Electrical engineering: ABB expands electrification business in Asia with joint venture

Zurich. The electrical engineering group ABB continues to buy. The Swiss group is setting up a joint venture with the Japanese Mitsubishi Electric, into which its outsourced product business for low-voltage power distribution will be brought, ABB announced on Tuesday.

The joint venture will focus on low-voltage offerings for markets in Asia. ABB acquired a majority stake of 51 percent in the newly formed company for the equivalent of around $495 million. In addition, the Siemens rival will completely take over Mitsubishi Electric's associated sales activities for low-voltage power distribution products outside Japan. The transaction is expected to be completed in the second half of 2027. ABB has an option to fully take over the remaining shares in the medium term.

At the same time, ABB presented its third quarter results. Driven by the boom in the construction of data centers, incoming orders climbed by 40 percent to $12.1 billion. In the second quarter, ABB recorded an adjusted order increase of 28 percent and in the first quarter of 24 percent. “ABB achieved record orders and improved operational performance with strong cash flow and high return on capital,” said CEO Morten Wierod.

In the largest and most profitable electrification business, incoming orders rose by 70 percent in the summer. The division, which produces switchgear, sockets and substations, among other things, is ABB's growth engine. The billions invested in the construction of new data centers for artificial intelligence (AI) are also boosting business. Here, ABB supplies, among other things, equipment for an uninterruptible power supply.

Group-wide sales rose by 14 percent to $9.7 billion. Thanks to the strong electrification business, the operating profit margin (Ebita) improved to 20.8 percent. According to a survey conducted by the company itself, analysts had expected sales of $9.7 billion and an operating margin of 20.5 percent.

ABB slightly raised its outlook for the full year. The group is now targeting comparable sales growth in the low double-digit percentage range. The operating margin should increase by at least 270 basis points compared to the previous year.