Lincoln Electric Sees Automation Surge, Prepares Physical AI Debut at FABTECH

Key Points

• Industrial demand is improving, with mid-single-digit consumables growth and rising demand for standard welding equipment and automation. Automotive remains weak, while automation growth is broadening across general industry, heavy industry and structural fabrication.
• Lincoln Electric plans to launch its first Physical AI offering at FABTECH in October and begin taking orders in the fourth quarter. The system combines vision technology, welding intelligence and collaborative robots to handle less-structured welding environments.
• The company expects pricing actions to restore price-cost neutrality in the fourth quarter, while Asia remains strong and Europe faces pressure. Lincoln is also continuing internal investment and bolt-on acquisitions, targeting 300–400 basis points of annual growth from M&A.

Lincoln Electric NASDAQ: LECO is seeing broad-based improvement in industrial demand, led by consumables, standard welding equipment and automation investments, while automotive remains the company’s principal weak end market, Executive Vice President, CFO and Treasurer Gabriel Bruno said during an investor discussion.

Bruno said the company entered 2026 with strong order and quoting activity in automation, along with backlog visibility that supported expectations for volume growth in the second half of the year. Lincoln Electric typically has visibility into six to nine months of automation business through its backlog, he said.

Consumables, which account for more than half of Lincoln Electric’s business, provide an indicator of welding, fabrication and production activity across industrial markets. Bruno said consumable volumes in the Americas Welding segment rose by the mid-single digits in the second quarter, signaling that industrial activity was “holding and growing.”

“Typically, after you’ve seen some consistent production activity, then you see conviction of capital investment,” Bruno said. He added that the company has seen an inflection in standard welding equipment demand as well as continued automation investment.

Automation growth broadens beyond automotive

Automation demand has been strongest outside automotive, according to Bruno. The company has seen broad growth across general industries, heavy industries and structural fabrication, while automotive activity remained down by the mid-single digits in the second quarter.

Lincoln Electric has seen significant automotive quoting activity but has not yet seen those opportunities convert into orders, Bruno said. He cited uncertainty around electric vehicles and internal-combustion vehicles, elections and other market dynamics as factors that have delayed investment and extended the life of existing vehicle platforms.

The company is watching for orders associated with vehicle programs expected to launch in 2028 and 2029. Bruno said the next several months will be important in determining whether quoting activity translates into meaningful industry investment.

Automotive now represents about 40% of Lincoln Electric’s automation business, down from nearly half after the company acquired Fori Automation, which had been entirely automotive-focused. Bruno said Lincoln Electric would prefer a more balanced automation mix, with roughly one-third tied to general industry, one-third to heavy industry and structural fabrication, and one-third to automotive.

The company views automation as a long-term growth driver rather than solely a cyclical capital-spending exposure. Bruno said Lincoln Electric expects high-single-digit organic growth in automation and believes industrial adoption remains in its early stages.

• Lincoln Electric expects long-term organic growth in the mid- to high-single digits.
• Automation is expected to grow at a high-single-digit rate.
• The company’s RISE strategy includes targets through 2030.

Physical AI offering planned for FABTECH launch

Bruno said Lincoln Electric plans to introduce its first Physical AI offering at the FABTECH trade show in October and expects to begin taking orders in the fourth quarter. The offering combines vision technology, welding-process intelligence and collaborative robot, or cobot, capabilities.

The company acquired Inrotech to add vision-system technology, which Bruno said has been important to developing its Physical AI capabilities. The technology is intended to enable a cobot to identify and respond to unstructured welding conditions, rather than operate only along a preprogrammed path.

Bruno said Lincoln Electric has been prototyping the technology with customers. While he did not quantify expected revenue from the product, he said the initiative supports the company’s confidence in automation’s long-term growth opportunity and its ability to expand adoption among smaller and midsize fabricators.

Pricing actions target fourth-quarter neutrality

Lincoln Electric has taken pricing actions to address persistent inflation in freight, fuel and other costs. Bruno said the company’s operating strategy is to remain price-cost neutral over time, though it expected to fall short of that objective in the third quarter.

The company announced price increases in August for both its Americas Welding and International Welding businesses. The Americas increases began in September, while International Welding increases were scheduled to take effect later in the month. Bruno said the benefits would not fully mature until the fourth quarter.

“We expect price cost neutral in the fourth quarter,” Bruno said.

He said the third-quarter dynamic would reduce incremental margins to the low 20% range from the mid-20% range, but described the dollar impact as not significant. Lincoln Electric continues to target high-20% incremental margins under its RISE strategy and aims to improve average operating margin by 300 basis points over time.

For its Harris brazing business, Bruno said silver and copper are the primary commodities affecting pricing. Harris adjusts prices monthly based on movements in those metals, he said. Silver had exceeded $110 per troy ounce earlier in the year before declining into the $60 range, according to Bruno.

Asia remains strong as Europe faces pressure

Internationally, Lincoln Electric is seeing growth in Asia, including India, China and Southeast Asia, while Europe remains challenging. Bruno said the company has not yet seen an expected increase in European aerospace, defense or industrial investment translate into incremental demand.

Lincoln Electric’s International Welding business is about 70% Europe, the Middle East and Africa and 30% Asia, Bruno said. The company is targeting International Welding EBIT margins of 12% to 15%, compared with a current range of roughly 10% to 11%.

The Middle East conflict has created a headwind, including effects on both International Welding and Americas Welding export activity. Bruno said Lincoln Electric has discussed a quarterly headwind of $67 million related to the region, but remains optimistic about its long-term positioning in Middle Eastern energy markets.

Looking ahead, Bruno said Lincoln Electric plans to continue increasing internal investment and pursue bolt-on acquisitions. The company targets 300 to 400 basis points of annual growth from mergers and acquisitions and has completed 10 bolt-on transactions over the past five years, split between automation and welding-related businesses.

About Lincoln Electric (NASDAQ:LECO)

Lincoln Electric Holdings, Inc NASDAQ: LECO is a Cleveland, Ohio-based manufacturer of welding, cutting and automation products. Founded in 1895 by John C. Lincoln, the company serves industrial, construction, energy, transportation and other end markets that use fabrication and joining technologies.

Its product portfolio includes arc-welding machines, welding consumables such as electrodes and wire, plasma and oxyfuel cutting equipment, robotic welding systems, and related automation solutions.

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