Specializing in electrification and automation technologies, ABB supplies systems for the transmission, distribution and management of electrical energy (smart grids, electrical substations, charging stations, etc.). In the automation sector, the group designs control, supervision and robotization solutions for production lines. Its strength lies in the diversity of its markets, which range from heavy industry to logistics, energy, transportation and manufacturing. CEO Morten Wierod has again said that ABB is still winning market share.
Q2 revenue grew by 6% on a comparable basis. This is better than market expectations. Margins are also improving. But the best surprise comes from orders, which are up 14%. They are mainly boosted by a large $600m order in process automation. Without this exceptional order, growth would have been halved. ABB also performed well in its other divisions: electrification, motion, robotics, and discrete automation.
The future therefore looks bright, especially as ABB's positioning in artificial intelligence is very promising. It is also stepping up its investments in electrical networks for data centers. Strong demand for this specific area is expected, not only for the current year, but also for the years to come.
The group is therefore well positioned to continue its development in favorable conditions. The past decade has been marked by a doubling of margins, demonstrating continuous improvement in operational efficiency. This has clearly offset flat revenue growth. Yet in uncertain times, such as those we are currently experiencing, or during the Covid crisis, clients continue with significant spending on industrial equipment. This is particularly true in the United States (27% of revenue), where momentum remains particularly strong, with the exception of a few specific sectors such as automotive. ABB is therefore a good defensive stock.
In the coming months, several catalysts could support the stock, starting with the IPO or sale of the robotics unit, potentially worth $3.5bn according to Bloomberg. This transaction would aim to maximize the value of this division for the benefit of shareholders.
