The robotics division of ABB contributed to the company’s growth in the third quarter, with manufacturing demand still strong worldwide. The industrial automation provider has also growth through recent acquisitions, most notably B&R.
ABB Group reported continued growth in the third quarter of this year, thanks to “solid operational performance” from its robotics division, among others. The Zurich-based company said its revenues were up 3% and that its total orders grew by 5%.
Demand for industrial automation remains strong in the automotive, fuel, and general manufacturing sectors, according to ABB. However, demand for building automation systems in transport and infrastructure was “mixed” because of a slowdown in oil and gas and in container vessels (but not cruise ships).
In addition to its robotics division, ABB credited its electrification products and power grids divisions for the growth. In particular, services and software orders increased by 11%.
Orders for ABB’s robotics and motion division grew by 5% to $2.2 billion, and orders for its industrial automation division grew by 4% (33% including mergers and acquisitions) to $1.8 billion. This is the fastest growth in orders since 2015.
“The combination of a stronger market orientation and a focus on high-growth segments, such as electric vehicle charging, robotics, and food and beverage, is paying off,” said ABB CEO Ulrich Spiesshofer.
Robotics division grows with acquisitions, investment
With a Q3 net income of $571 million, ABB is already one of the biggest robotics makers in the world. In July, it bought Bernecker & Rainer Industrial Automation GmbH (B&R), which is the largest independent provider of robotics, safety, and Internet of Things (IoT) software and controls for machine and factory automation.
Terms were not disclosed, but the deal was believed to be worth about $2 billion, according to Reuters. ABB did say that it has midterm expectations of sales by Austria-based B&R of more than $1 billion.
Last month, ABB bought General Electric’s industrial solutions unit for $2.6 billion. Integrating that unit, whose EBITDA was only 6% of sales, will cost $400 million over five years. But it should help ABB grow in the U.S., the world’s biggest market for products such as circuit breakers, switch gears, and power supply equipment for data centers.
“The integration of B&R is progressing well and, with the recently announced acquisition of GE Industrial Solutions, we are firming up our No. 2 position globally in electrification and have a clear plan to execute our value-creation ambition,” Spiesshofer said.
In May, ABB Technology Ventures joined Microsoft Ventures, Samsung NEXT, and Siemens in investing $7.6 million in BonsAI, which is building a platform for programming, running, and managing artificial intelligence models.
In September, ABB Technology Ventures participated in the Series A funding of $26 million in U.K. surgical robotics firm Cambridge Medical Robotics Ltd. It is an example of how the company is supporting the automation ecosystem beyond its industrial robotics division.
Geopolitical uncertainty affects the short term
“While uncertainties prevail, macroeconomic signs are trending positively in Europe and the United States, with growth expected to continue in China,” said ABB in its earnings report. “The overall global market shows modest growth and is impacted by geopolitical tensions in various parts of the world.”
“Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results. 2017 remains a transition year for ABB,” the company added.
Although orders declined in Germany and Sweden, they were offset by gains in the U.K., France, and Norway as those countries invest in their power infrastructure, ABB said. Orders in the U.S. grew by about 4%, and orders in Asia, the Middle East, and Africa grew by 2%.
However, ABB noted that its total orders in China were down and that growth in India was affected by new taxes.
Resurgent industrial production around the world is cause for “cautious optimism” for ABB’s robotics division, Speisshofer told The Financial Times.[note style=”success” show_icon=”true”]
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Next Level strategy
ABB’s “Next Level” strategy focuses on “profitable growth, relentless execution, and business-led collaboration,” it said implementation of Stage 3 during the past quarter included “further shifting its center of gravity to higher-growth segments, strengthening its competitiveness, and de-risking the portfolio.”
The acquisition of B&R is intened to help ABB “strengthen its position as the No. 2 industrial automation player globally.” ABB’s robotics division is complemented by B&R’s product lineup.
“With this acquisition, ABB closed its historic gap in machine and factory automation and created a uniquely comprehensive automation portfolio for customers globally,” said the company.
Among the company’s initiatives is ABB Ability, a “solution-based business model for industrial digitalization” that includes more than 180 products. In February, ABB acquired Spanish startup NUB3D for its 3D inspection technology, expanding ABB Ability’s connections for customers to industrial IoT.
In July, ABB acquired the communications business of Germany-based Keymile Group to add to its ABB Ability portfolio.
In addition, ABB hopes to participate in Saudi Arabia’s NEOM smart-city project, a $500 billion plan to build a new economic zone that includes solar power, service robots, and advanced manufacturing.
In the longer term, ABB said its robotics division and others will help it serve customers in the utility, industry, and transport and infrastructure markets as they are transformed in the Fourth Industrial Revolution.