ABB CEO Says Portfolio Management Will Play Bigger Role

(Bloomberg) -- ABB Ltd. will be increasingly looking at selling or buying businesses as part of the Swiss engineering giant’s efforts to become more profitable.

“Portfolio management will play an even more important role going forward and we will not shy away from fixing, exiting or growing divisions,” Chief Executive Officer Bjorn Rosengren said in a statement released ahead of an investor presentation on Wednesday. “At the same time, no major acquisitions are planned by ABB in the mid-term.”

The sale of its power-grid division to Japanese industrial conglomerate Hitachi Ltd. is on track to close at the end of the quarter and it plans to push ahead with a related share buyback, ABB said.

Investors have high hopes that the new CEO will further streamline the company’s structure, improve profitability and eventually lift the stock price. Rosengren, 61, has a track-record of decentralizing and successfully turning companies around, including Swedish mining-equipment maker Sandvik AB. The Swede took the helm from Chairman Peter Voser in March, who stepped in after the exit of Ulrich Spiesshofer last year. Spiesshofer’s tenure has been marked by meager stock returns and a public row with activist shareholder Cevian Capital.

As the world’s second-largest supplier of factory-automation gear, ABB is exposed to the car industry which has been hit by collapsing sales in the wake of the coronavirus crisis.

The “combination of Covid-19 and oil price drop will lead to challenges over the coming quarters,” ABB said. This situation had led to a decline in demand in automotive and power generation markets, while travel restrictions and supply chain constraints also hit its business. The Chinese market continues to recover, while the transport, food and beverage, and data center sectors remained relatively resilient.

ABB shares are down 12% since the beginning of the year, compared to a 13% drop in the European Stoxx 600 industrials index.

©2020 Bloomberg L.P.

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