CEO Q&A

<h3>Morten, what were the highlights of 2025?</h3> <p>In addition to building on our strong customer relationships, I was pleased to see our all time high results. We had a record year for orders, revenues, profits and cash flow. We also reached our record-high Operational EBITA margin and best-in-class ROCE (return on capital employed) and raised our targets for both metrics. We also made strong progress toward our sustainability targets. We achieved “A” scores for climate and water in the 2025 rankings of non-profit organization CDP, and were recognized by TIME magazine as one of the world’s most sustainable companies.<br> <br> On the innovation side, we launched our next-generation SACE Emax 3 air circuit breaker to improve power stability in critical infrastructure, like data centers, factories, hospitals, and airports. We also announced a long-term collaboration with NVIDIA to accelerate critical, high-efficiency and scalable power technologies for the next generation of 800V DC data centers. We are working with several industry partners to develop new distribution technologies that can deliver enough power to data centers running AI applications.<br> <br> On the M&amp;A side, we completed the acquisitions of Gamesa Electric’s power electronics business in Spain and of Siemens’ Wiring Accessories business in China. These broaden our market reach and expand our offerings in key segments, such as renewable power conversion and smart buildings. We also acquired innovative technology companies Sensorfact, which helps SMEs use AI to lower cost and increase energy efficiency, and Brightloop, a specialist in advanced power converters for off-road industrial vehicles and marine vessels.<br> <br> Our strong results show we have the right people, the right operating model, and are strongly positioned in the “right” markets.</p> <h3>In 2025, you announced plans to sell ABB’s Robotics business to SoftBank Group. How is that progressing?</h3> <p>Very well. ABB Robotics will benefit from the combination of its leading technology and deep industry expertise with SoftBank’s state-of-the-art capabilities in AI, robotics and next-generation computing. Together, the two companies will be in a strong position to shape the new era in AI-based robotics and expand as a technology leader in this field.<br> <br> We expect the transaction to close in mid-to-late 2026, once the regulatory approvals and further customary closing conditions have been completed.<br> <br> Since the fourth quarter of 2025, Robotics has been reported as discontinued operations and has been operating as a standalone division within ABB. Our Machine Automation division, which was previously within the Robotics &amp; Discrete Automation business area, has been integrated into our Automation (formerly Process Automation) business area. With the planned separation of Robotics, we have three business areas – Electrification, Motion, and Automation – with strong sales and technology synergies. Our Automation business serves as a brand and technology bridge between end-user segments and ABB, which benefits our Electrification and Motion businesses. Automation enjoys a competitive advantage because it is the only supplier with direct access to both electrification and motion products and solutions. With these shared opportunities, we are well-positioned to drive higher growth and margins.</p> <h3>Have US tariffs and higher materials prices had an impact on ABB’s business?</h3> <p>The impact of US tariffs has been manageable, thanks to our “local-for-local” strategy of sourcing and producing close to our customers. Where we were affected by tariffs and higher materials prices, we were able to balance our market position while defending our profitability. Despite the economic uncertainty, demand for our solutions remained strong, especially in sectors like data centers, marine, ports, utilities and infrastructure such as tunnels and airports. We are continuing to invest to increase localization. In the US, close to 80 percent of our revenues are generated from locally made products, solutions, and services, with around 15 percent sourced from Europe; in China, it is around 85 percent and in Europe, 95 percent.</p> <h3>In November, you announced an update to your financial targets. What makes you optimistic about ABB’s prospects?</h3> <p>We continue to challenge ourselves to improve and have raised our Operational EBITA margin and ROCE targets. We drive performance through a sharp focus on our decentralized ABB Way operating model, active portfolio management, and strong exposure to robust markets for electrification, energy efficiency, and automation.<br> <br> With our reshaped business portfolio, following the announced divestment of our Robotics division, I am very confident we can do even better as we build on the ABB Way and our leadership positions in electrification and automation. We are well-positioned at the center of key megatrends, such as rising energy demand and the energy transition, which are driving demand for our solutions across the power, industry, transport, data center, and building segments.</p> <h3>You mentioned strong demand from data centers and in power generation. Do you expect this to continue in the years ahead?</h3> <p>Yes, we are seeing rising demand for energy, and especially electricity, driven by the massive power demands of AI. This is driving major investment in grid expansion and modernization. At the same time, AI is rapidly being integrated into digital tools and activities, which is driving demand for more data center capacity. We already see this in search engines, which increasingly show AI-generated responses rather than just lists of links.</p> <h3>How big an impact is AI having on your business?</h3> <p>AI is having a significant, albeit indirect, impact due to strong demand for data center and power infrastructure. It is also becoming an increasingly important driver of value creation and productivity. Around half of our global R&amp;D workforce is now focused on software, AI, and digital, and we have a large and growing portfolio of AI-enabled solutions.<br> <br> Our decentralized approach empowers our businesses to innovate close to our customers. For example, our Genix™ Industrial IoT and AI Suite, developed with Microsoft, uses analytical and generative AI to interpret real-time data from multiple sources to help industrial customers optimize their operations.<br> <br> Internally, AI tools are also helping our people work better and faster. Our GenAI specification reading tool, for example, uses AI to read lengthy specifications for motor applications and propose a motor design that fulfills the requirements. Another example is our GenAI-powered coding assistant Github Copilot, which halves the time it takes to code and delivers better results.</p> <h3>You’ve been investing in startups and smaller acquisitions. Are you open to larger deals?</h3> <p>Our M&amp;A strategy focuses on emerging high-growth industries and addressing market and technology gaps. Our target is to add an annual average of 1–2 percent of revenues through acquired growth. We still have work to do to fully embed M&amp;A into our performance culture, but we are open to larger acquisitions provided they align with our company’s purpose and create shareholder value.</p> <h3>Are you still planning an IPO for your E-mobility business?</h3> <p>The turnaround of the business is progressing. Our solutions portfolio is now focused and modular, and we’re seeing encouraging order growth. The IPO will take place only once the business is ready and market conditions are favorable.</p> <h3>Looking ahead, what can we expect from ABB in 2026?</h3> <p>We expect demand for our solutions to remain strong; the key megatrends driving our business – in particular, the growing demand for electricity and the accelerating energy transition – are not going away. We also expect to see greater levels of automation and industrial operations becoming increasingly autonomous. So, a continued robust market environment coupled with our strong order backlog will support our revenues. Combined with our internal finetuning, such as driving the ABB Way deeper into the organization, we expect another record year for ABB.<br> <br> We welcomed Christian Nilsson as our new Chief Financial Officer and member of the Executive Committee as of February 1, 2026, succeeding Timo Ihamuotila. I want to thank Timo for his outstanding contribution to the success of our company as CFO for the past nine years.<br> <br> On behalf of the Executive Committee, I want to thank the entire ABB team for their commitment and strong performance and to thank our customers, partners, suppliers, and shareholders for their continued trust and support. We look forward to continuing to help our customers outrun – leaner and cleaner.</p>