Accelleron Capital Markets Day - turbochargers helping the world to move further, more efficiently and more sustainably
- Preferred partner supporting global marine, energy and rail/off-highway industries towards energy-efficient propulsion and decarbonization
- Leading market position and global megatrends drive sustainable revenue growth, attractive margins and strong cash conversion
- Intention to distribute 50 to 70% of reported net income as dividends
Accelleron Industries AG (formerly ABB Turbocharging), a global leader in high-power turbochargers for mission-critical applications, will host its Capital Markets Day today, August 31, 2022, starting at 11:00 CEST in Baden. Accelleron’s CEO, Daniel Bischofberger, and his executive leadership team will guide participants through Accelleron’s leading position in its attractive end markets, the opportunities presented by the company’s key role in the transition to renewable energy, sustainable transportation solutions and key technological developments. The presentation will also cover Accelleron’s business strategy, its financial profile as well as the company’s mid-term targets.
“Our technology is supporting the decarbonization of industries that are critical to modern life,” said Daniel Bischofberger. “Heavy transportation is a sector that has been long overlooked but is key to decarbonizing the economy, and we are proud to be at the epicenter of its transformation. Our leading market position, which is based on our unmatched product and service offerings and is reflected in Accelleron’s strong financial profile, is allowing us to invest in further growth and innovation. Together, we are proud to be helping the world to move further, more efficiently and more sustainably.”
Accelleron’s strategy
Accelleron is currently focused on medium & low-speed as well as high-speed gas applications. Its turbochargers increase power output by up to 300 percent while reducing fuel consumption and CO2 emissions by up to 10 percent. In addition, Accelleron provides vital support to its customers through its network of over 100 service stations worldwide, its comprehensive technology offering, and the rapid availability of servicing.
The growth prospects of the business are intertwined with the global energy transition, which the company expects will generate additional demand for more efficient internal combustion engines to reduce emissions in the short-term, a shift to transition fuels. Accelleron further expects this transition to cause a pivot to future technologies and paradigms, including increased demand for balancing power generation and new propulsion systems that can operate partially or completely on green fuels such as hydrogen, methanol or ammonia. Accelleron believes that its industry-leading R&D innovation capabilities and track record position it at the forefront of meeting these growing demands.
Accelleron aims to grow faster than its competitors and addressable markets, leveraging the company’s superior products and technology as well as its leading market positions and service network, while delivering attractive margins, strong cash generation and capital deployment.
The company is focused on increasing its market share in its core marine and energy markets as well as expanding, organically and inorganically, into adjacent areas where it can offer a clearly differentiated value proposition through technical leadership and its advanced service network. Targeted bolt-on acquisitions are planned to be complementary to Accelleron’s existing portfolio and will be subject to a disciplined strategic fit and value creation. To further empower its resilient service business, Accelleron aims to increase the share of lifetime service offerings, while leveraging its digital portfolio.
2022 financial outlook
Market development has been positive in the first half of 2022, and for the current financial year, Accelleron expects its revenues to grow organically1 by approximately 6 percent. Operational EBITA margin is expected to be approximately 24 percent and free cash flow conversion is targeted to be between 60 and 70 percent in 2022. Accelleron expects to achieve operational net income of roughly $150 million in 2022 and intends to pay its first dividend of around $75 million during the course of the first half of next year, barring any unforeseen events.
Mid-term targets2
Accelleron offers a compelling investment proposition based on robust revenue growth, attractive margins and a strong cash generation profile. These characteristics translate into the following mid-term targets for Accelleron:
– Organic revenue growth1: 2–4 percent CAGR
– Operational EBITA margin: 23–26 percent
– Free cash flow conversion: 90–100 percent
– Net leverage: 0.5–1.5x
– Dividend policy: 50–70 percent of reported net income, and up to 100 percent if net leverage <1.0x
Adrian Grossenbacher, CFO of Accelleron said: “We benefit from a strong balance sheet that provides us with the financial flexibility to grow our business and seize opportunities in new and adjacent areas while at the same time continuously returning cash to our shareholders.”
Sustainability to drive further growth
Sustainability is at the core of Accelleron’s business, and will provide significant opportunities for the company as the global challenge of decarbonizing essential industries is at a turning point. Within the marine, energy and rail sectors, Accelleron’s turbochargers and associated digital solutions play a critical role in making engines more powerful and efficient, while also reducing emissions without loss of power. Today, Accelleron operates in line with ABB’s sustainability strategy, but the company is in the process of establishing its own sustainability framework and policies. Accelleron’s environmental and social targets will be linked to, and reflected in, the executive compensation.
Accelleron has already made significant progress in limiting its environmental footprint, reducing its scope 1 & 2 CO2 emissions by 50 percent over the past three years. A further 60 percent reduction is planned by 2030, which is expected to be achieved via a transition to green electricity and test facilities that are expected to start using green fuels this year. At the same time, the company is in the process of quantifying its scope 3 CO2 emissions and plans to incorporate ethical and social responsibility considerations into its sustainability framework.
Spin-off subject to approval by ABB shareholders
On July 20, 2022, ABB announced its plans to spin off Accelleron and list the company on SIX Swiss Exchange, a transaction that will allow both ABB and Accelleron to focus on their respective core strategies and long-term value creation for their stakeholders. The spin-off process is subject to approval by ABB’s Extraordinary General Shareholders Meeting on September 7, 2022, with the subsequent listing planned for October 3, 2022.
