Investor Update

Feb 27, 2020

Press Release

Thanks very much, Joerg. Good morning, and welcome, everybody, from myself as well, especially those that we didn't get to see at dinner last night. It's a great pleasure to have you here with us. In case anybody doesn't know me, I'm Jes Mitchell. I'm ABB's Head of Investor Relations. Now many of you over the last year or so have said to me that you want to hear more about ABB's businesses. And in November, we had our Electrification Day in Italy, and many of you were able to attend. And today is the turn of robotics and automation. So we are being hosted here today entirely by the business, and they have a very full and interesting agenda planned for you all. And what I can tell you is you're going to see some fascinating stuff later. And amongst all the solutions that are here together today, we are seeing this wide range of things altogether for the first time here in this place today. So something to look forward to as we move through the day. So I'm shortly going to hand over to Sami Atia, who's President of Robotics and Automation. Most of you did already meet him last night and Johannes Avantu, who is CFO of the business. And they're going to give the opening presentation. What I would like to just let you know is that the opening presentation as well as the Q and A that takes place immediately afterwards is being recorded and will be on our website. The rest of the agenda for the day, you will find in your badges, including also the groups that you will be in. And Hannah will be up a little bit later to explain to you how that will work. But one special request from IR, please, I think you always hear this from me, Please stay in the groups to which you are assigned. Otherwise, my day doesn't go too well. So really for me, there's not a lot that I need to do before I hand you over, but I do always get to show you the most exciting slide of the day, which is our cautionary statement. And throughout the day, we will make forward looking statements based on our expectations and assumptions, and these are subject to certain risks and uncertainties and lots of those about at the moment. You will find this slide in your handout and also on our website. And with that, I am going to hand you right over to Sami. Thank you very much, Jessica. Thank you, Jorg, also for hosting us for all the support over the last couple of weeks. And good morning, everybody, and welcome at our Friedberg Solutions Center. It's a great pleasure and honor to have you here. I hope you had a nice dinner yesterday. The purpose of it was to get closer to you, for you to have an opportunity to ask our teams, and I can tell you our teams were excited. There was one comment was made that I wanted to repeat what was from one of you was just, just to know what you do raises trust. So I think this is the whole purpose of this event here is to make you aware in more detail of what we do and to get you excited about our business. We at ABB love solving problems, love solving problems of our customers. And we build technologies. We build solutions around them, and that drives our growth and our profitability. This is one of my favorite places in robotics worldwide because it really is the core of what we do. You see applications around us, but the core of it is that we have customers come here and we work together on their most difficult problems. We have automotive product heads, CTOs and so on. So the seats you occupy actually today are usually occupied by key customers from us who come with their challenges, and we work together with them. You heard from me, Gregor, that this is really the core of why we're actually growing and gaining market share is we have a core technology, we add solutions to it, and that's how we drive our performance. So we would like to get the spark over to you to get you excited. We have a full agenda today, and it's going to be really exciting also to learn and listen to you. But before we go into the details, most important is there's always a team behind a successful organization. Last year, when we decided to organize ABB into 4 entrepreneurial businesses, we took the chance and myself to say what is the right setup and what is the right team to capture the next level of growth. And I had the chance to actually assemble my dream team. And this is basically a strongest team I've ever worked with, diverse, deep knowledge and expertise and also quite a good understanding of the business, also people coming from outside. So I'm privileged to have this team really driving this business with me, and you'll see later how we the philosophy behind it is actually to use our core expertise that we have developed over the last years in automotive and to grow that into new industries to be able to drive profitability and growth. We have set ourselves in ABB into 4 core businesses, and we are one of the proud members of the ABB family with a 3,300,000,000 business and more than 10,000 employees, spread quite evenly across the world with a solid business in many countries that drive automation. If it starts in China or in Europe or United States, we have factories in China, U. S. And investors in Sweden. And we believe that being close to our customers is really one of the key success factors for how we are driving the business. And I can tell you that when we decided with the new organization, Entrepreneurial Divisions, the first last year, I really felt that I have the autonomy to drive the business and have the cost control in my hands. And what I am trying to do is to bring that authority down to my team to give them full autonomous decision making to be able to act according to market speed and not according to corporate speed. What are the things I would like you to leave with today? First, we act in a highly attractive market that is driven by key dynamics and megatrends that are here to stay. Robotics and automation will be a key driver for prosperity and sustainability over the next decades. I would like to better understand how we were able to win in the past and how we are planning to capture the next level of growth in our industry. And last but not least, how we are planning to get into the margin corridor and to be well in the 13% to 17% EBIT together with Jainosobanto after my presentation. Let's start with an understanding of what we do as ABB, Robotics and Discrete Automation. This is the portfolio that we offer to the market. It's the most comprehensive portfolio in the industry. And you can see here a wide range of portfolio elements from a robot that is able to carry 4 kilogram up to 1,000 kilogram, basically carrying a chassis of a car, but many other applications. And then you see other types of robots that we have brought to the market, collaborative robots of Yumi and then the picker, which is typically used in the food and beverage, picking smaller pieces like bananas or other cookies, you'll see applications in today. And then the SCARA robot is a high speed robot that is used in the electronics industry. In the robotics, in a very simple way, there are 2 main applications. 1 is motion control. That is a typical would be painting a car where you have high precision in what you do. And then there are other applications that we call pick and place. And these two applications are the ones that drive the applications in our industry. And in both of these applications, you need a strong motion control, and our ABB motion control is famous for being the best in the industry. After the acquisition of B and R, we added a comprehensive portfolio in the Automation space from the server motion control, highly newly developed vision system that is developed by Hans and his team and then new innovations that are coming in like the transport system, which is the ACOPOS track you'll see later, a quite fascinating application. And when you combine robots into the machines, you can actually add productivity and flexibility for the Machinery Automation business, a quite exciting portfolio. Now what we do is we take the robots, as you can see, the end to end portfolio that we have. We take the domain expertise that we have, and we use our simulation and software engineering tools to be able to address different application needs. And this is really at the core of what we do as ABB. A good example is we use our simulation tool, for example, in the electronics industry where a smartphone manufacturer typically comes in December, January and says, I want to have a production up and running in May, June, and I would like you to simulate my new device and show me that you're able to produce at a certain tact rate. And I would like the factory to be up and running in April. So we simulate that, we show it to the customer, and then we're able to fastly adjust and to show how this might work. We can do this in many other industries. You see in the back there other applications where you have 5 or 4 robots collaborating on one specific task, highly complex, and that is only possible because we use software simulation tools to reduce the downtime for the customer, but also to reduce the uncertainty because we can do that without touching any assets. We do the simulation, and then the software that is created is the runtime software. We take the same software, and that's the one that is really run with a robot. And you can see the multiple industries that we are driving, and this is really key for us. We learned in the automotive industry. We learned the cost discipline. We learned the position and many other things. And we're using that over the years to enter into new exciting industries like electronics, general industry, consumer and lately into the high growth industry logistics and machinery automation. We do that for a purpose for our customers. Productivity was always the number one requirement from our customers. But I can tell you, over the last year, the number of times a customer told me I need flexibility without sacrificing productivity. In the past, if you wanted flexibility, you create a new production line. Nobody can afford that anymore. With all the uncertainty we see, with the trade challenges, with uncertainties in many, many, many areas as we can see just today, flexibility of production is becoming the number one requirement without sacrificing productivity. And guess what, robotics and automation is the only solution for flexibility. We see that interestingly not only in the factory, but also on the machinery side. If you have a large machine that is used to produce bottles all the same, You can actually change that pattern if you add robots to the machine. And this is one of the innovation we will show you today with what we call machine centric robotics. Now because this is so fascinating, we wanted to show you an animation for 2, 3 minutes of how today we are able to produce at a higher productivity and show you how the factory of the future is possible. So I would like to ask Jasmin to come with me on stage. Jasmin will now order something. Can you explain what you want to order? Okay. Let's see what happens when I click on ordering. Okay. So I assume I'm sitting on my sofa, and I have this iPad in my head that says I can select what kind of bottle I would like my drink to have. So I would like to go for the green bottle, green for hope. Then I would like it to be with Coke. And for the flavoring, let's say we go with sweet cherry. Then I can also choose what label it should have on the outside of the bottle. And I think in that case, we'll go for the red one. And last but not least, I can also choose how the package looks like. So really, what box does it come in. And of course, we'd go with the red and gray as an ABB. Then I do see that for shipping and promos, there is an extra chocolate bar that comes with it as a promotional gift. And last but not least, I can enter a message here that comes on the box. And here, I would say we go for something like 0 calories, hoping that this would be true when drinking it. Or 0 caroly because that's what the tool wants me to say. And I'm flexible, just like our solutions. Thank you very much, Yasmin. So now the order goes to a factory that produces soft drinks. It goes to the MES system. And then you can see a singulation happening. This is the green bottle that Jasmin just ordered. And as you can see, it's now filled with the coke. And this is using our ACAPOS track technology that singulates out 1 single bottle, and then it gets filled with a cherry flavor. All of that is possible while you're doing mass production, but singulating out. You can see that it goes back to the regular flow, and then it gets labeled with the label that Jasmin has actually ordered. And again, it goes back into the mass production, but it has a separate path. And this is really key because the trends towards batch size 1 is probably the most biggest driver for production today. And then you see the Yumi putting a special chocolate bar in it. And then it goes to the robot that picks the individual package, puts it in another bag, and it goes basically through its flow. Now this batch size 1 is basically what you all we all do on the weekend. We order on Sunday. We want something to come individualized for us. Here, you see the package going onto an AGV. AGV is a big trend in our industry because it adds flexibility to the production line. The AGV brings it to the worker, and this is our safety concept with collaborative robots. And then you see the employee coming in, taking it, and then it gets delivered to Yasmin to her home. Now I would like to show you just 2 or 3 examples of what in detail is happening. So one example is the collaborative robotics. Let's zoom in into the factory without fences. So here you see the Yumi we need to take the other one. You see here the Yumi collaborating, which is an inherently safe robot. But the other example is we want to make all our products collaborative. And that is possible through a new technology we have developed called SafeMove 2. And basically, you see security zones where the employee can go in. As soon as you come in into the black zone, slows down. Red zone, it completely stops. When you go out, then it resumes working. And this is a technology that enables all our products to be able to be safe. And why is that important? Because when you buy a robot, you want to have a robot that carries high weight at a fast speed or else you don't need a robot. But that contradicts the safety concept. So if you can match these 2 together that you allow the robot to move fast, but when you need to interact with the robot, you come close. And then when you leave, it resumes working. This is the concept that makes all our robots basically be able to be collaborative. Thank you. So quite exciting, you'll see examples of these applications today. This is the factory of the future, and all our robots here are actually connected. When you buy an ABB robot, you'll see in a moment, the robot gets connected and has an own IP address. And it says, Hello, I'm here. I can be monitored. And then we can monitor. We have a center in India and Bangalore where we do analytics, and we can offer the customer prediction of what is going to happen to the robot, if it's going to fail, but we can also optimize the flow and the uptime for our customers. Today, we have the more than 9,000 robots connected, and the number is increasing rapidly. The more robots we have connected, the more we learn with our algorithms how to optimize the robots. So thank you for the information, and thank you, Jasmin, for joining me. Now how do we interact with our customers and what is our business model? So on the bottom, you see our robots, software and our automation products. These are at the core of what we deliver. We constantly innovate and make them smarter, more precise and add software elements to it. We sell robots separately, but we also add value by driving modular cells. And this is a key concept. You see examples back there. There's an example there of what we call a tending machine. It's basically a robot feeding CNC machines. This is an acquisition we had about 3 years ago. And what we do is we create repetitive modular cells standardized. So it solves the solution for our customer, but for us, by making it repetitive, we enjoy also a healthy margin in it. And then we can go to the up to the next level, which is we can provide a complete system to our customer. And this is key for us because all of the learning that we have in the value add, we bring back to our products and software and the same applications we use in the B and R model. So this is really a key concept for us, robots, the software, and then we have the cell that we repeat and we standardize, and then we go up to the next level and we do systems. We do systems mainly in the logistics area. We'll give examples today from Marc Segura. And we do systems mainly in the automotive, for example, a paint system or a body and white that's basically chassis, assembly and so on. Now this is key, unless we and how we are going to drive robotics in the future. We were strong always in the automotive from our product side but also on the systems side. But we've decided to create new segments that drive the attention on other industries that are high growth industries. Now automotive tier, you might think, is similar to automotive. But no, automotive tier, the level of automation there is much lower than in the automotive OEMs. And that's why there's big potential in the auto tier as much as it was in the auto OEM. Electronics industry is a very dedicated industry, a very specific one that has high passes up and down. Now we are more in the down, but we had a huge peak in 2016 and 2017, but it requires special solutions. General industry is an area where we will have a dedicated focus on because general industry addressing it is different than automotive. Automotive is an account driven business. That means we do directly the business with the end customer. General Industry, we use also distributors and system integrators. It's a different concept. And if you focus too much on the big large orders in automotive, you might tend to neglect the smaller customers, who, by the way, are highly profitable because there is a high attachment rate of service as well. And then consumer segments and service robotics, that's in its essence most of the innovative ideas that we have created. We created an incubator 3 years ago for logistics, robotics in logistics. And in the realm of a couple of years, we actually made it a 3,000,000 digit business. So we have the concept of always creating an incubator and then let it grow. And when it grows, we make a segment out of it. Now Max Segura is running that business, and it includes the logistics but also new areas like the medical robotics. And then we have the machinery automation with local engineering that is driven by Hans and his team. So this is key for us. Now all of these segments will drive specific solutions for the industries. And then we have a delivery and product platform that is driven on cost, productivity, quality and on time delivery to make sure that we have the right product in place and then let the colleagues drive their business. We have been showing in the last decades that we can drive profitable growth coming from a difficult situation in 2,009, going up to the level of 16% in 2017, growing both in B and R and in robotics at a CAGR of 11%. We are now in a temporary downturn in our business driven mainly by automotive, and we have driven a strong installed base, highly connected robots and more than 60,000 users in software engineering tools. Now what happened over the last 2 years, I would like to go through with you in more details. So over the last 2 years in 2017, we had what I would call a peak in orders from the electronics industry and the automotive. We had times where the ordering of the gearbox was taking more than 6 months. You had to actually build capacity for 6 months to be able to deliver. So that was a peak in both sides. And then we had the drop in both electronics and in automotive industry. And then we had a switch in the mix because we were still holding up quite well against our competitors because we didn't drop in our orders, but that was mainly Systems business. And the Systems business obviously has a lower gross margin than the rest. And then in 2,009, we had a drop in the service business, also mainly driven by the automotive, where the capacity load of the factories was getting down, and that's why the ordering of spare parts and service was driven down. That is what happened over the last 2 years. We are committed to be well in the margin range with multiple actions that we have in place. Cost management, we already started in 2018 when we saw the market declining. That's why we kept a certain level of probability. Mixed value pricing, you'll hear more later from Jana, the CFO. And then quality and execution has a key focus for us. These 3, we will drive independent of volume and growth investment. But this is a high growth business. So even in these times, we are investing in innovation. We are investing in specific countries to get back to a decent growth and volume to be well in the margin range of 13% to 17%. I mentioned before, we were resilient compared to our peers for multiple reasons. One of the reasons is we have a good mix between products, service and systems. This is certainly one. We are well positioned in China. We are the number 1 in China with more than 2,000 employees. But we also we are less vertically integrated. That gives us room in downturns to react much faster. And you can see that on the top line, we hold it up well. So we actually regained market share amongst our large peers over the last 6 quarters. And also on the profitability side, we went down, but we were more resilient than the rest of the industry. Now it's an attractive market, and it's a really exciting place to be in for multiple reasons. I spoke about the individualized product. This is really driving demand in consumers' business, in automotive and many others. Labor shortage is wherever I go worldwide, it's really one of the most pressing arguments that I hear. Even if you look at logistics, our e commerce partners, they have to hire 100 of thousands of people to cope with the Black Fridays and the peak demand and then go down. This is not sustainable. And you see the growth rates. That's why logistics is a growth place for us. But in many other areas as well, if you look at automotive, even in automotive, the final trim and assembly has almost only 10% to 20% of automation level, which is basically the last part of the manufacturing. So even there, there are potential as well. Digitalization is a big driver and uncertainty. And robots give you more leverage on uncertainty, and this is really key. You don't want to build a new line for every product. You want to have one line, even in automotive, where I can build an EV and a diesel and a hybrid and a combustion engine. If that's possible, you reduce your dependency on your CapEx and you improve your flexibility and leverage. And that is really the key driver for the megatrends. And what is also important to know that the cycle of our customers' business is very different. As I mentioned before, probably automotive was the key driver for automation over the last decades, no doubt about it. But Tier 1 has a much less level of automation, and they will raise up because productivity for them is absolutely key. And then you see the other industries like electronics, health care, consumer packaged goods and general industry has also a very low level of automation, take food and beverage and so on. If you go to factories, there is big potential to go there. But in automotive itself, even there, we are the leader in electric vehicle manufacturing, battery manufacturing. You'll hear from Mike Larsen later how even in automotive there are opportunities to grow. On the right side, this is really a key indicator for us. We use what we call robot density. It's the number of robots in a country that are used compared to 10,000 workers. Now you see in the country like Singapore, Korea and Germany are almost to 800 level. China is the largest market we have. And in 2 to 3 years, according to IFR, 40% of all robots will be sold in China. Now think of 140 robots compared to the German level or the Korean level. So there is huge potential even regionally to grow, and these are the countries that automation will raise their level of prosperity. So that's why we firmly believe that this is a growth business with a 6% CAGR coming from a mix inside of the businesses. Some high growth areas like consumer packaged goods or general industry or electronics and less in the automotive. But as I said before, even in automotive, we see a high growth area, which is the electric vehicle and battery manufacturing. So on all of these, lead us that we will invest in these industries also in automotive to capture that level of growth. Now how do we win? We have the broadest portfolio amongst our peers. We have shown over the last years that we are driving innovation very strongly, and we are a true global player, and it is really key. And this center here is a good example for that. When we have customers here that need support, robots need support. When we deliver to our customer, it is the core of production. Robots are becoming more core over the next years. If you have a production with a robot, you don't want this to be down. So service is important, proximity is important and then the applied domain expertise that I mentioned. Now we have a very strong and broad portfolio because amongst our peers, they are the ones who have actually robot suppliers. Then we have the ones who have the system and engineered solutions and service. And then we have the other part where it's based on PLCs and control. And with the acquisition of B and R, we have both, and we can leverage the strength of both portfolio elements. A great example is the machine centric robotics that you will see today, how when you bring 2 technologies together, you have a machine, you put robots on, you reduce the complexity by, for example, we don't use 2 systems to control actually the machine and the robot. We eliminated 1 complete system. So we use the B and R system to control the machine and all the robots on it, reduces complexity, reduces cost and implementation for our customers. We've shown over the last years that we are able to innovate and reduce the dependency on the automotive. Not that we don't want to do business in automotive, we want to do business in automotive. But to have a better balance and greater footage on others, we acquired B and R, and we introduced new engineering tools and software tools. And then with our incubation concept, which is really quite a strong concept, we create a small team. We let them interact with a lead customer. And then when that grows, we actually introduce it to the market. And the latest one is in health care. We opened up an innovation center in Texas Medical. It's the largest medical center on the globe. They serve 10,000,000 patients a year. And in the middle of it, we have now an incubation center where we deal with our hospital, allow them to test, for example, in the laboratory how robots can improve the productivity of a lab or the application in the hospital. But we don't stop here. We believe that innovation is key in our industry. On the collaborative robotics side, maybe because we had a strong focus on the large lot orders in automotive. Maybe we a little bit neglected that business, but we recognize that, and we will come up now with a series of products in that industry. We believe that the collaborative robot world is based on 2 things. 1 is you have inherently safe robots like the Yumi you might have seen. You can touch. You can see it stops. But you have other types of robots where the customers need to have the high payload and the speed. And in these cases, we introduced a new technology called SafeMove 2 that I've showed you where you enter the zone of the robot and then it slows down and then you go out. That's another concept for collaborative robotics, and you'll see now a series of products coming out soon. We have an own innovation center for artificial intelligence in San Jose, but we do something very unique. We invite every year in what we call an innovation challenge, startups to solve a very specific problem. So we picked a very hard problem for last year, which is what we call bin picking. We gave our start ups a bag full of stuff, Haribo bottles and what have you, and said we would like you to solve the problem of picking them without human intervention. So we took 20 start ups and companies, and there was one only company that was a start up in California, Berkeley Geniuses, I would say, and they managed with an AI algorithms to pick without human intervention. We decided then to partner with them and to use these algorithms to support our customers in the e commerce business. Why is that relevant? Because if you look at an e commerce parcel system, you have all these package coming in with different colors, shapes, shades and what have you, and you've never seen them before. So if you want to really automate, you have to be able to have a vision system, a grabbing mechanism of objects you've never seen before. And who solves that problem is in the game, in the logistics. That's why we partnered with them. We announced it this week. We're very happy to drive that innovation even further. And last but not least, mobile robots, we believe, will be the next growth area in our business. Why mobile robots? Because we see a big trend in manufacturing to go away from what we call the fixed line automation to more cell based automation. You have cells where you transport elements between the cells, and there you need mobile robots. That's why we think this is a big growth area. And then you can put the robot on the mobile device or you let the mobile device go to the robot and bring the equipment there. Another reason why we believe we are winning is we are a true global player. The solution center concept that you have here, you see across the world. We have a fantastic solution center in Barcelona. We have an engineering center in Edgelsberg, in the U. S. In Auburn Hills and in China. So we want to be close to our customers. We have 3 production hubs, but we are close through our solution center concept, and our service engineers are across the world. And that really means proximity and a better understanding of the market and the customers. We are the market leader by far in China, which is the largest market. We have more than 2,000 employees there, and the reason is we are close. We understand the market. We are distributed even in China across, and that gives us a strong hold there within even a research center that we have in China as well. Last but not least, the applied domain expertise. I explained that before. Now we talked about the solution centers. These are examples of what we mean by solution center. For example, we would have a sorting, picking, packaging and palletizing solution center. We acquired a company in Belgium, Intrion, that basically is 200 engineers that do solutions for the logistics business. We bought the company 2 years before, and I must say, we are sold out. We actually need to increase capacity pretty fast there. So that was a great acquisition. And they do basically, it's a center for understanding how you pick and place in a sorting environment and e commerce environment. And then you have we have the welding and cutting assembly and then many solutions centers traditionally in the automotive industry, and that is our one of our key strengths. Now our goal is to grow by 3 levels. Market will continue to grow, as I showed you before, but our goal is to accelerate growth in existing segments, drive new automation solutions and leverage existing expertise in new segments. You will see examples today from our colleagues in the automotive because we believe in the automotive industry, and it's quite an exciting business as well. We'll see examples for electric vehicle manufacturing. And what I just mentioned before, the flexible scalable manufacturing system going away from the fixed line to connected lines with cells. This is one example when you go on the tour today. From our B and R colleagues, you will see flexible track technology examples over there and then the unique offering that we have, a machine centric robot machine with a robot on it. And then you see from our innovation colleagues, Marc Segura will show you one example of robotized warehouse solutions, which is really booming market for us and the other one, an example from the Health Care business. So we picked for you examples, 1 in an industry that is more traditional, but even in this industry and automotive, we see innovation, B and R in the machinery automation side, but also to let you know about all the things we are doing for the high growth areas. All of these segments need dedicated strategies that are different, and this is the key enabler for us to capture the growth in these industries. You've seen yesterday evening the colleagues and also on the slide, all of the colleagues wake up in the morning and make sure that I'm targeting the outer tier. Tanja is targeting the auto tier industry, which is different than the automotive. And as I said before, general industry is different because in there, you need to work with distributors and not directly with the end consumers and so on and so on. I believe personally, having been in research and development for many years, that you cannot do everything on your own. We are proud to be the innovation leader, but we believe also that you need an ecosystem to build upon. There are many tasks that outside are solved by others at MIT or in Hong Kong or in Shanghai. And why not partner with these universities? Why not partner with the startups? And a good example is Microsoft. We work very closely with Microsoft on the platform for our ABB Ability, the digital platform. We work with Gevariant on the AI side, with the SO on the simulation tool and the PLM side. And I think this is really core of our strategies to leverage that strength to be able to drive innovations and growth in our organization. So with that, I thank you for the moment and for going through the details of robotics and how we operate. And I would like to hand over to Jana Sivanto, CFO of the business. This is the 2nd time I worked together with Jana, and I'm very happy that Jana joined the team April 1. I would say Jana is quite dedicated, and she will make this really work. So I'll hand over to you, Jana. Thank you very much. So good morning from my side. I hope you had also a great evening. I enjoyed talking many of you. Those that I couldn't meet last night, let me shortly introduce myself. So Janne Suvanto, CFO of Robotics and Discrete Automation. I started in ABP 22 years ago in the drives business where I worked almost 10 years in different roles. I also work in the service business, all of the ABB businesses, also in marketing and sales, global and local roles. And I'm truly excited to be here with you today. And I have to say that this business that we are talking about today, robotics and discrete automation, is the most exciting business that I have worked so far. And there are many people who are, on a weekly basis, in touch with me, want to join our team. So that's a very positive thing. So let me start with a very key message that you want hear today, I believe. So how we get into the margin corridor? So there are 3 key levers of improving profitability and supporting get us to the margin corridor independent of growth. And those are cost measures, mix and value pricing, quality and execution. So like Sami said, we started cost measures to offset the decline in the market 2018, mainly 2019. And those are really factory productivity improvements, ABB operating system savings like engineering footprint, closing of units that are not small units, taking out the management layers, etcetera. So this is crucial, and we will continue to drive those 2020. We also want to drive more balanced mix. And what I mean for that is really driving product scalable solutions, services and digital offering to the customers. Those value add solutions also enabled us to differentiate in the market and also drive value pricing, and that's super important also as a second lever. And we strengthen our quality and execution. And quality, everything what we do also strengthen the execution, project execution, which will improve also the gross margin. And this is independent of growth, all that. Of course, we will drive above the market growth, and also we will balance our growth investment against the growth opportunities. So let me give you my perspective of ABB Operating System. Many of you asked these questions last night. Also, how do I feel about that? First of all, it is the biggest change that I have seen in ABB And why? Now businesses are truly empowered to drive the performance. So for example, we have differentiated KPIs that we can drive performance and value creation, and we have all the tools now to manage and turn our business. And also the business line managers, platforms we are now, they are all fully accountable of delivering results. Also, I think the speed is crucial. So we want to be winners in the market and make fast decisions, and this is now possible compared to a few years ago. You need to have several approvals to get things moving. Now we can make a decision fast, being that price decision, investment decision or cost measure decision, and that's, I think, really super critical. And then I think accountability. So we have clear roles and responsibilities defined for corporate and businesses. Like Sami said also, we have more the cost base under our control, how we can now further optimize and drive costs down. And also, we are lead in 8 countries as a business, meaning that the fiduciary duties, the legal one, they are part of our team, so we can also optimize them going forward. So it's a big positive and enables also our new setup as our RA business going forward. So how we are measuring those levers, as I mentioned? So we have the KPIs in place that we are monitoring right now, and you see examples of these right now. So for example, in the cost measures, we have ABB operating system initiatives. We have initiative owners. We are tracking those monthly basis. And of course, Timo is talking about the big picture quarterly basis where we are heading. I can only comment that we are in the good path in our business to achieve our targets. And I can see in the P and L 2019 already big part of those savings coming through, and we will continue driving now 2020. Regarding mix and value pricing, we want to increase number of robots. And why? Because that enables better factory load. And then also, we want to increase service and digital offerings and portion of that as a key KPI driving the more balanced mix. And then in the quality and execution example of the project improvements, which has the gross margin impact. So each of the business lines and platforms, those KPIs are now selectively embedded to their scorecards, and they are responsible of driving those going forward. So let me come back to the growth. So you heard from Sami earlier how we are winning. So we have the most comprehensive portfolio in the market. No one else has that. And we constantly meet customers. They are truly excited about robotics and machine automation portfolio and are happy to that we are selling those. But there are 5 areas that will give us an edge to the growth. So first of all, selling existing portfolio to the existing customers that we have very good relationship secondly, accelerate growth in the new segments and new markets and also thirdly, deliver the scalable solutions to meet the customer needs. And you will hear from our business line heads later today in the kiosk sessions examples. And we want to also accelerate ABB Ability digital service offerings and continue investments in the sales and execution. So investments in the sales and execution. So putting all this together, I'm confident that we can drive above the market growth. So what does that mean for the investments then? So we want to invest where it matters, driving long term growth, not compromising short term. So for R and D, we plan to invest about 5% per annum, and we want to invest through the cycle, and this is super important for this business. And you will see great examples today, and I'm really proud to see what we have done as a team. So you will see those in the kiosk sessions. In parallel, we would also invest in the sales. We also will take down G and A same time. And maybe mention especially the application engineering, which is crucial for machine automation business because of the sticky business model and also that enables the better quality of the revenue. So we will continue that. And you will heard from Hans later on in the kiosk. So let's also look at the highlights of the CapEx investments. So you have heard some of this already earlier. So these all are supporting mid- and long term strategic goals. And let me mention 2 of these. So we have the factory replacement investment in Shanghai ongoing that we started, expected to be open 2021. It will be the most advanced flexible and automated robotics factory in the world and also showcase of the flexible automation. And why we are doing this investment? We want to maintain our position in China to be number 1. And remember also that our manufacturing footprint is pretty effective. So we have 3 key factories in robotics worldwide in all regions and then for machine automation, campus or factory in the Ekelsberg, Austria. So also the second investment is the campus investment in Ekelsberg that we started already 2018, and you see in the figures here that that's why the CapEx was higher. And this is really also expanding the factory floor to support the growth, but not only that, building the new innovation, training and customer training center that we can innovate together, including R and D, sales, etcetera. So let me summarize from my point of view my priorities as a CFO. So we will continue cost measures without compromising growth, and we will drive above the market growth with our new setup that you heard from Sami. And we continue investment through the cycle to R and D, digital sales, where it matters and also in the CapEx to support our long term growth. And putting all this together, we have a clear plan now how we put us to the medium term to the corridor of 13% to 17%. Thank you. Thank you very much, Janne. Fantastic. And I can tell you Janne is a quite determined person, and I'm pretty sure that Janne will help deliver what we promise. To recap, we are in a fantastic industry with many megatrends that support a secular long term growth. I hope we could have shown you and you show it, you'll see it later as well that we learn how to win in this industry and we'll continue to win and expand into new areas and that we are determined to drive profitability to be well in the margin corridor. With that, I would like to stop here and then ask Jessica to join us up, and then we'll open up for questions. And we will also have a session, a longer session, later after you have the chance to go through the kiosk and the tour. So please, Jessica? Okay. So thanks, Sami. Thanks, Janne. And we are going to have just a shortish Q and A session now just to be assured that there will be plenty of time to ask questions through the day in the kiosks and again later at the end of the day. So if I could ask just one question at a time, please, and possibly also state your name and company when you ask your question. Thank you. So let's take the first one over there. Guillermo Peigne from UBS. I guess one question, one follow-up. First, regarding the service comments regarding 2019 activity levels, can you give us an indication on what levels are you at the moment versus peak levels in service activity? And the operating leverage or any commentary around margin within the service operation will be welcome as well. Okay. Very good. So we like the service business. In terms of margin, I can tell you that service has the highest level of margin and gross profit and then comes the product business and then the system business. The reason why the service business went down is mainly because the automotive industry had a decline. We have a very healthy business in the automotive industry, but also outside. But when many of the services business that we do is actually spare parts and support of our customers. And when the factory loads are actually down, the demand for spare parts and the usage of robots actually slows down. We see a fast reaction back as soon as the factory loads go up. When you have a 3 shift factory going down to 1 shift and the robots are not used as intense as before. That's the reason why the service actually went down over the last year. But our goal is to bring it up to a decent level to have a good mix between the service system and products. But I also must say, depending on the market that you saw, the mix of services is different. So we have industries that like automotive, where we have a good service business in. In some of the electronics business, you might see that the service level is actually much lower. The request is there is not as high. General industry, very healthy service business. And we expect in the logistics business that will be a very, very good service business as well, and we're ramping that one up. Great. Thank you. Martin, please. Thank you. It's Marshall Milkey from Citi. Just a question on the margin profile by end market or segments. I mean, obviously, you're expanding into new areas. I appreciate there'll be growth investments there. But is there a natural margin headwind as you're going into new markets if the automotive market was higher margin historically? Or is it too simplistic just to think about margins by customer type? There is a difference in the margin because of the difference in the mix. So as I mentioned before, all of the businesses will be measured on the profitability in that in their segment. And this is key for us because I would like to have the teams drive service business, product business and the system business to be able to have the stickiness. But the margin across really depends on the level of service content. For example, in the general industry, it's actually a quite healthy margin that we have there also through the service. We expect that the logistics business has, at the beginning, a higher content of systems than the nature of the project that we have. But we expect over the next years to have a broad installed base and a very healthy service business as well. We'll take one over here. Thank you. Okay. Go. Just one thing because we sorry. John Mounsey, Exane BNP Paribas. In the context of the recent tariff war and maybe putting the coronavirus to one side, it may have changed customers' thoughts at the moment. But in the run up to or during that, have you started to see customers thinking about investing in robotics in maybe closer to home, re onshoring? You talked about 6% growth outperforming the end market. Is that part of that story? Are we going to see extra investment where we might not have otherwise seen it because of the trade war? We see that already. We have customers who are thinking of at least balancing their footprint in China and mostly in going into Southeast Asia. For example, Vietnam is a good place and then China and India as well. So we see that discussion as well, but we see also customers who are now starting to reshore even in the United States. So to be closer and to be independent of the manufacturing in China. So that's a clear turn. What we also see is a request from customers, in this case, was can you are you able to build me a factory in 3 to 6 months? So and are you able to basically transport your knowledge, which is basically robot based, and then you don't have to have as much training in the new country? So this is a request we get now from customers very often. Okay. Thanks, Jonathan. And we'll go right behind then if you look at yes. Thank you. Thank you. Gaele Dubreuil Deutsche Bank. So both of you, I mean, you've talked a lot about mid term ambitions, strong growth, good margin recovery back to the targeted range of 13% to 17%. But obviously, we are not exactly in that phase at the moment with the business actually shrinking, well, big time in Q3, Q4, the book to bill being well below 1x. So could you just be a bit more explicit about the timing you have in mind for the business to start picking up and be back on a gross mode really? And I mean, do you see any signs of this bottoming out in demand? Well, we are in, I would call, a temporary downturn, and this happened every 7 to 10 years. It's not uncommon in this business. We've seen the downturn in 2,009. And indications of when this will end is difficult. I mean, we have now a double challenge also with the coronavirus. So in these segments, we have segments that are much more resilient. Take the example of general industry, food and beverage and so on. These are actually more resilient businesses that we still continue to see healthy demand. And even in certain countries, even as you saw last year from Europe, even in Germany, we had actually a good year. We believe that automotive, which is still the largest base that we have, will continue to be down for a few quarters. But exactly when that will pick up, I cannot comment about that. Thank you. Dani, over here. Thank you. You'd like to make me run, right? Sorry. I'll try and moderate the swinging. Yes. Dani van Duisburg, APG Asset Management. A question on the robot density and also to Gil's question a bit on how that plays out over the next year. So I think it's a bit misleading looking too much about the robot density because like Germany, Korea, U. S, of course, that number is majorly biased by the fact that they are big exporters. So if you see automotive production more localized and going more to other parts of the world, you have a negative impact, of course, in Germany, where you have less export. So hence, probably, the robot density will drop. So on that big change of automotive into EV cars and other types of cars and also new clients like more bias to China, etcetera. Market share in Germany went from 13 to 23 as you showed, but how is that in the Rest of the World? So how is the new reality how is ABB positioned in that new reality? So for instance, in China and in the EUV world, do you see some similar market shares there? And so that's mostly the question. Thank you. Well, on the robot density, I understand your point. Although in China, we're still at a very much lower level. So even there, we believe that, that number will go up with 100,000,000 to 140,000,000. If you go to automotive tier, you see really the level of robotization is quite low there. And I'm pretty sure that the productivity will be forced through the OEMs into the whole chain, the first the tiers and then you have the metals and the other industries. But to the other question, in China, as I mentioned before, we actually are the absolute number 1, and we enjoy a very healthy market share there because of our proximity. And we believe that we will continue doing that. And you saw from Jana the investment in robotics because we believe in that industry. And we have a positive spiral in China because we have a very strong team. Our team, I would say, is the best across the industry in China. Chinese head and many talents actually come through the Chinese organization. So I'm quite comfortable there. Even the head of R and D and so on are located in China. So I believe that's really a place where we will continue to gain market share and grow. Okay. Moving slowly around, right at the back over there. Yes. Alessandra Freud, Takhtarian. Just a quick head on the automotive business. Don't you think that it could last longer, your downturn, if even if production comes back because production is not automatically equipment spending? Well, as I said, I think it will for a few quarters, we will see continued downturn. But I can tell you when you watch the later when you go to the kiosk of Mike Larsen, he will show you that we actually in automotive actually have segments with we are growing with high pace than the number of projects we have in the electric vehicle, electric vehicle assembly, but also battery assembly, battery manufacturing is really quite healthy. So even in that segment, we see growth. And then the other one is even in automotive, the final trim and assembly is a big area where we will see growth as well. Final trim is basically when the car is manufactured, painted, and then at the end, you put the dashboard in and the carpets and everything. That is extremely low automation. And you'll see examples how we do with our new technology, visual Sherbine and so on, how automation will improve that. And we're working as today. In the next couple of weeks, we will have the who is who of automotive sitting here to discuss with us how we automate the last part. And there's again, there's potential there. So we believe we still believe in that industry. We learn in that industry, and we'll take as a move out. But in the combined thing, I mean, in the numbers you've seen before, we estimate over the next 5 years about 3% to 4% growth for us in the automotive industry, driven by electric vehicles and others. But in other industries like in general, consumer, more the 20%, 25%. So in the combination, we see a 6% growth. And the reason why we have set it up this way is to have a balanced footage for our growth and for our profitability. Okay. So we're going to move slowly around that way. And Andreas, why don't we everyone over there in the middle? Andreas from JPMorgan. The market growth, the 6% you showed and then you showed the 3 levers you see to grow faster. Under the old CEO, there was an official target to become global number 1 in robotics and overtake your target? And when you look at the competition landscape outside automotive, particularly where you have a lot more smaller, different new competitors. How do you how have you taken that into account when you basically start with the 6% market growth and then add where you can outgrow, given that some of that market growth comes in areas where you have 300 competitors rather than 3? Yes. So on the first question, yes, absolutely. We our goal is to outgrow the competitors and to be the number one. That's a clear goal for us, and that's how we have set up the organization. We have the ambition to do that. On the other question, what I'll give you an example why I believe that this new way that we are targeting in the market is really the right thing to do. Take general industry. Our organization in over the last 10 years, when we get a big large order from Automotive, usually these are large orders of 500 to 2000, 3000 units, which peak for us. That's multimillion business. Then you have the organization divert to that easily. In the smaller transactional business like General Industry, where you have bakery, you have a smaller food and beverage and a customer, they buy 2, 3 robots, very healthy margin and very healthy margin on the service side, but the attention is not there. The reason that why we did it is exactly that, to have a clear focus on it. We have, for example, a team now dedicated on making the robots absolutely easy to use. 0 programming is our goal to tackle that market. And I'm firmly a believer that we will be able to do that. So each of these markets have different dynamics, and now we have teams who are actually targeting to address these industries. Another example is the distribution network that we have. We have a person who is now working and dedicated to work with distributed networks and system integrators to drive the growth in that. And they're, again, a very healthy margin business. All right. I'm following the microphone here. So I think we have one over here. It's Wassey Rizvi from Royal Bank of Canada. Just thinking about the push into the other segments. Clearly, there's some investment needed. And how much of that have you already done? How much is there to come? And then how do you balance that with your largest market probably being in a downturn for, as you said, next few quarters at least? Do you still go ahead with that investment? Or do you have to then try and manage the margin overall for the division and think about slowing that down? It's a good question because I see the faces of my team because we have a constant challenge internally, who gets how much. But we have a very simple way of deciding. It's the business case. If you have a good business case, you can go ahead and ask for the money to invest. So and interestingly also, we are continuing to invest in automotive and because we have opportunities to grow there. But I can tell you the investment we're doing proportionally, the size of the business in logistics is higher because the growth rates there are really, I mean, quite, quite high. And also the demand from our customers is quite high. So you saw the investment we're doing in the medical, that's a dedicated investment because we believe that's going to be a growth area. When we decided 3 years ago to create an incubator, what we usually do is we take about 10 people. We did that in UK. We put a team together. And as I said, you work with 1 or 2 lead customers, and you get the freedom to act. We don't even interfere. You get the standard robots you build, and then you run. That's an investment. And we try to keep them closer to me and not in the organization buried because then you basically you lose the traction because it's our operation always trumps. And when they become big enough, then we make them a division like now Marc Segura is heading it. That used to be a small incubator, and so the number is now 3 digit million number. So we constantly weigh out the investments, and I think B and R gets a big investment now with the because we believe in that growth. We've been showing an 11% growth over the last years, and we believe that they can do continue doing that. So I think, Will, I saw your hand up first there. Last question for the moment, but there will be another chance later today. So yes. Thank you. Will Mackie, Kepler Cheuvreux. The question is directed towards your growth inorganic growth in the future. When we look at the business, you're driving your presentation here towards solution led growth. When we look at the regional here towards solution led growth. When we look at the regional footprint, it appears you're underrepresented in North America relative to your other regions. And when we talk about the product capabilities you have in your portfolio, you mentioned in your presentation, for example, AGVs being an important growth area for the industry as a whole. So the main question would be, which areas do you see as the greatest opportunity for inorganic growth? And how do you expect to negotiate with the corporate center or with ABB? What criteria need to be met in terms of hurdles to get that capital to expand your business? Okay. So we have quite some actually good freedom to act in the past, and I expect that to continue. And we in Robotics and Automation have a very good track record actually in integrating buying companies and integrating them. SVEA is a good example 3 years ago and quite successful acquisition. We tend to have smaller companies that add technological edge to us, and then we standardize and expand. That's what we did with SPEA. But we have another strategy, which is investing in, where we say, system level integration capability. And the example is Intrion, the company that I mentioned, 200 employees in Belgium. And that we are using as a hub, for example, in the logistics. Logistics, when we started, it was a small team, as I said before. And then we said we need to really leverage scale. So we bought this company, and now this company is the hub for all Europe for all logistic projects. We will continue to develop this strategy as we go. And yes, we are actually very confident that corporate will support us with our strategy there, yes. Good. I mean the regional expert is part of that. So you can see that from the Intrion. It's always a mixture between the industries we are trying to get in, logistics is a good example, and the regional footprint because to your point, you're right. We need to be local. So the system integration capability is usually a local competence like the Intune example, that's a European solution for us. Thank you.