Following are excerpts from a CNBC interview with Ulrich Spiesshofer, ABB CEO, and CNBC's Steve Sedgwick and Geoff Cutmore.
GC: So let's welcome Ulrich Spiesshofer to our set, he's President and CEO of ABB, the international engineering business, Ulrich, nice to have you with us-,
US: Good morning.
GC: Thanks very much for joining us. Can I-, can I just start off with this growth headline, because obviously you're in a position where you can get a sense, through the early warning of new orders, as to actually whether this headline is overplayed at the moment. What's your read?
US: Look, I think the industry comes out of 2018 and enters '19 with a good underlying momentum, however, the uncertainties are rising around us, so it's very important for all of us to manage two things. On the one hand, we need to stay close to our customers, our markets, help them in these times of uncertainty, and on the other hand, make sure we have the right scenarios in the drawer for continued growth, but also for a global slowdown.
SS: I have a concern, that too many people are using too much money, and raising too much debt, on giving shareholders more money back, on-, including buybacks, and your company is a brilliant case in point, of where a-, an aggressive shareholder has made you look at parts of the business which you'd already decided to keep. Now, I know you've decided, and it's-, it's-, it's well-trod ground, talking about the power grids business, you've sold 80% of it now, but you didn't want to sell that, Ulrich, you wanted to hang on to it, you decided to hang on to it, and then an activist, who wants immediate returns, or shorter-term returns, made you do it, or certainly put it back on the agenda. Do you feel that too many people are thinking about here and now, and not doing what you just said, is trying to grow businesses over the long term?
US: Look, what we wanted, very clearly, is two things. We wanted to realise the value, or create the value of our power grids business, and we have held on-, held on to it, we created a lot of value a couple of years ago, it was rumoured to be worth about 4 billion, now we are selling it for 11-,
US: So our promise to realise the value has been fulfilled. At the same time, in a world of uncertainty and acceleration of technological advance, it's important that you focus. So, we focus ABB on digital industries, we exit the last part of our infrastructure business, so it's a consequent step, at times of strength-,
US: Where we have rebuilt the strength of our business.
SS: But-, but-, but, if I may say, I don't buy the short-term profit argument, because of everything you've said to me previously-,
SS: I.e. I know that you're trying to grow legacy businesses, you're like, maybe trying to do what Warren Buffett does, in holding stocks-, he doesn't sell stocks, he very rarely sells stocks, he holds them, so if he saw a 7 billion profit, or whatever, he wouldn't necessarily sell it, he'd build upon that-,
SS: And I know that's what you wanted to do. So, I think you're painting a very robust picture, but-,
SS: You would've preferred to hang on to that, wouldn't you?
US: No. Uh, it was very clear that we continue the journey of ABB into a focused industrial player. If you look at our journey, over the last 30, 40 years, we have divested infrastructure business in power generation. We have divested our rail business, we have divested-, we are divesting, now, the power grid infrastructure business. At the same time, we have built tremendous strength with leadership positions for digital industries. We are number two in electrification, we are number one in motion for industries, we are very strong with our ABB Ability digital solutions offering, so we have really reshaped the company, and this is a consequent step in to the future.
GC: Ulrich, do you see any prospect that Europe can turn around this deteriorating picture of demand? It just feels that the heartland of Europe is struggling here.
US: I think the way forward for Europe is to invest in competitiveness, digitalisation and automation, they are key pillars to drive in the future Europe's competitiveness, so for us, this is a very good market to be in, as a technology partner of the key industrial players, safeguarding the competitiveness. If I look at what's happening in other parts of the world, people are not sleeping, they are investing in competitiveness, they are driving the industrial capability, so we must keep, to stay on the forefront in technology here in Europe. I think we've got great education bodies, we've got great industrial players-,
US: That we can team up with, and make sure we do everything possible to get the growth momentum continued.
GC: Sure, sure, I understand all of that, but in the third quarter, you did express concerns about both Italy and the UK. Are those isolated stories for you, or do they represent a broader problem?
US: Well, we definitely have uncertainties around the world, and in Europe, as well, Brexit, as we all know, is a big uncertainty, for all of us, together. We hope that Italy gets stability, going forward, with the government that's not so long in place, and get going, so for me, altogether, as ABB, we need to make sure that we partner with European players, whilst they manage these uncertainties, whilst we have these uncertainties in front of us.
SS: Does Brexit unleash the British-, the animal spirits, that industrial knowledge, we had the people like Watton, who created great engineering, over the centuries. Or, actually, as you said, is it a dampening effect?
US: I think the reindustrialisation that we have seen in the UK in the last couple of years was really remarkable, if you look at the modern Jaguar Land Rover plants in the UK that we have, these are world-class industrial plants, it would be a pity if we have a significant dampening effect on that re-emergence of industrialisation, and really hope we get certainty very quickly, which, at the moment, is difficult to foresee.
SS: Yeah. We've got to leave it there. Nice to see you-,
US: Thank you very much.
SS: Thank you very much indeed for joining us.
US: Good to see you.
SS: I hope to bump in to you later in the week, as well. Ulrich Spiesshofer.