ABB Reports Strong Q3 2025 Order and Revenue Growth Driven by Data Center Demand

Q3 2025 Performance Overview

ABB Ltd (ABB:CA) reported robust financial results for the third quarter of 2025, demonstrating significant growth in orders and revenue, alongside improved profitability. The global engineering and technology company announced orders reaching $9,143 million, marking a 12% increase year-on-year (+9% comparable), comfortably surpassing analyst expectations by approximately 2%. Revenues also advanced, growing 11% (+9% comparable) to $9,083 million, exceeding analyst estimates of $8.89 billion.

The company's operational performance saw Operational EBITA climb 12% to $1,738 million, resulting in a strong 19.2% margin, which was 20 basis points higher than the previous year and above analyst expectations of $1.70 billion. Net profit for the quarter rose to $1.21 billion from $947 million in the prior year, exceeding forecasts of $1.15 billion. Basic earnings per share (EPS) saw a substantial 29% increase to $0.66. ABB also showcased strong cash generation, with cash flow from operating activities rising 32% to $1,777 million, and free cash flow reaching $1.6 billion, also a 32% increase. The book-to-bill ratio stood at a positive 1.01, indicating healthy demand.

Key Drivers of Growth

The strong performance was underpinned by a "robust overall market situation," as noted by CEO Morten Wierod, with sustained customer investments in electrical power and automation. A significant driver of this demand was the data center segment, which experienced double-digit order growth, largely fueled by the surging power needs associated with artificial intelligence development. ABB, a key provider of electrification products and uninterruptible power supplies for server rooms, reported that data center-related revenues now constitute approximately 7% of its group revenues, up from 6% a year ago.

Beyond data centers, positive development was observed in the electrification areas of infrastructure and commercial buildings, alongside robust customer activity in the energy segment. Geographically, the United States saw a notable surge in orders, jumping 27% during the quarter across all business areas, with Brazil also reporting strong growth of 38%. These gains underscore a resilient demand environment in key Western markets.

Segmental Performance and Strategic Adjustments

While growth was broad, certain segments faced challenges. The Robotics & Discrete Automation segment continued to be impacted by a muted discrete automation market, with orders remaining broadly stable amid weakness in the automotive and general industry sectors. Similarly, demand remained subdued in process industry-related areas such as pulp & paper, chemicals, and mining. The China market experienced a 4% drop in new business and a 12% decline in the AMA (Asia, Middle East, and Africa) region, reflecting regional economic pressures.

In a strategic move to sharpen its focus on core electrification and automation businesses, ABB announced the divestment of its Robotics division to SoftBank Group for $5.4 billion. This division will be reported as discontinued operations from the fourth quarter of 2025. Concurrently, the company is investing $210 million in North America to expand its Electrification business, targeting long-term demand from data centers, grid modernization, and energy efficiency.

Financial Strength and Outlook

The company's strong financial footing is further evidenced by a Return on Capital Employed (ROCE) of 23.3%. Despite continued uncertainties related to U.S. tariffs, CEO Morten Wierod indicated that these have had "no material impact on demand or profitability" so far. ABB has been countering potential tariff effects through small price increases and efficiency gains, with a strategy to increase local production in the U.S. from the current 75-80% to 90%.

Looking ahead, ABB anticipates comparable revenue growth in the mid-single-digit range for the fourth quarter of 2025. The Operational EBITA margin is expected to soften sequentially by approximately 150 basis points, a pattern consistent with historical trends for the period. For the full year 2025, ABB projects a positive book-to-bill ratio, mid-single-digit comparable revenue growth, and an Operational EBITA margin at the higher end of its long-term target range of 16%-19%, while acknowledging the global business environment's uncertainties.

Executive Commentary and Future Leadership

CEO Morten Wierod expressed satisfaction with the quarter's results, stating, "> "I was pleased to see a robust overall market situation as customers continue to invest behind electrical power and automation." He further added, "> "All combined, we are on a good path towards our ambition of delivering another record year for ABB."

The company also announced a change in its executive leadership, with CFO Timo Ihamuotila stepping down from the Executive Committee effective February 1, 2026, to focus on non-operational roles. He will be succeeded by Christian Nilsson, who currently serves as CFO of ABB's Electrification business area.