ABB Capital Markets Day 2023: Setting new standards

• Future focus on consistency in operating model, accelerating growthand continuous improvements
• Upgraded target for long-term comparable revenue growth to 5-7%
• Increased target for Operational EBITA margin target to 16-19%
• More ambitious 2030 and 2050 science-based net-zero targets

ABB is hosting its Capital Markets Day today at its Electrification site in Frosinone, Italy. At the event, CEO Björn Rosengren, CFO Timo Ihamuotila, as well as the Presidents of ABB's four business areas will give an update on ABB's successful transformation, financial targets and how the company will benef it from key secular trends across its business areas. In addition, ABB's Group Head of Sustainability will provide an update on the company's sustainability agenda, including more ambitious 2030 and 2050 net-zero targets.

Björn Rosengren said: "During the transformation period over the past three years, we aligned the ABB business portfolio to our purpose of enabling a more sustainable and resource-efficient future throughour technology leadership in electrification and automation. We have achieved strong improvements infinancial and sustainability performance during this phase, supported by increased accountability, transparency and speed thanks to our ABB Way operating model.

"Having set new standards, we are now coming out of this transformation period, and the majority ofour divisions have progressed towards a strategic growth mandate. They now focus on capturing the full potential of what in my view is a market sweet spot, at the heart of the transition toward selectrification, energy security, energy efficiency, automation and digitalization. Achieving our previous margin target a year earlier than planned, and being a more agile unit with fast decision-making gives usthe confidence to formulate stronger ambitions and lift our margin target. I am convinced that ABB isextremely well positioned - now and in future."

Higher ambitions following transformation phase

As part of its updated financial framework, ABB is lifting its comparable revenue growth target to 5-7 percent through the economic cycle (from 3-5 percent previously). The target for acquired growthremains unchanged at 1-2 percent. The company is also raising its target for annual operational EBITA margin to 16-19 percent (from ≥ 15 percent previously) and updating its annual ROCE target to >18 percent (from 15-20 percent previously). In addition, the company is sharpening its objective forbasic EPS growth through the economic cycle to at least high single-digit (from Basic EPS growth > revenue growth previously). ABB is also confirming its target of ~100% free cash flow conversion to net income.

The update in growth ambitions is based on both external and internal factors including accelerating demand for sustainability-driven electrification and automation solutions as the world moves towards common emissions targets aligned with the 1.5°C target. Additional support for higher growth is grounded in new ways of working with ABB's divisions that are accountable for growth and decision-making closer to the market as well as a reshaped portfolio around sustainability and resource efficiency through electrification and automation.

The Group has increased the share of its divisions that are in growth mode now comprising approximately 70 percent of the Group's revenues. The focus is on both organic growth, as well as M&A opportunities that can fill technology gaps, complement divisions' offering for high growth markets, provide access to new geographies or enable market consolidation. ABB is aiming at 5 to 10 small to mid-size bolt-on acquisitions per year.

Returns and cash generation driven by growth ambitions

Timo Ihamuotila said: "We expect that our higher growth will also lead to higher profitability and cash generation. As a lever to reaching our new financial targets, we are taking the next step on our journey towards further improved quality of our revenues as well as capital efficiency and productivity. At the same time our capital allocation priorities remain unchanged."

ABB will also continue to invest in digital where it creates synergies with the company's offering. As of 2022, approximately 57 percent of orders were related to the software and digitally enabled offering. Approximately 60 percent of R&D resources are focused on digital solutions which the company will continue to strengthen with bolt-on acquisitions. Between 2020 and 2023 ABB made 26 venture investments in the areas of technology and digital.

ABB is reiterating its target of maintaining a strong investment grade rating. Its capital allocation principles remain unchanged: funding organic growth through research & development, channel and capex investments; paying a rising, sustainable dividend per share over time; executing value-creating acquisitions; and when applicable returning additional cash to shareholders through share buybacks. In the past 10 years ABB has returned more than $28 billion to shareholders - either via dividends or share buybacks.

Sustainability: Ambitious 2030 and 2050 science-based net-zero targets

ABB's technologies are supporting all relevant sectors to optimize, electrify and decarbonize, enabling the energy transition to a net-zero future. In line with this mission, the company is today providing an update on how it is strengthening and accelerating its sustainability agenda with new targets and ambitions.

Björn Rosengren said: "At ABB we have been enabling energy efficiency and electrification for over 140 years. Today, we are putting our leading technologies in electrification, automation, and digitalization to work to accelerate the energy transition. Our sustainability agenda is fully aligned with this mission. It focuses on enabling a low-carbon society, preserving resources, and promoting social progress in collaboration with our customers, suppliers, and partners."

ABB is taking a rigorous science-based net-zero targets approach in line with the net-zero standard of the Science Based Targets initiative (SBTi). The company has submitted its new targets to SBTi with validation expected in 2024. These include 1.5°C-aligned Scope 1 and 2 targets aiming at a CO₂e emissions reduction of 80 percent by 2030 and 100 percent by 2050 versus a 2019 baseline. On a 12-month rolling average, ABB has now achieved a 72 percent reduction in Scopes 1 and 2 CO₂e emissions versus 2019. Additionally, the company has set new Scope 3 CO₂e emissions targets aiming at a reduction of 25 percent by 2030 and 90 percent by 2050 versus a 2022 baseline.

With this more stringent approach, ABB is moving away from former carbon neutrality targets, which included the use of carbon offsets.

Following the latest WBCSD avoided emissions guidance, ABB has also updated its ambition in this area and aims to enable its customers to avoid 600 megatons of CO₂e emissions through products sold from 2022 to 2030. ABB helped its customers avoid 70 Mt of CO₂e in 2022, across industry, transportation, buildings, data centers, and more.

Note to editors: The Capital Markets Day can be followed on the ABB Investor Relations website from 8am CET today via the following link:
https://capitalmarketsday.abb.com/

Further details on ABB's sustainability agenda can be found at https://global.abb/group/en/sustainability

ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company's solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated. Building on more than 140 years of excellence, ABB's ~105,000 employees are committed to driving innovations that accelerate industrial transformation. www.abb.com

Important notice about forward-looking information
This press release includes forward-looking information and statements which are based on current expectations, estimates and projections about the factors that may affect our future performance, including the economic conditions of the regions and industries that are major markets for ABB. These expectations, estimates and projections are generally identifiable by statements containing words such as "anticipates", "expects," "believes," "estimates," "plans", "targets", "aims" or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets or anticipated transactions. Some important factors that could cause such differences include, among others, business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd's filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved. The foregoing list of factors is not exclusive and undue reliance should not be placed upon any forward-looking statements, including projections, which speak only as of the date made.