systems as we have today? Well, if it were the case then 10 years' time, you would be sitting here, but me not anymore. No, but on a serious note, let me take your questions on that one. Look, on the for me, risk management is not a static exercise that you do once and that's it. Risk management is a dynamic everyday process that you need to have. Pick a large project. On every large project, we do risk reviews. And it's a very detailed process where we go through all the elements of the risks of a project. Erik and his team do every year on a regular base an ABB risk review for all of the businesses, the key business risks. And I would like to invite maybe quickly Claudio, if you talk a bit about the risk review process for projects and Erik for the overall business risk. Why don't you share a little bit what we are doing in this field to give you a little bit more granularity? Yes. So as Uli said, it's a continuous process. What we are doing and I was showing that in one of the slide is 2 dimensions. 1 is changing the business mix, derisking as you mentioned, which is an important part of the equation to get the sustainable performance in the division. And the other one is also adjusting not just the risk review process in that sense, but adjusting the whole process across the value chain when we execute projects to the extent that we will dedicate also an organizational design for that part, because as you can understand the logic, the overall risk management, execution on all the different functions is different for project execution compared to manufacturing for instance. On the risk review just to come back to that one, we've been running this process for now years. And of course, again, it's a learning curve that they were going through. Some of the, let's say, that missed a risk that we did not highlight, obviously, enough, for instance when we went into new arenas like offshore wind definitely now come in as part of the learning curve and go into the risk review process identifying those risks and say, is there any similarity for instance to the offshore wind challenges that we've seen or to the solar EPC that we have seen? And then what we create around that is what we call the safe island approach. So we look at then the portfolio projects and say, okay, in the past, this was what we've done right. This is what we've done wrong. And in some cases, we can fix it, so we can go after. Then it becomes part of the portfolio. In some cases, we simply say it doesn't make sense for us like for instance we did for the EPC Solar where we said look the safe island is the system integration piece no EPC anymore or similar to the offshore wind where we now concentrate on our core technology. Thanks, Claudio. Erik? So on the enterprise level, we are running a process to review all the businesses on yearly basis. It goes all the way to the Board for review to identify the risks that we have. And this is not only project these are also other risks we have in the group and define specific mitigation plans. And this process we are upgrading year by year and we are now over the last few months also been upgrading the way we approach it and make sure that there is no areas which are not properly covered through that process. And I think that has helped to avoid quite a few risks which we don't even talk about today because they have been properly mitigated. On the project side, we are upgrading it to make sure we really catch and implement the mitigation, which has been defined in all those processes. I think we have time for one more question. Here in the front. Thanks. Graham Phillips from Jefferies. Can I just go to the share buyback program? And how are you actually going to implement it? Is it sort of going to sit there perhaps to be used if you see weakness in the share price you're going to buy it? Or is it just going to be sort of a permanent program? And also why didn't you give consideration to actually not putting it all into a buyback? I understand that obviously some of it's going to be used to cancel the employee program issuance. But perhaps just rebasing the dividend to perhaps give even more confidence because course increasing the dividend not to the whole amount, but at least moving that up to another level would have perhaps given an even higher level of confidence. Erik, why don't you start on that? Yes. The dividend that we have in place today with the over 3% yield is a very high and competitive dividend today. Also when you look at it on other metrics such as net position over the next 24 position over the next 24 months. And how exactly we're going to implement it, we will not comment on in detail. But obviously, we will be ready around the 16 September to start. You also asked why do we have it in 2 pieces. And it's simply so that we have specific needs under the employee ownership programs. So we have over 20,000 employees in those programs both to hedge and to manage and deliver under those programs. So that part is something we need to do. And the one for cancellation is then what we have added up to come to total of SEK 4,000,000,000 as a total frame for this program. Okay. With that, we would like to thank you for joining us today. And we will be having an apro right after the event. We also have these exhibits again. So I please ask you, it's great the exhibits that are out there to start to understand more about ABB and what we actually have to offer. So with that, thank you very much for taking the time today. And we look forward to in the near future telling you about the execution on our next level strategy.

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