ABB Ltd

ABB reported record Q2 orders of about $12 billion, up 28% comparable, and record revenues of $9.5 billion, up 12% comparable. Operational EBITA was $1.9 billion, up 20%, with margin up 90 basis points to 20.2%; gross margin was 40%, down 50 basis points, hurt mainly by unrealized FX and commodity derivatives, and there were about $130 million of special non-operational items. Free cash flow was $881 million, slightly higher year over year. By segment, Electrification revenue was $5.2 billion (+19% comparable) with margin of 24.9%; Motion revenue was $2.2 billion (+4%) with margin of 18.5%; Automation revenue was $2.2 billion (+7%) with margin of 15.4%. For the full year, ABB raised comparable revenue growth guidance to low double-digit to low teens and said Q3 comparable revenue growth should be low- to mid-teens, with Q3 margin sequentially better than Q2. ABB also said it remains on track to improve free cash flow from last year’s $4.6 billion.

Morten Wierod framed the quarter as another record performance driven by strong end markets, no sign of pre-buys, and capacity that is now coming online. He emphasized secular demand from energy expansion, energy efficiency, resilience, and data centers, while saying ABB is actively investing to convert backlog into revenue and maintain execution discipline. On Rotork, his tone was upbeat and strategic: he described the deal as a strong fit for ABB’s Sense-Control-Act automation loop and said ABB is in a good position to integrate larger assets.

Christian Nilsson focused on the segment detail and margin mechanics. He said Electrification booked $5.2 billion of revenue on 19% comparable growth and delivered a 24.9% margin, supported by volume, about 2% pricing, and strong SG&A control; Motion’s 18.5% margin fell 130 bps, mainly because Gamesa Electric ran at a loss and diluted margin by around 70 bps, with additional inefficiencies in High Power and timing issues in traction; Automation’s margin improved to 15.4% aided by cost discipline and a one-time provision release. He also highlighted free cash flow of $881 million and said ABB is still on track to improve cash flow versus last year’s $4.6 billion.

Analysts focused on whether Electrification’s surging orders reflected longer lead times, pre-buys, or true demand; management said lead times are similar to before and that the growth is driven by more capacity coming online and sustained customer investment. Questions also centered on Rotork synergies, service opportunities, and why the deal is being pursued now; management said the main synergy is commercial and revenue-related, with some procurement upside, and that ABB’s improved governance and performance make this the right time. Another theme was pricing and data-center demand: ABB said pricing is around 2% overall, varies by region and cycle length, and that data-center order strength is broad-based, with some variation quarter to quarter but a strong longer-term outlook.