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CNBC Interview with Ulrich Spiesshofer, CEO of ABB

Following are excerpts of an exclusive CNBC interview with ABB CEO, Ulrich Spiesshofer, and Geoff Cutmore and Karen Tso.

GC: We're very pleased to have the CEO with us on a line this morning. Good morning Ulrich, thanks very much for giving us your time and joining us. Can I ask you – I mean, clearly there is an improvement here in your order uptake and you've beat on the headline numbers. What does visibility look like going forward from here then to maintain this order book momentum?

US: Good morning everybody. It's great to see that ABB has delivered profitable growth in the first quarter. When we look forward the markets are better than the previous years. All of our markets are either steady or improving and unless some of the uncertainties of the world would prevail we see a positive development in the quarters to come.

GC: And a big sigh of relief for you I'm sure here because it takes the pressure off you, doesn't it, to do something about this power unit business that continues to underperform?

US: Well I am very proud of the performance improvement that we've seen in power trades over the last couple of years. We've a very steady hand and a clear focus on the long term direction. We have improved the underlying performance of this business, we have changed the business model, we cut certain business models, that means we are (inaudible) on the top line, but altogether this is today the pristine asset in the power space, it's the number one globally, it's the most profitable by a long distance to our competitors, and we are firmly committed to continued improvement journey into the future.

KT: Ulrich, it's Karen weighing in. I'm just looking at some of your regional pattern orders in Europe particular down three per cent, you've got stable numbers for the Americas, but very strong levels coming through for Asia, Middle East and Africa are up to the tune of 20 per cent. Is this telling us anything about the pace of movement towards automation by these regions?

US: When you take Europe first, last year we had a couple of very large orders in the first quarter which didn't repeat. The base orders are up in the region which points that the underlying momentum is positive. If you go to the Americas, similarly there the base orders are up in the region as well, in Asia, Middle East, Africa is really performing very well. The infrastructure needs but also the upgrade and the industry side, the investment in automation, not only in robotics but also our acquisition (inaudible) had a really very very strong quarter and I'm very pleased with that altogether. So if you look at ABB, the way we are positioned, we are bringing power for many power plants to any consumption block of electricity, renewables are kicking in, emobility is coming, this will really be a great opportunity for us, and on the automation side there is no other player that has closest control, discreet automation, robotics, electrification, strong digital platform, so we are shaping the world with our offering and we are contributing. That means we are participating in the growth.

KT: I want to ask you about some of the appetite in the C-suite for Capex because tax reform in the States meant to be a real driver for those decisions yet concerns around a trade fight playing out globally has seemingly hampered some of those deciisons from being pushed forward. What do you make of the type of appetite you are seeing in the C-suite and do you think it is being altered to an extent by concersn around trade posturing or a trade fight brewing?

US: I think the long-term outlook on capital spending is positive. The process in the industries is coming back, we have really good discussions on future projects, we have some very very large scale commitments between now and 2025 and industries some of the players have come out and said they will invest very strongly. If you look at the utilities scale there's also an underlying appetite for investment. So I think the overall market sentiment and the capex appetite is there. It's very clear there are uncertainties on the political side, on the regulatory side, could have a dampening effect. I hope it will be worked out soon, that we really can grow in a growing world.

GC: Ulrich, just to pick up on some of the current market trends, as Daniel has mentioned the currencies can I just ask you about the energy price because overnight we did see a significant shift in the WTI price and now talk that the Saudis would like to see 100 dollars a barrel. How do you now bake those kind of numbers into your model?

US: Now if you take the commodity environment, whether it's the oil price, whether it is raw materials, if you take for example coal as an extreme one that has really shot all the way up very significantly steel, copper, aluminium is up, and then altogether they will create cash flow for our customers and that means there will be an investment appetite, that really needs a strong cash position, so altogether this might have a positive effect of ABB going forward.

GC: Ulrich, the next level strategy is very much about derisking the portfolio when yet there are still some shareholders out there who feel that the business mix is still a little too complicated. You've insisted that you're hanging on to power grids – um, will you be doing anything further at this point perhaps to simplify the structure or make further disposals?

US: Now look first we listen very very carefully to all of our shareholders and we seek their constructive open dialogue. Second, we have clearly articulated where we are and where we will be going. We have today the simplest portfolio in industry. We take power for many power plant to any (inaudible) and we automate industries from natural resources to the ready made product. There is no other competitor at our scale that has a simpler portfolio. Now our ambition is to drive performance on the streamlined and strengthened ABB that we have built over the last couple of years.

KT: Ulrich, can I just take the opportunity to ask you about electric vehicle charging orders? It's something that you've flagged up in the report today and if you look at some of the car sales in Europe they have been very weak – one of the views is that this is down to the uncertainty by the customer waiting for some of the very new technological advances to come through in the autos – what do you make of the infrastructure around those cars and just whether we're ready in Europe for more electric vehicles?

US: Look – I think you are putting your finger on a very very important point. We are at the moment what I would call a positive (inaudible) calling electric vehicles. If you look at the lineup of new cars that are coming, if you look at the appetite of the (inaudible) to invest, if you look at what's happening on the consumer side with the demand for more sustainable individual transport it all comes together. Seven years ago we set up a startup to really drive the leading technology position in fast-charging for electric vehicles. Today we are number one in the world, we have we have operations today with Cloud enabled electric charging all around the world, in more than 50 countries. We just announced now this week a very large order for electrify US where we basically work with a large OEM to bring up our network across the entire US. So this is a fantastic opportunity for ABB, we are very well positioned to work with governments, with OEMs, with utilities, to drive this opportunity and together with our global reach and our leading technology we will help to make this trend reality.

KT: I'll send you some coordinates later on where we would like some of those charging stations – just one for me, that would be great. Ulrich, thank you very much.

ENDS

For more information contact Jonathan Millman, EMEA Communications Executive: Jonathan.Millman@cnbc.com

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