Core Insights - ABB Ltd and Rockwell Automation, Inc. are key players in the industrial automation and electrification sectors, with ABB focusing on power and automation technologies while Rockwell is known for its industrial automation and information technologies [1][2] ABB Analysis - ABB's Process Automation segment is currently the strongest driver of its business, benefiting from robust project activity in marine, ports, and energy industries [3] - In Q2 2025, orders in the Process Automation segment increased by 45%, with revenues rising by 5% year over year, and a significant order worth $600 million was booked [4] - The Electrification segment is also performing well, with orders and revenues increasing by 11% and 14% respectively in Q2 [5] - The Motion segment saw orders and revenues rise by 5% and 6% year over year, supported by strong performance in commercial building HVAC and power generation markets [6] - However, the Robotics & Discrete Automation segment is facing challenges due to weak demand in chemicals, pulp & paper, and mining industries [7] - ABB's long-term debt increased to $8.26 billion from $6.65 billion at the end of 2024, with short-term debt surging by 90% [8] Rockwell Automation Analysis - Rockwell is expanding its portfolio of hardware and software products, benefiting from investments in cloud technologies [9] - The company's FactoryTalk Design Studio, which includes a copilot for automation system design, is an industry first and is expected to drive growth [9] - Rockwell's annual recurring revenues (ARR) grew in double digits in fiscal 2024 and are projected to grow by 10% in fiscal 2025 [13] - The company maintains a strong financial position, having repurchased 0.5 million shares for $129 million in Q2 2025 [14] - Rockwell's stock has appreciated by 28.9% over the past year, outperforming ABB's 18.7% increase [17] Financial Performance and Valuation - ABB's forward P/E ratio is 25.27X, while Rockwell's is higher at 31.49X, indicating that ABB may be more attractively valued [10][20] - The Zacks Consensus Estimate for ABB's 2025 sales and EPS implies growth of 6.1% and 14.1% respectively, although EPS estimates have decreased recently [18] - In contrast, Rockwell's fiscal 2025 sales estimates indicate a decline of 1.8%, but EPS estimates show a 1% increase, with positive trends for both fiscal 2025 and 2026 [19] Conclusion - ABB's strengths in Electrification and Process Automation are offset by weaknesses in Robotics and high debt levels [22] - Rockwell's market leadership and investments position it for strong growth, making it a more favorable investment option compared to ABB [23][24]

Core Insights - ABB Ltd's Motion segment reported revenues of $1.84 billion in Q1 2025, reflecting a 3% year-over-year increase, driven by strong performance in commercial building HVAC, power generation, and water & wastewater markets [1][7] - The operational EBITA for the Motion segment rose 5% year-over-year to $360 million, with an operational EBITA margin increase of 110 basis points to 19.6% due to positive pricing and improved operational efficiency [1][7] - The order backlog for the Motion segment increased to $5.72 billion from $5.61 billion year-over-year, with a book-to-bill ratio of 1.17 [1] Revenue and Orders - Total orders for the Motion segment decreased by 6% year-over-year to $2.16 billion, primarily due to a tough comparison with the previous year, which included a one-time $150 million order [2][7] - Weak demand was noted across various end markets, including oil & gas, food & beverage, chemicals, and rail [2] Market Position and Performance - Despite the decline in orders, the Motion segment is well-positioned for growth in the coming quarters, supported by solid momentum in the service business and a strong backlog level [3] - ABB's shares have gained 8.5% over the past six months, outperforming the industry growth of 3.5% [6] Peer Comparison - Eaton Corporation's eMobility segment reported net sales of $162 million in Q1 2025, up 2% year-over-year, but incurred an operating loss of $4 million due to launch costs [4] - EnerSys' Motive Power segment generated net sales of $392 million in Q4 fiscal 2025, down 0.6% year-over-year, with flat volume growth and a positive price/mix impact of 1% [5] Valuation Metrics - ABB is currently trading at a forward price-to-earnings ratio of 23.17X, slightly above the industry average of 23.12X [9] - The Zacks Consensus Estimate for ABB's second-quarter 2025 earnings has declined over the past 60 days, with current estimates at 1.29 for Q2 2025 and 2.43 for the current year [11][12]

Core Insights - ABB Ltd's Electrification segment is a key driver of overall growth, with strong customer activities in major markets such as utilities and buildings [1][3] - The segment's orders in Q1 2025 totaled $4.39 billion, reflecting a 2% year-over-year increase, while the order backlog reached a record $8.17 billion [1][7] - Revenue for the Electrification segment grew by 6% year-over-year during the same period [1][7] Segment Performance - The Electrification segment benefits from effective execution of its order backlog, particularly in medium voltage and power protection businesses [2] - Increased project wins and improving customer activity in short-cycle businesses are positive indicators for future performance [2] - The acquisition of Siemens' Wiring Accessories is expected to further support revenue growth in upcoming quarters [2] Market Challenges - There are concerns regarding muted customer demand in the hyperscale data center market and weakness in the residential building market in China [3] - Global trade policy uncertainties may impact the segment's near-term performance [3] - Despite these challenges, ongoing electrification trends and a strong order backlog position the segment for continued growth [3] Peer Comparison - Eaton Corporation's Electrical Americas segment reported net sales of $3.01 billion in Q1 2025, up 11.9% year-over-year, with a 6% increase in backlog [4] - EnerSys' Energy Systems segment generated net sales of $399 million in Q4 fiscal 2025, reflecting an 8% year-over-year increase, driven by data center growth [5] Valuation and Estimates - ABB shares have gained 13% over the past six months, outperforming the industry growth of 6.5% [6] - The company is trading at a forward price-to-earnings ratio of 23.61X, slightly above the industry average of 23.13X [9] - The Zacks Consensus Estimate for ABB's second-quarter 2025 earnings has declined over the past 60 days [10]

Core Viewpoint - ABB is expanding its production investment in the U.S. in response to Trump's tariff policies, raising questions about the actual effects of U.S. trade protectionism on global supply chains [1][5]. Group 1: ABB's Investment Strategy - ABB plans to increase its local production ratio in the U.S. to over 90% through a combination of organic investment and acquisitions [3]. - Currently, 75%-80% of ABB's sales in the U.S. rely on domestic production, with a total investment of approximately $500 million (about 3.7 billion RMB) over the past three years for factory expansions [3]. - Recent investments include a $40 million (about 290 million RMB) expansion in Senatobia, Mississippi, creating 122 technical jobs and doubling production capacity, and an $80 million (about 580 million RMB) new factory in Selmer, Tennessee, focused on power distribution equipment [3][5]. Group 2: Industry Context and Reactions - Other companies, such as Honda and Novartis, are also increasing their U.S. production to mitigate tariff risks, with Honda planning a 30% increase in U.S. auto production and Novartis investing $23 billion (about 161 billion RMB) [5]. - ABB's CEO emphasized the need to reduce import dependence in the U.S. market, aligning with the Trump administration's goals to boost domestic manufacturing and employment [5]. - The Mississippi Development Authority supports ABB through tax incentive programs, highlighting the state's attractive business environment [5]. Group 3: Market Concerns and Economic Impact - Despite ABB's investments being seen as a short-term success of tariff policies, there are concerns about the long-term sustainability of these strategies [7]. - Analysts express worries that rising costs due to tariffs may squeeze corporate profits, and that mergers and acquisitions could increase financial risks [7]. - The local economy has benefited from ABB's investments, with new jobs contributing to community stability, although actual job creation may fall short of initial promises [7][9].

Industry Overview - The electronics manufacturing industry is foundational to modern economies, involving the design, production, and assembly of electronic components and systems, supporting markets like consumer electronics, automotive, telecommunications, healthcare, and industrial automation [1] Demand Drivers - Rapid advancements in mobile technology, increased adoption of electric vehicles, and the growth of AI-powered data centers are driving demand for smarter, faster, and more energy-efficient electronic products [2] Company Profiles - **Eaton Corporation**: - Has a diversified portfolio including electrical components, aerospace, and industrial systems, focusing on high-margin sectors like data centers, utilities, and electric vehicles [3] - Strengthened profitability through disciplined capital allocation, steady dividend growth, and targeted acquisitions, positioning itself to benefit from megatrends and reindustrialization [3] - **ABB Ltd.**: - A leader in automation, electrification, and robotics, focusing on high-growth areas such as smart buildings and electric mobility [4] - Utilizes advanced technologies to enhance customer performance while minimizing carbon emissions, with a strong presence in emerging markets and a strategic focus on digital platforms [4] Financial Performance - **Earnings Growth Projections**: - Eaton's 2025 earnings estimate decreased by 0.33, while 2026 earnings remained unchanged [6] - ABB's 2025 earnings estimate remained unchanged, but 2026 earnings per share dropped by 0.38% [7] - **Return on Equity (ROE)**: - Eaton's current ROE is 22.62%, while ABB's ROE is 28.31%, both outperforming the industry average of 7.55% [9] - **Debt to Capital**: - Eaton's debt-to-capital ratio is 33.06%, compared to ABB's 31.58%, both higher than the industry average of 26.41% [11] Dividend Information - Eaton's current dividend yield is 1.55%, with an average annual dividend growth of 6.96% over the last five years [13] - ABB's current dividend yield is 1.15%, with an average annual dividend growth of 3.35% over the last five years [14] Capital Expenditure Plans - Eaton plans to invest $900 million in 2025 to strengthen operations, having already invested over $8 billion in transformative portfolio management [15] - ABB also plans to invest nearly $900 million in 2025 to enhance its operations [15] Valuation Metrics - Both companies are trading at a premium relative to their industry, with Eaton's forward P/E at 21.53X and ABB's at 21.24X, compared to the industry's 19.31X [16] Price Performance - Over the past year, ABB's shares gained 5%, while Eaton's shares declined by 16.1%, with the industry overall declining by 22.8% [18] Conclusion - Both Eaton and ABB are positioned to capitalize on the global shift towards smart energy infrastructure and industrial digitization, with ABB being a more favorable investment option due to its better ROE, healthier price performance, and lower debt levels [21][22]

Financial Data and Key Metrics Changes - The company reported a 5% increase in comparable orders year-over-year, with operational EBITDA margin reaching 20.2%, boosted by a one-time contribution of 170 basis points [4][5][22] - Free cash flow for the quarter was $652 million, a year-over-year increase of $101 million, primarily driven by a real estate sale [5][43] - The gross margin improved by 280 basis points to 41.7%, with 110 basis points of this improvement attributed to foreign exchange and commodity timing differences [20][21] Business Line Data and Key Metrics Changes - Electrification achieved record orders of $4.4 billion, up 2% on a comparable basis, with a 6% growth in revenues [23][27] - Motion reported over $2 billion in order intake, although lower large order bookings led to a decline from last year's record levels [29][30] - Process Automation saw orders increase by 23% year-over-year, with revenues up 5% on a comparable basis [34][36] - Robotics and Discrete Automation experienced a 17% growth in orders, but revenues were down 11% year-over-year due to lower production volumes in machine automation [38][40] Market Data and Key Metrics Changes - The Americas region grew by 11%, while Asia, Middle East, and Africa improved by 4%, with China finally showing positive order growth after 10 quarters of decline [16][17] - Europe saw a mixed performance, with overall growth of 1%, as some countries improved while others, like Germany, declined [17] Company Strategy and Development Direction - The company plans to spin off its Robotics division as a separately listed entity to enhance value creation for both ABB and the new company [47][50] - The strategy includes focusing on local production to mitigate tariff impacts, with 75-80% of U.S. sales covered by local production [19][76] - The company aims to improve operational performance across all business areas, with expectations for mid-single-digit revenue growth and stable EBITDA margins [60][104] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainty in the global business environment but maintained a positive outlook for mid-single-digit revenue growth and improved operational EBITDA margins [60][62] - The company is confident in the long-term growth of the data center segment, driven by trends in AI, despite short-term volatility from a major customer [69][70] Other Important Information - The company made significant progress towards sustainability targets, achieving a 78% reduction in CO2 emissions from 2019 levels by the end of 2024 [8] - The robotics division has shown consistent order growth and strong performance metrics, indicating readiness for a standalone listing [54][56] Q&A Session Summary Question: Data center business growth expectations - Management confirmed mid-teens growth in data center orders, with confidence in long-term growth driven by AI trends [69][70] Question: Impact of tariffs on pricing and supply chain - Management indicated minimal impact from tariffs due to local production and existing exemptions, with some price actions already taken [76][78] Question: Order pipeline and customer concerns - Management noted that while decision-making may take longer due to uncertainty, the overall order pipeline remains strong [85][86] Question: Capacity expansion in the U.S. - Capacity expansion is primarily demand-driven, with investments aimed at meeting local market needs rather than solely tariff mitigation [90][91] Question: Portfolio change timing - The decision to spin off the robotics division was based on its readiness for independence and limited synergies with other ABB businesses [93][94] Question: Electrification growth drivers - Management highlighted a strong order backlog and improved visibility for Q2, with expectations for margin expansion across all business areas [101][102]

Financial Performance - Order growth increased by 5% year-over-year, and revenue growth increased by 3% year-over-year[11] - Operational EBITA margin reached 20.2%, including a ~170 bps impact from real estate gain[11] - Free cash flow was $652 million, an increase of $101 million year-over-year, supported by proceeds from the sale of real estate of approximately $100 million[11] - A new share buyback program of up to $1.5 billion was initiated, with 16,715,684 shares repurchased for approximately $0.9 billion under the previous program[9] Sustainability Highlights - Scope 1 and 2 GHG emissions reduced by 78% compared to the 2019 baseline[13] - Scope 3 CO₂e emissions reduced by 8% compared to the 2022 baseline, with a target to reduce by 25% by 2030[13] - Customer GHG emissions avoided amounted to 66 million metric tons throughout the lifetime of products sold in 2024[13] Regional Performance - The Americas saw an order increase of 11%, with the USA up by 9%, Canada by 20%, and Brazil by 82%[23] - Europe experienced an order increase of 1%, with Germany down by 4% and Italy up by 47%, and the United Kingdom up by 27%[23] - AMEA saw an order increase of 4%, with China up by 13% and the United Arab Emirates up by 29%[23] Electrification Segment - Orders for Electrification reached $4,394 million, with revenues at $3,825 million[32] - Operational EBITA for Electrification was $886 million, a 7% year-over-year increase[32] - The Electrification backlog was $8.2 billion[34] Robotics Division Spin-Off - The Robotics division, with approximately $2.3 billion in revenues, is planned to be spun off as a separately listed company in the second quarter of 2026[66, 65]

Financial Data and Key Metrics Changes - 2024 was a record year for the company, with improvements in most financial headlines and a new operational EBITA margin of 18.1% [5][7] - Earnings per share increased by 6%, and free cash flow reached $3.9 billion, corresponding to a free cash flow margin of 12% [8][10] - ROCE improved to 22.9%, indicating better operational performance and effective networking capital management [45][46] Business Line Data and Key Metrics Changes - Electrification orders increased by 16%, with comparable revenue growth of 11%, surpassing $4 billion for the first time [27][29] - Motion orders remained stable at approximately $1.9 billion, with comparable revenues up by 6%, achieving a record quarter above $2 billion [31][32] - Process Automation saw stable orders, with a 4% increase in comparable revenues, driven by backlog execution [34][36] - Robotics and Discrete Automation experienced a positive order growth after eight quarters of decline, although impacted by de-bookings [37][38] Market Data and Key Metrics Changes - Comparable orders increased by 7% to $8.1 billion, driven by strong growth in short-cycle businesses, particularly in Electrification [19][20] - Regional performance showed Asia, Middle East, and Africa up by 4%, the Americas improved by 7%, and Europe increased by 9% [23][24] - China faced challenges with an 11% decline in orders, primarily due to backlog adjustments, but overall Asia showed resilience [23][24][132] Company Strategy and Development Direction - The company aims to optimize its business portfolio, focusing on energy transition and automation efficiency [11][12] - A new program for share buybacks of up to $1.5 billion was announced, indicating a commitment to returning value to shareholders [10] - The company is focused on becoming more transparent with ROCE and aligning reporting with operational performance [9][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving new records in 2025, despite geopolitical uncertainties and a strong U.S. dollar [50] - The company anticipates mid-single digit growth in comparable revenues and stable operational EBITA margins for the first quarter of 2025 [50][51] - Management remains optimistic about the data center market and the potential for increased energy efficiency through technological advancements [61][122] Other Important Information - The company has launched a new tagline, "Engineered to Outrun," to better position itself in the market [15] - There will be reporting changes starting Q1 to enhance operational focus on gross margin and networking capital [47][48] Q&A Session Summary Question: Insights on Electrification and Data Centers - The data center business accounted for 15% of order intake in 2024, up from 12% in 2023, indicating strong growth [58] - Lead times for data center products have improved from around 50 weeks to approximately 35 weeks [62] Question: Margin Improvement Guidance - The company expects a slight margin improvement in 2025, with operational leverage from revenue growth but also facing headwinds from increased corporate costs [66][70] Question: Cash Flow Guidance - Cash flow is expected to remain similar to 2024 levels due to increased CapEx investments, particularly in North America and India [81][84] Question: Electrification Growth Drivers - The electrification of buildings and industries is driving growth, with a focus on replacing traditional energy sources with electric solutions [92][95] Question: China Market Insights - The Chinese market remains mixed, with growth opportunities in utilities and data centers, but challenges in the construction sector [132] Question: ABB Way Contribution - The ABB Way has contributed to margin improvements, with ongoing efforts to enhance operational efficiency across business lines [138][146]

This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. Q4 2024 results Z U R I C H , S W I T Z E R L A N D | J A N U A R Y 3 0 , 2 0 2 5 | M O R T E N W I E R O D , C E O ; T I M O I H A M U O T I L A , C F O Ending record-high 2024 with strong order growth and positive 2025 outlook © 2025 ABB. All rights reserved. © 2025 ABB. All rights reserved. Important notices These statements are based on current expectations, estimates and ...

Financial Data and Key Metrics - Orders increased by 2% in Q3 2024, with a positive book-to-bill ratio and record-level margins [3] - Revenues improved by 2% in the quarter, but excluding Robotics & Discrete Automation (RA) and E-mobility, revenues were up 7% year-to-date [3] - Operational EBITA margin reached 19%, with Electrification contributing significantly at 24% margin [4] - Free cash flow year-to-date was $2.6 billion, with a target to match last year's $3.7 billion [5] - Earnings per share reached $0.51, up $0.03 from last year [14] Business Line Performance - **Electrification**: Orders grew by 10%, with revenues reaching a record $3.9 billion, up 10% YoY. Operational EBITA margin hit 24.1% [15][16] - **Motion**: Orders decreased by 4%, but short-cycle orders remained stable. Revenues were up 1% to $2 billion, with a record margin of 20.7% [17][18] - **Process Automation**: Orders remained stable at $1.8 billion, with revenues growing 6% YoY. Operational EBITA margin was 15.2% [19][20] - **Robotics & Discrete Automation**: Orders dropped by 4%, with Machine Automation facing significant challenges. Revenues declined by 20%, with a focus on cost-saving measures [21][22] Regional Performance - **Americas**: Orders declined by 6%, but excluding timing impacts, orders grew at a double-digit rate [12] - **EMEA**: Orders increased by 8%, driven by strong performance in Australia and India [12] - **China**: Orders declined by 2% YoY, but sequentially remained stable [12] - **Europe**: Orders grew by 6%, with significant improvement in Germany [12] Strategic Direction and Industry Competition - The company is focusing on the electrification trend, with strong demand in data centers and utilities [9][10] - ABB aims to outgrow the data center market, which is expected to grow in double digits in the midterm [11] - The company is investing in R&D, with 55% of R&D employees focusing on software and digital solutions [67] - ABB is also focusing on sustainability, targeting an 80% reduction in Scope 1 and 2 greenhouse gas emissions by 2030 [80] Management Commentary on Market Environment and Future Outlook - The company expects full-year revenue growth of below 5%, with operational EBITA margin slightly above 18% [25][26] - Management highlighted challenges in Discrete Automation, with normalization expected by Q2 2025 [32] - The company is optimistic about the long-term growth of automation and robotics, despite short-term challenges [90] Other Important Information - ABB completed the acquisition of Födisch Group, adding $55 million in revenues, and closed the SEAM deal, adding $19 million in revenues [5][6] - The company welcomed new business area Presidents for Electrification and Motion, both with long careers at ABB [6] - ABB is focusing on cost-saving measures, including a 25% reduction in headcount in Machine Automation [22] Q&A Session Summary Question: Electrification Margins and Capacity - ABB has added capacity in North America, particularly in the U.S. and Mexico, to meet market demand with shorter lead times [28] - The company does not believe it has reached the peak of benefits from volume drivers in electrification [29] Question: Machine Automation Trends - Machine Automation is facing prolonged inventory adjustments, with normalization expected by Q2 2025 [31][32] - Germany showed a 33% growth in orders, but this was from a low base, indicating stabilization at a lower level [33] Question: Pricing Trends for 2025 - ABB expects pricing to remain a positive driver in 2025, with a focus on better project execution and cost control [35] Question: Order Backlog and 2025 Outlook - The order backlog shows growth in Electrification and Motion, but a significant decline in Robotics & Discrete Automation [38] - ABB does not provide specific guidance for 2025 but expects to remain within the 5% to 7% growth range [37] Question: Cost-Saving Measures in E-mobility and Robotics - ABB is focusing on reducing variable costs and streamlining fixed costs in E-mobility and Robotics, with a focus on R&D investments [40][43] Question: Seasonality in Q4 Margins - Q4 margins are expected to be lower than usual due to higher corporate costs and losses in E-mobility [44] Question: Competition in Robotics in China - ABB is facing increased competition from local players in China and is focusing on a "China for China" strategy to remain competitive [46][47] Question: Data Center Revenue Split - ABB's data center business is growing rapidly, with strong demand in medium voltage switchgear and low-voltage UPS [51][52] Question: Medium Voltage Profitability - ABB's medium voltage business has seen significant profitability improvements, driven by trends in data centers and utilities [91] Question: Software Strategy - ABB focuses on combining hardware and software to solve customer problems, with 55% of R&D engineers working on software [104] Question: E-mobility Recovery and Industry Consolidation - ABB is focusing on renewing its E-mobility product portfolio and will consider IPO or industry consolidation when the market is ready [109][110] Question: M&A and Leverage - ABB has capacity for M&A, with a net debt to EBITDA ratio of 1.4, and could comfortably increase leverage for the right deals [112]