Power and automation group ABB is moving to “shift the centre of gravity” of the corporation to accelerate its already strong global power and automation position to the next level, amid the global change in the electrical value chain and the fourth industrial revolution.

Group CEO Ulrich Spiesshofer, on Tuesday, at ABB’s Capital Markets Day, in London, unveiled a five-year strategy that would, from January, see ABB embark on a journey, incorporating its recently adopted penetration, innovation and expansion plan, to strengthen its competitiveness, accelerate its organic growth momentum and lower risk.

“We want more, we want better and we want to do it together,” he said, outlining the new “next level” strategy from 2015 to 2020, which would maintain the three focused strategies of profitable organic growth, relentless execution and business-led collaboration.

Group CFO Eric Elzvik said that, as ABB shifted to higher-growth segments, the global group aimed to grow operational earnings a share at a compound annual growth rate of 10% to 15%, realise mid-teen cash returns on investments and generate revenue growth of 4% to 7% a year.

The group also eyed earnings before interest, taxes and amortisation, excluding depreciation, growth of between 11% and 16% by 2020, with divisional targets of 14% to 19% from discrete automation and motion, 15% to 19% from low-voltage products, 11% to 15% from process automation, 12% to 16% from power products and 7% to 11% from power systems.

ABB’s aspiration was to maintain markets where it was the power and automation market leader and to take the number one or two spots in all its segments across utilities, industry and transport and infrastructure, where, globally, market opportunities would rise $150-billion to $750-billion by 2020.

Continued worldwide focus on urbanisation, energy efficiency, electric transport, power quality and reliability, productivity, automation penetration, renewable energy, grid automation and smart upgrades, besides others, would collectively contribute to growth in ABB’s customer segments of utilities, industry and transport and infrastructure, which accounted for 35%, 45% and 20% of revenue respectively.

Asia, Middle East and Africa contributed 37% of the company’s revenue, while the Americas and Europe contributed 29% and 34% respectively of revenue, which had surpassed the $40-billion-a-year mark in 2013.

ABB had consolidated its regional structure, with executive committee members Frank Duggan, Greg Scheu and Veli-Matti Reinikkala heading up Asia, Middle East and Africa, the Americas and Europe respectively.

Spiesshofer stated that ABB was well-positioned to leverage the “big” shift in the electrical value chain and the “fourth industrial revolution”.

He said renewable energy would account for 40% of generation capacity by 2035, with the global generation mix currently being characterised by greater volatility and less predictability.

There was also an increasing complexity in power transmission and distribution and longer transmission distances and higher voltages, and the “realities” of micro- and nanogrids had also emerged, with energy storage becoming increasingly important.

In line with this, the group formed a global alliance with China-based energy storage company BYD to jointly develop new solutions for energy storage, with a focus on grid-connected energy storage, marine applications, solar energy and microgrid applications.

Further, the company on Tuesday announced an $800-million deal with Scottish Hydro Electric that would see it provide a 160 km high-voltage direct current (HVDC) power transmission link connecting the electrical grid on either side of the Moray Firth in northern Scotland.

ABB was tasked with designing, engineering, supplying and commissioning two 320 kV land-based HVDC light converter stations by 2018 to enable the integration of 1 200 MW of renewable energy.

Meanwhile, Spiesshofer said ABB remained well placed to leverage “Industry 4.0”, which would boast the Internet of people, things and services, leading “proactively” with new connected offerings, including YuMi – an intelligent, connected robot.

Showcasing the “human-friendly” dual-arm robot, he explained that the new innovation would enable human–robot collaboration in the assembly of parts and components and would send data to cloud servers for back-up, reporting, diagnostics and benchmarking.

YuMi, a small parts assembly robot, had the ability to see and feel and its soft, padded arms and force-sensing technology ensured the safety of its human co-workers.

Other features included flexible hands, parts-feeding systems, camera-based part location and robot control.

YuMi would be commercially launched at the Hannover Messe, in Germany, in April 2015.

SHARE BUY-BACK
Meanwhile, ABB had also announced a $4-billion share buy-back programme to be implemented over the next two years, with three-quarters allocated for a reduction in share capital and the balance to support employee share plans globally.

Spiesshofer assured that this was an indication of the “strong and solid” balance sheet held by ABB owing to the “successful pruning” of the group’s portfolio, which had generated about $1-billion in pretax proceeds.

BOARD PROPOSAL
ABB said on Tuesday that it would put to vote, at the company’s annual general meeting in April 2015, that Sasol CEO and president David Constable be elected to its board of directors.

The company’s board of directors “unanimously” proposed Constable as a new member to strengthen the group’s expertise for engineering, procurement and construction solutions and the process industries sector.

“His strong background and experience in a field where ABB recently faced challenges in the Power Systems division will further enrich our board,” said ABB chairperson Hubertus von Grunberg, who also cited Constable’s strong link to Africa, which was a key region for ABB, as attractive.