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ABB & Kawasaki to Partner on Collaborative Robot Automation

Zacks Equity Research

ABB Ltd ABB and Kawasaki Heavy Industries Ltd. KWHIY recently decided to join forces, effective immediately, on sharing knowledge and promoting the benefits of collaborative robots, particularly those having dual arm designs.

Per the agreement, both the companies will continue to manufacture and market their own offerings independently, while collaborating on joint technical as well as awareness opportunities. Under the world’s first collaboration focusing on “cobots”, the two companies will educate general public, policy makers as well as NGOs about benefits of collaborative automation. Further, they will create common industry approaches to safety, programming and communications.

The collaboration between people on the one hand, and robots, machines and processes on the other is gaining importance, particularly for industries with more product variability, which calls for a higher degree of human intervention. Collaborative automation enables people and robots to integrate their strengths, with people offering process knowledge, insight and improvisation, and robots lending tireless endurance for recurring tasks.

The cooperation will come out with a collaborative dual arm robot demonstration in Booth IR3-56, IR5-22 and SR-82 at IREX, in Tokyo from Nov 29 to Dec 2.

Existing Business Scenario

ABB is one of the best managed industrial infrastructure, power and automation companies in the world that stands to benefit from steady revenues from the Electrification Products and Robotics and Motion segments. Particularly, the Robotics and Motion segment is enjoying consistent strong demand patterns in robotics and light industry.

The company has garnered a solid reputation for winning strategic awards and forging important partnerships. The company anticipates broader market conditions to present selective opportunities that can supplement growth momentum going forward. It has also been successful in clinching major orders across all of its three segments, namely, utilities, energy and transport & infrastructure that are expected to boost the financials.

Year to date, the Zacks Rank #3 (Hold) company’s shares have returned 21.6%, outperforming the industry’s average growth of 14.2%.

However, the company’s exposure to oil and gas markets makes it susceptible to current price volatility in the market. Also, its order level in certain business segments has been hurt in recent times due to weak oil and gas demand. Further, the company’s financials is likely to be hurt by lower capital spending for the company’s key upstream energy end-markets.

Stocks to Consider

Some better-ranked stocks from the same space include Alamo Group, Inc. ALG and Kennametal Inc. KMT. Both Alamo Group and Kennametal sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alamo Group has surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 6.1%.

Kennametal has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 20.6%.

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