Data Center Demand Propels Eaton Q1 Profit, Revenue Growth
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Data center and electricity generation construction continued to power Eaton profit and revenue increases in the first quarter of 2025 as the component manufacturer’s vehicles division lagged again.
Dublin-based Eaton posted net income of $964 million in the most recent quarter, an increase of 17% compared with $821 million a year earlier, and beat analyst expectations.
Sales in the quarter totaled $6.4 billion, a quarterly record and up 7% from $5.94 billion in the first quarter of 2024, the company said May 2.
Deutsche Bank analyst Nicole DeBlase expected $6.35 billion in Q1 revenue and said in a May 2 research note that the overall consensus expectations were for a $6.28 billion total.
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At the Electrical Americas division, revenue totaled a record $3.01 billion, up 12% from $2.69 billion in Q1 2024, the company said.
Sales for the Electrical Global segment were a quarterly record $1.61 billion, up 7% from $1.5 billion in the year-ago period.
“In data center markets, we continue to see construction starts,” Chief Operating Officer Paulo Ruiz said during the company’s quarterly earnings call with analysts.
“U.S. data center construction backlog now stands at nine years based on the 2024 build rates, up from the seven years of backlog we spoke about last quarter,” said Ruiz, who will replace Craig Arnold as Eaton CEO on June 1.
“And we are also seeing strong activity in EMEA, in APAC as well as regional and regulatory policies drive data center built out globally,” he added.
Eaton’s aerospace segment sales totaled $979 million, up 12% from $871 million in the year-ago period.
However, Eaton’s vehicle unit — which manufactures clutches, brakes, transmission systems and more for trucks — reported sales of $617 million, down 15% from $724 million in the same period 12 months earlier.
The unit also missed analyst expectations by a considerable margin.
Deutsche’s DeBlase expected the unit to report $671 million in revenue and said the consensus was $658 million.
The company’s eMobility division posted $162 million in revenue, up 2% from $158 million in Q1 2024.
“We’re pleased with our performance in the quarter, which reflects our team’s high standards and focus on delivering on our commitments. Demand in our end markets continues to drive strong organic growth,” Ruiz said in a statement accompanying the results.
“As we look ahead, we’re confident, even amid broader macroeconomic volatility, we’re prepared to meet that demand with a proven strategy to invest in our businesses, drive operational excellence and continue our path of growth,” he added.
That optimism does not extend to the vehicle division, however, with the company now expecting 2025 sales to decline 3.5% to 5.5% year on year, compared with previous expectations of flat to a 2% decrease in revenue.
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Ruiz said during the analyst call the revision was due to weakness in the light motor vehicle sector.
Analysts are optimistic about the company’s prospects as a whole, with many commending the latest results and seeing continued macroeconomic tailwinds for the coming quarters.
“This has been a long up cycle for Eaton and all signs point to continuation,” Melius Research Founding Partner Scott Davis wrote in a May 2 research note.
“Eaton has had 16 straight quarters of core growth at multiples of GDP. 11 of the last 16 quarters have seen core growth at/above 9% – averaging somewhere around 3-4x global GDP,” Davis wrote.
“The longer-term history of electrical equipment saw growth below global GDP — so it’s logical that after two decades of under-growth, we could have quite some time of over-growth — that’s even if we didn’t have secular growth shifts,” he added for context.
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