(Bloomberg) -- ABB Ltd. raised its margin outlook as massive investments in data centers fueled demand for its power-grid business, helping offset weaker sales of factory automation products.
The Zurich-based company said orders rose 2% in the third quarter to $8.2 billion, and it now sees its profit margin exceeding the roughly 18% it had previously forecast, according to a statement Thursday.
Soaring investments in data centers, driven by growth in artificial intelligence, have been a bright point for ABB, which produces transformers that enable power grids to feed the centers’ substantial energy needs. ABB’s shares rose as much as 1.4% early Thursday, adding to more than 50% in gains over the past year.
While revenue from the electrification business jumped 10% in the quarter, sales of its robotics and factory automation products continued to suffer, as customers focused on reducing inventories after a period of supply-chain stress. Overall orders from China were down about 2% in the quarter on a comparable basis, and fell 7% in the US.
“We are not where we expect and want to be in our machine automation unit,” Chief Executive Officer Morten Wierod said Thursday during a call with reporters. “We have work to do in the coming quarters.”
ABB now sees revenue growth for the year coming in below its previous estimate of about 5%.
Wierod, who took over as CEO in August, reiterated that the company sees signs of recovery in China, where inflation and higher interest rates have weighed on spending. That looks set to improve after Beijing recently announced fresh stimulus measures, he added, though cautioned that it’s still too early to predict the timing of a recovery.
India, meanwhile, is becoming increasingly important for ABB and will be the company’s third biggest market, behind the US and China, within a few years, Wierod said.
ABB’s e-mobility business continued to be a weak spot. The company has been streamlining the business as it eyes a sale of some of its electric mobility assets, including electric-vehicle charging stations worldwide as well as research and development facilities in China.
The company is also picking up the pace of small to mid-sized acquisitions, Wierod said, adding he aims to expand in market segments where the company can add technology or new geographies to its existing portfolio.
(Updates with shares in third paragraph, CEO comment in fifth.)
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