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Automation giants report a pick-up in orders

04 May, 2010

UPDATED  Quarterly results released recently by several of the world’s leading automation players paint a mixed picture, with some showing recovering revenues, while others are still suffering from sales declines. But most report that orders are starting to pick up.

♦  Rockwell Automation’s second-quarter revenues of $1.16bn were 10% higher than a year ago and 9% up on the previous quarter.

♦  Siemens’ automation business recorded a 4% increase in second-quarter revenue (and a 12% increase in new orders) compared to a year ago, while revenues in its drives business were 17% down on the previous year (but 7% up on the previous quarter).

♦  First-quarter revenues from ABB’s discrete automation and motion business were 7% lower than the previous year (at $1.2bn), while orders were 10% up (at $1.4bn).

♦  First-quarter sales at Baldor Electric were 1% down on a year before (at $397m), although business improved during the quarter with incoming orders exceeding shipments by $25m.

♦  Q1 sales in Eaton’s electrical business outside the Americas (which includes its Moeller acquisition) were 12% higher than a year before at $608m, although in its Electrical Americas business, sales fell 7% to $802m.

♦  Sales in Emerson Electric’s industrial automation division fell by 10% to $867m in the second quarter of its financial year, (combining a 16% decline in underlying sales with 3% positive contributions from currency and acquisitions), but margins remained steady at 10.7%, helped by cost reduction initiatives. 

Elsewhere, the German company Beckhoff Automation has reported a 15% decline in sales during 2009 (to €236m) but says that an upturn began during the second half of the year and that the first quarter of 2010 was characterised by “extremely strong growth”. It expects 2010 sales to more than compensate for the 2009 decline.

Most of Rockwell’s sales improvement has come from its architecture and software business which has grown by 31% since the second quarter of 2009 to reach a value of $516m in Q2 2010. By contrast, the company’s control products and solutions business suffered a 2% drop in business with sales in the second quarter of 2010 amounting to $648m.

Rockwell CEO Keith Nosbusch (above) is confident that the company will return to solid organic growth for the whole of 2010 with revenues in the region of $4.65–4.8bn. “The recovery is underway,” he says. “While the shape of the recovery remains uncertain, we are well positioned to outperform the underlying market in this cycle. Our growth prospects are bright.”

In the second quarter of Siemens` current financial year, its industry automation business achieved revenues worth €1.42bn (up from €1.38bn in 2009), while its drive technologies business brought in €1.62bn (down from €1.95bn in 2009).

ABB’s CEO Joe Hogan sees “some encouraging signs of growth” in the company’s short-cycle businesses, mainly in the automation markets. “Given the improving global economy, we’re cautiously optimistic that the momentum should continue to build for our short-cycle businesses,” he says, “especially in the emerging markets, driven by increasing industrial production”.

During the quarter, orders in ABB’s short-cycle automation and motion businesses, such as low-voltage motors and drives, more than offset the decline in large orders and orders in later-cycle businesses such as machines and power electronics.

Baldor’s CEO John McFarland says that while sales in January and February of 2010 were below last year’s levels, March sales were up by more than 8%. He predicts that incoming orders will continue to improve and that second-quarter 2010 sales will be 8–12% higher than 2009 at $415–430m.

Because of increases in the costs of transportation and raw materials such as copper and electrical steel, Baldor is increasing the prices of its motor and drive products by 4.6% from the end of May – its first increase for about two years.

Of Eaton’s 12% increase in electrical sales outside the Americas, 8% has come from changes in foreign exchange rates, and 4% from increases in volume. These operations produced a $49m operating profit during the first quarter of 2010, compared to $10m a year before.

Emerson, whose operations include Control Techniques and Leroy Somer, reports that its drives business had a strong second quarter and that growth resumed in its fluid power and electrical distribution businesses. The corporation’s total global sales rose by 1% during the quarter to $5.1bn, but underlying sales fell by 6% globally, and by 18% in Europe.

Although Emerson’s CEO David Farr believes that industrial markets around the world “have bottomed and are beginning to recover,” he is “concerned about the sustainability of the US and European economies compared to historical recovery cycles”.

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