By John Revill
ZURICH (Reuters) -Swiss industrial group ABB (ST:ABB) on Thursday announced plans to spin off its robotics division in the biggest shake up at the company since it sold its power grids business to Japan’s Hitachi (OTC:HTHIY) in 2018.
The business is the world’s second-biggest industrial robot maker after Japan’s FANUC Corp and competes with rivals including Yaskawa and Germany’s Kuka.
It generated sales of $2.3 billion in 2024, equivalent to 7% of ABB’s total, but has struggled in recent quarters as the automotive sector - a big buyer of robots - has seen subdued demand.
The global robotics business is valued at $16.5 billion by the International Federation of Robotics, which last year forecast a 4% increase in the number of robots sold in 2025.
But the sector, which had been expecting a boost from companies reshoring manufacturing to the United States, has become more gloomy citing concerns about President Donald Trump’s tariffs policies and their impact on the global economy.
"If there is a broad level of tariffs, we are less confident," said IFR General Secretary Susanne Bieller.
ABB intends for its robotics business to start trading as a separately listed entity in the second quarter of 2026, with shares in the new company distributed to ABB investors as a dividend.
ABB said it was considering a listing in Sweden or Switzerland, but no final decision had been made. ABB shares gained 3.5% in early trading following the announcement.
CEO Morten Wierod said he saw a good long-term business for robotics due to rising labour costs and shortages of skilled staff.
Still, there were limited synergies with the rest of ABB, while the business would do better under its own leadership, he said.
"We believe value creation will be higher as a standalone, focused robotics company than what it is inside ABB today," Wierod told Reuters.
"The long term outlook for the business is strong. We believe the robotics business is ready to stand on its own two feet," he added.
The plan was supported by Investor AB, ABB’s biggest shareholder with a 14.3% stake, which said it was a "logical step".
Bank Vontobel analyst Mark Diethelm estimated an enterprise value of ABB Robotics at around $2.7 billion to $3.3 billion dollars, based on the usual ratio between earnings and market capitalisation in the industry.
The announcement came as ABB reported better-than-expected profit during its first quarter, with operational earnings before interest, tax and amortisation (EBITA) rising 13% to $1.59 billion.
Sales rose 1% to $7.94 billion in the three months to the end of March, missing analyst forecasts for $8.16 billion in a company-gathered consensus.
($1 = 0.8167 Swiss francs)