ZURICH (Reuters) - ABB’s (ABBN.S) robotics division is “well placed” to increase sales by broadening its business beyond the struggling automotive sector, the Swiss engineering company said on Thursday, confirming its profitability goal.
ABB expects its robotics and discrete automation business, which competes with Germany’s Kuka (KU2G.DE) and Japan’s FANUC (6954.T), to increase sales above the anticipated market growth of 6% in the coming years, it said at an investor event.
It also confirmed its intention to reach its operating profit margin target to 13% to 17% over the next three to five years, through productivity improvements and better execution of projects.
“With our strong position in key markets across three continents and innovation focus, we expect to deliver above-market growth,” said Samit Atiya, president of the business in a statement.
“At the same time, our initiatives to improve profitability should enable us to operate within our target margin corridor over the medium term.”
ABB is the world’s second biggest robot maker, with 400,000 machines installed around the world.
But its Robotics and Discrete Automation unit saw a decline in revenues and operating profit margins in 2019 after being hit by the downturn in the automotive industry and the economic slowdown in China.
The business, which makes up roughly 12% of ABB’s sales, saw its sales fall 4% on a comparable basis last year, while the operational operating margin shrunk by 2.7 percentage points to 11.9%.
ABB expects the global robotics market to increase to $110 billion by 2025 from $75 billion in 2019 due to trends such as shortage of skilled labor, individualisation of consumer needs and digitalisation.
The company said it was not only linked to the automotive sector, with 60% of its sales coming from outside the industry. It is also entering new markets like logistics and healthcare, ABB said.
Reporting by John Revill