Investing.com -- ABB (ST:ABB) on Thursday posted strong order growth in the fourth quarter of 2024, driven by surging demand from the data center and utilities sectors, the company reported in its latest earnings release.
Orders climbed 6% year-on-year to $8.1 billion, with the Electrification business leading the way, reflecting a broader trend of increased investment in power infrastructure.
The Swiss industrial giant recorded revenues of $8.6 billion for the quarter, a 4% increase from the previous year.
Operational earnings before interest, taxes, and amortization (EBITA) rose 8% to $1.43 billion, with the margin expanding to 16.7%.
A key factor in ABB’s performance was the robust demand for its Electrification products, particularly in data centers, where power consumption continues to rise amid increasing investments in cloud infrastructure and artificial intelligence.
The company highlighted strong uptake of its medium-voltage UPS (uninterruptible power supply) solutions, which help optimize energy efficiency and reduce complexity in next-generation data centers.
Orders in the Electrification segment rose 15% year-on-year, making it the strongest-performing division.
The results also showed a positive book-to-bill ratio for the full year, indicating healthy incoming orders relative to revenue recognition.
While ABB posted some softness in orders for long-cycle projects, growth in its short-cycle business and project execution helped offset this.
The Motion business area, which includes motors and drives, saw steady short-cycle demand, though overall order growth was constrained by weaker large-project bookings.
“Excluding the debooking of orders in the struggling machine automation space, ABB’s orders would have been a 4% beat. Still, given the strong growth in EL (rev +9% yoy) we would have expected a better margin development here,” said analysts at RBC Capital Markets in a note.
The company ended 2024 with a free cash flow of $3.9 billion and proposed a dividend increase to CHF 0.90 per share.
ABB also announced plans for a new $1.5 billion share buyback program, set to begin in early February 2025.
Looking ahead, ABB expects continued revenue growth in 2025, forecasting mid-single-digit percentage gains in the first quarter. The company remains optimistic about its prospects despite some market uncertainties, particularly exchange rate fluctuations.
ABB expects continued revenue growth in 2025, with a mid-single-digit percentage increase forecast for Q1.
They remain positive about their outlook despite some market uncertainties, notably exchange rate fluctuations.
Separately, ABB also announced planned changes to its board of directors, with Lars Foerberg, the managing partner of activist investor Cevian Capital, standing down.
The company proposed Claudia Nemat, a member of Deutsche Telekom’s management board since 2011, as a new board member, with a decision to be made at its annual general meeting on March 27.