World Economy

Automation in Africa, Asia and the Middle East is booming, ABB CEO says

Key Points
  • The Swiss engineering giant ABB is seeing strong growth momentum in developing markets ranging from Asia to Africa.
  • The maker of industrial robots and power grids reported Thursday a better-than-expected first quarter net profit of $572 million.
Electric vehicles a ‘fantastic opportunity’ for ABB, CEO says

Swiss engineering giant ABB is seeing strong growth momentum in developing markets ranging from Asia to Africa, the president and chief executive told CNBC Thursday.

"Asia, Middle East and Africa is really performing very well," ABB's Ulrich Spiesshofer told CNBC's "Squawk Box Europe" Thursday, following the company's first-quarter earnings report that showed a 20 percent increase in orders in those regions.

"The infrastructure needs but also the upgrade and the industry side (have done well), and the investment in automation — not only in robotics — have made for a very strong quarter, and I'm very pleased with that performance," he added.

Spiesshofer's comments come after the maker of industrial robots and power grids reported a better-than-expected first quarter net profit of $572 million, beating forecasts of $562 million in a Reuters poll of analysts. Revenue also rose above forecasts, to $8.63 billion, above an expected $8.39 billion.

The results showed regional differences in orders. Total orders in Europe were down 3 percent, numbers in the Americas were stable, but they were particularly strong for Asia, the Middle East and Africa — with orders up 20 percent. Both large and base orders developed positively in China, India and the United Arab Emirates, ABB said in its earnings report.

Collaborative dual-arm robot YuMi is pictured at the Swiss automation group ABB booth at the Hannover Messe industrial trade fair in Hanover, central Germany on April 13, 2015.
Tobias Schwarz | Getty Images

Spiesshofer said ABB was well placed to grow globally.

"If you look at the way ABB is positioned, we're bringing power from any power plant to any consumption block of electricity. Renewables are kicking in, e-mobility is coming and this will be a great opportunity for us. In the automation side, there is no other player that has process, control, discreet automation, robotics and electrification and a strong digital platform. So we're shaping the world with our offering and we're contributing, so that means we participate in the growth," he said.

The results showed a "strengthened ABB" and that the "transition year" of 2017, referring to the restructuring that the company has undergone in recent years, was "behind us," the earnings report from ABB said. Shares of the company soared 4 percent in early deals Thursday.

While the short-term outlook was "trending positively in Europe and the United States, with growth expected to continue in China," it said uncertainties around "oil prices and foreign exchange translation effects" are expected to continue to influence the company's results.

ABB CEO: Long-term outlook on capital spending is positive

Spiesshofer said the results showed that all of ABB's markets are "steady or improving." Particular focus was placed on the company's Power Grids business which has struggled in recent years. The company has also faced increased shareholder demand to ditch the Power Grids unit.

Spiesshofer said the division continued to improve, however.

"We have improved the underlying performance of this business. We have changed the business model, we cut certain business models and that means we have a dampening effect on the topline, but altogether this is the pristine asset in the power space, it's the number one globally and it's the most profitable by a long distance to its competitors and we are fully committed to continue the improvement journey into the future," he said.