Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ABB Ltd (ABBNY, Financial) reported a strong start to the year with a 5% increase in comparable orders from last year.
- The company exceeded its own expectations for operational EBITA margin across all business areas, achieving a margin of 20.2% with a one-time boost.
- Free cash flow for the first quarter was $652 million, positioning the company well to improve annual free cash flow from last year's $3.9 billion.
- ABB Ltd (ABBNY) made significant progress towards sustainability targets, helping customers avoid 66 megatons of emissions in 2024.
- The acquisition of Siemens' Wiring Accessories business in China is expected to add $150 million in sales and enhance market reach across 230 cities.
Negative Points
- Revenue growth of 3% was below original expectations due to slower conversion of backlog and recent short cycle orders.
- The robotics and discrete automation division saw a decline in operational EBITA margin, although there was a positive sequential development.
- The company noted a slightly lower contribution from large orders, particularly in the rail segment.
- Economic uncertainty, particularly related to tariffs, poses a risk to the business environment and decision-making processes.
- The data center segment experienced slower activity from one major hyperscaler, impacting overall order growth in that sector.
Q & A Highlights
Q: Can you provide an update on the data center business, particularly regarding the impact of a large customer's pause in orders?
A: Morten Wierod, CEO: Excluding the large customer, we saw mid-teens growth in the data center segment. We remain confident in the long-term growth of data centers, driven by the AI trend. However, we prefer not to speculate on individual customer performance and suggest referring to current news for updates.
Q: How is ABB responding to the recent US tariffs, and have you taken any pricing actions?
A: Morten Wierod, CEO: We have analyzed the impact of tariffs and have taken pricing actions, particularly related to steel and aluminum tariffs. Most of our US production is local, minimizing the impact. We are also leveraging exemptions from the USMCA trade agreement. Timo Ihamuotila, CFO, added that the tariffs themselves don't have a significant impact, but economic uncertainty is a concern.
Q: What is the rationale behind the decision to spin off the robotics division as a separate company?
A: Morten Wierod, CEO: The robotics division is ready to operate independently, with limited synergies with other ABB businesses. The spin-off will allow it to be evaluated on its own merits and provide shareholders with a direct investment opportunity. Timo Ihamuotila, CFO, noted that the spin-off will also improve ABB's overall financial metrics.
Q: Can you elaborate on the competitive advantage of ABB's process automation division, particularly in relation to electrification and motion?
A: Morten Wierod, CEO: Our process automation division benefits from synergies with electrification and motion, especially in sectors like LNG and marine. This integrated approach allows us to offer comprehensive solutions, which is highly valued by customers and gives us a competitive edge.
Q: How is ABB addressing the supply and demand dynamics in the low voltage market, especially with capacity expansions?
A: Morten Wierod, CEO: We are expanding capacity to meet increased demand and reduce imports. Despite longer lead times, we don't foresee short-term overcapacity issues. The ongoing trend of electrification and infrastructure investments, particularly in the US, supports our capacity expansion plans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
