Head to Head: ABB vs Schneider Electric vs Siemens
In this blog, we provide an apples-with-(almost) apples comparison across these three prominent European Large Capital Goods stocks aimed at highlighting their key strengths, differences and relative positioning with respect to each other. However, before doing so, we would like to highlight the following points for the reader:
1. All three groups have meaningful exposures to Electrification and Automation
2. Software & Service, and Datacentre demand bring additional value and growth
3. ESG is central to their business models, and their respective policies are at the forefront vs. the sector.
Electrification and Automation are the main markets
Between 2018 and 2020, all three groups regrouped/reorganised their businesses to align them towards broader Electrification and Automation end-markets. The former is driven by energy security, energy efficiency, and decarbonisation while the latter is supported by the need for better productivity, a shrinking labour force and an increased emphasis on safety. On top of them, there is additional demand from Datacentres, Software & Service, and Geopolitics (Re-shoring, Trade wars etc.).
That said, each group offers a unique blend of exposure to these two end-markets (see the chart below; we have adjusted the business unit reporting for the purposes of comparison).
• ABB – ABB provides balanced exposure to both Electrification (via Electrification) and Automation (via Motion, Process Automation and Discrete Automation), with an additional growth lever through Robotics.
• Schneider Electric – Schneider Electric offers outsized exposure to Electrification (via Energy Management) alongside a competitive Automation business (via Industrial Automation).
• Siemens – Siemens has a strong Automation franchise (via Digital Industries) and an improving Electrification business (via Smart Infrastructure). Additionally, it also provides access to Medtech (via Healthineers) and Transportation (via Mobility).
End-market exposures (%)
In Electrification, Schneider Electric is the clear leader owing to its strength in Products (higher margins vs. Systems). ABB had lost its way before the arrival of Mr. Rosengren. But since then, ABB has been as a firm challenger to Schneider Electric. Siemens has recently made notable improvements here, but it still has room to fully catch-up with its peers.
1. All three groups have meaningful exposures to Electrification and Automation
2. Software & Service, and Datacentre demand bring additional value and growth
3. ESG is central to their business models, and their respective policies are at the forefront vs. the sector.
Electrification and Automation are the main markets
Between 2018 and 2020, all three groups regrouped/reorganised their businesses to align them towards broader Electrification and Automation end-markets. The former is driven by energy security, energy efficiency, and decarbonisation while the latter is supported by the need for better productivity, a shrinking labour force and an increased emphasis on safety. On top of them, there is additional demand from Datacentres, Software & Service, and Geopolitics (Re-shoring, Trade wars etc.).
That said, each group offers a unique blend of exposure to these two end-markets (see the chart below; we have adjusted the business unit reporting for the purposes of comparison).
• ABB – ABB provides balanced exposure to both Electrification (via Electrification) and Automation (via Motion, Process Automation and Discrete Automation), with an additional growth lever through Robotics.
• Schneider Electric – Schneider Electric offers outsized exposure to Electrification (via Energy Management) alongside a competitive Automation business (via Industrial Automation).
• Siemens – Siemens has a strong Automation franchise (via Digital Industries) and an improving Electrification business (via Smart Infrastructure). Additionally, it also provides access to Medtech (via Healthineers) and Transportation (via Mobility).
End-market exposures (%)
Source: Company data, AlphaValue assumptions
In Electrification, Schneider Electric is the clear leader owing to its strength in Products (higher margins vs. Systems). ABB had lost its way before the arrival of Mr. Rosengren. But since then, ABB has been as a firm challenger to Schneider Electric. Siemens has recently made notable improvements here, but it still has room to fully catch-up with its peers.
Source: Company data, AlphaValue assumptions
Source: Company data, AlphaValue assumptions
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