An ABB Ltd. robot collects a component to be placed on a Raspberry Pi personal computer on the production line at the Sony UK Technology Centre in Pencoed, UK, on Friday, Feb. 2, 2024. Personal computer maker Raspberry Pi appointed bankers at Peel Hunt and Jefferies to prepare a London initial public offering, a listing that would be a win for the UK capital after an exodus of companies to the US. Photographer: Chris Ratcliffe/BloombergPhoto by Chris Ratcliffe /Bloomberg

ABB Raises Margin Outlook as Power Unit Gains From Data Boom

ABB Ltd. raised its margin outlook as massive investments in data centers fueled demand for its power-grid business, helping offset weaker sales of factory automation products.

by · Financial Post

(Bloomberg) — ABB Ltd. raised its margin outlook as massive investments in data centers fueled demand for its power-grid business, helping offset weaker sales of factory automation products.

The Zurich-based company now sees its profit margin exceeding the roughly 18% it had previously forecast, according to a statement Thursday.

Orders rose 2% in the third quarter to $8.2 billion. While its electrification business surged, sales of its robotics and factory automation products continued to suffer from weaker demand in China, as customers focused on reducing inventories after a period of supply-chain stress. The company now sees revenue growth for the year coming in below its previous estimate of about 5%. 

Soaring investments in data centers, driven by growth in artificial intelligence, have been a bright point for ABB, which produces transformers that enable power grids to feed the centers’ substantial energy needs. The unit’s revenue grew 10% in the third quarter.

The company has said previously that it has begun to see signs of recovery in China, where inflation and higher interest rates have weighed on spending. That could improve further after Beijing recently announced fresh stimulus measures.

ABB’s e-mobility business continued to be a weak spot. The company has been streamlining the business as it eyes a sale of some of its electric mobility assets, including electric-vehicle charging stations worldwide as well as research and development facilities in China. 

ABB shares have risen about 32% this year.

(Updates with additional details throughout.)