New start for ABB? The end of the hard times seems in sight for Swiss-Swedish engineering technology group, ABB, says the company's chairman and chief executive, Jurgen Dormann.
| Auteur | O'Brien, Tom |
| Fonction | Money |
Once the jewel in the crown of Switzerland's heavy industry, engineering technology group ABB lost something of its lustre over recent years as loses mounted.
The company traces its history back to 1988 when it was formed by the merger of Sweden's Asea and Brown Boveri of Switzerland.
Changing Times
The company then benefited from the economic boom of the '90s, expanding its operations rapidly, only to founder under a mountain of debts in 2002, recording a loss of $787 million.
Now ABB seems to be one of the most talked about recover), stocks after the company's newly appointed management team--headed by Dormann--embarked on an executive cost-cutting plan.
ABB spokesman, Thomas Schmidt tells Swiss News that the group has certainly learned a number of things from the recent bout of tough times.
"First, the group's business portfolio was too broad and complex for our resources and needed to be simplified," explains Schmidt. "Jurgen Dormann and ABB's senior management team have streamlined operations."
The six business divisions that existed in 2002 have been cut to two core divisions--Power Technologies and Automation Technologies (with a third division--Oil, Gas and Petrochemicals in the process of being divested).
So, it seems that ABB is concentrating on what it does best, focusing on the business areas where it remains a market leader.
ABB currently holds more than 50 per cent of the US power transmission market and is one of the world's leading producers of industrial robots.
Taking on Tough Times
It's difficult to avoid the fact that debts of around $7.3 billion (estimated end-2003) have put the company under great pressure, but still, ABB has been opening up procedures and seems to be dealing with these issues head-on.
"ABB ms an industrial company needed a stronger balance sheet," says Schmidt. "We are building a much stronger financial base to be in a good position to take advantage of the economic upturn when it comes."
"ABB will reduce its debt through divestments' proceeds, our new capital, and cash from the successful core business. This will allow us to achieve a sound balance sheet for an industrial company. We have a clear target to achieve a debt/equity gearing of 50/50 in 2005."
A major part of the group's restructuring has translated into large-scale job losses. Announced in late 2002, the cost-cutting programme aims to cut the annual cost base of the company by $900 million by mid-2004.
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