ABB Reports Strong Q3 Financial Growth as Pulp and Paper Demand Remains Soft

ABB reported strong financial and operational performance in the third quarter of 2026, with record order intake, double-digit revenue growth and improved operating margins. However, the company indicated that demand in process industries, including pulp and paper, remained soft, highlighting a more cautious investment environment for parts of the global manufacturing sector.

For the quarter ended September 30, ABB recorded orders of US$12.055 billion, an increase of 40% year-on-year on both reported and comparable bases. Revenue rose 14% to US$9.701 billion, while operational earnings before interest, taxes and amortisation (Operational EBITA) increased 24% to US$2.026 billion. The Operational EBITA margin expanded by 1.6 percentage points to 20.8%.

Income from operations increased 15% to US$1.846 billion, representing a margin of 19%. Net income attributable to ABB stood at US$1.181 billion, down 2% from the year-earlier quarter, while basic earnings per share declined to US$0.65 from US$0.66.

Cash generation remained strong. Cash flow from operating activities increased 5% to US$1.862 billion, and free cash flow reached US$1.576 billion, up 2% year-on-year. Return on capital employed was 29.9%.

Nine-month results show sustained financial momentum

For the first nine months of 2026, ABB reported orders of US$35.395 billion, up 34% year-on-year, while revenue increased 15% to US$27.910 billion. Operational EBITA rose 27% to US$6 billion, and its margin improved by 1.8 percentage points to 21.4%.

Income from operations reached US$5.211 billion, an increase of 15%. Net income attributable to ABB grew 8% to US$3.736 billion, while basic earnings per share rose 9% to US$2.06. Cash flow from operating activities increased 15% to US$4.041 billion, and free cash flow advanced 22% to US$3.707 billion.

The company’s order backlog stood at approximately US$32.3 billion at the end of the third quarter, up 35% year-on-year on a reported basis. With orders exceeding revenue, ABB recorded a book-to-bill ratio of 1.24 in the quarter and 1.27 for the first nine months, indicating that incoming orders continued to outpace sales.

Pulp and paper: a mixed demand environment

For the pulp and paper industry, ABB’s results present a mixed picture. The company reported strength in pulp and paper demand within its Motion business during the third quarter, alongside demand from food and beverage, marine and other industrial segments. In contrast, its Automation business continued to face softer demand in process-industry-related markets, including pulp and paper and chemicals.

This distinction is important for the industry. ABB’s broader financial performance was supported by strong demand in electrification, higher sales volumes and improved operational efficiency, but the company did not report a comparable broad-based recovery across process industries.

ABB’s Motion business recorded third-quarter orders of US$2.455 billion, up 14% year-on-year, while revenue increased 11% to US$2.320 billion. Operational EBITA rose 7% to US$449 million, although the margin declined by one percentage point to 19.1%. For the first nine months, Motion orders increased 18% to US$7.595 billion, and revenue grew 12% to US$6.679 billion.

The Automation business reported quarterly orders of US$2.114 billion, broadly stable against the previous year, while revenue increased 6% to US$2.126 billion. Operational EBITA rose 13% to US$315 million, with the margin improving to 14.8%. For the nine-month period, Automation orders declined 1% to US$7.032 billion, although revenue increased 11% to US$6.466 billion.

These figures are segment-level results and are not specific to pulp and paper customers. ABB did not disclose a separate revenue, order intake or profitability figure for the pulp and paper industry.

Profitability improves as volumes and efficiency support earnings

ABB attributed its improved operating performance primarily to higher volumes, positive pricing and operational efficiencies. In the third quarter, higher volumes and pricing helped offset inflationary pressures in commodities and freight, while disciplined cost management supported profitability.

At group level, gross profit increased 13% to US$3.939 billion, although the gross margin declined by 0.6 percentage points to 40.6%. The company said unrealised foreign-exchange and commodity-derivative effects were the largest adverse factor affecting gross margin.

For pulp and paper producers, ABB’s results provide a broader financial backdrop against which to assess industrial investment. The company’s reported performance demonstrates that its wider electrification and automation markets remain strong, even as demand in some process-industry segments remains subdued. The results do not, however, establish the level of capital expenditure or investment intentions among pulp and paper manufacturers themselves.

Outlook remains positive at group level

ABB expects comparable revenue growth in the fourth quarter of 2026 to be broadly similar to the third quarter, with its Operational EBITA margin expected to soften sequentially, although less than the historical seasonal pattern.

For full-year 2026, the company expects comparable revenue growth in the low-teens range year-on-year, a positive book-to-bill ratio and an improvement of at least 270 basis points in the reported Operational EBITA margin.

The outlook points to continued growth across ABB’s overall business, but the company has not provided a separate forecast for pulp and paper. For the sector, the key indicator to watch in subsequent reporting periods will be whether the softer demand identified in process industries begins to improve alongside ABB’s broader growth momentum.