Automation Supplier Financials Quarterly Year-Over-Year Analysis Q4 2024

Overview

In this Insight, ARC Advisory Group includes the most recent quarterly results for major automation suppliers that publicly report their results.  With this latest automation supply side-market update, ARC has increased the number and breadth of automation suppliers covered, based on a combination of publicly reported data and ARC’s own extensive research database. We have also added selected business intelligence visualizations.

• The automation business of the companies tracked by ARC showed marginal growth in Q4 2024 compared to Q4 2023.
• Although certain companies within the overall group encountered a decline, several entities included in ARC’s index demonstrated growth. Notably, some even reported double-digit increases.
• Customer demand in the automotive sector is low, with car makers focusing on short-term earnings due to reduced interest in electric vehicles.
• The semiconductor industry is presently experiencing slow growth, as manufacturers address issues such as surplus memory capacity and a constrained workforce.
• Despite current challenges in the global automation market, the foundational principles supporting both process automation and factory automation remain strong.
• Advancements in AI, machine learning, robotics, and IoT are set to boost innovation and automation across multiple sectors.
• Manufacturing is increasingly integrating digital technologies, with artificial intelligence being utilized to enhance productivity.
• The emphasis on Industry 4.0 initiatives is driving significant investment in smart manufacturing and the remote monitoring of plant operations.

Executive Summary

A significant portion of the revenue growth reported in Q4 resulted from the conversion of order backlogs during the quarter. Several major suppliers indicated advancement in converting existing order backlogs into recognized revenues.

Companies with growing revenues focused on different industries and sales strategies compared to those with declining revenues. Some companies reliant on factory automation markets saw a YoY decline, mainly due to high product inventory levels in their distribution channels.

Companies in heavy process industries performed better due to converting existing backlogs for new and upgrade projects, along with stable MRO spending driven by high utilization rates. Industrial initiatives and government incentives for decarbonization also boosted investment in renewables.

Greater emphasis on energy security led to increased investment in nuclear, LNG, fossil power, and regional oil & gas projects. Geopolitical tensions prompted governments to invest more in reducing reliance on foreign energy suppliers. The EU's decision to classify nuclear power as a green energy source influenced investments, with nuclear power plant owners aiming to expand capacity through new constructions and life extensions of existing facilities.

Recent advancements in artificial intelligence, machine learning, robotics, and the Internet of Things (IoT) are catalyzing innovation and enhancing automation capabilities across various sectors. The convergence of data science, AI, and increased computational power has created an optimal environment for the commercialization of algorithms capable of performing human-like analyses on extensive datasets at machine speeds.

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