{"id":48530,"date":"2017-10-24T07:49:24","date_gmt":"2017-10-24T07:49:24","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=48530"},"modified":"2017-10-24T07:49:24","modified_gmt":"2017-10-24T07:49:24","slug":"doing-the-heavy-lifting-investors-eye-tech-tonic-shifts","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/doing-the-heavy-lifting-investors-eye-tech-tonic-shifts.html","title":{"rendered":"Doing the heavy lifting investors eye tech-tonic shifts"},"content":{"rendered":"

Doing the heavy lifting investors eye tech-tonic shifts<\/span><\/strong><\/span><\/h2>\n

Doing the heavy lifting investors eye tech-tonic shifts: Building on their traditional expertise in factory automation, the conglomerates\u2019 digital divisions are adding cutting-edge software and systems that help customers design, build and test their products faster and more cheaply.<\/span><\/p>\n

In so doing they bring new value to companies historically linked mainly to customers in the power, energy and mining sectors that have had to slash spending in the past few years due to a precipitous drop in commodity prices.<\/span><\/p>\n

Not only is the divisions\u2019 growth outstripping that of legacy fossil-fuel businesses, but a trend toward breaking out their earnings separately in company reports allows investors to see value that was previously buried.<\/span><\/p>\n

\u201cYour industrial company today is not your dirty factory bending metals and producing simple and large objects,\u201d said Andreas Fruschki, director of equity research, Europe at AllianzGI.<\/span><\/p>\n

\u201cIt\u2019s a more high-tech, nimble assembly site.\u201d<\/span><\/p>\n

Their efforts are attracting the attention of investors looking for less obvious technology plays as the tide turns against U.S. stocks like Facebook, Apple, Netflix and Google, due to their uncomfortably lofty valuations.<\/span><\/p>\n

Meanwhile in Asia the soaring market capitalization of a handful of companies such as China\u2019s Alibaba and Tencent means investors in exchange traded funds (ETFs) who want exposure to a range of companies are finding themselves increasingly exposed to a single sector.<\/span><\/p>\n

The growth opportunities in European industrials are still limited by legacy businesses, however, said Neil Campling, head of global TMT research at Northern Trust Capital Markets.<\/span><\/p>\n

The oil & gas and mining sectors have cut capital expenditure to $706 billion in 2016 from $1.29 trillion in 2013, according to figures from S&P Global, which added that a slight recovery is expected in 2017.<\/span><\/p>\n

\u201cBut you\u2019re certainly seeing that factory automation, machine vision, automation, industry 4.0, improvements in supply chain systems, all these kinds of things … (are) enjoying very strong growth,\u201d Campling added.<\/span><\/p>\n

INDUSTRIAL SOFTWARE<\/span><\/p>\n

Siemens\u2019 Digital Factory, widely seen as the global leader in industrial software, only started reporting separate results in the German company statements in 2015.<\/span><\/p>\n

The 13 percent of 2016 revenue it contributed is still small fry compared with the power and energy divisions\u2019 40 percent. But while sales in Siemens\u2019 power and gas segment declined 11 percent in the fiscal third quarter, digital saw 11 percent growth and accounted for more than a fifth of total profits.<\/span><\/p>\n

Swiss power grids maker ABB is also winning investors\u2019 attention thanks to its robotics segment, although oil & gas, mining and other industries still account for more than 40 percent of company revenues.<\/span><\/p>\n

ABB Ability, a digital software and services platform that can connect to robots for remote monitoring and diagnostics, which partners with Microsoft and IBM, is starting to contribute to growth, ABB CEO Ulrich Spiesshofer said in a press release after the company released results for the second quarter that ended June 30.<\/span><\/p>\n

Robotics orders jumped 12 percent year-on-year in the quarter to more than 25 percent of the company\u2019s total.<\/span><\/p>\n

While some technology assets have been developed in-house or through collaboration, others have come from acquisitions.<\/span><\/p>\n

Siemens has spent more than $5 billion in the past 18 months acquiring industrial software companies while shedding legacy businesses like hearing aids and household appliances and preparing to list its giant healthcare unit.<\/span><\/p>\n

ABB this year bought automation software firm B&R for almost $2 billion, the biggest acquisition under its current chief executive, to better challenge Siemens.<\/span><\/p>\n

\u201cThe more exciting themes now are themes like automation, and that is definitely one we\u2019ve angled our portfolios towards,\u201d said Tim Crockford, European equities portfolio manager at Hermes.<\/span><\/p>\n

Crockford added German forklift truck and robotics maker Kion Group to his portfolio in 2016 on expectations for growing demand for warehouse automation, driven by e-commerce, via its acquisition of U.S. firm Dematic last year.<\/span><\/p>\n

Bank of America Merrill Lynch singled out Swedish machinery maker Atlas Copco for its SmartLink data monitoring program for air compressors, which looks to anticipate problems before they arise, an example of how the \u201cInternet of things\u201d is transforming the way equipment works.<\/span><\/p>\n

\u201cIndustrial companies with big software businesses generate stronger growth and profitability than their automation peers,\u201d BAML said in a research note last month.<\/span><\/p>\n

While the European industrials sector has outperformed the broader MSCI Europe benchmark over the past year, the companies still haven\u2019t reached the heights of tech stocks like semiconductor manufacturers.<\/span><\/p>\n

Source:http:\/\/www.reuters.com\/article\/us-europe-stocks-industrials\/doing-the-heavy-lifting-investors-eye-tech-tonic-shifts-for-europes-industrials-idUSKBN1CT0F0<\/span><\/p>\n

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