By John Revill
ZURICH (Reuters) -ABB raised its sales and profitability targets on Thursday, the latest European industrial group to outline more ambitious goals despite an uncertain global economic backdrop.
The maker of industrial robots, motors and controllers wants to tap into long-term trends like increased automation to tackle aging workforces, a desire to reduce carbon emissions and the rise of AI in factories.
Unveiling new targets, ABB (ST:ABB) said it now expects sales to increase by 6-9% annually from 2024, up from its previous goal for a 4-7% increase.
"You need to be confident to put up these numbers....and I feel very confident we will achieve these numbers," Chief Executive Bjorn Rosengren told the company's investor day in Frosinone, near Rome in Italy.
ABB shares were 2.5% higher in early afternoon trading, and are now up 24% since the start of the year.
ABB's raised goals follow recent updates by peers Siemens and Schneider Electric (EPA:SCHN), which have also given confident assessments despite current global uncertainties.
The International Monetary Fund recently downgraded its forecast for global growth for next year, with advanced economies expected to significantly slow as interest rates rise.
Much of ABB's growth would reflect market developments, although the company itself was in good shape with 70% of its business currently increasing sales, Rosengren said.
"It's a totally different environment to before 2019, where there was significantly less growth in the market," he said.
"We travel and meet with customers, and if only half of all the plans and projects that are being planned are going to happen, it's going to be an enormous drive for a company like ABB."
Among the opportunities highlighted were 45,000 miles of electrical cabling expected to be laid underground in the United States to avoid natural disasters, driving demand for ABB electrification products.
The increased use of electrical motors to replace gas and steam turbines, reducing their fossil fuel usage and carbon emissions, was also highlighted as an opportunity by ABB.
The Swiss company also said it would focus more on acquisitions in future, buying up to 10 companies per year.
This could include bigger deals than in the past, Rosengren said, with the company also considering mid-size deals for companies with annual revenue of more than $1 billion.
ABB also raised its core profitability target to a range of 16% to 19%, from a previous goal of more than 15%.
Analysts were broadly positive on the new targets.
"ABB group is entering a new phase of development focused on revenue growth and sustained high profitability, which will be supported by favourable end-market trends," said Kepler Cheuvreux analyst Will Mackie.