Strong start; optimizing value creation through portfolio management
Orders of $9.213 billion, up 3% year-on-year; up 5% on a comparable basis
Sales of $7.935 billion, up 1% year-on-year; up 3% on a comparable basis
Operating profit of $1.567 billion; profit margin of 19.7%
Operating EBITDA of $1.597 billion; profit margin of 20.2%
Basic earnings per share of $0.60, up 22% year-on-year
Cash flow from operating activities of $684 million, down 6% year-on-year
ABB Group CEO Maarten said that ABB had a strong start to the year, with growth in most items on the income statement and healthy cash flow. We maintain our 2025 target outlook, but also note that there is increased uncertainty in the market environment. At the same time, we plan to create further value through active portfolio management and the spin-off of the robotics business.
CEO Overview
In the first quarter of 2025, ABB achieved a 3% year-on-year increase in orders (5% on a comparable basis) in a strong market environment. Despite a slightly lower-than-expected sales growth of 1% (+3% on a comparable basis), the operating EBITDA margin reached 20.2%. All divisions performed better than initially expected and closed the quarter on a strong note. In addition, the margin improved by approximately 170 basis points, thanks to capital gains related to the sale of real estate. Free cash flow of $652 million laid a good foundation for the full-year free cash flow improvement target (free cash flow of $3.9 billion in 2024). Overall, this result is satisfactory.
The company once again achieved a book-to-bill ratio of more than 1, reaching 1.16, and the order backlog increased further. Orders increased in three of the four divisions, with only Motion Control slightly down from last year’s record high. Customer inventories in the Mechanical Automation business unit appear to be approaching normalization levels, with some final adjustments continuing into the second quarter. Compared with the previous quarter, overall market demand remained largely stable, but investment decisions were delayed at the end of the quarter, mainly related to uncertainties regarding trade tariffs.
As part of the 2024 Annual Report, we published our annual Sustainability Report. The company is pleased with the progress it has made in terms of sustainability. In 2024, the company’s CO2 equivalent emissions fell 78% from the 2019 baseline, close to its 2030 goal of an 80% reduction. I am proud that our leading technology has helped customers avoid 66 million tons of emissions during the life cycle of their products. In addition, the company’s focus on the “zero harm” goal has also reduced the lost time injury rate (LTIFR) to a low level of 0.15 again.
In the context of trade tariffs exacerbating the uncertainty of the global business environment, we focus on controllable factors and take proactive measures to consolidate our market position and profitability. ABB’s long-standing localization strategy has played an important role. In the United States, we cover 75%-80% of our sales needs through local production, coupled with the support of specific tariff exemption policies. In Europe and China, we have achieved a higher degree of localization. As the energy transition advances, the market demand for advanced electrical technologies is growing, and ABB continues to increase investment in the United States to support long-term market development. The company recently announced an investment of US$120 million in two production sites to expand local production of low-voltage electrical products. This is a further investment based on more than $500 million invested in the past three years.
ABB continues to advance its business portfolio management, and the Intelligent Building Business Unit has completed the acquisition of Siemens’ switch and socket business in China. The acquisition brings ABB a richer product portfolio and a strong distribution network covering 230 cities. The business achieved sales revenue of more than $150 million in 2024 and will help boost profit margins.
ABB has decided to start preparations for the spin-off of its robotics business, which is expected to be completed in the second quarter of 2026 and listed independently as a dedicated robotics company. ABB’s robotics business ranks second in the global market, with sales revenue of $2.3 billion in 2024. As an industry leader, the business will benefit from more direct benchmarking against peers. In addition, ABB’s robotics business has limited synergies with other business units of the group and faces different market demands and market characteristics. We believe that this change will support both parties in unleashing their value creation potential, and the timing is right for both ABB and the robotics business. For ABB, the major operational transformation phase has passed, and we are in the sprint stage of further deepening the ABB Way operating model into the company’s facilities. For the Robotics business, the business has achieved double-digit profit margins and healthy cash flow in the past few years under the verticalized operating model. The business has made significant investments in its state-of-the-art core sites in China and the United States, and has just started a major upgrade of its European site in Sweden. The business offers customers a wide range of product portfolios, and its R&D work has also been fruitful, with the successful launch of the unique Omnicore controller platform last year. In addition, the business has added autonomous mobile robots (AMRs) and 3D visual simultaneous localization and mapping (VSLAM) technology through a series of important acquisitions. The separation will enable both companies to better create customer value, achieve growth and attract talent, and more focused management and capital allocation will also benefit both parties.
After the separation, ABB will consist of three divisions with clear sales and technology synergies. The Mechanical Automation business unit, which currently forms the Robotics and Discrete Automation division together with the Robotics business, will be part of the Process Automation division. This adjustment will enable customer value creation to benefit from the synergy of software and control technologies, especially in the hybrid industry field.
The Annual General Meeting also approved a dividend of CHF 0.90 per share and, as part of its capital allocation strategy, ABB has launched a share repurchase program of up to $1.5 billion.
Outlook
For the second quarter of 2025, we expect sales revenue to grow by a mid-single digit on a comparable basis and an operating EBITDA margin to remain roughly the same as 19.0% in 2024, but the uncertainty in the global market environment has increased. We expect the performance growth in 2025 to offset the year-on-year impact of 30 basis points of non-recurring net growth in “Group and Other” projects in the second quarter of 2024.
For the full year 2025, ABB expects an order-to-bill ratio greater than 1, sales revenue to grow by a mid-single digit on a comparable basis and an operating EBITDA margin to increase compared to last year, but the uncertainty in the global business environment will still increase.
